Royal Mail plunges to £1 billion loss after fight with union

Royal Mail reported an operating loss of £1 billion (S$1.7 billion) after the beleaguered delivery service endured a long dispute with a trade union. 

International Distributions Services, which owns the UK postal service, said industrial action, a weak online retail market and severance costs from redundancies had hit performance.

Shares in IDS fell more than 5 per cent in early trading.

Still, the company said it has “grounds for optimism” following an agreement with the Communication Workers Union which will be voted on by staff.

IDS reported revenue of £12 billion for the year to the end of March, down 5.3 per cent on last year. GLS, its international parcels business, reported an operating profit of £296 million, down nearly 10 per cent.

Royal Mail’s chief executive officer Simon Thompson is due to leave the business at the end of October. He said on May 12 that now was the right time to hand over to a new boss following a tumultuous few months during which he was accused of “incompetence” and “cluelessness” by British Members of Parliament.

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Keith Williams, the IDS chair, said that Royal Mail “does have a future” inside the company. During a call with journalists he also said GLS was better off inside the group, but added: “We’re preserving our optionality on that one.”

IDS threatened last year to split its business if a deal could not be reached with the union. It said Thursday that it wouldn’t recommend a final dividend for the financial year, given the performance of Royal Mail and increased investment in GLS.

Thompson was recalled to answer lawmakers’ questions in February after they were left unconvinced by his response to accusations that the company was tracking its workers and prioritising parcels over letters. BLOOMBERG