Royal Mail set for first loss since float

As 115,000 posties prepare to go on strike . . .

RoYAL Mail’s UK postal service is facing its first loss since privatisation as around 115,000 postal workers prepare to walk out in the biggest strike of the summer.

Members of the Communication Workers Union (CWU) are planning to down tools later this month and in early september amid a bitter dispute over pay.

Royal Mail said that if the industrial action goes ahead the UK business will be ‘materially loss making’ for its current year.

The FTse 250 firm also accused the CWU of an ‘abdication of responsibility for the long-term job security of its members’, adding that the strike would make pay rises ‘less affordable’ and could put jobs at risk.

shares in the group slipped 1.1pc, or 2.9p, to 269.3p yesterday following the profit warning.

since its privatisation in october 2013, Royal Mail shares have dropped by over 25pc as it has struggled to adapt to the decline in letter posting and the rise of rival delivery firms.

The share performance has hurt its retail investor base, understood to be around 700,000-strong.

Broker Peel hunt previously forecast a £55m loss for Royal Mail in the UK this year, but analyst Alexander Paterson warned the figure could be ‘much worse’ as a result of the summer strike.

he added that if the group failed to improve it could be ‘ lossmaking indefinitely’ and would require a cash injection to keep itself afloat.

If the forecasts are accurate, it would be the first operating loss for Royal Mail UK since it was privatised in 2013.

The listed group is comprised of Royal Mail, its UK postal business, and GLs, its much more successful international delivery arm. The recent trouble started in June when the CWU rejected an offer from management that included a 2pc pay rise as well as an additional 3.5pc increase if the union agreed to a ‘series of changes’ to the business as it seeks to modernise its operations and compete with rivals such as Amazon. The union defended its decision, saying workers needed a ‘proper pay rise’ amid surging inflation, which is expected to hit 13pc by the end of the year.

Royal Mail admitted last month it was haemorrhaging £1m per day as its business was battered by a decline in posted letters, lower numbers of parcels following a surge during the pandemic

‘Significant operational change’

and a reduction in consumer spending amid the squeeze on the cost of living.

At the time, the Royal Mail UK predicted it would break even for the year if no strikes went ahead.

The 500-year- old firm, which can trace its roots back to King henry VIII, is aiming to shift its focus toward parcels as well as improving automation and delivering on sundays in a strategy spearheaded by boss simon Thompson ( picturedinset).

But the ongoing dispute will fuel speculation that the company could split its business after warning a break-up was on the cards unless it achieved ‘significant operational change’.

Royal Mail’s stock market performance is an embarrassment for former Chancellor George osborne, who presided over the sale of the Government’s stake in the firm and said in 2015 that the move would help secure the company’s ‘long-term future.’

Full-time Royal Mail workers received around 900 shares each in the firm during the privatisation process, which at the time were worth over £3,000. But at current prices, the stock would only be valued at around £2,300.