Royal Mail to axe thousands of jobs as it swings to loss

Royal Mail was accused of holding postal workers to ransom as it threatened to cut up to 10,000 full-time roles because its financial situation has deteriorated due to strikes.

The company swung to a first-half loss and warned of worse to come for the full year. It blamed a £70mn hit on three days of industrial action after workers downed tools in a dispute over pay and conditions.

The group said it planned to axe about 5,000 full-time roles by March and the equivalent of about 10,000 positions by August next year.

The “right sizing” of the business would involve a reduction of temporary workers and overtime, so would lead to an estimated 5,000-6,000 redundancies by the end of August.

The union representing postal workers said the announcement was “the result of gross mismanagement and a failed business agenda of ending daily deliveries”.

“This announcement is holding postal workers to ransom for taking legal industrial action against a business approach that is not in the interests of workers, customers or the future of Royal Mail,” the Communication Workers Union said. “This is no way to build a company.”

Royal Mail chief executive Simon Thompson said: “This is a very sad day. I regret that we are announcing these job losses. We will do all we can to avoid compulsory redundancies and support everyone affected.”

The union’s “decision to choose damaging strike action over resolution regrettably increases the risk of further headcount reductions”, he added.

Royal Mail said: “The ongoing uncertainty means that the board is unable to give a clear outlook for the full year.”

The company on Friday posted a first-half adjusted operating loss of £219mn, down from a £235mn profit in the same period last year.

It expected a full-year adjusted operating loss of about £350mn, including the hit from eight days of industrial action, and said this could increase to £450mn.

Royal Mail’s share price fell by as much as 13 per cent in early London trading on Friday, extending its slide for the year to about 64 per cent.

The company said its financial position meant its legacy voluntary redundancy policy, “which offered up to two years’ pay, [was] now unaffordable”.

“We will consult with CWU on any new voluntary redundancy arrangements,” the postal service added.

CWU said it was calling for an urgent meeting with the board and would put forward “an alternative business plan”.