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Royal Mail warns of thousands of job cuts as it slides into red
Global Banking & Finance Review®
Company
By Yadarisa Shabong
(Reuters) -Royal Mail could cut up to 10,000 jobs and the loss-making business warned of more layoffs if planned strikes go ahead, as the company that is locked in a dispute with its largest union flags even deeper losses this year, sending shares 10% lower.
The Communication and Workers Union (CWU), representing 115,000 Royal Mail postal workers, have held strikes in September and early October, and have threatened more strikes this month and next after months of failed negotiations over pay and operational changes.
“Royal Mail urges CWU to immediately call off planned strike action and embrace our offer of Acas talks to urgently find a resolution to the current dispute,” parent company International Distributions Services said on Friday.
Its proposals last month to take the pay dispute to arbitration and change its policies had angered the CWU.
The holding company said 5,000 to 6,000 jobs could be made redundant by the end of August next year, and up to 10,000 roles would be cut on a rolling 12 month basis, including reductions in overtime, temporary staff and natural attrition.
“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,” CWU General Secretary Dave Ward said on Friday.
“The CWU is calling for an urgent meeting with the Board and will put forward an alternative business plan at that meeting.”
Royal Mail has been working on a transformation plan to shift its focus to parcels amid sliding letter volumes, and while it got a boost from the online shopping boom during the pandemic, it is now dealing with inflationary pressures, a cost-of-living squeeze and a fall in parcel volumes.
Royal Mail swung to an adjusted operating losses of 219 million pounds in the first half of the year, and losses for the year is expected to be around 350 million pounds, it forecast.
That could increase to 450 million pounds in losses this year if customers switch to other providers and the UK business could go deeper into the red if more strikes are held during the holiday period.
“The ongoing uncertainty means that the Board is unable to give a clear outlook for the full year,” it said.
Shares fell as much as 17% to their lowest since September 2020.
GLS, its international distribution network, has been performing in line with expectations, the company said.
Royal Mail, the former British postal monopoly, recently changed the name of its holding company to International Distributions Services from Royal Mail Plc.
(Reporting by Yadarisa Shabong in Bengaluru; Editing by Savio D’Souza and David Evans)
A financial loss occurs when a company's expenses exceed its revenues, resulting in a negative profit. This can impact the company's ability to sustain operations and may lead to job cuts.
A union strike is a work stoppage initiated by employees to protest against working conditions, pay, or other employment terms. Strikes are often organized by labor unions representing the workers.
Unemployment refers to the situation when individuals who are capable of working are unable to find a job. It is often measured as a percentage of the total workforce.
Operational change involves modifications to a company's processes, policies, or structures to improve efficiency, reduce costs, or adapt to market demands.
A transformation plan is a strategic framework designed to guide an organization through significant changes, often aimed at improving performance and adapting to new market conditions.
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