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Chief executive Simon Thompson said that unless employees, represented by the Communication Workers Union, agree to the changes, the firm will be forced to spin off its profitable international logistics business GLS to “protect the value and prospects of the group”.
At its first quarter trading update, Royal Mail said that the pandemic boom it saw from online shopping and the mass distribution of Covid-19 testing kits has fizzled out.
As a result, revenues at its UK-based letters and parcels business fell 11.5 percent to £1.9billion. In contrast, GLS’ revenues rose 7.8 per cent to £1.1billion.
More than 115,000 Royal Mail workers have voted to go on strike after being offered a 5.5 percent pay rise. The CWU wants workers to get a pay rise that keeps pace with inflation, without any conditions attached.
However, Thompson said that he would only discuss pay together with working practices and conditions.
He said that as talks with the CWU have not got anywhere, the Royal Mail is in danger of missing out on £100million of the £350million worth of cost savings it had identified for its 2022/23 financial year.
Thompson said that with the letters and parcels business losing £92 million in the first quarter or £1.5 million a day, unless the CWU agrees to talk about pay and conditions, it will look at splitting GLS and Royal Mail into separate companies.
He added: “We have to transform the way we work.”
“We need to change – and change now. This is how we can give our team the job security that they deserve for tomorrow and not just for today. I am ready to talk about pay and change at any time. But it has to be both.”
Royal Mail’s shares are 13.5 percent below their 2013 flotation price and down 45.8 percent over the past 12 months.
Edison Group chief executive Fraser Thorne said that the first quarter results “make clear that Royal Mail is already facing a challenging set of circumstances”.
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