Royal Mail boss is playing hardball, fast...perhaps too fast

[TrueBlueTerrier]

https://www.theguardian.com/business/ni ... ay-dispute

That escalated quickly. A day after Royal Mail workers voted to strike over pay, their employer is threatening to perform the splits unless “significant operational change” happens. The UK postal service would go one way, taking its industrial relations disputes and modernisation challenges with it. GLS, the more profitable parcel operation that is run out of Amsterdam and serves continental Europe and North America, would go the other.

This is a hardball move by chairman Keith Williams, even if the first stage of the operation is only a cosmetic change of name for the holding company from Royal Mail plc to International Distributions Services (an ugly name, but at least it’s not Consignia, the ridiculous moniker briefly adopted a couple of decades ago until the mockery became unbearable).

But the serious intent-cum-threat was spelled out starkly. “In the event that significant change within Royal Mail is not achieved, the board will consider all options to protect the value and prospects of the group, including separation of the two companies,” said the statement.

The way Williams tells it, the break-up option merely reflects events on the ground since privatisation in 2013. GLS has grown massively, to the point where it has contributed two-thirds of group-wide operating profits over the past three years. And, since there are few operational links between GLS and Royal Mail, it is unsustainable to expect the vigorous bit to be held back by the laggard, especially now that the Covid whoosh to parcel volumes in the UK has faded.

Put like that, the separation case is indeed coherent. GLS was the junior partner at privatisation but this year’s forecasts see it making as much as £350m at the operating level versus a break-even position for Royal Mail, assuming no strikes, after a quarter in which losses ran at £1m a day. It’s a far cry from last year’s pandemic-inspired £412m of operating profit at Royal Mail.

So, yes, two very different businesses are housed under one roof and there’s an obvious candidate as a potential buyer for GLS. It is the group’s own 22% shareholder, Daniel Křetínský, the Czech billionaire who many assumed was always attracted by the thought that the overseas operation would shake loose one day.

Yet Williams must also know that privatisation did not remove Royal Mail from the political arena altogether. It is a regulated business with an obligation to deliver letters to every address in the country at a uniform price. Removing GLS from the group would raise many questions – the level of debt to be left with rump Royal Mail, for starters. The stock market, according to UBS’s sum-of-the-parts calculations, currently values the UK postal service at a negative £1bn, so should it get a dowry to adjust to independent life? That question would be a quarrel in itself.

A happy outcome would see the pay dispute resolved quickly, which is not impossible since there hasn’t been a major strike at Royal Mail since privatisation. But the two sides’ positions currently look miles apart. On one hand, the CWU union argues that a group that only recently sprayed £400m on shareholders via buy-backs and special dividends can afford a real-terms pay rise. On the other, management says investors’ prizes came, in effect, from a GLS business that it is prepared to flog if push comes to shove. The middle ground is very hard to spot.

[Phantom]

The split would be the best thing for RM, go for it.

[yubin282]

The split would be the best thing for RM, go for it.

Let's be honest none of us really want packets. Just give me mail and I'll deliver it.

They can have a 24/7 365 packets business....as long it doesn't involve me.

[SpacePhoenix]

The split would be the best thing for RM, go for it.

If GLS were split off then RM would probably be looking to make massive savings everywhere if GLS does indeed make up a very sizeable chunk of profits for the RM group

[2yearpostie]

The split would be the best thing for RM, go for it.

If GLS were split off then RM would probably be looking to make massive savings everywhere if GLS does indeed make up a very sizeable chunk of profits for the RM group

Personally, id be happy to do a 4 day week / 9hours a day and do 2 days mail every other day.

[yellowbelly]

The split would be the best thing for RM, go for it.

If GLS were split off then RM would probably be looking to make massive savings everywhere if GLS does indeed make up a very sizeable chunk of profits for the RM group

Personally, id be happy to do a 4 day week / 9hours a day and do 2 days mail every other day.

And how far would you like to walk in those 9 hours?

[britwrit]

I never understood the argument for selling off GLS. At best, Royal Mail gets a one-time cash infusion. And as we all know, they'll just fritter it away on stock dividends, gigantic white elephant mail centres, etc. etc.

GLS lets the whole company get around price restrictions the government has imposed on us. That alone means we should keep it.

[noggin1969]

x

[2yearpostie]

The split would be the best thing for RM, go for it.

If GLS were split off then RM would probably be looking to make massive savings everywhere if GLS does indeed make up a very sizeable chunk of profits for the RM group

Personally, id be happy to do a 4 day week / 9hours a day and do 2 days mail every other day.

And how far would you like to walk in those 9 hours?

2hours IPS, 1hr 30 prep 30 minute meal break leaves 5hours to do walk and 1/4.

[Woody Guthrie]

2hours IPS, 1hr 30 prep

It isn't 1995...

[BenacreNick]

Meal break 2yrpostie ?

I've never had one in 6 years my friend.

[captain kaos]

Correct me if I’m wrong but wasn’t splitting the business what Rico wanted to do?

[Grads75]

Meal break 2yrpostie ?

I've never had one in 6 years my friend.

Why not???

[Woody Guthrie]

Correct me if I’m wrong but wasn’t splitting the business what Rico wanted to do?

Isn't all of what Simon wants to do what Rico wanted to do?
It wouldn't surprise me if they were Facebook friends.

[pieoftheday]

Privatise, asset strip, nothing new