Royal Mail bosses consider nuclear option of administration for postal arm

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Royal Mail bosses have considered putting its struggling postal business into administration as a long-running dispute with unions shows no sign of resolution, it emerged overnight.

Negotiations between the company and the Communication Workers Union (CWU) are teetering on the edge of collapse, and it is thought insolvency may be the nuclear option for a business slated to lose between £350mln and £400mln this year.

Despite 18 strike days in 2022, discussions resumed earlier this year, and the union suspended further action, citing significant progress towards a potential settlement.

However, hopes for an agreement have dwindled in recent days amid a continued impasse over pay and changes to working practices.

Should talks fall through, the CWU's national executive will convene in the coming days to deliberate further industrial action.

The boards of Royal Mail and its parent company, International Distributions Services PLC (LSE:IDS), continue to favour a negotiated solution, but the possibility of special administration under the Postal Act has been explored, which could lead to additional job losses among the company's 140,000-strong workforce, multiple reports have revealed.

Only those parts of Royal Mail subject to the universal service obligation would be involved in the administration process, with Parcelforce and some parcel operations remaining unaffected.

The government would need to approve any such decision, and it remains unclear who might be appointed as an administrator to oversee the troubled postal service.