Royal Mail is in a royal mess

[TrueBlueTerrier]

https://bestinbusiness.news/companies/r ... oyal-mess/

Perhaps what’s most surprising about Royal Mail is that it got through nine years of privatised life without a national strike.

That period of superficial industrial harmony formally ended last week, when Communication Workers Union members walked out in a spat over pay. Royal Mail has offered workers a rise of more than 2 per cent only if they agree to other changes to their working conditions; the union reckons that with inflation running well above that, a bigger pay bump is needed regardless. Wednesday was the second day of strike action.

Everything else about the postal service’s predicament feels utterly familiar: a diminishing core letter business and a parcel unit not quite able to pick up the slack. Its costs remain too high. It is insufficiently flexible. It faces a host of more cut-throat competitors for profitable deliveries. Then there’s the six-day-a-week obligation to deliver letters across the UK for a single price.

It was 2008 when Richard Hooper warned in his pre-privatisation review that the organisation had to “modernise or decline”. Current Royal Mail chair Keith Williams is delivering much the same ultimatum now.

The trouble is, Royal Mail seems to have managed only enough modernisation to moderate its decline rather than reverse it altogether. Its share price languishes around a sixth below its IPO price and has resumed a downward slide after a pandemic-induced hiatus.

Williams has no doubt talked down Royal Mail’s prospects with his warning in July of £1mn a day losses: the full-year outlook before the strike impact was still for break even on an operating basis. But the profits of the pandemic parcel boom aren’t about to return overnight either. Some things are going to have to give. Williams is right about what needs doing. What’s less obvious is that he’ll be able to do it.

Part of the problem is that Williams’ threat to the union — to split the troublesome UK business from its prosperous international arm GLS unless progress is made on modernisation — is hard to take too seriously.

In theory it makes sense. GLS is expected to generate operating profit of €370-410mn this year to Royal Mail’s zero. Berenberg analysts calculated in July GLS was worth about 390p a share. With Royal Mail added on the price is more like 275p. Demerging GLS or selling it off could unlock a classic conglomerate discount for shareholders.

It’s possible a sale could also result in a healthy pay-off for Royal Mail’s posties, as the price of allowing the group to sacrifice financial security.

In the real world, though, it’s also plausible that a spin-off would expose the remaining Royal Mail business as an unattractive asset that would struggle to attract investors to back it through further periods of upheaval.

It’s hard to imagine politicians permitting such a deal, given that the government appears to have designated it “critical national infrastructure” that falls within the scope of the new national security and investment regime, calling in for review Czech billionaire Daniel Křetínský’s move to increase his stake last week. If they did allow a split, it’s less tricky to imagine the company requiring state support within the space of a decade.

Williams’ other warning, that he could move to terminate a historic contract with the union governing terms and conditions, also struggles for credibility. Relations between union and management may be bad. But moving to formally end an agreement that has ensured an accord, however uneasy, for the past nine years would mark a breakdown that could be hard to recover from.

Williams is an experienced negotiator thanks to his years spent as boss of British Airways. He surely appreciates that any change is going to mean worse terms and conditions for Royal Mail workers. Likewise, while it’s understandable that the union wants to use its position of strength to resist, changes to working patterns will ultimately be unavoidable. So will redundancies. That both sides have nonetheless found themselves so rigidly opposed is a mark of the right royal mess Royal Mail is in.

[fallenworld2022]

How could posties be in line for a healthy pay off? what does that mean?

[claystones]

The sad thing is a lot of posties have had enough and will want redundancy time to get out

[1617mel]

So what will it take , for both sides to come to an agreement, maybe need a mediator to take part, I think both sides will have to give a little, but whatever is the outcome the actual job I think is going to change quite dramatically, so will us the posties be up for this, Mr Williams and Mr Thomson ect. Will have to reign in some of these draconian measures that they want to impose on our workforce you know it is 2022 not 1922.

[fallenworld2022]

how is redundancy a years wages healthy pay off for posties? is this what this article is saying, or are they saying postmen as shareholders will be healthy if sold off, not really seeing the point of how posties would see a healthy pay off?

[TopperGas]

how is redundancy a years wages healthy pay off for posties? is this what this article is saying, or are they saying postmen as shareholders will be healthy if sold off, not really seeing the point of how posties would see a healthy pay off?

Assuming it does mean redundancy payments, rather than a dividend payment, what about the rest left working for Royal Mail, it should really have said a nice pay off for any posties looking to take early retirement.

As far as Keith Williams being a good negotiator, that's not going to help RM if he won't even attend a meeting with the CWU, plus he hardly seems to be doing a great job settling the RMT strike.

[goneaway]

How could posties be in line for a healthy pay off? what does that mean?

I would think the writer is talking about posties who still own free shares from when Royal Mail was privatised. If there's a takeover, those still holding the shares would be rewarded handsomely to give them up but they would no longer be shareholders in Royal Mail.

[Marshamp11]

How could posties be in line for a healthy pay off? what does that mean?

I would think the writer is talking about posties who still own free shares from when Royal Mail was privatised. If there's a takeover, those still holding the shares would be rewarded handsomely to give them up but they would no longer be shareholders in Royal Mail.

Posties owning shares in RM wouldnt be an issue as postal worker ownership in shares is a p*** in the ocean to the amount of shares that make up the total in RM, I would guess redundancy packages to those who have done a good few years and nearing retirement are the people RM would be looking to shed particularly as you cannot be forced to retire now and the prospect of which is an ageing workforce carrying on past retirement age must be a worry for their future plans. Imagine having a large % of your workforce in 10 years time being in their 70s.

[Clappedoutpostie]

I would think the writer is talking about posties who still own free shares from when Royal Mail was privatised. If there's a takeover, those still holding the shares would be rewarded handsomely to give them up but they would no longer be shareholders in Royal Mail.

But they will get less per share than they could have sold for in the open market when the price was £6. Personally I take the article to mean they would have to use the money from the sale of GLS to reform RM, mass redundancy payoffs that sort of then but I can see how the article has caused confusion about what the author actually means.