Rivals threaten to force sale of Royal Mail stake

[TrueBlueTerrier]

http://www.guardian.co.uk/uk/2009/jun/0 ... on-deficit" onclick="window.open(this.href);return false;

• Threat to call in EC over £10bn pension subsidy
• Summer of strife expected for firm 'on its last legs'

* Tim Webb
* guardian.co.uk, Monday 8 June 2009 20.34 BST


Royal Mail's rivals will appeal to competition authorities in Brussels if the government bows to demands from unions and rebel MPs to plug its estimated £10bn pension deficit without selling a stake in the state-owned postal group.

One chief executive of a leading ­private sector competitor told the Guardian that guaranteeing the enormous pension ­deficit without restructuring the business represented "unfair state aid".

The threat from rivals, such as TNT Post and Deutsche Post, owner of DHL, makes Royal Mail's predicament even more dire.

Royal Mail, which is predicted to make a loss of £50m this year as electronic forms of communication continue to replace mail deliveries, cannot afford the £500m annual payments it needs to plug the pension deficit. Without the government intervening, the postal group would go bust.

Business secretary, Lord Mandelson, has repeatedly stressed that plugging the pension deficit was conditional on the sale of a minority stake in Royal Mail. But the sale is in disarray. The only other way to get round European commission rules on unfair state aid would be to propose an even more radical reorganisation of the business, likely to involve thousands of job losses and further industrial strife.

State aid rules mean that direct ­gov­ern­ment aid to companies can only be allowed on a temporary basis, or as part of a wider restructuring.

Ministers had set a tight schedule, ­vowing to get parliamentary approval for the legislation allowing a sale of the stake before the middle of July.

The first vote for MPs had been planned for this week, but this has now been pushed back as ministers consider sacrificing the reforms to keep rebel MPs and unions onside amid turmoil at ­Westminster. However, a spokesman for Lord Mandelson's business department said that the government "had not ruled out going ahead [with the vote] before the summer".

The parallel process to find a buyer for a 30% stake in Royal Mail has also stalled as a result of the paralysis gripping the government. Private equity firm CVC, which owns a majority stake in the ­Belgian postal service, is understood to have submitted an initial bid of under £2bn, well below government expectations. The interest of Dutch rival TNT, which had been the front runner to buy the stake, has cooled.

Jonathan DeCarteret, from consultancy Post Switch, said: "Royal Mail is on its last legs. Without a sale, the only option for Royal Mail's management is to make ­significant cutbacks."

He said that the most likely option would be to close many of its large sorting offices, resulting in thousands of redundancies. "Unions would be up in arms," he added. "We are predicting a period of balloting for strike action this summer and in the autumn. This friction will explode in the next few months."

Jonathan Djanogly, shadow business minister, said the government should have acted sooner to secure Royal Mail's future. "The government could have seen this happening. It's not as if the internet has only just been invented. It's wasted 12 years."

The dire state of Royal Mail's finances will be laid bare as early as next month when its pension trustee formally updates the estimate of its pension deficit from the current figure of £3.4bn, calculated in 2006.

[fmrPOSTIE]

If they want to waste money then thats fine. But they've lost all previous cases regarding VAT, and one other bailout I believe.

[DGP1]

Without a sale, the only option for Royal Mail's management is to make ­significant cutbacks."

What about the significant cuts they have already made and are going to make in the future

[Lounge Lizard]

Without a sale, the only option for Royal Mail's management is to make ­significant cutbacks."

What about the significant cuts they have already made and are going to make in the future

Cuts that are going to be made in the future - yes, no Saturday deliveries, no Second Class social mail, no daily rural deliveries, etc. - maybe not in the near future, but all the quicker if Royal Mail is pirateised.

[DGP1]

Without a sale, the only option for Royal Mail's management is to make ­significant cutbacks."

What about the significant cuts they have already made and are going to make in the future

Cuts that are going to be made in the future - yes, no Saturday deliveries, no Second Class social mail, no daily rural deliveries, etc. - maybe not in the near future, but all the quicker if Royal Mail is pirateised.

I like that, yarrrrrrrrrrr

Brings a whole new meaning to 'Roger the cabin boy'

[norbert]

Without a sale, the only option for Royal Mail's management is to make ­significant cutbacks."

What about the significant cuts they have already made and are going to make in the future

Cuts that are going to be made in the future - yes, no Saturday deliveries, no Second Class social mail, no daily rural deliveries, etc. - maybe not in the near future, but all the quicker if Royal Mail is pirateised.

I like that, yarrrrrrrrrrr

Brings a whole new meaning to 'Roger the cabin boy'

Mandy would ! - note to ****mail - only joking ! , I wonder who Captain Bligh would be ? & Mr Christian ?

[BELIAL]

Tim webb ,another piss poor hack simply repeating hearsay and apocryphal evidence ,no research, no facts and nothing to back up his popularist rant. No data, no primary source evidence,just lazy and slipshod propaganda,still, nice work if you went to the right school.This bloke said down the pub the other day

[norbert]

Tim webb ,another piss poor hack simply repeating hearsay and apocryphal evidence ,no research, no facts and nothing to back up his popularist rant. No data, no primary source evidence,just lazy and slipshod propaganda,still, nice work if you went to the right school.This bloke said down the pub the other day

Is this from a press release from New Labour's Millbank or 148 Old St ?

I can imagine New Labour wanting to wash their hands of the CWU because of awful IR , and leave everything in the hands of the Private Firm and let RM be the " sleeping partner " ; a bit like the arrangement with ROMEC i.e. a true blue Tory building firm that don't do unions , a chairman that wouldn't meet anyone from the CWU for well over a year .

It's daft at times that paper , it's well known for it's campaigns ; it'll do one against the BNP which will mean that people WILL vote for them . The other New Labour cheer leader is the darling of the liberal left , Polly Toynbee ; desperately trying to defend McRuin .

What's happened with a lot of papers is sackings of half decent journalists and using agency news . For all it's faults , The Torygraph was known for good coverage on say ; Rugby & Cricket but now it's made up names and recycled agency copy & big photo agency pictures to fill the pages up .

The likes of Mr Rushbridger do all right though .

A career move for Mrs White ? in the offing ?