Royal Mail shares slump on threat to fire thousands as losses mount

Royal Mail upped the stakes in its pay dispute with postal workers on Friday, threatening to fire 6,000 workers as part of a wider plan to cut 10,000 jobs by the end of next August, while blaming financial losses on strikes and lower parcel volumes.

Members of the Communication Workers Union (CWU) on Friday started a 24-hour walkout in a long-running dispute over pay. It has threatened up to 19 days of strike action in the buildup to the busy Christmas period.

Parent company International Distributions Services said it had made a loss of £219m for the first half of this financial year, compared with a £235m profit last year, with around £70m attributed to "direct negative impacts" from three days of industrial action. Shares in the company slumped almost 14%.

Royal Mail warned that if the CWU followed up with its threat, annual losses “would increase materially and may necessitate further operational restructuring and headcount reduction”.

It said that under current plans 10,000 jobs in total could go, including up to 6,000 redundancies. For the current fiscal year, it forecast an adjusted operating loss of around £350m, including the “direct, immediate impact of eight days of industrial action which have taken place or been notified”.

“This may increase to around a £450m loss if customers move volume away for longer periods following the initial disruption,” it added.

The CWU said the company was “holding postal workers to ransom for taking legal industrial action against a business approach that is not in the interests of workers, customers or the future of Royal Mail”.

CWU general secretary Dave Ward said his members “face the biggest ever assault on their jobs, terms and conditions in the history of Royal Mail”.

“The public and businesses also face the end of daily deliveries and destruction of the special relationship that postal workers and the public have in every community in the UK.”

Reporting by Frank Prenesti for Sharecast.com