Turbulent tenure: Chief executive Simon Thompson resigned
Royal Mail is set for a critical week after its chief executive Simon Thompson resigned just days before the company plans to reveal the cost of a series of unprecedented strikes.
Parent group International Distributions Services announced on Friday that the embattled boss will be leaving Royal Mail at the end of October.
Thompson became chief executive in early 2021 when the firm was still benefiting from a boom in online shopping during the pandemic – but his two-year tenure became increasingly turbulent.
His departure had been rumoured, but many were not expecting it to be formally announced until the company’s annual results are unveiled on Thursday.
The figures will lay bare the damage inflicted on the 507-year-old postal service by a bleak year in which it was battered by 18 days of strikes, a slump in parcel deliveries and a cyber attack on its international delivery operations.
Months of chaos forced Royal Mail to warn that it was losing more than £1 million a day and could be forced to call in administrators if the situation did not improve.
The debacle hit the share price, with IDS stock now worth almost 30 per cent less than a year ago.
The firm’s biggest shareholder is Daniel Kretinsky, known as the Czech Sphinx, who has built up a 25 per cent holding in the group – prompting speculation that he could be considering a takeover.
Analysts predict Royal Mail will report a loss of half a billion pounds for the year to the end of March, according to Refinitiv data. This compares with a profit of £416 million in the previous year.
IDS, which is listed on the FTSE 250, is worth £2.3 billion. The company has estimated that Royal Mail will deliver a loss for the year of £350 million to £450 million. City observers will be looking for details on the cost of the dispute with its workers after Royal Mail said in January that industrial action in the final nine months of last year had cost it £200 million.
Mass walkouts at Royal Mail followed a confrontation with the Communication Workers Union – which represents 115,000 postal workers – over plans to modernise the business in an attempt to make it more competitive.
A deal struck last month included a 10 per cent pay rise for staff. CWU members are now set to vote on whether to approve it.
IDS will be scrambling to find a suitable replacement for Thompson as the company tries to repair its reputation.
Another point of interest for analysts will be how well the group’s parcel and letter delivery operations have performed despite the ongoing problems.
A City analyst told The Mail on Sunday that IDS needs to appoint someone who can repair relations with staff and unions, adding: ‘There needs to be a focus on winning hearts and minds.’
