Royal Mail has piled pressure on the Government to scrap Saturday letter deliveries as it crashed to a loss of nearly £320million.
With the 507-year-old firm facing a crucial Christmas after last year’s festive season was thrown into chaos by strikes, it warned that change was ‘urgently’ needed so it could adapt to people’s delivery habits.
To avoid a repeat of last year, when mail piled up in sorting offices, it is offering £500 bonuses if staff hit delivery targets.
It has also drawn up plans to hire 16,000 seasonal workers and open five temporary sorting offices to avoid backlogs.
‘Quality is key for customer satisfaction and sustainable growth, so we are pulling out all the stops to deliver Christmas for our customers,’ said Martin Seidenberg, the boss of Royal Mail’s parent company International Distributions Services (IDS).
Saturday post: Royal Mail warned that change was ‘urgently’ required if it is to adapt to people’s delivery habits
It is under particular pressure to deliver after first-class stamps hit a record £1.25 last month, or £10 for a book of eight.
Seidenberg, who took charge in August, reiterated that Saturday letter deliveries had to be axed as the volume of letters posted continued to dwindle.
‘It’s not sustainable to maintain a network built for 20bn letters when we’re only delivering seven billion. Regulation has to move with the times,’ he said.
The comments came as IDS revealed losses at Royal Mail jumped to £319million in the six months to September 24 – up from £219million in the same period last year – as sales fell 2.9 per cent to £3.5billion.
The losses at Royal Mail wiped out profits of £150million at its international sister business GLS, leaving IDS with an overall loss of £169million – almost treble the £57million loss in the same period last year.
Shares fell 3.84 per cent or 9.4p to 235.3p.
Seidenberg called on the Government and the regulator Ofcom to help it adapt to the declining use of letters alongside a boom in parcel deliveries and the rise of rival delivery groups such as Amazon and Evri.
‘We need to move on,’ Seidenberg said, adding that other countries had already reformed their postal services, and the UK was ‘being left behind’.
His comments came as Royal Mail continues to push for an overhaul of its Universal Service Obligation, the law that requires it to deliver letters six days a week, arguing that changing customer habits meant five days would be sufficient.
There have been growing complaints that the firm is falling behind on delivery targets, particularly for first-class post.
Ofcom fined it £5.6million this week for failing to meet its targets, which require Royal Mail to deliver 93 per cent of first-class mail within one working day and 98.5 per cent of second-class mail within three working days.
Last year, it delivered 73.7 per cent of first-class mail and 90.7 per cent of second-class mail on time.
The postal service is required to complete 99.9 per cent of delivery routes for each day on which a delivery is required, but last year it only managed 89.35 per cent.
Royal Mail also faces a £600million legal claim from rival Whistl which says it abused its dominant market position to squeeze out competitors.
It comes as the Post Office ended its 360-year exclusive partnership with Royal Mail this month by agreeing to act for rival carriers DPD and Evri.
