Losses: City analysts expect the postal service to report a huge loss for the second year in a row, after a £1bn hit in 2022-23
Royal Mail will lose more than £300million this year as its future hangs in the balance.
City analysts expect the postal service to report a huge loss for the second year in a row, after a £1billion hit in 2022-23.
But shares in owner IDS hit an 18-month high after regulator Ofcom opened the door for Royal Mail to scale back services.
Suggestions in Wednesday’s controversial report by Ofcom included scrapping first-class post and only delivering three days a week to save up to £650million.
The proposals were met with a furious backlash from politicians, businesses and trade unions.
Prime Minister Rishi Sunak said he was committed to the six-day a week service and the Communication Workers’ Union said cuts would ‘destroy’ Royal Mail.
But Labour leader Keir Starmer said that he would consider the report and the Government response and that he would ‘reflect on it really carefully’.
The IDS share price was buoyed by the prospect of a shake-up, gaining about 15 per cent this week on hopes that it will be on a more sustainable footing.
The stock closed at 286.6p – the highest price since July 2022. The company floated at 330p in 2013.
Analysts’ estimates for the 12 months ended 30 March 2024 put losses as deep £341million, with £266million viewed as the best-case scenario.
According to IDS, the average forecast is a loss of £317million.
Royal Mail wants to cut back services but is bound by the universal service obligation, requiring it to deliver six days a week to 32m homes.
It said the system is built for 20bn letters a year, but it is now managing only 7bn, a figure set to fall to 4bn within five years.
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