The Royal Mail is profitable and does not need to be changed?
Royal Mail’s latest results show that while the headline profits are in the millions, the pensions deficit is in the billions and confirms that the Royal Mail remains in a precarious financial position. The company is technically insolvent and mail volumes are expected to fall by as much as 10% this year. The need for urgent modernisation and fundamental reform is crystal clear. Looking more closely at the Group’s latest set of annual results shows that: • The universal service obligation is still loss making (made a loss for the second year running of £100m); • Just £1m a week of the total Royal Mail Group’s profit came from delivering letters: £58m a year on a total annual turnover of £7bn in the letters business – a profit margin of less than 1%; • Revenue in the letters business fell by £123m, in spite of a rise in postage prices in April 2008 averaging 5%; • Its pension deficit has more than doubled in the last year, to £6.8bn on an accounting basis; • Mail volumes have fallen by
