Dispute in Ireland likely to affect company’s already troubled financial position

The An Post dispute could have serious implications for the company’s deteriorating financial position. It expects to report an operating loss of more than E47 million for 2003, with losses in 2004 forecast to come in at almost E40 million.

The company is not due to break even until 2005, and even then its problems may not end. Postal delivery is under pressure worldwide, and An Post is no different as e-mail continues its onslaught on what is sometimes called “snail mail”.

While the company’s financial problems have been a concern of the Government since last summer, the difficulties date back to before then.

An Post has been making operating losses since 2001. An unfortunate combination of rising costs and falling profits have plunged it into the red.

Only a few months ago chief executive Mr Donal Curtin described the company as being on a “knife edge”.

While this has been dismissed by some as an attempt to panic the formidable An Post unions, there is no doubt the company’s cash position has deteriorated rapidly in the last two years, and almost three-quarters of its turnover is now accounted for by pay and pensions.

The latest dispute suggests that even sticking to existing targets could prove difficult. Revenue will obviously be lost because of the disruptions with companies and householders using electronic means instead of post.

The other loss of revenue will come in the area of inbound and outbound international mail. This is worth E46 million in turnover annually to An Post, but unlike standard mail, companies have a choice in this segment of the postal market.

Giant US corporations like DHL compete against An Post, and presumably the current dispute will bolster these operators.

While the dispute is only a few days old, its most alarming consequence may be the negative impact on the industrial relations climate at An Post.

Put simply, An Post desperately needs to reduce its staff numbers and it needs unions to sign up to a voluntary severance package. Despite promises over many years to reduce the pay bill, An Post is still employing more than 10,000 staff and its overtime costs are crippling.

Mr Curtin has stated that almost 1,500 workers must leave the company if rescue plans are to be successful.

But to date this figure has not been accepted by the largest union at the company, the Communications Workers’ Union. With such a fraught industrial relations climate, getting agreement on reducing numbers will be a big test for both sides.

The company’s financial position has slightly improved due to its decision not to pay the 3 per cent pay rise due under Sustaining Progress. This will save the company about E18 million, although unions are contesting its inability to pay.

The forecasts for 2004 and 2005 presume that certain productivity agreements will be met and that a 7 cent rise in the price of a stamp, from 48 to 55 cent, will be granted by the regulator, ComReg. The forecasts also allow for savings arising from the reduced staff numbers.

While unions and other observers accuse the company of overstating the difficulties, the current dispute can only make things more difficult.

Copyright © 2004 Irish Times Company