Taoiseach was warned An Post ‘could go bust’
Department of Communications officials told the Taoiseach that An Post could go bust within 18 months unless there is a radical turnaround in its fortunes.
The stark warning emerged in a March 2004 briefing document released yesterday under the Freedom of Information Act.
At the tail-end of last March’s bitter industrial action the briefing note says:
“Unless the company is turned around in the next 18 months it faces insolvency.”
“An Post which began this decade with slim profits, but a cash balance of over 170m has a net cash balance of almost zero,” it continued.
“It is currently being forced into sales of assets to avoid going into overdraft to pay day-to-day bills.”
An internal email written by former An Post chairman Stephen O’Connor, also in March, reveals how An Post’s losses have spiralled upwards with combined losses between 2003 and 2004 expected to hit 100m. The email describes An Post’s 2003 budget as “discredited” as its “Revenue target was missed by 25m, and costs actually rose on the lower revenue levels by 3m demonstrating the fixed, uncontrollable nature of the cost base in An Post Group.”
And it points the finger firmly at Letterpost and SDS (which is now seeking 270 voluntary redundancies) as the reasons for the crisis at An Post.
A more recent general briefing note from June highlights other serious issues, including the need for change management to curb the “unsustainable” rise in An Post’s cost base and the need to work with unions on a recovery strategy.
In addition, it argues that, despite heavy investment in automation, “the payback from this investment is not immediately apparent”.
And as An Post ups its prices there are “significant concerns about quality of service and significant difference between ComReg and An Post in this area”, particularly as ComReg figures reveal An Post had a next day delivery rate of just 71pc in 2003. Even more worryingly, the briefing note reveals that postal volumes are declining rapidly, with letterpost items delivered falling 6pc to 742m in 2003.
Yet another briefing note from January in the context of An Post’s decision to hike its standard tariff to 48c asks: “Are An Post customers taking the hit for the dire financial state of the company?”
Another note the following month discusses the need for An Post to restructure its post office network by converting non-automated sub-post offices to postal agencies offering a limited range of services and converting “least busy” branch offices into sub-offices.
A letter from the Department of Communications to the Taoiseach’s office dated January 13 reveals its tough stance towards the sticky issue of an Employee Share Ownership Programme (ESOP).
It said: “The union (CWU), based on the inability to deliver cost savings currently sees no basis on which an ESOP could be activated.”
