Frank Kane talks to chairman Allan Leighton

There is a distinct spring in the step of virtually everyone at the Royal Mail these days, a newfound corporate confidence that issues from the office of chairman Allan Leighton and beyond.

Chief executive Adam Crozier has good reason to cheer; the pounds 3m pay and incentives package he got last week was the headline figure of a long-term incentive plan that would have looked difficult to hit three years ago.

His fellow executives did rather well too, and even the post staff each got pounds 1,000, a bonus that served to counteract some of the resentment Crozier and his colleagues may have provoked.

For once Royal Mail was in the headlines for all the right reasons – an operating profit of pounds 537m, a significant reduction in the number of days lost to industrial action, and progress made towards meeting its targets on deliveries and customer satisfaction.

Leighton, even after a tiring week of transatlantic flights followed by the even more exacting demands of a weekend in Monaco with his friend Philip Green, celebrating Green's son's Bar Mitzvah, was relaxed and confident after he presented the Royal Mail's figures. 'I'm going for a run, and then a few drinks at the CBI dinner,' he said.

In fact, he had lit the fuse on a row that is going to simmer for many months, and which will strain to the limit the relations between Royal Mail, the unions and Government. His plan to give away 51 per cent of Royal Mail to the employees – in an arrangement similar to the one at the chainstore John Lewis – is a political handgrenade with a long fuse, and he knows it.

The idea of handing over more than pounds 2bn of equity to the group's 200,000 employees is revolutionary for a government-owned body like the Royal Mail, and taboo for the post unions.

It is a problem, too, for Alan Johnson, the new DTI minister, who successfully opposed 'privatisation' of the mail service in his former guise as leader of the Communication Workers Union.

Perhaps this is why Leighton is unwilling to have more than the vaguest conversation about it. 'We think it's a very good idea, and the John Lewis model has been very successful. It's worked for management, employees and customers,' he says.

But it is apparent, too, that the idea has been quite well thought through. Leighton would first need to borrow upwards of pounds 2bn to buy a 51 per cent majority in Royal Mail – but that should be no problem for an entrepreneur with his track record. Under the scheme, Leighton would give equity to the group's employees, leaving the government with a 49 per cent share, which would yield an annual dividend in hundreds of millions of pounds.

Royal Mail employees might well be happy with their handout of shares. There is also the possibility of an internal market in the equity, by which existing shareholders could buy each other out, or pass shares into a pool for new employees.

It sounds simple, and so obviously attractive that only sheer pig-headedness could turn it down. But in reality, there are many obstacles to be overcome.

First there is political and union antipathy. Leighton's strategy hinges on the hope that the government can be convinced the arrangement is one of common sense and that Johnson, being shrewd and pragmatic, will quickly come round to the idea.

The greatest obstacle is the ideological opposition of the union to any form of privatisation, and the government's manifesto commitment that it will not sell off the organisation.

But Leighton's new confidence is helping him. The watershed in labour relations between the Royal Mail management and the unions came last year, when Leighton and Crozier appealed over the heads of union leaders by asking employees not to strike over pay and conditions. Much to everybody's surprise, the workforce sided with the management.

It was a serious blow to union power, and the lesson has not been lost on Leighton. If it comes to it, and he can secure government backing, there is no doubt he will offer equity to the workers with or without the blessing of the unions. The determination to take on the unions in this ideologically critical confrontation is a sure sign Leighton believes his management has won back control of the group.

There are other tough management decisions to be taken in the near future. Leighton has to tackle the problem of high workforce turnover, which he sees as one of the main reasons for customer dissatisfaction, especially in the cities.

Royal Mail employees, who have seen wages rise 25 per cent on average over the past three years, are still not paid enough. The aim is for a pounds 400 a week average.

Also in Leighton's intray is the question of a pounds 2.5bn pension fund deficit, the low margins compared with some continental postal services, and technological investment in delivery and sorting systems.

On the other hand, Leighton, who has just signed up for a further three years as chairman, sees opportunities in e-commerce fulfilment, and the European parcels services, which is a pounds 100m profit business.

Using a horseracing analogy, under Leighton the Mail has just got over Beecher's Brook in the Grand National – now it has to complete the Aintree course.