The week that was: 11 February 2011

USPS posts further losses, Union makes UK Post Office strike threat, and La Poste to receive capital injection… In the US this week, it was revealed that USPS could be forced to default on its financial obligations to the government. The warning was made as the company posted a net loss of $329m for the first quarter of this financial year. The results saw net loss rise by 9.7% compared to the same quarter of the last financial year, when USPS declared a net loss of $297m. USPS reported a net loss of $8.5bn for 2010, for the fiscal year ending 30 September, which represented a further loss of $4.7bn on top of the 2009’s net loss of $3.8bn. As well as having a cash shortfall, the company predicts to reach its statutory borrowing limit by the end of this fiscal year. Unless changes are made to key legislation, it said the current trends will lead to the default on some of its financial obligations to the federal government by September. USPS accrued the losses despite “significant cost reductions” and “efforts to grow revenue”, it said. The results highlighted the burden of the future retiree healthcare benefits pre-funding and the workers’ compensation liability upon the USPS. Excluding the cost of those two vast expenses, USPS would have recorded a net income of $226m. Postmaster general and CEO Patrick Donahoe – who took over the role from John Potter in December – said that the USPS continues to “seek changes in the law to enable a more flexible and sustainable business model. We are eager to work with Congress and the Administration to resolve these issues prior to the end of the fiscal year.” Help is expected to come in the form of President Obama’s budget next week, stay tuned to Post&Parcel for the details.

A familiar story raised its head in the UK this week, as the Communication Workers Union (CWU) went to war again! This time it concerns Post Office Limited. Post Office staff in the UK could strike after a ballot notice was served. The ballot would represent more than 4,000 staff at crown offices across the UK in a dispute over pay, job security and the future of the post office network. As the CWU announced its decision, a union official stated that the Post Office’s current approach spells “disaster”. Post Office Limited (POL) has urged the CWU to withdraw the notification, stating that it is “disappointed” with the decision. The CWU said that despite increased profits of £72m last year, POL has “pleaded poverty and is refusing to consider a pay rise for counter staff”. Union officials also claim that during this time POL has awarded a pay rise to managers and increased directors’ remuneration by 21% (worth £3.9m in 2009-10). The union also said it was concerned that it had not received a guarantee on the number of post office branches that will remain in operation. Dave Ward, CWU deputy general secretary, said: “POL’s attitude is about driving a race to the bottom on terms and conditions for staff and further downsizing the post office network. The company has no vision – and worse still appears to have no desire – to give staff a fair and just pay settlement or to work towards a sustainable post office network.” In response, POL managing director Paula Vennells said: “The Crown Post Office network is losing £55m a year. We regret the fact that the CWU is unwilling to engage in a constructive dialogue about tackling this unsustainable financial position.” Post&Parcel suspects there will be more to run on this one!

Across the Channel to France where La Poste’s Board gave the go-ahead for the operator to receive EUR 2.7bn capital investment as it prepares for the liberalisation of the postal market. The cash injection will be provided by the state in conjunction with its investment arm Caisse des Depots – which will acquire a 26% stake in the French postal operator in return for its investment. The state will provide EUR 1.2bn of funding, which will be supplemented by Caisse des Depots (EUR 1.5bn). The operator will use the funds to push ahead with its major modernisation plans marked out in its ‘Ambition 2015′ strategy, which was adopted in April of last year. La Poste will receive the capital in three separate installments: EUR 1.05bn this year, EUR 1.05bn in 2012, and EUR 600m in 2013.

And finally…

World Mail & Express Americas took place this week in Mexico City, and I think you’ll all agree it was a fantastic event. Interested in the key messages from the conference? Well, have a read here, and here, for starters!