1,140 post jobs axed – bosses cut back after Eur 6.7m loss

AN Post plans to shed 1,140 jobs after reporting its first loses in 11 years, it was announced yesterday.

The company lost EUR6.7 million last year compared to profits of almost e10million in 2000.

Postal bosses are blaming last year's pay rises given to its 11,000 workers for the massive downturn in profits.

An Post's annual report, published yesterday, shows the group's turnover went up by just over nine per cent to e625million.

But its total operating costs went up by 12 per cent to EUR631.6million.

Money spent on staff and post- masters increased by 13.4 per cent and accounted for 70 per cent of the groups costs.

The company now plans to shed 1,140 jobs and to introduce new work practices.

An Post has been plagued with staff problems this year – just weeks ago a major strike was only prevented when it agreed to a 12.5 per cent pay rise for many clerical staff.

Its dramatic recovery plan will spend e21million on restructuring in 2002 and e32million in 2003.

An Post chairman Stephen O'Connor said they hope the company will be back in profit by 2004.

He said: "No business can sustain a position where its costs exceed its revenues particularly when the outlook, without remedial action, is for a continuation of this trend and a widening of the gap between costs and revenues."

The company expects to lose e15million in 2002 and to have further losses the following year.

The report states losses are also due to a delay in increasing the basic postal rate, which until April was at the same level since 1990.

And it found that fees for the delivery of welfare benefits through post offices are still at 1996 levels and need to be raised.

Chief executive John Hynes said: "The group must vigorously pursue and implement justifiable and overdue price increases."

And he confirmed that An Post is seeking to increase the price of a basic stamp by three cent to 45 cent.

All three of the business divisions in the company saw its profits rise last year.

Letter Post, the mails business division, increased by 8.6 per cent to e399million.

Revenues in the post offices division grew by 2.3 per cent to EUR107.6million while the parcels and courier distribution section saw its turnover rise by 4.5 per cent to EUR78 million.

However, Mr Hynes explained An Post lost EUR15 million on revenues of EUR288 million from "obligatory postal services reserved from competition".

The report also revealed the chief executive earned EUR319,000 last year.

This included pension contributions of EUR34,000 and a performance related bonus of EUR21,000.

IRISH TIMES 27th June 2002
LOSSES GROW AT AN POST MONOPOLIES
Profits at services run by An Post in competitive markets are subsidising growing losses in its monopoly businesses, the State company said yesterday.

The company reported a E6.7 million pre-tax loss for 2001, which its chairman Mr Stephen O'Connor described as "challenging and difficult".

An Post expected an overall deficit of E37 million this year and a E27 million deficit in 2003. It has a recovery programme but will not return to profitability until 2004.

The projected deficits are linked to once-off restructuring costs of E21 million this year and E32 million in 2003 when the company aims to reduce its workforce by 1,140. An operating loss of E16 million is expected this year.

The loss in 2001 occurred despite a 9 per cent increase in revenues to E625 million. Costs rose by 12 per cent to E631.5 million, reflecting the impact of the Programme for Prosperity and Fairness (PPF).

"The PPF is a hammer-blow to a low-margin business such as ours," said An Post chief executive Mr John Hynes. He hoped the telecoms regulator, Ms Etain Doyle, would sanction an increase in the cost of international and domestic postage by the end of the year.

He also said the company was seeking an increase in the fees paid by the Department of Social, Community and Family Affairs for its distribution of social welfare payments. Mr O'Connor said: "We have an income and we have a cost problem. No business can sustain a position where its costs exceed its revenues, particularly when the outlook, without remedial action, is for a continuation of this trend and a widening of the gap between costs and revenues."

The disclosure of losses in An Post's businesses reserved from competition revealed an anomaly at the company because the monopoly elements in any business are generally expected to generate strong profits.

But Mr Hynes produced extracts from regulatory accounts produced for Ms Doyle that showed postal services reserved from competition lost E15 million. Domestic mail services reserved from competition made a E1.7 million profit, while outbound international mail lost E5.6 million and inbound international mail lost E11.1 million.

Meanwhile, obligatory services open to competition made a profit of E8.4 million.

Mr Hynes said the international losses meant Irish consumers were subsidising larger post office companies in the EU. This would not be addressed until the company secured a rise in international tariffs.

The post offices division lost E13 million and a similar loss is expected this year.

In addition to staff reduction in its mail sorting division, An Post has introduced a severance package for postmasters on its loss-making network of sub-post offices.

This deal sees the transfer of contracts for over-the-counter post office business to agents who will be paid on a per-transaction basis. The initiative follows the Government's refusal last year to subsidise the network enabling retiring postmasters to gradually withdraw from the business.