Second tier European Post Offices continue to underperform

Management at An Post, the Irish national postal operator, has unveiled a restructuring plan that will result in a 40% reduction in its workforce. This decision has followed a prolonged period of underperformance in all three of its core business units.

Earlier this year, An Post reported a pre-tax operating loss of €17.4 million for the year end 2002. When exceptional charges of €52.5 million, for restructuring, are included the total losses for 2002 will be €70.5 million, the company’s biggest ever deficit since it was established as a commercial State company in 1984. Rising labour costs have been identified as the main problem and recent increases in both domestic and international tariffs have failed to improve margins.

This drastic step follows the appointment of a new Group Chief Executive, Donal Curtin, who was employed to undertake a complete review of the business.

Also in Europe, Belgium Post is reported to be in talks with Western Union, the money-transfer business of First Data, about a possible partnership as it looks for opportunities to return to profitability. The struggling Postal operator has identified such a partnership as a way to improve the performance of its branch network, the daily L’Echo explained.

The company is said to be holding discussions with other companies of the same type, but has still not taken any decision regarding developing a money transfer business. The head of the postal service, Johnny Thijs, said in a newspaper interview in August that it needed a partner to help it catch up with its Dutch and German peers that were years ahead in the modernisation of their services. The Belgian Post Office had a net loss of more than €40 million last year as it failed to adjust to the decline in the number of letters sent through its network.

Western Union already works with post services in Austria, France, Germany and the Netherlands.