Irish Post Service sells buildings to pay wage bill
An Post has been forced to sell property to pay its wage bill.
The beleaguered company is using overdraft facilities to meet day-to-day running costs. It is seeking to cut more than 1,300 jobs and faces a 30m loss for 2003.
Unless a radical rescue package is implemented, the State company could go under,chief executive Donal Curtin warned.
The disastrous financial position of the postal service was revealed by Mr Curtin tomembers of an Oireachtas committee. He told them An Post was facing the biggest crisisin its history.
Staff numbers would have to be cut back and all assets surplus to requirements must besold to generate cash.
A strategic rescue plan must be implemented by mid-year to save the company. Mr Curtinwarned that unless unions agreed to the changes the salvage operation could fail before it began.
The precarious state of the company’s finances was revealed to the Joint Oireachtas Committee on Communications, Marine and Natural Resources at a meeting lasting over three hours yesterday.
Mr Curtin criticised former managers for not telling the board of management the truestate of the company’s financial position. Despite forecasting an operating profit of 1m for 2003, the company will in fact lose a staggering 29.5m after the sale of properties is taken into account.
This projected profit of 1m was relayed to the committee by Mr Curtin’s predecessorJohn Hynes last January, with committee members yesterday accusing the company of misleading them.
And it emerged that operating losses for last year will be 46.4m – shored up by 18mgenerated from property disposal – with the situation not much better for 2004 wherelosses are expected to mount up to 16.3m.
Mr Curtin, who became CEO last July, said that when he took over he understood the company would generate a profit of 1m for 2003, but that soon after realised An Post faced a serious, and potentially fatal, financial crisis.
And he revealed that things became so bad at the end of last year, that in December thecompany was forced to sell property to meet day-to-day running costs.
“The cash is not there. Indeed the company has been in overdraft for the last six weeksof 2003 for the first time. I’ve had to sell property to pay wages and have had to go intooverdraft.”
Two properties sold – in Blackrock, Co Dublin and Eglinton Street, Cork – areunderstood to have generated 3m and 15m respectively.
Among the reasons given for the disastrous financial situation were that growth levels didnot continue as forecast, and because of weaknesses in financial reporting systems.
“The company was not well served by the quantity and quality of management information that included a degree of optimism that was not there,” he told committee members. He said the then financial controller had been on sick leave since September and was not available to appear before the committee.
Other members of the management team had since left the company, with others redeployed to different sections. It is understood none who left got a severance package.
An Post was in a “knife-edge situation”, he said but if the strategic plan was successfullyimplemented the company could be back to profitability by 2008.
