Tag: Royal Mail

The Royal Mail is to pay postal workers a pounds 400 bonus if profits reach pounds 600m in the current financial year. The “share in success” scheme will include all 195,000 delivery, sorting office and counter staff. Employees were given details of the proposed bonus yesterday, although the Royal Mail warned it faced a “challenging” year as it gears up for full-blown competition. The organization made an operating profit of pounds 537m in the last financial year.

Royal Mail lost more than GBP200m last year on post that weighed under 100g, the company’s regulatory accounts showed yesterday. This is the category of mail that is regulated by the government-appointed regulator, Postcomm, and represents the organisation’s monopoly area, which is about to be removed completely. Chairman Allan Leighton said that the figures illustrated Royal Mail’s problem. “Ninety percent of what we do loses money” he said.
Mr Leighton is fighting a Postcomm price control proposal that would cap first and second class stamps at a level he says is unsustainable. He said yesterday that the prices need rebalancing, because customers sending heavy parcels are subsidising lighter mail.

New figures from Royal Mail show that the company has been unable to make much progress in rebalancing postage prices to reflect the real cost of collecting, sorting and delivering 84 million items of mail to the UK’s 27 million addresses every working day. Without the rebalancing, Royal Mail will not be able to compete fairly when the market is opened up to full competition on 1 January 2006. This imbalance arises because stamp prices are currently subsidised by business prices and pricing is currently driven by weight, whilst cost is driven mainly by size – so heavier items continue to subsidise lighter items.

The proportion of first/second class and mailsort by volume and revenue in the UK.
Estimates from Geoff Lambert