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New Royal Mail boss Keith Williams in battle to end strike threat after 'Flying Postman' Rico Back is abruptly ousted

17 May 2020, 12:16

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Royal Mail has parachuted a veteran of industrial disputes into the top job after the abrupt departure of its chief executive.

Keith Williams took over as the postal service's executive chairman after chief executive Rico Back was unceremoniously ousted – and immediately called for 'an accelerated pace of change across the business'.

The 64-year-old, who was made chairman 14 months ago, is the former boss of British Airways credited with defusing a longrunning dispute between the airline and cabin crews in 2011.

And even while looking for a replacement for Back, he must repair relations with Royal Mail's heavily-unionised workers.

They have accused the former boss of trying to ram through a £1.8billion modernisation plan without their agreement.

Back's proposals sought to shift the company's focus away from letters and towards parcels, to take on rivals such as Amazon.

But concerns prompted members of the Communication Workers Union (CWU) to vote for strikes in March, although the union has held off from taking industrial action during the coronavirus crisis.

Back was also criticised by union chiefs after this newspaper revealed he was running the company from his £2.3million penthouse in Switzerland during the virus lockdown.

Royal Mail's shares have plunged by more than 65 per cent since Back took charge as industrial relations with the CWU have worsened

And he separately came under fire for failing to take a pay cut himself after slashing Royal Mail's dividend to save money – a move that hit the pockets of thousands of postal workers who own shares in the former state monopoly.

While it is understood Williams has no appetite to run Royal Mail for the long-term, his first act as executive chairman was to cancel executive bonuses for the year and hand £200 each to 125,000 posties and other frontline staff for continuing to work during the virus crisis.
Veteran of disputes

Keith Williams took over as Royal Mail’s chairman in March 2019.

The 64-year-old is seen as a calm operator with a knack for resolving tricky situations.

He rose to prominence in 2005 as BA’s finance chief. He was later instrumental in putting together the megamerger of BA and Iberia into what is now International Consolidated Airlines Group.

When Willie Walsh moved up to become the boss of IAG, Williams replaced him at the airline and swiftly resolved a long-running pay dispute with cabin crew unions.

He will remain on his current pay of £300,000 per year while Back's was £640,000.

One union official said Williams was 'someone we think we can work with'.

Back's exit came after nearly two years of lacklustre results and a collapse in Royal Mail's share price after he took over from Dame Moya Greene in 2018.

He immediately faced controversy after it emerged he had received a £6million payout for changes to his contract. That prompted a historic shareholder revolt at the company's annual general meeting.

Further revelations that he planned to remain living in Switzerland – where he and his family have been based for more than a decade – and commute to the UK also led to him being dubbed the 'flying postman'.

At the same time, Royal Mail's shares have plunged by more than 65 per cent since Back took charge as industrial relations with the CWU have worsened.

He inherited an agreement with the union from Greene which saw the parties agree to gradual pay rises for posties in exchange for steps toward modernisation. But union chiefs accused Back of reneging on the deal.

The row culminated in a court showdown in December that saw Royal Mail successfully block the CWU's attempt to call strikes.

Royal Mail has warned that its UK business is likely to be lossmaking this year and yesterday it warned that a rise in parcel deliveries during the pandemic had not been enough to cancel out lost revenue from a simultaneous drop in letter volumes.

Credit Suisse analyst Arthur Truslove said Royal Mail's turnaround plans were now 'likely back to square one'.

'This raises serious doubts over the company's ability to revive its fortunes,' he added.

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