Royal Mail needs change in fortunes post-haste

[TrueBlueTerrier]

http://www.ft.com/cms/s/0/cfedd74c-88d1 ... z1NdsT841R" onclick="window.open(this.href);return false;



A state-owned former monopoly beset by industrial strife and commercial malaise: although Moya Greene would have known what she was letting herself in for when appointed a year ago as head of Royal Mail, she might not have realised the scale of the problems.

This week, ministers used the House of Lords’ third reading of their privatisation Bill to update the timetable for finding a buyer. Given Royal Mail’s structural challenges, it may have been outlined more in hope than expectation.

Full-year results due to be published during the first half of June will, I am told, underline the growing fragility of Royal Mail’s core operations.

“They will not be pretty,” one board director told me this week.

It says much that these figures will represent almost the least of the company’s problems. The renewed threat of industrial action and a state aid application to Brussels – relating to the government’s move to take on historic pension liabilities – are also competing for Ms Greene’s attention.

The content of that submission to the European Commission, to be made this summer, is shrouded in secrecy, but Royal Mail executives are said to be prepared to fight tooth and nail to prevent the disposal of GLS, its profitable parcels subsidiary.

Neither does a sale of the company’s remaining property portfolio, suggested by some bankers, look a viable option.

Instead, those close to Royal Mail say that the effort to appeasing Brussels bureaucrats will partly lie in the industrial equivalent of a plea for clemency: the government will argue that the structural decline of the sector, allied to a regulatory framework, which dictates that 80 per cent of Royal Mail’s revenues are subject to price controls, have left the company with a bleak future.

Ms Greene will almost certainly demand the freedom to accelerate the company’s restructuring, including the further diminution of its workforce, and a more liberal regime for its more profitable business units.

Even in slimmed-down form, though, the list of enthusiastic bidders may be able to fit on the reverse of an average-sized postage stamp.

The appetite of private equity groups such as CVC Capital Partners is said to have waned since the previous sale process two years ago. And trade bidders, thin on the ground in 2009, will run a mile from a balance sheet as troubled as Royal Mail’s. Ms Greene’s task is not getting any easier.

[DGP1]

How's about this for a way to fix RM................get rid of the DSA (or let the leeches deliver it themselves).

[Phantom]

How's about this for a way to fix RM................get rid of the DSA (or let the leeches deliver it themselves).

Nah that would be to easy and the right thing to do!

[baldrick]

How's about this for a way to fix RM................get rid of the DSA (or let the leeches deliver it themselves).

Nah that would be to easy and the right thing to do!

And it wouldn't make money for the fat cats. :dcfo :ncfo :vcfo

[Lincox]

And it would put 75% of the workforce out of a job.

[Lounge Lizard]

And it would put 75% of the workforce out of a job.

Of course it wouldn't.
Only Royal Mail delivers to all houses in the land so without DSA businesses would hand their mail straight to Royal Mail, as they always did until a few years ago, cutting out the parasitic middle men.

[Phantom]

And it would put 75% of the workforce out of a job.

WTF?

[Lincox]

The wording says 'Let the Leeches deliver it themselves'. If thats the case, they have the contracts with the businesses and no doubt would come up with ways of delivering. The reason they don,t at the moment is because they would not be able to do it as cheap as passing it to Royal Mail via dsa. Individually these companies are unlikely to invest in an end to end delivery system, but what if they combined to invest in such a system. Yes, we know about the regulators and the USO but we have a Tory Government at the helm, and they will sell anything to make a bob or two for themselves.

[DGP1]

The wording says 'Let the Leeches deliver it themselves'. If thats the case, they have the contracts with the businesses and no doubt would come up with ways of delivering. The reason they don,t at the moment is because they would not be able to do it as cheap as passing it to Royal Mail via dsa. Individually these companies are unlikely to invest in an end to end delivery system, but what if they combined to invest in such a system. Yes, we know about the regulators and the USO but we have a Tory Government at the helm, and they will sell anything to make a bob or two for themselves.

Bring on the real competition I say..............I just don't care anymore

[Lounge Lizard]

The wording says 'Let the Leeches deliver it themselves'. If thats the case, they have the contracts with the businesses and no doubt would come up with ways of delivering. The reason they don,t at the moment is because they would not be able to do it as cheap as passing it to Royal Mail via dsa. Individually these companies are unlikely to invest in an end to end delivery system, but what if they combined to invest in such a system. Yes, we know about the regulators and the USO but we have a Tory Government at the helm, and they will sell anything to make a bob or two for themselves.

"Individually these companies are unlikely to invest in an end to end delivery system, but what if they combined to invest in such a system" - if that was a viable option they would already be doing it.

[Lincox]

Not if it is cheaper for them to use DSA as it is at this time. If Royal Mail are allowed to charge a reasonable market rate then the goal posts change and then you might see a move by the big operators to invest in delivery methods.

[clashcityrocker]

Not if it is cheaper for them to use DSA as it is at this time. If Royal Mail are allowed to charge a reasonable market rate then the goal posts change and then you might see a move by the big operators to invest in delivery methods.

You MIGHT but it is highly unlikely due to the costs involved.
Just as you will never see any phone provider except BT provide phone boxes on street corners.
BT have been removing them over the years as they become obsolete and I'm sure if they could, they would remove them all.
Bit like our USO.

[ziko]

And it would put 75% of the workforce out of a job.

Why? They aren't going to deliver to the end of cornwall to northern scotland and if they agree to the contract they must oblige it. If they don't they would be fined and companies would soon figure out that only RM deliver to 100% of the country. Thus bringing 100% of all lost revenue back into RM's lap - pre tax profits 10 years ago were around 1/2 a billion. Therefore the end result would be lessor (leach) company's blownout the water and your job and your friends job safe while foreign 'investors' (term used losely) losing out. May also see a director or person of vision growing the company so much so that it is able to pay off its massive pension deficit over a period of years whilst producing small but 'real' bonus shares for its hard working engine room i.e you and i.

But this will never happen because a few greedy men want a little more while the majority will get a little less for putting more in.

[Lincox]

We are talking Tory Government here Ziko. If it,s their buddies that are getting the contracts then the USO will not be part of the contract. Tories are only in it for money, and if it does,nt pay then you wont see a Tory for miles.