Post rescue bid to cut 1,450 jobs

AN POST outlined a rescue plan yesterday that will see 1,450 jobs go over the next two years at the stricken semi-state company.

Chief executive Donal Curtin said the company was facing an unsustainable financial situation with the company’s core post office business losing nearly 1m a week this year.

An Post yesterday forecast that it would make losses of 47m this year from the slowdown in letter post growth due to economic deterioration and the increased use of email, combined with its own extremely high cost base. It is also facing a loss of nearly 25 million in 2004.

Even after the jobs cuts, which will be paid for through the sale of assets and property owned by An Post, the company will not return to profit until 2006.

Mr Curtin said it was vital for the company’s future that the transformation go ahead as the losses could not be sustained on a long-term basis.

The job cuts will come from all of the post office’s operations, in collection and delivery, post office network and from senior management, where 120 posts will go. The company employs around 10,000 people.

An Post also said yesterday that performance bonuses for senior managers, which would total 1m this year, would not be paid and that future bonuses would depend on targets being met. Mr Curtin did not say whether bonuses would be paid next year if the company meets it projected loss of nearly 25m.

It has also earmarked a reduction of 4.5m from discretionary spending next year and savings of 7.5m from the rationalisation of its IT services.

The company is also scrapping its group structure and all individual departments will now report to Mr Curtin.

An Post chairperson Margaret McGinly said that in the past the company’s financial reporting structure had led to vital information not being communicated in a timely fashion and that this would change.

Recently An Post was allowed to increase the price of a stamp from 41c to 48c, but it said this was still below the European average. Although the price rise was in the order of 17%, it would only boost revenues by around 5%. An Post said it would offer an improved services in return for the price hike and for further price increases in the future with new service level agreements and a new customer service charter.

Once the rescue plan is implemented, the company would be profit, earning around 30m with a slimmed-down workforce and much automation of its services. It will also seek to extend its foothold in financial services.

The plan will be put to the board of An Post shortly, with negotiations with unions on the jobs cuts to follow soon after. It is expecting to complete talks with the unions by the end of next January.