Royal Mail Reaches for the Black Ink

11 November 2003

Britain's lossmaking Royal Mail Group is expected to announce a return to profitability this week with an operating surplus of between £40 million ($66.83m; €58.25m) to £50 million in its fiscal first half to September 30.

Part-time chairman Allan Leighton is also expected to unveil interim pre-tax profits of more than £3 million versus the deficit of £611m posted in the same period last year.

This will be the postal giant's first profit in five years, largely due to the recent one penny increase in first-class and second-class postal rates.

Insiders say Leighton will not be resting on his laurels. He is expected to demand additional cost-efficiency gains to ensure that the group posts a full-year profit; and will also look for further savings to cover around £440 million in costs arising from a recent round of increases in pay and pensions contributions.

Meantime, the threat of renewed industrial action hangs over the group as its pay offer has yet to be accepted by the leadership of the Communications Workers Union which meets for new talks with Royal Mail management next week.

Data sourced from: Times Online (UK); additional content by WARC staff