The British state-owned post office, recently rebranded Consignia, warned on Wednesday it aims to reduce its cost base by £1 billion ($1.47bn) and its 200,000-strong workforce by up to 10% over the next year and a half.

The cost-cutting, it cautioned, could affect its group headquarters, the Royal Mail letters delivery business and parcels operations Parcelforce. However, Consignia emphasised that no concrete decisions had been made.

The group blamed competition and regulatory demands for the cuts. Its Royal Mail unit, which enjoyed a monopoly on its letters business for 350 years, last month squared up to competition for the first time in its history.

The Communication Workers Union was outraged at the cutbacks: “The DTI [Department of Trade and Industry] and government must ask just how a business that was in profitability for twenty years before commercial freedom was granted is now in such a financial mess,” said deputy general secretary John Keggie.

Although profitable last year, Consignia posted results £88 million below targets agreed with the government.

News source: Financial Times