The day after the Communication Workers Union (CWU) announced that thousands of Royal Mail workers had voted to strike, the company said it was considering all options, including separating its domestic and international operations under a renamed holding company called International Distributions Services. In a frank statement to the stock market on Wednesday, the company revealed an adjusted operating loss of £92m between April and June. It said deliveries of Covid-19 test kits and items bought online fell during the quarter compared with a year earlier, contributing to an 11.5% drop in revenue alongside a longer-term decline in letter deliveries. Royal Mail said it had worked to reduce its variable labor costs by limiting overtime and the use of temporary workers, but added that it had not been able to reduce costs quickly enough to match lower volumes of parcels and letters. The company also blamed the operating loss on what it called a “disappointing performance” to make the business more efficient. On Tuesday, the CWU announced the results of a vote of postal workers’ members in a dispute over pay. Almost 97% voted in favor of the strike, with a turnout of 77%. The CWU and Royal Mail have both said they are ready to return to the bargaining table, but the union said if no deal is reached it will notify the company of the strikes, which are expected to take place in August. Royal Mail chief executive Simon Thompson said on Wednesday the company needed to “transform the way we work”, amid growing demand for larger parcels and next-day deliveries, including on Sundays. He told reporters that productivity had been “set back” in the past three months and that initiatives previously agreed with the CWU had stalled, amid deteriorating industrial relations. Royal Mail’s international parcel business GLS proved a bright spot as it reported an operating profit of £94m and higher revenue, despite falling parcel volumes. This was thanks to higher prices and increased cargo revenues. The company said it wanted to make the most of its new infrastructure, including a new parcel “super hub” in Warrington which opened in June. However, Royal Mail said it needed to ensure it had a “more flexible and sustainable relationship with the CWU”. “I’m more than happy to meet to talk about change and payment,” Thompson told reporters. “We need to discuss the change that will actually pay for the fee. It’s the change we need to win and compete in the marketplace and I’m absolutely ready, we’re absolutely ready to have that conversation as long as it’s about change and payment.” CWU deputy general secretary Terry Pullinger said Royal Mail’s supposed 5.5% pay offer actually amounted to a 2% rise at a time of soaring inflation, which last month hit a new 40-year high in 9.4%. Subscribe to the Business Today daily email or follow Guardian Business on Twitter @BusinessDesk Accusing the company of “sharp practice” and “dishonest behaviour”, Pullinger said he did not believe Royal Mail was making a genuine offer. “They were very economical with the truth,” he told BBC Radio 4’s Today programme. “There is none [an offer of] 5.5% on the table as a straight pay deal with no strings attached for our members.” Pullinger added: “They raised the price of a postage stamp by 11% but gave their workers a 2% pay rise. The extra money they make from it doesn’t go back into the industry, it won’t go back to the workers. It will go straight through the window into the shareholders’ pockets.” Royal Mail said it hoped to break even in the current financial year, but this did not include the impact of a possible strike.
