An Post has been forced to use overdraft facilities and the proceeds of property sales to pay the wages of its 10,000 staff over recent months, it was revealed yesterday.
Chief executive Mr Donal Curtin said there was no cash in the business in recent months and for the first time in the company's history overdraft facilities had to be called upon.
He also told the Oireachtas Joint Committee on Communications that 1,350 people working in An Post would be made redundant and all non-core subsidiaries needed to be sold. He said the company was on a "knife-edge" and any "slippage" in its survival plan or "adverse market developments" could have serious implications.
"The company is in deep financial difficulty and its future is at risk. The reality is that the company must solve its own problems by taking the actions that are necessary to achieve financial stability," he said.
"If progress in implementation is slower than planned, or if there are more negative market developments than anticipated, then there will be a need for adjustments to the plan, which will impact on staff and customers," he said.
In response to questions from committee chairman Mr Noel O'Flynn, TD, Mr Curtin said in the second half of 2003 that An Post called on money from property sales to meet its commitments. He said the company was running an overdraft for the last six weeks of 2003.
Financial figures released by the company at the meeting show that property disposals are expected to total €15.1 million for 2003. The sale of a large office on Cork's Eglington Street is believed to be a major contributor to this.
A spokesman for the company explained after the meeting that An Post had surplus property to sell following a restructuring of its mail processing operations and the financial crisis was not the trigger for this decision.
He said the company experienced a deficit in terms of cash flow and had to use funds from property sales to meet its commitments in the latter half of 2003. He rejected any suggestion the disposals were part of a "fire sale". Mr Curtin earlier told the meeting: "The reality is the cash is not there."
Mr Curtin was also asked about the management team at An Post during 2003. He said the people who compiled financial data previously submitted to the committee were no longer "active" in the company.
He later revealed that An Post chief financial officer Mr Ronan Byrne has been on sick leave since September 2003. He said several members of the management team had been re-assigned and others had left of their own volition. He said nobody received a "golden handshake" but anyone who left before their contract had expired received normal compensation.
Mr Curtin revealed that of the €46.4 million losses forecast for 2003, about €36 million will be accounted for by the company's letter post business and the rest by the SDS parcel service. He said price competition from private operators in the parcel sector was causing major problems.
The meeting was due to be addressed by the Communications Workers Union, but a letter to the chairman from the union said it wanted to hear what management had to say first.
Mr Curtin said agreement on the change programme in the letters division needed to be agreed by February so the benefits could kick in by mid-2004.
He added that a price increase would also be submitted to ComReg by the middle of 2004. He declined to say precisely how much this might be, but said the company needed to be compensated for the wage rises resulting from pay agreements.
Mr Curtin also defended the company's plan to exit from the collection of the television licence fee. He said that while on the surface this service was profitable, the cost of debt collection in relation to licences made the service unprofitable. He said the cost of putting inspectors on the ground to check on evasion was very high.
