An Post CEO David McRedmond told workers the company will be loss making again next year despite the 28 cent rise in the cost of a stamp unless action is taken.
Addressing members of the Communications Workers' Union (CWU) in Portlaoise, Co Laois on Thursday, Mr McRedmond said downsizing will have to take place at the company.
When he joined the company last September, Mr McRedmond said it was “dramatic and stark how bad the finances were”.
He told the union members “it was clear that An Post was heading rapidly for insolvency.”
“If we had not got the price increase An Post was on target to lose €50 million this year. That’s the importance of the price increase, but it only keeps us cash positive for a year.
“In a year’s time we will be in the same position again and our ability to do more price increases is going to be halved by what customers are prepared to pay.
“The good news is it is not going to be capped by the regulator, at least for the next couple of years,” he remarked.
He said An Post found itself in a difficult situation when he arrived.
‘Digital world is shutting the door’
“What do we do in a world where people are no longer sending mail and in a society that is becoming cashless,” he asked.
“The digital world is shutting the door on An Post but An Post did not have a strategy to deal with that,” Mr McRedmond explained.
It is understood An Post is now looking at several possibilities for the future of the service.
These are believed to include the closure of over 400 rural post offices, the closure of two temporary sorting centres in Dublin, and the downsizing and the possible closure of two of An Post’s four sorting centres as the company looks to parcel deliveries for increased revenue.
The four permanent sorting centres are located in Cork, Dublin, Portlaoise and Athlone.
The mail centre in Athlone is believed to be most under threat, while Portlaoise - which deals with parcels and mail - could be scaled back.
An Post delivers two million letters daily but has the capacity to deal with four million.
It is thought the changes being considered across the company could result in between 1,000 and 1,500 job losses.
Mr McRedmond, who had arrived at the seminar in Portlaoise fresh from a board meeting in Dublin, was not prepared to discuss any of the specifics around the planned downsizing.
However, he said, “I would much prefer that we go through a step change, a downsizing that will not be easy but something that has an end date.”
“From that point onwards as we enter this new economy, the economy I am referring to is the e-commerce economy, as we enter that and as parcels start taking over as the mail volumes decline, we will have business that is growing again,” said Mr McRedmond.
Ad mailing
He had earlier outlined his vision to double the level of ad mailing-which he said was worth €60 million at the moment- and said, “we can become one of the largest media companies by really having that focus. We have a fantastic product with the ad mailing product.”
Mr McRedmond also wants to look at pricing by looking at Yield Management Pricing, similar to airlines and hotels, where prices will vary depending on demand.
He said this wouldn’t see people paying more at Christmas as the opposite was likely to happen.
Mr McRedmond also noted that sellers were often taking on the price of post as online shopping continues to enjoy growth.
“In five years time at least 50 per cent of all non food shopping will be online,” he said.
“We have to move very fast. The decline in mail volumes is such that it puts this company under a lot of pressure so we need to move fast.
“In the next few months we will be in a position where we should be able to make very clear what the strategy is, but I don’t want to put a date on it,” he remarked.
Earlier in the afternoon, CWU General Secretary Steve Fitzpatrick said "every time we have a conference the pace of change seems to pick up.
“There is probably no industry that has dealt with more change than the telecommunications industry going back over the years…it just seems to be no end to it.”
He told Mr McRedmond that he was encouraged by his talk of collaboration in transforming An Post.
“I think if we can work together we can come out of this the right way around,” he remarked.
While An Post’s CEO received applause at the event, one delegate was overheard in the hotel corridor remarking that there hadn’t been as much blood letting in the GPO in 1916.