Royal Mail is resisting political pressure to sell its profitable European parcels subsidiaryGeneral Logistics Systems (GLS), according to UK newspaper reports. The unconfirmed reports said
that potential buyers such as FedEx, UPS or TNT had approached the British post office with aninterest to acquire GLS but Royal Mail did not want to sell off the company. The post office didnot comment on the information.Royal Mail, which faces full postal liberalisation in January, has appealed to the UK governmentfor support to fill a massive £4 billion hole in its pension funds. Several UK newspapers reported,however, that the Treasury (Finance Ministry) was putting pressure on the post office to generatethe cash itself by selling GLS as well as disposing of property worth billions of pounds. UnnamedRoyal Mail sources were quoted as saying that GLS was already worth more than £1 billion and itsvalue could double in the near future.
But Royal Mail chairman Allan Leighton was determined to retain the European parcels carrierwhich he saw as “a jewel in the crown” and as a basis for future growth. Instead, he hopes to winapproval from the UK regulator Postcomm for stamp price increases to generate additional revenuesto help fill the pension gap.
GLS, one of Europe’s largest parcel transport networks, made a profit of £61 million on turnoverof £913 million (1.34 billion euros) in the financial year ending March 31, 2005. It carried 280million parcels through a network that currently comprises 29 hubs, 667 depots, 14,500 staff andcovering 34 European countries. It has recently embarked on a major expansion strategy designed tobuild up a Europe-wide network of retail outlets over the next few years.
