GLS, the European parcels subsidiary of Royal Mail, will invest €100 million on furtherexpansion of its network, including the launch of air express services, in 2006-07. CEO Rico Back
has meanwhile played down speculation about a strategic alliance with FedEx or UPS.The parcels carrier said in a statement that it aims to increase revenues by 6.7% to €1.6billion in the fiscal year ending March 31, 2007. In 2005-06, it increased revenues by 13.5% to€1.5 billion euros, and improved earnings before interest and tax (EBIT) by 37% to some €155million. The volume growth of 14% to 293 million parcels included a 26% rise in the number ofinternational shipments.
“It is very encouraging to see the progress made by the group’s companies during 2005/6”, saidCEO Rico Back. “In every major market we delivered revenue growth coupled with an increase in newcustomers.” The company invested over €60 million to support its growth with the focus on networkinfrastructure expansion and modernisation, and IT system development.
Outlining plans for 2006-07, GLS said that over €100 million will be made available for capitalexpenditure to support the continued expansion. Significant investments in hubs and depots areplanned in Germany, France, Denmark, Hungary and Poland. GLS will also continue to strengthen itsnetworks in Italy and Spain. Moreover, GLS is planning further harmonisation of IT systems and mostGLS companies will be equipped with new scanner technology by mid-2006. “For GLS, state-of-the-artstandardised IT systems are an essential tool for achieving a consistently high level of qualitythroughout Europe,” Back commented.
GLS, meanwhile, confirmed its plans to launch air express services in Europe in order to broadenits product portfolio. “In spring 2006, a GLS-operated air network for express shipments will beintroduced. GLS will successively connect its ground-based European area networks with each otherby air line hauls in order to provide a 24 hour express service,” the company said. Theintroduction of an air network would complement GLS’ traditional strength in ground-based parceland express delivery across Europe and would provide customers with a cost-effective alternative toexisting Express operators.
Separately, CEO Rico Back has played down recent speculation about a strategic alliance betweenGLS and either FedEx or UPS. Britain’s Sunday Times reported that Royal Mail was in advanced talkswith the two US express firms about an alliance with GLS but had not yet selected its preferredpartner. Commenting for the first time on the reports, Back told German newspaper Die Welt: “Icannot imagine cooperation with UPS.” UPS has a strong European presence in both express and parcelmarkets.
On FedEx, Back commented: “FedEx is a service provider with whom we cooperate on several trafficroutes. Nothing more than that is planned.” FedEx operates a European air express hub at Paris CDGserved by its own intercontinental freighter flights and intra-European express flights operated bypartner airlines.
