British postal challenger Whistl today dramatically suspended its small loss-making final-mile delivery operation, leaving 2,000 jobs at risk, after a potential financial backer pulled out and parent company PostNL launched a strategy review.
The mail and packets company (formerly called TNT Post UK) announced it was suspending its end-to-end (E2E) delivery service in London, Manchester and Liverpool, affecting some 2,000 employees. However, its core business of collecting and sorting mail, with final-mile delivery through Royal Mail is unaffected.
The move came after PostNL’s plan to turn Whistl into a joint venture with Lloyds Bank subsidiary LDC, which would have funded the rollout of an end-to-end delivery network to challenge Royal Mail, collapsed two weeks ago when LDC pulled out of long-running talks due to changes in market and regulatory conditions. In response, PostNL said last week it had launched a review of its international strategy.
In 2014, Whistl increased its revenues by 3.2% to €753 million but its profitability was impacted by start-up losses related to the end-to-end services. The company claims to process over 26% of mail volumes in the UK, handling nearly four billion items of addressed mail, packets and parcels per year. The bulk of these volumes are delivered by Royal Mail through a downstream access agreement.
Whistl stated: “Following the announcement from LDC that it would not proceed with the proposed investment to fund further rollout of E2E we have now commenced an extensive review of the viability and potential for the rollout of an e2e postal delivery service in the UK.
“To stem the losses from the operations we have taken the difficult decision to suspend the current E2E service during the review process and all mail will now be delivered through our long-standing downstream access service until we have concluded the review.
“As part of this extensive review, we will begin consultations with the relevant employees who are affected by the suspension of the E2E service, and with their union representatives, with a view to identifying and exploring viable proposals to secure the continuation of this service.”
In response, Community, the recognised trade union at Whistl, said its members are 'extremely worried for their futures' as almost 2,000 employees have been suspended pending a review of the future of the company's end-to-end delivery business.
Les Bayliss, National Officer at Community, said: "Understandably, our members are extremely concerned and worried for their futures. Community has a meeting of our senior reps tomorrow where we will begin to develop our response to the company's consultation. We will be doing all we can to identify a viable way forward for the business that safeguards our members' jobs. We should be clear that this is a suspension of the business not a termination of it, so we will be looking for the company to work with us to identify sustainable options to continue operations as soon as practically possible.
He added: "We understand the consultation was triggered by the decision of LDC not to fund a further rollout of the end-to-end business but we're also aware of the challenges faced by the business because of the continuing costs dictated by Royal Mail, which affect the sector as a whole."
