Australia Post today unveiled plans to cut about 1,900 jobs to reduce operating costs as it heads towards its first full-year loss for more than 30 years, prompting angry responses from unions and post office operators.
The state-owned postal operator said that its mail business is likely to make a full-year loss of up to A$500 million in the year ending June 30, 2015 as letter volumes drop about 10%, taking the segment’s losses over the last five years to more than A$1,500 million. These losses will outweigh the parcel division’s profits, leaving the group with an overall full-year loss.
"We have reached the tipping point that we have been warning about where, without reform, the business becomes unsustainable," CEO Ahmed Fahour declared.
About 1,900 jobs are now set to disappear over the next three years, according to Australian media, as the group, which has some 36,000 employees, including 23,000 mail workers, tries to bring down operating costs in response to rising losses. However, Australia Post will aim to avoid compulsory redundancies by reducing the workforce through natural attrition and non-replacement of departing staff.
In the first half of 2014/15, Australia Post’s net profit already slumped by 56% to A$98 million, due to an A$151 million loss in the mail business. Losses in the letters business were expected to overwhelm parcel profits in the seasonally quieter second half of the financial year, resulting in the first full year loss since 1982.
But the main postal union, the Communication Workers Union, reacted angrily to the news and called on the government to sack the Australia Post CEO, claiming that Fahour’s overall downsizing plans included 4,400 job reductions, closure of regional sorting centres, higher stamp prices and slower mail deliveries.
Assistant national secretary Martin O’Nea said: “Australia Post doesn’t have the staff to deliver the mail consistently on time now, this plan will make every letter later. The Australian economy relies on a fast, cheap, postal service to move the cheques, documents and parcels to keep business working. Mr Fahour plans to cut thousands of posties and double the price of a stamp. Mr Fahour and his crazy plan must go.”
The Post Office Agents Association Ltd (POAAL), representing the post office owners/operators who comprise about 80% of Australia Post’s retail network as well as independent delivery contractors, described the programme of voluntary redundancies as “another band-aid solution” for the mounting losses in the domestic letters business and urged the company to build up new revenue streams to compensate for the mail losses.
Director Bob Chizzoniti said: “Australia Post has failed to act decisively in response to falling letter volumes and now, faced with massive losses, it’s making panicky decisions. Senior management has sleep-walked its way into a crisis and is now only making reactionary short-term fixes.”
The association claimed that Australia Post had not responded to its past proposals for a ‘managed transition’ which would have enabled a group-wide transformation “before the losses in letters reached a critical point”.
“Major postal corporations across Western Europe are facing the same challenges as Australia Post but responded much quicker and earlier,” Chizzoniti pointed out.
