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Monday, 26 November, 2001, 12:46 GMT
UK post operator loses 1.5m a day
A Royal Mail train
The Royal Mail has been hit by labour problems
Losses at Consignia, the renamed Post Office, have hit 1.5m a day, with increased costs blamed for the decline deeper into the red.

While sales rose slightly in the May to October period, investment in technology, redundancy payments and rising wage costs saw Consignia lose 281m over the six months, the firm revealed in an earnings statement.

The loss was more than double the 113m reported for the previous six months, raising fears that up to 10,000 or even 15,000 jobs may be at risk.

Consignia said the trade slide had strengthened its resolve to progress plans to cut costs by 1.2bn, 15%, over the next two years.

"The key signal from the results is that our costs are running ahead of income," said Consignia chief executive John Roberts

"We have got to improve efficiency if we are to return to profit."

Strike threat

Consignia's recovery plans include a radical restructuring of its package delivery service Parcelforce, which has burnt though an estimated 200m in cash in the last 10 years without making a profit.

The company said it aimed to cut its wages bill by making Parcelforce drivers self-employed, a proposal which has triggered the threat of strike action by members of the Communication Workers' Union.

"The union's membership are fed up being blamed for inefficiency and being held responsible for the inability of Post Office management to run the business effectively," CWU deputy general secretary John Keggie said.

The union is also resisting separate moves to outsource some Consignia services to sub-contractors.

A Consignia spokesman said on Monday that the CWU's strike threat has been withdrawn following negotiations last week.

Increasing competition

The 8bn firm blamed much of its predicament on increasing competition in its most lucrative delivery markets.

However, industry analysts say Consignia's financial crisis is due to a series of ill-advised investments, and a long track record of poor industrial relations.

The results announced on Monday reveal a sharp deterioration in the company's cost-efficiency.

The company's wage and transport bills rose by 65m and 48m respectively, helping to boost trading losses to 100m, up from just 20m during the previous six-month period.

The Post Office changed its name to Consignia in March at a cost of 2m, much of it in consultancy fees.

 WATCH/LISTEN
 ON THIS STORY
The BBC's Jeff Randall
"The company is in danger of drowning in losses"
The BBC's Hugh Pym
"Consignia made an operating loss of 100m for the first half of its financial year"
See also:

03 Oct 01 | Business
Consignia cuts 1bn to stem 'crisis'
13 Jul 01 | Business
Consignia to axe 2,100 jobs
26 Jun 01 | Business
Post office jobs warning
31 May 01 | Business
Consignia considers outsourcing deal
09 Jan 01 | Business
UK Post Office name change
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