BGN Entrepreneur

As the Conservatives and the main postal union launched advance attacks on the government’s plans for the postal operator, Ministers were forced to rule out the full privatisation of Royal Mail as losses mount.
According to a report by Richard Hooper, the lossmaking company is confirmed to be techinically bankrupt due to its ￡7bn-puls pension liability. Besides, the company is also making losses on its key mail delivery business, which will suck ￡400m of cash from the business next year.
The mail market is shriking fast. With the influence of the economic downturn, mail volumes are now falling at 5-7% a year. Meanwhile, with a thin margin, it has no prospect of generating the investment itself. The company is in great need of more investment. If the government cannot provide it, the private sector will have to. However, the private capital will be attracted only if the pension deficit is lifted off the balance sheet.

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