Royal Mail Split Could Mean Job Cuts

Business Secretary Lord Mandelson has announced that TNT, the major dutch postal service, has a significant interest in buying part of Royal Mail.

This decision could be the best option for securing Royal Mail against future financial trouble. Richard Hooper's recent report on the company recommended such action as well. Royal mail is facing a pension deficit number in the billions which puts its future in jeopardy.

Lord Mandelson said that he would welcome the move and remain open to other offers from credible buyers. He did emphasize that the purchases would not affect any of the local post office branches due to their unique role.

Official statements have said that as much as 33% of Royal Mail might go on the market for foreign investors. This would mean that 50,000 jobs would be at risk. Union officials have stated that the possible £3bn deal would involve closing half of their 71 existing mail centers with the business being divided amongst their rivals.

The recently released Hooper report revealed a number of serious problems that Royal Mail must overcome. Their £3.4bn pension deficit from 2006 will probably double in next year's valuation. The report warned that they must update their service to remain viable. It suggested that they offer delivery six days a week as a start. Internal labor relations also need drastic improvement. Cooperation and trust were almost absent from the workforce in their review.

Peter Bakker, TNT's CEO, stated that he believes it is just the next logical step for both companies. He hopes that the move will ultimately help Royal Mail continue as a world class postal service with strong financial support.

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