An Post has forecast a €30 million (£23.6 million) loss this year after a €7.2 million deficit in 2001. The State company is understood to attribute the deepening financial crisis to the economic downturn, wage increases and its failure to implement a cost-cutting plan agreed with staff almost two years ago.
With a general election only months away, An Post is also understood to have informed the Government that it cannot attempt to address the losses without a significant increase in postal tariffs.
It has also sought a seven-cent rise in the cost of a standard postage stamp to 45 cents from 38 cents. If granted, this would boost revenues by about €7 million.
The submission last month to the telecoms regulator, Ms Etain Doyle, is understood to have pointed out that domestic tariffs have not increased since 1991 and decreased in 1998.
It follows an application last April for a 30 per cent rise in international postal rates. No decision has been reached on either application.
An Post is understood to have told Ms Doyle that it is incurring unsustainable losses in its international postal business. It is said to be unhappy with the slow progress of the regulator's determination on non-domestic tariffs.
Ms Doyle's spokeswoman said: "We intend to publish a consultation paper shortly on proposals to increase prices charged for some services reserved to An Post."
Relations between An Post and Ms Doyle are strained. The company has initiated a challenge in the High Court to a €2.5 million levy charged by Ms Doyle for her regulation of the business this year. The company also disputes new next-day delivery targets set by the regulator, stating that they are unnecessary and unattainable.
An Post reported a €9.8 million profit from day-to-day activities in 2000. While its 2001 financial results are not expected to be published until April, provisional calculations are understood to suggest day-to-day losses last year of about €7.2 million.
Half of the €17 million turnaround was attributed to ongoing losses in the post offices division, which has been forecast to lose more than €100 million by 2005.
The company has entered talks on a severance deal with postmasters. A package under negotiation will see a lump sum paid to salaried postmasters. If agreed, it is thought that many smaller post offices will close.
But this will not be enough to reverse the losses expected this year. An Post is obliged to pay wage increases under the Programme for Prosperity and Fairness at a time when the growth in mail volumes is stalling due to the economic slowdown. Volumes rose by 7 per cent in the first half of last year, but the rate of increase fell to 3 per cent in the second half as the downturn took hold.
A significant portion of the €30 million deficit forecast this year is expected to derive from restructuring costs.
The employee share option plan agreed with workers in April 2000 was designed to deliver €34.28 million in work practice savings by the end of this year. An informed source said virtually none of the changes had been delivered yet and accelerated savings were now needed.
The company is expected to seek a significant cut in its overtime bill. It is also expected to intensify its efforts to implement a transformation plan at its largest mail depot at Clondalkin, west Dublin, which was rejected by staff last summer.
