An Post says €30m Government loan will not save post office closures

Funds to secure five-day postal service and parcel-delivery expansion, claims company

An Post chief executive David McRedmond said recently he expected up to 360 post offices to close over the next four years. Photograph: Dave Meehan

An Post chief executive David McRedmond said recently he expected up to 360 post offices to close over the next four years. Photograph: Dave Meehan

 

An Post is to receive a €30 million loan from the Government to help it restructure the company, which has been struggling to cope with the decline in traditional mail services.

The funding will allow for a continuation of a five-day-week postal service and an expansion of its parcel delivery service, but will not the halt the ongoing closure of post offices across the company’s 1,125-strong network.

A spokeswoman told The Irish Times on Tuesday there were no hard numbers on future closures as the company was still in negotiations with postmasters, who run the majority of offices.

“There will be fewer post offices,” she said, “but we haven’t got a decided number. We want to get the services, the spread and the network right and do the detailed work on that first.”

However, An Post chief executive David McRedmond said recently he expected up to 360 post offices to close over the next four years.

His tenure has been marked by a fundamental shift in the business as consumers migrate to digital communications to send letters and pay bills, known in the industry as “e-substitution”.

The decline in traditional mail services saw An Post incur a loss of €15.6 million in 2016 with predictions that this would balloon to €61 million in 2017 unless corrective action was taken.

Stamp price

However, the company said it was now on course to break even in 2017 on foot of significant actions taken to resolve the financial situation.

These included a recent stamp price hike, an expansion of its parcels business (which now runs on a six-day week basis with evening and Saturday deliveries) and further reductions to its cost base.

“An Post is moving in the right direction in becoming the logistics backbone of e-commerce in Ireland while providing new and traditional services for every community in the State,” Mr McRedmond said.

According to the Department of Communications, the €30 million loan will be subject to stringent conditions and key performance indicators, the delivery of which will be monitored on a monthly basis.

“The main impact of this measure has been to avoid a cash crunch in 2017 and reduce the level of losses expected to be incurred for the year by the company,” Minister for Communications Denis Naughten said.

“ It also allowed the company time to construct a modernisation plan. However, without further remedial action, losses for the group will simply keep going,” he said, noting the local post office was an integral part of the fabric of local communities.

Under the restructuring, An Post plans to split the company into two business units – An Post Mails and Parcels, and An Post Retail.

The spokeswoman said the company would eventually evolve into a predominantly parcels-based business. The relaunch and respecification of the parcels business with evening and Saturday deliveries and later cut-off times for next-day delivery had already contributed to an additional €8 million profit in that division this year, she said.