Royal Mail boss is playing hardball, fast … perhaps too fast
That escalated quickly. A day after Royal Mail workers voted to strike over pay, their employer is threatening to perform the splits unless “significant operational change” happens. The UK postal service would go one way, taking its industrial relations disputes and modernisation challenges with it. GLS, the more profitable parcel operation that is run out of Amsterdam and serves continental Europe and North America, would go the other.
This is a hardball move by chairman Keith Williams, even if the first stage of the operation is only a cosmetic change of name for the holding company from Royal Mail plc to International Distributions Services (an ugly name, but at least it’s not Consignia, the ridiculous moniker briefly adopted a couple of decades ago until the mockery became unbearable).
But the serious intent-cum-threat was spelled out starkly. “In the event that significant change within Royal Mail is not achieved, the board will consider all options to protect the value and prospects of the group, including separation of the two companies,” said the statement.
The way Williams tells it, the break-up option merely reflects events on the ground since privatisation in 2013. GLS has grown massively, to the point where it has contributed two-thirds of group-wide operating profits over the past three years. And, since there are few operational links between GLS and Royal Mail, it is unsustainable to expect the vigorous bit to be held back by the laggard, especially now that the Covid whoosh to parcel volumes in the UK has faded.
Put like that, the separation case is indeed coherent. GLS was the junior partner at privatisation but this year’s forecasts see it making as much as £350m at the operating level versus a break-even
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