Royal Mail to cut 700 managers after Omicron delivery crisis

theguardian.com:

Royal Mail plans to cut 700 management jobs and lowered its profit outlook after a tough Christmas when deliveries were disrupted by high sickness levels caused by the spread of Omicron.

The company said it had started consulting unions on the cuts, which were designed to “streamline operational management to improve focus on performance at a local level”. It has frequently been at loggerheads with unions over changes, and stressed that the cuts would be made “through natural turnover, redeployment and voluntary redundancy, wherever possible”.

Royal Mail employs 140,000 people, and the 700 management cuts are out of a total of 8,000 managers.

The job cuts will save £40m a year, but result in a one-off charge of £70m. This means Royal Mail’s full-year adjusted operating profit will miss its previous £500m estimate and come in at £430m.

The latest job losses come on top of 2,000 reductions outlined in June 2020 – one in five management roles – in areas including IT, finance, marketing and sales.

Russ Mould, the investment director at the stockbroker AJ Bell, said: “In streamlining the business, Royal Mail needs to ensure it doesn’t go too far and diminish its operational capability or spark widespread industrial action, the threat of which has hung over the business in the past.”

Thanks to a surge in parcel delivery driven by the online spending boom, Royal Mail made a £311m pretax profit in its first half after barely scraping a profit a year earlier.

Royal Mail said it handled 439m parcels in the three months to December, and said it was confident that a “structural shift” had occurred in parcel volumes since the start of the pandemic. Domestic parcel revenues increased by nearly 44% compared with 2019 levels, and fell by 4.9%