Australia Post is facing heavy financial losses.Australia Post is forecasting its first full-year loss in over 30 years after recording a first-half profit of just $98 million, down 56 per cent on this time last year.
The dramatic profit dive was driven by mounting losses of $151 million in its letters business.
Letter volumes have also posted their largest decline since they first started falling in 2008, down 8.2 per cent in the last six months.
The losses in its letters business are so big they are forecast to overwhelm the profit in its parcels business.
A full-year loss would be the company’s first for 30 years.
Australia Post chief executive Ahmed Fahour is using the dire forecasts of a company-wide loss to highlight the need for urgent regulatory reform of the company’s letters service.
Mr Fahour said the company wants to slow the delivery of non-urgent mail and charge a premium for customers who still want to use its regular service. It also wants the right to increase the price of stamps.
“The immediate challenge for our business is clear,” Mr Fahour said on Monday in a statement.
“We have been carefully managing the real decline in our letter volumes for the past seven years, but we have now reached a tipping point where we can no longer manage that decline, while also maintaining our nationwide networks, service reliability and profitability.
“We urgently need reform of the regulations that apply to our letters service.”
Mr Fahour said a government-commissioned report last year predicted that Australia Post would incur $12.1 billion cumulative losses in letters, and $6.6 billion for the enterprise over the next 10 years, without regulatory reform.
He is seeking approval from the Abbott government to allow Australia Post to introduce a new regular letters service for non-urgent consumer mail delivered two days slower than the current schedule, and to charge a premium for customers wanting to use its existing daily timetable.
He also wants the power to increase stamp prices to better reflect the cost of running the letter service.
The lobby group representing the interests of licensed post offices and mail contractors, the Post Office Agents Association Limited (POAAL), said it supports the “concept” of mail reform but the company must be allowed to look for new business and revenue streams beyond letter delivery.
“It is obvious that without changes to the letters service Australia Post will incur greater and greater losses,” the group said in a statement.
“Regardless of the proposal to reform the letters service,these latest results show that it is urgent that new business streams are found.”
“Reform to the letters service is just stemming the bleeding – Australia Post needs to focus on finding new customers and new revenue streams.
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