Czech Billionaire Plans £400m Overhaul for Royal Mail, Sparking Job Concerns

One in five letters and parcels sent first class do not arrive the next working day, Royal Mail has admitted.

Daniel Kretinsky, the Czech billionaire poised to take over Royal Mail, has unveiled a transformative vision for the company, which includes a £400 million investment to establish a network of dropboxes and delivery lockers across the UK.

This move could significantly impact tens of thousands of postal delivery jobs and the fate of the iconic red pillar boxes.

In a rare public statement, Kretinsky, whose £3.5 billion bid has been endorsed by the board of Royal Mail’s parent company, International Distribution Services (IDS), highlighted the importance of out-of-home delivery systems for the company’s future. He emphasized the need for immediate investment to avoid a detrimental impact on Royal Mail’s market share.

Kretinsky’s proposal includes merging Royal Mail with its European counterpart, PostNL, in which he holds a 31% stake. Speaking to Reuters, he underscored the urgency of adapting to out-of-home delivery trends prevalent in continental Europe and the US.

“It is crucial for logistics companies to invest now in out-of-home delivery solutions,” Kretinsky said. He plans to allocate up to £400 million to develop a network of dropboxes and delivery lockers, reducing the need for door-to-door deliveries.

Labour unions and industry experts have expressed concerns that this shift could lead to widespread job losses and the phasing out of many red pillar boxes, a staple of British streets for over a century. Critics argue that this strategy is a cost-cutting measure disguised as innovation.

Kretinsky, however, insists that without embracing out-of-home solutions, Royal Mail risks losing market share in a rapidly evolving postal industry. He envisions installing approximately 20,000 remote mail parcel boxes across the UK, which he believes would enhance efficiency and reduce costs.

This structural change aligns with Kretinsky’s broader strategy of modernising Royal Mail, making it more competitive in the global market. He suggests that these changes would be easier to implement if Royal Mail were privately held, free from the scrutiny of being a publicly quoted company.

In the takeover documents, Kretinsky has assured Royal Mail’s 130,000 employees and government ministers that he will uphold the universal service obligation to deliver six days a week for at least five years. Additionally, he has pledged to maintain current salary and benefit levels for at least two years post-acquisition.

However, Chancellor Jeremy Hunt has raised concerns over the sufficiency of Kretinsky’s three-year commitment not to break up Royal Mail. Hunt suggested that the government might need to extend this commitment to ensure the stability and integrity of the postal service.

Kretinsky has also committed to retaining the Royal Mail name, the royal cypher, and keeping the company’s headquarters and tax residency in the UK for the next five years. Despite these assurances, the proposed changes have sparked a debate about the future of Royal Mail and its role in the UK’s postal and logistics landscape.

As Royal Mail faces this potential overhaul, the coming weeks will be critical in determining the company’s trajectory and its impact on employees and the services it provides to the British public.