British Royal Mail in Danger?!

[johnorun]

http://www.ft.com/cms/s/0/db9aac18-ca48-11dd-93e5-000077b07658.html?nclick_check=1

[hugo929]

I got this

[Neon_WA]

[johnorun]

[CPUShack]

[donutty]

Don't worry. Nothing is happening. Your package will arrive!

[picur10]

Here is the article if someone cannot read from ft.com:

Study urges radical surgery to boost Royal Mail survival

By John Willman and Jimmy Burns

Published: December 15 2008 02:00 | Last updated: December 15 2008 02:00

The decline in Royal Mail's letters business is so steep radical surgery will be needed to preserve the one-price-goes-everywhere postal service, ministers have been told.

A report by Richard Hooper, the former telecoms regulator, says the state-owned former monopoly needs further heavy investment in automation, but is hobbled by a pension deficit that has doubled to £7bn in the past three years.

The report, to be published this week, sets out solutions including a government takeover of the pension deficit, further automation to improve efficiency and an overhaul of how postal services are regulated.

Mr Hooper has warned that Royal Mail's position is "extremely precarious", with large cash payments needed during the next two years to top up the pension scheme at a time when mail volumes are falling by between 5 per cent and 7 per cent a year.

"The situation in the postal services sector in the UK is and remains untenable," he said recently.

The Hooper review was set up a year ago to investigate the impact of competition on the universal service, which provides collection and delivery to every address in the UK, six days a week.

Competition with private sector postal companies has reduced Royal Mail's operating profit by £100m during the past two years, the report will say. However, this is dwarfed by the impact of digital competition, such as email, mobile telephony and the internet, which cost it £500m in the same period.

Royal Mail is still much less efficient that other European operators, with post sorted by hand each morning.

One obstacle to government action will be the European Union's ban on state aid - the EU has yet to approve the £1.2bn bail-out package negotiated in 2006. Further government support would be approved by Brussels only as part of a fundamental restructuring of Royal Mail, such as partial privatisation or partnership with the private sector.

The German and Dutch mail operators have been privatised, while France has announced a partial privatisation plan. Three other operators have formed partnerships with CVC, a private equity firm.

Lord Mandelson, business secretary, recently signalled in an interview with the Financial Times his support in principle for the partial privatisation of Royal Mail. But officials said yesterday the government would stick to Labour's election manifesto promise to keep Royal Mail publicly owned.

Copyright The Financial Times Limited 2008

[hugo929]