Royal Mail today revealed it is cutting 2,000 jobs as it announced a management overhaul to help slash costs in the face of the coronavirus crisis.
The postal service said the restructuring plans will see it save £130million in staffing costs next year as it reported a 31 per cent fall in annual profits.
Royal Mail is also cutting £300million in spending over the next two years. It has 9,700 managers, with senior executive and non-operational roles to be hardest hit.
It comes six weeks after the group’s chief executive Rico Back quit following two years in charge and major battles with unions over a £1.8billion restructuring plan.
A Royal Mail postman empties a postbox in Glasgow during the coronavirus crisis on April 1
Royal Mail is one of a raft of companies in the UK to announce hefty job losses due to the pandemic, including British Gas owner Centrica and easyJet and British Airways.
Keith Williams, interim executive chairman at Royal Mail Group, said the firm is taking ‘immediate action’ on costs to offset the Covid-19 impact.
Rico Back leaves the job at Royal Mail after agreeing his departure with the board
He said: ‘In recent years, our UK business has not adapted quickly enough to the changes in our marketplace of more parcels and fewer letters.
‘Covid-19 has accelerated those trends, presenting additional challenges.’
On the job cuts, Mr Williams said: ‘We are committed to conducting the upcoming consultation process carefully and sensitively.
‘We will work closely with our managers and their representatives during this difficult period.’
In May, German businessman Mr Back agreed with the board to step down with immediate effect and will leave the company on August 15.
Hamburg-born Mr Back founded and ran the company’s German arm GLS for almost three decades before taking over as group chief in 2018.
But Mr Back – dubbed ‘the Flying Postman’ because he commutes to Britain from Switzerland – attracted criticism for running Royal Mail from his £2.3million home overlooking Lake Zurich during the crisis, having left the UK after the lockdown.
Mr Back attracted criticism for running Royal Mail from his £2.3million home in this apartment block overlooking Lake Zurich during the crisis, having left the UK after the lockdown
Mr Back will be replaced by a duo of Keith Williams, who becomes interim executive chairman, and Stuart Simpson, who will be the temporary chief executive.
Rico Back: Career of the £647,000-a-year flying postman
Rico Back, 66, founded and ran Royal Mail’s German arm GLS for almost three decades before taking over as group chief in 2018.
He was appointed the first managing director of German Parcel in 1989, before establishing the European-wide firm General Parcel in 1992.
Seven years later he led the sale of this to Royal Mail, and by 2002 a uniform brand called General Logistics Systems (GLS), was established.
The Hamburg-born businessman became known as ‘the Flying Postman’ because he normally commutes to Britain from Switzerland each week.
The married father-of-four used to spend his weekends at a luxurious £2.3million home overlooking Lake Zurich, before returning to Britain to work during the week.
But when he flies to the UK he covers the costs himself, including those of his London accommodation.
He took over as group boss from Dame Moya Greene in 2018, receiving £6million for changes to his contract. He was paid £647,000 last year but can earn up to £2.7million.
Mr Back had promised a £1.8billion pound programme last year to transform Royal Mail into a sustainable, profitable operation by 2024.
But that turnaround plan was delayed by labour unrest and the uncertainty caused by the coronavirus crisis.
The company also said in May that costs rose by £40million, driven by overtime and agency resource costs due to coronavirus-related outlays.
Critics had said Mr Back, dubbed ‘the Flying Postman’ because he commutes to Britain, was too far away to effectively run Royal Mail and called for him to resign.
Mr Back has been working from his £2.3million family home, a luxury penthouse overlooking Lake Zurich.
The father-of-four, who took over as Royal Mail boss two years ago, usually travels by air to the UK for the working week and returns to the property during weekends.
But after the postal service’s London office was shut on March 24, it is understood Mr Back returned to Switzerland and has remained there.
He took over as group boss from Dame Moya Greene in 2018, receiving £6million for changes to his contract. He was paid £647,000 last year but can earn up to £2.7million.
Dame Moya oversaw the privatisation of Royal Mail in 2013 and also settled a long-running dispute on pay, pensions and a shorter working week for employees.
Royal Mail revealed earlier in the crisis that revenue from UK parcels, international and letters dropped by £22million in April, compared to the same month last year.
In April, the postal service said it had halted all Saturday letter deliveries until further notice as it continues to suffer from staff shortages.
Letters that have to be signed for as well as tracked items and those sent by special delivery are still being delivered on Saturdays.
The service restriction came after union leaders encouraged postmen to call in sick rather than risk catching the virus on their rounds.
Royal Mail workers have been designated as key workers to keep deliveries going during the pandemic.
In March, the Communication Worker’s Union lobbied for deliveries to be cut back to just three days a week with homes receiving post every other day – but the plan was not implemented.