After reviewing our trading in the first half of the financial year, we have issued an update to the market on Royal Mail's performance. We have also made a significant and difficult announcement on the need to reduce the number of roles in the business. This is ahead of the formal Group presentation of results which will take place on 17 November 2022.

Financial results in the first half of the year

We have announced:

• An adjusted operating loss of £219 million in the first half of our financial year. By comparison, in the same period last year we made £235 million profit.
• Compared to last year, Royal Mail revenue is down 10.5% and domestic parcel volumes are down 16%.
• We now estimate that our full year loss could be around £350 million (excluding voluntary redundancy charges).  This may increase to around a £450 million loss if customers move more volume away for longer periods following the initial disruption of industrial action.

Given our reality, there is now an urgent need to reduce the size of our workforce in response to the impact of industrial action, to address the lack of progress on productivity under the Pathway to Change agreement and lower parcel volumes.

We have to make sure we have the right number of people for the reduced volumes passing through our network. I am very sorry to announce that we estimate that our FTE (full time equivalent) operational workforce will need to reduce by an estimated 10,000 by the end of August 2023. Wherever possible, we will look to achieve this through natural attrition (not replacing people when they leave), and reductions in overtime and temporary staff.

However, based on current estimates, c. 5,000-6,000 redundancies in frontline delivery and processing roles may be required by the end of August 2023.

We have already seen major customers move their traffic to competitors due to industrial action. It is important to understand that if industrial action takes place beyond 25 October, the loss for the full year would increase materially and may require further operational restructuring and headcount reduction beyond what we have announced today.

Who will be impacted?

At this stage, we do not have a formal redundancy proposal. This is because the precise number of roles potentially impacted will be subject to consultation. They will be determined on a unit-by-unit basis through a programme of revisions and realignments across delivery and processing, expected to be completed by the end of June 2023.

This will be subject to consultation once unit-based proposals are provided. Those processes will start over the coming months and we estimate people could start to leave the business from February. 

I appreciate this will be worrying news. I assure you we will do all we can to provide certainty as soon as possible and to give you the support you need. This will include a comprehensive outplacement support programme for any employees who may leave the business to help them to transition to a new career outside Royal Mail.

Will there be compulsory redundancies?

We will try to avoid compulsory redundancies and we will offer a voluntary redundancy scheme.

That said, the financial position of the business means that our old voluntary redundancy policy relating to CWU OPG and administrative grades (known as MTSF) is unaffordable. As such, we will consult with CWU on any new voluntary redundancy arrangements.

We will keep you updated during those discussions and we hope to be able to share the new arrangements with you in December 2022.

Where can I find more information?

We know you will have many questions as a result of this announcement so we have set up this dedicated microsite. Below you will find a Q&A document, which will be updated regularly, and details of how to access our wellbeing advisers and resources to help you at this time.

We are at an early stage in the process and that means we may not be able to give you detailed, individualised answers just now.  However, we will keep the site updated on an ongoing basis. Your manager will also keep you updated when they have information to share about your unit.

You can also email questions@royalmail.com with questions and feedback. Whilst we may not be able to answer all individual queries at this stage, we will point you towards the latest information related to your question and will use the feedback to keep our Q&A materials up to date.

What happens next?

We will try to give as much certainty on any job reductions as soon as we can, subject to consultation with the CWU.

Given the acute risk that 18 further days of strike action poses, I have again urged the CWU to immediately call off their planned strikes and join us for talks at Acas. We want the CWU to work with us to try and limit the damage that strike action is having on our business to and job security. We want to find a resolution.

It is very upsetting to bring this news to you. I have met so many hundreds, if not thousands, of dedicated members of staff during my time at Royal Mail. The last thing I wanted was to be in a position where we are having to announce possible redundancies. 

Royal Mail is a fantastic company, and we can have a bright future. But only if we change. That is the only way we can deliver more for our customers, grow our business, and provide long term job security.