Royal Mail has announced a cost-cutting plan that will involve slashing about 2,000 jobs in a move accelerated by the Covid-19 crisis.
One in five management roles will go by March 2021, in areas including IT, finance, marketing and sales. The companys 90,000 postal workers would not be affected by the cuts, Royal Mail said.
The sweeping changes follow years of declining profits and a failure to respond quickly enough to the drop in letter volumes and a boom in parcels linked to online shopping.
The company said the pandemic had accelerated that shift towards more parcels and fewer letters being sent.
Royal Mail Groups interim chief executive and a former boss of British Airways, Keith Williams, said: “Covid-19 has accelerated those trends, presenting additional challenges.”
He added that “immediate action” would help to save £130m in staff costs next year. The company also aims to slash spending by a further £300m over the next two years.
Williams described the job cuts as “regrettable”, adding: “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, including supporting them as they transition into the next stage in their careers.”
While delivery staff were not targeted by the cuts, Royal Mail confirmed there would be a gradual decline in frontline workers as it started to automate the processing of letters and parcels.
The cuts were announced alongside Royal Mails annual results, and a month after the surprise departure of Rico Back, who had been with the company for three decades but left after less than two years as chief executive.
Williams said: “We agreed with Rico to leave. The one thing were calling out today is that we need a quicker pace of change.”
Pre-tax profits for the year to March 2020 fell by a quarter to ÂŁ180m. Revenues over the period rose by about 2.5% to ÂŁ10.8bn.
Letter volumes fell 8% over the year, while parcel volumes rose 2% – less than expected.
The company has also cancelled any potential dividend for the next financial year, but told investors it planned to restart payouts by the 2021-22 financial year.
Royal Mail shares were down 6.6% at 168p in Thursday morning trading.