A newspaper report has suggested that the UK incumbent postal operator Royal Mail may be on the verge of bankruptcy as it suffers under the burden of a GBP6.2 billion pensions black hole.
The Mail on Sunday report suggests that the postal company is facing a looming financial crisis as it struggles to come to terms with its onerous retirement obligations. The UK Treasury is apparently reluctant to follow through with the payment of a GBP2 billion lifeline to bail the company out of its predicament.
The news will be especially galling for the Royal Mail management team, led by Adam Crozier, which has worked hard to drag the company back into the black in recent years.
However the company admits that despite being profitable on an operational level, the doubts over government funding for restructuring mean that it could yet be sunk by the pensions gap.
We make about GBP600 million a year, but we are going to have to put GBP800 million into the scheme because people are living longer. You do the maths, we’ll go bust. We are a commercial company and we can’t sustain such losses, one Royal Mail executive told the Mail on Sunday.