Australia Post Calls for Postal Reform as Profit Drops

Australia Post, which reported a decline of 56% in profit after tax to A$98m for the first half of its 2015 financial year ended December 31, 2014, has called for reform of the regulations that apply to its letters service.

Ahmed Fahour, managing director and group CEO for Australia Post, demands reforms  / company courtesy
Ahmed Fahour, managing director and group CEO for Australia Post, demands reforms / company courtesy

The decline in profit was driven by growing losses of A$151m in the letters business, which was an increase of 57% compared to the loss recorded by the letters business in the year-earlier period. Letter volume decline accelerated to 8.2%, year-on-year, which is the largest decline recorded since Australia Post’s letter volumes started falling in 2008.

Reforms needed…
Ahmed Fahour, managing director and group CEO for Australia Post, said the half-year result highlighted the urgent need for regulatory reform of Australia Post’s letters service to ensure a stabilized mail service for the future.

“We have been carefully managing the real decline in our letter volumes for the past seven years. But we have now reached a tipping point where we can no longer manage that decline, while also maintaining our nationwide networks, service reliability and profitability. We urgently need reform of the regulations that apply to our letters service."

…or losses loom
A government-commissioned external report last year predicted that, without reform, Australia Post will incur A$12.1bn (US$9.4bn) cumulative losses in letters, and A$6.6bn (US$5.1bn) for the enterprise over the next 10 years.

Australia Post needs government approval to change its regulations to enable it to introduce a new Regular letters service for non-urgent consumer mail delivered two days slower than the current schedule. Customers wanting to use the existing timetable could then pay more for a priority service. Australia Post also wants the ability to adjust prices to better reflect the real cost of running the letter service.

Nol van Fenema

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