Royal Mail are expecting to report a “material loss” despite a surge in parcel post during the coronavirus lockdown.
Letter deliveries have more than “halved since 2004” and the company has faced extra costs during the pandemic.
Royal Mail are consulting unions over cost cutting and to replace “outdated working practices” that no longer meet the needs.
Royal Mail said, “We are failing to adapt our business to fundamentally lower letter volumes and are holding on to outdated working practices and a delivery structure that no longer meets customer needs.”
Handling more parcels saw costs rise by £85m and £75m spent on coronavirus measures, such as protective equipment and covering absent staff.
“A heavily unionised workforce and watchful regulator make Royal Mail inflexible, and have made it difficult to prepare for a shift from letters to parcels which has been going on for more than a decade now,” said Nicholas Hyett, equity analyst at Hargreaves Lansdown.
“Historic underinvestment in automation means hundreds of millions need to be spent in the next few years, and since that’s likely to mean job losses confrontation with the group’s unions is probably inevitable.”