Royal Mail asks to stop Saturday letter deliveries

Royal Mail has asked the government to allow it to stop letter deliveries on Saturdays, as it seeks to turn its fortunes around after slumping to a loss in the first half of the year.

The business said it wanted to move from a six-days-a-week letter delivery to five, from Monday to Friday only.

However, parcel services would continue to run all days of the week.

It came as Royal Mail reported a £219m underlying operating loss for the six months to 25 September.

Strike action weighed heavily on the firm, with further walkouts expected in the coming weeks.

Keith Williams, non-executive chair of Royal Mail's owner International Distributions Services (IDS), said "urgent reform" was needed, to ensure a sustainable future.

"[The] government has now been approached to seek an early move to five-day letter delivery, whilst we continue to improve parcel services," he said.

Royal Mail needs to ask the government for permission because it would require a change to the Universal Service, which states that letters must be delivered from Monday to Saturday.

To change the Universal Service, the Business Secretary would need to bring forward secondary legislation to amend the Postal Services Act 2011.

However, publishers raised concerns about the plan to stop Saturday letter deliveries, warning it could threaten the sustainability of many weekly magazine titles.

The Professional Publishers Association said many print titles are mailed out to arrive on a Saturday, and will find it difficult to operate effectively if the plan goes ahead.

Simon Thompson, chief executive of Royal Mail, said: "We have always been clear we need change to survive.

"We have started turning the business around and will do whatever it takes."

He added: "We would prefer to reach agreement with the Communication Workers Union (CWU) but in any case we are moving ahead with changes to transform our business."

The CWU has been locked in a long-running dispute with Royal Mail over pay, jobs and conditions.

A series of strikes have taken place in recent weeks and action is set to resume on Black Friday and Cyber Monday.

"Battles with unions over pay are never good for business, and when that leads to strike action it has a material impact on performance," said Matt Britzman, an equity analyst at Hargreaves Lansdown.

"That's exactly what we're seeing with Royal Mail, profits have disappeared, and recent strikes have cost the business around £100m."

Mr Britzman said that while negotiations over pay continue, management at Royal Mail have started looking at ways to address the poor performance.

Costs will come in "laser sharp focus", he said, with Royal Mail already announcing plans to cut 10,000 jobs by next August.

"Other actions include a plea to the government to look at the expectations of letter delivery on weekends, with Royal Mail pleading for a five-day letter delivery week to help reduce spend," he added.

Royal Mail's losses dragged down the performance of the overall group, with IDS reporting a pre-tax loss of £127m for the first-half of the year.

The company, which was renamed from Royal Mail Group earlier this year, also includes international parcel service GLS.