An Post chief executive Mr John Hynes will stand down next July at the end of his current contract, after 13 years in the post.

His decision means that both levels of leadership at the company will change in the coming months, because the An Post chairman, Mr Stephen O'Connor, is expected to retire early next year.

Among the most difficult semi-state firms, with testy industrial relations, An Post recorded a €6.7 million operating loss last year on revenues of €107.6 million. While it has initiated a recovery plan, managers project a €37 million deficit this year and a €27 million loss in 2003 before a return to profits in 2004.

The company has faced several significant difficulties in recent years, some linked to the unprofitable rural network of post offices.

Other challenges surrounded the introduction of new technology, and there has been tension over levies and stamp prices with the postal regulator, Ms Etain Doyle.

Mr Hynes said yesterday that the company would bring options to the Government on a strategic alliance by the end of the year. Deutsche Post and the Dutch group TNT are believed to be in the frame although progress has been slow since the company received approval at the end of 1999 to seek a partner.

Mr Hynes (57) informed staff of his decision yesterday, stating that An Post had a strong management team and committed staff and unions. He said he had made his decision at this stage to ensure a smooth transition for his successor.

It is thought that the An Post board will meet soon to appoint a sub-committee to manage the process of appointing a new chief executive.

The post will be advertised with applications invited from inside and outside the company. The job commands a salary of about €239,000, which rises to about €319,000 when other benefits are included.

Internal figures in the running for the post are believed likely to include four figures in the top-management group. They are head of the letter post division, Mr Ken Robinson; head of the post office division Mr Eamonn Ryan; chief financial officer Mr Ronan Byrne; and human resources director Mr John O'Hehir.

Among the longest serving chief executives in the semi-state sector, Mr Hynes joined An Post in August 1990 from Dublin Bus, where he had been its first managing director. He worked for Guinness before then.

The introduction this year of new equipment in Dublin and in Athlone means that up to 75 per cent of mail will be processed automatically.

An Post is conducting a pilot programme that will see the transfer of the loss-making subpost office business from postmasters to postal agents, who will carry out the business on a fee-per-transaction basis at retail outlets.

This scheme is likely to be declared a success soon, paving the way for a wider roll-out of the system, introduced last year by the Government.