An Post warns it cannot meet wage bill next month

An Post has told the Government it will face cash-flow difficulties next month unless it can immediately increase the price of stamps.

Ministers say the company will be unable to meet its €10 million-a-week wage bill in April unless it receives an immediate cash injection through increasing the price of stamps.

An Post chief executive David McRedmond told The Irish Times last night that a "price increase is an essential measure for the company".

The company has told the Government that it needs the immediate increase in order to stabilise its financial position for a period of 18-24 months.

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It will use the period to introduce a wide-ranging restructuring plan which is likely to see huge changes introduced to the semi-State company. While some reports have suggested that 80 small post offices could be closed, both political and company sources said the restructuring plan was likely to involve the closure of a significantly greater number.

The legislation to abolish a cap on the price of stamps passed through its final stages in the Seanad last night and is expected to be signed into law by the President in the coming days. This will pave the way for an increase in the price of stamps after a short notice period.

The Irish Times understands that the price of a basic stamp will increase from the current price of 72 cents to more than €1.

Ministers have been told that the company has 9,000 employees and a weekly wage bill of €10 million which it will run into difficulties paying this as early as next month.

“They need €10 million a week for their wages bill,” said a political source who was briefed on the situation at An Post. “They don’t have it from next month. They’ve enough money to pay wages until the end of March and that’s it.”

‘Crisis situation’

Another political source described the company’s current difficulties as a “crisis situation”.

Sources in An Post played down the immediacy of the cash squeeze but confirmed that without the price increase the company’s cash flow would be negative next month, and would “run into difficulty” soon afterwards.

An Post is the second semi-State company to have concerns raised over its financial viability in recent weeks. Bus Éireann has said it is in danger of running out of money by Christmas unless drastic action is taken to correct its finances.

Mr McRedmond met Minister for Communications Denis Naughten on Monday to discuss the situation at the company.He said An Post was not looking for an ongoing subsidy from the Government but to secure the future for "a self-funding network that meets the needs of consumers".

A complicating factor within Government is that while Mr Naughten has responsibility for the overall governance of the company, the post office network comes under the authority of the Minister for Rural Development Heather Humphreys, and the Minister of State at her department, Michael Ring.

Mr Ring is currently preparing a report on the future of rural post offices which he is expected to bring to Cabinet shortly.

Businessman Bobby Kerr has also produced a report on the future of the network, which proposes the closure of 80 small post offices and a State subsidy to sustain small rural post offices.

More significant is likely to be an internal process in the company which is being advised by the management consultants McKinsey. This is likely to recommend for swingeing changes to the company.