Czech billionaire plans a £400m overhaul of Royal Mail, sparking employment concerns

Daniel Kretinsky, the Czech billionaire who is set to take over Royal Mail, has unveiled a transformative vision for the company, including a £400 million investment to set up a network of letterboxes and delivery lockers across the UK.

The move could have a significant impact on tens of thousands of mail delivery jobs and the fate of the iconic red mailboxes.

In a rare public statement, Kretinsky, whose £3.5 billion bid has been approved by the board of Royal Mail’s parent company International Distribution Services (IDS), highlights the importance of out-of-home delivery systems to the future of the business . He stressed the need for immediate investment to avoid a damaging impact on Royal Mail’s market share.

Kretinsky’s proposal includes a merger of Royal Mail with its European counterpart, PostNL, in which he has a 31% stake. Speaking to Reuters, he underlined the urgency of adapting to the out-of-home delivery trends prevalent in continental Europe and the US.

“It is critical for logistics companies to invest in curbside delivery solutions now,” Kretinsky said. He plans to spend up to £400 million to develop a network of drop boxes and delivery lockers, reducing the need for door-to-door deliveries.

Unions and industry experts have expressed concern that this shift could lead to widespread job losses and the gradual abolition of many red letterboxes, which have been a key part of the British street scene for more than a century. Critics argue that this strategy is a cost-cutting measure disguised as innovation.

However, Kretinsky emphasizes that without embracing out-of-home solutions, Royal Mail risks losing market share in a rapidly evolving postal sector. He is considering installing around 20,000 remote parcel boxes across the UK, which he believes would increase efficiency and reduce costs.

This structural change is in line with Kretinsky’s broader strategy to modernize Royal Mail, making it more competitive in the global marketplace. He suggests these changes would be easier to implement if Royal Mail were privately owned, free from the control of a listed company.

In the takeover documents, Kretinsky has assured Royal Mail’s 130,000 employees and ministers that he will maintain the universal service obligation to deliver six days a week for at least five years. In addition, he has pledged to maintain current salary and benefits levels for at least two years after the takeover.

However, Chancellor Jeremy Hunt has raised concerns about the adequacy of Kretinsky’s three-year commitment not to break up Royal Mail. Hunt suggested that the government may need to expand this commitment to ensure the stability and integrity of the postal service.

Kretinsky has also committed to retaining the Royal Mail name, the royal code, and keeping the company’s headquarters and tax residence in Britain for the next five years. Despite these assurances, the proposed changes have sparked a debate about the future of Royal Mail and its role in the UK postal and logistics landscape.

As Royal Mail faces this potential review, the coming weeks will be crucial in determining the company’s trajectory and its impact on its employees and the services it provides to the British public.