Royal Mail has warned it might need government help to see it through the slump in people sending letters.
In its ongoing battle to get its Universal Service Obligation (USO) amended, Martin Seidenberg, chief executive of Royal Mail-owner International Distributions Services PLC (LSE:IDS) (IDS), wrote to Liam Byrne, chairman of the business and trade select committee saying it might need financial help unless there are reforms.
Seidenberg warned unless there are changes it will have to “significantly” hike prices or even seek aid from the government through a subsidy.
“Whilst we are doing all we can to transform, and the actions taken by us to date provide some breathing space to continue our journey, we also need Ofcom and the Government to do their bit," he wrote.
“Delivering the current Universal Service requirements – in a financially sustainable way - is increasingly difficult, if not impossible, to achieve as the mix and number of parcels and letters changes.”
Letters have been in steady decline for years with Seidenberg predicting the number being delivered will fall from 7 billion currently to 4 billion in five years while currently only four letters per week are being delivered to UK households on average.
Royal Mail has been campaigning for years to have its USO relaxed.
Currently, it is mandated to deliver letters to UK households every day from Monday to Saturday.
Ofcom is currently evaluating whether USO needs to evolve with an analysis of the evidence scheduled to be released early this year.
In a tough year in 2023, Royal Mail paid out £26 million in compensation to customers, was hit with a £5.6 million fine and tripled its first-half losses.
According to the Telegraph. the company is focused on USO reform and would seek a bail-out only as a last measure.
Shares in IDS fell 2% to 243.7p.