Dead letter day for Aussie Post

Australia Post chief executive Ahmed Fahour has signalled the death of the letter, declaring its mail service will "never ever make money again". And posties might have to feed pets, check meters and even check on the elderly to keep their jobs as mail continues to diminish as a business.

The nation's 207-year-old postal service saw its net profit dive 84 per cent to $16 million in the six months to December 31, after a record decline in the number of letters being sent.

Posties might be forced to feed pets, check water meters and even look out for elderly people as their traditional ...
Posties might be forced to feed pets, check water meters and even look out for elderly people as their traditional delivery business declines. 

Despite introducing $1 stamps, a two-tiered mail service and a reduction in staff, Mr Fahour said the demise of the letter means it is no longer viable as a profit-making division. It is switching its focus to parcels and lobbying to provide more government services such as Medicare payments.

"The [letters] business will never ever make money again, it's just structurally impossible for it to make money," Mr Fahour told Fairfax Media.

Australia Post chief executive Ahmed Fahour says letters will never make money again.
Australia Post chief executive Ahmed Fahour says letters will never make money again. Photo: Luis Ascui

"Letters today are less than 28 per cent of our total revenue. We are a parcels and logistics company.

"It's a huge, huge shift in who we are, what we are, how we run the company, and it's been happening in the last two to three years."

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Letter volumes were down 9.5 per cent in the six months to December 31 – the biggest half-year drop in the mail services' history, and have halved in the past seven years.

"That is an all time record for letter volume declines," Mr Fahour said.

Letter volumes were down 9.5 per cent in the six months to December 31 – the biggest half-year drop in the mail ...
Letter volumes were down 9.5 per cent in the six months to December 31 – the biggest half-year drop in the mail services' history. 

Massive turnaround

The long-time CEO said he hoped the increase in the price of stamps to $1 would stem the losses in the letters business and help return the entire corporation to an annual profit for 2016, after it delivered a $222 million loss last year.

"We are pleased that we broke even ... this time last year we had made nearly $100 million dollars, so this decline in letter volumes has really come home to roost."

Mr Fahour said he expected the combination of price changes, service reforms and lower staff numbers would reduce the losses in the letters business and that the growing parcels business would help deliver a "massive turnaround" by June 30.

"Normally, seasonally, we always lose money in the second half but ... we believe we will be in the black for the full year, which means we expect ... to break even. Hopefully we will make a bit more than that."

Although Australia Post made a massive $222 million loss last year - its first in three decades - it included $190 million in redundancy payments after it sacked 900 workers in 2014.

Checking on grannies

Mr Fahour is also spruiking an expanded role for his 10,000 posties to keep them employed, such as checking water meters and even looking out for elderly relatives or feeding the family pet.

"We have begun a conversation with our staff... as we look to 2020 and beyond... what is the postie of tomorrow in addition to parcels... they really care about their neighbourhood and the people who live there, so you will see them from time to time checking in on elderly people and seeing things are right."

"The other thing we are investigating is a motorbike the best way to deliver those small packets and parcels that Australians are buying online ... and what are the alternative modes of transportation that are safe but that can handle bigger boxes and bigger items," Mr Fahour said.

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