Australia Post will go the way of Kodak and the local video store without a fundamental transformation of the business, according to chief executive Ahmed Fahour, who confirmed the company would axe 900 jobs over the next 12 months.
Most of the job losses will come from Australia Post's head office in Melbourne, with managerial, administrative and support roles most affected.
Mr Fahour also confirmed he was lobbying the federal government to relax Australia Post's Community Services Obligation to deliver standard mail to homes five days a week.
Australia Post is currently required to deliver letters five days a week to 98 per cent of homes and businesses across Australia, set a uniform rate for letter delivery and maintain 10,000 post boxes.
Mr Fahour said a 30 per cent decline in letter volumes over the past five years means radical reform of the 205-year old company is needed to keep it viable.
He said history was littered with examples of companies who had responded too slowly to technological transformation and changing consumer demands.
"People really don't understand the magnitude of the losses - our letter losses will blow out to a billion dollars without reform," Mr Fahour told Fairfax Media.
"We are shifting resources, capital and money from the declining area of our business [letters] to the growing part - our trusted services in stores and the delivering of packages.
"We are prepared to take the pain in our headquarters to fund what the community wants."
The decline in letter volumes is expected to accelerate to between eight and 12 per cent in coming years, wiping out the profits from the booming parcels division.
While he said every job loss is regrettable, Mr Fahour said no frontline services would be affected by the cuts and that no post offices would close.
The savings from the job cuts – estimated at $90 million – will help fund the extended Saturday trading hours and weekend parcel delivery announced earlier this year.
Many staff at Australia Post are waiting to be told about the future of their jobs at a meeting on Wednesday morning.
Nancy Glasson, a franchise manager with Australia Post in Melbourne, said senior executives were briefed during phone hook-ups on Tuesday afternoon, but the rest of staff were still in the dark about whether their jobs were safe.
''I'm told there will be a meeting tomorrow [Wednesday],'' Ms Glasson said.
''We just don't know where this is going to go. We just don't know what will happen next.''
Communication Workers Union's Joan Doyle said she had been flooded with calls and text messages from worried workers, and concern was growing over the future of the business.
''This has not been a consultative approach,'' she said. ''And if Australia Post becomes a three-day-a-week delivery business, two-fifths of the posties won't be required and thousands more will be enormously affected.
''If there's one job that should be cut it's the CEO's. He has beefed up middle management and is sheding people who actually do the work. It's the way he manages that's causing financial problems, not the underlying business.''
Australia Post will next month hand a corporate plan to the federal government, outlining a detailed vision for the company.
Mr Fahour also wants Australia Post to deliver a broader range of government services – including Centrelink and Medicare services – to shore up the viability of local post offices. Both the Coalition and Labor have flagged their openness to this proposal.
The company will be reorganised around two separate brands. Australia Post will house the existing retail and communication management services while StarTrack will house the parcel and express services for businesses.
The Communications, Electrical and Plumbing Union warned jobs cuts could pave the way for the privatisation of Australia Post.
Jim Metcher, the union's postal and telecommunications secretary, said reports of job cuts were a "terrible blow" and called for workers whose jobs were on the line to be redeployed.
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