Proactive Investors - Royal Mail (LON:IDSI) delivery days could fall to 5, or even 3, says Ofcom.
Ofcom has said the Royal Mail could reduce letter delivery days in the service from six to five or even three, in proposals aimed at modernising the postal service.
The regulator said the universal postal service risks becoming unsustainable as people send fewer letters and receive more parcels, meaning reform is necessary to secure its long-term future.
“Given the significant cost to Royal Mail of delivering the universal service there is an increasing risk it will become financially and operationally unsustainable in the long term,” it said.
Ofcom laid out two primary options: making changes to existing First and Second Class and business products so that most letters are delivered through a service taking up to three days or longer, with a next-day service still available for any urgent letters; and reducing the number of letter delivery days in the service from six to five or three.
Under any scenario, Royal Mail must modernise its network, become more efficient and improve its service levels, Ofcom said.
It estimated Royal Mail could achieve a net cost saving of £100-£200 million if letter deliveries were reduced to five days; and £400-£650 million if reduced to three days.
If the large majority of letters were delivered within three days, it could achieve net cost savings of £150-£650 million, Ofcom said.
Downgrading delivery targets is not an option for reform, it added.
IDS, the owner of Royal Mail, has seen its share price rally ahead of the announcement, so let's see what the City makes of it.
easyJet loss narrows but takes £40 million hit from Middle East
easyJet PLC (LON:EZJ) reported a narrowed first quarter loss despite taking a £40 million from the Middle East conflict.
The budget airline said its performance has improved year on year, with booking trends giving a positive outlook for the remainder of the financial year.
Underlying trends in the quarter were strong, although headline results were impacted by the conflict in the Middle East.
The conflict had short term impacts from a pause in flights to Israel and Jordan and a temporary slowdown in flight bookings for the wider industry.
But it said demand and bookings have recovered strongly from late November. while easyJet holidays had another strong quarter, with customer numbers increasing by 48% compared to the same period last year, and a profit of £30 million, a 131% increase year-on-year.
The headline loss in the quarter narrowed to £126 million from £133 million before with passenger growth of 14% and a revenue per seat increase of 3%.
easyJet said it remained on track to deliver disciplined capacity growth of c.9% in financial 2024 with a positive outlook for the summer.
Bookings are strong with seats sold and yield ahead year-on-year with second half revenue per seat well ahead.
easyJet holidays continues to expect >35% customer growth year-on-year in financial 2024.
Abrdn axes 500 job cuts as part of £150m cost-cutting drive
abrdn PLC has confirmed reports that is cutting 500 jobs as part of a transformation programme designed to reduce costs by £150 million per year.
The fund manager said the programme is designed to restore “our core Investments business to an acceptable level of profitability and allow for incremental reinvestment into growth areas.”
Chief Executive Stephen Bird said: “Market conditions have remained challenging for our mix of business, and this is reflected in our year-end AUMA, flow numbers, and margins.”
Assets under management fell to £494.9 billion in the second half of 2023 from £495.7 million in the first half of the year with net outflows rising to £12.4 billion during the period.
For the group overall, the firm expects 2023 adjusted operating profit to be broadly in-line with consensus, and adjusted capital generation to be above consensus, owing to higher interest income on the group's cash balances.
The company said the cost cuts would come mostly from group functions and support services and largely be implemented in 2024, completing in 2025.
Around £60 million of the benefit will be seen in 2024, the firm said.