Proactive Investors - Shares in Royal Mail-owner International Distributions Services PLC have hit a 16-month high despite fears that it could deliver another calamitous Christmas in the UK despite having agreed a deal with trade unions after the strikes that disrupted the festive period last year.
July's deal with the Communication Workers Union (CWU) does not seem to have improved service levels, with a recent report from regulator Ofcom pointing to “high levels of staff absence and vacancies”, for which the UK business was fined £5.6 million for failing to meet targets
These factors, combined with below-par service levels are resulting in growing concerns about Royal Mail (LON:IDSI)'s ability to deliver for British customers, according to a report in the Financial Times today that cited MPs and analysts.
Despite worries about Royal Mail's resilience amid increasing competition, it has not prevented the shares from being carried over 4% higher to almost 285p, the highest since early August 2022.
The company has made efforts to boost performance, including hiring 16,000 seasonal workers and launching an internal campaign, straplined 'We are Christmas', that included a bonus scheme worth up to £500 per worker in an attempt to meet delivery targets over the Yuletide weeks.
IDS finances are strained, too, with no profit expected until at least 2025, further complicating its efforts to modernise and compete effectively in the rapidly evolving delivery sector.
City analysts have been expressing worries about performance for some time, citing a slower recovery and ongoing market challenges.
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