LONDON (Reuters) - Whistl, the British arm of Dutch-based postal company PostNL (AS:PTNL), said on Monday it had suspended a mail delivery service to rival Royal Mail 's (L:RMG), putting around 2,000 jobs in jeopardy.
Since April 2012 Whistl has been delivering business mail in cities such as Manchester and London without using the Royal Mail network. However, plans for a full rollout were hit last month when LDC, the private equity arm of Lloyds Bank (L:LLOY), decided not to fund the expansion.
Whistl said it was now reviewing the viability of such a service in the United Kingdom.
"To stem the losses from the operations, we have taken the difficult decision to suspend the current service during the review process," Whistl said in a statement, adding it had begun consultation talks with workers.
Shares in Royal Mail were up 3.4 percent on the news to 495 pence at 1142 London time, the top riser on the FTSE 100 Index.
Royal Mail has said Whistl's plans to deliver only to the most profitable, easy to serve areas would undermine the financial viability of its own universal six-day-a-week service.
RBC analyst Damian Brewer said Whistl's decision eased some of the margin pressure Royal Mail faced, although issues such as falling letter volumes and fierce competition to deliver parcels remained significant headwinds for the firm.
"(Whistl's decision) implies PostNL made significant losses in the UK and that to the door mail delivery is likely the natural preserve of the incumbent mail operator, Royal Mail," he said.