07 July 2024 , 17:51
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Three more freight flights to go this month as parent company’s CEO Martin Seidenberg pursues transformation
The boss of Royal Mail’s parent company has said it will push on with a transformation of the group despite its £3.57bn takeover, as Royal Mail prepares this month to cut more daily freight flights.
Martin Seidenberg, the chief executive of International Distribution Services, plans “the biggest network change in 20 years” to revamp Royal Mail’s deliveries despite uncertainty created by the Czech energy tycoon Daniel Kretinsky’s takeover, which has been backed by the board.
As part of the overhaul, Royal Mail is halving its daily chartered flights transporting post around the UK to 18 in an effort to reduce costs and cut its carbon emissions. The company cut the first 11 flights last week and will end another three on 20 July and a further four in early 2025.
The move, an element of Seidenberg’s strategy after his arrival last year, represents its biggest ever reduction of domestic airmail, saving 30,000 tonnes of carbon dioxide equivalent a year by shifting the post on to the roads and cutting 1.2m air miles. It hopes to hit net zero by 2040.
Seidenberg told the Guardian: “The flights are part of the wider transformation agenda. Take aside the bid situation – we had a couple of weeks where we had to focus on that one – the organisation continues to focus on transformation.”
Royal Mail shifted the mail from the air to roads in part through an overhaul that has included later shift times of up to 90 minutes in delivery offices, meaning it can move mail by road over longer journey times and still meet next-day delivery targets.
“We have more time to push the mail through the network by road, enabling us to take the flights out,” said Seidenberg, adding that the change meant some customers such as online retailers could now hand over parcels as late as 1am for delivery that day.
The flights cut include routes from Stansted to Belfast and Edinburgh, and Inverness to Edinburgh and East Midlands airport (EMA). The 18 flights remaining include journeys between EMA and Belfast and Edinburgh, and Glasgow and the Scottish islands, with flights typically running between 7pm and 4am.
The 508-year-old company first moved mail by air on passenger services from the south-east of England to Scotland and Northern Ireland in the 1960s, but found their schedules limiting. In 1979 it established a small hub for chartered flights in Speke, Liverpool, rapidly growing from moving 600 postbags to 6,000 daily in just two years.
In 1992 a second hub at EMA was established, with 15 planes carrying 5,000 bags a night. A dedicated network, Skynet, was established the same year, connecting a matrix of hubs around the UK to allow mail to be moved on fewer, larger aircraft.
By 2003 the company had ditched some air services as part of a £90m cost-cutting drive, and three years later operations were closed at Liverpool and Gatwick. A later move to limit road speeds of heavy vehicles pushed some mail volumes back into the air.
During the pandemic the company began trials of delivering by drone to remote corners of the UK, including the Isles of Scilly and the Shetland Islands. But Seidenberg cautioned that regulations around the technology and its limited capacity meant widespread use of drones remained impractical for a “mass production business”.
Kretinsky’s EP Group, which is IDS’s largest shareholder, has offered 370p a share to take over the group, an improvement on an initial 320p bid.
Seidenberg, who is in line to land more than £5m if the takeover completes, declined to comment in detail on the deal but said Royal Mail would benefit from potential investment by EP Group.
He said: “The increase of the price paid a share, which is 73% to where it was before the bid, is quite outstanding. And we do need to realise that this company is still in transformation. We’re making good progress, but also we need to understand the change hasn’t happened yet.
“This company still needs investment going forward. We’ve started with the Parcelshops and parcel lockers, but increasing those networks will require investment. Transformation is always a risk. It’s a business risk.”