An Post gets the stamp of approval and delivers profit
Challenge now is to provide public service in an open market without becoming unstuck
The local Post Office was traditionally at the heart of community life but as times have moved on, many have now closed down
For a service provider that was on its knees just a few years ago, An Post has engineered a remarkable reversal of its financial fortunes.
Between 2001 and 2003 it made accumulated losses of €67m, having reported a loss of almost €43m in 2003 alone. There was little doubt the organisation was fit for intensive care.
By late 2003, it was selling assets simply to meet its wage bill. For the first time in its history, it resorted to an overdraft, using the facility during the final weeks of that year. An Post had become a financial basket case.
In early 2004, the then chief executive, Donal Curtin, said the company was on a "knife edge". He sold off the loss-making SDS delivery business and, in the process of shaking up An Post, alienated the unions. But in 2004, An Post returned to the black, making a profit of over €11.6m from continuing operations. In 2005, that rose to €16.2m, but in 2006 it slipped to €14.6m before exceptional items.
However, the overall profit figures were skewed in 2005 and 2006 by the sale of a site on the Naas Road in Dublin, which resulted in a net gain of €94.7m, and by a further €59.3m gain from the company's Post TS UK and An Post Transaction Services businesses, which were sold to Alphyra. An Post accounts have yet to be released for 2007.
For years the organisation, faced with the prospect of a completely liberalised market from 2011, has been hatching plans to reduce overheads and boost revenue.
That has resulted in its joint venture with Belgian-Dutch bank Fortis, but also in other attempts to revamp the traditional notion of the service.
Among the ideas previously floated has been the elimination, in some areas at least, of direct-to-door postal delivery. Customers might instead be expected to collect their post from the local post office.
None of this has happened yet, and it could an unemployable strategy as An Post gradually reduces the number of rural post offices, in particular, with a view to streamlining the organisation and preparing for a tougher environment.
But part of its plans to shrink its footprint and save money has incensed some interests, particularly some so-called postal contractors, who provide services in mainly rural areas.
There are currently just under 1,300 such outlets, typically located in local shops such as newsagents.
Last week, the St Vincent de Paul agency said that it was concerned over the number of contract post offices that have closed, claiming that in nine counties including Leitrim, Cavan, Sligo and Westmeath, at least 30pc of contractor-operated post offices have ceased business since 2002.
But An Post maintains that most of those closures have been the result of existing operators choosing to retire.
Angus Laverty, public affairs manager with An Post, says that when contractors decide to retire, the company makes an effort to find a new operator, but that in many cases no-one wants to take on the job.
He admits that the post offices have been a crucial link in the social fabric of rural communities, but adds that the network is no longer sustainable in its current form due to sweeping demographic changes that have seen an overall higher percentage of people living in urban areas.
He was unable to clarify whether the contractor-operated offices are generally profitable or not, citing the symbiotic nature of the business with, for example, newsagents.
"(The businesses) feed off each other. People come in to collect their pension, for example, and then buy a newspaper or other necessities."
John Kane, general secretary of the Irish Postmasters' Union, however, points out that most retiring operators aren't replaced because their postal contract business doesn't turn a profit.
He also believes that the government is unlikely to tackle the issue, perhaps by introducing public service obligation (PSO) status for some post offices, which would enable it to provide some level of subvention.
"I'd say about half the existing contract-operated post offices need some sort of subvention in order to help them survive in the longer term," said O'Kane, who added that at the current rate of closures he would expect the number of such post offices to decline significantly over the next few years, perhaps dwindling to less than 1,000.
UK-based PA Consulting is expected to complete, within the next couple of weeks, a preliminary analysis of An Post's network. That will begin an undoubtedly longer process by An Post to pin down exactly how many post offices it believes it needs to operate effectively.
But An Post's semi-state mandate is to make money. In its defence, that's what it's been doing since 2004. Kane's view is that its network should retain its function of acting as a cohesive to the rural social fabric, even if that means some post offices are operated at a loss. However, until An Post is told otherwise, it will continue to deliver a strategy that will ensure its profitability.
The company has even acknowledged that if the government was to introduce a PSO order with EU authorisation for some of the post offices, then it would have no issue in some outlets being operated under such terms.
Such a policy would have to be initiated by Eamon Ryan, the Minister for Communications, Energy and Natural Resources. Kane isn't holding his breath, however. An Post, like many semi-states, is a political hot potato that successive ministers seem to believe is best left in the oven.
"I've spent years lobbying various ministers with responsibility for An Post to stem closures of local post offices," he says. "They haven't listened and I don't think it's going to be a high priority for Eamon Ryan either."
The rural post office now seems destined to become a rare breed.
- John Mulligan
