Canada seeks plan from postal service to stem big losses

Wed Aug 28, 2013 5:24pm EDT
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

By David Ljunggren

OTTAWA (Reuters) - The large losses being racking up by Canada's postal service are of great concern to the government and it wants to see Canada Post's plans for stemming them, an official said on Wednesday.

Canada Post reported a loss on Tuesday of C$104 million ($99 million) for the second quarter of 2013 and said it was on track to run short of cash by the middle of next year.

Like the U.S. Postal Service, Canada Post is suffering as customers switch to digital communications. Canadian mail volumes fell by 6.3 percent from the second quarter of 2012.

The postal service's other big challenge is a C$5.9 billion deficit in its pension plan.

Canada Post - which has a mandate to be self-financing - is an arm's length corporation that reports to Parliament through the office of Transport Minister Lisa Raitt.

"We are very concerned that they are posting significant losses," said Raitt's spokeswoman, Ashley Kelahear. "The minister has met with Canada Post to request their plans for rectifying the financial under performance."

Canada Post says it is looking at a number of ways to save money, such as cutting back on deliveries, raising prices and relaxing delivery standards. Last year it signed a deal with the Canadian Union of Postal Workers to reduce labor costs by lowering wages for new hires and freezing wages for a year.

"We have a 19th century business model that we have to pull into the 21st century ... we are exploring all options and clearly talking to the government about those options. We haven't landed on anything yet," said Canada Post spokesman Jon Hamilton.   Continued...

Mail trucks are seen as they are parked behind a fence after the Canadian Union of Postal Workers (CUPW) were locked out at a Canada Post sorting facility in Toronto, June 15, 2011. REUTERS/Mark Blinch