The Royal Mail share price, also known as International Distributions Services PLC (LON: IDS), was trading sideways as the Communication Workers Union (CWU) is scheduled to go on strike on Thursday, 24 November, and Friday, 25 November.
YOUR CAPITAL IS AT RISK. 68% OF RETAIL CFD ACCOUNTS LOSE MONEY.
The CWU also plans to strike on Wednesday, 30 November, and Thursday, 1 December, with more strikes planned for December 9, 11, 14, 15 and December 23 and 24, which could cause massive disruptions for the parcels and mail delivery company.
Royal Mail, the British subsidiary of International Distribution Services, said it lost over £100 million due to the strikes organised in the year’s first half. It is set to incur more losses if the planned strikes go ahead.
The company made a last-ditch effort to prevent the planned strikes by upping its pay offer to 9% for the CWU workers as opposed to its previous offer of a 5.5% increase with a £1,000 one-time lump sum offer. However, the CWU has rejected the offer and has threatened to proceed with the planned strikes.
On its part, Royal Mail has said that it will call off the negotiations if the CWU goes ahead with its planned strikes, and it appears that the two sides have reached a stalemate. However, there is still hope that the CWU will call off the strikes at the last minute, giving both sides a chance to resume negotiations.
Royal Mail’s management team has argued that it does not have the financial headroom to accommodate much higher salaries for its staff, given the challenging operating conditions. As a result, the company made a £219 million loss in the first six months of its fiscal year ending on 25 September 2022.
According to most analysts, the company was still headed for a loss in the year’s first half, even without the industrial action that worsened an already challenging situation. As a result, IDS is considering all options, including divesting its profitable GLS International unit from Royal Mail.
This is a tricky situation since the workers’ salary demands have merit, but can the company afford to pay more? Only time will tell.
*This is not investment advice.
Royal Mail (IDS) share price chart.
The Royal Mail share price was trading sideways amid looming industrial action starting tomorrow.