Royal Mail heads for £200m profit

ROYAL Mail is on course for a dramatic change in its fortunes, with profits for the year to March 31 soaring to nearly £200 million.

The £800 million turnround - last year it lost £611 million - will automatically trigger bonuses for the 200,000 workers.

The key to the recovery has been better relations with the unions. Last month both sides signed a pay-and-conditions agreement that has allowed a redundancy programme to go ahead smoothly.

More than 15,000 workers have lost their jobs in two years and a further 15,000 will go over the next 12 months as the second post disappears. Last May's 1p rise in the price of stamps boosted revenue by more than £90 million, and more letters than ever are being posted

Royal Mail, chaired by Allan Leighton, has also negotiated a deal with Business Post that will enable the private firm to collect mail from customers across the country.

It will then pay Royal Mail 13p per item to deliver it over the 'last mile'. In return, Business Post will be able to use Royal Mail's huge network of sorting and delivery offices and its 160,000 postal workers.

Though the deal marks the end of Royal Mail's monopoly, it has managed to secure agreement that Business Post will not 'cherry pick' its customers.