Australia Post reveals grim warning on letter business after $200 million loss

Letter deliveries risk being cut in half after the nation’s postal service has issued a grim warning after recording its first full-year loss since 2015.

Letter deliveries could be slashed by half if a new trial by Australia Post is rolled out across the country.

Under a new trial, which will be expanded in coming months, regular letters will only be delivered every second day, while express post and parcels will still be lived five days per week.

The change comes after Australia Post revealed it had lost $384m on its letter businesses.

On Thursday, Australia Post announced a loss of $200m for the 12 months to June 2023. It’s the second time that the service has recorded a loss since it was established as a government enterprise in 1989.

As the group’s operations transition towards parcel delivery, rather than letters, profitability has been increasingly strained.

Currently, the average Australian household receives only 2.2 addressed letters each week, down from 8.5 each week in 2008. This number is expected to almost halve in the next five years.

Australia Post’s letter business lost $384m in FY2023. Picture: NCA NewsWire / Kelly Barnes

But under community service obligations, Australia Post is required to maintain 4000 post offices. In the 2022 financial year it had 4310 post offices, 2513 of these in rural and remote areas, which it claims cost more than $1.3bn to run.

While Australia Post’s letter business suffered heavy losses, its parcels and services business continued to perform strongly, recording revenue of $7.3bn for the year.

“The headwinds Australia Post is facing into aren’t new,” Australia Post chief executive and managing director Paul Graham said.

AusPost chief executive Paul Graham called on government to deliver regulatory changes to make AusPost a profitable venture. Picture: NCA NewsWire / Christian Gilles

“We have a laser-like focus on simplifying our business, we’re stripping out the complexity accrued over a number of years and investing in our key growth area of parcels.

“We now have a distinct two-speed business, with our Letters business weighing heavily on our eCommerce-driven Parcels business, retail and other services.”

Amid increasing letter losses, Mr Graham called on the federal government to pursue regulatory reforms to enhance the service’s viability.

A stamp for a standard letter costs $1.20 at the moment.

“We have a clear plan and we’re doing everything we can within our control, however we need regulatory support,” he said.

In March, Communications Minister Michele Rowland announced the government would undertake a sweeping review into Australia Post to ensure it remained financially viable.

Originally published as Australia Post reveals grim warning on letter business after $200 million loss