The impending Royal Mail sell-off has been brought back to light by the coalition government that signals that the state owned postal provider may soon be in need of private capital.
The announcement came at the same time that Royal Mail announced that mail volumes had decreased which caused a 26% increase in operating profits up to £404m.
The decision to privatize Royal Mail was led by the Conservative Government and was met with tensions from the Communications Workers Union and staff members. It also met with opposition from the Liberal Democrat MPs.
Conservatives previously felt that 49% of the Royal Mail stakes should be sold to private equity investors, and it seems that now it is likely the shares will be up for auction.
However, the future of Royal Mail in general is still in jeopardy given that there is not yet a solution to address the £10b pension fund deficit.
Royal Mail stated that it was able to improve profits in the March year to year end analysis even though mail had fallen in volume by about seven percent.
Over a third of all letters that are posted within Britain are now handled by private post companies.
In addition, many customers are now choosing to pay utilities and other bills via electronic formats such as emails and texting that utilize automatic withdrawal.
Chairman of Royal Mail, Donald Brydon, stated that given the poor economic conditions last year’s small increase in profit was a positive sign.