Canada Post reported a $129-million loss on Thursday in its latest quarter, as growth from online shopping package deliveries did not make up for the steep losses from declining letter mail volume.
The federal Crown corporation and its subsidiaries, known collectively as the Canada Post Group, said despite a parcel delivery revenue increase of $32 million, the company is on track to post a "substantial loss in 2013."
"With historic shift away from paper-based communications, the corporation's current business model does not allow it to achieve sufficient profitability and cash flow to support its operations," a statement from Canada Post on Thursday said.
The loss comes at a time when letter mail, which generates approximately 50 per cent of Canada Post's revenue, continues to fall. For the third quarter, "transaction mail" or letters, bills and statements fell by 73 million pieces compared to the same period last year.
Canada Post also cited a mostly fixed operating cost model “required to meet its service mandate to a growing number of addresses despite volume declines.”
Canada Post said it was able to reduce its labour costs by $65 million, or 2.7 per cent in the first three quarters compared to the same periods in 2012.
The company, a Crown corporation, said based on current financial projections, it is exploring options with its “shareholder” -- the federal government -- to address "liquidity challenges.”
It said it would need an “estimated $1 billion” by the middle of 2014 just to meet its pension obligations.
“We need to adjust and we need to do it quickly,” Canada Post spokesperson Jon Hamilton told CTV News Thursday.
Options under consideration include the requesting additional pension regulatory relief and new financing for 2014.
A government spokesperson told CTV News there are no plans to lend the corporation money.
Canada Post has long been eyeing delivery cuts and closing retail outlets. The union says the moves suggest they’re giving up on rural Canada.
“When a big business like Canada Post is thinking of shrinking to really reduce services, it’s like deciding to die,” said Denis Lemelin, president of the Canadian Union of Postal Workers.
The corporation’s subsidiaries -- Purolator, SCI Group and Innovapost -- all posted quarterly profits.
The Crown corporation employs about 68,000 workers and delivers 10 billion pieces of mail and parcels annually.
Other postal services around the world that are facing the same crisis are adjusting their business model.
The U.K.’s Royal Mail recently went public and share prices soared. The U.S. postal service recently cut Saturday delivery and is said to be eyeing a plan to deliver alcohol to residents by mail.
With a report by CTV News’ Richard Madan
