An Post on the brink -- but cabinet sources warn there will be NO bailout
Communications Minister Patrick O'Donovan has briefed the Cabinet on the bleak financial realities facing the State's postal service.
The Cabinet was told that without the significant once-off revenue generated from election-related posts last year, when general, local and European elections were held, the organisation would have made a 'substantial loss'. Communications Minister Patrick O'Donovan has briefed the Cabinet on the bleak financial realities facing the State's postal service. Pic: Leah Farrell/RollingNews.ie
Political sources insisted last night that there would be 'no bailout' for An Post despite its deteriorating long-term financial wellbeing.
A Coalition row could be brewing, however, with Minister of State and Independent TD, Michael Healy-Rae, who is also a postmaster, advocating for more funding for the network. Postage revenue has collapsed in line with mail services in other countries.
A recent analysis by consultancy firm Grant Thornton found that, between 2019 and 2023, the level of mail processed by An Post dropped by 25%. Political sources insisted last night that there would be 'no bailout' for An Post despite its deteriorating long-term financial wellbeing. Pic: Dirk Hudson/Shutterstock
Latest company accounts for the company show that cash balances decreased from €45.7million in 2022 to €11.3million in 2023. The boost from the elections masked this with a spokesman for An Post saying their final position was €38million in cash balances.
An Post's Annual Report for 2024 will be laid before the Oireachtas tomorrow, having been presented to Cabinet yesterday.
One Cabinet minister told Extra.ie that the organisation was facing a 'dire financial situation', which was highlighted by cash reserves dropping below €1million last year. An Post's Annual Report for 2024 will be laid before the Oireachtas tomorrow, having been presented to Cabinet yesterday. Pic: File
A separate Government source said last night that 'a decision will have to be made on whether we are willing to fund it or not and what it looks like in a digital age'.
New Economy and Recovery Authority (NewERA), who provide financial and commercial advice to Government ministers and departments, have been actively involved with An Post in assessing its financial future.
'They still have a mail infrastructure for an old-style postal service, so that will be subject to review,' one Cabinet source said. An options paper has yet to be provided to Mr O'Donovan, but one is expected 'imminently'. A spokesman for An Post told Extra.ie that their balance sheet is 'strong with little debt', and that small loans from the European Investment Bank and Bank of Ireland are both 'being fully serviced'. Pic: RollingNews
A spokesman for An Post told Extra.ie that their balance sheet is 'strong with little debt', and that small loans from the European Investment Bank and Bank of Ireland are both 'being fully serviced'.
They added: 'The company has reduced its debt significantly in the past two years – by €48million – including the repayment of a Government loan of €30million from its own resources.
'At December 2024 year end the company had spare cash resources of €38million and undrawn bank facilities of €30million, ensuring it had working capital facilities for its trading operations.'
An Post operates as a commercial entity and does not receive State funding. However, the post office network, most of which are privately owned and run by postmasters under contract to An Post, receives a €10million annual subvention from Government.
An Post is currently in negotiations with the post office network, with the existing contract between the pair, which sees post office providers paid per transaction, expiring this month.
In May, the Irish Postmasters' Union, representing the post office network, made a submission to Government in which it insisted the current €10million in annual funding 'is no longer sufficient'.
The submission by Grant Thornton described the postal network as being 'at tipping point' as they sought a €5million increase in their annual funding.
'The current annual Government investment of €10million, while welcome, is no longer sufficient to secure the network,' the report said.
Speaking to Extra.ie last night, Seán Martin, president of the Irish Postmasters' Union, said that 'up to 400 post offices' would face closure without the increase in funding.
'Speaking at the Oireachtas Committee on Communications, Minister of State at the Department Charlie McConalogue said that 'we're very committed to continue to support the post office network' through the budgetary process.
However, he said this was being done through the €10million allocation. The row has the potential to place the two main Coalition parties on a collision course with the junior coalition partners of Independent TDs.
Minister of State at the Department of Agriculture and Independent TD for Kerry, Mr Healy-Rae, told Extra.ie last night that 'the constant delivery, excellent service, outreach, [customers] entitled to a service every day – from a social point of view… we'll be advocating for €15million'.
Mr Healy-Rae said that the retention of the existing model of service delivery, which sees post delivered five days a week in addition to other services provided, has support across the political divide.
Asked if the Government should support An Post if it was no longer economically viable, Mr Healy-Rae said that he hoped that it could be 'made to be viable by directing more business through it'.
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