OTTAWA — Canada Post's operations lost money for the first time in 17 years in 2011, the Crown corporation reported Tuesday, citing a labour disruption and declining mail volumes as some of the main factors.
Canada Post added there is an "urgent need to transform the business," given the long-term trends of declining mail delivery and high labour costs.
The government-owned operation, which has a mandate to be financially self-sufficient, said its group of companies lost $253 million last year, ending a 16-year streak of profitability.
Canada Post said the combination of rotating strikes and a lockout last June effectively shut down the postal system for 25 days.
Also, there was a 4.6 per cent decline in mail volumes per point of delivery, which it said amounts to 20 per cent over the past five years.
"We have a business model that is no longer working," said Canada Post spokesman Jon Hamilton.
Some of the key ways the company plans on turning its operations around include more affordable labour costs, which it aims to achieve through the collective-bargaining process. As well, it is looking to take better advantage of services related to growing use of technology, such as the delivery of products purchased over the Internet and processing payments for such transactions.
Other factors also contributed to the loss, which was $327 million at its core Canada Post operations. Its group of companies also includes Purolator Inc., SCI Group Inc., and Innovapost Inc.
Canada Post said its "volatile" pension obligations to employees also were costly last year. It said employee pension funds are underfunded by $4.7 billion, and it had to contribute $510 million to this last year, of which $219 million was considered "special payments."
Canada Post said finances were further affected by factoring in an estimated cost from a ruling last year from the Supreme Court of Canada that certain employees represented by the Public Service Alliance of Canada, dating back to 1983, were paid less money than those in comparable jobs.
The estimated figure for this ruling was not released. Canada Post said it is in talks with the union to clarify exactly how much this ruling is going to cost.
The Canadian Union of Postal Workers, which represents about 50,000 Canada Post workers, said the cost of this court decision is thought to be between $150 million and $250 million, meaning it would account for the majority of the loss reported for 2011.
The union, which was involved in last year's labour dispute, also said the corporation itself is largely to blame for losing $60 million during the strikes and lockout last year.
Union president Denis Lemelin said in statement that Canada Post has ignored its ideas for how to improve the business, such as providing longer counter hours, more door-to-door delivery and offering banking services.
"Canada Post management has refused to listen but finds it convenient to blame its workers for a shortfall in revenue," Lemelin said.
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