Will the post office shut down?

Strikes conducted by the Communication Workers Union (CWU) has resulted in the South African Post Office (Sapo) posting a loss of R1.3 billion by the end of the financial year in March according to reports.
 
The strike lasted three months and ended in November 2014, when Sapo announced that the government had bailed it out of financially difficulty.
 
"Labour unrest during the year under review [2014] also contributed to the loss in revenues earned and negatively impacted our operations and customer service. Additional costs were also incurred to clear backlogs resulting from the strike action," said Mlu Mathonsi, group chief operating office of Sapo in the company's annual report.
 
However, the strike did more than just halter work. There were reports of damage to property, and companies were forced to use Sapo's competitors to distribute their post.
 
"During the 2013/2014 financial, the South African Post Office experienced three waves of industrial actions that resulted in the loss of 59 days of business operations.
 
"In addition to losing revenue that is estimated at R236 million, property was damaged and vandalised and non-striking employees were intimidated and assaulted," said Sapo.
 
Losses
 
At the end of the financial year last year, Sapo also announced large revenue losses, and these losses were greater than in 2013.
 
"Tough trading conditions prevailed during the period under review [2014] with further losses in revenue and customers contributing to the net loss of R 358.88 million posted for the year ended 31 March 2014. This represented an increase of 6.5% from the restated net loss position of R 337,12 million for the prior year," said Mathonsi.
 
The report went on to highlight that Sapo was facing difficulties for a number of reasons, which is also contributing to the loss in revenue.
 
"The SA Post Office faces several challenges that impact the business's ability to deliver against its mandate and license requirements. These include, negative customer perception, uncertain financial sustainability due to declining revenues, loss of Universal Service Obligation (USO) subsidy and a large fixed cost base," said the report.
 
Future plans
 
Sapo said that it plans to change the postal system in South Africa back into a profitable enterprise.
 
"The 2014/15 – 2016/17 Strategic Corporate Plan of the SA Post Office is aimed at addressing these business challenges facing the organisation and mapping out a new path that will see the organisation reposition itself, into a profitable, self-sustaining, efficient and customer centric organisation," said Sapo.
 
However, this plan was set out before the reported losses of March this year. Whether or not the post office will be able to remain open, and profitable, as it plans, remains to be seen.