The High Court has been told that the communication regulator's refusal to grant an increase in the price of stamps for standard letters threatens the financial recovery of An Post and could lead to losses of €70m by 2010.
An Post was today granted leave to challenge the ComReg decision. The regulator in December had refused to sanction a 12 cent rise which would have increased the cost of stamps for standard letters to 60 cent.
An Post CEO Donal Curtin said that ComReg has effectively imposed a price freeze on the obligatory and loss-making letter post service of An Post, a company which is at risk and whose entire recovery plan is dependent on a price increase. He said ComReg has put An Post back on a financial knife edge in the immediate future.
In a lengthy affidavit before the High Court, Mr Curtin said that much of An Post's recovery plan was constrained by legal obligations in relation to workers' pay. Last November the Labour Court fixed the future wage costs of the company.
He said the refusal of the price increase also had grave consequences for the provision of postal services in the state, especially the standard letter post service.
Donal Curtin was appointed CEO of An Post in 2004. In August 2003, ComReg had sanctioned a letter stand price from 41 to 48 cent. In May 2005, An Post proposed further increases in the cost of sending letters, flats and packets but while ComReg had sanctioned increases, on conditions, for envelopes and packets, it had refused to sanction an increase from 48 to 60 cent in stamps for letters.
If An Post does not achieve an adequate price increase, Mr Curtin said the company would lose at least €6m this year, break even next year (due in part to expected revenue from the general election). Losses will grow to €5m in 2008, €30m in 2009 and €70m by 2010.
