Czech Post is in a miserable situation and is threatened with insolvency

According to Czech Interior Minister Vít Rakušan (STAN), the Czech Post may go into insolvency at the end of the year. Last year, the company reported a loss of CZK 1.5 billion, Rakušan said at a press conference in the Chamber of Deputies on Wednesday.

“We are facing four scenarios. I will automatically reject the first one, but the idea is that if we do nothing, the Czech Post will go bankrupt and end up in insolvency. The next scenario is a controlled insolvency, where we say we don’t need Czech Post. Another legitimate scenario is to sell it. And the fourth scenario is that it has to change,” he said, adding that it is the last scenario the Czech Republic will take.

The ministry, together with the management of the post office, is preparing a transformation project that will consist of splitting the company into a state enterprise that provides essential services ordered by the state and a commercial part that provides parcel services or logistics. The legislative preparation for the transformation should be completed by mid-year, and the company’s division should begin in autumn.

“By 2025, we should be operating under a new scheme that ideally brings better services and allows one part of Czech Post to generate a profit. We are now discussing the search for the most suitable financial model for the transition period, so there is no fatal financial problem,” the interior minister said.

As part of the preparations for the transformation, the Czech Telecommunications Office (CTU) has already proposed to reduce the minimum number of post office branches from 3,200 to 2,900 up for comment. “This will not affect post offices in villages where there is only one post office, but branches will be opened in cities where the network is more extensive,” Rakusan told a press conference.

He added: “In Pardubice, for example, the number of post offices will drop from 13 to nine.” He said the move would not mean a reduction in the availability of services, as the post office will look for other ways to serve. He mentioned, for example, the development of a network of partners.

At the same time, however, it logically means laying off employees. “It will, of course, mean that their number will have to be reduced adequately to match the number of branches,” he announced.

Together with the ministries of finance and industry and trade, the Austrian wants to find a financing model that would help the post office bridge the next two-year transition period. By 2025, he wants the post office in the new scheme already wholly split, with the commercial part profiting.

As part of the company’s division, the minister said, it will be necessary to find a workable financial model for the amount that provides essential services ordered by the state. These include the delivery of letters or pensions throughout the country or an accessible branch network. At the same time, however, both parts of the company should develop new modern services, such as the online ordering of parcels or booking a visit to a branch electronically for a selected time.

In recent years, the Czech Post has been operating in the red. The year before last, it halved its loss to CZK 681 million. In the previous year, it posted a loss of CZK 1.37 billion. Last year, after approval by the European Commission, the state was reimbursed for the costs of providing essential services for the previous four years of CZK 6 billion. It had to use much of the money to repay operating loans.