Britain set to privatize its Royal Mail postal service

By Shan Li

July 10, 2013 12 AM PT

Britain is privatizing its Royal Mail postal service through a public stock offering within the next nine months.

The step is expected as the British government has been giving the Royal Mail a big overhaul in preparation for going public, including paying its whopping $6.9-billion pension fund deficit and bolstering its profit.

So far, so good. Revenue from parcel deliveries was up 13% in the last fiscal year, thanks to the growing popularity of online shopping. Overall profit climbed to $600.5 million, from $226.5 million in the previous year.

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All that success has led Moya Greene, Royal Mail’s chief executive, to declare that the service’s transformation “is well underway.”

Contrast that to the U.S. Postal Service, which is pondering cutting back to only five days of service in order to cut costs. Despite efforts to streamline, the USPS reported a loss of $15.9 billlion in its 2012 fiscal year, more than triple its loss the previous year.

Last year the postal service defaulted on a legally required $5.5-billion payment toward pre-funding its promised health benefits to retirees. Critics have pointed to USPS’s massive healthcare liability as one big reason for its troubles, along with a declining number of deliveries.

Experts say the U.S. Postal Service’s poor financial track record takes any thoughts of privatization off the table.