Ed Davey, the postal affairs minister, is said to be mulling a full-privatisation as one of several options being considered to address the firm’s pension deficit and declining mail volumes.
The coalition Government said last month it would seek capital for a part-privatisation of the Royal Mail but it is now understood to be looking at flotation as well as private equity investment or a cash injection from a rival postal operator.
Minsters have vowed to keep the Post Office network in public hands.
Davey told The Daily Telegraph that the financial situation at Royal Mail will become “increasingly dire” if no action is taken.
“If we don’t transform Royal Mail, it will be dragged down by a lethal combination of falling mail volumes, low investment and potentially one of the worst pension crises for employees in UK history”.
His assessment comes despite Royal Mail recently posting a 26% rise in profit for the last financial year. The improved performance was driven by modernisation and efficiency improvements, it said.
Talk of full-privatisation follows the appointment of Canada Post head Moya Greene as its new chief executive last month.