With no sign of an agreement with the Communication Workers Union (CWU), and the threat of further strike action hanging over the beleaguered postal operator, there are mounting fears that Royal Mail management could opt for the 'nuclear option' and put the business into administration.

Monday’s online chatter about a potential administration move had morphed into national media headlines by midweek. 

In an update to more than 100,000 postal worker members today, CWU general secretary Dave Ward said: “Our members will have seen in the last 24 hours reports surfacing in the media that effectively Royal Mail are threatening the union with administration if we don’t reach agreement with them on the changes that they want.

“I want to reassure our members. We’re not reckless people. The position that we’ve reached on their finances is down to the company and the way that they’ve dealt with this dispute right from the start,” he stated. 

“They need to start answering and fronting that up themselves, rather than trying to place that pressure on our members.

“At the moment it’s important that the pressure goes back onto Royal Mail to answer truthfully where they really are on that point.”

Royal Mail is part of listed PLC International Distributions Services (IDS), which would need to make a Stock Exchange announcement if any part of its operations were to enter, or be likely to enter, insolvency. 

The IDS share price has been largely unaffected by the uproar. It has slipped by 1.78% over the past five days, to 225.70p (52-week high: 363.90, low: 173.65p). 

A Royal Mail spokesperson told Printweek: “If there was any material change to what we said in our most recent trading statement we would have a regulatory obligation to communicate.”

The spokesperson added: “Throughout the dispute we have highlighted the need for Royal Mail to transform, and been very clear about the damaging impact of strike action.

“That is why we are doing all we can to get agreement with the CWU, including making numerous improvements to our offer throughout the negotiations with the CWU, supported by Acas and Sir Brendan Barber. We remain committed to getting the right deal, which secures the future of Royal Mail and its workforce – that would be the best outcome for our people, our customers and our shareholders.”

IDS’ financial year has just ended. The group had previously flagged that it expected Royal Mail to make an adjusted operating loss of between £350m-£450m, with the strike action so far costing the business an estimated £200m. 

A voluntary redundancy scheme has been over-subscribed, with scores of long-serving postal workers posting on social media that they are relieved to be leaving the business. 

According to the CWU the Royal Mail board is meeting today to discuss the crisis and whether an agreement can be reached. “They must choose between ending the disastrous approach that has alienated its own workforce which means reaching an agreement that is in the interests or our members, customers and company –  or they continue along the path that will destroy the company,” the union stated. 

If Royal Mail were to go into administration, it would be via a ‘special administration’ – used for business that provide a public or statutory service because of the potential far-reaching economic effect – and requiring a government-appointed administrator under the Postal Act. 

The Royal Mail service dates back more than 500 years. The business was 90% privatised in 2013, at 330p per share.