The Israel Postal Company is on the brink of collapse and requires an aggressive recovery package after it has accumulated losses of NIS 800 million, over the past two years, and according to sources is mired in a cash flow deficit. The company’s recovery process will be led by its new chairman Michael Vaknin, who assumed the post last week several days before the Israel Postal Co.’s CEO Daniel Goldstein announced he was stepping down after seven years in the job.
Since then Israel Postal’s board of directors has approved an emergency plan that includes reducing the number of VPs from 14 to eight, and merging computerized systems. Estimates are that a much broader streamlining plan will have to be introduced that will see 1,000 employees leave. The Postal Co. has 5,000 employees.
The state, which owns the Israel Postal Co. will need to finance a substantial part of the plan. The Postal Co. has an estimated deficit of NIS 200 million, which may be covered through a state-guaranteed loan.
The company will also reduce management overheads by merging all its functions into one building rather than two. The emergency plan should bring immediate savings of tens of millions of shekels and will not require approvals of the workers committee because most people being laid off are employed on outsourcing contracts.
Israel Postal Co. is due to be privatized, with 40% of its equity sold on the Tel Aviv Stock Exchange (TASE) and the remainder sold to private investors. But the privatization cannot take place until the recovery program is implemented.
In the past the Israel Postal Co. has been valued at NIS 1.2 billion but the cost of laying off 1,000 employees and the recovery plan is estimated at NIS 1 billion.
Published by Globes, Israel business news – en.globes.co.il – on March 3, 2022.
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