* Royal Mail to cut net 1,300 managerial and HQ jobs
* Expects to eventually save 50 mln stg a year
* Unite trade union says industrial action an option
* Restructuring to cost 100 mln stg, Royal Mail shares dip
(Adds details, shares, shareholder and analyst comment)
By Neil Maidment
LONDON, March 25 Just five months after its
privatisation, Britain's Royal Mail postal service has
announced plans to cut a net 1,300 jobs to reduce costs,
prompting a threat of industrial action from a trade union.
Royal Mail, sold off last October in Britain's biggest
privatisation for decades, has shed 50,000 jobs in 11 years as
it tries to adapt to the rise of electronic mail and a shift
from traditional letters to more parcel deliveries.
The group said on Tuesday it planned to cut 1,600 managerial
and head office jobs, offset by the creation of around 300 new
or enhanced positions, in order to save an eventual 50 million
pounds ($82.5 million) a year.
The Unite trade union, which represents the majority of
those staff to be affected, called the cuts ruthless and said
industrial action was an option.
"Unite is demanding a commitment to no compulsory
redundancies on fair terms and an effective method for
redeployment within the restructured organisation. If Royal Mail
refuse we will have no alternative than to consider a ballot for
industrial action," its Royal Mail officer Brian Scott said.
Royal Mail, which employs about 150,000 staff, only narrowly
avoided strike action from frontline postal workers at Christmas
after agreeing a new deal on pay and terms.
The company, which said the latest cuts would not affect
postmen or women, has rarely been out of the headlines since the
government sold off part of its stake.
With its shares surging almost 80 percent above the offer
price, opposition lawmakers accused the government of selling
the stake off too cheaply and short-changing taxpayers.
The job cuts won the backing of some investors.
"We see this as just another phase in their cost-cutting to
evolve the business," Chris Murphy, UK equity income fund
manager at Aviva Investors, a top 20 shareholder in Royal Mail,
told Reuters. "We still think it's a well run company with
strong management and we have faith in what they're doing."
Cantor Fitzgerald analyst Robin Byde also welcomed the cuts
as a necessary step in a restructuring that had further to run,
although he was wary of potential industrial action.
"The net job cuts proposed are slightly higher than we had
forecast," he said.
"We think that there is risk of industrial action."
At 1015 GMT, Royal Mail shares were down 1.4 percent at
576.18 pence, the biggest fall in the benchmark FTSE 100 stock
index, although they are still around 75 percent higher
than their government sell-off price of 330 pence.
Asked about the reassurances sought by Unite, Royal Mail
said it had a track record of achieving change through natural
turnover, redeployment and voluntary redundancy where possible.
The group said the job cuts would deliver around 25 million
of cost savings in 2014-15 and would help it to respond to
increasing competition and higher pension charges.
The plan will result in a one-off cost of 100 million
pounds, taking the total costs of its transformation plans to
230 million pounds for 2013-14, 70 million pounds more than
Royal Mail had previously expected.
However, the group said this would have no impact on its
Royal Mail, which will announce full-year results on May 22,
said underlying trends were broadly in line with those seen in
the first half, when rising parcel revenue and cost cuts helped
it to almost double operating profit after transformation costs
to 283 million pounds.
($1 = 0.6065 British Pounds)
(Editing by Kate Holton and Mark Potter)