France Post will receive 500 million euros in annual government subsidies

The French government recently announced that it will provide La Poste with at least 500 million euros each year to subsidize the severe losses of the universal service caused by the sharp decline in mail volume.

Previously, France's postal universal service had not received government subsidies and had been in a loss-making state since 2018. In 2020, due to the structural decline in mail business volume caused by the spread of the new crown pneumonia epidemic, the universal service deficit rose to 1.1 billion euros. The government expects that the universal service will lose 1 billion euros each year in the next few years.

In 2020, France Post's mail business lost 1.425 billion euros, mail volume fell by 18%, and mail revenue fell by 13%.

French Prime Minister Jean Castex announced that the government will provide "500 million to 520 million euros" per year to subsidize the operating costs of French Post starting in 2022. This government subsidy must be approved by the European Commission.

Jean Castex said the COVID-19 pandemic has exacerbated the decline in letter business and seriously undermined the financial balance of the universal postal service.

As part of the universal service, La Poste is legally obliged to deliver letters six days a week throughout the country. The public service contract also requires La Poste to maintain a network of 17,000 "contact points" across the country, as well as provide banking services and a nationwide newspaper distribution service.

In response, La Poste welcomed the government's decision, saying the country is actively fulfilling its commitment to the four "public service missions."

Philippe Wahl, CEO of La Poste, said: "The state subsidy fully proves that La Poste and its employees play an important role in serving the whole society. This will motivate La Poste to continue its efforts to continuously improve the quality of its services."

In addition, starting in 2023, La Poste has been authorized to introduce a slower mail service (D+3) to complement the next-day priority service for urgent communications. This will effectively respond to the downward trend in business volumes and reduce the carbon footprint.

The six-day-a-week delivery frequency, affordable prices and network of contact points will all remain.