Why there’s doubt over Royal Mail’s fourth chief in five years, before she’s even started

Royal Mail’s incoming chief executive has not yet stepped foot in the door but she already faces scepticism about her credentials.

International Distributions Services (IDS), yesterday appointed Emma Gilthorpe as the new boss of its Royal Mail service. Currently heading up operations at Heathrow Airport, Gilthorpe is set to assume her role at the start of May.

While the market’s initial reaction to her appointment was relatively positive, it has raised some eyebrows over whether an operations executive with limited union experience can lead a turnaround for the UK’s struggling postal service. The stock has since fallen into the red, down around 0.25 per cent on Thursday morning.

In a note on Wednesday, brokerage firm Liberum maintained its ‘sell’ rating for IDS. Analyst Gerald Khoo explained the decision: “While we were not necessarily expecting an appointment from elsewhere in the parcel industry, and a background in a regulated industry is helpful, we had expected the incoming CEO to have a much clearer track record of delivering significant restructuring in a unionised environment,” he said.

Gilthorpe is stepping into a challenging position at Royal Mail, which has seen a revolving door of leadership. She will be the fourth chief executive in just five years.

Challenges at Royal Mail

Filling the top role at Royal Mail can’t have been easy. Whoever looked at the job will have seen demands pressing from all sides, including financial, regulatory and operational.

“Being CEO of Royal Mail is an incredibly tough job and not one that would appeal to many given the challenges of dealing with a devoted workforce, but sometimes one that is reluctant to refresh working practices, a mail sector in long structural decline and a highly competitive parcels market,” Peel Hunt analyst Alexander Paterson told City A.M..

While planes will always keep landing at Heathrow Airport – one can hope – the number of letters landing on doorsteps is dwindling, and this is beyond Gilthorpe’s control.

And although the volume of parcels may be rising, so is the level of competition, with nimbler services like Amazon, DPD and Hermes stealing market share.

Both of these issues combined have spelled financial trouble for Royal Mail, which posted losses of £1bn last year while also booking a £539m writedown on the company’s value due to the impact of strikes.

The Communication Workers Union (CWU) was something of a thorn in the side of Gilthorpe’s predecessor, Simon Thompson. Industrial action over pay and conditions was a defining subject in Thompson’s two-year tenure at Royal Mail. A deal was eventually reached but Thompson was left bruised. He departed shortly after.

On the unions front, it is calm for now at least, but relationships between management and staff are surely still delicate and a new boss may have to tread carefully.

In November 2023, Royal Mail was fined £5.6m by Ofcom for failing to deliver post on time. Allegations that bosses are encouraging workers to prioritise more profitable parcels over letters, something that Royal Mail denies, also plague the company.

To top it all off, Royal Mail is fighting to reform the Universal Service Obligation (USO), which decides how mail is delivered across the country. It has proposed several measures to “deliver a more efficient and more financially sustainable Universal Service”, in response to Ofcom’s call for input into a national debate.

Is Gilthorpe up to the task?

Gilthorpe’s Linkedin page simply states that she is “chief operating officer at one of the world’s busiest airports.”

The job needs no explaining; it is obviously a difficult one.

When announcing her appointment, IDS gave Gilthorpe a more thorough biography, praising her management of “large, complex and high-profile regulated infrastructure businesses”.

Before Heathrow, she worked in various strategy, policy and commercial roles in the telecoms sector, including at BT and Cable & Wireless. Gilthorpe is also non-executive board member of the Jet Zero Council, a government initiative aiming for net-zero aviation by 2050.

She joined Heathrow in 2009, holding a number of roles there before taking on the mantle of chief operating officer in 2020.

But a recent ongoing scuffle with Heathrow workers may not bode well for the new chief. The airport’s bosses are facing backlash over plans to outsource security roles in a bid to save around £40m, affecting hundreds of workers.

Gilthorpe said that ICTS, a third-party supplier, would oversee Heathrow’s “campus security” control posts. Heathrow assured no job losses, but unions are mulling strikes, potentially disrupting summer travel.

Paterson said: “Emma may not have extensive experience with unions, although there are many unions in aviation, but she will be familiar with the space between a rock and a hard place.”

IDS chief Martin Seidenberg, who revised the group’s leadership structure when he took over , clearly has faith in her.

He said: “Emma has an impressive track record of delivering major strategic change programmes while driving up performance. She will bring a customer- and employee-centric approach to delivering Royal Mail’s transformation for the benefit of all our stakeholders, and I look forward to working closely with her to ensure Royal Mail reaches its true potential.”

Hopefully Gilthorpe is successful because a high quality postal service is good for stakeholders and for the whole of Britain.