Correios’ bloodshed continues with no end date. The public company is accumulating serial losses. From January to September, the deficit was 6 billion reais. Desperate for capital, it eventually managed to raise 12 billion reais from two state banks and three private banks, at a cost close to the maximum allowed for Treasury-guaranteed loans. With oxygen guaranteed to survive for some time, the government should prepare to sell the company to the private sector. Repeated administrations have already proven incapable of providing profitable postal and delivery services. But that’s not what President Luiz Inácio Lula da Silva thinks. This week, Lula declared that “as long as he is president, there is no privatization.”
- Email: The Treasury gives approval and will provide a guarantee for a loan of 12 billion reais
The reluctance to recognize the seriousness of the situation is due to the certainty of further losses and the need for new loans in the future. Any government proposals aimed at reversing the Correios crisis are unlikely to succeed. Under the restructuring plan, the state-owned company will settle its outstanding debts, reduce operational and personnel expenses and form partnerships to expand its services. As a next step, you will hire a consulting firm and an investment bank to present solutions. One of the alternatives considered is to transform it into a mixed economy company, with public and private capital, like Petrobras or Banco do Brasil.
Even in the lucrative finance and energy sectors, state-controlled companies are worth less. It’s hard to imagine the value of Correios’ shares in the unlikely event that the company is reorganized and there is some interest in the IPO. It is not even necessary to predict the extent of the difficulties. Just follow the news. Since Wednesday, postal workers have been on strike. On Thursday, Minister Kátia Magalhães Arruda, of the Superior Labor Court, was forced to determine that the blocked unions kept 80% of their workforce active.
- Negotiation: Correios offers an inflation adjustment to employees, but without a turkey voucher
Faced with obvious financial difficulties, Correios proposed an adjustment of salaries based on inflation, but without the payment of the end-of-year “turkey voucher”. Enough to arouse the revolt of a category accustomed to the complacency of the government, confident in the influence of its union with Lula. The unionists want the benefits to be maintained, such as 70% additional vacation, 200% weekend payment and the “turkey voucher” of R$2,500. Faced with such demands, there is no chance of negotiating job cuts or increased productivity. This situation helps to understand why the most profitable postal companies in the world are private. Without cost optimization, there is no formula capable of getting a company out of its losses.
Lula’s ideological resistance to privatization condemns Correios to remain hostage to the unions and the country to face an inefficient and insatiable public enterprise to capture debts always guaranteed by the Treasury – and paid by the taxpayer. The distance from private competitors is only increasing. Each year of postponement of privatization represents more losses and more devaluation of the brand.
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