The federal government is loaning Canada Post more than $1 billion to help the struggling Crown corporation stay solvent and keep operating, in the wake of a bitter strike last year.
The government announced Friday that it’s loaning the $1.034 billion so Canada Post can “maintain its solvency and ensure it can continue its operations.”
Canada Post says it will receive the repayable funding through the 2025-26 fiscal year.
The announcement, from Public Services and Procurement Canada, came just a day after Canada Post parted ways with three senior executives, including its chief financial officer, and eliminated a total of five senior roles in the wake of a nationwide strike last year.
It also comes just a few days before the company’s CEO and new chief financial officer speak to a government-appointed industrial inquiry commission in Ottawa about the Crown corporation’s future.
“The cash injection, which is a temporary measure and which Canada Post will be required to repay, will provide a much-needed financial bridge to ensure Canada Post can continue to serve Canadians while working with the government on the changes required to ensure the long-term viability of Canada’s postal system. The cash injection remains subject to further approvals,” the government said in its announcement.
Without the money, Canada Post said it would have burned through its cash reserves by the second quarter of this year.
The Crown corporation said the money will help temporarily, but won’t fix long-term financial woes.
“This approach will maintain continuity of Canada Post’s operations but will not solve the Corporation’s structural issues,” Canada Post said in a written statement. “It will, however, provide a temporary financial bridge while Canada Post and the government work together on a plan to secure the long-term viability of a service that millions of Canadians consider essential.”
It’s unclear whether the cash will be used to help pay back $500 million in Canada Post bonds which come due in July.
While Canada Post is a Crown corporation, under the Canada Post Act, it is mandated to be self-sufficient financially.
There was no immediate response to a request for comment from the Canadian Union of Postal Workers.
Roughly 55,000 CUPW members went on a month-long strike late last year before being ordered back to work by the Canada Industrial Relations Board following a request from federal labour minister Steven MacKinnon.
MacKinnon also appointed an “industrial inquiry commission,” which will have until May 22 to probe potential ways to reach a new contract agreement.
Until then, the strike, which began on Nov. 15, will be on pause and workers and management will operate under the terms of the existing contract, which expired more than a year ago.
The union initially called for a cumulative wage hike of 24 per cent over four years, as well as suggesting that Canada Post expand into banking. The union later lowered its wage demands to a 19 per cent increase over four years, but the company still balked.
The company is seeking to provide weekend deliveries and have a greater share of its staff working part-time. The union wants full-time workers to do weekend delivery, while the company wants to hire part-time staff to do the job.
The bitter strike came amidst dwindling revenues for Canada Post, which lost $3 billion between 2018 and 2023, and has estimated it will lose $900 million in 2025 alone.
“Without changes and new operating parameters to address our challenges, we forecast larger and increasingly unsustainable losses in future years,” the company said in its 2023 annual report.
The report also said that Canada Post delivered 2.2 billion letters last year, down from 5.5 billion in 2006.
“A system built to deliver 5.5 billion letters a year cannot be sustained on two billion letters,” the report said.
The strike also came during what is usually a peak revenue period for the Crown corporation, when Canadians send and receive holiday cards and packages. Instead, much of that parcel business went to other companies, including Canada Post-controlled Purolator and other couriers.
According to an internal memo sent to staff Thursday and obtained by the Star, chief financial officer Jan Faryaszewski, senior vice president of corporate communications Jo-Anne Polak and vice president of business transformation Ian Kerr have left the company effective immediately.
Canada Post CEO Doug Ettinger said in the memo that the changes will “enhance decision-making by reducing layers and bringing new, strategic perspectives to the table.”
“These decisions were not easy, but they reflect the financial realities we face as a corporation and are effective immediately,” Ettinger wrote.
In a written statement to the Star, Canada Post said the decision to shake up the executive suite wasn’t related to the strike but was a reflection of the organization’s “significant financial and operational challenges.”
“The company informed employees on Thursday that it had completed a reorganization of the senior leadership team and was eliminating 5 senior executive positions as a result. As well, any resulting vacancies were filled internally,” the statement said.
