Our financial picture
Canada Post’s significant financial challenges continued to mount in 2024 as the Corporation was headed for insolvency. The postal service is at a critical juncture in its history. Its long-standing role as a vital, publicly owned national infrastructure for Canadians and Canadian businesses continues to be under significant threat.
The company has a responsibility to report to Canadians about its financial picture and its ability to maintain operations on a going-concern basis and in a financially self-sustaining manner.
Losses continue to mount
Canada Post has recorded seven consecutive years of significant losses. These losses have been fuelled by rapid changes in the postal and parcel delivery sectors, along with outdated operating, regulatory and policy parameters that impede the company’s ability to evolve and compete.
In 2024, Canada Post recorded a loss from operations of nearly $1.3 billion. The loss from operations excluded non-recurring gains and dividend income from the divestitures of SCI Group Inc. and Innovapost Inc. in the first and second quarters, respectively, of the year. Since 2018, Canada Post’s cumulative losses from operations are more than $4.5 billion.
Overall, the Corporation recorded a loss before tax of $841 million in 2024, widening by $93 million from the $748-million loss before tax in 2023. The loss before tax factors in the non-recurring gains and dividend income from the divestitures of SCI and Innovapost. From 2018 to 2024, Canada Post lost over $3.8 billion before taxes. The status quo is clearly not an option, as our outdated operating, regulatory and policy framework must change.
Canada Post segment profit (loss) before tax
(in millions of dollars)
Preventing insolvency with repayable funding from the Government of Canada
To prevent insolvency in mid-2025 and ensure Canada Post can continue operating, the Government of Canada announced in early 2025 it would make available to Canada Post up to $1.034 billion in the government’s 2025-26 fiscal year.
While the repayable funding is a temporary measure, it provides a much-needed financial bridge that maintains continuity of operations in the short term. The funding will ensure the continuity of postal services and continued stability for the workers who depend on their pay and benefits. Any cash provided will be on an as-needed basis to pay non-discretionary obligations.
The funding does not solve the Corporation’s structural issues. Despite recent stamp price increases and other actions taken to control costs and increase revenues, Canada Post would fall below its necessary operating cash requirements in mid-2025 without the funding.
This short-term financing ensures Canada Post can continue to serve Canadians, while working with the federal government on the significant changes required to ensure the long-term viability of the postal system.
Financial impact of the labour disruption
The national strike by the Canadian Union of Postal Workers (CUPW) in the fourth quarter of 2024 was a challenging period for Canada Post, its employees and the millions of Canadians who rely on the postal service. Canada Post put forward fair and reasonable proposals for a more flexible delivery model that would better serve Canadians and help sustain the business – all while increasing wages, enhancing leave entitlements, and protecting the defined benefit pension and job security provisions for current employees.
However, the parties could not reach a resolution. The resulting 32-day national strike during the peak holiday season had a significant impact on the company’s financial results, as operations ceased and customers shifted their deliveries to other carriers. Customer trust and loyalty was significantly eroded. Many customers who found other delivery providers have not yet returned to Canada Post – a financial impact that’s expected to last well into 2025 and beyond.
The strike weighed heavily on the results for mail and parcels, and significantly affected the lines of business in 2024 (compared to 2023):
- Parcels revenue and volumes – which had already declined through the first three quarters – fell sharply for the full year largely due to the strike, declining by 20.3 per cent and 19.9 per cent, respectively.
- Transaction Mail revenue and volumes declined by 5.3 per cent and 9.3 per cent, respectively.
- Increased sales in Direct Marketing until mid-November were offset by the impacts of the labour disruption. Direct Marketing revenue declined by 3.0 per cent in 2024, while volume increased slightly by 1.8 per cent.
Overall, we estimate the labour disruption had a $693-million negative impact on revenue in 2024. While costs also fell sharply during the strike, the impact on revenue was substantially larger. As a result, the Corporation estimates the labour disruption contributed a net negative impact of $208 million toward Canada Post’s $841-million loss before tax in 2024.
Liquidity and borrowings
In recent years, ongoing annual losses have required the company to tap into cash reserves to address the rising costs of meeting its universal service obligation, maintaining the network and preserving postal services for Canadians.
Canada Post needs financing of at least $1 billion in 2025 to pay off debt and sustain its operations. The Corporation welcomes the federal government’s announcement of the repayable funding and may require additional short-term borrowing to remain solvent through 2025. Without the government funding, Canada Post expected to completely deplete its cash reserves by mid-2025. The funding will be critical to meeting a $500-million debt repayment due in July 2025.
As of December 31, 2024, the Corporation had loans and borrowings of nearly $1 billion. In its current financial situation and in the absence of changes to its outdated operating, regulatory and policy framework, the Corporation will need additional annual funding going forward to maintain operations and meet employee obligations.
The Great Mail Decline continues
The ongoing, steady decline of letter mail, combined with the country’s increasing number of addresses, is one of the key drivers of the Corporation’s financial pressures. For more than a century, letter mail was the main source of revenue for the postal service. In 2006, letter mail volumes hit an historic high when we delivered almost 5.5 billion letters to Canadians.
Letter mail volumes have declined from
5.5 billion pieces in 2006 to 2.0 billion today
Since then, domestic letter mail volumes for the Transaction Mail line of business have declined by 63 per cent and associated revenue has fallen by 30 per cent. A system built to deliver 5.5 billion letters a year cannot be sustained on two billion letters. Canadians are seeing this sharp decline in their mailboxes. Back in 2006, Canadian households received an average of seven letters per week; today, it’s two per week.
As our mail revenue declines, the cost of delivering keeps rising. We deliver to more locations each year, with over 200,000 new addresses added annually. In 2006, we delivered to 14.3 million addresses; in 2024, we delivered to 17.6 million – an increase of 3.3 million addresses. This combination of delivering fewer letters to more addresses every year is unsustainable, adding to our cost pressures.
In 2006, Canadian households received an average
of seven letters per week – today it’s two per week
A steady stream of parcels is needed to offset decline in letter mail
It costs significantly more to process and deliver parcels than mail. Parcels require more technology, equipment, scans and customer service support, and they take up more space in facilities and vehicles. It also often takes more time to deliver a parcel than a letter (the delivery agent may require a customer signature, for example).
In this way, Canada Post needs a steady stream of parcels to make up for the decline of letter mail. The parcel delivery business is intensely competitive, and the company has not secured the volumes it needs to financially sustain the business. While the ecommerce market is our biggest growth opportunity, our success has been limited because we do not have the ability to go head to head with the competition. With a rigid, outdated structure and operating model in a competitive market, our Parcels business is not offsetting losses from Transaction Mail.
Cost of operations
Without the labour disruption, operating costs were on track to rise in 2024 compared to 2023. However, largely due to the strike, the Corporation’s operating costs declined by 5.3 per cent compared to the previous year.
Canada Post’s labour costs remain significant. Labour represents by far the largest portion of the company’s overall operating expenses. In 2024, labour and employee benefits represented 64.9 per cent of total operating expenses. Over the year, the Corporation spent more than $10 million per day on labour costs, excluding benefits. Labour costs have continued to rise over time, primarily due to wage increases and the company’s outdated operating model.
Non-labour collection, processing and delivery costs were 16.8 per cent of total operating expenses in 2024, while non-capital investment expenses were 3.0 per cent and capitalized investment expenses (depreciation and amortization) were 5.0 per cent.
Breakdown of operating expenses – 2024
While we have taken significant action to address our financial crisis, there is only so much we can do on our own. Canada Post needs urgent changes to its operating model, collective agreements, and regulatory and policy framework to improve its financial situation and keep pace with the changing needs and expectations of Canadians and Canadian businesses.