Royal Mail says it expects to report a “material loss” this year despite seeing the number of parcels it delivered throughout five months of lockdown jump by more than a third.
The surge in parcel post meant revenues beat expectations for the period.
However, the number of letters it delivered fell by 28%, continuing the trend seen in recent years.
Royal Mail said it was talking to unions about making changes to cut costs further.
In July, the company said it would cut 2,000 management jobs – a fifth of such roles – which would save it £130m.
But it has seen rises in costs elsewhere, including £85m in higher costs from handling more parcels and fewer letters, and £75m in extra costs related to the coronavirus measures, such as covering staff absence, social distancing and extra protective equipment.
The company’s other recent challenges have included former boss Rico Back making a surprise exit from the business in May. Royal Mail is currently operating with an interim chairman and chief executive.
In its latest trading update, Royal Mail said: “We are failing to adapt our business to fundamentally lower letter volumes and are holding on to outdated working practices and a delivery structure that no longer meets customer needs.”
It specified a number of practices it wanted to get reduce or get rid of, including sorting parcels by hand and workers signing in by hand.
Royal Mail also said it had yet to remove old letter-sorting machines, “unneeded when letter volumes have halved since 2004”.