A Canada Post worker delivers mail to a community mailbox during a winter storm in Souris, PEI, on Jan. 6, 2025.John Morris/Reuters
Ottawa will extend a $1-billion loan to Canada Post to keep the Crown corporation afloat as it faces significant financial hurdles, including the maturing of $500-million in bonds that have to be repaid to bondholders in July.
In a statement issued Friday, Public Services and Procurement Canada, the ministry in charge of the mail service, said it had exercised provisions under the Canada Post Corporation Act to allow the postal service to access $1.034-billion in cash for the 2025-2026 fiscal year “to maintain its solvency and ensure it can continue its operations.”
The ministry said the cash injection was a temporary measure, which Canada Post will have to repay and will be provided on an as-needed basis to pay non-discretionary obligations. In government filings made public this week, Canada Post sought help from Ottawa, saying that it was in dire financial straits and expected to deplete its cash reserves in the first half of 2025.
On Wednesday, The Globe reported that the postal service was working with Ottawa to resolve its liquidity issues.
PSPC said that it extended a lifeline to Canada Post because, despite a recent stamp increase of 25 cents, the corporation will not have enough cash to operate in 2025. “Canada Post’s more than 68,000 workers depend on its continued stability to receive their pay and benefits,” the ministry’s statement said.
Canada Post has been losing billions of dollars over the past five years, owing in part to its dwindling letter mail operations and its inability to compete with low-cost private delivery carriers such as Amazon, FedEx and UPS. The corporation projects that its annual losses will grow from $900-million in 2025 to $1.7-billion in 2029, and it has repeatedly blamed the high cost of labour, including employee pensions, for its financial state.
Canada Post has been in heated and protracted negotiations for more than a year now with the Canadian Union of Postal Workers over a new collective agreement. More than 55,000 postal workers were on strike for a month late last year before they were ordered back to work by the federal labour board at the direction of the Ottawa.
In a statement issued Friday, Canada Post said the government’s cash infusion would help “maintain continuity” of the company’s operations, but would not solve the underlying issue related to how its work force is structured.
CUPW did not respond to a request for comment about the government’s $1-billion loan to Canada Post. The union has long argued that Canada Post exaggerates its financial plight and manages its revenue poorly by making capital investments that have little long-term payoff.
The union and the Crown corporation are set to begin a series of hearings on Monday in front of the Industrial Inquiry Commission – a panel appointed by the Minister of Labour in December to examine the structural issues at Canada Post that have prevented the resolution of the labour dispute. The panel is headed by veteran arbitrator William Kaplan. In submissions made to Mr. Kaplan ahead of the hearings, CUPW questioned the $3-billion figure that Canada Post often cites about its losses between 2018 and 2023. The union claims that part of that loss was to settle past violations to pay-equity rules to the tune of hundreds of millions of dollars.
Canada Post’s own submissions to Mr. Kaplan, which were made earlier this week, stated that they were in talks with Ottawa to mitigate liquidity issues. In 2010, the corporation issued $500-million in bonds as part of a public debt offering to raise money for its operations. Those bonds mature in July, and Canada Post has warned that it might not have the cash to pay back bondholders.
The corporation said it lost $748-million in 2023 and as of the third quarter of 2024, had lost an additional $345-million last year. Canada Post has a mandate to deliver mail at a low cost to all Canadian homes, but the the number of addresses to deliver to has increased, even as the number of pieces of letter mail per address has substantially decreased over the last decade.
While it has substantially invested in focusing on parcel delivery (which accounted for 50 per cent of Canada Post’s operating revenue in 2023, or $3.5-billion), its market share in the parcel delivery industry has eroded over time. Multinational couriers such as Amazon and FedEx operate 24 hours a day, seven days a week on a low-cost labour model that often involves the use of third-party contract employees. In contrast, much of Canada Post’s work force consists of full-time employees and it does not deliver parcels on most weekends of the year.
This structural difference is at the heart of the labour dispute with CUPW. The union has accused Canada Post of attempting to create a more flexible work force by opening more part-time and temporary jobs with fewer benefits, while Canada Post says that is the only way it can remain competitive.
Canada Post has an operational mandate to be self-financing. However, under the Canada Post Corporation Act, it can request financial assistance from the government, but layers of approval from the Minister of Finance, the Governor-General and the Privy Council are needed in order to grant financial help.