Ottawa is throwing another financial lifeline to Canada Post after it burned through an earlier government loan faster than expected last year amid massive losses and a renewed labour dispute.

Late last week, Public Services and Procurement Canada said it will make another $1.01-billion loan facility available to the mail carrier to help it “maintain its solvency and keep services running” while it moves ahead with a major overhaul of its operations. The money will be provided on an “as-needed” basis and must be repaid.

This is effectively a top-up to a $1-billion loan facility Ottawa provided to Canada Post in January, 2025, to help the Crown corporation deal with a cash crunch caused by large continuing losses and a $500-million bond repayment due last summer.

That credit line was supposed to last through the 2025-26 fiscal year. However, Canada Post had exhausted the available cash by December, following a record third-quarter loss caused in part by a strike by the Canadian Union of Postal Workers – the second major job action in less than a year.

Opinion: Tentative deals between Canada Post and union amount to lumps of coal for taxpayers

Yianni Papadatos, a spokesperson for Public Services and Procurement minister Joël Lightbound, said the second $1-billion loan facility announced last week is effectively a “contingency fund” and can only be used by the Crown corporation to fund operations in the event of a cash shortfall.

Canada Post approached the federal government about additional financial support in November, Mr. Papadatos said.

“Originally the fear was that the strike would last into March or April. So the loan facility was structured in a way where it would be like, well, if it actually does get to that point, we have contingency to keep the lights on,” he said.

In December, Canada Post and its union reached a tentative agreement in their contentious two-year-long contract negotiations. The agreement has not yet been ratified, but both sides have agreed to refrain from strike actions or lockouts until the agreement has been voted on by CUPW workers.

The federal government – which is Canada Post’s sole shareholder – has said the carrier’s current business model is unsustainable, and it cannot keep bailing the Crown corporation out.

In September, Mr. Lightbound, the minister, ordered Canada Post to end door-to-door mail in favour of community mailboxes and to change standards for mail delivery timelines. He also lifted the moratorium on closing rural post offices that has been in place since the 1990s.

Canada Post has been under extreme financial pressure in recent years owing to a decline in letter mail and increased competition from parcel delivery companies such as Amazon.

Over the past two decades, annual mail delivery has fallen to around two billion letters from around 5.5 billion, according to the federal government. Meanwhile, Canada Post’s share of the parcel delivery market has fallen to below 24 per cent from 62 per cent in 2019.

The Crown corporation has lost more than $5-billion since 2018, and recorded a record $541-million third-quarter loss last year.

At Ottawa’s request, Canada Post has submitted a “transformation plan” to the federal government.

“The plan details the decisive action we are prepared to take to deliver the services Canadians need in a way that is financially sustainable. We continue to work with the government to finalize our plans to modernize operations and secure the postal service for Canadians into the future,” Canada Post spokesperson Phil Legault said in an e-mail.

It’s time to dream bigger than the community mailboxes Canada Post is offering us

Canada Post’s turnaround plan involves reducing operational and labour costs and increasing revenue in areas like e-commerce parcel delivery, Canada Post chief executive officer Doug Ettinger told the House of Commons standing committee on government operations and estimates in December.

The organization has cut the size of its management team by 11 per cent over the past year-and-a-half, he said, and there are some 16,000 workers eligible to retire in the next five years. Moreover, Canada Post expects to save around $400-million a year by moving from door-to-door delivery to community mailboxes.

Balancing the books, however, will take some time. Mr. Ettinger said he does not expect Canada Post to break even until 2030 under the plan submitted to the federal government.

Mr. Papadatos said that the government was currently examining the plan, and would have more to say “very soon.”

“We want to make the right decision here,” he said. “This is going be a transformation that’s going to last almost a decade – six, seven, eight years. So [the minister] wants to make sure that we actually do make the right decision and move the corporation in the right direction.”

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