Leighton warns Consignia is in peril as he takes the helm

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The new head of Britain's postal service, the former Asda boss Allan Leighton, warned yesterday that the organisation was in a "perilous state" and could only be turned around with "radical action".

Mr Leighton, who has taken over as chairman of Consignia, the parent company of the Post Office, on a part-time interim basis, also confirmed that about 30,000 jobs would disappear as part of a £1.2bn cost-cutting drive designed to bring the business back into profitability.

Mr Leighton replaces Neville Bain, who retired at the end of last year after his performance had been publicly criticised by ministers. The former Asda chief executive takes over at a time when Consignia is facing the threat of a national postal strike and moves by the postal regulator Postcomm to open up a third of the Royal Mail's monopoly market to competition.

"The next few months will be pivotal and critical to Consignia's future," said Mr Leighton. "Basically, the business model does not work and the organisation is not profitable. We just can't go on as we are. No change is not an option for us. This is a turnaround situation and it has to start now."

Mr Leighton glossed over Consignia's appalling strike record, saying that in recent months its industrial relations record had improved and praising what he described as "one of the most loyal workforces you will ever find".

He said Consignia has three "terrific" brands in the Royal Mail, Post Office Counters and Parcelforce but he said the operation, management and control of the group was broken up into too many constituent parts. "It's like a curate's egg with the management, the unions, the Government, the regulator and Postwatch all having their say. They are not engaged in the same way. We have to stop fighting ourselves and realise the real enemy is competition," he said.

Asked whether there was a need for further boardroom changes, Mr Leighton said: "Everything is up for grabs but you cannot read anything into that or out of that."

He added that John Roberts, Consignia's chief executive, was "very good". Mr Roberts, who will continue to run the group on a day-to-day basis, had harboured hopes of becoming chairman himself but they have almost certainly been dashed by the deterioration in the company's performance. In the first half of the current financial year it made an operating loss of £100m and a bottom-line loss of £281m.

Mr Leighton said he expected to do the job on a part-time basis for the next six months or so while the Government searches for a new long-term chairman. The company hired the headhunters Odgers Ray & Berndtson earlier this month.

Mr Leighton is also the chairman of lastminute.com and the housebuilder Wilson Connolly and was already a non-executive director of Consignia. He will not be paid any more for his new role than the £15,000 to £20,000 he currently receives in director's fees. He had been asked by the board to take on the job and accepted because the next three to four months would be "critical" and Consignia needed a chairman in place to help guide it through.

Details of the job-cutting plan, which does not involve compulsory redundancies among Consignia's 200,000 staff, will emerge in the next six weeks, Mr Leighton added.