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Brazil’s national postal service, Correios, will require additional financing despite recently securing a $12 billion loan for restructuring, according to company President Emmanoel Rondon. The state-owned enterprise anticipates needing an additional $8 billion in funding through 2027, though the method of securing those funds – whether through a capital injection from the federal government or further borrowing – remains under evaluation.
Rondon detailed the restructuring plan in an interview Monday, stating that a potential public investment in the company is still under discussion with the government.
“The need for $8 billion remains,” Rondon said. “The guarantee contract stipulates that the company will receive support within the scope of its financing needs, as projected from 2026. A decision on whether there will be a capital injection has not yet been made.”
According to the president, the company initially calculated it would require up to $20 billion to restore financial sustainability by 2027. However, Correios has so far secured $12 billion under terms aligned with the Union’s guarantees. Securing the remaining $8 billion is the next challenge, and negotiations with banks have not yet begun, Rondon added.
The restructuring plan also includes cost-cutting measures, such as reducing personnel expenses by $2.1 billion, selling off real estate assets, and closing 1,000 of its approximately 6,000 branches.
To achieve personnel cost reductions, Correios plans to implement a voluntary layoff program (VDP) aimed at reducing its workforce by 15,000 employees over two years. This represents an 18% reduction in payroll.
Key measures expected to have a positive impact of $7.4 billion on the company’s finances include:
- A reduction of $2.1 billion in annual personnel costs (including the VDP, review of mid- and high-level salaries, and review of health and pension plans)
- Sale and disposal of real estate assets, generating $1.5 billion in annual revenue
- A reduction of $2.1 billion through the closure of 1,000 unprofitable branches (approximately 20% of the total) and optimization of the logistics network
- Strategic partnerships: generating $1.7 billion in annual revenue through new logistics partnerships and service diversification
The plan is designed to reverse 12 consecutive quarters of losses. Currently, the company faces a structural deficit of over $4 billion annually due to the requirement to provide universal postal service to remote locations.
- State-owned enterprise in crisis: Correios experienced its worst on-time delivery rate of the year leading up to Christmas
According to the company president, personnel expenses account for 62% of total costs.
Despite these measures, Correios expects a deficit of around $9 billion in 2025, with a potential for further deterioration in 2026. The company does not anticipate returning to profitability until 2027.
“There is no substantial change in 2025 that will affect this year. We expect a slight worsening for 2026,” Emmanoel Rondon stated.
- Delivery delays generate complaints: Delivery delays during the Christmas season have sparked complaints and social media backlash
$12 Billion Loan
Correios has secured a $12 billion loan from a consortium of five banks. Approximately $10 billion is expected to be disbursed in 2025, with the remaining $2 billion in 2026. The credit operation was conducted with Bradesco, Itaú, Santander, Caixa, and Banco do Brasil, with a guarantee from the Union.
According to the plan detailed Monday, these funds will be used for the first phase of the restructuring, focused on restoring Correios’ liquidity. In the short term, the funds will be used to pay the company’s obligations, including salaries, court-ordered payments, and overdue debts, bringing the company back into compliance.
“This will allow us to meet contractual obligations, recover performance and quality of operations, which has the potential to drive revenue growth again. And then regain confidence in the market,” the company president said.
