Australia Post's survival hinges on its parcel business after the national postal service notched up its first loss in more than 30 years.
Huge declines in the number of companies and people posting letters have been blamed for dragging the business into the red.
Australia Post managing director Ahmed Fahour says losses from its letters service were so large that it "overwhelmed" profits from its parcels and retail businesses in 2014/15.
He says losses in the mail business grew to $381 million as more Australians switched to digital alternatives.
Since 2008, letter volumes have declined by 36 per cent.
"The company has had to absorb over that same time $1.3 billion in losses in the letters service," Mr Fahour said.
"There is no question that the success we are having with parcels and the rest of our commercial business has had to absorb this.
"The Australian community's use of letters are now in terminal and structural decline."
Australia Post made a $222 million loss after tax for 2014/15, compared to a $116.2 million profit a year ago.
Letter volumes fell 7.3 per cent, compared to a four per cent fall the prior year.
"As a result of significant investment and focus over the past five years in eCommerce, our revenue from parcels has grown 136 per cent," Mr Fahour said.
"The pure letters business is today closer to 28 per cent of revenue.
"We are a parcel company more than we are a letters company."
For the first time in its 206 years of history, parcels have made up more than half of the group's total revenue of $6.37 billion, rising 3.6 per cent to $3.21 billion.
Mr Fahour said this was achieved despite intense competition from international operators, including Japan Post and Singapore Post, and from more smaller players and the emergence of new delivery and collection models. He did not comment on potential job cuts despite the business setting aside funds for an expected 1,900 job losses.
AUSTRALIA POST DELIVERS FIRST FULL-YEAR LOSS:
*Full year loss of $222m, compared to $116.2m profit a year ago
*Group revenue flat at $6.37 billion
*No dividend will be paid to the Australian government
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