Australia Post warns of historic losses

Australia Post's letter delivery service is in "terminal decline", a Senate committee has heard.

The decline is so severe that taxpayers will soon have to subsidse the business of delivering letters, its CEO says.

Fresh from reporting a first-half after-tax profit of $98 million, Ahmed Fahour told an estimates hearing on Tuesday that figure was 57 per cent down on the same period last year.

Australia Post is forecasting an overall loss this financial year, the first since 1982.

"The use of our letter service is in terminal decline," Mr Fahour said on Tuesday.

Australia Post had reached a "critical tipping point" where it could no longer manage the decline and maintain a reliable and profitable nationwide network.

"Something has to give."

Instead of paying a dividend to government as Australia Post had done for past 30 years, it would now be dependent on taxpayer funds to subsidise the letters service.

Mr Fahour said there was an urgent need for reform to the regulation of the letters service, including raising the price or introducing a two-speed service.

In the first six months of this financial year the volume of addressed letters sent by Australians fell by 8.2 per cent.