UPDATE 1-Royal Mail to focus on pandemic-driven parcel growth as union dispute ends

(Adds CWU comments, trading update, background)

Dec 22 (Reuters) - Britain’s Royal Mail said on Tuesday it had reached a deal with its largest union over pay and operational change, ending two years of dispute and paving the way for one of the oldest postal companies to focus more on parcel deliveries.

Royal Mail and the Communication Workers Union (CWU) had been locked in a dispute over a 1.8 billion pound ($2.42 billion) restructuring plan, proposed by its former chief executive officer, Rico Back. The resistance led to Back resigning in May.

“This agreement marks the end of our two year dispute with Royal Mail Group and brings closure to one of the most adversarial periods of our history,” CWU said.

The union added that the circumstances brought on by the COVID-19 pandemic have “massively advanced the change anticipated in our previous agreements in parcel growth”.

As part of the agreement with CWU, Royal Mail said it would increase workers’ pay by 2.7% from April 2020 and by another 1% from April 2021.

It also added that a review of its operational network would conclude by April to build on proposals for the parcel network, prioritise investment for expansion, while maintaining an efficient letters operation.

Royal Mail, which has suspended deliveries to mainland Europe due to a travel ban on the UK following the new coronavirus strain, said its revenue in the eight months to November was 380 million pounds higher, thanks to growth in parcel demand during the pandemic.

$1 = 0.7445 pounds Reporting by Yadarisa Shabong in Bengaluru; Editing by Vinay Dwivedi