The Mail on Sunday reports that the expected profit figure would be sufficient to trigger bonuses for the company's 180,000 employees of a minimum 拢400 each. It would also exceed the company's 2004/2005 profits of 拢537m.
However, the company's pension fund deficit has worsened over the same period, due to an actuarial review that has adjusted mortality rates.
According to the Sunday Times, the deficit has increased from 拢4.4bn to 拢5.5bn, and the company will need to increase its annual contribution to the fund from 拢600m to 拢800m.
Royal Mail has been lobbying the government for around 拢2bn, which will allow it to address the deficit, invest around 拢700m in improving its sorting machines and give 20% ownership of the company in free shares to workers.
The government is expected later this week to say that it supports the idea "in principle", after the Chancellor Gordon Brown and the new trade and industry secretary Alistair Darling approved the plan. Darling took over from Alan Johnson in the Cabinet reshuffle at the beginning of this month.
The move is set to meet resistance from many sides, with MPs and the Communication Workers Union decrying the creation of shares in the company as a prelude to full privatisation and with Royal Mail's postal operator rivals registering their displeasure with what they perceive as state aid.
Around 211 Labour MPs have signed a parliamentary Early Day Motion opposing any change in ownership of Royal Mail. The CWU has also come out against the share issue plans and is threatening to hold a strike ballot and cut its funding to the Labour party.
Royal Mail and the government have said they are not planning a full privatisation.
The injection of government money has also been resisted by Royal Mail's rival TNT Post. Its chief executive Nick Wells has written to Gordon Brown to express his alarm at the "completely unnecessary state aid" which would create "an uneven playing field".
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