Royal Mail reported an operating loss of £1 billion ($1.25 billion) after the beleaguered delivery service endured a long dispute with a trade union.

International Distributions Services Plc, which owns the UK postal service, said industrial action, a weak online retail market and cost-cutting from redundancies had hit performance.

Still, the company said it has “grounds for optimism” following an agreement with the Communication Workers Union which will be voted on by staff.

IDS reported revenue of £12 billion for the year to the end of March, down 5.3% on last year. GLS, its parcels business, reported an operating profit of £296 million.

Royal Mail’s Chief Executive Officer Simon Thompson is due to leave the business at the end of October. He said on May 12 that now was the right time to hand over to a new boss following a tumultuous few months during which he was accused of “incompetence” and “cluelessness” by British Members of Parliament.

Read More: Royal Mail Under Investigation for Failing to Meet Targets

Thompson was recalled to answer lawmakers’ questions after they were left unconvinced by his response to accusations that the company was tracking its workers and prioritizing parcels over letters.