Australia Post has told its workers 900 jobs will go as part of a restructure that will split its post and parcel businesses.

As fewer people post letters, and losses in that part of the business mount, the Government-owned company is planning to operate its retail, mail and communications services under the Australia Post brand, and its parcel post and express mail services under the StarTrack courier banner.

Australia Post says the changes will result in a leaner administration, with 900 managerial and support positions going over the next year, mostly from its head office in Melbourne.

It chief executive Ahmed Fahour says Australia Post's front-line employees, such as posties and retail staff, will not be affected by the cuts.

"We have robust, well-established processes to manage these situations respectfully," he said in a statement.

"We will also consult with the appropriate representatives of our employees throughout this process."

Nicholas Reece, a public policy fellow at Melbourne University who was an adviser for former prime minister Julia Gillard, says foreign postal services have suffered far worse job cuts.

"If you look at postal businesses overseas they have had huge job losses in recent years," he said.

"Royal Mail has lost about 50,000 jobs over the last decade, whereas the once mighty US Post has shed about 70,000 jobs in the last two years alone," Mr Reece said.

Fahour says job cuts needed to avoid billion-dollar losses

Mr Fahour says the job cuts are needed as Australia Post heads towards billion-dollar annual losses due to a 30 per cent decline in letter volumes over the past five years, which is only expected to accelerate.

"Losses in letters are now, for the first time, overwhelming the profits we make in parcels," he said.

"Furthermore, without postal services reform, the losses in our letters business will reach a billion dollars per annum within a few years. By making these changes now, we can minimise the impact for our people, our broader workforce, our business and the community."

When Mr Fahour talks about "postal services reform", one of the other changes expected is a move to persuade the Federal Government to cut Australia Post's daily mail delivery service obligation to three, or even two, days a week.

He says Australia post has already made some moves in this direction.

Sorry, this audio has expired Australia Post CEO Ahmed Fahour

"As the community becomes less reliant on our letters service, we need to fundamentally reform it," he said.

"That’s why we have recently introduced an additional 'regular' letters service for business customers that is delivered according to a slower timetable and at a lower price than the 'priority' letters service that Australians are used to receiving five days a week."

Australia Post recorded a $218 million loss in its domestic mail business in the last financial year.

The service says it has already publicised a proposal to reduce household deliveries from next year, which could see standard mail delivered only two or three days per week.

Earlier this year, Australia Post successfully lodged a request with the Australian Competition and Consumer Commission to raise the basic postage rate from 60 cents to 70 cents to offset growing losses.

The pricing changes came into effect on March 31. The organisation has also flagged increases to the costs of business letter services, mail redirection services and some parcel products.

The Federal Government's Commission of Audit recommended the service be privatised, but the Coalition decided not to put it up for sale.