The volume of letters sent across the nation is at a 90-year low and steep declines continue, Australia Post group chief executive and managing director Paul Graham said.
Mr Graham pointed to the Danish postal service ending letter delivery after 401 years in December 2025 because it was no longer deemed viable or essential.
"Eventually there will be a day when we'll deliver the last letter," Mr Graham told AAP.
"I don't know when that is, but that business is structurally broken and will never recover."
While letters from individuals represented only three per cent of the 734.2 million sent in the six months to December 2025, businesses and government agencies were also shifting to digital correspondence.
The delivery of a record 283 million parcels in the last half of the year helped Australia Post record a modest $50.4 million pre-tax profit, according to its half-year results released on Friday.
With $5.06 billion in revenue, the half-year profit was down $198.7 million from previous results, which the company said reflected strategic investment decisions to remain competitive in a tight market.
Global platforms like Amazon had picked up a share, along with "last mile" gig economy businesses that directly deliver goods from warehouses to doorsteps.
"Whilst our revenue is going up, our average revenue per parcel is declining, and that's because of the intense competition that we're seeing," Mr Graham said.
"We're also seeing a number of these platform players and merchants using algorithms to determine who they use for delivery because it looks at lowest cost and service.
"So the world is changing."
Christmas parcels were a gift for the business, as posties delivered a record 3075 parcels every minute in the November and December peak, with a total of 111 million packages.
The business may be set to record a loss in 2025/26, Mr Graham warned.
Australia Post was investing in the future by streamlining operations, upgrading legacy facilities and technology.
The business spent $219.9 million on facilities, retail formatting, fleet, technology and regional expansion.
"These are conscious choices," Mr Graham said.
"By fighting hard and planning for the future now, we're building a modern, sustainable Australia Post that will continue to serve all Australians for generations to come."
The letters service posted a loss of $2.1 million, a slightly improved outcome due to a 20c increase on stamps from July 2025.
Australia Post lodged a draft price notification with the consumer watchdog in January to raise the price of stamps from $1.70 to $1.85.
The proposed increase would take effect from mid to late-2026 to offset the ongoing losses.
Australia Post estimated the price rise would equate to less than $1 per year for households.
