Australia Post was Friday expected to axe hundreds of jobs as it struggles with growing losses from a decline in letter volumes despite growth in its parcels business.

The firm has forecast losses of almost Aus$500 million (US$385.5 million) in its mail service business this financial year as ordinary mail volumes fell by more than 10 percent -- the largest-ever annual decline.

The sharp drop would take the overall losses in the past five years to more than Aus$1.5 billion, with Australia Post set to record its first full-year loss in more than three decades, chief executive Ahmed Fahour said.

"We have reached the tipping point that we have been warning about where, without reform, the business becomes unsustainable," he said in a statement.

Fahour said Australia Post would introduce a voluntary redundancy programme and retrain and redeploy staff across the business. Some 1,900 jobs were expected to be lost at the government-owned firm, media said.

The "dramatic shift in consumer behaviour" resulting in plunging mail volumes meant there would be fewer jobs needed across the country's mail service.

He added that most of the job cuts were expected to be in metropolitan areas, but the Communications Workers Union said it was concerned regional staff and services would be hit hard.

"We've got grave concerns that a number of these jobs earmarked are in regional Australia -- areas that can't afford to lose quality jobs," the union's assistant national secretary Martin O'Nea told AFP.

"We believe Australia Post should be doing more to work with the mailing industry as a whole to promote the traditional mail service instead of the CEO being out there talking it down all the time."

Communications Minister Malcolm Turnbull said in March the organisation would introduce a two-speed mail service, while Australia Post has flagged the possibility of higher stamp prices.

Australia Post in February reported a 56 percent fall in first-half net profit to Aus$98 million.

The postal service is the country's oldest, continuously operating organisation and celebrated its 200th anniversary in 2009.