Mark Szakonyi, Associate Editor | Aug 09, 2012 10:04AM EDT
The U.S. Postal Service warned Thursday that its loss of $5.2 billion in the third fiscal quarter, a 68 percent deeper loss than a year ago, would only expand if Congress failed to allow the agency to make fundamental changes.
The USPS wants an $11 billion refund of its pension payments, to cut Saturday delivery service and stop prefunding retiree health benefits by introducing its own health insurance plan independent of current federal programs. The $3.1 billion in retire health payments and a 3.6 percent drop in mail volume more than offset a 9 percent jump in revenue from Shipping Services and package delivery.
“Moving forward with our business plan will make the Postal Service financially self-sustaining, provide a platform for future growth and preserve our mission to provide secure, reliable and affordable universal delivery services for generations to come,” said Postmaster General and CEO Patrick Donahoe.
A lack of cash forced the USPS on Aug 1 to default on a $5.5. billion prefunding payment for retiree health benefits. Unless Congress provides relief, the agency expects to default on a second prefunding payment of $5.6 billion due by the end of September.
First Class mail volume fell 4.4 percent year-over-year, a sign of electronic communications continuing to edge out traditional mail. The agency’s investments in Shipping Services and package delivery appear to be paying off, as volume jumped 5.2 percent.
USPS operating revenue fell less than 1 percent, or $153 million, to $15.6 billion compared to the same period a year. The mandated prefunding of retiree benefit were key in driving operating expenses up by 10.2 percent, or $1.9 billion, to $20.8 billion.
“The Postal Service has successfully improved productivity while removing nearly $14 billion from its annual cost base during the past five fiscal years,” Acting Chief Financial Officer Stephen Masse said. “These operational actions to improve efficiency will continue in the future, but we urgently need the legislative changes noted above to restore our short-term liquidity and provide a stable base for the future. In the meantime, we will prioritize our cash resources to ensure that we deliver on our mission.”
Contact Mark Szakonyi at mszakonyi@joc.com. Follow him on Twitter @szakonyi_joc.
