US Postal Service Posts $8.5 Billion Loss

The U.S. Postal Service lost $8.5 billion in its fiscal year ended Sept. 30 as the recession and the rise of electronic media reduced volume and economic pressures related to regulations and retirement benefits added to costs.

The net loss more than doubled from the $3.8 billion the Postal Service lost in fiscal 2009. This year’s loss included a $5.5 billion expense for pre-funding retiree health benefits.

Operating revenue of $67.1 billion in 2010 declined $1 billion from 2009, primarily because of lower volume. The USPS has responded to the structural shift away from traditional mail by cutting costs and eliminating jobs, but Congress has not acted on its request for relief from a staggering pension obligation and the Postal Service has faced opposition to its plans to cut back some services such as Saturday delivery and close post offices.  

By The Numbers: U.S. Domestic Air Cargo.

Excluding the pre-funded retiree health benefits, operating expenses for 2010 amounted to approximately $70 billion. That was down only $400 million from operating expenses of approximately $70.4 billion in 2009, also excluding a $1.4 billion expense for pre-funding retiree health benefits.

USPS said the net loss was primarily due to “the revenue decline, additional expenses in 2010 associated with (retiree health benefits) pre-funding and workers’ compensation – but offset by cost savings associated with the work hour reduction.”

Revenue fell $1 billion; the pre-funding cost shot up $4.1 billion. On top of last year’s $3.8 billion loss, that leaves cost savings of $400 million, just what USPS said it cut from operating expenses.

But, the small reduction of operating expenses comes as USPS said it cut $9 billion in costs over the last two years, primarily by reducing employment.

“Over the last two years, the Postal Service realized more than $9 billion in cost savings, primarily by eliminating about 105,000 full-time equivalent positions — more than any other organization, anywhere,” said Chief Financial Officer Joe Corbett. “We will continue our relentless efforts to innovate and improve efficiency. However, the need for changes to legislation, regulations and labor contracts has never been more obvious.”

-- Contact Thomas L. Gallagher at tgallagher@joc.com.