The U.S. Postal Service fell deeper into a financial hole in its fiscal first quarter, losing $3.3 billion and forecasting “large losses” will continue until a broad restructuring plan is put in place.
The latest loss came despite what the USPS called strong holiday shipping that kept the year-over-year decline in overall operating revenue to just 1.1 percent. But the loss in the quarter ending Dec. 31, 2011 means the USPS has lost $20.7 billion since 2009.
With operations and mail volume fairly stable compared to previous reports, the latest results starkly illustrated the challenges the USPS faces meeting changes in the postal marketplace while coping with expensive mandates that only Congress can control.
Basic operating expenses increased 1 percent, partly from higher fuel costs that increased transportation expenses. Overall mail volume fell 6 percent, while package services revenue actually increased slightly. But the USPS also had to “pre-pay” nearly $3.7 billion in retiree health benefits in the first fiscal quarter, nearly double what the Postal Service had to pay a year ago.
The USPS has a plan to reduce annual costs by $20 billion by 2015, but Postmaster General and CEO Patrick Donahue said some of the changes need approval by Congress. USPS efforts to close some post offices and eliminate Saturday delivery have met resistance on Capitol Hill.
“Passage of legislation is urgently needed that provides the Postal Service with the speed and flexibility needed to cut costs that are not under our control, including employee health care costs,” Donahoe said. “The changes will give the Postal Service a bright future and provide the nation with affordable and reliable delivery for generations to come.”