The U.S. Postal Service pointed to its $3.2 billion loss in the fiscal second quarter, a $1.1 billion deeper gash than the year before, as proof of the growing need for reform from Congress.
The agency blamed much of the losses on having to pre-fund retiree health benefits, not being able to close thousands of post offices and mail processing centers, and being restricted from cutting some 120,000 workers and Saturday delivery. Excluding pre-retiree health payments and adjustments for worker’s compensation, the USPS lost $486 million last quarter, compared with a $469 million loss in the prior year.
“We are aggressively pursuing new revenue streams and reducing costs in areas within our control,” said Patrick Donahoe postmaster general and CEO. ”These actions are not enough to return the Postal Service to profitability.”
Through its overhaul plan, the USPS said it would reduce costs by $22.5 billion annually. The agency expects to lose $83.2 billion by 2016 if Congress doesn’t back the requested reform measures.
Revenue related to shipping and packages in the fiscal second quarter grew more than 13 percent year-over-year to $3.5 billion, illustrating the success of business generating initiatives, Donahoe said. Volume expanded 9 percent to 74 million pieces in the same period.
Mailing service revenue, however, shrank 3 percent year-over-year as the agency handled 1.8 million pieces less than a year ago. The USPS said the drop was part of the steady shift of customers turning to electronic communications instead of First-Class Mail.
Standard mail also fell in the fiscal second quarter, reflecting advertisers’ shift from direct mail advertising to electronic media.
“Without legislative change, we will not have sufficient cash to pay the $11.1 billion required for retiree health prefunding and may be forced to default on other payments due to the federal government,” said Joe Corbett, chief financial officer.
A recently passed Senate bill would reimburse the USPS about $11 billion for overpaying into federal workers’ retirement fund, but the legislation fell short in approving operation and work force cuts. The agency this week pulled back on plans to close rural post offices, electing instead to shorten the hours of remote sites.