USPS Loses $2.4 Billion in Quarter

The U.S. Postal Service reported a net loss of $2.4 billion for the third quarter, compared to a net loss of $1.1 billion last year.

The USPS posted operating revenue of $16.3 billion for the quarter ended June 30, a 9% decrease from $17.9 billion in the prior year.

Postal management attributed this in part to an $807 million increase in workers’ compensation expenses.

Standard mail volume for the quarter was 18.8 billion pieces, a decrease from 23.2 billion pieces in the prior year. Standard mail revenue for thequarter was $3.96 billion, down from $4.8 billion in the prior year.

“As the postal service reaches the final quarter of its fiscal year, it’s clear that weakness in the overall economy is continuing to have a profound negative effect on our finances,” said Postmaster General Jack Potter at a press conference Wednesday morning.

He predicted the USPS could lose as much as $7 billion this year.

“Virtually every element of the mailing industry has been experiencing the effects of reduced employment, reduced spending and reduced consumer confidence. We are seeing that reflected in mail volume and revenue with the third quarter adjusted net loss of $2.4 billion.”

The postal service also attributed a significant portion of its losses to a nearly 20-billion-piece decline in mail volume so far this year.

Third quarter mail volume totaled 41.6 billion pieces, down 7 billion pieces, (14.3%, compared to a year ago) — the largest consecutive three-quarter drop in total volume since 1971, according to the USPS.

This movement toward electronic alternatives will also cause continued downward pressure on mail volume into coming years, according to the postal service.

At the conference Potter reiterated his calls for help in dealing with the USPS’s yearly obligation to pre-pay $5.4 billion to cover retiree healthcare benefits as well as possibly reducing mail delivery to five days down from six.

“Huge prefunding obligations for the postal service retiree health benefits imposed by a 2006 federal statute have raised our costs by over $5 billion a year,” he said during the conference. “We simply cannot afford these costs.”
He then reported House and Senate bills HR. 22 and S. 1507, which would restructure the USPS’s payment terms, have both been reported out of committee in their respective chambers.

“If this legislation, HR 22 or S 1507, is enacted it will improve our solvency, reduce our losses and help shore up our financial position,” Potter told the conference.

The PMG also repeated his call for cutting back mail delivery to five days, an idea that requires Congressional approval and does not sit well with the mailing industry (Direct Newsline, Jan. 28).