USPS Posts $1.9 Billion Loss for Quarter

The U.S. Postal Service posted a net loss of $1.9 billion for the second quarter, compared to a net loss of $707 million in the prior year. This marks the USPS’s 10th loss in the past 11 quarters. The postal year starts on Oct. 1.

The USPS posted operating revenue of $16.9 billion for the quarter ended March 31, a 10.5% decrease from $18.6 billion last year.

The postal service reported a net loss of $2.3 billion for the year-to-date, compared to a loss of $35 million in the prior year. The USPS attributed a significant part of the deepening loss to an unprecedented decline in mail volume of 7.5 billion pieces, to 43.8 billion, a 14.7% decline from last year.

This long-declining financial picture has apparently led the USPS to try novel ways to raise revenue, particularly among standard mailers which represent the bulk of its mailing customers.

For example, the USPSA board of governors will allow the Service to go ahead with a proposed summer postage reduction for Standard Mail rates. The change affects standard mail letter and flat rates, (Direct Newsline, May 4).

In authorizing the program, the governors noted “The current state of the economy has forced businesses, particularly Postal Service customers, to pull back on important investments necessary for ensuring their continued prosperity…With this in mind, the Standard Mail Volume Incentive Pricing program offers an incentive to mailers to improve above their expected performance during the summer months, which is typically a low-volume period for the Postal Service and its customers.”

Meanwhile, the USPS said it’s continuing to support H.R. 22, a House bill that aims to reduce the projected 2009 net loss by approximately $2 billion by redirect a portion of its legal obligations to pre-pay for the health benefits of former employees through 2016.

Despite the passage of the Postal Accountability and Enhancement Act in late 2006, which generally reformed the postal service, the USPS was still saddled with this obligation.

In addition:

“We are aggressively reducing work hours and other costs to limit losses, preserve cash and improve productivity,” said Joseph Corbett, chief financial officer, in a statement. “Initiatives designed to match work hours to reduced volume have resulted in a work-hour decline of 58 million hours – the equivalent of a reduction of 33,000 full-time employees – in the first half of FY 2009, despite an increase in the number of delivery points by 1.1 million from the same period last year. The work-hour reduction is on pace to meet the goal of reducing work hours by more than 100 million for the entire year, the equivalent of 57,000 full-time employees.

Corbett also said other savings are coming from consolidating excess capacity in mail processing and transportation networks, realigning carrier routes, halting construction of new postal facilities, freezing and executive salaries at 2008 levels, reducing travel budgets and similar measures.