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Shows & Panels
Postal Service posts $3.3B loss for the quarter
Thursday - 2/9/2012, 2:12pm EST
Holiday greeting cards and presents delivered in December did not grant the Postal Service a reprieve from its financial problems. The agency reported a loss of $3.3 billion in the first quarter of fiscal 2012, which ran from Oct. 1 to Dec. 31.
Officials blamed rising healthcare costs for retirees and the continued decline of first-class mail as people turn to email and other online alternatives.
“ While the magnitude of the losses themselves is bad enough, the fact that they came during a period of the year that is usually the most successful for the Postal Service is truly shocking. ” -- Sen. Thomas Carper (D-Del.)
The agency has said that it would post $14.1 billion in losses this year if lawmakers do not grant management the flexibility to make drastic cuts to its workforce and facilities.
"Management expects large losses to continue until the Postal Service has implemented its network redesign and down-sizing and has restructured its healthcare program," the agency said in a written statement.
USPS said total mail volume decreased by 6 percent over the same period last year.
On a brighter note, the Postal Service said stronger than expected holiday shipping brought in $2.8 billion and helped its shipping services grow by 7 percent over the same period last year.
"Revenue from shipping services represents about 17 percent of total revenue and, even with continued growth, cannot fully offset the decline in first-class mail revenue," said Postmaster General Patrick Donahoe.
Agency 'precariously' low on cash
The agency is "precariously" low on cash and will not be able to pay $11.1 billion in retiree health benefits due later this year, according to the first-quarter financial report.
The agency has lobbied lawmakers for help.
The Postal Service's first-quarter losses, while disappointing, are not a surprise, Sen. Tom Carper (D-Del.) said in a written statement.
"While the magnitude of the losses themselves is bad enough, the fact that they came during a period of the year that is usually the most successful for the Postal Service is truly shocking," he said.
Carper cosponsored a bill with leaders of the Homeland Security and Governmental Affairs Committee. It would refund some of the money that the Postal Service has prepaid to the federal pension system and allow the agency to restructure future payments.
The Postal Service said that $21 billion of its $25 billion of net losses over the past five years have stemmed from the legal requirement to prefund retiree health benefits.
But a recent Congressional Budget Office review of the bill estimated that it would cost the government $6.3 billion over 10 years.
The House Oversight and Government Reform Committee has approved legislation that would enable an oversight commission to impose a Base Realignment and Closure process on the Postal Service's large network of facilities and provide for a control board to take over the agency's finances should it continue to bleed money.
"Absent significant changes in the law to allow normal commercial freedoms, the Postal Service will default on both retiree health benefits pre-payments to the federal government due this year," said Chief Financial Officer Joe Corbett. "Even if legislation changes or eliminates the prefunding payments, we may reach our $15 billion debt ceiling in the fall of this year."
The agency also is seeking concessions from two of its unions, the National Association of Letter Carriers and National Postal Mail Handlers Union, which represent a combined 242,000 workers. The parties entered mediation late last month after failing to reach a deal. Their contracts expired on Nov. 20.