U.S. Postal Service posts loss, 4th straight year
WASHINGTON (Reuters) - The U.S. Postal Service reported a net loss of $8.5 billion for the most recent fiscal year as mail volume continued to decline, forcing the agency to find ways to overhaul its business.
The Postal Service has been trying to dramatically reform its business practices for years as increasing popularity of email, competition from FedEx, United Parcel Service and other delivery services, and the recent economic downturn hurt volumes.
This is the fourth straight year the agency has posted net losses despite cost-cutting measures and staff reductions.
The agency this summer proposed raising rates on first-class mail and other services beyond the pace of inflation to compensate for revenue losses. The agency's regulator denied the proposal and said the Postal Service's long-term structural problems were to blame for budget shortfalls.
The Postal Service also has sought congressional approval to cut Saturday service in 2011.
"We will continue our relentless efforts to innovate and improve efficiency. However, the need for changes to legislation, regulations and labor contracts has never been more obvious," said Joe Corbett, the agency's chief financial officer, in a statement.
The agency's revenue woes are not new. The Postal Service reported a $3.8 billion net loss for the previous fiscal year, 2009, despite about $6 billion in savings.
Mail volume fell 12.7 percent in that year, more than double any decline the agency had seen previously.
Although standard mail volumes began to recover in late fiscal 2010, the Postal Service reported first-class mail, its most profitable product, fell 6.6 percent for the year.
Total mail volume fell 3.5 percent to 170.6 billion pieces during the fiscal 2010, which ended September 30, the agency reported.
Cost-saving measures eliminated 75 million work hours and reduced operating expenses about 0.6 percent from 2009. But that was not enough to compensate for a $1 billion decrease in revenue to $67.1 billion in 2010.
"Over the last two years, the Postal Service realized more than $9 billion in cost savings, primarily by eliminating about 105,000 full-time equivalent positions -- more than any other organization, anywhere," Corbett said.
An audit of the agency's finances is expected to question the Postal Service's ability to make all of its future payments, including a $5.5 billion payment to prefund retiree health benefits due on the last day of the current fiscal year, 2011, according to the Postal Service's statement.
The Postal Service receives no tax dollars for operating expenses and relies on the sale of products and services to fund operations.
(Reporting by Emily Stephenson; Editing by Phil Berlowitz and Steve Orlofsky)
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