U.S. Postal Service loses $3.3 billion in first quarter

WASHINGTON Thu Feb 9, 2012 4:23pm EST

U.S. Park Police Officer Calvin Covington stands at the front of the line with his horse Harper to mail his family's income tax returns at a mobile post office near the Internal Revenue Service building in downtown Washington, April 15, 2010.    REUTERS/Jonathan Ernst

U.S. Park Police Officer Calvin Covington stands at the front of the line with his horse Harper to mail his family's income tax returns at a mobile post office near the Internal Revenue Service building in downtown Washington, April 15, 2010.

Credit: Reuters/Jonathan Ernst

Related Topics

WASHINGTON (Reuters) - The U.S. Postal Service's losses shot up to $3.3 billion in the last three months of 2011, a tenfold jump from the same period a year before, as its customer base eroded with the growth of email and online billing.

The cash-strapped agency recorded the loss during its traditionally strongest period, the year-end holiday shipping season, as declines in mail volumes outweighed growth in shipping.

"Technology continues to have a major impact on how our customers use the mail," Postmaster General Patrick Donahoe said in a statement on Thursday.

"While it has helped us grow our Shipping Services businesses, it has had a significant negative impact on some of our much larger sources of revenue."

The agency reiterated its call for Congress to pass legislation giving the Postal Service flexibility to remake its crumbling business.

Postal officials want lawmakers to allow the agency to tap into a retirement-fund surplus and permit it to offer new services. It also wants to end Saturday delivery and eliminate a large annual payment to prefund retiree health benefits.

"The longer the Postal Service remains in a weak position, the more damage can be done to our business," Chief Financial Officer Joe Corbett said during a conference call with reporters.

"We need to change and get back to a point where we're financially stable so that our customers and our suppliers have faith in us."

The Postal Service lost $5.1 billion the last fiscal year, which ended on September 30. Corbett warned the agency could hit its legally mandated borrowing limit this fall. A downturn in the economy or other unforeseen circumstances could cause a cash crunch that would force the agency to miss some payments in order to keep paying employees and suppliers, he said.

Total mail volume dropped 6 percent in the first fiscal quarter which ended on December 31, the Postal Service said.

Declines in first-class and standard mail revenue outweighed a boost to the package business from increased online shopping during the holidays.

Total revenue fell 1.1 percent to $17.7 billion, the Postal Service said.

The Postal Service said it needs to reduce operating costs by $20 billion by 2015, and that it expects large losses to continue unless it sees results from a plan to close thousands of facilities, eliminate jobs and restructure its healthcare program, as well as action from Congress.

Lawmakers remain deeply divided on closing post offices, ending Saturday mail and eliminating the retiree health benefit payment. But the losses could pressure Congress to act.

"USPS has reached a new, deeper level of crisis," said Republican Representative Darrell Issa, author of postal legislation in the House of Representatives. "Congress must pass legislation that allows USPS to reduce its operating costs and realign its network in line with America's declining demand for paper mail."

The Postal Service, which relies on sales of stamps and other products rather than taxpayer dollars, said it expects to default on this year's retiree health prefunding payment.

(Editing by Vicki Allen and Mohammad Zargham)

FILED UNDER:
We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/
Comments (18)
BudVerde wrote:
Must be nice! What other business can run up massive losses without worry? Congress will deliver, you can count on it.

Feb 09, 2012 10:42am EST  --  Report as abuse
BOsucks wrote:
what can congress deliver but deficits?

Feb 09, 2012 11:29am EST  --  Report as abuse
USAPragmatist wrote:
@BudVerde, the USPS is not a business per say, it is a government subsidized mail-delivery system. If it was an actual business you would not be paying less then $.50 to send a letter across the country, it would cost on the order of a few dollars. IMO, like many other government services, it has turned into a subsidy for big business as businesses use the post office and the cheap rates to flood our mail boxes with mass-marketing material. Also IMO, I think the USPS should be a government subsidized cheap mail delivery system for PEOPLE, not corporations.

Feb 09, 2012 11:35am EST  --  Report as abuse
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

Full focus