WASHINGTON (Reuters) - The U.S. Postal Service's net loss widened to $5.2 billion during the April through June period, and the cash-strapped agency warned on Thursday that without help from the U.S. Congress it will face low cash and be unable to borrow money this fall.
The Postal Service, which relies on the sale of stamps and other products rather than taxpayer funding, has been struggling for years as Americans increasingly communicate online and as payments for future retiree health benefits and other obligations drain its cash.
A week after its first-ever default on a legally required payment to the federal government, officials called on Congress to pass postal legislation that would overhaul the mail agency's business model and offer some relief from its dire financial situation.
Lawmakers, who have said they are committed to helping the Postal Service become profitable, left last week for a month-long recess without reaching an agreement on postal legislation.
"Congress needs to act responsibly and get on with things so that we can get these things in our rearview mirror," Postmaster General Patrick Donahoe said on Thursday.
While postal officials insist it is unlikely Congress would allow the Postal Service's financial straits to get so dismal as to impede mail delivery, the agency has said it needs a significant restructuring to get back on sound footing.
The mail agency defaulted last week on a legally required $5.5 billion payment for future retiree health benefits, and its inspector general said the Postal Service could face a $100 million cash shortfall in mid-October.
Much of the net loss of $5.2 billion in the third quarter, compared to $3.1 billion for the same period in 2011, came from funds the agency must set aside for the retiree benefits payment. Even though the Postal Service defaulted and expects to skip a second payment due next month, it still must account for the payments in its financial statements.
Even without the payments, a postal official told the agency's Board of Governors on Thursday that the Postal Service lost about $1 billion on normal operations as Americans' ongoing shift to email strangled mail volume.
The USPS has made a number of cost-cutting moves, slashing operating hours at small post offices, offering buyouts to thousands of workers and launching a plan to consolidate operations at 140 processing sites by February.
Still, the service projects a net loss of about $15 billion for the fiscal year, which goes through September, said Stephen Masse, acting chief financial officer for the agency.
Postal officials said Congress needs to step in. They want authority to end Saturday mail, pull employees out of federal health plans and run their own instead, stop making the payments for future retiree benefits and make other changes.
The Senate passed a bill in April that would let the agency end Saturday mail and tap into a surplus in a federal retirement fund to offer retirement incentives to workers.
Leaders in the House of Representatives have said that bill does not go far enough, but they left last week for a recess until after the September 3 Labor Day holiday without bringing their version of the postal reform bill up for a vote.
"I can only hope that as members of Congress are back in their districts meeting with their constituents over the next month, they will hear these concerns about the future of the Postal Service and be persuaded that they cannot continue to postpone passing comprehensive postal reform legislation," said Senator Tom Carper, one of four authors of the Senate bill.
Shipping services and package delivery were a bright spot, growing 9 percent in revenue compared to the same quarter a year earlier. Email and online bill payments have hurt letter mail volumes, but the USPS's shipping business has benefited from online shopping and sites like eBay.com.
But mail volume fell 3.6 percent to 38.5 billion pieces, the agency said. Operating revenue during the quarter was $15.6 billion, a decrease of less than 1 percent from a year earlier.
Postal officials said the agency will face low cash levels in October, when a $1.4 billion payment for workers compensation comes due.
Masse said officials believe extra revenue from election-related mail could get the agency through the tight period. The cash crisis should improve during the holiday mailing season, typically the best time of year for the Postal Service.
He also said the agency would prioritize paying suppliers and employees over making obligations to the federal government, but he did not say what payments the USPS might skip or delay.
Last summer, the Postal Service temporarily halted payments into a retirement system that has surplus funds. The agency's inspector general has said the USPS could do the same this year.
Reporting By Emily Stephenson; Editing by Vicki Allen and Sofina Mirza-Reid