* Total mail volume down 1.7 pct, First-Class down 5.8 pct
* Loss excludes $5.5 bln payment delayed by Congress
* Officials warn agency could run out of money next year
WASHINGTON, Nov 15 The U.S. Postal Service, recording a net loss of $5.1 billion for its 2011 year, warned on Tuesday that it could run out of cash by the end of fiscal 2012 if Congress did not offer relief.
The rise of e-mail and online bill payments combined with the recession drove total mail volume down 3 billion pieces, or 1.7 percent, from 2010, the agency said in a statement.
Operating revenue for the 2011 fiscal year ended September 30 was $65.7 billion, down 2.1 percent from 2010. A key reason for the decline is that revenue from First Class Mail, the Postal Service's most profitable product, fell 5.8 percent, overwhelming gains in shipping services and Standard Mail.
Officials said during a Postal Service Board of Governors meeting on Tuesday that the agency could run out of cash by the end of fiscal year 2012.
"To return to profitability, we must reduce our annual costs by $20 billion by the end of 2015," Postmaster General Patrick Donahoe said in a statement.
"We continue to take aggressive cost-cutting actions in areas under our control and urgently need Congress to do its part to get us the rest of the way there," Donahoe said.
The agency's total expenses for 2011 were $70.6 billion, much lower than $75.4 billion in 2010.
The agency is reviewing 3,700 post offices and hundreds of processing facilities for possible closure and pausing biweekly payments into a federal retirement program, and it announced a one-cent boost in stamp prices starting in 2012.
Officials have asked lawmakers to let it end Saturday mail delivery, spin off its retirement and health programs, and renegotiate union contracts.
But the agency says it has limited ability to restructure and may need to cut more than 220,000 more workers by 2015, many through layoffs.
The agency's loss reported on Tuesday did not include a $5.5 billion payment to prefund retiree health benefits, which was extended by Congress to Nov. 18 to help conserve cash.
Donahoe has said the agency will default on the payment if it is not extended again. A stopgap bill proposed this week to fund the federal government for another month would give the agency until mid-December to make the payment, a congressional staffer said on Tuesday.