* Election mail, holiday packages help results
* Postal Service lost $3.3 billion in year ago quarter
* CFO forecasts extremely low levels of cash in 2013
By Elvina Nawaguna and Emily Stephenson
WASHINGTON, Feb 8 The U.S. Postal Service cut
its losses by more than half in its first quarter as mail tied
to the November elections, and stronger revenue from
holiday-related packages contributed to a better quarter.
The postal agency, which recently announced plans to cut
back on Saturday deliveries because of financial problems, lost
$1.3 billion in the October through December quarter compared
with a year ago loss of $3.3 billion, officials said on Friday.
USPS Chief Financial Officer Joe Corbett said the Postal
Service still expects to face extremely low levels of cash
"The need for such cost-saving initiatives like five-day
mail delivery are borne out by the continuing loss of
first-class mail and the resulting deep and unsustainable
financial losses," Corbett said on Friday.
"We cannot continue to operate on a precipice," he said.
The mail service has been grappling with tumbling mail
volumes as Americans communicate more online, and has struggled
under the weight of massive required payments for future retiree
The October through December period, which is the first
quarter of the Postal Service's fiscal year, is typically the
strongest because of the holidays.
Officials said total mail volume during the quarter fell to
43.5 billion pieces from 43.6 billion a year earlier. A dip in
first-class mail volume was mitigated by the 3.6 percent rise in
standard volume, largely due to official election and political
The Postal Service also set aside less this year for its
annual payment for future retiree health benefits, which
contributed to a 9.8 percent drop in operating expenses to $18.9
billion during the quarter.
A 2006 law requires the Postal Service to fund 75 years
worth of its future retirees' healthcare by 2016.
The Postal Service has blamed much of its financial troubles
on the massive payments into this fund. The independent
government agency relies on sales of stamps and other products
rather than taxpayer dollars to fund its operations.
Last year, the Postal Service had to account for two such
payments after Congress delayed a payment initially due in 2011.
The mail agency defaulted on both but still had to account for
them in financial reports.
Officials said they expect to default again on this year's
$5.6 billion contribution, which is due at the end of September.
Excluding the prefunding requirement for future retiree
health benefits, the Postal Service posted $100 million in
operational profits in its first quarter.
"The report makes clear that the top financial burden is the
2006 congressional mandate to pre-fund future retiree health
benefits, which no other agency or company is required to do,"
Fredric Rolando, president of the National Association of Letter
The Postal Service's financial report, he said, shows the
folly of making drastic cuts in service such as the plan to
eliminate first-class mail delivery on Saturdays.
"The USPS should focus on urging Congress to reform the
pre-funding requirement, not on a counterproductive slashing of
services that would hurt the public, businesses and the Postal
Service itself," Rolando said.
CALLING ON CONGRESS
Postmaster General Patrick Donahoe again called on the U.S.
Congress to pass legislation alleviating the agency's woes. The
agency wants to stop making the payments for future benefits and
to take over its own health care plan, among other changes.
Lawmakers tried last year to pull together legislation to
overhaul the agency's business model but were unable to agree on
how to do it.
U.S. Senate Homeland Security and Governmental Affairs
Committee Chairman Tom Carper, who has pledged to push for
postal service legislation, said that despite the Postal
Service's progress in trimming costs, a lot remains to be done
to fix the agency's outdated business model.
"Piecemeal efforts like those announced in recent days and
months will not be enough to solve the Postal Service's
financial challenges for the long haul," Carper said in a
With gun control, immigration and looming federal spending
cuts dominating the attention of Congress this year, it appears
unlikely lawmakers will tackle postal legislation soon.
In an effort to spur Congress to act, the mail agency
earlier this week announced plans to stop delivering first-class
mail on Saturdays starting in the first week of August. The
agency said cutting back to five-day mail delivery would save $2
billion a year.
The move prompted an outcry from postal unions and some
lawmakers, who argued the Postal Service was circumventing
Congress. Lawmakers for decades have prevented the Postal
Service from scrapping Saturday delivery.
"My encouragement to Congress would be to please not put any
restrictions on us moving ahead," Donahoe said. "We've got to
make this change, we've got to get savings."
The Postal Service will continue delivering packages on
Saturdays and will keep post offices on their normal schedules.
Packages have been a bright spot in a series of bleak
financial reports as Americans order products from online
retailers such as e-Bay Inc and Amazon.com Inc