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Federal Eye
Posted at 01:15 PM ET, 08/05/2011

Postal Service reports more losses in third quarter

Rein

Despite continued cost-cutting efforts that include a reduction of 7,500 administrative positions, the U.S. Postal Service lost $3.1 billion in the third quarter of the fiscal year as mail volume continued to plunge. Postal officials said Friday that they will be forced to default on payments to the federal government by fall if Congress does not act.

The loss for the quarter that ended June 30 narrowed from $3.5 billion during the same period in fiscal 2010. But the Postal Service said it will have a cash shortfall and will have reached its legal borrowing limit by the end of the fiscal year, when it must make a $5.5 billion payment to a trust fund for health benefits for retirees.

“We continue to take aggressive actions to reduce costs and bring the size of our infrastructure into alignment” with reduced demand for mail service, Postmaster General Patrick Donahoe said at a briefing.

There was one bright spot: Revenue from shipping services, including Express Mail and Priority Mail, rose 7.3 percent. But first-class mail continued to fall in the last quarter, by 6.4 percent.

The Postal Service expects to lose as much as $9 billion this year.

Donahoe has been lobbying Congress to pass legislation that would eliminate the health fund prepayment and give the agency access to a pension fund into which it has overpaid. He is also pushing to eliminate Saturday service, a proposal that could save $3 billion a year but that has proven unpopular with members of Congress.

The agency announced in July that it has targeted about 3,600 unprofitable post offices for closure in the next year. Another 700 announced last fall also are on the chopping block.

There are several bills pending to address the agency’s financial and structural problems, some introduced by Democrats, some by Republicans.

The Postal Service receives minimal tax dollars to cover its operating expenses and relies on the sale of postage, products and services to fund its operations.

By  |  01:15 PM ET, 08/05/2011

 
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