USPS posts $3.8 billion loss as volume plummets
Tuesday, November 17, 2009
The U.S. Postal Service posted a $3.8 billion net loss during the fiscal year that ended in September, despite $6 billion in cost-cutting moves. Total mail volume fell more steeply than ever -- by 25.6 billion pieces, or almost 13 percent, more than double any decline in postal history. Worse, the Postal Service expects that 2010 mail volume will drop by another 11 billion pieces.
The decline is tied to the economic downturn and the continued migration of communications to the Internet. The Postal Service lost $1 billion more than it did in 2008, despite cutting the equivalent of 65,000 full-time jobs through buyouts and attrition, slashing transportation costs and getting $4 billion in financial relief from Congress.
"I think saying it was an extremely difficult year is a bit of an understatement," Postal Service Chief Financial Officer Joseph Corbett told reporters.
The Postal Service's financial health has historically lagged national economic recoveries by two quarters, Corbett said. A strong correlation between employment levels and mail volume also suggests that volume will continue to slide, he said.
Postal officials will present a 2010 financial plan this week that cuts another 93 million work hours, the equivalent of 53,000 full-time employees, through attrition and reassignment. The plan also estimates a revenue decline of $2.2 billion and a year-end net loss of $7.8 billion.
That loss includes $5.5 billion in payments the Postal Service is legally required to make to its retiree health-benefits system. Congress cut $4 billion from the 2009 payment in September, and postal officials want lawmakers to make the cut permanent.
"The business model, quite frankly, is broken. It doesn't work in a declining-volume scenario," Corbett said.
Postal officials will also continue pushing Congress to cut mail delivery to five days, a move that could save between $3 billion and $4 billion annually, Corbett said.
The Postal Service has already announced that it will not raise stamp prices this year. Some post offices started selling greeting cards this year in an effort to raise revenue.