Postal Service loses $3.2 billion in Jan-March
By Emily Stephenson
WASHINGTON | Thu May 10, 2012 4:38pm EDT
(Reuters) - The Postal Service said its loss widened to
$3.2 billion in the first three months of 2012 and repeated on Thursday its
warning that it will likely default on payments to the federal government
unless Congress passes legislation offering some relief.
The agency, which does not receive taxpayer funds and has
been losing billions each year as Americans communicate online, said it lost
$2.2 billion in the same period in 2011.
Postal officials are pressing Congress to pass
legislation that would allow the agency to move forward with its five-year
business plan, including ending Saturday mail delivery. In the meantime, they
have sought ways to cut costs.
The announcement came a day after the cash-strapped mail
service said it was walking back a plan to close thousands of money-losing post
offices and would instead slash operating hours at 13,000 locations with low
traffic.
"We are aggressively pursuing new revenue streams
and reducing costs in areas within our control," Postmaster General
Patrick Donahoe said in a statement. "These actions are not enough to
return the Postal Service to profitability."
The Postal Service lost $5.1 billion in fiscal year 2011
and was unable to make a massive annual payment for future retiree health
benefits, which is required by law. The agency said much of the loss during the
second quarter of 2012 came from setting aside funds for the $11.1 billion that
is due this year.
Mail volume also fell 4.1 percent to 39.5 billion pieces
from the same period a year earlier, as electronic communications drained both
first-class and advertising mail.
The agency has asked Congress to end the retiree health
payment requirement, let USPS pull its employees out of federal health programs
and run its own plan, scrap Saturday mail delivery, raise rates beyond
inflation, and give back a retirement-fund surplus estimated at about $11
billion.
The Senate passed bipartisan legislation last month that
would allow the Postal Service to use the retirement-fund surplus to offer
retirement incentives, spread out the health benefits payments over a longer
time period, and let it end Saturday mail after two years.
USPS Chief Financial Officer Joe Corbett said the bill
"doesn't go far enough."
"Huge losses will continue until the Postal
Service's comprehensive plan, including the key legislative proposals, moves
forward," he told reporters. "The Senate bill ... would provide
short-term relief, but in the long-term we need additional initiatives
passed."
The House of Representatives has yet to schedule a vote
on postal legislation.
Several lawmakers issued statements on Thursday calling
for action on postal legislation in response to the second-quarter loss. But
they still disagree on whether or not to end the retiree health payments and
what to do about Saturday mail.
DEFAULT EXPECTED
The Postal Service said operating revenue during the
three months that ended on March 31 was $16.2 billion, down about $7 million
from the same quarter of 2011.
First-class mail volumes have consistently fallen, but
Corbett said the decline in standard mail was disappointing. The Postal Service
said better-targeted mailings and electronic alternatives eroded advertising
mail volumes during the quarter.
The shipping business again represented the bright spot
in a bleak report, with revenues related to shipping and packages up 13 percent
from the same period in 2011, USPS said. The online shopping trend and sites
such as eBay Inc. have given the package delivery business a boost.
Operating costs rose about 5 percent, in part because the
agency is setting aside more for the retiree health benefit payments. The
agency also saw an 8.1 percent increase in transportation expenses due to
rising fuel costs.
Corbett said officials do not expect to make the retiree
health payment, which comes due at the end of the fiscal year when the Postal
Service expects to be low on cash and near its borrowing limit, and that to do
so would be "irresponsible."
Fred Rolando, president of the National Association of
Letter Carriers, a postal union, said Congress should end the health payment
before making service changes such as ending Saturday mail or closing
facilities.
"It would be absurd to start to dismantle the
universal network and degrade service to the American people and America's
businesses when almost all of the red ink ... stems directly from a burden that
Congress imposed and Congress could fix overnight," Rolando said in a
statement on Thursday.
(Reporting By Emily Stephenson; editing by Mohammad
Zargham and Eric Beech)
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