The U.S. Postal Service is warning it likely will not be able to make a $5.5 billion mandated payment in September to its employee retirement health fund.

"Given current trends, we will not be able to pay all 2011 obligations," said Joseph Corbett, the agency's chief financial officer, in a news release. "Despite ongoing aggressive cost reductions totaling over $10 billion in the last three years, it is clear that a liquidity problem is looming and must be addressed through fundamental changes regarding legislation and changes to contracts."

For the third quarter, which covers the period from April through June, the Postal Service had a net loss of $3.5 billion, compared to $2.4 billion for the same period last year. Third-quarter operating revenue amounted to $16 billion, down $294 million from last year, while operating expenses were up 4.2 percent to $19.5 billion. The Postal Service attributed the increase mainly to higher retiree health costs and a non-cash fair value adjustment.

Third-quarter mail volume was 40.9 billion pieces, down about 700 million pieces, or 1.7 percent from last year, according to the release.

To shore up its position, the Postal Service is seeking to end most Saturday mail delivery and also wants to raise postage rates. Through the end of June, its cumulative net loss for fiscal 2010 was $5.4 billion, compared to $4.7 billion for the same nine-month period last year.