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USPS reports $3.2 billion in second-quarter losses

May. 10, 2012 - 06:00AM   |  
By SEAN REILLY   |   Comments
Postmaster General Pat Donahoe again is calling on lawmakers to approve plans that would allow the service to defer payments for retiree health care obligations. Above, Donahoe speaks at a May 9 news conference in Washington.
Postmaster General Pat Donahoe again is calling on lawmakers to approve plans that would allow the service to defer payments for retiree health care obligations. Above, Donahoe speaks at a May 9 news conference in Washington. (Chip Somodevilla / Getty Images)

The U.S. Postal Service lost $3.2 billion during the three-month quarter ending in March, $1 billion more than the losses during the same time last year, the agency reported Thursday.

At $16.2 billion, operating revenue for the quarter was almost unchanged from last year; the added loss resulted mainly from the Postal Service's mounting bills for future retiree health care benefits.

Total mail volume continued its slide, dropping to 39.5 billion pieces during the three-month period, which represents the second quarter of fiscal 2012. That is a 4 percent decline from the same period in 2011.

Overall, revenue was stronger than expected, the Postal Service said in the quarterly report, as the shipping and package business continued to be a bright spot. The $3.5 billion in revenue from that segment represented a 13 percent increase over the same period last year. But income from first-class mail, the Postal Service's most profitable line, fell more than 3 percent over last year to about $7.8 billion.

Operating expenses rose more than 5 percent to $19.4 billion, mainly because of the future retiree health care obligations. Under a 2006 law, the Postal Service must pay about $5.5 billion annually to pre-fund those obligations. Because the agency lacked the cash to cover the fiscal 2011 payment due last September, Congress deferred it until this August. But in Thursday's report, the Postal Service said it still can't pay that bill or make a similar payment for fiscal 2012 due at the end of September.

Winning congressional relief from the payment mandate is a key part of the Postal Service's agenda for steadying its finances. In a statement, Postmaster General Pat Donahoe again called on lawmakers to approve that and other elements of a long-term USPS plan to cut more than $22 billion in annual operating expenses by 2016.

While the agency is aggressively pursuing revenue streams and cutting costs within its control, Donahoe said, "these actions are not enough to return the Postal Service to profitability."

Legislation approved by the Democrat-controlled Senate last month would let the Postal Service redirect more than $11 billion in surplus employee pension contributions for other purposes, and stretch out the schedule for building up the retiree health care fund. But it faces strong opposition in the Republican-run House, where top lawmakers say the Senate bill doesn't do enough to put the Postal Service on a sound business footing.

Related reading

http://www.federaltimes.com/article/20120509/DEPARTMENTS02/205090303/1001">USPS offers buyouts to postmasters, drops plan to close post offices (May 9)

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