Postmaster General Pat Donahoe (AFP/Getty Images)
The U.S. Postal Service reported a net loss of $1.3 billion for the first three months of fiscal 2013, despite successes in maintaining revenue and cutting expenses.
The $17.7 billion in revenue from October through December was virtually unchanged from the same period a year ago and expenses were down almost 10 percent, according to financial results released at a meeting of the Postal Service’s Board of Governors.
Total mail volume was 43.5 billion pieces, down slightly from 43.6 billion pieces last year. While revenue from first-class mail — the Postal Service’s most profitable line — dropped 3.1 percent, that dip was offset by 4.7 percent growth in shipping and package revenue and a 3.1 percent increase in standard, or advertising, mail income.
On an operating basis, the mail carrier showed a profit of about $100 million.
But the red ink resulted from $1.3 billion in paper expenses for workers’ comp adjustments and the quarterly installment of a retiree health care prepayment obligation. On an annual basis, the Postal Service is legally supposed to pay about $5.6 billion into a fund for future retiree health care. But the cash-strapped agency defaulted on the payments due in 2011 and 2012 and says it will be unable to make this year’s as well. It must nonetheless book the cost as an expense.
Because of the holiday shipping season, the first quarter is typically the Postal Service’s most profitable quarter. Further bolstering results this year was a flood of election-year political mail.
Friday’s board meeting came two days after Postmaster General Pat Donahoe announced that the Postal Service will end Saturday mail delivery starting in August, although package delivery will continue. That measure, which the Postal Service says will save $2 billion a year, followed a board directive to accelerate cost-cutting efforts, but has drawn fierce criticism from some members of Congress.
The board strongly supports the move, Chairman Mickey Barnett said Friday. He added, however, that the Postal Service still needs comprehensive legislation to return to long-term financial stability.