Post office loses another $1.9 billion

WASHINGTON — The U.S. Postal Service said Friday it lost $1.9 billion over the last three months and warned that losses would continue to mount without help from Congress.

The loss for the financial quarter ending March 31 was narrower than a $3.2-billion loss for the same period last year, thanks to slightly higher revenues and lower payments towards health benefits for workers who will retire in the future.

But the Postal Service continues to lose money at a rapid pace due to a decline in mail volume and a congressional requirement that it make advance payments to cover expected health care costs for future retirees — something no federal agency does.

Postmaster General Patrick Donahoe said the agency is considering its options, including negotiations with unions to reduce labor costs and another possible increase in prices. “Everything has to be on the table,” Donahoe said.

Over the past six months, the Postal Service has shed about 31,000 full-time employees, consolidated 61 processing facilities, eliminated 350 delivery routes and reduced work hours in 5,000 offices. It now has the lowest number of full-time employees since 1966.

Donahoe said the Postal Service would continue to pursue legislation allowing it to end Saturday mail delivery and reduce health and other labor costs. The agency had planned to cut back in August to five-day-a-week deliveries for everything except packages, but it backpedaled last month after Congress passed a spending bill that continued a longtime prohibition against reducing delivery days.

Joe Corbett, the service’s chief financial officer, said the agency could return to a level of modest profits averaging about $2 billion a year if Congress approves all the changes it has requested.

First-class mail revenue, the Postal Service’s most profitable category, declined by $198 million, or 2.7 percent in the second quarter compared to the same period last year. Volume decreased by 4.1 percent to about 713 million pieces, in large part due to consumers moving to email and electronic bill payments.

On the positive side, revenue from shipping and packages increased $267 million in the second quarter, or about 9.3 percent compared to the prior year. Advertising mail revenue increased by 2.4 percent or $96 million.

The National Association of Letter Carriers noted that the Postal Service’s operating revenue of $16.3 billion was nearly 1 percent higher than the same period last year, a sign of gradual progress in the agency’s financial picture. Fredric Rolando, the union’s president, said the improvement “shows the absurdity of taking the radical step of degrading the postal network by eliminating Saturday delivery.”

“This would cost the USPS its competitive advantage, drive customers away, reduce revenue and make the Postal Service less able to adapt to an evolving society,” Rolando said.

The unusual requirement for the Postal Service to pre-fund future retiree health benefits decades in advance “accounts for 90 percent of this year’s red ink” and shows the urgency for Congress to end the mandate, Rolando said.

The Postal Service is an independent agency that receives no tax dollars for its day-to-day operations but is subject to congressional control.

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