U.S. Postal Service Loses More Than $5B for Q3 2012
WASHINGTON, DC—The U.S. Postal Service (USPS) ended its third fiscal quarter (April 1 to June 30, 2012) with a net loss of $5.2 billion, compared to a net loss of $3.1 billion for the same period last year. Contributing significantly to the quarter's $5.2 billion loss was $3.1 billion of expense for the legislatively mandated prefunding of retiree health benefits.
These expenses, along with the continued decline of First-Class Mail volume, more than offset the quarter's 9 percent growth in revenue from shipping services and package delivery.
The USPS said that large losses are expected to continue until legislative changes are made in line with the Postal Service Business Plan to return to financial stability. Changes sought include:
• A refund of $11 billion of pension plan overfunding needed to pay down debt and invest for future growth;
• Transition to a five-day schedule of weekly mail delivery; and
• The elimination of prefunding for retiree health benefits with the introduction of a postal health insurance program, independent of the current federal programs.
"We remain confident that Congress will do its part to help put the Postal Service on a path to financial stability. We will continue to take actions under our control to improve operational efficiency and generate revenue by offering new products and services to meet our customers' changing needs," said Postmaster General and CEO Patrick Donahoe.
The Postal Service was forced to default on a $5.5 billion prefunding payment for retiree health benefits on Aug. 1, due to insufficient cash resources. It is also set to default on a second similar payment of $5.6 billion due by Sept. 30.
Current projections show very low levels of cash, and no remaining borrowing capacity, at the end of the current fiscal year and through October 2012.