As USPS Losses Deepen, Year-End Shortfall Looms

WASHINGTON, DC—Mr. ZIP’s financial woes keep growing, and the news promises to get worse. The U.S. Postal Service (USPS) ended the second quarter of this fiscal year (Jan. 1 to March 31) with a net loss of $2.2 billion, compared to a net loss of $1.6 billion for the same period in FY 2010.

The growing loss comes despite what the USPS calls “significant cost reductions and revenue growth initiatives.” The agency reiterated that current financial projections indicate it will have a cash shortfall and reach its statutory borrowing limit by the end of the fiscal year. Absent substantial legislative change, the Postal Service will be forced to default on payments to the federal government.

“The Postal Service continues to seek changes in the law to enable a more flexible and sustainable business model,” said Postmaster General and CEO Patrick Donahoe. “We are committed to working with Congress and the administration to resolve these issues prior to the end of the fiscal year. The Postal Service may return to financial stability only through significant changes to the laws that limit flexibility and impose undue financial burdens.”

Mailing services revenue of $14.0 billion decreased $568 million, or 3.9 percent, in the second quarter of 2011, compared to the same period a year ago. Mailing services volume of 40.7 billion pieces represents a 3.1 percent decline from the same period a year earlier. According to the USPS, revenue from Standard Mail was not sufficient to offset the loss of revenue from the reduced volume of First-Class Mail.

“Sluggish economic growth and diversion of First-Class Mail to electronic alternatives continue to cause record losses, despite a reduction of over 130,000 full-time equivalents in the last three years,” added Joseph Corbett, CFO and executive vice president.

The Postal Service reduced work hours in the second quarter by 9.6 million hours or 3.2 percent. The number of career employees on March 31 was 571,566, a reduction of 6,726 employees during the second quarter.

  • http://NoelWard Noel Ward

    Get this over with. Stop talking, bickering and studying and do a bunch of things at once:
    Raise the1 ounce rate to 50 cents over the next 2 years, give fewer discounts for Standard mail, kill Saturday delivery now, close the small post offices or integrate them into other businesses (like at the front of Wal-Marts, supermarkets and in rural area general stores). Stop delivering to every address every day (with exceptions for things like medicines and benefit checks). Cut back the pension & retirement benefit deals (just like corporate America does). Also cut the exec pay at L’enfant Plaza in DC so those bureaucrats will either go away or do something useful. Terminate the union or get its members to realize they are part of the problem.

    Or just start privatizing the whole thing. Or at least parts of it.