Postal Service’s $3.2 Billion Q2 Loss Underscores Need for Legislative Changes
WASHINGTON, DC—May 10, 2012—The Postal Service ended its second quarter (Jan. 1 – March 31, 2012) with a net loss of $3.2 billion, compared to a net loss of $2.2 billion for the same period last year. Despite ongoing management actions that have grown and improved efficiency, the losses will continue until key provisions of the Postal Service five-year business plan move forward.
Without the impact of the non-controllable costs related to mandated retiree health benefit pre-funding payments and accounting for non-cash adjustments for worker’s compensation, the non-GAAP loss for the quarter was $486 million compared to $469 million for the same period last year as shown in the following table:
||Quarter 2, 2012
||Quarter 2, 2011|
|Non-GAAP Operating Loss||$486 million||$469 million|
|PSRHBF Payments||$3.05 billion||$1.38 billion|
|Worker’s Compensation Fair Value Adjustment||$(599) million||$(209) million|
|Worker’s Compensation Claims & Adjustment||$240 million||$593 million|
|Net Loss||$3.18 billion||$2.23 billion|
The losses are due primarily to legislative mandates such as the unique mandated pre-funding of retiree health benefits, and prohibiting management from making the needed operational and human resource changes required to address these issues under current laws and contracts. Also contributing to the continuing losses are the declining First-Class Mail and Standard Mail volumes. The Congress must act soon to pass legislation providing the Postal Service with the flexibility and speed needed to make the changes necessary for long-term financial viability.
Other details of the second quarter results compared to the same period last year include:
- Total mail volume of 39.5 billion pieces, a decrease of 1.7 billion pieces, or 4.1 percent;
- Operating revenue of $16.2 billion, a decrease of $7 million or less than 1 percent;
- Operating expenses of $19.4 billion, an increase of $938 million, or 5.1 percent, driven by expenses related to the legally mandated prefunding of retiree health benefits payments scheduled to be paid in the final quarter of this year;
- Transportation expenses of $1.7 billion, an increase of $126 million, or 8.1 percent, driven by rising fuel costs. Other expenses of $2.3 billion, a decrease of $133 million, or 5.6 percent.
These results bring the year to date net loss to $6.5 billion, compared to $2.6 billion for the same period last year.