USPS Losses Continue, Default on Federal Payments Looming
WASHINGTON, DC—August 05, 2011—The U.S. Postal Service ended its third quarter of fiscal year 2011 (April 1-June 30) with a net loss of $3.1 billion, compared to a net loss of $3.5 billion for the same period in FY 2010. Total mail volume declined to 39.8 billion pieces for the quarter, compared to 40.9 billion pieces in the third quarter of FY 2010.
Even with significant cost reductions and revenue growth initiatives, current financial projections indicate the Postal Service will have a cash shortfall and will have reached 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.
Postal Service third-quarter revenue reflects the anemic state of the economy during the past three months. Additionally, the growth in electronic communications continues to erode core First-Class Mail volume. Net losses for the nine months ended June 30 amount to $5.7 billion in 2011 compared to $5.4 billion in 2010.
“We continue to take aggressive actions to reduce costs and bring the size of our infrastructure into alignment with reduced customer demand,” said Postmaster General and CEO Patrick Donahoe. The Postal Service announced plans on July 25 to identify and study nearly 3,700 under-utilized Post Offices for possible closure and introduced the new Village Post Office concept. Village Post Offices would be operated by local businesses, such as pharmacies, grocery stores and other appropriate retailers, and would offer popular postal products and services such as stamps and flat-rate packaging.
Despite an overall dire financial situation, the Postal Service reports increased revenue for the quarter in certain areas. Standard Mail revenue increased 1.7 percent in the third quarter, and Package Services revenue increased 3.2 percent. Revenue from Shipping Services, including Express Mail and Priority Mail, increased 7.3 percent for the quarter.