Foundering USPS Absorbs Punishing Q2 Loss

WASHINGTON, DC—The U.S. Postal Service (USPS) 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 USPS believes have grown and improved efficiency, the Postal Service feels the losses will continue until key provisions of its 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.

The losses are due, the USPS maintains, primarily to legislative mandates such as the pre-funding of retiree health benefits and prohibiting management from making needed operational and human resource changes required to address the issues under current laws and contracts. Also contributing to the continuing losses, it says, are the declining First-Class Mail and Standard Mail volumes.

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.

Comments
  • Ijay

    I can only imagine how much they are spending on TV commercials for the EDDM (every door direct mail) campaign. Is it getting them a return on that investment? Or, would it have been more beneficial to promote this program by educating the existing carriers to "promote" it directly to their delivery business base. Add to this, more seminars regionally (I know they did this after the soft launch last May) on a regular basis also making it available on recorded Webinars for businesses that can’t attend during business hours.

  • Clint Bolte

    We’ve had Express Mail (overnight guaranteed) send Thursday to arrive Friday that somehow were delayed until Saturday. This has never happened before. Hope this is not a game being played by the postal unions to beef up the Saturday "urgent delivery" statistics.

    Have friends starting to work as "part timers" for the local post office(s). The reported sniping and back biting among the work force (partime v. full time, hourly v. management) is hard to believe.

    I can’t imagine a business more difficult to manage or to be part of the management team.

    They all deserve our prayers. It does not have to be this way even though total restructuring is a given.