Postal Service’s $3.2 Billion Q2 Loss Underscores Need for Legislative Changes
“We are aggressively pursuing new revenue streams and reducing costs in areas within our control,” said Postmaster General and CEO Patrick Donahoe. “These actions are not enough to return the Postal Service to profitability. The legislative changes outlined in our business plan will enable us to reduce annual operational expenses by approximately $22.5 billion by 2016 and set the stage for long-term financial stability so we can continue to provide secure, reliable and economical universal service to the American public.”
Postal Service actions to increase revenue continue to pay off in the shipping and package service lines of its business. Revenues related to shipping and packages totaled $3.5 billion, an increase of over 13 percent compared to the same period in the previous year, as volume increased 74 million pieces, or 9 percent.
Despite the growth and success of Postal Service shipping and package products, it was not enough to overcome the decline in Mailing Services. Revenue from mailing services, excluding market dominant packages, totaled $12.8 billion, a 3 percent decrease compared to the same period last year, on a volume decrease of 1.8 billion pieces. The revenue reduction reflects the continued decline in First-Class Mail as consumers continue to turn to electronic alternatives.
The second quarter also saw a decline in Standard Mail, attributable to a decline in direct mail advertising spending across a number of sectors as sales prospecting slowed in certain sectors, advertisers used more selective targeting methods and competition from electronic advertising media increased.
“We expect to retain the ability to continue high quality delivery services to all of our customers, and continue to take all actions necessary to make sure that our employees and suppliers will be paid. Without legislative change, we will not have sufficient cash to pay the $11.1 billion required for retiree health prefunding and may be forced to default on other payments due to the Federal Government,” said Chief Financial Officer Joe Corbett.