PNP comment: And people think the government should manage other aspects of our lives and business. Ha. — Editor Liz Bowen
WASHINGTON (AP) — The nearly bankrupt U.S. Postal Service on Thursday reported a quarterly loss of $5.2 billion and warned it will miss another payment due to the Treasury, just one week after its first-ever default on a payment for future retiree health benefits.
From April to June, losses were $2.1 billion more than during the same period last year.
The mail agency said it is being hurt significantly by mounting costs for future retiree health benefits. Those expenses made up $3.1 billion of the post office’s quarterly loss.
Declining first-class mail volume also contributed to losses.
“We have simply reached the point that we must conserve cash,” Thurgood Marshall Jr., chairman of the Postal Service’s board of governors, said in explaining the payment defaults. He cautioned that the mail agency may have to delay other payments if necessary but that day-to-day mail service will not be impacted in any way.
The Postal Service for months has been urging Congress to pass legislation that would allow it to eliminate Saturday mail delivery and reduce the annual health payment of more than $5 billion. The post office defaulted on that payment last week after the House failed to take action before heading home for a five-week break.
The mail agency says it will miss the second $5.6 billion payment due on Sept. 30, also for future retiree benefits, as cash runs close to zero.
“We remain confident that Congress will do its part to help put the Postal Service on a path to financial stability,” said Postmaster General Patrick Donahoe. “We will continue to take actions under our control to improve operational efficiency and generate revenue by offering new products and services to meet our customers’ changing needs.”
Overall, the post office had operating revenue of $15.6 billion from April through June, the third quarter of its 2012 fiscal year. That was down a fraction from the same period last year. But quarterly expenses this year climbed to $20.8 billion, up 10 percent, largely driven by the health prepayments. The Postal Service is the only government agency required to make such payments.
The Postal Service also has been hurt by declining mail volume as people and businesses continue switching to the Internet in place of letters and paper bills. The number of items mailed during the last quarter was 38.5 billion pieces, a 4 percent decrease, much of it in first-class mail.
On the positive side, the mail agency reported that it continued to lower costs by reducing work hours and boosting employee productivity. The Postal Service’s fast-growing shipping services, which include express and priority mail, had a 9 percent increase in operating revenue to $3.3 billion.