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Originally published Wednesday, February 4, 2009 at 12:30 PM

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Post office $384 million in the red

The Postal Service had a $384 million loss in the October-December period, usually a profitable time for the agency because of holiday cards, gifts and catalogs.

Associated Press Writer

WASHINGTON —

The Postal Service had a $384 million loss in the October-December period, usually a profitable time for the agency because of holiday cards, gifts and catalogs.

But the worsening recession pushed mail volume down by 5.2 billion pieces compared to the same period a year earlier.

It was the eighth consecutive quarter that mail volume fell by increasing amounts. Without an economic recovery, mail volume for the year could be down 12 million to 15 million items, the post office said.

The post office lost $2.8 billion last fiscal year and if current trends continue the loss could be much greater this year.

A rate increase is scheduled to take effect in May, but the amount has not yet been announced. Because rates are tied to inflation a 2-cent increase in the 42-cent first-class price is likely. Officials could seek a higher rate, citing the extraordinary economic conditions, but they are concerned that could lead to even greater declines in business.

Preliminary results for the first quarter of the fiscal year - October through December - were presented to the postal board of governors Wednesday.

They showed operating revenue of $19.1 billion, a decrease of $1.3 billion compared to the same period last year, and operating expenses of $19.5 billion, a reduction of approximately $200 million.

First-class mail volume, cards, letters and bills, was down 1.8 billion items while advertising mail declined 3 billion pieces in the quarter.

Postmaster General John Potter noted that the agency is cutting costs, reducing work hours, and asking Congress to ease requirements for advance funding of retiree benefits and to allow mail to be delivered five days a week instead of six.

Also on Wednesday, Carolyn Lewis Gallagher was elected chairman and Louis J. Giuliano was elected vice chairman of the Board of Governors. Gallagher previously served as vice chairman.

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On the Net:

U.S. Postal Service: http://www.usps.com

Copyright © 2009 The Seattle Times Company

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