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Friday, August 10, 2012 - Page updated at 08:00 p.m.
Postal Service reports $5.2B loss in fiscal 3rd quarter
By HOPE YEN
The Associated Press
WASHINGTON — The nearly bankrupt U.S. Postal Service on Thursday reported losses of $57 million per day in the last quarter and warned it will miss another payment due to the U.S. Treasury, just one week after its first-ever default on a payment for future retiree-health benefits.
From April to June, losses totaled $5.2 billion, up $2.1 billion from the same period last year.
The mail agency said it is being hurt significantly by mounting expenses for future retiree-health benefits. Those expenses, mandated by Congress in 2006, made up $3.1 billion of the quarterly loss, while workers' compensation tacked on $1.1 billion more in expenses.
First-class mail falls
The agency's operating loss was $1 billion, mostly due to declines in first-class mail.
"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 other payments may be delayed if necessary.
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. It defaulted on that payment last week when the House failed to act n before heading home for a five-week break.
The mail agency says it will miss the second $5.6 billion payment due Sept. 30, also for future retiree benefits, as cash runs close to zero.
At a news briefing, Postmaster General Patrick Donahoe made clear that day-to-day mail delivery will not be disrupted. But Donahoe expressed frustration with the repeated delays by Congress, which he said is contributing to a lot of "negative talk on finances" that could undermine confidence in the mail agency and its long-term growth.
The Senate passed a postal bill in April that would have provided financial relief in part by reducing the annual health payments and providing an $11 billion cash infusion, basically a refund of overpayments the Postal Service made to a federal pension fund.
The House, however, remains stalled over a separate bill that would allow for aggressive cuts, including an immediate end to Saturday delivery. Rural lawmakers in particular worry about the impact in their communities.
The Postal Service originally sought to close low-revenue post offices in rural areas to save money. But after public opposition, it is moving forward with a new plan to keep 13,000 open with shorter operating hours.
An independent agency of government, it does not receive tax dollars for its day-to-day operations but is subject to congressional control.
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.
On the positive side, the agency reported it continued to lower costs by reducing work hours and boosting employee productivity. Its fast-growing shipping services, which include express and priority mail, had a 9 percent increase in operating revenue to $3.3 billion.
Shipping services grow
That strong growth in shipping services, which the mail agency is promoting as a cheaper alternative to FedEx and UPS, helped offset roughly three-fourths of the declines in first-class and advertising mail, said Stephen Masse, the Postal Service's acting chief financial officer.
The numbers bring the Postal Service's year-to-date net loss to $11.6 billion, compared with $5.7 billion for the same period last year.
The Postal Service on Thursday said it believes it will stay afloat, despite perilously low cash levels anticipated in October, partly because of increased revenue from the higher amount of election mail.
"There are more than 8 million private-sector workers whose jobs depend on the mail, and these jobs may be in jeopardy if Congress fails to reform the Postal Service," Sackler said. "As bad as things are getting for the Postal Service, it could be worse next year."
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