Post Office's Quarterly Loss Hits $3.5 Billion

[Geee]

Fox News:


Post Office's Quarterly Loss Hits $3.5 Billion
Published August 05, 2010

WASHINGTON -- The Postal Service was $3.5 billion in the red for the third quarter and may not be able to make a required payment for future retiree health benefits, the agency said Thursday.

Losses for the April through June quarter were $1.1 billion more than the post office lost in the same period a year ago.

The post office has been rocked by declining mail volume as people and businesses continue switching to the Internet in place of letters and paper bills.

"Given current trends, we will not be able to pay all 2011 obligations," Joseph R. Corbett, the Postal Service's chief financial officer, said in a statement.

"Despite ongoing aggressive cost reductions totaling over $10 billion in the last three years, it is clear that a liquidity problem is looming and must be addressed through fundamental changes requiring legislation and changes to contracts," he said.

To stem the losses, postal officials have proposed raising rates, cutting out Saturday mail delivery and eliminating advance payments for retiree health benefits.

Congress has been skeptical about the proposal to eliminate Saturday deliveries and a Senate Appropriations subcommittee voted to block the change.

On the House side, meanwhile, a subcommittee is looking at changing the requirement that the Postal Service pay more than $5 billion annually into a fund for future health benefits for its retirees.

The post office said its cash flow and the $3 billion it could borrow may not be enough to cover the $5.5 billion payment it is required to make into the benefit fund on Sept. 30.

Such payments are not required of other federal agencies, but federal budget officials have opposed eliminating them for the post office as that would -- at least on paper -- show up as an increase in the federal deficit.

Overall, the post office had income of $16 billion for April-June, which was down $294 million from the same period last year. At the same time expenses were $19.5 billion, an increase of $789 million.

The number of items mailed during the period was 40.9 billion pieces, down by 700 million.

The year-to-date net loss for the post office is $5.4 billion, compared to a loss in the same period last year of $4.7 billion.

The post office has cut spending and work hours in recent years but is restricted by union contracts. In addition, efforts to save money by closing or consolidating postal facilities often run into opposition from local residents and Congress.

Print Email Share Comments (30)

[pollyannaish]

Wow. Just wow.

[Argyle58]

The Postal Service is in the red because of union obligations.....who'da thunk?

 

I keep seeing this trend, how come the PTB can't?

[clearvision]

And raising the rates will increase mail how? If mail volume does not go up, then it is clear layoffs need to follow the volume down and service reduced where volume is too low to justify even one worker full time. If you are in an area far out then maybe it has to go to every other day. We don't even check our mailbox more than twice a week anymore. Anything critical we get by email/fax or FedEx.

 

Where two government workers deliver mail to an area, go down to 1 and that person goes alternate days with service and Sunday off. Of course this would mean laying off a worker who is Government AND Union.

[Geee]

Just can't wait for them to run healthcare

[NCJim]

I don't see any about the 75 Billion ..yes billion with a B that was over paid into postal retirement funds ..mandated by congress

[clearvision]

Maybe they should consult with Amtrak on how to run a successful government enterprise....

[Geee]

I read an article last week that Amtrak is getting some new trains! Stimulus?

[WestVirginiaRebel]

Reuters:

WASHINGTON, Aug 5 (Reuters) - The U.S. Postal Service reported a quarterly net loss of $3.5 billion on Thursday and said it will likely have a cash shortfall going into 2011.

The agency, which delivers nearly half the world's mail, has reported net losses in 14 of the last 16 fiscal quarters.

Revenue in the third quarter that ended June 30 fell $294 million to $16 billion from a year ago, while expenses were $789 million higher at $19.5 billion, due largely to higher workers' compensation costs and retiree health benefits.

"Given current trends, we will not be able to pay all 2011 obligations," said Joseph Corbett, the agency's chief financial officer.

Cash flow seems on track to handle 2010 operations, Corbett said, but it is uncertain whether sufficient liquidity will be in place for 2011 after the agency must make a $5.5 billion payment on Sept. 30 to prefund retiree health benefits.

"It is clear that a liquidity problem is looming and must be addressed through fundamental changes requiring legislation and changes to contracts," Corbett said.

A U.S. law requires annual payments through 2016 to prefund the health benefits, a requirement not placed on any other government agency. The Postal Service is pushing for legislation that would restructure this payment schedule.
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I think part of the reason for the Post Office's woes may be that they're run as though most people are still using them for mailing letters instead of using email. Privatizing them would go a long way towards helping them to survive against their package-mailing competition.