(U.S. Postal Service news release) The U.S. Postal Service ended its third fiscal quarter (April 1 – June 30) with a net loss of $5.2 billion, compared to a net loss of $3.1 billion for the same period last year.
According to a news release issued Thursday:
Contributing significantly to the quarter’s $5.2 billion loss was $3.1 billion of expense for the legislatively mandated prefunding of retiree health benefits. These expenses, along with the continued decline of First-Class Mail volume, more than offset the quarter’s 9 percent growth in revenue from Shipping Services and package delivery. Despite continued success in generating new package delivery revenue, improving efficiency and reducing costs, large losses are expected to continue until legislative changes are made in line with the Postal Service Business Plan to return to financial stability.
The Postal Business Plan includes measures that require urgent legislative changes, including:
A refund of $11 billion of pension plan overfunding needed to pay down debt and invest for future growth
Transition to a five-day schedule of weekly mail delivery
The elimination of prefunding for retiree health benefits with the introduction of a Postal health insurance program, independent of the current federal programs.
“We remain confident that Congress will do its part to help put the Postal Service on a path to financial stability. 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,” said Postmaster General and CEO Patrick Donahoe. “Moving forward with our business plan will make the Postal Service financially self-sustaining, provide a platform for future growth and preserve our mission to provide secure, reliable and affordable universal delivery services for generations to come.”
The Postal Service was forced to default on a $5.5 billion prefunding payment for retiree health benefits on Aug. 1, due to insufficient cash resources. Absent legislative changes, the Postal Service will also default on a second similar payment of $5.6 billion due by Sept. 30, 2012. Current projections show very low levels of cash, and no remaining borrowing capacity, at the end of the current fiscal year and through October 2012. In response, the Postal Service will continue to prioritize payments to employees and suppliers to ensure completion of its mission to provide high-quality mail service to the American people.
“The Postal Service has successfully improved productivity while removing nearly $14 billion from its annual cost base during the past five fiscal years,” said Acting Chief Financial Officer Stephen Masse. “These operational actions to improve efficiency will continue in the future, but we urgently need the legislative changes noted above to restore our short-term liquidity and provide a stable base for the future. In the meantime, we will prioritize our cash resources to ensure that we deliver on our mission.”
Read the entire news release from the U.S. Postal Service HERE.