The U.S. Postal Service on Tuesday reported a $5.1 billion annual loss, but the figure would have been more than twice as high if Congress had not postponed a $5.5 billion bill to fund retiree health benefits.
The announcement of the latest in a string of multibillion-dollar annual losses came during a meeting of the Postal Service's Board of Governors, with officials blaming the troubles on a continued steep decline in first-class mail despite encouraging gains in the shipping and package business.
“We are cash-strapped,” said Joseph Corbett, chief financial officer for the Postal Service.
Postmaster General Patrick Donahoe said the Postal Service would run out of money by the end of the fiscal 2012 unless Congress passes postal reform legislation. He said the Postal Service has reduced its workforce by more than 125,000 in the past four years, but needs to continue to downsize in coming years because first-class mail, the Postal Service’s top source of revenue, is expected to continue to drop.
Overall, he said, the Postal Service needs to cut $20 billion by 2015.
Postal Service revenue dropped to $65.7 billion from $67.1 billion, though operating expenses were cut to $70.6 billion compared to $75.4 billion in 2010.
Among other changes, the Postal Service is seeking to restructure the way it funds retiree health benefits, cut Saturday home mail delivery and consolidate post offices across the country.
The Postal Service has until Friday to pay the postponed $5.5 billion to prefund retiree health benefits. Unless the Nov. 18 deadline is postponed again, officials warned that the Postal Service would be forced to default on the payment. Officials also say they don’t plan on being able to make a $5.6 billion retiree health benefit payment due next year.
The financial results prompted “alarm” from one mailing industry group that issued a statement shortly after the meeting calling for congressional action.
“For the Postal Service and the mailing industry, the news cannot get much worse,” said Art Sackler, coordinator of the Coalition for a 21st Century Postal Service. “If nothing is done to stem these losses, USPS will be forced to shut down within a year.”
However, there was some positive news.
Shipping services revenue, including priority mail and express mail, increased by 6.3 percent over the year, while standard mail rose by 2.9 percent.
The meeting also saw the election of a new chairman of the Board of Governors, a bipartisan board appointed by the president that oversees the Postal Service. Appointees earn a stipend of $30,000 per year plus $300 per day for not more than 42 days of meetings each year.
By unanimous vote Tuesday, the new chairman starting next month is Thurgood Marshall Jr., a Washington lawyer, and the new vice chairman is Mickey D. Barnett, a New Mexico lawyer.
Though encouraged postal reform legislation is starting to work its way through Congress, Mr. Marshall added, “We are keenly aware that much more work needs to be done to get us across the goal line.”