Postal Service Posts $1.9 Billion Loss in First Quarter

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US Postal Service Mail Delivery Ahead Of Second-Quarter Results
Andrew Harrer/Bloomberg via Getty Images
By PAULINE JELINEK

WASHINGTON -- The U.S. Postal Service reported a $1.9 billion loss for the first three months of this year and pleaded again Friday for reforms to its troubled financial system.

The agency said the loss for the quarter that ended March 31 matched the $1.9 billion in red ink in the same period last year and marked the 20th time of the last 22 quarters that it posted a loss.

It came despite a 2.3 percent rise in its operating revenue and continued cost-cutting efforts. Postal officials have said repeatedly that they need comprehensive legislation that includes more control over its personnel and benefit costs and more flexibility in pricing and products. Though various legislative proposals have been advanced, Congress has not passed a bill with the requested changes.

"The Postal Service is working diligently to improve its finances by streamlining our network to improve efficiency, reduce operating costs and increase revenue, which was up $379 million over the same period last year -- the third straight quarter of revenue increase," Postmaster General Patrick Donahoe said in a statement. "However, we will still incur annual inflationary cost increases ... and first-class mail volume continues to decline."

Details in the report for the second quarter of the budget year, compared to the same period last year, included:
  • Operating revenue was $16.7 billion, an increase of $379 million or 2.3 percent.
  • Operating expenses before non-cash workers' compensation expenses were cut to $17.9 billion from $18.1 billion, a 1.1 percent improvement.
  • Total mail volume fell to 38.1 billion pieces from 38.8 billion pieces.
  • Volume in shipping and packages rose 7.3 percent.
  • First-class mail declined 4.1 percent.
The Postal Service is an independent agency that receives no tax dollars for its day-to-day operations but is subject to congressional control. It has asked to end most Saturday deliveries, a move it says could save about $2 billion annually. And it's seeking to reduce its congressionally mandated $5.6 billion annual payment for future retiree health benefits.

The prefunding requirement for future retiree health benefits accounts for the brunt of the agency's red ink and the agency has defaulted on a number of the congressionally mandated payments. Officials note the solution to their financial problems is much larger than just addressing the retiree issue.

"Some comments in recent news reports suggest that all we need from Congress is help with restructuring our retiree health benefit plan," chief financial officer Joseph Corbett said. "Nothing can be further from the truth. Our liabilities exceed our assets by $42 billion and we have a need for more than $10 billion to invest in new delivery vehicles, package sortation equipment, and other deferred investments.

"We haven't been making the retiree health benefit prefunding payments because we can't," Corbett said, adding that if the retiree requirement was reduced, it still wouldn't give the agency any more cash to pay down its debt or put needed capital into the business.

"Only comprehensive postal legislation ... will provide the necessary cash flows," Corbett said.


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drbobdez

A lot of the comments below would be amusing if not so sad. Minions seem enrapt with the "Bill of Rights," but appear unconscious about the rest of the Constitution. The Post Office is authorized by Article 1, Section 8. This provision was included in 1788, the "Bill of Rights" did not come along until 1791. The post office was not established to make money, it was created to provide a critical services. Free delivery started in 1863: rural free delivery in 1902 (although experimentation with it began in 1890), and parcel post in 1912. In 1971, the USPS was established as "an independent establishment." Interestingly, postal rates have not really escalated —the 2¢ stamp of 1914 is equivalent to 48¢ today. In 2003, congress required the P.O. to overfund its retirement obligations by $71 billion and also moved the funding of military pensions for current and former postal employees from the taxpayer to the P.O. to the tune of $27 billion. For most of its history, the P.O. has had an operating loss—it stayed viable, however, because, as a cash business, it used overnight investments to generate sufficient income to offset the operating losses. With congress saddling it with $98 billion additional pension funding, limiting the services it can provide, and controlling what it can charge for services, they have dried up this income source and put it on a course toward financial disaster. So why would they do such a thing? Well, they cannot kill it because of its constitutional protection, but they might be able to starve it to death. This practice has become more popular recently — if you cannot kill a law, starve it by not funding its execution. If this is successful, I wonder who will profit from the USPS demise. UPS and Fedex are not options constitutionally, yet their lobbying efforts and political contributions seem more tactical than coincidental. In terms of corporate political contributions, UPS ranks #4 and FedEx #13.

May 10 2014 at 1:33 PM Report abuse rate up rate down Reply
jdykbpl45

What do you expect with Obama as President.

May 09 2014 at 4:38 PM Report abuse rate up rate down Reply
createidea

bdgrizcp down below wrote:

The USPS is subject to Congressional review but is run as a private entity.

Private entity ? Really.

Who's its CEO ? How many board of directors are there ? What's their stock symbol and what is their current stock price at ?

Oh - you're going to tell me an entity this huge is privately held !

Well then, who's this mogul that 'OWNS' this 'private entity' ?.....

LOL !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Tthe USPS is a joke - just like every other government run agency.

May 09 2014 at 1:51 PM Report abuse +1 rate up rate down Reply
the aol experien

Our government at work! If this happened in other countries people would be protesting in the streets, but not here, the American public just gets dumber and dumber. Just wait till they see how much this Health Care is going to cost them every year with all the fox’s guarding the chicken house.

May 09 2014 at 1:39 PM Report abuse +1 rate up rate down Reply
vinceautopart

just get UPS to run it, I'm always amazed at how efficient they are.

May 09 2014 at 1:13 PM Report abuse +1 rate up rate down Reply
donovansdanes

Well I guess it might be time to hire and pay an individual to run and manage our U.S. Postal services that has the ability to cut unnecessary costs and expenses across the board.

The Postal services can't nor should they expect everyone else to pay for their mismanagement of monies and financial downfall by raising the price of postage stamps every time we the people turn around.

May 09 2014 at 1:06 PM Report abuse rate up rate down Reply
bdgrizcp

Remember the good old days when you sat down and wrote checks for all your expenses and then mailed them? That was after your bills came the same way. Times have changed. I save $75 a year on postage using electronic bill pay. That adds up over time. Congress has got to modernize the USPS--but can Congress actually get this done?

May 09 2014 at 1:00 PM Report abuse -1 rate up rate down Reply
flysalot2

The Federal govt. runs the post office. Aren't these the same people who are starting to manage our health care? How the hell did that happen?

May 09 2014 at 12:32 PM Report abuse +2 rate up rate down Reply
1 reply to flysalot2's comment
bdgrizcp

Not exactly. The USPS is subject to Congressional review but is run as a private entity. And that is nothing like the ACA, which has saved millions of Americans lots of cash on health insurance. Like me.

May 09 2014 at 12:57 PM Report abuse -2 rate up rate down Reply
unitedpaintings

USPS's business model is a dinosaur from thr industrial age.

May 09 2014 at 12:27 PM Report abuse +1 rate up rate down Reply
dencuddy

Republicans force the USPS top fund retirements for employees in full for the next 75 years in ten years. Force Fedex or UPS to do the same and an envelope would cost $25 to mail, not 48 cents.

May 09 2014 at 12:24 PM Report abuse -4 rate up rate down Reply
2 replies to dencuddy's comment
unitedpaintings

Good.

May 09 2014 at 12:28 PM Report abuse +2 rate up rate down Reply
1 reply to unitedpaintings's comment
dencuddy

You'll whine if they try to raise the price of postage.

May 09 2014 at 3:53 PM Report abuse -1 rate up rate down
dopey.obamite

Yes den......look up 'unfunded liability' and get back to us.

May 09 2014 at 1:58 PM Report abuse +1 rate up rate down Reply
2 replies to dopey.obamite's comment
dencuddy

I'm sure you would whine if postage went to a dollar a letter.

May 09 2014 at 3:51 PM Report abuse -1 rate up rate down
dopey.obamite

I go through maybe 8-10 stamps a year. I can just as easily do this electronically.

Now, please continue to educate us on funding retirement obligations.

May 09 2014 at 5:17 PM Report abuse +1 rate up rate down