Postal Service loses $5.2B in latest quarter

The U.S. Postal Service racked up $5.2 billion in debt in the third quarter of fiscal 2012, the agency announced Thursday, as it continued to plead for Congress to act on postal reform legislation.

The cash-strapped service has now lost some $11.6 billion this fiscal year, up from $5.7 billion at this time a year ago. 

USPS also defaulted at the beginning of August, for what is thought to be the first time for an agency that has its roots in the Constitution, on a scheduled $5.5 billion payment to the U.S. Treasury for future retiree healthcare costs. 

Postmaster General Patrick Donahoe has been urging lawmakers for months to come together on a broad overhaul of postal operations — with certain changes he calls crucial, like scrapping Saturday delivery, only possible through legislation.

But while the Senate passed a postal bill in April, the House recessed for August without considering its GOP proposal, and sponsors of that measure have said they don’t expect it to come to the floor before November’s election.

“We remain confident that Congress will do its part to help put the Postal Service on a path to financial stability,” Donahoe said in a Thursday statement. “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.”

Postal officials did find one bright spot in the third-quarter numbers: Revenues from shipping packages, which many analysts and lawmakers hope will be a growth area for USPS, reached $3.3 billion, an increase of 9 percent.  

But the agency said that growth was nowhere near enough to cover the $3.1 billion it had to put aside for the retiree prepayment, and a more than 4 percent decline in first-class mail volume. 

In all, USPS lost some $2 billion more than it did in the same period a year ago, and says it is losing roughly $25 million a day.

The agency has said that declines in first-class mail volume have been largely driven by the rise of online communication.

But service officials also tried to put a positive spin on Thursday's third-quarter numbers, asserting that only around $1 billion of the losses — a similar size to last year — were related to issues that USPS can control.

The Postal Service is required to account for the healthcare prepayments on their financial statements, even if they don’t end up paying them. And this year, the agency has to account for two installments instead of the normal one, after the 2011 payment was pushed back into fiscal 2012.

USPS officials have said they will not be able to make the $5.6 billion payment due at the end of September, either. Workers compensation payments also accounted for some of the agency’s third-quarter losses.

The Postal Service also continues to say that it expects its cash levels to hit dangerously low levels in October, but that revenues from holiday and election-related mail will allow it to make it through that month. 

But some postal analysts say that the election-year flurry could be masking even deeper losses for the agency as well.

“As bad as things are getting for the Postal Service, it could be worse next year when the absence of political mail, on top of greater mailer uncertainties about the system’s stability, may well further drive down volume and revenues,” said Art Sackler of the Coalition for a 21st Century Postal Service, which represents private-sector companies and industries that rely on USPS.

The agency has also said that missing those payments won’t stop it from fully funding its operations in the short term, and that it will continue to deliver mail and pay its employees. 

House Republicans have suggested that part of the reason for their delay is that USPS will be able to keep its head above water in the interim, even as key senators urge them to pass their postal reform bill and allow the two chambers to hash out their differences.

The House bill would empower a BRAC-style task force to recommend post office consolidations, and a restructuring panel to cut costs. It would also likely allow USPS to move to five-day delivery more quickly than the Senate bill. 

The bipartisan Senate bill, meanwhile, would use an overpayment into a federal benefits fund to ease postal workers into retirement, and give USPS more relief from the required prepayments. 

In all, those prepayments have accounted for roughly 80 percent of the Postal Service’s losses this fiscal year. 

Unions and more liberal lawmakers have said that doing away with those payments and giving USPS access to more revenue streams could put the service on firmer fiscal footing without cutting services like six-day delivery. 

But USPS also lost some $5.1 billion in fiscal 2011 even as the retiree prepayment for that fiscal year was pushed off into fiscal 2012. 

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