Postal Service bleeds another $2 billion

The U.S. Postal Service announced Monday that it lost $2 billion in its most recent quarter, despite some positive signs for the cash-strapped agency's bottom line.

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The USPS’s revenue grew by some $327 million over the same period last year, a jump of 2 percent. The revenue increase was largely driven by shipments of packages, an area where the agency has even expanded into Sunday service. Package revenue grew 6.6 percent this most recent quarter, as more people turned to online shopping.

Volume for first-class mail, the Postal Service’s most popular product, declined once more, marking a full eight years of quarterly drops.

But revenue for first-class mail increased 3.2 percent, due to an emergency price increase for stamps that the USPS was allowed to implement this year. Advertisers also used the mail more frequently, though the rate increase also mostly fueled the 5.1 percent increase in standard mail revenue.

“We’ve been effective in developing and marketing our products, and we’re improving how we leverage data and technology — all providing a higher return on mail for many customers and causing them to take a fresh look at the Postal Service,” Postmaster General Patrick Donahoe said in a statement.

Still, the agency’s losses in the most recent quarter far outstripped the USPS’s red ink from a year ago, when it lost $740 million between April and June.

Postal officials blamed the increased losses on a $1.5 billion increase in expenses, propelled by a jump in workers’ compensation costs. Without those new costs, caused by a change in interest rates, this quarter's losses would have been similar to 2013.

The Postal Service’s losses for the first nine months of the year have now climbed more than $4 billion, and senior officials said the tight financial situation had left them unable to make investments in the agency’s vehicle fleet and necessary parts of its infrastructure.

“Due to continued losses and low levels of liquidity, we’ve been extremely conservative with our capital, spending only what is deemed essential to maintain existing infrastructure,” said Joseph Corbett, the service’s chief financial officer.

Corbett said the USPS would be unable to pay a required $5.7 billion prepayment for future retirees’ healthcare, which is due at the end of September. The agency has already defaulted on three of those payments in recent years.

Both the Postal Service and postal unions have asked Congress for relief from those payments, as they press lawmakers for a broader overhaul of postal operations. Donahoe said Monday that legislation could even help morale by lifting the "cloud" that has hung over the agency due to losses in 21 of the past 23 quarters.

Labor officials and some Democrats say that simply relieving the USPS of the prepayment burden would put the agency on firm ground. They argue the USPS would have an operating profit of hundreds of millions of dollars a year without the prepayment, though postal officials argue it’s a more complicated situation.

"Lawmakers need to preserve and strengthen the profitable postal networks — which are the future of the USPS as it increasingly delivers not just six but seven days a week — while fixing the pre-funding fiasco," Fredric Rolando, the president of the National Association of Letter Carriers, said in a statement.

The agency is now even distinguishing between controllable losses — what unions and other liberals have pointed to when insisting USPS has an operational profit — and losses beyond its control, such as the prepayment and workers compensation adjustments.

The Postal Service also has roughly three times as many liabilities as assets, $67.2 billion to $23.2 billion. And Corbett noted on a conference call that, while the agency has increased its cash on hand, it would still be vulnerable in the face of another economic downturn.

In any event, both the House and the Senate are stalled in their efforts to move ahead with postal reform legislation.

In addition to relief from the prepayment, Donahoe has also asked Congress to let the USPS limit Saturday delivery, which would allow the agency to deliver only packages six days a week.

But postal unions, Democratic lawmakers and even some Republicans who represent rural areas have resisted that idea. House GOP leaders had proposed using savings from limiting Saturday delivery to help pay for highway projects, but were eventually forced to scrap that plan. 

— This story was updated at 11:53 a.m.