Postal Service reports $1.9B six-month loss
The US Postal Service reported a net loss of $1.9 billion for the six months ending March 31. The agency also saw a $1.6 billion net loss in the second quarter of its 2010 fiscal year, which was a year-over-year improvement of about $300 million. Despite beating internal forecasts for the quarter, the organization is on track to lose nearly $7 billion this fiscal year, which ends September 30.
“We have narrowed the loss, but we are not popping the corks on the champagne just yet,” said Joseph Corbett, CFO and EVP of the Postal Service, in remarks at the May 6 open meeting of the USPS Board of Governors.
For the first six months of the fiscal year, operating losses totaled $1.8 billion, an improvement over last fiscal year's $2.3 billion. Total volume was down 3.3% year-over-year for the three months ending March 31.
While mail volumes continue to drop, that decline is slowing, Corbett said. Total mail volume in the quarter declined by 1.5 billion pieces, the smallest quarterly mail volume decline in the past two years, he noted. Standard Mail volume increased in the quarter, up 0.6%, although Corbett said this could represent a shift from First Class mail.
Historically, the USPS has relied on volume growth to increase revenue and offset the steady increase in costs. However, mail volume has declined by nearly 40 billion pieces during the past three years, a trend that postal officials expect to continue through the next decade. This has prompted the Postal Service to introduce an aggressive business plan, which includes the elimination of Saturday home delivery.
The Postal Regulatory Commission recently scheduled a nearly six-month-long review of the possible service reduction.
John Potter, CEO and postmaster general of the USPS also urged Congress and the Office of Personnel Management to immediately take up the issue of whether the Postal Service has over-funded one of its pension plans. The USPS Office of Inspector General has reported that the USPS overpaid one plan by $75 billion from 1972 to 2009.
“I do believe the CSRS [Civil Service Retirement System] issue needs to be addressed, because it's a distraction to implementing other parts of the plan,” said Potter.