Postal Service sees $3.5B Q3 net loss; warns of 2011 cash shortfall
The US Postal Service saw a net loss of $3.5 billion for the third quarter of its 2010 fiscal year, which ran April 1 to June 30. The USPS also warned that it could see a cash shortfall next year.
Last year, the USPS ran a net loss of $2.4 billion for the same period.
The Postal Service also said that Q3 mail volume was down about 700 million pieces, or 1.7% from the second quarter of FY 2009, which ended last September 30.
“There are a few somewhat bright spots. Our Flat Rate Box program is doing extremely well and Priority Mail Flat Rate Box has been very successful,” said Greg Frey, PR representative for delivery, online services, post offices and retail at the USPS. “The unfortunate part is that the continuing decreases in First Class mail is not offset by modest increases in other products."
He added that adjustments to worker's compensation expenses and low interest rates also contributed to the USPS' net loss for the quarter.
The USPS saw operating revenue of $16 billion in Q3, $294 million less than last year, and operating expenses of $19.5 billion, an increase of $789 million, or 4.2%, from the prior year's Q3.
The US Postal Service, which ran a net loss of $3.8 billion for its 2009 fiscal year, has asked the Postal Regulatory Commission, its oversight body, for permission to increase rates for 2011. It is also seeking permission from Congress to reduce home delivery to five days per week.
Joseph Corbett, CFO of the Postal Service, said in a statement that “given current trends, we will not be able to pay all 2011 obligations.” Frey said that while the USPS will have enough revenue for 2010, next year “is problematic.”