USPS: Financials Still Below Plan

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The U.S. Postal Service lost $166 million in its third quarter, chief financial officer Richard J. Strasser reported yesterday at the monthly meeting of the USPS Board of Governors.

The postal service had planned on revenue of $146 million for the quarter, so the results were $312 million under budget.

Revenue increased 3.5 percent over the same period last year but was $603 million -- or 3.7 percent -- under budget. Expenses were $291 million under budget.

For the year to date, postal service revenues are $46.7 billion and expenses are $47.1 billion, for an overall net loss of $422 million. Growth in total mail volume continued to decline, nearly reaching zero in the third quarter, compared with 3.3 percent growth in the first quarter and 0.8 percent in the second quarter.

The third quarter began Feb. 24 and ended May 18.

"As we look toward year's end, the July 1 modified rates for certain classes of mail will increase revenues some $200 million," Strasser said.

He added that postal management plans to intensify its cost control programs, including a reduction in work hours, a hiring freeze at headquarters, a continuation of a freeze in capital spending and a reduction in the program budget.

According to Strasser, total factor productivity improved by 2 percent for the year to date. Over the past two years, the number of career employees has been reduced by 21,000.

Finally, Strasser said continuing weak business growth through the end of this fiscal year could mean a total year-end loss of $1.6 billion to $2.4 billion.

At its meeting, the Board of Governors also voted to approve $15 million in funding to implement the Surface-Air Support System, a key component of the postal service's information platform. This new link to the information platform will allow the postal service to measure performance and verify accurate payments for all modes of transportation, including air, highway and rail. Testing will be completed in July and activated in August.

The board also granted approval to purchase a 325,000-square-foot building on a 15.3-acre site in Teterboro, NJ, to be used as the northern New Jersey metropolitan processing and distribution center. The building will resolve severe space deficiencies at two mail processing centers: the Hackensack, NJ, center and its Huyler Street annex; and the Paterson, NJ, center, which is supported by the Totowa annex.

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