**Henderson May Step Down as Postmaster General, Reports Say

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Postmaster General William J. Henderson will leave the U.S. Postal Service in May after three years at the helm, according to news reports. However, postal officials refused to comment on the issue yesterday.

Henderson, the 71st postmaster general, was named to the post in May 1998. According to a news article in The Denver Post last week, the agency's Board of Governors and Henderson reached a mutual decision this summer not to extend his three-year contract. U.S. News & World Report added fuel to the rumor mill with a recent story saying Henderson "is thinking about quitting rather than face a life of headaches" because of the agency's bleak financial future.

USPS spokesman Greg Frey confirmed yesterday that Henderson "does have a three-year contract that expires in May 2001, and there is no change in that agreement at this point."

Reportedly, some members of the board wanted Henderson to stay on another year so he could complete negotiations with FedEx to provide extra airlifts for the USPS' Priority Mail and Express Mail. However, any hopes that Henderson would remain were dashed when the board recently told Henderson it would not increase his salary above the current $157,800.

Much of the attention concerning a replacement is likely to focus on Deputy Postmaster General John Nolan, who, like Henderson, is a career postal executive and has been given a number of high-profile assignments.

The postal service is going through tumultuous times. Earlier this month, it reported a $199 million deficit in the just-ended fiscal year. In addition, despite winning an overall 4.6 percent postage-rate increase that takes effect next month, it now expects to end fiscal 2001 $1.2 billion in the red. This is up from projections Nov. 1 that the postal service would see a $480 million loss.

The postal service said the reasons for the gloomy financials are high fuel costs, declining First-Class mail volume and the need for additional routes and mail carriers. In addition, potentially large pay increases may result from arbitration between the postal service and three unions. About 530,000 members of the postal service's 830,000-person labor force are in contract arbitration.

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