Potter: Postal Service faces tight 2011 after $6B FY 2010 loss
The US Postal Service lost about $6 billion in fiscal year 2010, while mail volumes dropped 7 billion pieces to 170 billion, Postmaster General John Potter said October 1 at a press briefing.
The unaudited results for FY 2010, which ended September 30, are an improvement from the $7 billion loss the USPS projected for the year. Potter attributed that to strong cost control and an uptick in mail volume from the financial services industry, in particular advertising direct mail.
“This added somewhere in the neighborhood of $600 million to $800 million,” he said.
The year-end loss was driven primarily by the statutorily required $5.5 billion payment the Postal Service made to its Retiree Health Benefits Fund this week. If Congress had granted the USPS relief from this payment, the USPS would have ended its fiscal year with an operating loss of about $500 million, according to the organization.
Still, the Postal Service faces the possibility that it could run out of cash next year, Potter said. The USPS made the retiree payment using cash it carried over from last year and by maximizing its borrowing authority.
“Our prediction is that cash will be tight at the beginning of the year, and if things go as expected, we might be able to get through most of the year but run out of cash in September 2011,” said Potter.
The Postal Service will not be able to generate revenue from higher postage rates in January, as it had hoped, because the Postal Regulatory Commission rejected its request for an “exigent” price increase. Potter said the Postal Service is mulling its next steps in regard to the PRC's ruling.
“We are carefully studying the decision, and we are looking at all the options we have going forward,” he said. “We will present all options to the board of governors.”
Its options include appealing the PRC decision to an appeals court, raising prices up to the inflation-based cap or re-filing an exigent case, he said.
The Postal Service will continue to lower its costs, grow revenue, pursue opportunities in its package business, and work with lawmakers to make difficult policy decisions affecting the organization, he said.
“Nothing changes in our plan. We will pursue five-day delivery, look at our retail network, and hopefully resolve this issue of retirement funding and the Retiree Health Benefits payment schedule,” Potter said.