USPS' Loss for '01 Increases to $1.7 BillionThe U.S. Postal Service finished its 2001 fiscal year with a $1.7 billion loss as the Sept. 11 attacks and a slumping economy caused mail volume to fall for the first time in a decade, officials said yesterday.
The USPS ended its fiscal year Sept. 7, but the final audited figures are based on the federal government's fiscal year, which ended Sept. 30.
At the board of governors' monthly meeting yesterday, the board also set a Dec. 28 deadline for postal officials and businesses affected by a possible rate case settlement to decide on whether to seek a settlement. Officials have been meeting with executives from major mailing companies and groups over the past several weeks to accept the current rate case without challenge and raise rates in June. Each additional month of new revenue would bring in an extra $500 million, the USPS said.
However, some have indicated that a settlement would be impossible without changes in the proposed rate design. American Business Media and McGraw-Hill oppose the USPS' plan to eliminate the flat editorial pound rate for periodicals.
Without a settlement, some USPS officials have threatened to increase the numbers in the current rate case, adding $2 billion to $6 billion more to the $5.3 billion increase already requested.
Richard J. Strasser, chief financial officer and executive vice president, said mail volume dropped by 800 million pieces in the three weeks after Sept. 11, thus eliminating any possibility of mail volume growth for the year. Overall, the USPS finished the year with a decline of 420 million pieces, or 0.2 percent. It is the first drop in mail volume since 1991.
"One of this year's success stories is the progress the postal service has made in productivity," said Strasser, referring to the USPS' ability to process and deliver the mail with fewer resources. The agency reported a reduction of $900 million in costs during fiscal year 2001. The USPS also processed and delivered the mail to 1.7 million new addresses with fewer employees and 23 million fewer work hours than the previous year.
The governors also approved yesterday an FY2003 appropriation request to Congress of $988 million, which includes $928 million for reimbursement of the remaining amount under the Revenue Foregone Act of 1993. Under the act, Congress set up an installment plan that was to be paid over 40 years at a rate of $29 million a year, but the board decided to request the full amount because of its situation.
The board also will submit a supplemental request for additional money to pay for mail sanitization and security, pending the outcome of congressional discussions.
Accelerating the payment, however, is not a substitute for comprehensive legislative reform of the 1970 federal law under which the USPS operates, the Direct Marketing Association said. These funds helped underwrite reduced rates for nonprofits, libraries and similarly "preferred" mail.
"This one-time payment will not cure what ails the postal service," DMA president/CEO H. Robert Wientzen said in a statement. "Accelerating the payments will help with some cash flow problems, especially as the postal service bumps up hard against its debt ceiling."