Postmaster General Patrick Donahoe’s final earnings call was emblematic of his four-year run at the helm of the Postal Service: Revenues edged slightly up, but the bottom line was weighed down by financial burdens that continued to engulf its financial statements in red.
After announcing his retirement earlier in the day, Donahoe and CFO Joe Corbett delivered results that sounded all too familiar. Revenues increase for the second straight year to $569 million, but the agency still suffered a $5.5 billion net loss, due largely to the mandated $5.7 billion contribution to the retiree healthcare fund that it was unable to make.
“Without needed legislation, we are not going to be able to improve on our increased earnings curve,” said Corbett. “We start out each year $2.5 billion in the hole. We’re simply running out of game-changing efficiency measures.”
Corbett credited the 4.3% exigent price increase that went into effect in January, along with an improved shipping business, for increasing operating revenue by $1.9 billion over last year and for giving the Postal Service 19 days of operating cash, the highest total it’s had in years.
Corbett said that a planned rollback of the exigent increase in 2015 would deal a severe blow to the Postal Service. He added that USPS—which has already filed a petition in appeals court against that happening—would continue to press the issue. “We don’t believe that’s appropriate,” he said. “If we lose that case, it puts downward pressure on our cash.”
Donahoe emphasized that the continuing downward spiral of First Class Mail poses the bigger problem to the Postal Service’s future than healthcare prefunding. “We’ve lost 60% of the blue mailbox mail over the last 10 years. If we had that today, it would be $14 billion,” he said. “It’s not healthcare, it’s the loss of First Class mail.”
Total mail volume declined during the year by 2.8 billion pieces to 155.4 billion, most of that due to a 2.2-billion-piece drop-off in First Class Mail. Thanks to the exigent increase, however, Standard Mail revenue increased by 3% to $17.4 billion even though volume decreased by 495 million pieces.
Shipping and package services grew by 300 million pieces, an 8% increase over fiscal 2013.
