The U.S. Postal Service moved into the black in the first quarter of its fiscal year, posting net income of $317 million compared to a $1.1 billion loss in the same quarter (ending Dec. 31) last year. But Postal Service CFO Joe Corbett allowed that the number could be misleading, noting that favorable changes in interest rates and revenue contribution from the 4.3% exigent surcharge offset what could have been a quarterly loss of $700 million.
“Absent legislative reform, the exigent surcharge is expected to roll back in April and our losses will increase by approximately $2 billion a year,” Corbett said in an earnings call today.
USPS officials prefer to measure performance by “controllable income,” which does not take into account its mandated retiree health benefit prefunding. This metric showed the Postal Service with controllable income of $1.3 billion, up $200 million from the same quarter last year.
Package volume growth received credit for the increase. Shipping and package revenue rose 13.5% on a 16% volume increase during the holiday season. Volumes of Standard and First Class Mail fell 3% and 2.2%, respectively, in the quarter. Those two classed accounted for more than 90% of total USPS volume compared to just 3% for shipping and packages.
As she did at a recent hearing of the Senate Homeland Security & Governmental Affairs, Postmaster General Megan Brennan expressed optimism that a postal reform bill could be passed that would retain the exigent surcharge due to expire in April.
“Over the past year, we have been actively working with key stakeholders…to identify potential critical reforms capable of gaining broad support,” Brennan said, noting that this consensus included a “cross-section” of the mailing industry that provides USPS with most of its volume.
But big mailers are split over the exigency issue. A letter from 36 mailers supportive of keeping the surcharge was introduced at the Governmental Affairs Committee hearing; it was answered last week by a letter from another 36 mailers opposing it.
Total USPS operating income of $19.3 billion represented a $613 million dollar increase over last year’s first quarter, which is typically the Postal Service’s strongest-performing quarter.