The U.S. Postal Service lost $354 million in the first quarter of fiscal 2014, a significant improvement over its performance in the same period last year.
USPS lost $1 billion less last quarter than in the first quarter of fiscal 2013, when it was $1.3 billion in the red. The first quarter of fiscal 2014, which lasted from Oct. 1, 2013, through Dec. 31, 2013, is always the Postal Service’s strongest period, as it receives a large business boost from the holiday season.
The agency grew revenue by $334 million compared to last year, and posted an operational surplus of more than $700 million. While that figure improved upon its $100 million surplus in the first quarter of fiscal 2013, it still netted a loss due to obligations to prefund retiree health benefits and pay out workers’ compensation claims.
The growth came largely from package delivery, which saw a 14 percent increase over last year. While first-class mail continued its slide, USPS held steady its standard mail business -- largely direct mail advertising -- despite losing $200 million from political mailings that boosted the product in the run up to the 2012 election.
The Postal Service also managed to cut operating costs by $574 million, the bulk of which came from continuing to trim its workforce. USPS reduced its career workforce by 6 percent, leading to 1 million fewer work hours and $200 million in savings compared to 2013. Non-career employees, who are paid hourly and receive less generous benefits, now make up 20 percent of the agency’s workforce.
“The Postal Service is doing its part within the bounds of law to right-size the organization, and I am very proud of the achievements we have made to reduce costs while significantly growing our package business,” said Postmaster General Patrick Donahoe in a statement.
In a conference call with reporters Friday, Donahoe praised the Senate Homeland Security and Governmental Affairs Committee for approving a postal overhaul bill this week, and said the ongoing losses at USPS highlight the need to pass it into law. The bill would mitigate the need for prefunding retiree health benefits by shifting retirees into Medicare, and would reduce workers’ compensation for the entire federal workforce.
The postal unions -- which unanimously oppose the Senate legislation -- interpreted the news differently, saying any further cuts enabled by the bill would “jeopardize the postal turnaround.”
“The Postal Service's unmatched networks and outstanding employees have made these striking results possible,” said Frederic Rolando, president of National Association of Letter Carriers. “And these trends augur well for the future, because they reflect the opportunities increasingly presented by the Internet and by an improving economy.”