Postal Service ends first quarter of fiscal 2012 in the red
Losses of $3.3 billion come during what is typically the strongest time of year due to holiday mail volume.
This story has been updated.
The U.S. Postal Service lost $3.3 billion in the first quarter of fiscal 2012, the agency announced Thursday.
The losses for October 2011 through December 2011 were $3 billion higher than those for the same quarter the previous year, according to an Associated Press report. The first quarter of the fiscal year is usually the agency’s strongest because of holiday mail.
“Management expects large losses to continue until the Postal Service has implemented its network redesign and downsizing and has restructured its health care program,” the USPS statement said.
Postmaster General Patrick Donahoe has said the Postal Service must cut about $20 billion in costs by 2015 to become profitable. In 2011, mail volume fell by 3 million pieces, or 1.7 percent, from 2010.
USPS has proposed several cost-cutting measures. It has agreed to wait until May to initiate its plan to close 252 of its 487 mail processing facilities, which will eliminate 28,000 jobs nationwide. First-class mail will move to a two-to-three day standard delivery time under that change.
USPS officials Thursday said Congress must pass legislation quickly so that USPS can take other steps to improve its finances.
“Absent significant changes in the law to allow normal commercial freedoms, the Postal Service will default on both retiree health benefits prepayments to the federal government due this year,” USPS Chief Financial Officer Joseph Corbett said Thursday in the statement. “Even if legislation changes or eliminates the prefunding payments, we may reach our $15 billion debt ceiling in the fall of this year.”
But two USPS reform bills on the table, the Senate’s 21st Century Postal Service Act and the 2011 Postal Reform Act, sponsored by Reps. Darrell Issa, R-Calif., and Dennis Ross, R-Fla., are stalled in committee.
The House bill, H.R. 2309, was granted an extension for further consideration in the House Rules Committee last month ending no later than March 1.
“USPS has reached a new, deeper level of crisis,” Issa said Thursday. “No accounting gimmick will restore it to solvency. Congress must pass legislation that allows USPS to reduce its operating costs and realign its network in line with America’s declining demand for paper mail.”
The House legislation includes a provision changing USPS to a five-day mail delivery schedule and would require postal workers to pay at least as much as other federal employees in health and life insurance premiums, keeping pay in line with the private sector. The Senate bill would transfer more than $11 billion from the Civil Service Retirement and Disability Fund to the Postal Service Fund to help process the large number of USPS employees set to retire in the next few years. It would also offer additional credit to employees for retirement incentives based on years of service, and allow USPS to reduce mail delivery to five days a week.
A Senate aide familiar with postal legislation said it is not realistic to expect that the 21st Century Postal Service Act will see floor debate until at least March, due to more pressing legislation that must be considered.
“While today’s announcement that the U.S. Postal Service lost $3.3 billion in the first quarter of fiscal year 2012 is disappointing, it unfortunately does not come as a surprise,” Sen. Tom Carper, D-Del., said in a statement Thursday. “While the magnitude of the losses themselves is bad enough, the fact that they came during a period of the year that is usually the most successful for the Postal Service is truly shocking.”