Holiday profits were erased by prefunding mandate, agency announces.
The U.S. Postal Service on Friday announced a $1.3 billion loss in the first quarter of fiscal 2013, despite record sales from the holiday period.
USPS actually ran an operational surplus of $100 million for the quarter, which lasted from Oct. 1, 2012, through Dec. 31, 2012. But ultimately it accrued a deficit due to congressionally mandated prefunding of retirees’ health benefits, as well as workers’ compensation obligations. The agency had $200 million in an operational surplus in the same period in fiscal 2012, but the total was brought down this year due to employee buyouts.
The first quarter is typically USPS’ best quarter because it includes the December holidays. In a glimmer of hope for the cash-strapped agency, continued growth in package shipping mitigated the ongoing decline of First-Class Mail. The volume of First Class Mail declined 4.5 percent compared to the same period last year, while package volume increased 4 percent.
The Postal Service recently announced a major schedule change to reflect this shift. It plans to reduce mail delivery to five-days, eliminating Saturday delivery for the first time in its history. It will keep six-day delivery for packages, however.
Postal Service officials also said Standard Mail volume increased dramatically, thanks in large part to political mailings. The USPS sales team redoubled its effort in attracting campaigns to use the agency’s services, resulting in higher political revenue than any previous election cycle.
The Postal Service Board of Governors -- including Postmaster General Patrick Donahoe -- continued its call for legislative action to grant the agency more autonomy and to rid it of its prefunding mandate.
Officials said that according to current projections, by the end of the fiscal year the Postal Service will have enough cash on hand for just 2.5 days of operations.