Liabilities Overshadow Postal Service’s ‘Fantastic Quarter’
USPS loses $754 million to start fiscal 2015, despite massive revenue growth.
The U.S. Postal Service posted a net loss of $754 million in the first three months of the fiscal year, despite significant revenue growth compared to the same period last year.
Increases in political mailings and holiday shipping propelled USPS to a $1.1 billion operational profit in the first quarter of fiscal 2015. Outstanding liabilities to fund workers’ compensation and future retirees’ health benefits led to a net loss more than double that of the loss in the first quarter of fiscal 2014, however.
The first quarter is typically the Postal Service’s best, with holiday shoppers boosting business and -- in election years such as 2014 -- political campaigns using bulk mailings to get their messages to voters.
Still, USPS Chief Financial Officer Joe Corbett called the October through December period “a fantastic quarter,” as revenue was up 4.3 percent over the same period last year. Shipping and packages, which has been growing steadily in recent years, jumped nearly 13 percent in the quarter over the year prior.
“Our employees delivered double-digit growth in packages this holiday season, which shows our growing ability to compete for and win new package delivery customers,” newly sworn in Postmaster General Megan Brennan said. She added, “The Postal Service is operating with a lot of momentum.”
Corbett cautioned the news was not as positive as the growth made it seem. The Postal Service’s liabilities still exceed its assets by $46 billion, he said, and the agency’s current trajectory does not provide for ever paying down its debt. If USPS owed private banks rather than the U.S. Treasury, the Postal Service would have been forced to declare bankruptcy, Corbett said.
The Postal Service, however, added significantly to its cash on hand, allowing the agency to make capital investments into its aging vehicle fleet. Postal groups said the financial news was a cause for celebration.
“This is great news for Americans throughout the country and for the millions of businesses that rely on a strong Postal Service,” said Fredric Rolando, president of the National Association of Letter Carriers.
The Postal Service announced its earnings during a meeting of its temporary emergency committee, created in response to the Senate’s failure to approve a sufficient number of governors to allow the agency’s board to have a quorum.