Postal Service sees a net loss of $1.5 billion in second quarter of fiscal 2015.
For the sixth consecutive quarter, the U.S Postal Service turned an operational profit when accounting for its controllable costs. But the agency still lost a total of $1.5 billion from January through March due to outstanding liabilities.
USPS was profitable by $313 million in the second quarter of fiscal 2015, and operational revenue was up $233 million over the same period last year, the agency announced Friday. The growth was due in part to the temporary emergency rate increase on postal products that took effect last year, but also aided by a 14.4 percent increase in package volume.
The Postal Service still suffered a net loss of $1.5 billion in the quarter -- down from $1.9 billion in the same period last year -- due to its obligatory payments to prefund retirees’ health benefits and workers’ compensation costs. Postal officials were eager to note the agency maintains $90 billion in unfunded liabilities, and a simple fix to the prefunding requirement would not solve all of its issues.
The price increase, for example, is set to expire in July or August, which will drive down revenue. USPS is fighting to keep the higher rates, but that process is currently being fought in the courts. Officials continued to call for comprehensive legislative reform, including a shift of retirees’ health care to Medicare.
Postmaster General Megan Brennan said she was “pleased” with the results of the quarter.
The growth “demonstrates that our cost containment and revenue strategies are delivering results,” Brennan said. “We also took significant steps during the quarter to improve our long-term operating model, which will help drive greater long-term efficiencies throughout our network.”
The Postal Service’s operational expenses dipped in the quarter due to “favorable trends” in workers’ compensation, but its compensation costs increased due to the labor-intensive growth of shipping and packages. USPS is seeking flexibilities to decrease the size of its career workforce, but officials would not elaborate on the details of those plans as the agency is currently negotiating a new collective bargaining agreement with both the American Postal Workers Union and the National Rural Letter Carriers Association.
Overall mail volume continued to slide as it has for many years, with first-class mail -- historically the Postal Service’s biggest money maker -- down 2.1 percent over the same period last year. Still, some groups said the financial news was nothing but positive.
“Today’s results show the impressive Postal Service financial turnaround continuing in full force,” said Fredric Rolando, president of the National Association of Letter Carriers. He added the operational profitability demonstrated USPS should not move forward with its planned facility closures this year.
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