The Postal Service reported a $586 million loss in the third quarter of fiscal 2015, and for the first time in nearly two years did not post an operational profit.
USPS saw a loss in controllable costs of $197 million, compared to a $10 million operational profit in the same period last year. The Postal Service had taken advantage of a temporary pricing surge and increased efficiencies in its network to keep its controllable operation in the black for six consecutive quarters, until its most recent dip.
Postal management attributed the decline to increased compensation costs and to the period between April 1 and June 30 typically being its slowest time of the year. The overall loss was attributable to factors outside of the agency’s control, primarily the congressionally mandated prefunding of health benefits for future retirees.
Through the first nine months of fiscal 2015, the Postal Service has still seen a controllable profit of $1.2 billion. The other factors overshadow that figure, however, and USPS has reported $2.8 billion in total losses.
Revenue from shipping and packages continued to be the biggest glimmer of hope for the mailing agency, growing nearly 11 percent compared to the same quarter in fiscal 2014. Standard and first-class mail still provide the Postal Service with a majority of its revenue, however, and they continued their long-running decline. The volume for standard mail dipped 2.1 percent in the quarter, and the volume of first-class mail fell 2.6 percent.
Postmaster General Megan Brennan attributed the growth in package revenues to both specific initiatives USPS has taken to leverage new markets and technology, as well as the agency’s workforce.
Postal employees take “great pride in the mission and work hard every day” to deliver on it, Brennan said Monday.
The Postal Service’s Chief Financial Officer Joe Corbett noted, however, contractually mandated pay increases for employees added to operational costs in the quarter.
"This underscores the need for a combination of continued sales growth, productivity gains and legislation to ensure the Postal Service can return to financial health and meet its public service obligations," Corbett said. USPS is currently negotiating new collective bargaining contracts with two of the major unions representing its employees.
Fredric Rolando, president of the National Association of Letter Carriers, said the financial news demonstrated the “turnaround continuing in full force.”
“The operating profits stem from structural factors and thus augur well for the future,” Rolando said. “Revenue is growing as an improving economy leads to stabilized letter revenue and as rising online shopping produces skyrocketing package revenue.” He added the improved finances make clear “the need to strengthen, not degrade, the now-profitable networks.”
Corbett said the Postal Service is on track to turn a controllable profit for fiscal 2015.