The USPS (U.S. Postal Service) posted a loss of $1.9 billion in its most recent fiscal quarter, bringing the agency’s total loss for the fiscal year to more than $3.2 billion.
This recent loss reignites concerns about the agency’s viability as it projects as little as three days of operating cash in October.
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The cash-strapped agency warned that since the organization reached its $15 billion debt limit last year, defaulted on $11.1 billion of government payment obligations and expects to default on $5.6 billion more this September, along with the $17 billion it owes for future workers’ compensation claims, the Postal Service still requires “urgent” reforms from Congress.
USPS’ Joe Corbett Statement
USPS Chief financial officer Joe Corbett said today these obligations of nearly $50 billion and continuing losses, highlight the need for immediate legislative reform to give them the latitude to execute on their Five-Year Plan and improve their ability to repay these obligations and return to profitability.
However, the agency’s latest figures do post some improvements. Package and shipping services helped the US Postal Service to stabilize revenues in the latest quarter, as it more than halved its losses compared to the same quarter last year.
The latest results show a continuation of the decline of the USPS cash cow, First Class Mail, slight growth in Standard Mail, and good growth in competitive shipping and package services. USPS saw its most profitable and biggest contributing service, First Class Mail’s revenue declined by $198 million year-on-year, with mail volume down by 713 million pieces.
The agency’s advertising mail, Standard Mail, saw a $96 million increase in revenue. This service got benefited from an 80 percent growth in the saturation mail product Every Door Direct Mail, used by small businesses to advertise in entire neighborhoods.
The postal service agency emphasized it was continuing to work to reduce its overheads in line with the need to cut $20 billion of its annual expenses by 2016.
The cash-strapped agency said it still needs comprehensive legislative reforms to be passed by the Congress this year to turn around its large quarterly losses. Some of the key reforms expected include a refund of surplus pension funds, a restructuring of the USPS healthcare plan taking it independent of the federal system, and a cut in mail delivery services to five days per week.
Besides the Postal Service also wants more authority to expand its range of products and services and reduce pricing controls, a new defined contribution pension plan for new employees and a reform of workers’ compensation.
Exuding confidence, Postmaster General Patrick Donahue said the USPS five-year business plan revised last month is “achievable”.