Postal Service reports billions in losses
Wednesday, May 11, 2011
WASHINGTON (AP) — The Postal Service is continuing to hemorrhage money, reporting a loss Tuesday of more than $2 billion over the first three months of the year and warning it could be forced to default on federal payments.
Such a default would not interrupt mail service to millions of Americans, but it could further hobble an agency struggling with a sharp decline in mail because of the Internet and a tough economy.
The agency says the $2.2 billion loss covers Jan. 1 to March 31, 2011 — sharply higher than the net loss of $1.6 billion for the same period last year. The post office also said it will have reached its borrowing limit, set by Congress, of $15 billion by the end of the fiscal year.
Unless Congress intervenes, the Postal Service said, the agency won’t have the cash for certain payment to the government, such as billions for a trust fund to provide health care benefits for future retirees.
“The Postal Service continues to seek changes in the law to enable a more flexible and sustainable business model,” said Postmaster General and CEO Patrick R. Donahoe. “The Postal Service may return to financial stability only through significant changes to the laws that limit flexibility and impose undue financial burdens.”
Total mail volume, about 41 billion pieces, was down 3.1 percent for the January to March period, compared to the same time a year earlier, the Postal Service said. A modest increase in revenue from standard mail wasn’t enough to offset the revenue loss from fewer pieces of first-class mail.
In the last three years, the agency has cut over 130,000 jobs. And it’s making more cuts, with the elimination of about 7,500 administrative jobs in regional offices.
The Postal Service does not receive tax money for its operations.