Postal Service Loses $3.1 Billion in 2nd Quarter

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The Postal Service said Friday it lost $3.1 billion in the April through June period and could be forced to default on payments due to the federal government when the fiscal year ends in September.

Losses for the year come to $5.7 billion.

"We continue to take aggressive actions to reduce costs and bring the size of our infrastructure into alignment with reduced customer demand," Postmaster General Patrick Donahoe said. But losses have been mounting over the last few years as more private mail and bill payments were switched to the Internet, and the recession caused a decrease in business mail.

He said the agency planned for a decline in first-class mail but it occurred more rapidly than expected. On the positive side, Donahoe said, there has been an increase in parcels business as the post office carries more items purchased via the Internet.

The post office has asked Congress to change or drop the requirement that it make a $5.5 billion annual payment into a fund to cover future retirement disability benefits. No other government agency is required to make such a payment.

If Congress doesn't act and current losses continue, the post office will be unable to make that payment at the end of September because it will have reached its borrowing limit and simply won't have the cash to do so.

In that event, Donahoe said, "Our intent is to continue to deliver the mail, pay our employees and pay our suppliers."

The post office wants permission to reduce mail delivery from six days a week to five as part of a series of cost-cutting measures. And it would like a refund of overpayments it says it made to employee retirement accounts.

Art Sackler, coordinator of the Coalition for a 21st Century Postal Service, which represents the private sector mailing industry, commented that "within the past year, the Postal Service's financial situation has gone from bad to worse to worst. If Congress does not enact bold reforms soon, the tailspin the Postal Service is in will pass the point of recovery, and many of the 8 million private sector workers who depend on it will lose their jobs. This would be terrible not only for them and their families, but for our economy."

Several bills designed to change the law governing the post office, an independent government agency, are pending in the House and Senate.

Rep. Darrell Issa, R-Calif, chairman of the House committee that supervises postal operations and the sponsor of one of those bills, said Friday's announcement underscores the need to enact meaningful reforms.

"The increasing use of electronic, paper-free technology has caused a permanent decline in mail usage and the Postal Service must adapt its outdated brick-and-mortar model to meet current customer needs," Issa said.

The Postal Service, which does not receive tax revenues for its operations, is in the process of reducing its administrative staff by 7,500 people and is reviewing about 3,600 underused post offices across the country for closing. Over the last four years the Postal Service has cut its staff by 110,000 and reduced costs by $12 billion.

In the three months from April through June, the post office handled 39.8 billion pieces of mail. That's 1.1 billion fewer items than in the same period a year ago.