USPS: $1.98B loss - the Unites States Postal Service's future remains bleak after revealing that it has a net loss of $1.9 billion for the second quarter. Lawmakers, on the other hand, remain unreceptive in providing financial relief, the Chicago Tribune has learned.
The $1.98B loss of the USPS is taking a toll on the said agency as first-class mail volume continued to dwindle over the past three months.
"We're quite obviously in a deep financial hole," USPS Chief Financial Officer and Executive Vice President Joseph Corbett told reporters Friday.
The net loss of the USPS for the fiscal second quarter reportedly ended March 31, and it surpassed the $354 million loss in the first quarter while remaining flat from the year-ago quarter.
The $1.98 billion loss was the 20th of the 22 quarters that the said agency has documented a loss, according to USA Today.
The second quarter loss came in spite of a 2.3 percent rise in its operating revenue and continued efforts in cost-cutting, KOIN reports.
As more and more Americans prefer to communicate and pay bills via the Internet, the volume of first-class mail - technically, the most profitable product of USPS - fell by 4.1 percent in the second quarter.
USPS said a total of $64 billion liabilities exceeded current assets by $42 billion while the shipping and packaging business remained active, with volume increasing 7.3 percent as e-commerce continued to grow and as more online shoppers require carriers to deliver their goods.
According to the Chicago Tribune, the USPS continuously struggles under the weight of "heavy mandatory payments" into its future retirees' health funds as mandated by Congress in 2006.
Postal officials have singled out that they need comprehensive legislation that should give the USPS more control over its personnel and benefit costs, as well as more flexibility in pricing and products.
Although a number of legislative proposals have been advanced in the past, Congress has not passed a bill requesting the said changes, USA Today stated.
"The Postal Service is working diligently to improve its finances by streamlining our network to improve efficiency, reduce operating costs and increase revenue, which was up $379 million over the same period last year - the third straight quarter of revenue increase," Postmaster General Patrick Donahoe said in a statement. "However, we will still incur annual inflationary cost increases ... and first-class mail volume continues to decline."
The agency says that it lacks the money to upgrade its 23-year-old vehicles and make other necessary improvements for efficient operations.
The United States Postal Service is an independent agency that receives no tax dollars for its day-to-day operations; however, it is still subject to constitutional control.
Posting officials had asked to end most Saturday deliveries since this is seen as a means to save about $2 billion yearly. Also, the agency also seeks to reduce its congressionally mandated $5.6 billion annual payment for future retiree health benefits.
"Some comments in recent news reports suggest that all we need from Congress is help with restructuring our retiree health benefit plan," chief financial officer Joseph Corbett said. "Nothing can be further from the truth. Our liabilities exceed our assets by $42 billion and we have a need for more than $10 billion to invest in new delivery vehicles, package sortation equipment, and other deferred investments."
"We haven't been making the retiree health benefit prefunding payments because we can't," Corbett added. "Only comprehensive postal legislation ... will provide the necessary cash flows."
