The financially struggling USPS is one step closer to gasping for survival as it announced a $3.3 billion net loss yesterday for the last fiscal quarter.
According to a Feb. 9 USPS press release, the delivery agency continues to suffer great losses as the first three months of its 2012 fiscal year closed. This reflects the time frame of Oct. 1 – Dec. 31, 2011.
The loss of revenue from declining use of first class and standard mail continues to plague the USPS. The agency stated holiday shipping activity was stronger than anticipated and this helped, however, the loss of sales from their primary product persists as an issue.
“Technology continues to have a major impact on how our customers use the mail,” said Postmaster General and CEO Patrick Donahoe. “While it has helped us grow our Shipping Services businesses, it has had a significant negative impact on some of our much larger sources of revenue, particularly First-Class Mail. Revenue from Shipping Services represents about 17 percent of total revenue and, even with continued growth, cannot fully offset the decline in First-Class Mail revenue.”
In the statement USPS said they anticipate "large losses to continue" until the agency has downsized, gotten a network redesign, and restructured its healthcare program.
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However, the agency says until Congress allows the USPS "typical commercial freedoms" and reimburses over $10 billion of prepaid payments made for retirees, it'll continue to struggle. Donahoe has been trying to get the Congressional restraints on the USPS loosened so it can operate as a competitive business. Additionally he has submitted a plan designed to reduce $20 billion in costs by 2015.
The prepaid retiree stipulation has been a major hurdle for the USPS, currently it cannot make a payment, which has been deferred since its original due date in Sept. No other agency is required to prefund this type of account.
"Passage of legislation is urgently needed that provides the Postal Service with the speed and flexibility needed to cut costs that are not under our control, including employee health care costs,” Donahoe said. “The changes will give the Postal Service a bright future and provide the nation with affordable and reliable delivery for generations to come.”
USPS receives no tax dollars and must rely on sales, however struggles as people gravitate towards electronic correspondences, bill paying, banking and other routine communications.
The first quarter of a fiscal year is usually the postal agency's most profitable. If this trend continues, the USPS expects its cash to run out in Oct. unless Congress restructures how the USPS operates.
Chief Financial Officer Joe Corbett said, according to Dow Jones (courtesy of Wall Street Journal), "Those losses cannot continue, or we will not be able to sustain the business.We have to execute the plan, and execute it quickly. "