- Postal Service Ends First Quarter with $1.3 Billion Loss - Board Directed Accelerated Operational and Other Cost-Cutting Actions Moving Forward - Postal Reform Legislation Urgently Needed to Complete USPS's Return to Profitability
WASHINGTON, Feb. 8, 2013 /PRNewswire-USNewswire/ -- The U.S. Postal Service ended the first three months of its 2013 fiscal year ( Oct. 1 – Dec. 31, 2012) with a net loss of $1.3 billion. Continued growth in Shipping and Package revenue (+4.7%) and increased efficiency helped mitigate but could not fully offset the financial effects of continued First-Class Mail volume declines and costs that are beyond Postal Service management control. As a result, the Postal Service recently announced it would move forward with accelerated cost-cutting actions necessary to help maintain liquidity because Congress has not passed comprehensive postal reform legislation.
The first quarter is traditionally the Postal Service's strongest financial quarter, mainly due to the holiday mailing and shipping season. The Quarter One results were also aided by growth in Standard (advertising) Mail during the months leading up to the election. The holiday season resulted in a strong increase in competitive package volume as customers took advantage of Postal Service Priority Mail flat rate pricing and increasingly turned to the Postal Service for last-mile delivery.
"The encouraging results from our holiday mailing season cannot sustain us as we move deeper into the current fiscal year and face continuing financial challenges," said Postmaster General and CEO Patrick Donahoe. "By moving forward with the accelerated cost-cutting actions directed by our Board of Governors, we will continue to become more efficient and come closer to achieving long-term financial stability. We urgently need Congress to do its part and pass legislation that allows us to better manage our costs and gives us the commercial flexibility needed to operate more like a business does. This will help ensure the future success of the Postal Service and the mailing industry it supports."One of the accelerated actions, announced earlier this week, is the transition to a new delivery schedule during the week of Aug. 5, 2013. Packages will be delivered Monday through Saturday and mail will be delivered Monday through Friday, resulting in an annual cost savings of approximately $2 billion once the new delivery plan is fully implemented. The Postal Service continues to suffer from a severe lack of liquidity. Current projections indicate that the Postal Service will once again have a low level of liquidity in the second half of this year and that there will be insufficient funds to make the required $5.6 billion payment due Sept. 30 to prefund retiree health benefits. Further, as was the case last year, this cash position will worsen in October when the Postal Service is required to make its' annual payment of approximately $1.4 billion to the Department of Labor for workers' compensation. Current projections show the Postal Service will have less than five days of operating cash reserves by the end of the 2013 fiscal year, an unsustainable position given the lack of commercial flexibility to react to possible economic downturns or other issues that may impact liquidity. "We have mitigated our losses through growing the package business and continuing to improve our efficiency which reached a new record in the most recent quarter. However, our liquidity concerns can only be fully resolved if Congress takes action to address our unsustainable business model, including resolving the overly-aggressive payment schedule to prefund retiree health benefits," said Chief Financial Officer Joe Corbett. "The Postal Service will continue to prioritize payments to our employees and suppliers ahead of those to the Federal Government to ensure that we maintain high-quality customer service." First Quarter Results of Operations Compared to Same Period Last Year
- Total mail volume of 43.5 billion pieces compared to 43.6 billion pieces
- First-Class Mail volume declined 4.5 percent
- Standard Mail volume increased 3.6 percent, with assistance from the elections
- Shipping and Package volume increased 4.0 percent
- Operating revenue of $17.7 billion, a decrease of only $17 million or less than one percent
- Operating expenses of $18.9 billion compared to $20.9 billion, a decrease of 9.8 percent.
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