U.S. Postal Service takes $5 billion loss
WASHINGTON — The US Postal Service on Tuesday reported a $5.1 billion loss for fiscal 2011 and warned of more trouble if has to meet obligations to pay into a retiree health benefits program.
The USPS, government-owned but expected to operate on its own financial legs, said the year-end loss would have been $10.6 billion had it not been for legislation that postponed a congressionally mandated payment of $5.5 billion to pre-fund retiree health benefits.
Hit by falling revenues from lower mail volumes and a sizable historical debt burden, the USPS said it remains weak and unable to honor huge commitments to fund its retirement programs.
Revenue fell to $65.7 billion for the fiscal year that ended September 30 from $67.0 billion a year earlier.
The service’s net loss dropped to $5.1 billion from $8.5 billion in 2010.
While Congress lifted its need to pay $5.5 billion into the retirement health fund for 2011, the USPS still faces making up that, currently by November 18.
“Unless additional legislation is enacted, the Postal Service will be forced to default on this payment,” it said in a statement.
USPS is further obligated to make a similar-sized new payment in fiscal 2012, which it is also currently unable to honor.
Moreover, it warned, even if those commitments are removed, “current projections indicate that we will have a precariously low level of cash and liquidity at September 30, 2012.”
“As a result, we would likely not be able to meet all of our financial obligations by October 2012 when we are required to make a payment of approximately $1.3 billion to the Department of Labor for workers’ compensation.”
In a push for more relief from Congress, postmaster general and chief executive Patrick Donahoe in a statement that the company had to cut annual costs by $20 billion by the end of 2015 to return to profitability.
“We continue to take aggressive cost-cutting actions in areas under our control and urgently need Congress to do its part to get us the rest of the way there.”
The Postal Service has been piling up losses since early 2008 due to rising costs and a decline in volumes caused by rising Internet use and e-commerce.