U.S. Postal Service Suffers $354 Million Net Loss in First Quarter
The U.S. Postal Service had its 19th quarterly loss in the last 21 quarters with $354 million net loss in its first quarter of the 2014 fiscal year, which spanned Oct. 1 to Dec. 31, 2013.
These losses have been continuing due to persistent declines in higher-margin First-Class Mail (down 4.6 percent), stifling legal mandates and inflexible business and governance models despite Shipping and Package Services growth (volume up 10.3 percent) and operating cost reductions (down 3 percent), according to a U.S. Postal Service press release.
“The Postal Service is doing its part within the bounds of law to right-size the organization, and I am very proud of the achievements we have made to reduce costs while significantly growing our package business,” Postmaster General and CEO Patrick Donahoe said.
That package business, touting 14.1 percent revenue growth, has been the driving force for the Postal Services' $334 million increase in revenue, according to the Postal Service. While operating costs have decreased by $574 million, the Postal Service has $63 billion in liabilities, which exceeds its assets by about $40 billion.
“We cannot return the organization to long-term financial stability without passage of comprehensive postal reform legislation," Donahoe said. "We appreciate the efforts of the House and Senate oversight committees to make this happen as soon as possible.”
Without Congress' help, the Postal Service will default on yet another $5.7 billion retiree health benefits pre-funding payment due Sept. 30, according to the Postal Service. The Postal Service will have a low level of liquidity through October, which could result in it creating a contingency plan to keep mail deliveries en route.
"These measures could require the Postal Service to prioritize payments to its employees and suppliers ahead of some payments to the federal government, as has been done in the past," according the release.
Last year, the Postal Service significantly reduced its costs instead of waiting on legislation to ease its financial issues.
“We grew revenue by over $300 million through aggressive marketing and improving service, and we reduced operating costs by $574 million in Quarter 1, partially due to the separation of approximately 22,800 employees in 2013 under a Voluntary Early Retirement program and improved efficiency in our workforce,” Joseph Corbett, chief financial officer and executive vice president, said.
For more information, visit www.usps.com.