Postal Service lost $3.5 billion in third quarter
By The Post's Lisa Rein
The U.S. Postal Service lost $3.5 billion in the third quarter of the year and may have trouble making payments for health benefits for future retirees, officials said Thursday.
Losses for the quarter that ended June 30 were $1.1 billion more than the Postal Service hemorrhaged during the same period a year ago, according to a financial report presented to the agency's board of governors.
The bleak picture -- on top of several years of plummeting revenue caused by declining mail volume -- comes as the Postal Service prepares to begin labor negotiations for new four-year contracts with its two largest unions,representing rural letter carriers and clerks, maintenance workers and motor vehicle operators.
"We continue to work on productivity," chief financial officer Joseph R. Corbett told the board. "But we need legislative and contractual changes... .We've got to get to be a profitable organization."
To stem the losses, the Postal Service has proposed raising rates and eliminating Saturday delivery. Both proposals are pending. Another high cost is advance payments required for future retirees, which come to about $5.5 billion annually. Even with borrowing, the agency's cash-flow problems may be too severe to allow payment in the next fiscal year, Corbett said.
The financial statement was challenged by a new lobbying group representing volume mailers. The Affordable Mail Alliance, which is fighting the plan to raise rates in January, accused the Postal Service of inflating its financial pressures to push the rate increase through.
"It's misleading information designed to thwart the need for the rate case," said Tony Conway, head of the alliance. He said postal officials indicated as recently as a month ago that they would finish this fiscal year with $1.3 billion in cash.
| August 5, 2010; 2:29 PM ET
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