The U.S. Postal Service (USPS) reported it lost another $2.2 billion during the second quarter of 2011, will be pretty much broke by October and may be forced to default on its required payments to the federal government.
"Despite significant cost reductions and revenue growth initiatives, current financial projections indicate that the Postal Service will have a cash shortfall and will have reached its statutory borrowing limit by the end of the fiscal year," stated the USPS in a press release. "Absent substantial legislative change, the Postal Service will be forced to default on payments to the federal government."
The payment they may not be able to make is the more that $5 billion a year required by Congress to pre-fund lifetime health care benefits for USPS retirees. Needless to say, the USPS is trying to get Congress to change that requirement.
"The Postal Service continues to seek changes in the law to enable a more flexible and sustainable business model," said Postmaster General and CEO Patrick R. Donahoe in a press release. "We are committed to working with Congress and the administration to resolve these issues prior to the end of the fiscal year. The Postal Service may return to financial stability only through significant changes to the laws that limit flexibility and impose undue financial burdens."
The USPS continued to suffer from reducing mailing volumes during the second quarter of 2011. The 40.7 billion pieces mailed represented a 3.9% decrease in mailing from the same period last year. Revenue from mailing of $14.0 billion decreased $568 million, or 3.9%, in the second quarter of 2011, compared to the same period in 2010.
"Sluggish economic growth and diversion of First-Class Mail to electronic alternatives continue to cause record losses, despite a reduction of over 130,000 full-time equivalents (FTEs) in the last three years," said Joseph Corbett, USPS' CFO and executive vice president.
By cutting those 130,000 FTEs, the USPS also cut 9.6 million paid work hours during the second quarter. By March, the total USPS work force had dropped to 571,566, down by about 6,700 from last year.
In March 2011, the USPS announced a career employee buyout plan it hopes will eliminate another 7,500 administrative and local postmaster jobs by March of 2012. So far, about 2,000 employees have taken the option to retire.
Other popular and not-so-popular USPS money-saving plans include ending Saturday mail delivery and closing local post offices, many of them in rural areas.
Also See:
Postal Service Travels Well on Your Dime
Postal Service Snubbing Rural Americans?
Is End of Saturday Mail Such a Good Idea?
Comments
If the postal service stopped giving free or near free postal rates to politicians and every contest house in the country the postal service would make money. I use the postal service all of the time and I don’t mind paying my share. People I know still enjoy getting letters and cards in the mail.
This does not suprise me in the least, customer service is not a priority for them and these days with all the competition it should be. They draw a nice fat paycheck too!!!!!!!!!!!
The main problem is that Congress imposed what amounts to a $5 billion tax on the USPS under the guise of “pre-funding of healthcare” costs. There is no other business or individual that is saddled with such an onerous piece of excrement. If not for this obvious tax (because none of the money is going into the USPS coffers) then the USPS would be breaking even or better.
If they stuck to simply delivering the mail, and doing it excellently, they’d have no problem at all.
you have no idea what it takes to deliver 212 billion pieces of mail/parcels a year you would be mindf*cked
… and on the SAME PAGE, there are ads for the postal service HIRING employees. Folks, I just don’t think so, no. The USPS is not in any serious trouble, and never will be. It’s an arm of the Federal Government, private or not, and will always be so.