Postal Service reports billions in losses

[Auburn85 434]

http://news.yahoo.com/s/ap/20110510/ap_on_re_us/us_postal_problems

AP

JENNIFER C. KERR

WASHINGTON – The Postal Service is continuing to hemorrhage money, reporting a loss Tuesday of more than $2 billion over the first three months of the year and warning it could be forced to default on federal payments.

Such a default would not interrupt mail service to millions of Americans, but it could further hobble an agency struggling with a sharp decline in mail because of the Internet and a tough economy.

The agency says the $2.2 billion loss covers Jan. 1 to March 31, 2011 — sharply higher than the net loss of $1.6 billion for the same period last year. The post office also said it will have reached its borrowing limit, set by Congress, of $15 billion by the end of the fiscal year.

Unless Congress intervenes, the Postal Service said, the agency won't have the cash for certain payment to the government, such as billions for a trust fund to provide health care benefits for future retirees.

"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. "The Postal Service may return to financial stability only through significant changes to the laws that limit flexibility and impose undue financial burdens."

Total mail volume, about 41 billion pieces, was down 3.1 percent for the January to March period, compared to the same time a year earlier, the Postal Service said. A modest increase in revenue from standard mail wasn't enough to offset the revenue loss from fewer pieces of first-class mail.

In the last three years, the agency has cut over 130,000 jobs. And it's making more cuts, with the elimination of about 7,500 administrative jobs in regional offices.

The Postal Service does not receive tax money for its operations.

[TitanTiger 20,708]

As a comprehensive study ever been undertaken to explain all the reasons why the USPS can't be profitable like UPS and FedEx are? I mean, I could name some things off the top of my head I think my be hurting them in competition: way too many locations and thus too many postal workers, too much reliance on regular mail (letters, catalogs, etc), not investing enough in their package shipping business to match the level of service UPS and FedEx provide, inefficient routes. I know some will label unionized workforce, but UPS has a unionized workforce and UPS drivers make an average of $70,000 a year in the US. So I don't think that's it. Any ideas or whether there's a comprehensive study on this?

[CCTAU 3,369]

As a comprehensive study ever been undertaken to explain all the reasons why the USPS can't be profitable like UPS and FedEx are? I mean, I could name some things off the top of my head I think my be hurting them in competition: way too many locations and thus too many postal workers, too much reliance on regular mail (letters, catalogs, etc), not investing enough in their package shipping business to match the level of service UPS and FedEx provide, inefficient routes. I know some will label unionized workforce, but UPS has a unionized workforce and UPS drivers make an average of $70,000 a year in the US. So I don't think that's it. Any ideas or whether there's a comprehensive study on this?

Logistics. To be fair, UPS and FedEx do not run the same route every day. They only go where they have deliveries. They do not deliver stacks and stacks of "JUNK" mail every day. The USPS was a government run entity that will NEVER truly run like an independent business. And they can't. The American people will not allow it. Having mail delivered to your house is an American right(we have a lot of those). If the USPS stopped doing that, the uproar would be horrendous. Congress would call a special session to SAVE us from ourselves. So, in reality, we might as well make it another government black hole and call it a necessity. It will end up there anyway.

[Auburn85 434]

http://news.yahoo.com/s/nm/20110517/us_nm/us_postoffice

U.S. Postal Service in dire financial straits: Postmaster

WASHINGTON (Reuters) – The U.S. Postal Service is in such bad financial condition that it may not be able to make a payment for future retiree health benefits due September 30, Postmaster General Patrick Donahoe said on Tuesday.

In testimony to a Senate subcommittee, Donahoe said that without Congressional action, the service would default on its payments.

"As things stand, we do not have the cash to make a $5.5 billion prepayment for future retiree health benefits due September 30," Donahoe said.

"Despite our significant role in the American economy and our aggressive cost cutting and revenue generating efforts, I regret to say we are in a serious financial predicament today," he said in a statement.

Donahoe's remarks came on the same day that the Government Accountability Office issued a report focusing on the need to update an aging fleet of vehicles for mail delivery. It also highlighted recent news of a $2.2 billion loss after the first half of the fiscal year and potential insolvency by September.

"USPS's financial condition has deteriorated significantly since fiscal year 2006," GAO Director of Physical Infrastructure Issues Phillip Herr said in remarks prepared for the committee hearing..

"And its financial outlook is grim in both the short and long term," he said.

In March, the service announced that it would cut 7,500 jobs and close 2,000 post offices. The U.S. agency has lost business to electronic mail and to private sector competitors like FedEx and the United Parcel Service.

The report focuses on the world's largest civilian fleet which is approaching its designed life span of 24 years and is accruing significant costs in unexpected maintenance.

Presenting the GAO's findings, Herr emphasized that the strategy to upgrade the fleet should be a part of a larger plan to make the mail carrier financially viable.

Herr suggested that Congress modify the service's payment for retiree benefits and eventually loosen restrictions on closing facilities as it develops a strategy.

Senator Tom Carper of Delaware has introduced legislation to address these issues by allowing a transition to a five-day delivery schedule, which supporters say could save $3.1 billion annually.

(Reporting by Wendell Marsh; Editing by Greg McCune)