U.S. Postal Service moves closer to default as losses mount to $5.1B
Washington ? The U.S. Postal Service said Tuesday it has lost $5.1 billion in the past year, pushing it closer to imminent default on a multibillion-dollar payment and to future bankruptcy as the weak economy and increased Internet use drive down mail volume.
The financial losses for the year ended Sept. 30 came despite deep cuts of more than 130,000 jobs in recent years and the closing of some smaller local post offices.
Losses will only accelerate in the coming year, Postmaster General Patrick Donahoe warned, citing faster-than-expected declines in first-class mail. He implored Congress to take swift, wide-ranging action to stabilize the ailing agency’s finances as it nears a legal deadline Friday to pay $5.5 billion into the U.S. Treasury for future retiree health benefits.
Congress is expected to grant a reprieve, but that will only delay the day of reckoning for an agency struggling for relevance in an electronic age. Based on current losses, the Postal Service says it will run out of money — or come dangerously close — next September, forcing it to halt service.
“We are at a point where we require urgent action,” Donahoe said.
In the event of a shutdown, private companies such as FedEx and UPS could handle a small portion of the material the post office moves, but they do not go everywhere. No business has shown interest in delivering letters everywhere in the country for a set rate of 44 cents for a first-class letter.
For the fiscal year ended Sept. 30, the post office had income of $65.7 billion, down $1.4 billion from the previous year. Expenses totaled $70.6 billion.
The loss of $5.1 billion was less than a previous estimate of $10 billion, but only because the $5.5 billion payment — originally due Sept. 30 — was deferred until Nov. 18 with the approval of Congress.
In 2010, losses totaled $8.5 billion.