U.S. Postal Service narrows loss in latest fiscal year

Reuters

(Adds details on USPS finances, responses from lawmakers andNALC)

By Elvina Nawaguna

WASHINGTON, Nov 15 (Reuters) - The U.S. Postal Servicereported on Friday that it managed to slow the hemorrhaging ofcash in its latest fiscal year, but said a legislative fix isstill needed to put it on a sound financial footing.

The mail agency, which does not rely on taxpayer funds, saidits loss for the 2013 fiscal year narrowed to $5 billion fromnearly $16 billion in the prior year.

The U.S. Postal Service (USPS) said it benefited from growthin its shipping and packages business as well as aggressivecost-cutting that included a drastic reduction in employeehours. But the agency is still struggling under the weight ofheavy mandatory payments into its future retirees' health fund,which was mandated by Congress in 2006, as well as the continuedslide in first-class mail, its most profitable product.

"We've achieved some excellent results for the year in termsof innovations, revenue gains and cost reductions, but withoutmajor legislative changes we cannot overcome the limitations ofour inflexible business model," Postmaster General PatrickDonahoe said in a statement.

The U.S. Postal Service has sought legislation that wouldrelieve the pressure of the retiree payments, shift to afive-day mail delivery service, close some rural post officesand allow it to modernize its business service offerings.

Lawmakers for years have failed to reach agreement, partlybecause they are reluctant to see postal services rolled back intheir districts.

House Oversight and Government Reform Committee ChairmanDarrell Issa, a California Republican, and postal subcommitteeChairman Blake Farenthold, a Texas Republican, said in a jointstatement that USPS losses will continue unless Congress stepsin soon.

"Based on briefings the Committee has received from USPS,this is likely the last year that ongoing cost-cutting measureswill generate significant savings," the lawmakers said. "Thereis no doubt that mail delivery will be affected in the nearfuture without Congressional action to cut costs and restructureUSPS finances."

With few days left on the U.S. congressional calendar, itwas seen as unlikely that any bills addressing these issues willpass by year-end.

REVENUE GROWTH

In the meantime, package services have remained a promisingbusiness as more people shop online and need carriers to delivertheir goods. Package volumes grew by 210 million pieces thisyear.

Earlier this week, the USPS announced a potentiallylucrative partnership with online retail giant Amazon.com Inc to deliver packages on Sundays in some large cities,including New York and San Francisco. Financial terms of thedeal were not disclosed.

The U.S. Postal Service has also entered an arrangement tosell its services out of Staples Inc office suppliesretail stores.

The agency's operating revenues rose to $66 billion from$65.2 billion last year, the first growth in revenue since 2008.To cut costs, the agency reduced work hours by 12 million andconsolidated mail processing centers this year.

A plan to cut Saturday delivery of first-class mail wasdefeated by Congress earlier this year.

Fredric Rolando, president of the National Association ofLetter Carriers, said he was encouraged by the improvement inthe U.S. Postal Service's finances.

"With the economy gradually recovering from the recession,the Postal Service has returned to operational profitability -with an operating profit of $600 million delivering the mailthis fiscal year," he said.

Still, this was the USPS's seventh consecutive year oflosses as first-class mail volumes continued to tumble, withmore Americans communicating and paying bills electronically.First-class mail, or stamped mail, fell by 2.8 billion pieces in2013. (Reporting by Elvina Nawaguna; Editing by Karey Van Hall, GCrosse)

View Comments (51)