The United States Postal Service (USPS) recorded a second quarter net loss of $1.9 billion, which is now the 20th of the past 22 quarters that the nation’s postal service has reported a loss, according to an issued press release.
The USPS’s fiscal second quarter loss was higher than the first quarter loss of $354 million, but it remained flat from the same time a year ago. The losses have been attributed to a number of reasons, such as first-class mail volume declining 4.1 percent, liabilities totaling $64 billion and making hefty mandatory payments into its future retirees’ health fund.
Moving forward, the USPS will be required to diminish its pre-payments into future retiree health benefits. This has cost the USPS approximately $5.6 billion each year, but the mailing agency has defaulted on the payments quite a few times over the past two years.
“Some comments in recent news reports suggest that all we need from Congress is help with restructuring our retiree health benefit plan,” said Chief Financial Officer and Executive Vice President Joseph Corbett in a statement. “Nothing can be further from the truth. Our liabilities exceed our assets by $42 billion and we have a need for more than $10 billion to invest in new delivery vehicles, package sortation equipment, and other deferred investments.
According to the figures, the USPS did have some positive news to report: the volume of packaging and shipping business rose 7.3 percent. It is also working on increasing its package delivery service that would permit customers to track their mail with improved software and Sunday and day-specific delivery.
In addition, Congress remains at a standstill as to whether or not to provide financial aid or perhaps a bailout to the more than two-century-old institution. There has been rigorous debate but nothing has come to fruition.
“We haven’t been making the retiree health benefit prefunding payments because we can’t,” added Corbett. “If legislation reduced the required retiree health benefit prefunding payment, it doesn’t provide us with any more cash to pay down our debt or put much needed capital into our business. Only comprehensive postal legislation that includes a smarter delivery schedule, greater control over our personnel and benefit costs, and more flexibility in pricing and products will provide the necessary cash flows.”
We reported in March of a Government Accountability Office (GAO) report that found the USPS faces about $100 billion in debt and unfunded benefits. Officials and experts say that there is no other option for it then to garner a bailout from the federal government – it has noted that it would need a $50 billion bailout within the next three years if Congress does not take action.
However, Patrick R. Donahoe, Postmaster General and CEO of the USPS, says another route to take is innovation, though it can’t do so without first seeking approval from Congress.
Washington might be on the verge of granting this request from the USPS. Delaware Democratic Senator Tom Carper and Oklahoma Republican Senator Tom Coburn co-sponsored a bill that would offer financial relief and modernization, including providing a five-day mail delivery service as of 2017 and operate processing facilities for an additional two years.
