USPS Reports Q2 $1.9 billion Loss
The United States Postal Service ended the second quarter of its 2013 fiscal year (to March 31) with a net loss of $1.9 billion (all figures are reported in U.S. dollars). The organization states this Q2 result highlights an urgent need for comprehensive legislation or its current business model will continue to result in large quarterly financial losses.
“To return the Postal Service to solvency requires a comprehensive approach, which is reflected in our updated five-year business plan,” said Postmaster General and CEO Patrick Donahoe. “The plan provides an achievable road map to restore financial stability and preserve affordable mail service for the American public. The major elements of the plan must be pursued and executed within a short window of opportunity.”
The Postal Service stated that it needs to save $20 billion annually by 2016 and many of the savings cannot be achieved without the following legislative action:
- Require a USPS Health Care Plan (resolves the Retiree Health Plan prepayment issue),
- Refund the FERS overpayment and adjust the FERS payment schedule,
- Adjust delivery frequency (six-day package/five-day mail delivery),
- Streamline the governance model,
- Allow USPS the authority to expand products and services,
- Require a defined contribution retirement plan for future postal employees,
- Provide instructions to arbitrators to consider USPS’s financial condition in interest arbitration awards, and
- Reform workers’ compensation.
The Postal Service has already reached its debt limit of $15 billion. It also has defaulted on $11.1 billion due for retiree health benefits in 2012 and also expects to default on an additional $5.6 billion on September 30, 2013. In addition, the Postal Service owes an estimated $17 billion on future workers’ compensation claims.
“These obligations of nearly $50 billion and continuing losses highlight the need for immediate legislative reform to give us the latitude to execute on our Five-Year Plan and improve our ability to repay these obligations and return to profitability," stated Chief Financial Officer Joe Corbett.
In the 2013 second quarter, USPS work hours were reduced by approximately 7 million hours, a 2.4 percent reduction compared to the same period last year. "Even with a 6.2 percent volume increase in Shipping and Packages compared to the same period last year, we were able to reduce these work hours to increase efficiency," Corbett added, noting that work hour reductions have been the single largest contributor to the ongoing achievement of savings targets.
The number of career employees decreased by approximately 25,000 in the second quarter and by 46,000 in the last year. The USPS now has the lowest number of career employees since 1966.
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