The US Postal Service has forecast it will make a $5.2 billion loss for the 2007 fiscal year,ending 30 September, due to a new legal requirement mandating it to accelerate employees’
retirement funding.In the first quarter of the year, ending 31 December 2006, USPS made a loss of $2.7 billion,although revenues grew over 6%. The funding of retiree health benefits, under the PostalAccountability and Enhancement Act signed into law by President Bush in December, has turned anotherwise net income of $1.2 billion into the loss, a statement by USPS said.
Revenue for Q1 was $19.7 billion, an increase of 6.4% on the same period in 2005, driven by a2.3% increase in mail volume. Standard mail volume grew by 4.9 percent, while first-class mailvolume for the quarter was flat in relation to the first quarter the previous year. Productivityrose 1.9%.
Package volume increased 3.5 million pieces (1.1%) to 329 million, although Parcel Postvolume declined 7.8% due to the disruptive impact of bankruptcies in the consolidator industry inearly 2006, USPS pointed out.
Express mail volume declined 0.4 million pieces (3.1%) for the quarter. “Express mail is themost price sensitive class of mail so this decrease was not unexpected,” USPS said, adding howeverthat the express arm was benefiting from the impact of surcharges imposed by private sectorcompetitors.
International Mail originating in the USA increased 3% or 7.2 million pieces in Q1, most ofwhich was attributable to a 25% increase in International Surface Airlift Mail.
Net operational income is expected to nearly double to $1.7 billion for the full year of 2007from $900 million in the year ending 30 September 2006.
But the new law mandates that USPS pays up to $5.8 billion a year over the next 10 years intothe newly-created Postal Service Retiree Health Benefits Fund (PSRHBF). This year’s payment willleave it with a cash shortfall of $600 million, the postal operator said.
Last year, USPS made a net loss of $2.1 billion due to increased fuel, labour and escrowcosts, despite record revenues and volume.
