The cash-strapped US Postal Service is again set to default on a $5.6 billion payment for staffbenefits due to its spiralling losses which have hit $14.5bn so far this year and with little
chance of any major postal reform to reduce costs in the near future.The government-owned agency, which does not receive any state subsidies, said that for thesecond time in two months it will not make a mandated payment of $5.6 billion on September 30 toprefund retiree health benefits. It already defaulted on a similar $5.5 billion payment due onAugust 1.
But USPS stressed: “Customers can be confident in the continued regular operations of the PostalService. We will continue to deliver the mail and pay our employees and suppliers. Postal Serviceretirees and employees will also continue to receive their health benefits.”
The healthcare payments for current retirees are made from the Postal Service’s generaloperating budget and are not affected by the Postal Service’s inability to make the acceleratedpayments mandated by Congress as part of a 2006 law.
The USPS loss has now reached more than $14 billion so far this year, according to preliminaryfinancial information for August filed with the Postal Regulatory Commission. The January-Augustoperating loss was $14.3 billion compared to $8.6 billion last year, while the net loss has soaredto $14.5 billion compared to $8.8 billion in the first eight months of last year.
However, the bulk of this loss is due to the large-scale prefunding of retiree health benefitsobligation. USPS’ “controllable” operating loss actually fell to $1.95 billion in the eight monthsto August from $2.1 billion last year. Its revenues were flat at $59.9 billion with total volumesdown 4.6% while operating expenses were reduced by 1% to $61.85 billion.
Mailing volumes (primarily letters) dropped 5.1% to 145 billion pieces and revenues were 4.5%lower at $49.5 billion. In contrast, shipping volumes (parcels and express) grew 56% to 2.3 billionpieces and the segment’s revenues grew by 22% to $10.45 billion.
USPS again called for politicians to agree on a postal reform bill to enable it to reduce costssubstantially. “Comprehensive reform of the laws governing the Postal Service is urgently needed inorder for the Postal Service to fully implement its five-year business plan and return to long-termfinancial stability. The Postal Service continues to encourage comprehensive legislative action inthis Congress”, it stated.
“The Postal Service additionally remains focused on implementing significant cost reduction andrevenue generating strategies that it currently has the authority to pursue.”
