Postal Service Announces $5.2 Billion Loss, Begs Congress For Help
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The United States Postal Service announced today that it lost $5.2 billion during the third quarter of 2012. This net loss is over $2 billion more than the $3.1 billion loss the Postal Service recorded for the third quarter of 2011. So far, the Postal Service has lost $11.6 billion during the fiscal year 2012.
The Postal Service stated that the reasons for the loss are two-fold. $3.1 billion was spent for pre-funding for the health benefits of its retirees. The Postal Service is currently mandated by law to provide such pre-funding. The organization also cited the continued decline of first-class mail volume as a reason for the loss.
Though overshadowed by the enormous loss, the Postal Service did report a 9% growth in its package delivery services during the third quarter of 2012.
As part of its announcement, the Postal Service begged congress to pass legislation to help it survive. Among the law changes the Postal Service is looking for are a refund of $11 billion worth of pension plan overfunding, the elimination of the aforementioned pre-funding for retiree health benefits, and a switch to a 5-day weekly mail delivery schedule.
“We remain confident that Congress will do its part to help put the Postal Service on a path to financial stability,” said Patrick Donahoe, postmaster general and Postal Service CEO. “We will continue to take actions under our control to improve operational efficiency and generate revenue by offering new products and services to meet our customers changing needs. Moving forward with our business plan will make the Postal Service financially self-sustaining, provide a platform for future growth and preserve our mission to provide secure, reliable and affordable universal delivery services for generations to come.”
The U.S. Postal Service has been struggling with its outdated business model in recent years. It has suggested that Post Office branches throughout the nation could be shut down in an effort to curb expenses. The challenges for the organization are the same as for many aging industries: disruption caused by the instant communication the internet provides. The question now is whether the Postal Service has a place in the same world as the internet.