USPS Q3 Loss is $740 Million, Despite Efficiency Efforts
The U.S. Postal Service ended the third quarter of its 2013 fiscal year (April 1 – June 30) with a net loss of $740 million, increasing the year-to-date net loss to $3.9 billion. Aggressive Postal Service actions to contain costs and increase efficiency, along with a decrease in workers’ compensation expense due to fluctuations of discount rates, prevented the financial loss from being greater. However, the Postal Service will not return to profitability and long-term financial stability without passage of comprehensive legislation to fix a business model that does not allow it to adapt to changes in the marketplace.
“We are encouraged that comprehensive postal reform legislation has started making its way through the legislative process in both the House and Senate,” said Postmaster General and CEO Patrick Donahoe. “We continue to evaluate the current legislation based on whether it enables $20 billion in savings by 2017.”
Donahoe added that the Postal Service's five-year business plan does provide at least $20 billion in savings and creates a financially sustainable business model to support America’s residential and business mailing and shipping needs well into the future.
Contributing to the third quarter loss were continued expenses for the legally-mandated prefunding of retiree health benefits, the continuing decline of First-Class Mail volume and the continuation of six-days-per-week of mail delivery. The quarter’s operating expenses were reduced by $918 million due to a change in the discount rate for workers’ compensation. Future cash payments for workers’ compensation must be converted to present-day dollars, or discounted, by applying the current rates at which the liability could theoretically be settled.
Operating revenue in the third quarter increased 3.6 percent compared to the same period last year and revenue for the first nine months of the fiscal year was up 1.3 percent. The increases were fueled by strong growth in Postal Service shipping and Package Services supplemented by moderate increases in Standard Mail revenue. However, these increases were offset by declines in First-Class Mail revenue, which continues its decline that began in 2008.