USPS Reports $586M Net Loss in Q3 and Double-digit Package Growth
The U.S. Postal Service reported a net loss of $586 million for the third quarter of fiscal 2015 (April 1, 2015 - June 30, 2015), a reduction of $1.4 billion from the net loss of $2 billion for the same period last year.
Operating revenue was $16.5 billion for the quarter, essentially unchanged from the same period last year. Due to the seasonality of its business, the Postal Service has historically experienced lower revenue during the third quarter of each year. A price increase impacting certain mail classes went into effect on May 31, 2015; however, this was offset by declining mail volumes as First-Class Mail and Standard Mail volumes fell 2.6 percent and 2.1 percent, respectively, compared to the same period last year.
Shipping and package revenue and volume increased by 10.6 percent and 13.4 percent, respectively, from the same quarter last year.
"The continued growth of our shipping and package services is a direct result of the Postal Service's continued efforts to offer consumers more choice, excellent value and reliable service in a growing and competitive marketplace," said Postmaster General and CEO Megan Brennan. "We are investing in our network and continually enhancing our services to best compete for America's shipping and package delivery business."
Total controllable operating expenses increased by $256 million from the same quarter last year. This is the result of higher compensation costs primarily attributable to contractually obligated salary escalations, increased benefits expenses and additional work hours associated with growth in the more labor-intensive shipping and package business.
Controllable loss in the third quarter was $197 million, compared to a controllable income of $10 million for the same period last year. However, for the year-to-date period, the Postal Service has achieved a controllable net income of $1.2 billion. Controllable income or loss is defined as net income excluding retiree health benefits prefunding expense and expenses for interest rate and other non-cash workers' compensation expense, which are factors largely outside of management's control.