USPS Continues String of Quarterly Losses
Net loss of $1.9B in fiscal second quarter makes 10 out of last 11.
The U.S. Postal Service announced today that it ended its second
fiscal quarter with a net loss of $1.9 billion. The recession and
continued volume decline were cited as primary reasons, making this the 10th quarter in 11 the USPS has registered a net loss.
Year-to-date, the net loss is $2.3 billion, a staggering increase from its $35 million loss in the same period 2008.
The announcement also noted that the USPS will have a cash shortfall of more than $1.5 billion at the end of its fiscal year.
"The economic recession has been tough on the mailing industry, and
we have seen an unprecedented decline in mail volumes and revenue that
continued to accelerate during the second quarter," said Postmaster
General John Potter.
In its 10-Q filing, the USPS reported that mail volume
has dropped by 13 billion pieces. That translates to a revenue loss of $3.3 billion, or an 8.3
And it doesn’t look much better for the next year or two. Potter’s increasingly dire warnings to Congress
are borne out in the 10-Q filing: The net loss for 2009 is forecasted
at $6 billion, more than double the 2008 net loss. [Click here for Potter’s statement to Congress in March.]
In 2010, the USPS predicts volume will fall another 10 billion
pieces resulting in a similar net loss to 2009—despite some aggressive
cost-cutting measures such as executive salary freezes, work-hour and
headcount reductions, and facility consolidation.
The 10-Q notes that, if granted, the six-day delivery adjustment
will not create any savings for 2009, but could ease pressure in 2010.
Other obligations that must be paid by September this year include a
$5.4 billion payment into the Postal Service Retiree Benefit Fund and
$1.1 billion to the Department of Labor for workers’ comp. "We do not
expect to generate sufficient cash flow from operations in the second
half of 2009 to enable us to fully fund these obligations," the
USPS said in its 10-Q.
Not much comfort can come from its revolving credit either, which
has an annual, statute-liimited cap of $3 billion. The USPS says it
plans to max out that $3 billion debt infusion, landing it at the $1.5
billion shortfall for 2009.