The U.S. Postal Service reported a net loss of $3.5 billion for the third quarter compared with a net loss of $2.4 billion last year and said it foresees “a liquidity problem” next year as the battle over postal financing heats up.
In late July, the USPS filed for an “exigent rate increase” averaging 5.6% to take effect next year with the Postal Regulatory Commission. A week later, the Affordable Mail Alliance, a coalition of industry groups, filed to block this increase and the USPS countered this with a motion to dismiss the AMA’s filing.
In its release last week, the USPS made no direct mention of its rate increase filing.
The USPS attributed much of its financial condition to a 20% decline in mail volume over the past three years and to the $5.4 billion to $5.8 billion it must pay each year annually to prefund retiree health benefits.
“Given current trends, we will not be able to pay all 2011 obligations,” said USPS chief financial officer Joseph Corbett, in a statement. “Despite ongoing aggressive cost reductions totaling over $10 billion in the last three years, it is clear that a liquidity problem is looming and must be addressed through fundamental changes requiring legislation and changes to contracts”
The AMA disputed some postal service claims.
“As the postal service said just a month ago in its rate filing, even after making this year’s retiree health benefit payment, it will end fiscal year 2010 (Sept. 30) with $1.3 billion in cash,” said Tony Conway, executive director of the Alliance of Nonprofit Mailers, and AMA spokesman, in a statement.
Third quarter mail volume of 40.9 billion pieces decreased by 700 million pieces (1.7%) from the prior year.
The postal service reported revenue of $16 billion, about $294 million less than the same period last year, and operating expenses of $19.5 billion, a 4.2% increase over last year.
The PRC has until Oct. 4 to rule on the postal service’s rate hike request.
