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Thursday, February 9, 2012

Postal Service pleads for help as losses continue

The U.S. Postal Service renewed its pleas for legislative support Thursday as the floundering agency reported another massive quarterly loss.
NEW YORK-- The U.S. Postal Service renewed its pleas for congressional support Thursday as the floundering agency reported another massive quarterly loss.
The Postal Service announced that it sustained a net loss of $3.3 billion in the last three months of 2011, as declining mail volumes and mounting benefit costs continue to weigh on its business.  
In the previous fiscal year, the Postal Service lost $5.1 billion and said its losses would have been roughly $10.6 billion if not for the passage of legislation postponing a $5.5 billion payment required to pre-fund retiree health benefits.
In a statement, the Postal Service urged the government to do away with the requirement that such benefits be funded at their current rates, and also called for greater "delivery flexibility."
The Postal Service has floated the idea of scaling back to five-day delivery from the current six-day system to save costs, though this is unpopular with Congress, which has the final authority. Also under consideration is a plan to slow down next-day service.
"Passage of legislation is urgently needed that provides the Postal Service with the speed and flexibility needed to cut costs that are not under our control, including employee health care costs," Postmaster General Patrick Donahoe said in the statement.
The Postal Service warned that it could default on its health benefit pre-payments this year. It may also reach its $15 billion debt limit and run out of cash even if Congress changes or eliminates the pre-funding requirement.
The Postal Service is chartered as a government enterprise but does not receive taxpayer support.
In an effort to cut some $20 billion in costs, the agency plans to close post offices around the country. But it has delayed the closures until May 15, allowing Congress some time to devise a plan to support it.
The Postal Service's struggles have come even as its private-sector competition is thriving. Both UPS (UPS, Fortune 500) and FedEx (FDX, Fortune 500) reported strong increases in earnings and revenue in their most recent quarterly reports.

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