Postal Service Loses Billions Per Year; Wants to Start a Bank
After the Postal Service pulled off a profitable quarter to start this fiscal year, Postmaster General Megan Brennan warned not to get too used to good news because more red ink was on the way.
It looks like her prediction is on the mark. This month, the Postal Service announced a second straight losing quarter. It reported a loss of $1.57 billion for the quarter, which leaves USPS more than $3 billion in the red so far this year.
Postal Service executives say requiring they prepay health and pension benefits for their employers makes it hard to turn a profit, and the $450 million they “lost” when a temporary increase was allowed to expire on April 10 has not helped. They say losing the price hike will account for half of the $4 billion they expect to lose this year.
But other numbers in the report suggest problems also lie elsewhere. For the three months ended June 30, total revenue increased 7 percent to $17.72 billion. But almost all that growth – all but 0.7 percent – is a one-time-only windfall that comes from an accounting change on “forever” stamps.
When it comes to what the Postal Service calls “controllable losses” – those acquired doing business rather than predestined pension payments – things are getting worse. The Postal Service lost $552 million in controllable funds this year, compared to $197 million a year ago. Its overall loss was nearly three times what it was in the third quarter a year ago. – READ MORE