US Post Office $2.8 Billion In The Red

WASHINGTON — The Postal Service ended its fiscal year $2.8 billion in the red, battered by a faltering economy that cut the amount of mail being sent.

Postmaster General John Potter said the agency is making sharp cuts in hours and overtime, but added there are no plans for layoffs. The mail being sent dropped by 9.5 billion items.

"We expect the new fiscal year to be another difficult one," Potter said, adding: "We're not panicking here."

By cutting back on spending the post office had a net operating income of $2.7 billion in 2008, but still ended up in the red because of the requirement for a $5.6 billion payment to a health benefit fund for retirees.

Even so, the $2.8 billion loss was well short of last year's $5.1 billion postal deficit.

The Postal Service does not receive a tax subsidy for its operations

Potter welcomed recent reductions in the cost of fuel _ a major expense for the post office _ and said his agency is continuing to cut overtime and working hours as it seeks to increase efficiency.

He said the agency reduced working hours by 50 million in 2008 and hopes to double that to 100 million hours cut this year.

Story continues below

advertisement

"We are working hard to do everything that we possibly can to avoid layoffs," Potter added in an interview following the board meeting.

The post office has been offering early retirement, which has been accepted by 3,685 workers.

Asked about the possibility of cuts in service, Potter was emphatic in saying no: "When you're in tough economic times, the last thing you want to do is back away from your customers."

The cost of First Class postage went up to 42 cents in May and Potter said the annual increases for letters will continue to occur in May, with the new price being announced 90 days in advance. The increase is based on the rate of inflation.

For packages, however, rates will increase in January so the post office will be in step with its major competitors, which generally announce new rates in January, he said.

Planned rate increases are Express Mail, 5.7 percent; Priority Mail, 3.9 percent; parcel select, 5.9 percent; parcel return service, 5.3 percent and international shipping, 8.5 percent.

Potter said the agency plans to ask Congress to restructure the way it handles payments for retiree health care. A 2006 law requires the post office to create a fund to cover retiree health care, contributing several billion dollars annually for 10 years. At the same time the agency is paying about $2 billion annually for retiree health care.

The postmaster general said the agency would like to start funding retiree health care from the new account, which it will continue to build up. But it would like to eliminate the need to pay the extra $2 billion for current costs.

Standard mail, mostly advertising and the largest mail category at 99.1 billion items, was down 4.3 percent in 2008. First class mail dropped 4.8 percent to 91.7 billion cards and letters and periodicals fell 2.2 percent to 8.6 billion.

Overall, the post office had revenue of $74.9 billion, operating expenses of $72.1 billion and a health benefit fund payment of $5.6 billion for a net loss of $2.8 billion. The fiscal year began Oct. 1.

"This has been a very challenging year for the Postal Service," chief financial officer H. Glen Walker told the agency's governing board on Thursday.

___

On the Net:

U.S. Postal Service: http://www.usps.com

Comments

[BuyRubles]

The future of the Big 3.

[ramal]

Great portions of the Post Office should be privatized. Given that 90% of all mail is junk mail, the Post Office should immediately institute a three day a week delivery system for private residences.A Monday, Wednesday and Friday delivery is quite enough.

[jozap]

There are seveal ways they can save money.

Stop printing specialty stamps every month. Just have stamps.

Stop giving money to charities.

Stop trying to run a gift shop.

Just be a post office and deliver the mail.

Investing in elec vehicals would be great too.

[Gasparilla]

Those "specialty" stamps are a money maker. Collectors buy a lot of them and never use them, so it's all profit. They also make money on the gift items. They don't give money to charities. But thanks for your informed comment.

[ignorantwillyharper]

What's a $1.50 for a stamp...their not part of the federal government at least.

[nivek]

If people would take into consideration exactly what the USPS accomplishes daily they might have a better appreciation of their letter carrier and the system at large. A letter is mailed in New York .That letter is processed and routed to its destination within hours, possibly minutes. It passes through several stages wherein it travels over land to it's destination in California. Your letter is kept secure and at a cost of .42 it makes a 3000 mile journey ultimately being hand delivered to the door of the person receiving it. Generally this all happens within three to four days. Now consider that this is repeated millions of times over, reaching every part of this country of 300 million. Appreciate it people, try to imagine if it no longer existed.

[vandegrasse]

They suck! That's why!

[harriettubman]

Ever notice if a town is predominantly white the postal employees are white and if the town is predominantly black, same thing? I'm from a town where no blacks have EVER worked in the post office and from what I hear the post master doesn't want any either. Some are too afraid to speak out. Now that's a place that needs to be picketed!!!

The U.S Postal System needs a complete overhaul and so does Amtrak, local Metro-links, the airline industry, the federal government and so many other entitites.

[vandegrasse]

OMG. I was in the Postal Service and 99 percent of the employees were black! Get real!

[nivek]

What do you base this faulty assertion upon? Personal experience? Have you ever been in the working area of a postal facility? My experience has been that the USPS employees racial makeup is representative of the communities they are located in.

[Eric8869]

This harriettubman person is really insane. Not only has she posted 100's of anti-gay hate things on huffpo but now this reverse racism stuff.

Honey - i live in Chicago. I would find about 5 white people in ALL THE POST OFFICES here.

Go spread your hate elsewhere.

[sposton]

Why doesn't Post Office buy thousands of plug-in hybrid vehicles from GM (Ford)? Or replace existing fleet's gasoline engines with efficient diesels, the kind GM (Ford)build in Europe. They start making them right here in the US. USPS would save a lot on fuel bills and auto manufactures could be manufacturing something.

[StephenBarry]

Just give them the money. What's the problem ?

[Ray46]

What does it mean when the post office flag is at half mast?

They're hiring!

[StephenBarry]

Cheers, that made me laugh !!!

[Tulka2]

Every time a gallon of gas goes up one penny, the Post Office is out millions. Here is another example of Reagan privitizing. I have never understood what exactly they did to our wonderful postal service of old. All i know is one day it was not longer under the United States Government control and we lost overnight and Sunday pick-up. I would much rather bail out the post office rather than Detroit....only it has to belong to us again.

Universal Health care would take care of so much of this pain.

[nycelite]

I'm pretty lucky. My mail carrier is a hard worker and pretty accurate. It's rare that we get misdelivered mail. Better still at the post office I use most frequently the counter personnel are really friendly and helpful. I was there the other day at 4:59 on a Friday trying to ship a package and they were very patient and considerate. I don't know about the upper management or back room personnel, but I'd be happy if the front line people I know aren't laid off.

[mespace]

Fire all those really slow, grumpy employees. Get new management. Make sure when I go in to mail a package I don't have to stand in line for 40 minutes. Update the interiors. Paneling and grungy gray walls were great in 1978, but let's get with the program. They deserve to go belly up. If someone came in with a capitalist version of the post office, it would be profitable, fast, friendly and efficient. I got to the point where I was printing my own postage on my home computer just to avoid this place. Then when you go in to drop off your package, they ignore you. So you have to wait in line, just like everyone else. Just so you can say "This box is too big to fit into the mailbox. Can I leave it with you?" http://mespace.wordpress.com

[DragonMama]

Dude, that "capitalist version" was called Mailboxes Etc and it went belly-up in less than a decade. Don't like it? Get a postal scale, weigh your own packages and print the postage on your computer, then they will pick it up from your door regardless of YOUR slow, grumpy personality. It doesn't need to be in your mailbox, and they provide that extra service for FREE when you use the online postage printing.

[Ramirez]

Here's an idea. Let's have these people run our health care.

[Oldbuck]

Sound like another good job Brownie to me.

[MajorKong]

Sure, and we can let Lehman Brothers and Bear Stearnes run Social Security.

[Pappa]

Marlys is incorrect. The reason why the Postal Service is failing is that even the custodians earn over $50,000 a year. go there at night or day and you will find half of them asleep. You can neve get fired regardless what you do. 1/20 of the craft employees spend their time on worker's comp - Because its easy to get on. So keep passing the buck, but the facts never lie.

[Marlys]

You must have got fired from the post office.... LOL
Probably was one of those lazy custodians and got the ax!

WAHHHHHH!!!!!

[ohmetoo]

Let's not go postal on the pappa! Perhaps the 42 cents isn't working because many use email for correspondance and cards and paypal for their bills these days. All those catalog's I get don't pay proper postage to get the advertising out. The GOA needs to do a thorough efficiency survey to eliminate the inefficiencies and down size the workforce perhaps.

[sandiegoconservative]

He has a few good points. Most of those counter workers get paid pretty well for what they do. What always cracks me up is that at the post office by my house, which I use quite a bit, the busy and down times are pretty much the same every day, every week. During the busy hours is when everyone suddenly needs a break and there are two counter workers instead of four. It happens all the time.

[harriettubman]

$50,000/yr?!! WTH?