* USPS net loss $5.2 bln vs $3.1 bln a year earlier
* Mail volume down, shipping and packages up
* Officials call on Congress to overhaul agency


By Emily Stephenson
WASHINGTON, Aug 9 (Reuters) - The U.S. Postal Service's net
loss widened to $5.2 billion during the April through June
period, and the cash-strapped agency warned on Thursday that
without help from the U.S. Congress it will face low cash and be
unable to borrow money this fall.
The Postal Service, which relies on the sale of stamps and
other products rather than taxpayer funding, has been struggling
for years as Americans increasingly communicate online and as
payments for future retiree health benefits and other
obligations drain its cash.
A week after its first-ever default on a legally required
payment to the federal government, officials called on Congress
to pass postal legislation that would overhaul the mail agency's
business model and offer some relief from its dire financial
situation.
Lawmakers, who have said they are committed to helping the
Postal Service become profitable, left last week for a
month-long recess without reaching an agreement on postal
legislation.
"Congress needs to act responsibly and get on with things so
that we can get these things in our rearview mirror," Postmaster
General Patrick Donahoe said on Thursday.
While postal officials insist it is unlikely Congress would
allow the Postal Service's financial straits to get so dismal as
to impede mail delivery, the agency has said it needs a
significant restructuring to get back on sound footing.
The mail agency defaulted last week on a legally required
$5.5 billion payment for future retiree health benefits, and its
inspector general said the Postal Service could face a $100
million cash shortfall in mid-October.
Much of the net loss of $5.2 billion in the third quarter,
compared to $3.1 billion for the same period in 2011, came from
funds the agency must set aside for the retiree benefits
payment. Even though the Postal Service defaulted and expects to
skip a second payment due next month, it still must account for
the payments in its financial statements.
Even without the payments, a postal official told the
agency's Board of Governors on Thursday that the Postal Service
lost about $1 billion on normal operations as Americans' ongoing
shift to email strangled mail volume.
The USPS has made a number of cost-cutting moves, slashing
operating hours at small post offices, offering buyouts to
thousands of workers and launching a plan to consolidate
operations at 140 processing sites by February.
Still, the service projects a net loss of about $15 billion
for the fiscal year, which goes through September, said Stephen
Masse, acting chief financial officer for the agency.
Postal officials said Congress needs to step in. They want
authority to end Saturday mail, pull employees out of federal
health plans and run their own instead, stop making the payments
for future retiree benefits and make other changes.
The Senate passed a bill in April that would let the agency
end Saturday mail and tap into a surplus in a federal retirement
fund to offer retirement incentives to workers.
Leaders in the House of Representatives have said that bill
does not go far enough, but they left last week for a recess
until after the Sept. 3 Labor Day holiday without bringing their
version of the postal reform bill up for a vote.
"I can only hope that as members of Congress are back in
their districts meeting with their constituents over the next
month, they will hear these concerns about the future of the
Postal Service and be persuaded that they cannot continue to
postpone passing comprehensive postal reform legislation," said
Senator Tom Carper, one of four authors of the Senate bill.

SHORT ON CASH
Shipping services and package delivery were a bright spot,
growing 9 percent in revenue compared to the same quarter a year
earlier. Email and online bill payments have hurt letter mail
volumes, but the USPS's shipping business has benefited from
online shopping and sites like eBay.com.
But mail volume fell 3.6 percent to 38.5 billion pieces, the
agency said. Operating revenue during the quarter was $15.6
billion, a decrease of less than 1 percent from a year earlier.
Postal officials said the agency will face low cash levels
in October, when a $1.4 billion payment for workers compensation
comes due.
Masse said officials believe extra revenue from
election-related mail could get the agency through the tight
period. The cash crisis should improve during the holiday
mailing season, typically the best time of year for the Postal
Service.
He also said the agency would prioritize paying suppliers
and employees over making obligations to the federal government,
but he did not say what payments the USPS might skip or delay.
Last summer, the Postal Service temporarily halted payments
into a retirement system that has surplus funds. The agency's
inspector general has said the USPS could do the same this year.