|ACMA Alert: USPS Posts Huge Loss; What Does This Mean?|
USPS Posts Huge FY 2012 Loss;
What Lies Ahead?
Yesterday, the US Postal Service reported a fiscal 2012 net loss of $15.9 billion, 6% greater than its own projection of $15 billion. Overall mail volume fell by 5%, primarily in First Class. The USPS also has noted October 15, 2013, as the date it will run out of cash. That is the date it is required to make a workers comp payment to the Department of Labor.
During the USPS’s Board of Governors meeting that I attended Thursday morning in Washington, Postmaster General Pat Donahoe said the big financial loss “has nothing to do with the value of the mail - only due to our restrictive business model. Ideally, comprehensive legislation [Postal Reform] can be accomplished in this Lame Duck session.”
The loss is more than three times greater than the USPS’s FY 2011 loss. PMG Donahoe said that although the USPS is walking a “financial tightrope,” any disruption to mail service “will never happen. We are simply too important to the economy and the flow of commerce.”
ACMA and other mailing concerns have been urging members of the House to pass its Postal Reform bill (H.R.2309) during the lame duck session so as to get it into conference with a Senate Postal Reform bill (S.1789), which was passed last spring. If no bill gets passed into law this year, both bills will be scrapped and the new Congress will have to start all over again next year.
The USPS is banking on Postal Reform so it can spread out future retirees’ health benefit payments longer, end Saturday delivery, and gain greater flexibility to close post offices and processing plants, among others.
Most damaging among the fall-off in overall mail volume to 159.9 billion pieces from 168.3 billion last year was an 8% drop in First Class volume, which is the agency’s most profitable mail product. Despite the volume decline, postal revenues still dropped, albeit by less than 1% to $65.2 billion. Other noteworthy figures reported today:
The 2013 plan does not include the required future retiree health fund payment of $5.6 billion the USPS clearly does not have the resources to make. Corbett pointed out this is a projection that can change at any time and given the razor-thin liquidity, very small changes to inputs can have large impacts to the forecast.