USPS Posts $3.8 Billion Loss for FY2009

It could have been much worse, but it’s still not pretty: The U.S. Postal Service lost $3.8 billion in fiscal 2009, according to financial results released yesterday. The company’s net loss for fiscal 2008 was $2.8 billion.

USPS officials reduced costs by $6 billion during fiscal ‘09 and received a $4 billion reduction in required payments for retiree health benefits due to legislation passed in September. USPS chief financial officer Joseph Corbett said the cost savings reflect a reduction of 40,000 career employees, along with reductions in overtime hours and transportation.

The Postal Services’ operating revenue for the fiscal year was $68.1 billion, compared to $74.9 billion in 2008, and its operating expenses were $71.8 billion, compared to $77.7 billion in 2008.

Total mail volume for the year was 177.1 billion pieces, compared to 202.7 billion pieces in 2008. That’s a decline of more than 25 billion pieces, or 12.7%.

“To say it was an extremely difficult year would be an understatement,” Corbett said during a conference call. He admitted that the USPS business model is broken and “doesn’t work in a declining volume scenario.”

After taking out 115 million work hours in 2009, Corbett says plans for FY10 call for a reduction of 93 million work hours through attrition—the equivalent of nearly 53,000 full-time positions. Quality of service will not suffer, though, Corbett said.

The USPS will continue lobbying in 2010 on two major issues: the proposal to reduce mail delivery from six days per week to five, and changes in prefunding requirements for retiree health-care benefits. “We need flexibility in terms of the delivery schedule and require adjustments to retiree health benefits funding to be a level playing field,” Corbett said. USPS is slated to pay $7.7 billion in retiree benefits in FY10.

Will there be a harder push for one of the two major issues? The USPS is scheduled to present various information to Congress “to demonstrate we’re doing everything we can within operational restraints,” Corbett said.

But the Postal Service really needs both changes at least to get back to financial health, Corbett said. “It would certainly put us on a platform to succeed in the future.”

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