Tuesday, July 17, 2018
Business

U.S. Postal Service says it lost $200 million over holiday season

WASHINGTON — The U.S. Postal Service said Thursday it lost $200 million during the year-end holiday season, despite a strong quarter of package shipping and expanded use of vote-by-mail in the November presidential election.

The results also reflect continued erosion in the delivery of first-class mail as well as expensive mandates for pre-funding of its retiree health care obligations.

The post office's report shows earnings of more than $1.4 billion between October and December 2016. But when effects of a $1.7 billion change in workers' compensation liability due to fluctuating interest rates are excluded, the service says it lost money overall.

Operating income came to $522 million, down from $1.3 billion in the previous year.

The post office continued to notch double-digit growth in its package business, boosted by the strength of Amazon and other Internet retailers, but also suffered losses from a forced reduction in stamp prices last year. Election-related mail volume, meanwhile, rose to 1.3 billion, up from 214 million in the same period in 2015, a nonelection year.

An independent agency, the Postal Service does not use taxpayer money for its operations. Under federal law, it can't raise prices more than the rate of inflation without approval from the Postal Regulatory Commission.

Quarterly revenue was $19.2 billion, down slightly over the same period in the previous year.

The Postal Service is urging relief from the mandate to "pre-fund" retiree health benefits. Legislation in 2006 required the post office to fund 75 years' worth of retiree health benefits, something that neither the government nor private companies are required to do. The service continues to press for legislation this year.

"Our current financial situation is serious, but solvable," said Postmaster General and CEO Megan J. Brennan. "With legislation that contains broadly supported provisions to improve our business model, the Postal Service can generate total savings of $26 billion over the next five years."

She is seeking more flexibility to raise stamp prices but has made clear that more drastic measures, such as a cut to Saturday mail delivery, would not be needed to return to profitability.

The Postal Service has lost money for 10 consecutive years. First-class mail volume is down as people rely more on email for online bill payments. But online shopping has led to record volume in its package-delivery business. Holiday shipping experienced revenue growth of $701 million, or 14.7 percent over the prior year.

Another bright spot was marketing mail last quarter, sometimes referred to as junk mail, which includes mail-in ballots. It was buoyed last quarter by an expanding trend of early and absentee voting in the November election. Still, revenue in that category ultimately dipped due to last year's drop in stamp prices.

The post office said election-related mail yielded $226 million in revenue. That's a jump from $42 million for the same period in the prior year. In 2016, a record number of voters sent in ballots early or on Election Day, many of them in Colorado, Oregon and Washington state, which conducted their elections almost entirely by mail. Next year, some California counties will also move to all-mail voting.

Fredric Rolando, president of the National Association of Letter Carriers, said the post office's operating profit demonstrates the strength of its turnaround. "The red ink you hear about has nothing to do with the mail but rather with congressional politics — the 2006 decision by a lame-duck Congress to compel the Postal Service to pre-fund future retiree health benefits," he said.

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