Executive Summary
The U.S. Postal Service lost $3.5 billion in the third quarter of FY 2010. USPS says that it has lost money in 14 of the last 16 quarters. Operating revenue declined by $294 million, or 1.8 percent, relative to Q3 FY 2009. Total volume declined by about 707 million pieces, or 1.7 percent, compared to the same quarter last year. Operating expenses, meanwhile, increased by $789 million, or 4.2 percent, over the same period.
The Postal Service has said that it may not be able to make the $5.5 billion payment it owes at the end of FY 2010 to the Postal Service Retiree Health Benefits Fund. The USPS Inspector General reported that the Postal Service may have overfunded its pension obligations by $75 billion, while the Postal Regulatory Commission released a report that calculated the USPS overpayment at about $50 billion. Just after the close of Q3, on July 6, 2010, the Postal Service filed a request for an exigent rate increase averaging 5.6 percent.
The uncertainty surrounding the Postal Service’s finances is certain to play a major role in the agency’s contract negotiations with its labor unions, which will begin this fall.
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