Postal Service Reports $1.6 Billion Net Loss in Q3

By on August 9, 2016 in Current Events with 34 Comments

Following on last quarter’s $2 billion loss, the Postal Service reported a $1.6 billion net loss on $16.6 billion operating revenue for the third quarter. The $1.6 billion net loss was an increase of $981 million compared to the same period last year.

The losses are the result of a decline in first class mail revenue as well as a much higher “controllable loss” over the same period last year. This year’s loss was $552 million versus $197 million last year.

The Postal Service defines a “controllable loss” as “a non-GAAP [Generally Accepted Accounting Principles] financial measure defined as net income (loss) adjusted for items outside of management’s control and non-recurring items. These adjustments include the mandated prefunding of retirement health benefits, actuarial revaluation of retirement liabilities, non-cash workers’ compensation adjustments and the change in accounting estimate.”

The Postal Service also said that operating expenses were higher this year than last year. Labor costs increased by $387 million, largely due to the increase in Shipping and Packages volume, and transportation costs increased by $97 million.

If there’s any good news to be had in the financial results, it’s that the Shipping and Packages business grew by 18% ($645 million). The Postal Service also actually reported a profit in the first quarter of this fiscal year despite the extreme losses in the most recent two quarters.

In a statement on the financial figures, Chief Financial Officer and Executive Vice President Joseph Corbett said, “Although the Postal Service achieved strong results in package delivery and Standard Mail volumes, only a slight increase in total revenue was recorded due to a mandated price reduction earlier this year. We incurred a net loss resulting, in part, from continued decreases in First-Class Mail volume and systemic financial imbalances associated with our retiree health benefit prefunding requirements.”

© 2016 Ian Smith. All rights reserved. This article may not be reproduced without express written consent from Ian Smith.

Tags:

About the Author

Ian Smith is one of the co-founders of FedSmith.com. He enjoys writing about current topics that affect the federal workforce. Ian also has a background in web development and does the technical work for the FedSmith.com web site and its sibling sites.

Top