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.”