The U.S. Postal Service ended the 2012 fiscal year a loss of $15.9 billion, the largest in the agency’s history. The losses follow on the heels of a $5.1 billion loss for the same period last year.
The majority of losses stem from $11.1 billion in retiree health benefits prefunding expenses as well as expenses related to the long term portion of workers’ compensation.
At the end of FY 2012, the Postal Service reached its statutory debt ceiling of $15 billion for the first time. “Our liquidity continues to be a major concern and underscores the need for passage of legislation that gives the Postal Service a more flexible business model to improve its cash flow,” said Chief Financial Officer Joseph Corbett. “Despite reaching the debt limit, the Postal Service mail operations and delivery continue as usual and employees and suppliers continue to be paid on-time.”
However, postal officials said Thursday that the agency is likely to run out of money by the end of the current fiscal year and is planning to default on required retiree health payments in 2013.
“It’s critical that Congress do its part and pass comprehensive legislation before they adjourn this year to move the Postal Service further down the path toward financial health,” said Postmaster General and CEO Patrick Donahoe.
Dennis Ross (R-FL), Chairman of the House Subcommittee on the Federal Workforce and Postal Service said, “We must make a concerted effort to streamline and modernize the Postal Service so it can meet the needs of a 21st Century economy. This is not a partisan issue – the continued viability of the Postal Service is in every American’s interest. My hope during these closing weeks of the 112th Congress is that legislators from both parties can come together and make these changes happen.”
On the plus side, the Postal Service’s revenue from Postal Service package business increased by $926 million, or 8.7 percent, on a volume increase of 244 million pieces compared to the same period last year. Higher consumer spending, higher e-commerce retail sales plus increased marketing efforts drove much of the growth in this segment of the Postal Service business during the last year.