The Postal Service had a net loss of $5.5 billion in FY 2014. This is the eighth consecutive annual loss it has experienced.
The Postal Service blames the bulk of the losses on the pretending requirement for the Postal Service Retiree Health Benefit Fund. The net loss in 2014 includes $5.7 billion for the pretending requirement as well as $1.2 billion in non-cash workers’ compensation expense, consisting of $485 million related to changes in interest rates and $697 million of other non-cash workers’ compensation expense.
“The legally mandated $5.7 billion prefunding requirement for the Postal Service Retiree Health Benefit Fund contributed to our continuing losses,” said Chief Financial Officer and Executive Vice President Joseph Corbett. “Due to lack of sufficient cash, we were forced to default on the $5.7 billion prepayment, underscoring the need for legislative change.”
On the positive side, operating revenue increased to $569 million in FY 2014. This revenue growth resulted from the January 2014 price increase and strong growth in the Shipping and Packages business.
Other highlights from the Postal Service’s revenue report include:
- Operating revenue was $67.8 billion compared to $67.2 billion in 2013.
- Total mail volume was 155.4 billion pieces compared to 158.2 billion pieces a year ago, a decrease of 2.8 billion pieces or 1.8 percent. Shipping and Package Services volume grew by 300 million pieces, an increase of 8.1 percent. First-Class Mail and Standard Mail volume decreased by 2.2 billion and 495 million pieces, respectively.
- Operating expenses were $73.2 billion in 2014 compared to $72.1 billion in 2013. A non-cash adjustment for interest rate changes associated with workers’ compensation caused $2.2 billion of the increase year over year. This was offset by a $737 million reduction in other workers’ compensation expense and a $708 million reduction in compensation and benefits expenses.
- Expenses include the required $5.7 billion contribution to the retiree health care benefits fund that the Postal Service was unable to make by the due date of Sept. 30, 2014. The Postal Service said that unless legislation reforms the retiree health care benefits program, it will likely be forced to default on its prefunding obligations in 2015 and 2016.
- The resulting net loss for the 2014 fiscal year was $5.5 billion compared to a net loss of $5.0 billion in 2013.
The Postal Service also announced today that Postmaster General Patrick Donahoe will be retiring in February 2015. He will be replaced by Megan J. Brennan, the current chief operating officer of the Postal Service.