The Postal Service has announced its end of fiscal year results and reported a net loss of $2.7 billion for FY 2017. Believe it or not, this is a slight improvement over the previous fiscal year in which it lost more money: $2.8 billion.
The losses were on total revenue of $69.6 billion. They came largely because of accelerated declines in First-Class and Marketing Mail volumes. Mail volumes declined by approximately 5.0 billion pieces, or 3.6 percent, while package volumes grew by 589 million pieces, or 11.4 percent, continuing a multi-year trend of declining mail volumes and increasing package volume.
Expenses for retiree health benefits and workers compensation declined by $4.8 billion and $3.5 billion, respectively, but were partially offset by $2.4 billion in higher expenses for the amortization of unfunded retirement benefits.
As it has in the last several years, the Postal Service once again defaulted on payments that were due to the federal government at the end of the fiscal year to pre-fund pension and health benefits for postal retirees. This amounted to approximately $6.9 billion in 2017.
“Making the payments to the federal government in full or in part would have left the Postal Service with insufficient liquidity to ensure that we will be able to cover our current and anticipated operating costs, make necessary capital investments, and absorb any contingencies or changes in the marketplace,” said Chief Financial Officer and Executive Vice President Joseph Corbett. “We will continue to prioritize the maintenance of adequate liquidity to ensure the Postal Service is able to perform our primary mission of providing universal service to all Americans.”
Postmaster General and CEO Megan J. Brennan called the Postal Service’s financial situation “serious, but solvable” and continues to state that much of the problems the organization is facing can be solved by Congress. She urged passing of The Postal Service Reform Act, legislation that would make a number of changes including with respect to how the Postal Service’s pension costs are calculated. At the time of this writing, the bill had been reported out of a House committee but not advanced beyond that.
Another bill that was recently introduced to give the Postal Service an additional source of revenue would allow it to ship alcoholic beverages. As of the time of this writing, that bill has not advanced beyond introduction.