The Postal Service (USPS) reported a net loss of $639 million for the second quarter of fiscal year 2022 on revenue of $19.8 billion compared to a net loss of $89 million for the same quarter last year.
USPS also reported an even bigger loss of $1.7 billion for the second quarter which it calls an “adjusted loss” which “excludes non-cash workers’ compensation adjustments for the impacts of actuarial revaluation and discount rate changes, which are outside of management’s control.”
As bad as those figures sound, the net loss is an improvement over Q1 2022 in which USPS had a $1.5 billion net loss and a $4.9 billion net loss for fiscal year 2021.
On the plus side, quarterly revenues were up in three major categories. Marketing Mail revenue increased $512 million (15.9%) compared to the same quarter last year, on volume growth of approximately 1.2 billion pieces. First-Class Mail revenue increased $296 million (5%) compared to the same quarter last year, and Shipping and Packages revenue increased $98 million (1.3%).
USPS said it also delivered about 320 million COVID-19 tests last quarter and continues to send them out as more orders come in.
What About the Postal Service Reform Act?
The Postal Service Reform Act was recently signed into law in early April. Among other things, it eliminates the requirement of the USPS to pre-fund retiree health benefits for its employees and allows it to cancel all past due prefunding payments, something that the agency has long blamed for much of its financial losses.
Other changes for the Postal Service in the new law include:
- It would require USPS employees to enroll in Medicare when they turn 65. Currently, about one-fourth of agency employees do not enroll in Medicare. This change would purportedly save about $22.6 billion over 10 years.
- The bill requires the Office of Personnel Management (OPM) to establish the Postal Service Health Benefits Program within the Federal Employees Health Benefits Program under which OPM may contract with carriers to offer health benefits plans for USPS employees and retirees.
- The bill would make delivery of mail six days a week a permanent service provided by the agency.
The exceptions to this requirement are for “weeks that include a Federal holiday, in emergency situations, such as natural disasters, or in geographic areas where the Postal Service has established a policy of delivering mail fewer than six days a week as of the date of enactment of the Postal Service Reform Act of 2022.
“ - The Postal Service would be authorized to work with State governments, local governments, or tribal governments to provide services such as licenses for fishing, hunting, and drivers’ licenses and to provide “property or nonpostal services to the public on behalf of such agencies for non-commercial purposes…” with some restrictions.
However, USPS notes that this bill did not impact the financial results from the last quarter since it was signed into law after the conclusion of the Q2 2022. The agency said that repeal of the prefunding for retiree health benefits and the cancellation of past due amounts will be reflected in its third quarter results, so the accounting figures stand to show even further improvement going forward.
