Postal Service Begins 2011 with $329 Million Loss in First Quarter. Recession eases, but First-Class Mail volume continues to decline
The U.S. Postal Service (USPS) ended the first quarter of this fiscal year (Oct. 1 – Dec. 31, 2010) with a net loss of $329 million, compared to a net loss of $297 million for the same period in fiscal year 2010. Excluding the cost of prefunding future retiree healthcare benefits and noncash adjustments to the workers’ compensation liability, the Postal Service would have had a net income of $226 million for the first quarter.
Despite significant cost reductions and efforts to grow revenue, current financial projections indicate that the Postal Service will have a cash shortfall and will have reached its statutory borrowing limit by the end of the fiscal year. Absent changes in applicable laws, the Postal Service will be forced to default on some of its financial obligations to the federal government on Sept. 30, 2011.
“The Postal Service continues to seek changes in the law to enable a more flexible and sustainable business model,” said Postmaster General and CEO Patrick R. Donahoe. “We are eager to work with Congress and the Administration to resolve these issues prior to the end of the fiscal year.”
Economic indicators suggest that the worst of the precipitous volume decline during the recession is over. The lack of strong economic growth, however, continues to have an impact on the Postal Service’s financial situation. Total mail volume increased a modest 707 million pieces or 1.5 percent for the first quarter of 2011, compared to the first quarter of 2010. Total mail volume remains well below the 2006 peak.
Mailing Services revenue of $15.3 billion decreased $520 million, or 3.3 percent, in the first quarter of 2011, compared to the same period a year ago. Mailing Services volume of 45.9 billion represents a 1.5 percent increase from the same period a year earlier. Revenues from Mailing Services declined despite an increase in overall volume. The increase in revenue from Standard Mail was not sufficient to offset the loss of revenue from the reduced volume of First Class Mail.
Mailing Services results include:
First-Class Mail revenue of $8.8 billion, on volume of 20 billion pieces;
Standard Mail revenue of $5 billion, on volume of 23.8 billion pieces;
Periodicals revenue of $480 million, on volume of 1.8 billion pieces; and
Package Services revenue of $431 million, on volume of 186 million pieces.
Shipping Services revenue of $2.6 billion increased 1.7 percent or $42 million compared to the same period a year ago. Shipping Services volume of 422 million pieces represented a 2.4 percent increase compared to the same period a year earlier.
Details of the first quarter results include:
Operating revenue of $17.9 billion, compared to $18.4 billion in the same period a year earlier, a decrease of 2.6 percent;
Operating expenses of $18.2 billion, compared to $18.6 billion in the same period a year earlier, a decrease of 2.4 percent;
Total mail volume of 46.4 billion pieces, compared to 45.7 billion pieces in the same period a year earlier, an increase of 1.5 percent.
The Postal Service reduced work hours in the first quarter by 6.4 million hours or 2.1 percent representing a reduction of approximately 3,600 full time equivalent employees. The number of career employees on Dec. 31, 2010 was 578,292, a reduction of 5,616 employees since the beginning of the first quarter. Since Dec. 31, 2007, the number of career employees has been reduced by 102,721 or 15.1 percent
Service performance remained excellent during the first quarter, with the national score for overnight Single-Piece First-Class Mail arriving on-time 96 percent of the time, a slight improvement over the same period a year earlier.
“I am very proud of our workforce. Postal employees continue to deliver exceptional service in these difficult times and in very challenging weather,” said Postmaster General Patrick R. Donahoe, addressing the Postal Service’s Board of Governors in open session today in Washington.
Several new marketing initiatives have been introduced that may help to improve revenue growth in 2011, including expansion of simplified addressing for business mailers, Priority Mail Regional Rate Boxes, Reply Rides Free, customized cards and the sale of gift cards. In addition, in January 2011, new Shipping Services prices increased an average of 3.6 percent. New Mailing Services prices that are limited to the Consumer Price Index cap of 1.7 percent, will take effect in April. While new marketing initiatives and price increases may help improve revenue growth, electronic diversion implies long term structural changes in demand.
The Postal Service is aggressively pursuing a plan to reduce total expenses, which include organizational redesign initiatives. The Postal Service projects $2 billion in cost savings in fiscal year 2011, including a reduction of some 40 million work hours across the organization. Benefits of these initiatives, however, may be offset by rising fuel prices. Also, new contracts with the American Postal workers Union (APWU) and the National Rural Letter Carriers Association (NRLCA) are currently in negotiation.
Copies of the first quarter financial results will be available later today on the Postal Service website: http://www.usps.com/financials/_doc/Quarter_I_FY11_10Q_Final.doc
The Postal Service receives no tax dollars for operating expenses, and relies on the sale of postage, products and services to fund its operations.
Mature Worker, you are so correct. You would be amazed at the number of employees who have nothing better to do but find ways to get out of work. The ones who blatantly laugh at the system and say to themselves and others that they don’t have to work if they don’t want to. That they can call in sick whenever they want or “get hurt” on the job with no plans to ever going back to doing their job in the manner that they were paid to. I have had to deal with employees like that for too many years.
Besides Mr. Potter, who I dearly respect because he has worked in both craft and management, which one of you has worked in both craft AND management? It’s easy to blame management for all of the “ills” of the postal service. But what about the union that works diligently to get a craft employee’s job back and he/she was removed for attendance related issues (i.e. did not come to work half the year). What about the frivilous lawsuits that are filed on behalf of craft employees that if they did the job they are PAID very well to do, management and the Postal Service would not have to deal with. After nearly thirty years on this job, twenty in craft positions, and ten in management, I am sick and tired of hearing employees that barely have a high school education, but make as much money as entry level engineers, complain about a great job that has benefits. I SAY DO YOUR JOB WELL, STOP FINDING EXCUSES ABOUT WHY YOU CAN’T DO IT. Remember there are a lot of unemployeed attorneys, doctors, engineers, etc that would love to make the money you make. Stop whining everyone and just man up and do what you have to do. This applies to both management and craft employees.
Joy your incorrect. No manager would hold a bulb , let alone help turn a ladder. Instead you’d have 33 morons looking up at a burnt out bulb , blaming it on a lack of employee productivity.
If the service is in such bad shape why are raises being given?? The Unions and management should take a pay freeze to try to keep the company afloat. But then again who will move the mail if the USPS is disolved? There are problems on both sides of the fence and hiring processes need to be changed to get qualified people in both craft and management. We have ET’s that can’t fix anything as well as managers that can’t manage. Who’s to fault, those that hire there buddies??
HEY, DON’T KNOCK IT. ONE HAS TO HOLD THE LIGHT BULB, THE OTHER 32 HAS TO TURN THE LADDER. THESE ARE VERY IMPORTANT PEOPLE!
Looks like they are building a good case for reductions in pay, benifits, and pensions. Retirees will not be getting healthcare, but our elected rulers will continue to get good pensions and benifits they didn’t earn. They are the ones that put us in the economic mess. One side continues to push socialism and we all know looking at the social democracies of europe it doesn’t work, and the other side is filled with wimps and rockefeller republicans that are just as lefist.
The auto companies went to the Bush Whitehouse and said they had X amount of dollars in each car they produced and can’t compete with other countries that were not paying for their employee healthcare, so the conclusion is we here in America must pay for our own healthcare. Now government is leading us to chose between Obamacare which eventually lead to single payer (rationed healthcare) or paying for individual policies. Time for the workers to think for themselves because I don’t see government officials or unions being on our side.
If Donahoe wants to save money he could try dumping some of those THIRTY-THREE VICE-PRESIDENTS the USPS now employs. The country only neeeds ONE VP, why the hell do we need thirty-three?
Looks like we have turned the corner towards productivity