U.S. Postal Service reports $3.2 billion loss

WASHINGTON -- Drowning in red ink, the U.S. Postal Service reported a quarterly loss of $3.2 billion yesterday and blamed Congress for blocking the agency's cost-cutting efforts to offset declining mail volume and mounting costs for future retiree health benefits.

From January to March, losses were $1 billion more than during the same period last year. The mail agency said that without legislative action it will be forced to default on more than $11 billion in health prepayments due the Treasury this fall.

The Postal Service is seeking new leeway from Congress to eliminate Saturday mail delivery and reduce health and other labor costs. Last month, the Senate passed a bill that would give the agency an $11 billion cash infusion and reduce the health payments while delaying a move to five-day delivery for two years; the House remains stalled over a separate bill allowing for far-reaching cuts.

"We are aggressively pursuing new revenue streams and reducing costs within our control," said Postmaster General Patrick Donahoe. "These actions are not enough to return the Postal Service to profitability."

Overall, the post office had income of $16.2 billion from January through March, the second quarter of its 2012 fiscal year. That was down a fraction from the same period last year. But quarterly expenses this year climbed to $19.4 billion, up 5 percent, largely driven by the health prepayments. The Postal Service is the only government agency required to make such payments.

The Postal Service also has been rocked by declining mail volume as people and businesses continue switching to the Internet in place of letters and paper bills. The number of items mailed during the last quarter was 39.5 billion pieces, a 4 percent decrease, much of it in first-class mail.