FILE This Dec. 5, 2011 file photo shows the United States Postal Service headquarters in Washington. The nearly bankrupt U.S. Postal Service on Thursday reported losses of $57 million per day in the last quarter and warned it will miss another payment due to the U.S. Treasury, just one week after its first-ever default on a payment for future retiree health benefits. (AP Photo/Charles Dharapak, File)
FILE This Dec. 5, 2011 file photo shows the United States Postal Service headquarters in Washington. The nearly bankrupt U.S. Postal Service on Thursday reported losses of $57 million per day in the last quarter and warned it will miss another payment due to the U.S. Treasury, just one week after its first-ever default on a payment for future retiree health benefits. (AP Photo/Charles Dharapak, File)
FILE - This Dec. 5, 2011 file photo shows mail loaded into bins for transport at the Capitol Station in Springfield, Ill. The nearly bankrupt U.S. Postal Service on Thursday reported losses of $57 million per day in the last quarter and warned it will miss another payment due to the U.S. Treasury, just one week after its first-ever default on a payment for future retiree health benefits. (AP Photo/Seth Perlman, File)
FILE - This May 9, 2012 file photo shows a customer entering a post office in Websterville, Vt. The nearly bankrupt U.S. Postal Service on Thursday reported losses of $57 million per day in the last quarter and warned it will miss another payment due to the U.S. Treasury, just one week after its first-ever default on a payment for future retiree health benefits. (AP Photo/Toby Talbot)
WASHINGTON (AP) ? The nearly bankrupt U.S. Postal Service on Thursday reported losses of $57 million per day in the last quarter and warned it will miss another payment due to the U.S. Treasury, just one week after its first-ever default on a payment for future retiree health benefits.
From April to June, losses totaled $5.2 billion, up $2.1 billion from the same period last year.
The mail agency said it is being hurt significantly by mounting expenses for future retiree health benefits. Those expenses, mandated by Congress in 2006, made up $3.1 billion of the post office's quarterly loss, while workers compensation tacked on another $1.1 billion in expenses. The agency's operating loss was $1 billion, mostly due to declines in first-class mail.
"We have simply reached the point that we must conserve cash," Thurgood Marshall Jr., chairman of the Postal Service's board of governors, said in explaining the payment defaults. He cautioned that the mail agency may have to delay other payments if necessary.
The Postal Service for months has been urging Congress to pass legislation that would allow it to eliminate Saturday mail delivery and reduce the annual health payment of more than $5 billion. The post office defaulted on that payment last week when the House failed to take action before heading home for a five-week break.
The mail agency says it will miss the second $5.6 billion payment due on Sept. 30, also for future retiree benefits, as cash runs close to zero.
At a news briefing, Postmaster General Patrick Donahoe made clear that day-to-day mail delivery will not be disrupted in any way despite the cash crunch. But Donahoe expressed frustration with the repeated delays by Congress, which he said is contributing to a lot of "negative talk on finances" that could undermine confidence in the mail agency and its long-term growth.
"Congress needs to act responsibly and move on this legislation," he said. "This is no way to run any kind of business."
The Senate passed a postal bill in April that would have provided financial relief in part by reducing the annual health payments and providing an $11 billion cash infusion, basically a refund of overpayments the Postal Service made to a federal pension fund. The House, however, remains stalled over a separate bill that would allow for aggressive cuts, including an immediate end to Saturday delivery. Rural lawmakers in particular worry about the impact of closures in their communities.
The Postal Service originally sought to close low-revenue post offices in rural areas to save money, but after public opposition, it is now moving forward with a new plan to keep 13,000 open with shorter operating hours.
The Postal Service, an independent agency of government, does not receive tax dollars for its day-to-day operations but is subject to congressional control.
Overall, the post office had operating revenue of $15.6 billion from April through June, the third quarter of its 2012 fiscal year. That was down a fraction from the same period last year. But quarterly expenses this year climbed to $20.8 billion, up 10 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 hurt 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 38.5 billion pieces, a 4 percent decrease, much of it in first-class mail.
On the positive side, the mail agency reported that it continued to lower costs by reducing work hours and boosting employee productivity. The Postal Service's fast-growing shipping services, which include express and priority mail, had a 9 percent increase in operating revenue to $3.3 billion.
That strong growth in shipping services, which the mail agency is promoting as a cheaper alternative to FedEx and UPS, helped offset roughly three-fourths of the declines in first-class and advertising mail, said Stephen Masse, the Postal Service's acting chief financial officer.
The numbers bring the Postal Service's year-to-date net loss to $11.6 billion, compared to $5.7 billion for the same period last year.
Art Sackler, co-coordinator of the Coalition for a 21st Century Postal Service, a group representing the private-sector mailing industry, cautioned that the worst of postal losses may be yet to come. He noted that the Postal Service's third-quarter numbers may reflect an unusually high volume of mail that typically occurs in an election year.
The Postal Service on Thursday said it believes it will stay afloat, despite perilously low cash levels anticipated in October, partly because of increased revenue from the higher amount of election mail.
"There are more than 8 million private sector workers whose jobs depend on the mail, and these jobs may be in jeopardy if Congress fails to reform the Postal Service," Sackler said. "As bad as things are getting for the Postal Service, it could be worse next year."
The agency has forecast a record $15 billion loss by the end of this fiscal year. Without legislative changes, it said, annual losses will exceed $21 billion by 2016.
Fredric Rolando, president of the National Association of Letter Carriers, said Congress is to blame for much of the postal red ink.
"The positive aspects to today's USPS report are the continuing sharp rises in revenue from package deliveries associated with Internet orders and also in productivity," he said. "If Congress would step up and fix the pre-funding mess it created, then the Postal Service could focus on developing a business plan for the future.... Degrading services and dismantling the universal network are not a business plan."
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