May 10 (Bloomberg) -- The U.S. Postal Service, which says it will be insolvent by September without congressional permission to delay a required payment, reported a widening second-quarter loss as first-class mail volume declined.
The loss expanded to $2.6 billion in the three months ended March 31 from $1.9 billion a year earlier, Louis Giuliano, the chairman of the Postal Service’s board, said today at a meeting in Washington. Revenue declined 2.8 percent to $34.1 billion. The volume of first-class mail, the most profitable mail type, fell 7.6 percent.
The Postal Service, which reported a loss of $8.5 billion in its 2010 fiscal year, is seeking to cut expenses by eliminating Saturday mail delivery and restructuring labor contracts. It’s also urging Congress to change laws requiring it to pay now for health-care benefit costs of future retirees, saying that it will otherwise run out of cash.
“Absent changes in the laws, the postal service will be forced to default on some of its obligations to the federal government,” Giuliano told the agency’s board. “The Postal Service is facing challenges it has never faced before, and, as a result, every aspect of Postal operations will need to anticipate and accommodate changes.”
The agency would continue to pay employees and vendors, James Miller, a board member, said at the meeting.
Increases in package shipments and advertising mail won’t offset the decline in first-class mail, which includes greeting cards and bills, said Chief Financial Officer Joseph Corbett.
“We’re very pessimistic in terms of the out-turn for 2011,” Corbett said. “We see no end to the continued decline in first-class mail.”
The Senate Homeland Security and Governmental Affairs Committee is scheduled to hold a hearing next week on the agency, Giuliano said. Committee members Senator Thomas Carper, a Delaware Democrat, and Senator Susan Collins, a Maine Republican, have both sponsored legislation to overhaul the Postal Service.
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