USPS reports $5.1 billion loss in FY 2011

Financial pressures for the United States Postal Service continue to mount.

The self-described “self-supporting government enterprise” on Tuesday (Nov. 15) reported a net income loss of $5.1 billion for fiscal year 2011 (Oct. 1, 2010-Sept. 30, 2011).

“The year-end loss would have been approximately $10.6 billion had it not been for passage of legislation that postponed a congressionally mandated payment of $5.5 billion to pre-fund retiree health benefits,” noted the USPS press release.

Actions by the USPS have garnered numerous local and national headlines in recent months as the agency has announced plans to cut costs.

NATIONAL RESTRUCTURING PLAN
The USPS on Sept. 15 announced a national plan that would include the study of about 250 processing facilities for possible consolidation or closure, reducing mail processing equipment by as much as 50%, decreasing the nationwide transportation network, cutting up to 35,000 jobs, and revising service standards for first-class mail and periodicals.

The USPS proposal announced Sept. 15 would essentially move all mail processing in Arkansas to Little Rock and create lengthier mail delivery times and the loss of more than 200 jobs in Northwest Arkansas and Fort Smith.

The new study has also halted the transfer of mail processing from Fort Smith to Fayetteville. Leisa Tolliver-Gay, the USPS spokeswoman in Little Rock, confirmed that the Labor Day weekend plans to begin shifting sorting machines from Fort Smith to Fayetteville has been put on hold pending the outcome of the new national plan.

The USPS announced April 28 its plan to move Fort Smith area mail processing operations to Fayetteville. That move was supposed to be complete by October.

On Tuesday, (Nov. 8), U.S. Rep. Mike Ross, D-Prescott, announced on his Twitter feed that the U.S. Postal Service will “temporarily suspend” all post office closings nationwide from Nov. 19 – Jan. 2. The USPS has not made an announcement confirming Ross’ statement.

2011 NUMBERS
According to the USPS earnings report issued Tuesday, 2011 mail volume declined by 3 billion pieces, or 1.7%, from 2010. The USPS’s largest and most profitable product, first-class mail, continued its year-over-year decline, from $34.2 billion in 2010 to $32.2 billion in 2011 (5.8%), which dwarfed continued growth in its more competitive products, packages and Standard Mail.

USPS Postmaster General and CEO Patrick Donahoe pointed to revenue and volume growth in the service’s shipping and standard mail services as proof the USPS could be profitable if Congress will allow it to restructure.

"The Postal Service can become profitable again if Congress passes comprehensive legislation to provide us with a more flexible business model so we can respond better to a changing marketplace," Donahoe said in the statement. "To return to profitability we must reduce our annual costs by $20 billion by the end of 2015. We continue to take aggressive cost-cutting actions in areas under our control and urgently need Congress to do its part to get us the rest of the way there."

USPS Shipping Services revenue, which includes Priority Mail and Express Mail, increased $530 million in 2011 (6.3%). Revenue from Standard Mail increased by $495 million (2.9%) on a volume increase of 2 billion pieces (2.6%).

Other stats from the USPS report include:
• Operating revenue of $65.7 billion compared to $67.1 billion the year before;

• Operating expenses of $70.6 billion compared to $75.4 in 2010;

• The USPS reduced work hours by 34 million despite an increase of 636,500 delivery points. Since 2001, the Postal Service has reduced work hours by 28%, while delivering to almost 14 million additional addresses; and,

• With 32,000 retail locations, the Postal Service has annual revenue of more than $67 billion and delivers nearly 40% of the world’s mail.