Postal Service Reports $2.1 Billion Loss
POSTED September 7, 2017
WASHINGTON -- The U.S. Postal Service reported revenue of $16.7 billion for the third quarter of fiscal year 2017 (April 1, 2017 - June 30, 2017). Revenue for the quarter was essentially unchanged compared to the same quarter last year, excluding the effect of a $1.1 billion non-cash change in accounting estimate recognized during the third quarter of fiscal year 2016.
Revenue from First-Class Mail and Marketing Mail decreased $422 million and $150 million, respectively, over the prior year quarter, due largely to lower volumes. These declines in revenue for these products were nearly offset by continued growth in the lower-margin Shipping and Packages business, with third quarter revenue increasing $473 million, or 11.3 percent, in that part of the Postal Service's business.
Operating expenses for the quarter were $18.8 billion, a decrease of $461 million, or 2.4%, compared to the prior year quarter. Expenses for retiree health benefits and workers compensation declined by $869 million and $1.0 billion, respectively, but were partially offset by $1.2 billion in higher retirement expenses largely driven by changes in Office of Personnel Management actuarial assumptions and interest rates.
The Postal Service reported a net loss for the quarter of $2.1 billion, an increase in net loss of $573 million, compared to the same quarter last year. Controllable loss for the quarter was $587 million, an increase in controllable loss of $35 million, driven by higher transportation costs.
The growth in our lower-margin package business is not sufficient to make up for the accelerating mail volume declines," said Postmaster General and CEO Megan J. Brennan. Our financial situation is serious, but solvable. The continuation of aggressive management actions, and legislative and regulatory reform, will return us to financial stability and enable the Postal Service to maintain the long-term affordability of mail, invest in America s mailing and shipping industry, and best serve the American public."
The Postal Service continues to engage with stakeholders to advance H.R. 756, the Postal Service Reform Act of 2017, through the legislative process in the 115th Congress. The Postal Service's long-term financial stability also depends on the Postal Regulatory Commission establishing a new pricing system that enables the organization to generate sufficient revenues to cover its costs.
In the third quarter, letter mail volumes declined by approximately 1.4 billion pieces, or approximately 4%, while package volumes grew by 133 million pieces, or approximately 11%, continuing a multi-year trend of declining letter mail volumes and increasing package volume. Year-to-date, despite growth in package volume, overall volume has declined by more than 3 billion pieces.
The volume declines in mail are expected to continue due to the ongoing migration from mail toward electronic communication and transaction alternatives," said Chief Financial Officer and Executive Vice President, Joseph Corbett. "To address this trend, we have focused on innovations, including mobile and digital strategies, to improve the value of mail. We must also continue to focus on reducing expenses and improving efficiencies, including adjusting employee staffing and scheduling to match the changing workload."