Services

US Postal System Hurtles Toward Financial Restructuring

Douglas A. McIntyre

Published: May 10, 2016 9:50 am

Last Updated: January 13, 2020 9:38 am

The U.S. Postal Service (USPS) lost another $2 billion in its second quarter, as it continued careening toward insolvency. The management of the organization used the description “serious,” despite the belief of Postmaster General and Chief Executive Officer Megan J. Brennan that operations can be improved. Regardless of the optimism, a restructuring likely will be necessary, which means tens of thousands of layoffs, post office closings and delivery cuts to four days. These measures have been discussed before.

The USPS blames its problems on future retirement, which is fair. According to management:

Controllable income for the quarter was $576 million compared to $313 million for the same period last year. Calculation of controllable income takes into account the impact of operational expenses including compensation, benefits and work hours; but does not reflect factors such as the legally-mandated expense to prefund retiree health benefits (see Non-GAAP Financial Measures table on following page for full description).

Although non-GAAP measures are misleading, the sum of $1.454 million represents total workers’ compensation expense.

Otherwise:

The U.S. Postal Service reported operating revenue of $17.7 billion for the second quarter of fiscal year 2016 (January 1, 2016 – March 31, 2016), an increase of $788 million or 4.7 percent over the same period last year. The increase was primarily due to an 11.4 percent increase in Shipping and Package volume and pricing strategies.

Also:

Net loss for the quarter was $2.0 billion compared to $1.5 billion for the same period last year. The change in net loss was most significantly impacted by a $547 million unfavorable change in the workers’ compensation expense as a result of interest rate changes – a factor outside of management’s control.

Not nearly good enough to save the USPS in its current form.