Postal Service posts loss of $3.3B

WASHINGTON — Teetering on the brink of bankruptcy, the U.S. Postal Service's quarterly loss ballooned to $3.3 billion amid declining mail volume and the soaring costs of health benefits for future retirees.

From October through December 2011, losses were $3 billion more than the same period a year ago, even though that quarter is typically the strongest due to increased holiday shipping. The mail agency said that at this rate, it will run out of money by October.

The Postal Service is seeking new leeway from Congress to eliminate Saturday mail delivery, raise stamp prices and reduce health and other labor costs.

Also at stake are roughly 100,000 jobs, part of a postal cost-cutting plan to save up to $6.5 billion a year by closing 252 mail processing centers and up to 3,700 post offices. At the request of Congress, the cash-strapped agency agreed to wait until mid-May to begin closures so lawmakers would have time to stabilize its finances first.

Prospects for immediate congressional action remain uncertain.

"Passage of legislation is urgently needed that provides the Postal Service with the speed and flexibility needed to cut costs that are not under our control, including employee health costs," said Postmaster General Patrick Donahoe.

He said the post office must cut $20 billion in annual costs by 2015 so it can reach profitability, rather than becoming a "long-term burden to taxpayers." The agency forecasts a record $14.1 billion loss by the end of this year.

If the post office were to run out of money, officials said, they would prioritize what mail services to provide. Private companies such as FedEx and UPS could handle a small portion of the material the post office moves, but they do not go everywhere. No business has shown interest in delivering letters everywhere in the country for a set rate of 45 cents for a first-class letter.

"We have a Postal Service that essentially is living from paycheck to paycheck, which is a very risky proposition for the American economy and the 8 million private sector workers whose jobs rely on the mail," said Art Sackler, coordinator of the Coalition for a 21st Century Postal Service, a group representing the private sector mailing industry. "Each day Congress fails to enact postal reform, this problem grows more difficult and perhaps more expensive to resolve."