US Postmaster: With $10B Loss, Service Needs Help

The U.S. Postal Service may lose $10 billion in the fiscal year ending Sept. 30, more than it had predicted, as mail volume continues to drop, Postmaster General Patrick Donahoe said in testimony for a Senate hearing.

The loss will leave the Washington-based service unable to make required payments to the federal government and puts it at risk of default as it reaches its $15 billion borrowing limit, Donahoe said in testimony prepared for the Homeland Security and Governmental Affairs Committee hearing today.

“We are at a critical juncture,” Donahoe, who is also the service’s chief executive officer, wrote in his testimony. “Action from Congress is sorely needed by the close of this fiscal year.”

The Postal Service, which Donahoe predicts may lose $9 billion next year, is asking Congress to let it break union contracts to fire workers, loosen a requirement to pay now for future retirees’ health-benefit costs and end mail delivery on Saturdays.

Mail volume will decrease 2 percent from last year, marking the fifth consecutive year of declines, Donahoe said in the testimony. Mail volume has dropped 22 percent since 2006. The service previously predicted a $9 billion annual loss.

Job Cuts

The Postal Service last month said it wants to eliminate 220,000 jobs, or 39 percent of its full-time workforce, by 2015. That would include firing about 120,000 people, breaking its tradition of cutting employment mainly through retirement and voluntary departures. The service is negotiating new contracts with two of its largest unions, the National Association of Letter Carriers and the National Postal Mail Handlers Union. The groups’ current contracts expire Nov. 20.

Cliff Guffey, president of the American Postal Workers Union, the largest postal union based on current employees, said in testimony prepared for the hearing today that such a change would be “outrageous, illegal and despicable.”

The postal workers union, with about 250,000 members, signed a contract with the Postal Service this year that extends through 2015 and prohibits firing most employees.

If Congress doesn’t pass a law addressing the Postal Service’s finances, the service may run out of money to pay employees and suppliers as soon as August 2012, Chief Financial Officer Joseph Corbett said in an interview last month.