Despite cutting 40,000 career employees, getting a $4 billion break on retiree health benefit payments, and taking other cost containment measures, the Postal Service reported a net loss of $3.8 billion for its 2009 fiscal year. The bleak report, issued November 16, showed $1 billion more red ink than a year earlier.
The report also cited total mail volume of 177.1 billion pieces, compared to 202.7 billion pieces in 2008, a 12.7 percent decline. In making the announcement, the Service said its projections for FY 2010 are based on continuing six?day delivery.
“There is no way to sugarcoat it; it was a horrible year,” NALC President Fred Rolando said. “The housing collapse and meltdown on Wall Street hit the most mail?intensive sectors of the economy, and the deep recession that followed may have accelerated the drive by many mailers to seek electronic substitutes for mail.”
The Postal Service’s chief financial officer, Joseph Corbett, agreed: “Our 2009 fiscal year proved to be one of the most challenging in the history of the Postal Service. The deep economic recession, and to a lesser extent the ongoing migration of mail to electronic alternatives, significantly affected all mail products, creating a large imbalance between revenues and costs.” Corbett noted that the Service reduced work hours by 115 million, or the equivalent of 65,000 full?time employees. The Service reduced overtime and pared transportation costs and virtually every other expense.
Independent auditor Ernst & Young cautioned that “there is significant uncertainty” whether the Postal Service will have enough cash on hand to make all of its payments in the year ahead, including the $5.5 billion retiree health benefits payment due on the last day of FY 2010. That is the next installment due to pre?fund future retiree health insurance costs. The 2009 payment was reduced by $4 billion, thanks to passage of legislation vigorously endorsed by the NALC.
With further revenue losses and mail volume declines expected, Postmaster General John E. Potter said that USPS will continue to move aggressively to meet the challenges posed by the recession.
“We realize our customers are facing the same economic challenges,” Potter said, noting the Service will not raise prices for First?Class and Standard Mail and its other market?dominant products in 2010.
Looking ahead, the statement said, “The 2010 plan, which estimates a revenue decline of $2.2 billion, a net loss of $7.8 billion, cost reductions of more than $3.5 billion and a reduction in mail volume of 11billion pieces for the year, is based on the assumption that there will be no change in the number of delivery days per week, and no change in the current retiree health benefits payment schedule.”
Potter said, however, that the Postal Service faces “a sobering reality” of the same financial problems in 2010 and every year in the near future as volume contracts and the Postal Service struggles with the costs of an ever?expanding delivery network.
President Rolando said the Postal Service’s year?end report underscored the need to enact a long?term fix to the retiree pre?funding obligation.
“We appreciate the short?term relief provided by H.R. 22, but Congress must order the Office of Personnel Management to review the pre?funding provisions of the law to both more accurately measure the true cost of future benefits, which it now grossly exaggerated, and provide for a more reasonable and sustainable schedule for pre?funding,” he said.
Rolando expressed hope that the economy will begin to turn around in 2010, but cautioned letter carriers that a full recovery will take time: “We will have our work cut out for us in the years ahead to restore the Postal Service and protect our long?term job security. We will have to fight for legislative reforms and make the right decisions at the bargaining table.”
see full NALC Bulletin: http://nalc.org/news/bulletin/PDF2009/Bull09-20.pdf