US Postal Service still losing billions

The U.S. Post Service did not escape the effects of the economic meltdown.

The USPS on Monday said it suffered a net loss of $3.8 billion for fiscal 2009, which ended Sept. 30. The loss came despite $6 billion in cost savings and $4 billion in reduced payments for retiree health benefits, the agency said in a press release.

The USPS slashed 40,000 jobs, but it still employs more than 712,000 people.

"Our 2009 fiscal year proved to be one of the most challenging in the history of the Postal Service," said chief financial officer Joseph Corbett. "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."

The loss is the third in a row. In fiscal 2008, the USPS lost $2.8 billion, and in 2007, it lost $5 billion. The USPS is a self-supporting government agency that does not receive any tax dollars, relying solely on postage, products and services.

"We realize our customers are facing the same economic challenges," said Postmaster General John Potter. "That's why we are not raising prices on first-class mail, standard mail and our other market-dominant products in 2010."

But the service has to do something to get back in the black, so it plans to formally propose to Congress the idea of ending Saturday delivery, which would save the agency $3.5 billion. The USPS will also propose to Congress that it reduce the $5.5 billion in annual payments to pre-fund retiree health benefits that it must make until 2016.

Legislation must address "the impossible demands" of pre-funding future retiree health benefits at current levels of more than $5 billion annually, Potter said.