The loss reflects continued erosion in the delivery of first-class mail as well as expensive mandates for upfront funding of its retiree health care obligations that have been set up. On a whole, there was good and bad news in the results. One bright note is that overall revenues were up, and it made an operating profit of $1.2 billion, reflecting continued growth in its package-delivery business.
However a special rate surcharge that is set to expire next year, promises to cut revenues by $2 billion annually, and volume of mail delivery should continue to shrink. There is also a chance that expenses continue to rise despite slower mail delivery.
The Postal Service is still seeking relief from the mandate to “pre-fund” retiree health benefits. Legislation put fourth in 2006 required the Postal Service to fund 75 years’ worth of retiree health benefits, something that neither the government nor private companies are required to do.