Financial Performance

Postal Service Loses $2.1B on Flat Revenue

"Within the framework of our current business model, we are executing to grow revenue and reduce operating expenses," CFO Joseph Corbett says.
Matthew HellerMay 10, 2019

The U.S. Postal Service continued its long string of losses in the second quarter though operating expenses, excluding costs “outside of management’s control,” were basically flat.

USPS has been losing money for 12 straight years as electronic mail alternatives continues to eat into its revenue and efforts to remedy its financial problems continue to stall in Congress.

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For the second quarter, the service on Friday reported a a net loss of nearly $2.1 billion, an increase of $747 million over the year-ago period. Overall revenue fell $8 million to $17.5 billion, with first-class mail revenue down 3.3% to $217 million on a volume decline of 3.9%.

What USPS calls its “controllable” loss for the quarter was $806 million, compared with $656 million a year ago. Overall expenses rose 4.0% to $19.6 billion, but excluding costs outside management’s control, such as amortization of unfunded pension liabilities, expenses increased by only $154 million, or 0.8%.

“We continue to face challenges from the ongoing migration of mail to electronic alternatives, and we are legally limited under current law in how we can price our products and streamline our legacy costs,” CFO Joseph Corbett said in a news release. “Within the framework of our current business model, we are executing to grow revenue and reduce operating expenses.”

Postmaster General and CEO Megan J. Brennan said USPS is continuing “to pursue aggressive management actions and to seek legislative and regulatory reforms to address our overall cost structure and enhance revenue-generating opportunities.”

She has previously blamed USPS’ financial problems on “a flawed business model that is imposed by law.”

USPS is required, among other things, to pre-fund the future health benefits of its retirees. Rep. Peter DeFazio, Oregon Democrat, has introduced the so-called USPS Fairness Act to eliminate the pre-funding requirement, saying the “unfair” mandate is “responsible for more than 90 percent of USPS’s financial losses and 100 percent of losses over the past six years.”

But a task force formed by President Donald Trump to address USPS’ finances recommended only that the pre-funding obligation be “restructured.”