A record $15.9 billion annual loss pushed the U.S. Postal Service closer to its own fiscal cliff, and officials say without congressional action the agency is likely to run out of cash within 12 months.
The loss for the fiscal year ended Sept. 30 reflects the Postal Service's default earlier this year on $11.1 billion in required retiree-health-benefit payments and the continued decline in first-class-mail volume, the agency's primary revenue driver.
The mounting losses are forcing the Postal Service to operate on razor-thin margins. But record election-related mail volume and an expected 20% revenue boost from 2012 holiday shipping are expected to give the Postal Service enough of a cash cushion to operate until next fall.
The Postal Service reached a $15 billion borrowing limit in September and cash is tight enough that a coalition of businesses relying heavily on the Postal Service warned of temporary mail stoppages.
"If Congress fails to act, there could be postal slowdowns or shutdowns that would have catastrophic consequences," said Art Sackler, leader of the Coalition for a 21st Century Postal Service. The group includes some of the country's largest mailers, including eBay Inc., EBAY +0.11% Time Warner Inc. TWX -0.14% and FedEx Corp., FDX -0.67% which uses the postal service for the final leg of some deliveries.
Even a short shutdown would cost businesses that depend on mailed bill payments, Mr. Sackler said, adding a shutdown could disrupt as many as eight million private-sector workers whose employment is tied to the mail.
The Postal Service says it will run out of cash in October 2013 without congressional intervention.
"We're walking a financial tight rope--we can't sustain these large losses," said Postmaster General Patrick Donahoe. "Legislation must be passed in the lame-duck session."
Source: Wall Street Journal | ERIC MORATH