Postal Service announces a record $16 billion loss in fiscal 2012

This story has been updated.

The U.S. Postal Service lost nearly $16 billion in fiscal 2012, the agency announced Thursday, marking the sixth consecutive year of losses.

The $15.9 billion total loss exceeded estimates of $15 billion. USPS lost $5.1 billion in fiscal 2011 and $8.5 billion in 2010.

The agency pinned the blame for the record losses on the prefunding requirement for future retirees’ health benefits. The Postal Service reported 70 percent of its losses were due to the prefunding mandate. As is it has maintained for months, USPS said solvency is within reach, and depends on congressional action.

“It’s critical that Congress do its part and pass comprehensive legislation before they adjourn this year to move the Postal Service further down the path toward financial health,” Postmaster General Patrick Donahoe said at the agency’s Board of Governors meeting. “We continue to do our part to grow revenue and reduce expenses by making our operations more efficient and by providing our customers with new and expanded services to meet their mailing and shipping needs.”

While the number of letters sent through first-class and standard mail has continued to decline, the Postal Service has seen growth in its package deliveries. Because of e-commerce and other factors, USPS saw an 8.7 percent increase in its package business.

Still, even without the losses related to the prefunding requirement and long-term workers’ compensation commitments, the Postal Service was $2.5 billion in the red in fiscal 2012. The Board of Governors said the agency is continuing to become more efficient by reducing the number of work hours, but operating revenues continued to drop, coming in $500 million lower than fiscal 2011.

The board called on lawmakers to eliminate the prefunding requirement, cut delivery days from six to five and return a surplus accumulated in the agency’s pension fund.

One key lawmaker said the losses announced Thursday mark a breaking point that will lead to congressional action.

“As the nation creeps toward the ‘fiscal cliff,’ the U.S. Postal Service is clearly marching toward a financial collapse of its own,” said Sen. Tom Carper, D-Del., chairman of the Homeland Security and Governmental Affairs subcommittee that oversees USPS. “The Postal Service’s financial crisis is growing worse, not better. It is imperative that Congress get to work on this issue and find a solution immediately.”

Carper cosponsored the 21st Century Postal Act, which largely follows the board’s advice and passed the Senate with 62 votes in April. The House, however, has yet to act on its version of postal reform legislation.

Reps. Darrell Issa, R-Calif., chairman of the House Oversight and Government Reform Committee, and Dennis Ross, R-Fla., chairman of the committee’s subpanel that oversees the Postal Service, echoed the call for legislative action.

“USPS has failed to take reasonable steps under its current authority to reduce losses over the past several years,” Issa and Ross said in a joint statement. “The losses announced today underscore the need for postal reform legislation to cut costs and capture savings to achieve long-term solvency.”

Issa said recently that he is hopeful Postal Service reform can clear Congress by the end of the year.