The United States Postal Service (USPS) reported operating revenue of $19.3bn for the first quarter (Q1) of fiscal year 2016 , which was about 3.3% up on the same period last year.
In a statement issued on Tuesday (9 February), the Postal Service said that the increase was driven by the record volume of packages delivered during the 2015 holiday season.
Commenting on the results, Postmaster General and Chief Executive Officer Megan J. Brennan said: “Shipping and Package revenue grew 13.5% over the same period last year, and was particularly strong during the holiday shipping season. We projected and delivered more than a 16% increase in package volume. We continue to grow our e-commerce business and remain focused on delivering the best value for our customers.”
However, Brennan warned: “Despite these achievements and the best efforts of our employees, our financial condition will worsen without legislative reform. Our financial situation is serious but solvable through the enactment of prudent legislative reform.” This was basically a repeat of the message which the Postmaster General delivered at a US Senate Homeland Security and Governmental Affairs Committee hearing on 21 January.
Net income for the quarter was $307m, a $1.1bn change from the net loss of $754m for the same period last year. At face value, this might seem an excellent turnaround, but USPS said that the net income was “most significantly impacted by a $1.2bn favorable change in the workers’ compensation expense as a result of interest rate changes – a factor outside of management’s control”.
USPs Chief Financial Officer and Executive Vice President Joseph Corbett rammed the point home: “While net income is favorable compared to a net loss, it unfortunately does not reflect the end of our losses.
“Excluding the favorable impact of interest rate changes and the exigent surcharge, the organization would have actually reported a net loss of approximately $700m in the first quarter. Absent legislative reform, the exigent surcharge is expected to roll back in April, and our losses will increase by approximately $2bn per year.”
Senator Tom Carper, the author of the iPOST bill that is currently working its way through Congress, echoed Corbett’s concerns.
“As expected,” said Carper, “last quarter’s numbers reflect continued growth in package delivery and show the Postal Service with higher profits than we’ve seen in a long time thanks to a strong holiday season.
“But behind these positive numbers lie longstanding financial burdens that threaten the Postal Service’s future.
“And in just two months, things will get worse when the emergency rate increase that has been keeping the Postal Service’s head above water expires.
“Even a 13.5% increase in packages is not enough to compensate for an expected $2bn revenue loss should the temporary emergency rate increase expire in April.
“There is broad consensus among a large number of stakeholders, union leaders, and postal leadership that substantive legislative reforms are urgently needed to head off these expected losses.”