USPS reports $1.6bn net loss for Q3
Excluding a $1.1bn change in accounting estimate, the US Postal Service (USPS) has reported an operating revenue of $16.6bn for the third quarter (Q3) of fiscal year 2016. Although this was an increase of $117m on Q3 2015, USPS still incurred a loss for the quarter. USPS also calculated that its revenues were “approximately $450m less than they otherwise would have been during the quarter because of the expiration of the exigent surcharge on April 10, 2016”.
The net loss for the quarter was $1.567bn, compared to $586m in Q3 2015. According to USPS: “The increase [in losses] was most significantly impacted by a $1.6bn unfavorable change in workers’ compensation expense as a result of interest rate changes, offset by the $1.1bn change in accounting estimate.”
Although the Shipping and Packages business generated a revenue growth of $645m this was offset by a decline in First-Class Mail revenue of $379m, which USPS attributed largely to the expiration of the exigent surcharge.
USPS also warned that the expiration of the surcharge “will reduce revenue by an additional amount of approximately $500m for the fourth quarter and by almost $2bn annually”.
Commenting on the results, US Postmaster General and CEO Megan J. Brennan said: “We continue to post double-digit gains in package volume and are well-positioned operationally for further growth. Our capital investments are enabling increased efficiencies across the enterprise and improving experiences for our customers.
“Despite the encouraging numbers, net losses continue to mount. Our results in the quarter further underscore the need for legislative reform that provides the organization with greater financial stability.”
