WASHINGTON – A strong holiday shipping season and a couple of favourable economic situations temporarily turned around the financial fortunes of the Postal Service, officials said Tuesday.
The post office reported a $307 million profit between October and December of 2015, as compared to a $754 million loss the previous year. That was in part because increases in holiday shipping during the first quarter of the fiscal year, which begins in October.
“Shipping and package revenue grew 13.5 per cent over the same period last year, and was particularly strong during the holiday shipping season,” Postmaster General and Chief Executive Officer Megan J. Brennan said. “We projected and delivered more than a 16 per cent increase in package volume.”
But postal officials warned that without favourable interest rate changes and a postal surcharge that will expire in April, they would have had a net loss of approximately $700 million in the first quarter.
“While net income is favourable compared to a net loss, it unfortunately does not reflect the end of our losses,” Chief Financial Officer and Executive Vice-President Joseph Corbett said.
The service is still seeking relief from the mandate to “pre-fund” retiree health benefits. Legislation in 2006 required the Postal Service to fund 75 years’ worth of retiree health benefits, something that neither the government nor private companies are required to do.
The service continues to press for legislation that would provide relief from its funding requirement for retiree health benefits and give it greater flexibility in setting rates.
The first quarter operating revenue for the Postal Service was $19.3 billion, an increase of $613 million or 3.3 per cent over the same period in the previous year.
“Today’s good news is consistent with, and reinforces, the emerging consensus among key lawmakers, the Postal Service, postal unions, businesses, mailers and industry groups to move forward with practical reform that all stakeholders can buy into,” said Fredric Rolando, president of the National Association of Letter Carriers. “Such reform should include stabilizing rates as well as addressing the pre-funding mandate that is responsible for the red ink that’s been reported in previous quarters.”