WASHINGTON, Aug. 5 (UPI) -- The U.S. Postal Service said it lost $3.1 billion in the third quarter and warned a default on federal payments was possible without congressional action.
The third-quarter financial statement reflected the "anemic state of the economy" of the past three months and the growth of electronic communication at the expense of first-class mail volume, the USPS said Friday in a release.
Net losses for the nine months ended June 30 amount to $5.7 billion in 2011, compared with $5.4 billion in 2010, USPS officials said. Total mail volume was 39.8 billion pieces for the quarter, compared with 40.9 billion pieces in the third quarter of fiscal year 2010.
Despite efforts to reduce costs and grow revenue, projections indicate the service would have a cash shortfall and reach its borrowing limit by the end of the fiscal year, officials said. If Congress doesn't act, the USPS will be in default on payments to the federal government.
"We are experiencing a severe cash crisis and are unable to continue to maintain the aggressive prepayment schedule that was mandated in the [Postal Accountability and Enhancement Act of 2006]," said Joseph Corbett, USPS chief financial officer and executive vice president. "Without changes in the law, the Postal Service will be unable to make the $5.5 billion mandated prepayment due in September."
In July, the postal service announced plans to identify and study nearly 3,700 underutilized post offices for possible closure and introduced the "Village Post Office" concept. Village Post Offices would be operated by local businesses and offer popular postal products and services such as stamps and flat-rate packaging.
"We continue to take aggressive actions to reduce costs and bring the size of our infrastructure into alignment with reduced customer demand," Postmaster General and Chief Executive Officer Patrick Donahoe said.