Is the U.S. Postal Service (USPS) ever going to get back on its feet? It has reported another huge quarterly loss. The struggling company (or government entity) showed more of the same negative trends you have heard of endlessly — for a net loss of $1.9 billion, the 20th of the past 22 quarters with a loss.

Friday’s earnings confession showed that first-class mail volume declined by another 4.1%, but at least there was some 8% growth in shipping and package services, sending revenues higher by $379 million.

Where the big problem remains is on the balance sheet. The good old U.S. Postal Service confessed that its liabilities of approximately $64 billion exceeded assets by a whopping $42 billion.

Operating revenue was $16.7 billion, including the impact of the price change effective January 26, 2014. Operating expenses before non-cash workers’ compensation expenses were $17.9 billion, a 1.1% improvement from $18.1 billion.

Postmaster General and CEO Patrick Donahoe signaled that despite cost-cutting efforts, the USPS will still incur annual inflationary cost increases of approximately $1.2 billion each year — at the same time that first-class mail volume continues to decline.

Shipping and package revenue rose by 8%, or $252 million. Other key issues seen were as follows: Total mail volume of 38.1 billion pieces compared to 38.8 billion pieces, first-class mail volume declined 4.1%, standard mail volume increased 0.5% and shipping and package volume increased 7.3%.

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One interesting thing about the report is that the USPS downplayed that its pension system needing reform is its only key operating problem. Chief Financial Officer Joseph Corbett said:

Nothing can be further from the truth. Our liabilities exceed our assets by $42 billion and we have a need for more than $10 billion to invest in new delivery vehicles, package sortation equipment, and other deferred investments. We haven’t been making the retiree health benefit prefunding payments because we can’t. If legislation reduced the required retiree health benefit prefunding payment, it doesn’t provide us with any more cash to pay down our debt or put much needed capital into our business. Only comprehensive postal legislation that includes a smarter delivery schedule, greater control over our personnel and benefit costs, and more flexibility in pricing and products will provide the necessary cash flows.

Another warning was made as well: If a downturn in the economy or other circumstance should further stress USPS’s cash flow, the agency would implement contingency plans to ensure that all mail and package deliveries are completed and that employees and suppliers are paid ahead of the federal government. Regardless of the state of the country’s economy, without comprehensive legislative reform, the USPS will be unable to make the required $5.7 billion retiree health benefit prefunding payment to the U.S. Treasury due by Sept. 30, 2014.

We will leave it up to you to decide if this white-washing the pension cost is real. More losses, with the promise of more losses ahead. Imagine if we hit another recession. Is this not the most appropriate USPS truck picture you could imagine?

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