On the day that the US lost its Aaa credit rating as determined by S&P and as Europe tried to calm the markets about the risks of Spain’s and Italy’s sovereign debt, the US Postal Service said it was on the brink of default.
The Postal Service said it lost $3.1 billion in the last quarter. The service’s CFO called that an improvement.
The U.S. Postal Service ended its third quarter of fiscal year (FY) 2011 (April 1-June 30) with a net loss of $3.1 billion, compared to a net loss of $3.5 billion for the same period in FY 2010. Total mail volume declined to 39.8 billion pieces for the quarter, compared to 40.9 billion pieces in the third quarter of FY 2010
The Postal System’s problems could add to those of America’s taxpayers
Even with significant cost reductions and revenue growth initiatives, current financial projections indicate the Postal Service will have a cash shortfall and will have reached its statutory borrowing limit by the end of the fiscal year. Absent substantial legislative change, the Postal Service will be forced to default on payments to the federal government.
The notice to Congress was delivered by mail and so may have been too late for the House and Senate to take action.
Douglas A. McIntyre