U.S. Postal Service loss widens

WASHINGTON - The U.S. Postal Service continued to bleed money during its second quarter, despite an increase in package revenues and an emergency price hike that took effect in January.

The agency said on Monday that it lost $2 billion from April to June, compared with a net loss of $740 million in the same period last year, and a $1.9 billion loss in its first quarter.

An increase in its shipping and package business helped the agency see a 2 percent rise from last year in its total operating revenues to $16.5 billion.

USPS has focused on its shipping and package business and expanded to Sunday package delivery as more people shop online and need a service to deliver their purchases. Shipping and package revenue jumped 6.6 percent, compared with the same period last year.

The volume of its most profitable product, first-class mail, fell 1.4 percent as more people communicate electronically, but the temporary rate increase helped offset the losses by bringing a 3.2 percent rise in revenues for that product. The rate increase is a temporary measure to mitigate the effects of the recession.

The jump in losses was largely due to a $1.5 billion increase in operating expenses as a result of workers compensation payments, the agency said.

USPS blames much of its financial troubles on a 2006 mandate to stow away billions of dollars for its future retirees' healthcare. The Postal Service already defaulted on three of its payments into the fund and does not expect to make the next $5.7 billion installment due Sept. 30.

USPS and postal unions have so far failed to coax U.S. lawmakers to allow it to modify its business, including eliminating or modifying the future retirees' health fund.