Postal Woes May Lead to Congress Showdown

Feb 7, 2013 8:18am

Morning Business Memo…

The proposal by the US Postal Service to end Saturday mail delivery may lead to a confrontation with Congress, which has blocked previous plans for greater business flexibility. In a show of independence, Postmaster General Patrick Donahoe calls the decision “a reasonable business action, and common sense.”  But Sen. Frank Lautenberg, D-N.J., who heads the Senate appropriations panel with jurisdiction over the agency, said it “circumvents the will of Congress.”

The Postal Service is deeply in the red. Ending Saturday mail would save about $2 billion a year, Donahoe says, but “we need to generate nearly $20 billion in cost reductions and revenue increases to close the budget gap.”  The chasm between costs and revenues could lead to far more dramatic changes in the future for local post offices. Congress has control over the Postal Service’s long-term financial operations.

A giant merger in the airline industry may be about to take off. Final details have still to be worked out by top executives at American Airlines and US Airways, but if the two companies merge it would create the world’s biggest carrier. US Airways chief Doug Parker would probably run the new airline. Published reports say the boards of both airlines may meet early next week. Bondholders are crucial to the deal as American is in Chapter 11. American is by far the biggest airline of these two carriers, and a reorganization would take it out of bankruptcy.

What would be the impact of a US-American merger on passengers? “In the short haul probably no big deal,” says Rick Seaney, CEO of FareCompare. But over the long haul fares would probably rise on many routes. “It guarantees that these airlines will never compete and the number one driver of ticket prices is competition. So all things equal, it will drive up prices in the future.”

It didn’t have the glamour of Facebook, but the first day of trading following Boise Cascade’s IPO was far more successful. Riding a strong stock market and a US housing recovery, the maker of plywood and other building materials jumped 25 percent in its market debut. Another sign of the housing recovery: Home Depot plans to hire 80,000 temporary workers during the busy spring season – a 10,000 increase over last year.

Sanitation officials in New York City are considering a ban on plastic foam food containers. Communities from Massachusetts to California have barred eateries from using to-go containers made of polystyrene foam, a material in Styrofoam. Restaurateurs like the lightweight containers. But environmentalists say they take years to break down in trash.

Richard Davies Business Correspondent ABC NEWS Radio ABCNews.com twitter.com/daviesabc

 

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