Post office is $1.9 billion in red

WASHINGTON -- The post office was $1.9 billion in the red for the second quarter of the fiscal year and continues to face the possibility of running out of money before year's end.

The agency cited the recession and movement of mail to electronic communications in announcing the loss on Wednesday.

Postal rates go up on Monday, but the increase — to 44 cents for first-class mail — is unlikely to cover the entire shortfall.

The second quarter loss brings the total loss for the fiscal year — which began Oct. 1 — to $2.3 billion.

"We are aggressively reducing work hours and other costs to limit losses, preserve cash and improve productivity," said Joseph Corbett, chief financial officer and executive vice president.

Work hours have been cut by 58 million hours so far this year, the equivalent of a reduction of 33,000 full-time employees, the agency said.

In addition, the post office has been seeking savings by consolidating excess capacity in mail processing and transportation networks, realigning carrier routes, halting construction of new postal facilities, freezing officer and executive salaries at 2008 pay levels and reducing travel budgets.

Mail volume in the second quarter totaled 43.8 billion pieces, down 7.5 billion pieces, or 14.7%, compared with a year ago.

In an effort to increase mail volume the Postal Service has recently developed incentive programs for high-volume mailers.

Overall in the second-quarter — January through March — the post office had revenue of $16.9 billion, a decrease of nearly $2 billion, or 10.5%, from the same period last year, and expenses of $18.8 billion, a reduction of $782 million, or 4.0%, from the second quarter of last year.

The postage increase was limited to 2 cents on first class mail because under the law the change in rates cannot exceed the amount of inflation that occurred the year before.