The Postal Service said Friday it lost $8.5 billion last year despite deep cuts of more than 100,000 jobs and other reductions in recent years.
The post office had estimated it would lose $6 billion to $7 billion, but a sharp decline in mail took a toll. Increased use of the Internet and the recession, which cut advertising and other business mail, meant less money for the agency.
For the year that ended Sept. 30, the post office had income of $67.1 billion, down $1 billion from the previous year. Expenses totaled $70 billion, a decline of about $400 million. The post office also was required to make a $5.5 billion payment for future retiree health benefits.
"Over the last two years, the Postal Service realized more than $9 billion in cost savings, primarily by eliminating about 105,000 full-time equivalent positions — more than any other organization, anywhere," chief financial officer Joe Corbett said in a statement. "We will continue our relentless efforts to innovate and improve efficiency. However, the need for changes to legislation, regulations and labor contracts has never been more obvious."
The post office is currently in contract negotiations with two of its unions, with two more scheduled to be negotiated next year.
The loss of $8.5 billion in 2010 was $4.7 billion more than the previous year.
Mail volume totaled 170.6 billion pieces, compared with 176.7 billion in 2009, a decline of 3.5 percent. At the same time, volume was declining the post office was required to begin service to thousands of new addresses to accommodate population growth and new businesses.
The post office has asked Congress for permission to reduce mail delivery to five-days-a-week and to eliminate the annual payments for future retiree health benefits.
While the post office does not receive tax money for its operations it still must answer to Congress, which has been reluctant to agree to closing of local post offices and centers.
The future of the Postal Service is expected to be an issue in Congress next year.
Some have suggested privatizing the service, but the requirement to provide service everywhere in the country at the same price is not likely to be attractive to private companies.
Of particular concern has been the decline in the lucrative first-class mail, largely consisting of personal letters and cards, bills and payments and similar items. First-class mail volume fell 6.6 percent in 2010, 8.6 percent in 2009, and 4.8 percent in 2008. Traditionally, this mail has produced more than half of total revenue.
Volume for standard mail — advertising and similar business items — improved somewhat, indicating some signs of economic recovery, but generates less income.
Postmaster General John Potter, who retires in December, has developed a 10-year plan for the future of the post office, but parts of that plan require congressional action.