WASHINGTON, May 17 (Reuters) - The U.S. Postal Service is in such bad financial condition that it may not be able to make a payment for future retiree health benefits due Sept. 30, Postmaster General Patrick Donahoe said on Tuesday.
The U.S. agency has lost business to electronic mail and to private sector competitors like FedEx and United Parcel Service.
In testimony to a Senate subcommittee, Donahoe said that without congressional action, the service would default on its payments.
'As things stand, we do not have the cash to make a $5.5 billion prepayment for future retiree health benefits due Sept. 30,' Donahoe said.
'Despite our significant role in the American economy and our aggressive cost cutting and revenue generating efforts, I regret to say we are in a serious financial predicament today,' he said in a statement.
Donahoe's remarks came on the same day that the Government Accountability Office, the investigative arm of Congress, issued a report focusing on the need to update an aging fleet of vehicles for mail delivery. It also highlighted recent news of a $2.2 billion loss after the first half of the fiscal year and potential insolvency by September.
'USPS's financial condition has deteriorated significantly since fiscal year 2006,' GAO Director of Physical Infrastructure Issues Phillip Herr said in remarks prepared for the committee hearing..
'And its financial outlook is grim in both the short and long term,' he said.
In March, the service announced that it would cut 7,500 jobs and close 2,000 post offices.
(Reporting by Wendell Marsh; Editing by Greg McCune) Keywords: USA POSTAL/ (wendell.marsh@thomsonreuters.com) COPYRIGHT Copyright Thomson Reuters 2011. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
The U.S. agency has lost business to electronic mail and to private sector competitors like FedEx and United Parcel Service.
In testimony to a Senate subcommittee, Donahoe said that without congressional action, the service would default on its payments.
'As things stand, we do not have the cash to make a $5.5 billion prepayment for future retiree health benefits due Sept. 30,' Donahoe said.
'Despite our significant role in the American economy and our aggressive cost cutting and revenue generating efforts, I regret to say we are in a serious financial predicament today,' he said in a statement.
Donahoe's remarks came on the same day that the Government Accountability Office, the investigative arm of Congress, issued a report focusing on the need to update an aging fleet of vehicles for mail delivery. It also highlighted recent news of a $2.2 billion loss after the first half of the fiscal year and potential insolvency by September.
'USPS's financial condition has deteriorated significantly since fiscal year 2006,' GAO Director of Physical Infrastructure Issues Phillip Herr said in remarks prepared for the committee hearing..
'And its financial outlook is grim in both the short and long term,' he said.
In March, the service announced that it would cut 7,500 jobs and close 2,000 post offices.
(Reporting by Wendell Marsh; Editing by Greg McCune) Keywords: USA POSTAL/ (wendell.marsh@thomsonreuters.com) COPYRIGHT Copyright Thomson Reuters 2011. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
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