Although the U.S. Postal Service posted modest controllable income for the second quarter of fiscal year 2017 (January 1, 2017 – March 31, 2017) of $12m, it fell well short of the $576m that it had for the same quarter last year. This reduction was driven by the April 2016 expiration of the exigent surcharge, which would have generated approximately $500m in additional revenue during the quarter had it remained in place, and to a lesser extent, a $69m increase in controllable operating expenses.
Operating revenue was $17.3bn, a decrease of $474m from the same period last year. Revenue from First-Class Mail and Marketing Mail decreased $606m and $331m respectively over the prior year quarter, due largely to the exigent surcharge expiration and lower volumes. These declines in operating revenue were somewhat offset by continued growth in the Shipping and Packages business, with a second quarter revenue increase of $486m, or 11.5%, over the same period in the prior year.
The net loss for the quarter declined to $562m from a $2bn net loss a year ago, as the Postal Service benefited from declines in operating expenses outside of management’s control.
The multi-year trends of declining volumes of letter mail and growth in packages continued this quarter. During the second quarter, letter mail volumes declined by approximately 1.4bn pieces or approximately 3.8%, while package volumes grew by 137m or approximately 11%.
Chief Financial Officer and Executive Vice President, Joseph Corbett, commented: “We are addressing declines in letter mail volumes by aggressively managing our work hours and compensation expense, while balancing and fine-tuning the resources needed to accommodate growth in package volumes and to optimize customer service. Despite inflationary pressures in the marketplace, the Postal Service’s controllable operating expenses rose by less than 1% in the quarter.”
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