US Postal Service Miracle? $1.1B Turnaround Reported, But Officials Hold Back Celebration

It sounds like a miracle: For the first time in years, the U.S. Postal Service reported a quarterly net profit. Yet officials say the recently released stats offer little reason for celebration, the Washington Post reported.

The $307 million in net income in the first quarter of the 2016 fiscal year marked a $1.1 billion turnaround for the struggling sector compared with the same period a year earlier. But officials attributed the positive net income to decreased workers’ compensation expenses and the prevailing interest rates. The postal service continues to lose money, said Joseph Corbett, chief financial officer and executive vice president.

“Excluding the favorable impact of interest rate changes and the exigent surcharge, we would be reporting a net loss of approximately $700 million in the first quarter,” he said. “Absent legislative reform, the exigent surcharge is expected to roll back in April, and our losses will increase by approximately $2 billion per year.”

Playing down the positive numbers, Postmaster General and CEO Megan J. Brennan said the postal service continues to face major challenges. “Our financial situation is serious but solvable. That’s the reality of the balance sheet,” Brennan said.

Yet not everyone was as pessimistic. Fredric Rolando, the president of the National Association of Letter Carriers, said it was an “impressive performance.”

“These results aren’t a fluke,” Rolando said. “They stem from two structural factors: An improving economy has helped stabilize letter revenue, and internet-driven online shopping has sent package volume sharply upward — up 16.2 percent over the first quarter of last year.”

There are signs the challenges once facing the postal service have mostly waned in recent months. USPS officials are no longer pushing to end Saturday mail delivery — once viewed as inevitable to ease financial strain. At the same time, officials continue to call for other types of legislative reforms.

Employees have been laid off in the last few years, and some staff have been employed at lower wage rates. Unlike other government agencies funded by tax dollars, the postal service operates on its own budget.