Postal Service cites loss estimate

The U.S. Postal Service expects a loss of about $600 million next year despite increased income and reduced spending.

The agency's governing board on Tuesday approved a fiscal 2008 financial plan that anticipates income of $78.2 billion and expenses of $78.8 billion.

The plan for the budget year beginning Oct. 1 does not assume any increase in rates, though the Board of Governors has not taken a formal position on any price changes.

Rates were increased in May, and the expected $3.2 billion income increase from 2007 is based on having those prices in effect for the full year, plus an anticipated increase in mail volume.

Meanwhile the agency plans to cut spending from the $80.4 billion total expected when final 2007 figures are in.

The net loss of $5.4 billion expected for 2007 includes operating income of $1.5 billion and a $6.9 billion in costs from the 2006 changes in the law governing postal operations, including a $3.0 billion one-time escrow expense, a $5.4 billion payment into the Retiree Health Benefit Fund for 2007 and $1.5 billion in savings.

Postal managers remain concerned about potential threats, however, including changes in the economy, the possibility of reduced mail volume because of higher prices and proposals for a "do not mail" list which could reduce mail volume.

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