USPS Projects $600 Million Profit for 2003
By Helen Rumbelow
Washington Post Staff Writer
Saturday, September 7, 2002; Page A09
The U.S. Postal Service expects to earn $600 million next year, Postmaster General John E. Potter announced yesterday, the first time the agency would make a profit since 1999.
It is unexpected good news for an agency that has been hit hard by a dramatic drop in advertising mail caused by the recent recession and by major disruptions after the anthrax attacks.
Preliminary forecasts had projected a loss of up to $3 billion for the next fiscal year.
However, at the meeting of the agency's board of governors, Potter said an aggressive series of cost-cutting measures and the rate increase that took effect in June have made the outlook much rosier.
He estimates that the agency will finish the current fiscal year -- which ends this month -- with a loss of $1.2 billion, less than the anticipated loss of $1.35 billion.
The gradual return of advertisers -- mail volume is expected to rise by about 3 percent next year -- now appears set to push the Postal Service into the black.
"It's been a white-knuckle year in terms of managing our cash position," said Richard J. Strasser Jr., the agency's chief financial officer.
Last year's board of governors meeting was held on the morning of Sept. 11, in a meeting room overlooking the Pentagon, where officials said they witnessed the terrorist attack on the building.
In October, anthrax spores contaminated the mail system, killing two postal workers in Washington and causing major disruptions throughout the postal system.
Subsequent disruptions encouraged the public to stop sending mail and to replace it with e-mail and electronic bill payments. Because of the anthrax attacks and the drop in mail volume, the agency cut 23,000 jobs, mainly through attrition, said Potter.
The Postal Service plans to cut as many as 30,000 more jobs next year, from a workforce of 753,000. In addition to cost-cutting, the agency decided in June to boost its income by increasing its rates, by an average of 7.7 percent across all classes of mail. The price of a first-class stamp went up by 9 percent, to 37 cents. The rate increase generated $1 billion in additional revenue.
Potter repeated his promise that postal rates will not go up again until at least 2004.
© 2002 The Washington Post Company