The U.S. Postal Service (USPS) warned that it may default on some of its financial obligations later this year, after reporting a first-quarter loss.
The USPS, which receives no tax dollars, reported that it incurred a $329 million loss in the first quarter of fiscal year 2010, which ended Dec. 31. That compares with a loss of $297 million the year before.
The agency cites ongoing decline in mail volume and retiree healthcare costs as straining its reserves. Excluding costs related to retiree benefits and adjustments to workers' compensation liability, the USPS said it had a net income of $226 million in the first quarter.
The USPS said it will default on some of its financial obligations unless Congress changes a 2006 law requiring it to pay between $5.4 billion and $5.8 billion into its prepaid retiree health benefits each year.
The agency expects to have a cash shortfall this year and to hit its federally mandated borrowing limit by September, when the fiscal year ends.
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