Postal Service cuts losses to $676 million

WASHINGTON -- The Postal Service ended its financial year in the red, but not as deeply as expected.

A work force reduction of 23,000 employees through attrition helped slice estimated losses in half, to $676 million, Postmaster General John E. Potter told the governors board Tuesday.

Officials had budgeted a loss of $1.35 billion for the year that ended Sept. 30. Last year, the Postal Service lost $1.6 billion. Potter said officials cut and avoided $2.8 billion in costs.

The job cuts accounted for savings of about $2.3 million. Besides the cost-cutting, revenues were augmented by a June increase in postal rates.

Volume has continued to drop, however, even though new delivery addresses were added. Volume fell by 4.6 billion pieces in the past year, which officials attribute to the Internet, fewer people writing letters, more competition and a poor economy. The delivery network increased by 1.77 million addresses.

Last month, the Postal Service reported that a new financial review found it had been overpaying into the Civil Service Retirement System. Should Congress decide to fix the discrepancy and reimburse the money, another rate increase could be delayed until 2006, officials have said.