WASHINGTON (Reuters) - The U.S. Postal Service said its loss widened to $3.2 billion in the first three months of 2012 and repeated on Thursday its warning that it will likely default on payments to the federal government unless Congress passes legislation offering some relief.
The agency, which does not receive taxpayer funds and has been losing billions each year as Americans communicate online, said it lost $2.2 billion in the same period in 2011.
Much of the loss came from setting aside funds for future retiree health benefits, which is required by law. Mail volume fell 4.1 percent to 39.5 billion pieces from a year ago, according to a statement.
"We are aggressively pursuing new revenue streams and reducing costs in areas within our control," Postmaster General Patrick Donahoe said in a statement. "These actions are not enough to return the Postal Service to profitability."
The Postal Service said operating revenue was $16.2 billion, down about $7 million from the same quarter of 2011. But operating costs rose about 5 percent, in part because the agency is setting aside more for the retiree health benefit payments after failing to make last year's payment on time.
The agency also saw an 8.1 percent increase in transportation expenses from a year earlier due to rising fuel costs.
Shipping business continued to grow and revenues related to shipping and packages rose 13 percent from the previous year, USPS said.
But that growth could not outweigh losses in both first-class and standard mail. The Postal Service said spending by advertisers fell as businesses more selectively targeted mailings or turned to electronic alternatives.
USPS Chief Financial Officer Joe Corbett warned that without action from Congress the agency would likely default on the retiree health payments due later this year and could fail to make other payments to the federal government.
The agency wants Congress to eliminate the prefunding payment, let it tap into a retirement fund surplus, end Saturday mail delivery, and make other controversial changes.
The Senate passed bipartisan legislation last month that would allow the Postal Service to use the retirement-fund surplus to offer retirement incentives to workers and would restructure the health benefits payments.
But the House of Representatives has yet to schedule a vote on the legislation.
The Postal Service has attempted to make its own cost cuts despite opposition from some lawmakers. The agency walked back on a plan to close thousands of small facilities, announcing on Wednesday it would instead reduce operating hours at 13,000 low-traffic post offices.
(Reporting By Emily Stephenson; editing by Mohammad Zargham)