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USPS Does Not Deny Rumors of Another Rate Increase this Summer

Press release from the issuing company

(January 30 2001) According to ABM, there have been rumors in Washington, which the Postal Service won't deny, that it will file for another rate increase as early as this summer, with rates to become effective before the fall mailing season in 2002. The flames of those rumors were given more fuel when the Postal Service disclosed its dismal financial performance for the first quarter of its fiscal year. Total volume growth was a healthy 3.3 percent, but that figure masks the flat volumes for first-class mail and the decrease in Priority mail, offset by a 6.8 percent increase in Standard A (advertising) mail. Standard A volume exceeded the volume of more profitable first-class mail for the first time in history. Overall, the Postal Service showed what appears to be a healthy net income of $246 million in the first quarter, but that result was $142 million below plan, in what is the Postal Service's most profitable quarter. As costs, especially labor costs, increase through the year, the black ink will soon turn red. In fact, preliminary data for Accounting Period 4, which includes Christmas, show a loss of $292 million, more than wiping out the first quarter's profit. By comparison, the Postal Service earned a net income of more than $1 billion through the first four accounting periods of last year (and ended the year with a loss).

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