WASHINGTON, D.C. - Reporting today on the financial condition of the Postal Service, Chief Financial Officer and Executive Vice President Richard J. Strasser Jr. told the Postal Service Board of Governors the net loss in Quarter 2 was $303 million, $123 million greater than the planned loss. Expenses were reduced $499 million below plan. Strasser also reported that overall mail volumes dropped 1.6 billion pieces, or 3.4 percent below the same quarter last year. Standard Mail volume was 1.0 billion fewer pieces than last year. First-Class Mail dropped 445 million pieces below last year. Success in controlling expenses was due to aggressive work-hour cuts, including management and staff reductions. During the first two quarters of this fiscal year, the Postal Service trimmed 8,100 career employees from its rolls and cut more than 38 million work hours below last year's level. The Postal Service expects continuing loss in volume during Quarter 3 (which ends May 22, 2002), while reducing expenses a further $500 million. In other Board action: Transformation Plan Postmaster General John E. Potter said he was pleased with congressional and mailing industry reaction to the Postal Service's "Transformation Plan" that was submitted April 4 to Congress. The plan details the future vision of the Postal Service and provides the framework for how the agency will be reformed to meet changing customer needs over the next 10 to 20 years. Congress and the General Accounting Office requested that the Postal Service create the plan to address how it intends to meet the challenges of changing markets, new technologies, and its need to provide universal service to an ever-increasing number of addresses. Postage rate increase The Governors voted to accept the Postal Rate Commission's recommendation for a three-cent increase in the price of a First-Class stamp to 37 cents as part of an overall rate increase of 7.7 percent. The new rates will take effect on June 30, 2002. Service performance The Postal Service reported that First-Class Mail with a next-day delivery standard was delivered within that standard 93 percent of the time, marking the eighteenth consecutive quarter at 93 percent or higher. Four performance clusters or postal districts achieved scores of 96 percent, including Erie, Honolulu, Pittsburgh, and Central Illinois. CONFIRM pricing proposal In other action, the Board approved postal management's request to file a new classification and flexible pricing proposal with the independent Postal Rate Commission for CONFIRM-the Postal Service's flat- and letter-mail tracking system that enables senders or recipients to track delivery of their mail. CONFIRM uses a PLANET Code to uniquely identify each mail piece. This technology provides major mailers with near "real-time" information about where their letters or flats are in the mail stream, and provides the Postal Service with important operations and delivery performance data. Both the utilization of technology to add value to the mail along with products and prices to meet specific customer needs are aligned with the critical components of the Transformation Plan. The Postal Service expects to file its CONFIRM case later this month. eCommerce services In other news, Postmaster General John E. Potter announced that the Postal Service will terminate it independently maintained public key infrastructure operations effective mid-May. The Postal Service created the infrastructure several years ago when this type of technology wasn't readily available from the private sector. Now that it is, the Postal Service will instead use commercially available certificates. Since the Internet and eCommerce are important links to customers in today's marketplace, Potter said the Postal Service will continue to review customer demand for all of its eCommerce products and services as it proceeds to define the agency's role in the electronic marketplace, and that it will establish transition plans to minimize customer inconvenience for any discontinued service. Capital investments Finally, the board approved funding for Phase I of the Postal Automated Redirection System (PARS) program. Designed for installation on letter automation sorters, PARS technology will identify undeliverable-as-addressed (UAA) mail during first handling and automatically redirect it to the correct destination. Each year, the Postal Service processes more than 42 million Change-of-Address orders and forwards more than two billion pieces of mail. PARS technology will improve mail service for customers receiving forwarded mail by eliminating the multiple handlings now required to direct UAA mail to it correct destination.