USA - US Post Office to make cut backs to avoid bankruptcy

Uploaded by FinancialNewsOnline on Dec 5, 2011

Get ready for snail mail to move even slower. The US Postal Service announced that it plans to eliminate Next Day service as early as next spring in an effort to avoid bankruptcy. USPS also plans to cut 250 of the nearly 500 mail processing centers as early as March and effective January 22, 2012, the price of a first class stamp will rise to 45 cents. These cut backs are being taken in the face of an imminent default this month on a $5.5 billion annual payment to the U.S. Treasury for retiree health benefits. Currently, the post office is projecting a record loss of $14.1 billion next year amid steady declines in first-class mail volume. Postmaster General, Patrick Donahoe has said the agency must make cuts of $20 billion by 2015 to be profitable. He said in a statement, "We have a business model that is failing. You can't continue to run red ink and not make changes. We know our business, and we listen to our customers. Customers are looking for affordable and consistent mail service, and they do not want us to take tax money."