The Postal Service lost $1.7 billion in its recently-ended fiscal year.
A press release from the USPS touted "continued progress in productivity, cutting $900 million in costs during fiscal year 2001."
Chief financial officer Richard Strasser blamed the loss on the declining economy and increased competition.
In addition, he noted Tuesday that the terrorists attacks of Sept. 11 had caused a reduction in mail volume.
The loss was for the 12 months that ended Sept. 30. The anthrax attacks through the mail began later and will result in additional costs to the agency, Strasser said.
He told the postal Board of Governors that the agency ended the fiscal year with revenues of $65.8 billion and expenses of $67.5 billion.
At one point during the year the semi-independent government-owned corporation had anticipated a loss of $2 billion or more and made cuts in hours worked and other costs in order to reduce the losses.
The Postal Service has applied for an increase in stamp prices to take effect next year, which would raise the price of a first-class stamp by 3 cents, to 37 cents.
The increase could come four months earlier than expected, as early as June, however, if the U.S. Postal Service makes headway negotiating a rate case settlement, reports DM News.
According to the site, postal officials have been meeting with executives from major mailing companies and mailing groups over the past several weeks. If it happens, it would be the first fully-executed rate case settlement, in which all parties agree not to take the case to the oral and hearing stages and, instead, approve the current numbers.
If approved, rates would rise an average of 8.7 percent across the board, as expected. If it's not approved, the USPS is threatening to revise its request upwards to as much as 19 percent 40 cents for a first class letter.
Postal board chairman Robert Rider said the agency is exploring all options to meet the expected additional expenses without further increases in rates.
After making a profit for five straight years, the service recorded a $199 million loss in the fiscal year that ended Sept. 30, 2000. First-class postage bates were increased one cent in 1999 and one cent in 2001.
Until then, the pattern had been a year of profit, a year breaking even, and a year of loss plus a rate hike.
The Postal Service has asked Congress for additional funds to help cover expenses from the terrorist attacks and is waiting for a response from the House and Senate.
Postmaster General John Potter said that without the sharp drop in mail volume that occurred after Sept. 11, the loss for the fiscal year would have been reduced by $200 million to $300 million.
"The last eight weeks have been the most difficult in our history," said.
©MMI CBS Worldwide Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report