The bottom line was $300 million better than had been expected for the 2003 fiscal year, which ended in September. Nearly all of the surplus was used to reduce the agency's outstanding debt.
The results will enable the Postal Service to "help keep the commitment to hold the current rates stable through 2006," Postmaster General John Potter told the agency's board of governors.
Chief financial officer Richard Strasser said the results were achieved despite a decline in first-class mail and noted that the Postal Service had been able to make significant savings through a reduction in staff and other cost-cutting.
"Recognizing early in the fiscal year the delayed economic recovery and its negative impact on mail volume, our managers adjusted resources, cutting another $2 billion in costs," said Strasser.
The Postal Service had a net income from operations of $900 million, Strasser said. And a change in the law that allowed the agency to stop overpaying into retirement accounts increased its net income by an addition $3 billion.
That brought the total net for the year $3.9 billion, and $3.8 billion of that was used to reduce the agency's debt from $11.1 billion to $7.3 billion as of Sept. 30, Strasser said.
Overall, the Postal Service had revenues of $68.5 billion for the year, Strasser said. He noted that the agency had been able to reduce its work force by the 24,000 workers without layoffs, resulting in a significant savings in salary paid.
The agency has been plagued by losses in the last couple of years as mail volume dwindled in the wake of the terrorist attacks, the anthrax scare and the weak economy.
The main postal facility in Washington, the Brentwood post office, only reopened last Friday after being closed more than two years after two postal workers died from anthrax there. Full service at Brentwood is not expected to resume until early next year. The cost of the cleanup and decontamination of the facility is estimated at more than $130 million.
Total mail volume in 2003 declined by about 600,000 pieces, the second straight year that mail volume fell. "This year's increase in advertising mail and packages did not provide us with as much revenue as the same amount of first-class mail would have," Strasser said.
Strasser said that while postal finances look good in the near term, "continued declines in first-class mail volumes, continued growth in delivery addresses," and changes in the marketplace threaten the ability to finance the agency in the future.
He noted, for example, that although mail volume declined in the year, the Postal Service added 1.8 million new addresses to which it has to deliver mail. The Postal Service has also been hampered by limits on its ability to change prices and add services in the marketplace and has sought more flexibility by seeking changes in the law under which it operates.
A presidential commission recommended several changes in a report issued last summer, and on Monday the Bush administration urged Congress to take up the issue and rewrite the postal operating law.
Postal rates last went up in mid-2002, when the price for mailing a letter rose from 34 to 37 cents.