Postal Service loses $2 billion in second quarter

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Postal Service loses $2 billion in second quarter
NEW YORK, NY - SEPTEMBER 25: Signage for the United States Post Office (USPS) is seen on September 25, 2013 in New York City. The USPS announced today that they're considering raising the price of stamps by 3 cents. (Photo by Andrew Burton/Getty Images)
FILE - In this Feb. 7, 2013 file photo, U.S. Postal Service letter carrier Jamesa Euler, delivers mail in the rain in the Cabbagetown neighborhood, in Atlanta. As many high-profile agencies sit idle because of the federal government shutdown, others are humming along just fine. Many of them have escaped the fiscal ax because they pay much of their own way, or enjoy a revenue stream that’s insulated from Congress. That means the cable bill and weekly grocery ads will still fill the mailbox, due to the stamps and other items the post office sells.(AP Photo/David Goldman, File)
FILE - In this Thursday, Feb. 7, 2013, file photo, packages wait to be sorted in a Post Office as U.S. Postal Service letter carrier Michael McDonald, gathers mail to load into his truck before making his delivery run, in Atlanta. The financially struggling U.S. Postal Service said Wednesday, Aug. 14, 2013 it is revamping its priority mail program as part of its efforts to raise revenue and drive new growth in its package delivery business. (AP Photo/David Goldman, File)
NEW YORK, NY - SEPTEMBER 25: People write addresses on envelopes and packages at a United States Post Office (USPS) on September 25, 2013 in New York City. The USPS announced today that they're considering raising the price of stamps by 3 cents. (Photo by Andrew Burton/Getty Images)
NEW YORK, NY - SEPTEMBER 25: A man uses a self service machine at a United States Post Office (USPS) on September 25, 2013 in New York City. The USPS announced today that they're considering raising the price of stamps by 3 cents. (Photo by Andrew Burton/Getty Images)
NEW YORK, NY - SEPTEMBER 25: A man uses a self service machine at a United States Post Office (USPS) on September 25, 2013 in New York City. The USPS announced today that they're considering raising the price of stamps by 3 cents. (Photo by Andrew Burton/Getty Images)
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By ELVINA NAWAGUNA

(Reuters) - The U.S. Postal Service continued to bleed money during its second quarter, despite an increase in package revenues and an emergency price hike that took effect in January.

The agency said on Monday that it lost $2 billion from April to June, compared with a net loss of $740 million in the same period last year, and a $1.9 billion loss in its first quarter.

An increase in its shipping and package business helped the agency see a 2 percent rise from last year in its total operating revenues to $16.5 billion.

USPS has focused on its shipping and package business and expanded to Sunday package delivery as more people shop online and need a service to deliver their purchases. Shipping and package revenue jumped 6.6 percent, compared with the same period last year.

The volume of its most profitable product, first-class mail, fell 1.4 percent as more people communicate electronically, but the temporary rate increase helped offset the losses by bringing a 3.2 percent rise in revenues for that product. The rate increase is a temporary measure to mitigate the effects of the recession.

The jump in losses was largely due to a $1.5 billion increase in operating expenses as a result of workers compensation payments, the agency said.

USPS blames much of its financial troubles on a 2006 mandate to stow away billions of dollars for its future retirees' healthcare. The Postal Service already defaulted on three of its payments into the fund and does not expect to make the next $5.7 billion installment due September 30.

Because of continued losses, the agency also said, it has not been able to update its fleet.

"To continue to provide world-class service and remain competitive, we must invest up to $10 billion to replace our aging vehicle fleet, purchase additional package-sorting equipment, and make necessary upgrades to our infrastructure," said USPS Chief Financial Officer and Executive Vice President Joseph Corbett.

USPS and postal unions have so far failed to coax U.S. lawmakers to allow it to modify its business, including eliminating or modifying the future retirees' health fund.

The agency also wants Congress to authorize it to limit door-to-door delivery and to cut Saturday mail delivery, but those plans have been blocked by some unions and lawmakers who say it would hurt their communities.

Despite the red ink, the latest announcement showed an improvement from 2012 when USPS lost $15.9 billion that year.

Many in the industry point to these improvements as a sign that the agency does not need to make the drastic service cuts it has sought.

"Given the positive mail trends, it would be irresponsible to degrade services to Americans and their businesses, which would drive away mail – and revenue – and stop the postal turnaround in its tracks," Fredric Rolando, president of the National Association of Letter Carriers, said in a statement.

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