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.
More from AOL.com:
Supermoon puts on stunning show Sunday night
NATO: Russia may be on the brink of invading
- People Who Retire Comfortably Avoid These Financial Advisor Mistake…
- The Worst Way to Withdraw From Retirement Accounts
- 2020: How to Maximize Your Savings
- $300K Refi in this Economy? 2.01% APR (15 yr)
- Calculate your new refi payment in minutes. See if you can save
- Rates Could Rise After the Fed Meets. Lock in Now.
- Home Mortgage Rates Drop Sharply This Week
- HARP Refinance Program is Over. Now What?
- Digital Mortgage Platform Helps Home Buyers Shop for Mortgages
- 5 Best Credit Cards For Consolidating Debt
- You'll Love Paying 0% Interest Until 2022
- 4 Cards With Massive Sign Up Bonuses (Get $200 Fast)
- Forget the 30yr mortgage if you owe less than $822K (Do this instea…
- How to pay off your house ASAP (So simple it's unbelievable)
- Congress Gives Veterans A Generous Mortgage Relief Program