The Postal Service announced Monday it will proceed with its plan to cut future spending costs.
The financially-strapped agency is proposing to shift first class mail to a 2-3 day standard in contiguous U.S. destinations. The announcement comes just weeks after the government agency closed its books on fiscal year 2012, recording a $5.1 billion loss.
“The proposed changes to service standards will allow for significant consolidation of the postal network in terms of facilities, processing equipment, vehicles and employee workforce and will generate projected net annual savings of approximately $2.1 billion,” David Williams, vice president of the Postal Service’s network operations.
Williams also noted that if the Postal Service wants to return to profitability, it must cut costs by $20 billion by 2015.
The Postal Service blames a steady decrease in first class mail, which is the agency’s most profitable product, for a lump of its budget problems, as it reported a 5.8 percent decline or $2 billion loss from the service alone last year.
To make things worse, the Postal Service also owes an additional $5.5 billion for retiree health benefits, which was recently postponed due to a continuing resolution passed by Congress in mid-November.
The agency, which does not receive tax dollars for operating expenses, reported it will send its request for an advisory opinion regarding service standard charges.
See our previous coverage on Postal Service here.