Just two days after announcing it would cease Saturday delivery of first-class mail later this year, the agency Friday announced it lost $1.3 billion during the last three months of 2012.
The October through December time frame is traditionally the postal service's strongest financial quarter because of the holiday shipping season.
While package delivery was up 4% from the year-earlier period, that was not enough to buffer that $1.3 billion net loss.
"The encouraging results from our holiday mailing season cannot sustain us as we move deeper into the current fiscal year and face continuing financial challenges," said Postmaster General
The U.S. Postal Service also projected continued financial woes in the second half of this year, saying it will not be able to make its required $5.6 billion payment due in September to prefund retiree health benefits.
Projections show that the agency will have fewer than five days of operating cash reserves by the end of the 2013 fiscal year.
During the agency's first quarter of its fiscal year, total mail volume declined slightly from 43.6 billion pieces to 43.5 billion compared with the same period last year.
First-class mail volume declined 4.5%. Standard mail volume increased 3.6% in part because of election mailings.