Holiday Shoppers, Political Mail Boost USPS in 1Q

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The United States Postal Service ended its first quarter with a net loss of $754 million but increased its operating revenue as holiday shoppers boosted its package delivery business and as political mail from the midterm elections increased, the agency announced on Friday.

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The agency posted a net loss of $354 million in the same period last year.

The mail carrier, which has seen declines in the volumes of first-class mail, its most profitable product, has focused on building its package delivery services to take advantage of the growth in e-commerce.

That push appears to be paying off. Shipping and package volumes were up 12.8 percent in the first quarter, which runs October to December.

First-class mail continued to tumble, falling by 1.1 percent in that period, albeit at a slower pace.

The agency saw its operating revenue climb 3.4 percent to $18.7 billion from the same period last year.

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"Our employees delivered double-digit growth in packages this holiday season, which shows our growing ability to compete for and win new package delivery customers," Postmaster General and Chief Executive Officer Megan Brennan said in a prepared statement.

"To keep the momentum going - and to ensure we are the shipper of choice for our residential and business customers - we will continue to expand customized delivery solutions and package capacity while delivering high levels of service."

Brennan took over the top job this month as Patrick Donahoe, who was postmaster general for the last four years, retired.

Donahoe's tenure was marked by tension with Congress and postal unions, as he sought to modify the agency and have more control over its operations and finances.

Congress remains gridlocked on postal legislation, with lawmakers from rural districts arguing any cuts to service would hurt their constituents.

An increase in postal prices in January 2014 helped boost the agency's finances, leading to a 7.6 percent increase in standard mail revenues and a 3.7 percent increase in first-class mail revenues in the first quarter.

The Postal Service continues to struggle with a 2006 congressional mandate to prefund the healthcare of its future retirees, causing it to default several times on the required installments.

In a letter to Postal employees on Feb. 1, the day she took office, Brennan pledged to improve the agency by making better use of data and technology and speeding the pace of product and service innovations. (Reporting by Elvina Nawaguna; Editing by Eric Beech)