U.S. Postal Service to cut 7,500 jobs, close offices

WASHINGTON (Reuters) - The U.S. Postal Service said on Thursday it would cut 7,500 jobs and close seven district offices and 2,000 post offices as it handles less mail and faces greater staff costs and competition from FedEx <FDX.N> and United Parcel Service <UPS.N>.

"It's critical that we adjust our work force to match America's changing communications trends as mail volumes continue to decline," Postmaster General Patrick Donahoe said in a statement.

In November, the Postal Service reported a net loss of $8.5 billion for fiscal year 2010, its fourth consecutive year of losses.

Joanne Veto, a spokeswoman for the Postal Service, said, "We know that we cannot look the same 10 years from now. The mail volume isn't there. We have to adjust to keep up with the mail and customer needs."

She said the Postal Service would close 2,000 post offices around the United States over the next 12 months, while eliminating the 7,500 jobs.

As of the end of January, the agency employed 583,000 people.

The first round of job cuts are expected to be completed by May 31. As part of the first round of cuts, the Postal Service said it was offering voluntary early retirement of $20,000 paid over two years to employees 50 years old with 20 years of service, or any age with 25 years of service.

The job cuts are expected to be completed by March 2012.

The Postal Service, which delivers about 40 percent of the world's mail, does not receive tax revenue. It relies on the sale of products and services to fund its operations.

The agency said the job cuts and office closings would save about $750 million per year.

The United States started organizing mail delivery in 1775 under the stewardship of Benjamin Franklin and the Second Continental Congress. In 1792 the Post Office Department was created and almost 200 years later, in 1971, it was reorganized at The U.S. Postal Service.

The Postal Service lost a bid last summer to raise rates on first-class mail beyond the pace of inflation. It has also asked Congress for permission to cut Saturday mail delivery. The Postal Service is an independent agency of the U.S. government.

The Government Accountability Office observed in a report in February that the Postal Service had been slow to modernize, and it recommended looking into alternative delivery methods, such as digital mail or allowing customers to pick up parcels from machines 24 hours a day.

(Reporting by Emily Stephenson)