Chief Financial Officer Joseph Corbett said, “Our 2009 fiscal year proved to be one of the most challenging in the history of the Postal Service. The deep economic recession, and to a lesser extent the ongoing migration of mail to electronic alternatives, significantly affected all mail products, creating a large imbalance between revenues and costs.”

With a total mail volume of 177.1 billion pieces, a reduction of 12.7 percent compared to 2008, the USPS reported operating revenue of $68.1 billion, down from $74.9 billion, and a drop in expenses to $71.8 billion from $77.7 billion.

USPS auditors Ernst & Young noted questions remain about the ability of the Postal Service to generate sufficient liquidity to make its annual $5.5 billion retiree health benefits payment. “There is significant uncertainty as to whether the United States Postal Service will have sufficient liquidity to make this payment on Sept. 30, 2010,” the company said.

In its 2010 business plan, the USPS forecasts a further revenue drop of $2.2 billion, a net loss of $7.8 billion, cost reductions of more than $3.5 billion and a reduction in mail volume of 11 billion pieces for the year. The plan assumes there will be no change in the number of delivery days per week and no change in the current retiree health benefits payment schedule.

Postmaster General John Potter said the Postal Service faces “a sobering reality” of repeating the 2010 result every year. "It’s clear that long-term success requires fundamental, legislative change.” Potter added that any legislation must address “the impossible demands” of pre-funding future retiree health benefits at current levels of more than $5 billion annually; the barriers to matching delivery frequency with declining mail volumes; and the ability to leverage the Postal Service’s logistics, distribution and retail networks to create new revenue streams.