By Elvina Nawaguna
WASHINGTON (Reuters) - Revenues from shipping and package delivery services helped prop up the U.S. Postal Service's finances in the second fiscal quarter of 2015, but the agency continued bleeding money as mail volumes tumbled.
USPS reported on Friday that it posted a net loss of $1.5 billion in the quarter that runs from January to March, down from the same period last year when it lost $1.9 billion.
The mail carrier, which saw a 2.1 percent decline in the volumes of first-class and standard mail, has focused on building its package delivery services to take advantage of the growth in e-commerce.
That effort appears to be paying off as shipping and package volumes rose 14.4 percent in the second quarter, leading to a $223 million increase in operating revenues. That brought the operation revenue to $16.9 billion.
First-class mail, USPS' most profitable product, has been on a downward spiral as more people communicate and pay bills electronically.
"Shipping and Package Services are a key business driver, however, operating margins in this business are lower than in mailing services," USPS Chief Financial Officer and Executive Vice President Joseph Corbett said in a statement. "And, while we're pleased to see a small increase in controllable income, to improve our margins, we'll need to make investments in our network infrastructure and delivery vehicles."
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.
Without the retiree health benefit prefund requirement, the agency said, its net loss would have been $44 million in the second quarter.
The agency, which receives no tax dollars for its operations, has sought congressional approval to modify its business, including switching to a five-day delivery schedule, cutting door-to-door delivery and allowing shipments of alcohol.
Lawmakers have so far failed to pass postal reform legislation, with some from rural districts arguing that any cuts to service would hurt their constituents.