The U.S. Postal Service ended the third quarter of fiscal year 2010 (April 1 - June 30) with a net loss of $3.5 billion, compared with a net loss of $2.4 billion for the same quarter last year. Third-quarter mail volume totaled 40.9 billion pieces - down approximately 700 million pieces, or 1.7 percent, compared to a year ago.

The USPS blamed much of the losses in the past few years to "an unprecedented decline in mail volume - down by more than 20 percent since 2007. The replacement of letter mail and business-transactions mail by electronic alternatives continues to cause downward pressure on mail volume."

The USPS said it was concerned about liquidity: "Although cash flow appears to be sufficient for 2010 operations, it is uncertain whether cash flow, together with maximum available borrowing of $3 billion, will be enough to fund the Congressionally-mandated $5.5 billion payment to the Retiree Health Benefit Fund on September 30 and retain sufficient liquidity into 2011."

Joseph Corbett, USPS Chief Financial Officer, said, "Given current trends, we will not be able to pay all 2011 obligations. Despite ongoing aggressive cost reductions totaling over $10 billion in the last three years, it is clear that a liquidity problem is looming and must be addressed through fundamental changes requiring legislation and changes to contracts."

The USPS wants to move from 6-day delivery to 5 days, saying in April such a change would save $3 billion a year.