US Postal Service to end Saturday letter delivery

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The US Postal Service plans to end Saturday delivery of first-class mail by August, in its latest cost-cutting drive.

The move would save about $2bn (£1.3bn) a year, according to the agency.

But the USPS will still deliver parcels six days a week, a service that has grown by 14% since 2010.

The financially troubled postal service lost nearly $16bn last year and has defaulted twice on required payments to the US government.

"Our financial condition is urgent," Postmaster General Patrick Donahoe told reporters on Wednesday.

The 237-year-old institution is in the middle of a major restructuring, although it is projected to remain in the red this year.

'Disastrous idea'

Since 2006, the agency has reduced its costs by about $15bn and cut its workforce by 28%, the equivalent of 193,000 jobs.

Start Quote

The alternative is the status quo until it is completely cash starved”

End Quote James O'Rourke Professor of management

Most of the mail agency's financial woes come from mounting mandatory costs for future retiree health benefits. The USPS has asked Congress to reduce the payments, but lawmakers have not acted.

The new proposal may require congressional approval. Although the USPS does not receive taxpayer funding, it is subject to government control.

Mr Donahoe said the service reduction could be carried out through a combination of employee reassignment and attrition.

He also pointed to research that suggests seven in 10 Americans support the shift to a five-day schedule.

But Frederic Rolando, president of the National Association of Letter Carriers, said it was a "disastrous idea".

It "would have a profoundly negative effect on the Postal Service and on millions of customers", he said, adding that businesses, rural communities, the elderly and disabled were just some of the groups that depended on Saturday service for work and communication.

Analysts say the postal service is making the change because it has little other choice.

"It's unclear whether the USPS has the legislative authority to take such actions on its own, but the alternative is the status quo until it is completely cash starved," James O'Rourke, a professor of management at the University of Notre Dame, told the Associated Press.

While the rising healthcare payment made up $11bn of last year's $16bn loss, the agency has also been weakened by the internet and competition from rivals such as FedEx and UPS.

But parcel deliveries have grown as consumers order more products from sites such as eBay and Amazon.

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