Postal Service may close entirely this winter as billion dollar losses mount

One fifth of workforce laid off and 3,700 offices closed

Amount of mail handled down 22 per cent in five years



Warning: Postmaster General Patrick Donahoe said the Postal Service's financial problems are 'extremely serious'

The U.S. Postal Service may be forced to close this winter after being unable to make a $5.5 billion repayment, it has been claimed.



The post office has already been subject to painful cost-cutting measures during attempts to erase a deficit which will reach $9.2 billion this fiscal year.



The agency has already pushed for elimination of Saturday deliveries, laying off nearly one fifth of the work force and closing up to 3,700 postal locations.



Postmaster general, Patrick R. Donahoe, has now described the situation as 'extremely serious' and warned the agency will be forced to default if Congress dosn't take action to stabilise its finances.



Bosses have now laid off 120,000 workers - nearly one-fifth of the Postal Service work force, despite a no-layoffs clause in the unions' contracts.

The huge popularity of the internet has led to people and businesses sending far less conventional mail, while the recession also saw less business mail being sent.



Officials had previous said they had planned for a decrease in first class mail, but that it had occurred much more rapidly than expected.

The Senate Homeland Security and Governmental Affairs Committee are to meet to discuss the financial problems of the Postal Service on Tuesday.

Mr Donahoe said in an interview recently: 'Our situation is extremely serious. If Congress doesn’t act, we will default.'



Last month the post office asked Congress to change or drop the requirement that it make a $5.5 billion annual payment into a fund to cover future retirement disability benefits.



Tough times: The Postal Service lost $3.1 billion in the April through June period

No other government agency is required to make such a payment.



If Congress doesn't act and current losses continue, the post office will be unable to make that payment at the end of September because it will have reached its borrowing limit and simply won't have the cash to do so.



Thomas R. Carper, the Delaware Democrat who is chairman of the Senate subcommittee that oversees the postal service, told the New York Times: 'The situation is dire.



Changes: The post office has asked Congress to change or drop the requirement that it make a $5.5 billion annual payment into a fund to cover future retirement disability benefits

If we do nothing, if we don’t react in a smart, appropriate way, the postal service could literally close later this year.



'That’s not the kind of development we need to inject into a weak, uneven economic recovery.'



Although missing the £5.5 billion repayment on September would not be immediately disastrous, the agency would eventually run out of money early next year and would not be able to pay its staff or fuel delivery trucks, officials warned.

