U.S. Park Police Officer Calvin Covington stands at the front of the line with his horse Harper to mail his family's income tax returns at a mobile post office near the Internal Revenue Service building in downtown Washington, April 15, 2010. 
 
 WASHINGTON The U.S. Postal Service's losses shot up to $3.3 billion in the last three months of 2011, a tenfold jump from the same period a year before, as its customer base eroded with the growth of email and online billing. 
 
 The cash-strapped agency recorded the loss during its traditionally strongest period, the year-end holiday shipping season, as declines in mail volumes outweighed growth in shipping. 
 
 "Technology continues to have a major impact on how our customers use the mail," Postmaster General Patrick Donahoe said in a statement on Thursday. 
 
 "While it has helped us grow our Shipping Services businesses, it has had a significant negative impact on some of our much larger sources of revenue." 
 
 The agency reiterated its call for Congress to pass legislation giving the Postal Service flexibility to remake its crumbling business. 
 
 Postal officials want lawmakers to allow the agency to tap into a retirement-fund surplus and permit it to offer new services. It also wants to end Saturday delivery and eliminate a large annual payment to prefund retiree health benefits. 
 
 "The longer the Postal Service remains in a weak position, the more damage can be done to our business," Chief Financial Officer Joe Corbett said during a conference call with reporters. 
 
 "We need to change and get back to a point where we're financially stable so that our customers and our suppliers have faith in us." 
 
 The Postal Service lost $5.1 billion the last fiscal year, which ended on September 30. Corbett warned the agency could hit its legally mandated borrowing limit this fall. A downturn in the economy or other unforeseen circumstances could cause a cash crunch that would force the agency to miss some payments in order to keep paying employees and suppliers, he said. 
 
 Total mail volume dropped 6 percent in the first fiscal quarter which ended on December 31, the Postal Service said. 
 
 Declines in first-class and standard mail revenue outweighed a boost to the package business from increased online shopping during the holidays. 
 
 Total revenue fell 1.1 percent to $17.7 billion, the Postal Service said. 
 
 The Postal Service said it needs to reduce operating costs by $20 billion by 2015, and that it expects large losses to continue unless it sees results from a plan to close thousands of facilities, eliminate jobs and restructure its healthcare program, as well as action from Congress. 
 
 Lawmakers remain deeply divided on closing post offices, ending Saturday mail and eliminating the retiree health benefit payment. But the losses could pressure Congress to act. 
 
 "USPS has reached a new, deeper level of crisis," said Republican Representative Darrell Issa, author of postal legislation in the House of Representatives. "Congress must pass legislation that allows USPS to reduce its operating costs and realign its network in line with America's declining demand for paper mail." 
 
 The Postal Service, which relies on sales of stamps and other products rather than taxpayer dollars, said it expects to default on this year's retiree health prefunding payment. 
 
 (Editing by Vicki Allen and Mohammad Zargham) ||||| The U.S. Postal Service said Thursday that its quarterly loss widened to $3.3 billion amid declining mail volume and mounting costs for future retiree health benefits as it struggles to stave off bankruptcy. 
 
 From October through December 2011, losses were $3 billion more than the same period a year ago, even though that quarter is typically the strongest due to increased holiday shipping. The mail agency said that at this rate, it will run out of money by October. 
 
 The Postal Service is seeking new leeway from Congress to eliminate Saturday mail delivery, raise stamp prices and reduce health and other labor costs. 
 
 Also at stake are roughly 100,000 jobs, part of a postal cost-cutting plan to save up to $6.5 billion a year by closing 252 mail processing centers and up to 3,700 post offices. At the request of Congress, the cash-strapped agency agreed to wait until mid-May to begin closures so lawmakers would have time to stabilize its finances first. 
 
 Prospects for immediate congressional action remain uncertain. 
 
 "Passage of legislation is urgently needed that provides the Postal Service with the speed and flexibility needed to cut costs that are not under our control, including employee health costs," said Postmaster General Patrick Donahoe. 
 
 He said the post office must cut $20 billion in annual costs by 2015 so it can reach profitability, rather than becoming a "long-term burden to taxpayers." 
 
 Overall, the post office had income of $17.7 billion from October through December, the first quarter of its 2012 fiscal year. That was down $200 million from the same period last year. Expenses were $17.5 billion. 
 
 In addition, the Postal Service had costs stemming from yearly advance payments of roughly $5.5 billion to a future retiree health-benefit fund. Because the agency is low on cash, Congress agreed to extend the legal deadline for last year's payment until this fall, when this year's payment will also be due. 
 
 In its financial statement, the post office spread the total $11.1 billion in costs over 12 months, creating additional quarterly debt of more than $3 billion. Without those annual payments _ not required of other government agencies _ the post office would have posted a profit in most recent years and had a loss of roughly $200 million in the last quarter. 
 
 The Postal Service also has been rocked by declining mail volume as people and businesses continue switching to the Internet in place of letters and paper bills. The number of items mailed during the last quarter was 43.7 billion pieces, a 6 percent decrease, much of it in first-class mail. 
 
 On the positive side, postal shipping services such as express and priority mail had an 8 percent increase in income to $3.2 billion, with package volume in the holiday period nearly double that of FedEx and UPS, according to postal officials. 
 
 Separate proposals passed last year by House and Senate committees would scrap or reduce the annual health prepayment requirement, but they differ widely on financial oversight and a reduction to five-day-a-week delivery. The Senate initially planned to take action earlier this month but stalled as some lawmakers pushed for changes that would delay decisions on closings and delivery cuts for two more years. 
 
 On Thursday, Donahoe said reducing the size of its postal network was critical to its efforts to reduce costs. Closure of mail-processing centers were still planned to begin after mid-May. He said the mail agency was revising some of its proposals to accommodate the needs of rural communities, which rely more heavily on postal service for the delivery of newspapers, prescription drugs and other services. 
 
 As part of the changes, the mail agency plans cuts to first-class mail that would slow delivery and, for the first time, virtually eliminate the chance for stamped letters to arrive the next day. 
 
 "We have to make sure we are taking actions that are swift to maintain our liquidity and pay our bills," said chief financial officer Joe Corbett, warning that large losses will continue without changes. 
 
 Last year, postal losses totaled $5.1 billion. 
 
 In the event of a postal shutdown, private companies such as FedEx and UPS could handle a small portion of the material the post office moves, but they do not go everywhere. No business has shown interest in delivering letters everywhere in the country for a set rate of 45 cents for a first-class letter. 
 
 "We have a Postal Service that essentially is living from paycheck to paycheck, which is a very risky proposition for the American economy and the 8 million private sector workers whose jobs rely on the mail," said Art Sackler, coordinator of the Coalition for a 21st Century Postal Service, a group representing the private sector mailing industry. "Each day Congress fails to enact postal reform, this problem grows more difficult and perhaps more expensive to resolve." 
 
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 Online: 
 
 http://www.usps.gov
– The US Postal Service had a jaw-droppingly ugly holiday quarter, losing $3.3 billion despite a better-than-expected surge in gift shipments, the agency announced today. That's $3 billion worse than its figure for the same period in 2010, the AP reports, and at this rate the agency expects to run out of dough by October. The problem is that traditional mail delivery continues to plummet—it fell 6% in the first fiscal quarter, which ended Dec. 31. "Technology continues to have a major impact on how our customers use the mail," the postmaster general said, according to Reuters. "While it has helped us grow our Shipping Services businesses, it has had a significant negative impact on some of our much larger sources of revenue." Still, the Post Office would have lost only $200 million if not for payments it had to make toward the $5.5 billion it is required by law to set aside for future retiree health benefits annually, something no other government agency needs to do.