Although the proposal for five-day mail delivery by U.S. Postmaster General John E. Potter remains unanswered in Congress, Potter believes it will become reality by FY 2011. And the U.S. Postal Service returns to the black by FY 2012. This bold prognostication came out of a meeting last week, according to a letter by Charley Mapa, president of the National League of Postmasters.

During the meeting, the letter says, Potter reviewed the elements of the Postal Service’s Survival Strategy. “They look simple enough; cut costs, grow the business, and protect liquidity,” the letter reads. “He laid the strategies out for the next few years. We are on target to cut more than $6 billion in expenses during the current fiscal year 2009. A great part of these savings will come from a reduction of 100 million work hours.”

Strategies for FY 2010 include network distribution centers, increased usage of Flats Sequencing, continued reduction in delivery routes, the consolidation of stations and branches, and further administrative reductions, according to Mapa. The Postal Service hopes to implement 5-day delivery by FY 2011. “If all of these strategies are implemented, the Postal Service projects a move back into black ink in FY 2012,” the letter says. “This projection assumes the passage of H.R. 22 through Congress, and the implementation of 5-day delivery. Of course, a positive turn in the economy will help the trend.”

H.R. 22 is a House bill that would redirect a portion of the Postal Service’s prior payments to the Postal Service Retiree Health Benefits Trust Fund to pay its share of contributions for current retiree health benefits through 2016. If enacted, H.R. 22 would allow the USPS to pay for health care benefits for current retirees out of its Retiree Health Benefit Fund – which currently hovers around $32 billion — instead of its operating budget.

But the Subcommittee on Federal Workforce and Postal Service, And the District of Columbia, Committee on Oversight and Government Reform amended H.R. 22 before passage. U.S. Rep. Stephen Lynch (D-MA), who chairs the subcommittee, recommended a three-year timetable for the bill, instead of the proposed eight. The bill was introduced by Rep. John McHugh (R-NY) and co-sponsored by Rep. Danny Davis (D-IL).

The financial woes of the U.S. Postal Service have been well documented: The federal agency has not received an operational subsidy from Congress since 1982, and current estimates forecast the federal agency will lose a record $6.4 billion in fiscal 2009. That would be on top of losses of $2.8 billion in fiscal 2008 and $5.1 billion in fiscal 2007. The USPS last turned a profit of $900 million in fiscal 2006.

Potter’s five-day delivery proposal would save the USPS roughly $3.5 billion per year.

Mapa’s letter reveals that the Postal Service, according to Potter, is losing about $20 million a day). “At the current rate of revenue loss, the Postal Service would not be able to meet its financial obligations by the end of the fiscal year,” the letter adds. “One of the big obligations, as you know, is our payment of more than $5 billion into the fund for our future retirees’ health benefits. How much impact does this obligation have on the bottom line of the Postal Service? The Postal Service is the only government entity required to make such a payment into a fund for its future retiree health benefits. The League has made the point several times that last year. In spite of the dismal economy, the Postal Service would have turned a profit of more than $2 billion. Let me repeat that. In a year when the nation’s largest financial institutions, and our largest automobile manufacturers needed billions and billions of dollars of bailout money from the federal government, in a year where a great number of Americans lost their homes to foreclosure, and in a year when so many national franchise businesses went out of business, the Postal Service would have been profitable had it not been for this obligation. It’s tough to be a cash cow.”

Without H.R. 22 becoming a reality and the implementation of five-day delivery, Mapa’s letter says, “Mr. Potter told us that the Postal Service’s losses would climb into double-digit billions. That can’t happen.”