"The smallest 10,000 post offices collectively cost USPS less than $600 million to operate each year," he said. "To achieve real savings creating long-term solvency, the Postal Service needs to focus on consolidation in more-populated areas where the greatest opportunities for cost reduction exist."
Most of the 3,700 post offices that had been under review for possible closing had been in rural areas with low volumes of business, with most having only two hours of business a day even though they are open longer. Currently the post office operates more than 31,000 retail outlets.
The agency said its new plan will save more, mostly by weeding out full-time postmasters who don't have labor contract protections and replacing them with part-time workers. It plans to discuss possible buyouts with 13,000 postmasters who are now eligible for retirement. More than 80 percent of postal costs in rural areas are labor-related.
The Postal Service has been grappling with losses as first-class mail volume declines and more people switch to the Internet to communicate and pay bills. The agency has forecast a record $14.1 billion loss by the end of this year; without changes, it said, annual losses will exceed $21 billion by 2016.
If the House fails to act soon, postal officials say, they will face a cash crunch in August and September, when the agency must pay more than $11 billion to the Treasury for future retiree health benefits. Already $13 billion in debt, the health payment obligation will force the agency to run up against its $15 billion debt ceiling, causing it to default on the payments.
The agency plans to release its latest quarterly financial results on Thursday.
Associated Press writer Matt Gouras in Helena, Mont., contributed to this report.
Link to post offices facing reduced operating hours: