USPS posts losses for first quarter of fiscal 2026

Feb 17, 2026, 11 AM

By Linn’s Staff

For the first quarter of the 2026 fiscal year (Oct. 1, 2025, to Dec. 31, 2025), the United States Postal Service reported operating revenue of $22.2 billion, a drop of 1.2 percent, compared to the first quarter of fiscal year 2025.

According to the USPS, that drop in operating revenue was primarily due to declining volumes in three mail categories: first-class mail, shipping and packages, and marketing mail. The revenue decline was partially offset by price increases in those categories, the Postal Service said in a Feb. 5 press release.

Controllable income, which doesn’t include specific expenses beyond management’s control, was $350 million, a noticeable drop from $968 million for the first quarter last year.

Net loss for the first quarter totaled almost $1.3 billion, compared to net income of $144 million for same quarter in 2025. “This change to net loss is attributed to an increase in workers’ compensation expense of $634 million, operating revenue decrease of $264 million, an increase in retiree health benefits expense of $175 million, higher other operating expenses of $169 million, and higher transportation expenses of $43 million,” the Postal Service said.

The Postal Service is pursuing reforms that it believes will improve the financial situation, such as changes in retiree pension benefit funding rules for the Civil Service Retirement System, diversifying pension asset investments, raising the statutory debt ceiling and reforming workers’ compensation administration.

The Postal Service has petitioned the Postal Regulatory Commission (PRC) for specific regulatory changes, such as modifying the market dominant ratemaking system by eliminating the price cap and adopting a regulatory monitoring ratemaking system, that will help put the USPS on as sustainable path.

“While we are pleased that the holiday quarter was quite strong with regard to service improvement as measured by our on-time delivery scores and other important service performance metrics, we continue to face difficult systemic financial and business model headwinds,” said Postmaster General David Steiner. “To right our financial ship, we are aggressively pursuing growth strategies – which include creating new opportunities for businesses to leverage our vast last-mile delivery network – and driving greater efficiencies throughout our operations.”

Total operating expenses increased $1 billion to $23.5 billion for the first quarter, compared to the same quarter in 2025.

Overall, revenue and volume for the Postal Service’s three main mail categories declined for the most part during the first quarter.

“First-Class Mail revenue increased $68 million, or 1.0 percent, on a volume decline of 702 million pieces, or 6.1 percent, compared to the same quarter last year,” the USPS said. “Shipping and Packages revenue decreased $23 million, or 0.2 percent, on a volume decline of 243 million pieces, or 12.1 percent, compared to the same quarter last year. Marketing Mail revenue decreased $126 million, or 2.7 percent, on a volume decline of 1.8 billion pieces, or 10.9 percent, compared to the same quarter last year.”

Luke Grossman, the Postal Service’s chief financial officer, pointed out that various constraints continue to hamper the Postal Service’s performance.

“The financial results for the quarter continue to reflect the realities of our mandated cost structure and the ongoing decline in volume. We were able to offset these constraints to some degree by aggressively managing the costs under our control,” Grossman said. “But for our strategy to truly succeed, further reforms and regulatory changes will be required on top of organizational efforts to find additional operational efficiencies and to develop revenue strategies and innovative products and offerings that generate growth.”

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