Post office's quarterly loss hits $3.5B

WASHINGTON (AP) — The Postal Service was $3.5 billion in the red for the third quarter and may not be able to make a required payment for future retiree health benefits, the agency said today.

Losses for the April through June quarter were $1.1 billion more than the post office lost in the same period a year ago.

The post office has been rocked by declining mail volume as people and businesses continue switching to the Internet in place of letters and paper bills.

"Given current trends, we will not be able to pay all 2011 obligations," Joseph R. Corbett, the Postal Service's chief financial officer, said in a statement.

"Despite ongoing aggressive cost reductions totaling over $10 billion in the last three years, it is clear that a liquidity problem is looming and must be addressed through fundamental changes requiring legislation and changes to contracts," he said.