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 on Thursday reported a $5.2 billion quarterly loss and said it was nearly out of cash and likely to exhaust its government credit line in coming months. 
 
 The U.S. Postal Service on Thursday reported a $5.2 billion loss for its fiscal third quarter, an indication that the agency's financial woes are deepening. Eric Morath has details on The News Hub. Photo: Getty Images. 
 
 The agency said the loss was its widest since it began releasing quarterly financials in 2007. But Postmaster General Patrick Donahoe said the Postal Service would do whatever it takes to maintain its operations, even if that means defaulting on a second multibillion-dollar retiree obligation in as many months. 
 
 "We will do everything we need to do to make sure the mail is delivered," he said. "Congress needs to act responsibly and move on this legislation." Losses and defaults will continue, despite cost-cutting efforts, unless Congress passes a postal-overhaul bill, Mr. Donahoe said. 
 
 The Postal Service's loss for its third quarter ended June 30 compared with a $3.1 billion loss for the like period a year earlier. Charges taken in connection to a mandate to prefund retiree health care drove the loss in the latest quarter, but declining first-class and advertising mail volume were a drag on revenue. 
 
 Mr. Donahoe said the Postal Service would pay its employees and critical vendors but might skip some payments to others. 
 
 He said current retirees aren't at risk of losing insurance coverage. While the Postal Service may tap all its credit from the U.S. Treasury by October, finances should improve later in the year with election mail and holiday deliveries propping up revenue, the agency said. 
 
 The Postal Service defaulted for the first time in its history on Aug. 1, failing to pay $5.5 billion for future retiree health benefits. A similar $5.6 billion payment is due at the end of next month. The agency said it wouldn't make that either, unless Congress acts. 
 
 The Senate passed postal-overhaul legislation earlier this year, but the House hasn't take up the bill or a plan drafted by Republicans. 
 
 "I'm not sure how much more evidence leaders in the House of Representatives need before they realize that the Postal Service is in dire straits," said Sen. Tom Carper (D., Del.), one of the Senate bill's authors. 
 
 A spokesman for the House Oversight and Government Reform Committee said no date has been set to take up the legislation. 
 
 The Postal Service has criticized the Senate plan for not going far enough. For example, the bill makes it difficult for the Postal Service to implement its plan to cut delivery to five days a week to reduce costs. 
 
 Rep. Dennis Ross (R., Fla.), a co-author of the House bill, said Thursday's loss shows the Senate bill, which would eliminate the prefunding requirement and return pension overpayments, isn't enough. "These declines, without right-sizing the expense side of the postal equation, spell the end of the Postal Service," he said. 
 
 The House bill, which allows for more sweeping changes that would enable the post office to cut costs sooner, has met resistance from some lawmakers who are concerned it would lead to slower service and more post-office closings. 
 
 Excluding losses tied to retiree health care and workers' compensation, the Postal Service lost $1 billion in the latest quarter. That marks an improvement from a year earlier, when the operating loss totaled $1.3 billion. 
 
 By the end of this month, the Postal Service will have closed 48 mail-processing plants this year. It plans to shut 92 more next year. 
 
 In a positive sign, the agency said it is seeing growing sales from its parcel business. Led by "If It Fits, It Ships" service, the shipping revenue was up 9.9% for the quarter. That wasn't nearly enough to make up for a 3.1% decline in first-class mail, still the main revenue driver. 
 
 Write to Eric Morath at eric.morath@dowjones.com 
 
 A version of this article appeared August 10, 2012, on page A2 in the U.S. edition of The Wall Street Journal, with the headline: Postal Service Posts Big Loss as Cash Runs Low.
– 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.