The U.S. Postal Service plans to end Saturday mail delivery assoon as August to cut financial losses, a change Postmaster GeneralPatrick Donahoe said it can make without Congress's approval ifnecessary.

The service, which lost $15.9 billion last year, said it wouldcontinue six-day deliveries of packages, deliver mail topost-office boxes and keep open retail locations that now operateon Saturdays.

The change would lead to the elimination of 22,500 jobs and costreductions of as much as $2 billion a year, Donahoe said. The jobcuts can be made by attribution and buyouts, he said at a newsconference in Washington.

“We need to generate nearly $20 billion in cost reductions andrevenue increases to be able to close our budget gap and repay ourdebt,” Donahoe said at the service's headquarters.

Lawmakers have stifled previous cost-cutting proposals,including efforts to end Saturday mail delivery.

Cutting Saturday delivery is allowed under Congress's continuingresolution funding government operations that expires March 27,Donahoe said.

“It is our opinion with the way the law is set with thecontinuing resolution, we can make this change,” he said.

Representative Darrell Issa, a California Republican who leadsthe House Oversight and Government Reform Committee, which overseespost office operations, backed the proposal. Issa and OklahomaRepublican Senator Tom Coburn, his party's senior member on theSenate Homeland Security and Governmental Affairs Committee, sent aletter to Congress calling the change to five-day delivery a“common-sense reform” that is “worthy of bipartisan support.”

The post office's losses have continued to widen and areestimated at $25 million a day. Mail volume is down 26 percent fromits 2006 peak. To pay bills and keep the mail moving, the postalservice has had to skip $11.1 billion of required payments over thepast two years for future retirees' health costs. It exhausted its$15 billion borrowing authority last September.

The service, which has 521,000 career employees, says it willrun out of money in October even after ignoring this year's retireehealth obligation. If it can't pay workers or buy fuel for trucks,Americans looking for their bills, magazines and catalogs couldfind empty mailboxes.

President Barack Obama's budget proposal for fiscal 2013,released last year, called for cutting one day of mail deliveryeach week.

'Disastrous' Move

Fredric Rolando, president of the National Association of LetterCarriers union, called the move “disastrous” and said Donahoeshould resign or be ousted.

“If the Postmaster General is unwilling or unable to develop asmart growth strategy that serves the nearly 50 percent of businessmailers that want to keep six-day service, and if he arrogantlythinks he is above the law or has the right to decide policymatters that should be left to Congress, it is time for him to stepdown,” Rolando said in an e-mailed statement.

Since the Postal Service plans to continue delivering packageson Saturdays, any impact on United Parcel Service Inc. or FedExCorp. would probably be negligible, said Kevin Sterling, an analystat BB&T Corp. in Richmond, Virginia, who recommends buyingshares of both companies.

UPS and FexEx rely on the USPS for last-mile delivery ofpackages sent using their cheaper SurePost and SmartPost services,respectively, in which case the USPS determines the date of thefinal delivery already and could simply hold some of those packagesuntil Monday.

Customers who chose those shipping options are picking the“cheapest alternative” and likely wouldn't care if their itemsarrived a day or two later, Sterling said. They probably wouldn'tbe willing to spend more for UPS or FedEx's more premium ground orair services to begin with, he said.

“It's a rounding error for UPS and FedEx, either way,” Sterlingsaid. “They don't want to deliver the mail, and that's what this isabout. I don't see it having a material impact on either ofthem.”

About 5 percent of the service's employees in January accepted acost-cutting early retirement offer. The service says it hasalready cut about 60,000 full-time jobs in the past two years.

Donahoe, in a Jan. 3 statement, urged Congress to make postallegislation “an urgent priority.”

“We are on an unsustainable financial path,” Donahoe said. “ThePostal Service should not have to do business this way.”

Competing Senate and House proposals to help resolve PostalService finances expired when the old Congress left Jan. 3.

Bloomberg News

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