Postmaster general to retire next year

Postmaster General Patrick Donahoe will retire in February, after a topsy-turvy tenure that saw the U.S. Postal Service rack up record losses, as the agency grappled with shifts in technology and congressionally mandated expenses.

{mosads}The Postal Service also announced Friday that Megan Brennan, the current chief operating officer at the USPS, will replace Donahoe, becoming the first woman to hold that position.

Donahoe will leave the Postal Service in a stronger financial position than it was in just a few years ago. The agency also announced Friday that it lost $5.5 billion in fiscal 2014, despite a $569 million increase in revenue.

That marks the eighth consecutive year the USPS recorded a net loss, but is also a far cry from the record $15.9 billion the Postal Service lost in 2012.

Postal officials chalked up the revenue rise to both a temporary increase in stamp prices, and the increasing strength of the USPS’s packaging business, as U.S. consumers increasingly rely on online shopping.

The Postal Service’s packaging revenues grew 9.1 percent in all in 2014, and it is continuing to search for new ways to expand that side of its business. The agency is now delivering packages seven days a week in some markets for the online giant Amazon.

But first-class mail continued its decline of recent years, with USPS delivering 2.2 billion fewer pieces. 

The Postal Service also noted that almost $7 billion worth of losses — far more than the agency’s total loss for the year — were beyond their control. The agency, for instance, defaulted at the end of September on a $5.7 billion required prepayment for future retiree healthcare, its fourth such default in recent years.

On Friday, Mickey Barnett, the chairman of the agency’s board of governors, praised both Donahoe’s service and the historic choice of Brennan to replace him.

“Pat was the calm in the financial storm. He ignored the naysayers and went forward with his team and built a comprehensive plan for the future of the organization, made tough decisions, and executed against those decisions,” Barnett said. “That’s a testament to the great team he built and his own personal leadership.  

“Megan has demonstrated outstanding vision, leadership and executive ability in her role as chief operating officer, and has been extraordinarily successful in managing the operations of the Postal Service,” Barnett added. ”She is highly regarded throughout the Postal Service and among the broader community of our major customers and business partners — and rightly so.”

Donahoe was appointed postmaster general in October 2010 and presided during a time of steep declines in first-class mail volume, the agency’s bread-and-butter service.

And while Barnett praised Donahoe for a dramatic restructuring, the USPS has almost a quarter million fewer employees than it did a decade ago, that didn’t rely on layoffs, the chief’s decisions also often drew criticism from postal unions and their allies on Capitol Hill.

The four postal unions, for instance, are protesting the Postal Service’s decision to shutter dozens of mail processing centers early next year, and have generally thought Donahoe’s tenure was too focused on cost-cutting.

Donahoe has already pushed through an earlier round of processing center consolidations, and has led the charge for knocking off Saturdayletter delivery.

“We hope that the next Postmaster General will reverse Donahoe’s policies of lowering standards, reducing hours, outsourcing work and diminishing a great American institution,” Mark Dimondstein, the president of the American Postal Workers Union, said in a statement.

Both Donahoe and Brennan have spent decades at the Postal Service, working their way up from entry-level positions.

Donahoe started his 39-year career as a postal clerk in Pittsburgh, while Brennan joined the agency in 1986 as a letter carrier in Lancaster, Pa. As chief operating officer, Brennan now runs the day-to-day operations of the Postal Service.

Brennan will take over an agency next year that has repeatedly called on Congress to give it more freedom to cut costs and grow new revenue streams. But Democrats and Republicans have been unable to strike a deal on postal reform so far, with neither the House nor the Senate bringing legislation to the floor over the last two years.

On Friday, Donahoe said the timing was right for Brennan to help guide USPS through those sorts of challenges.

The Postal Service is scheduled to start labor negotiations early next year, and Donahoe said that his departure would allow Brennan to implement new policies, like the seven-day package delivery and the USPS initiative to deliver groceries.

“I think we made a lot of progress over the last four years,” Donahoe said. “We’re much leaner, much more technologically-centric than we were just a few short years ago.”

“That pretty much puts me in the right time to leave the organization,” he added. 

This story was updated at 2:46 p.m.