Postal Service reports billions in losses

By JENNIFER C. KERR | May 10, 2011 | 6:15 PM EDT

WASHINGTON (AP) — The Postal Service is continuing to hemorrhage money.

The service is reporting a loss of more than $2 billion over the first three months of the year and warning it could be forced to default on federal payments.

Such a default would not interrupt mail service to millions of Americans, but it could further hobble an agency struggling with a sharp decline in mail because of the Internet and a tough economy.

The agency said Tuesday that the $2.2 billion loss covers Jan. 1 to March 31, 2011 — sharply higher than the net loss of $1.6 billion for the same period last year. The post office also said it will have reached its borrowing limit, set by Congress, of $15 billion by the end of the fiscal year.