By Paul Ziobro 

The U.S. Postal Service is facing a precipitous decline in mail volume and billions of dollars in additional losses as it operates during the pandemic, where hundreds of its workers have fallen sick and a dozen have died from the coronavirus.

The quasigovernmental agency, which operates as part of the executive branch, is asking Congress for financial support, even after the Treasury Department extended it a $10 billion loan and increased its annual borrowing limit under the Cares Act last month.

The agency's Board of Governors has asked Congress to provide $25 billion in emergency funding, a $25 billion grant for modernization projects and access to $25 billion in Treasury loans.

"We are at a critical juncture in the life of the Postal Service," Postmaster General Megan Brennan said in a statement Thursday. "At a time when America needs the Postal Service more than ever, the reason we are so needed is having a devastating effect on our business."

The Postal Service projects the pandemic to add $22 billion to the agency's continuing operating losses over the next 18 months, Ms. Brennan said. Mail volumes and purchases of the agency's services have plummeted with the mandated closures of businesses around the country.

She said losses could hit $54 billion over the longer term and threaten the agency's ability to operate. Ms. Brennan delayed her retirement earlier this year during a search for a successor.

The Postal Service has faced financial struggles for more than a decade, which it says stem from structural issues like the relentless decline of first-class mail, its most profitable business, and legislation that requires it to prefund retiree health benefits.

It has skipped out on nearly $50 billion in the mandated retiree health-benefit payments, according to public filings. The agency has also argued for greater leeway in raising prices so it can offset the decline in mail volumes.

Congress has proposed and failed to pass several iterations of postal reform legislation which the Postal Service says is vital for its survival.

The Postal Service has also been hit hard by the virus's spread. At least 600 workers have tested positive for Covid-19 -- the respiratory illness caused by the pathogen -- 6,000 are quarantined and 12 have died, according to Fredric Rolando, president of the National Association of Letter Carriers. Most have been concentrated in the New York area, among the areas that have faced some delivery disruptions.

"Everybody is scared, obviously," Mr. Rolando said. "There's so many challenges with our craft in terms of safety," including entering many buildings during the day and touching countless surfaces.

Two major partners, FedEx Corp. and Amazon.com Inc., have sent fewer packages to the Postal Service as they shift toward handling more of their own local deliveries. FedEx has decided to build out its ground network to seven days a week, while Amazon has hired thousands of local drivers to deliver many of its orders.

The private delivery giants are also struggling with the health crisis as workers get sick and the companies try to manage a surge in residential deliveries ordered by homebound shoppers. Amazon is hiring 100,000 workers and said it would focus on deliveries of essential items. The federal relief package included fuel-tax relief for cargo carriers like FedEx and United Parcel Service Inc. but not enough to offset the loss of profitable business-to-business deliveries, analysts say.

The Postal Service was lobbying for more relief in the $2.2 trillion stimulus bill. The House Democrats' proposal would have granted the Postal Service $25 billion and forgiven $11 billion in debt.

House Democrats have called for the appropriations to be included in the next stimulus package, and have also suggested including some sought-after reforms to the agency, like requiring postal workers to enroll in Medicare.

Paul Steidler, a senior fellow at the Lexington Institute think tank that advocates for limited government, says that the Postal Service should be extended loans to maintain operations during the pandemic but that any other appropriations shouldn't come without fixing longstanding problems.

"If you do it now without structural reform, you don't deal with the underlying issues that have led the Postal Service to have years of consecutive losses," Mr. Steidler said. "You also eliminate some of the pressure to do that."

Mr. Rolando, whose union represents more than 275,000 postal workers, says funding is needed to cover the anticipated revenue shortfall.

"At the end of this thing, we want to be where we were at the beginning of it financially," Mr. Rolando said. "It's all about getting through the crisis."

President Trump has said the Postal Service is being taken advantage of by Amazon and online merchants who rely on the agency to deliver many packages to residents and says they should pay more money to do so.

"If they raise prices by actually a lot, then you'd find out that the post office could make money or break even," Mr. Trump said Tuesday at a White House briefing. "But they don't do it. And I'm trying to figure out why."

In 2018, Mr. Trump created a task force headed by Treasury Secretary Steven Mnuchin to review the Postal Service's operations and contracts. The task force recommended that the agency charge more for certain package deliveries and redefined the universal service obligation that requires that it deliver everywhere in the U.S., but stopped short of proposing major structural changes like privatization.

Write to Paul Ziobro at Paul.Ziobro@wsj.com

(END) Dow Jones Newswires

April 09, 2020 16:26 ET (20:26 GMT)

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