The Postal Service incurred net losses of $3,794 million, $2,806 million and $5,142 million for the years ended September 30, 2009, 2008 and 2007, respectively. A significant portion of the loss in 2009 is attributed to an unprecedented third consecutive annual decline in mail volume, which fell by 25.6 billion pieces, resulting in a $6,842 million, or 9.1%, decrease in revenue, compared to 2008. Also contributing to the losses over these three years were significantly higher retiree health benefit costs pursuant to P.L. 109-435 and its requirement to fund the newly created PSRHBF, COLAs and record fuel prices for a substantial period in 2008.
We experienced negative cash flow from operations in two of the past three years and would have also had a negative cash flow from operations in 2009 had it not been for the enactment of P.L. 111-68, which decreased our 2009 retiree health benefit payment from $5.4 billion to $1.4 billion. During those three years, cash flow from operations included payments into the PSRHBF of $1.4 billion in 2009, $5.6 billion in 2008 and $5.4 billion in 2007. We have maintained liquidity during these years through a series of cost reduction initiatives and increased borrowing. In addition, in 2009, we shifted our annual workers’ compensation payment to October, a payment that in the past was paid in September. Our debt outstanding at September 30, 2009 was $10.2 billion and our annual net increase in debt remains limited by statute to $3 billion, effectively limiting our debt outstanding to $13.2 billion for 2010. Total outstanding debt is limited to $15 billion which we expect to reach in 2011.
The impacts of the severe recession, the annual PSRHBF payment and record September 2008 COLA have contributed to significant losses in the last three years and have placed unprecedented strains on cash flow. We experienced a net loss of $3.8 billion in 2009. Had P.L. 111-68 not provided a $4 billion decrease in our 2009 payment requirement, we would have come extremely close to a cash shortfall at September 30, 2009. In 2010, revenue is expected to continue to decrease, as declining volumes will not be offset by price increases for most services, and we expect our liquidity challenge to continue.
We believe that our liquidity and cash flows will cover operation through most of 2010, but we remain highly uncertain regarding the availability of cash in an amount that is sufficient to fund our required $5.5 billion PSRHBF payment on September 30, 2010. If sufficient cash is not available, we will not be able to make the full payment. The legal and/or regulatory consequences of failing to make the required PSRHBF payment cannot be known with certainty. We will continue to inform the Congress on our financial outlook and on legislative changes that would help ensure the availability of cash at September 30, 2010. However, there can be no assurance that adjustments to the PSRHBF payment schedule will be granted by September 30, 2010, or at all.
