US Postal Service nets $1.9B loss at mid-year

WASHINGTON, May 6 (Reuters) - The U.S. Postal Service said on Thursday it posted a loss of $1.9 billion in the first half of fiscal 2010, and renewed pleas for regulatory changes that it believes will save the agency billions of dollars.

The Postal Service, which delivers nearly half the world's mail, was hit by the global recession that led to unprecedented drops in mail volume. But the increased popularity of email and competition from FedEx (FDX.N), United Parcel Service (UPS.N) and other delivery services have long been adding to the agency's financial challenges.

Some 88.1 billion pieces of mail were delivered in the six months that ended March 31, a 6.3 percent drop from the same time period a year ago.

Joseph Corbett, the agency's chief financial officer, said the declines in first-class mail, the most profitable class of mail, were expected to continue for the foreseeable future.

"Quite simply, the business model is broken," Corbett said. "Laws, regulations and contracts must be changed to provide commercial operating flexibility needed for financial stability."