The Postal Service reported a net loss of $5.1 billion for its 2011 fiscal year and on Tuesday warned that could run out of cash by September of next year if Congress did not offer relief.

The rise of e-mail and online bill payments combined with the recession has eroded mail volume, which fell by 3 billion pieces, or 1.7 percent, during 2011.

The Postal Service, which receives no taxpayer money for operations, says it is limited in how it can respond to shrinking revenues and high labor costs.

Operating revenue for the 2011 fiscal year ended September 30 was $65.7 billion, down 2.1 percent from 2010.

Revenue from First Class Mail, the Postal Service's most profitable product, fell 5.8 percent, overwhelming gains in shipping and advertising mail.

Joseph Corbett, the Postal Service's chief financial officer, said during a conference call with reporters that the agency could run out of cash by the end of fiscal year 2012.

We will likely nearly run out or run out of money at the end of this year, and ... if the economy turns south or we are unable to achieve our plan, we could run out of cash earlier, he said.

The losses could add pressure on Congress to pass legislation offering relief to the cash-strapped agency.

Postmaster General Patrick Donahoe said in a statement the agency needs to cut $20 billion by 2015 to return to profitability.

The agency has proposed a strategy for trimming costs but has said it needs congressional action for more dramatic measures.

The Postal Service is reviewing 3,700 post offices and hundreds of processing facilities for possible closure, temporarily halted payments into a retirement fund, and it announced a one-cent boost in stamp prices to start in 2012.

The agency has previously said it may need to cut more than 220,000 of its about 550,000 career jobs by 2015, many through layoffs.

PRESSURE ON CONGRESS

Officials have asked lawmakers to let the agency end Saturday mail delivery, spin off its retirement and health programs, and renegotiate union contracts. The agency also wants to tap into an estimated $6.9 billion surplus in a retirement fund.

Bills in Congress take some of these steps, but lawmakers in the House of Representatives and the Senate have yet to reach an agreement on how to fix the problem.

There are 8 million private sector jobs that rely on the Postal Service, and these jobs will be put at risk unless Congress quickly enacts bold reforms, Art Sackler, of mailing group the Coalition for a 21st Century Postal Service, said in a statement.

The loss reported on Tuesday did not include a $5.5 billion payment to prefund retiree health benefits, which was extended by Congress to November 18 to help conserve cash.

Corbett said the agency will default on the payment if it is not extended again and that the Postal Service will not have the cash to make next year's payment either. The mail carrier wants Congress to end the prefunding requirement, which was imposed in 2006.

A stopgap bill proposed this week to fund the federal government for another month would give the agency until mid-December to make the payment, a congressional staffer said on Tuesday.

(Reporting by Emily Stephenson; editing by Philip Barbara and Eric Beech)