The financially strapped U.S. Postal Service is considering cutting as many as 120,000 jobs, CNBC reported.

Rocked by the loss of mail to the Internet and the decline in advertising caused by the recession, the agency faces a second year of losses totaling $8 billion or more. Now the Postal Service also wants to pull its workers out of the retirement and health benefits plans covering federal workers and set up its own benefit systems.
 
Congressional approval would be needed to downsize or change benefits, and both steps could be expected to face severe opposition from postal unions, which have contracts that ban layoffs.

The post office has cut 110,000 jobs in the past four years and is currently engaged in eliminating 7,500 administrative staff.

Postal officials have said they will be unable to make a $5.5 billion payment to cover future employee health-care costs due Sept. 30. It is the only federal agency required to make such a payment.