A new sense of urgency emerged Tuesday to save the U.S. Postal Service from disaster. It reported a $5.1 billion deficit for 2011 expected to grow to more than $11.3 billion next year.

Postal Service executives pleaded with Congress to come up with a plan to save the 200-year-old American institution. It’s likely to include layoffs of thousands of workers.

“The Postal Service can become profitable again if Congress passes comprehensive legislation to provide us with a more flexible business model so we can respond better to a changing marketplace,” Postmaster General Patrick Donohoe told the U.S. Board of Postal Governors at its meeting reporting the mail agency’s dire situation.

You can’t continue to lose that kind of money; we need to change.” – Joe Corbett

The Postal Service deficit was not as bad as it could have been. The number was half of what was expected because Congress had delayed a $5.5 billion payment until Nov. 18 for retiree health benefits. But the cry for help was loud and clear at the Board of Governors which concluded that a major overhaul must take place immediately or the postal service would have to default on its payment.

“We are cash-strapped,” Chief Financial Officer Joe Corbett told the governors.

Increases in standard mail and the Postal Service’s package business were not enough to offset the “steady” decline in first-class mail use. Corbett said total mail volume dropped to about 168 million pieces, down almost 2 percent from 2010. Revenue was also down about 2 percent to approximately $66 billion.

“You can’t continue to lose that kind of money; we need to change,” said Corbett, adding that the Postal Service remains in danger of running out of cash by next September.

Tony Conway, executive director of the Alliance of Nonprofit Mailers, said the final lifeline for the Postal Service is a long way off. But he said the agency is in a “horrible financial position” with no way out except drastic cuts.

“The organization has a footprint that is twice as large as it needs to be,” Conway said. “There are too many people and services. Unnecessary plants have to be closed. Their payroll needs to get in order.”

Among the mandates likely to emerge from Congress: Curtailing Saturday delivery; Ending one-night overnight mail; Closing 3,700 rural post offices; Layoffs of more than 100,000 workers and reduction of worker and retiree health benefits.

The Senate Homeland Security and Governmental Affairs Committee has approved a bailout plan. It heads to the Senate floor and to the House for action. The House bill would allow Postal Service to designate 12 holidays a year with no mail delivery service.

In the meantime, the urgency of the situation is prompting the National Association of Letter Carriers to hire former Obama administration official Ron Bloom who oversaw the 2009 auto manufacturers’ bailout as a financial adviser. He oversaw the restructuring of Chrysler and General Motors.

The Postal Service’s disastrous situation has been known for the last four years as first class mail volume dropped 22 percent as internet use grew stronger worldwide and customers turned to alternative services, including private companies such as Federal Express, to carry their mail.

“The continuing and inevitable electronic migration of First-Class Mail, which provides approximately 49 percent of our revenue, underscores the need to streamline our infrastructure and make changes to our business model,” Corbett said.

Some positive news emerged from the Board of Governors’ meeting:

-The Postal Service continued to increase operating efficiency in 2011, including a reduction in work hours by 34 million despite an increase of 636,500 delivery points.

-Its productivity gains were the result of effective workforce management, efficient use of materials and transportation, and continued advancements in the use of technology.

-Since 2001, the Postal Service has reduced work hours by 28 percent, while delivering to almost 14 million additional addresses.

-Package and standard mail for advertisements and magazines continued to increase.