"With historic shift away from paper based communications, the corporation's current business model does not allow it to achieve sufficient profitability and cash flow to support its operations," a statement from Canada Post on Thursday said.

The company, a Crown corporation, said based on current financial projections, it is exploring options with its "shareholder" the federal government to address "liquidity challenges."

Options under consideration include the requesting additional pension regulatory relief and new financing for 2014.

The loss comes at a time when letter mail, which generates approximately 50 per cent of Canada Post's revenue, continues to fall. For the third quarter, "transaction mail" or letters, bills and statements fell by 73 million pieces compared to the same period last year.

Canada Post said it was able to reduce its labour costs by $65 million, or 2.7 per cent in the first three quarters compared to the same periods in 2012.

The federal Crown corporation and its subsidiaries, known collectively as the Canada Post Group, said despite a parcel delivery revenue increase of $32 million, the company is on track to post a "substantial loss in 2013."

Other postal services around the world that are facing the same crisis are adjusting their business model.

The corporation's subsidiaries Purolator, SCI Group and Innovapost all posted quarterly profits.

129M loss in Q3 letter mail volume continues to fall

It said it would need an "estimated $1 billion" by the middle of 2014 just to meet its pension obligations.

A government spokesperson told CTV News there are no plans to lend the corporation money.

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The Crown corporation employs about 68,000 workers Buy Women Canada Goose Victoria Parka Black Singapore and delivers 10 billion pieces of mail and parcels annually.

Canada Post also cited a mostly fixed operating cost model "required to meet its service mandate to a growing number of addresses despite volume declines."

"We need to adjust and we need to do it quickly," Canada Post spokesperson Jon Hamilton told CTV News Thursday.

Canada Post reported a $129 million loss on Thursday in its latest quarter, as growth from online shopping package deliveries did not make up for the steep losses from declining letter mail volume.

"When a big business like Canada Post is thinking of shrinking to really reduce services, it's like deciding to die," said Denis Lemelin, president of the Canadian Union of Postal Workers.

Canada Post has long been eyeing delivery cuts and closing retail outlets. The union says the moves suggest they're giving up on rural Canada.