American Express to cut more than 5,000 jobs, mostly in travel department
Credit Card Company plans to add jobs later this year
So worldly, so welcome -- American Express Co. has announced that it will slash about 5,400 jobs, chiefly in its travel business. The iconic credit card firm is seeking to cut costs and transform its operations. This is in response to the fact that more of its customers are shifting to online portals for booking travel plans and other needs.
American Express Chief Executive Kenneth Chenault says the company is keen to invest in growth opportunities in a marketplace that's increasingly becoming defined by consumers' use of the Internet and mobile technology.
The jobs eliminated this week would span employee seniority levels and divisions worldwide, primarily involving positions that do not directly generate revenue for the company.
The New York-based firm says that the reductions would be spread proportionately between the U.S. and international markets. "For the next two years, our aim is to hold annual operating expense increases to less than three percent," Chief Executive Kenneth Chenault said in a statement.
Staffing levels will end up between four and six percent lower this year than in 2012, according to company estimates. AmEx currently has 63,500 employees.
"Against the backdrop of an uneven economic recovery, these restructuring initiatives are designed to make American Express more nimble, more efficient and more effective in using our resources to drive growth," Chenault says.
The company said it recorded a $287 million after-tax restructuring charge in the quarter, booking a $212 million charge to account for a larger number of customers redeeming the rewards they earn while using its cards.
AmEx also took a $95 million charge for card-member reimbursements for transactions going back several years. Card member spending grew eight percent in the fourth quarter, the third straight quarter of single-digit growth after nine quarters of double-digit growth.
A profit of $637 million, or 56 cents per share, including the charges, is expected to be reported.
Revenue rose five percent to $8.1 billion when analysts expected $8.01 billion.
The company is scheduled to report full results next week. Overall, American Express has done well after the recession, as upscale shoppers have spent freely, due to Amex cardholders are in general about a third more affluent than other credit card holders.
American Express has been consistently gaining market share, even during the recession, Chenault noted.
Chenault says the company is keen to invest in growth opportunities in a marketplace that's increasingly becoming defined by consumers' use of the Internet and mobile technology.
"One outcome of this ongoing shift to online is that we can serve a growing customer base with lower staffing levels," Chenault said during a call with analysts.
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