American Express cuts 5,400 jobs
- 10 January 2013
- From the section Business
American Express has announced plans to cut 5,400 jobs worldwide from its total workforce of 63,500 by the end of 2013.
The credit card provider said it took almost $600m (£370m) in after-tax charges in the fourth quarter of 2012.
The company said that these charges would halve its net profit for the quarter from $1.2bn to $637m.
It said the majority of the job losses would be in its travel business, which is being "fundamentally reinvented as a result of the digital revolution".
American Express said it was having to adapt parts of the business as more customers make payments online or via mobile.
It added that the job losses would be spread proportionally between the US and international markets.
The charges include restructuring costs of $287m mostly related to redundancy payments, $212m for Membership Rewards expenses and $95m for card member reimbursements
In the fourth quarter, spending by card members was 8% higher than a year ago, the company said, "despite a brief dip in late October/early November reflecting the impact of Hurricane Sandy on consumers and businesses in the north-eastern United States".
Total revenues rose 5% on the year to $8.1bn.
"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," said chief executive Kenneth Chenault.
"For the next two years, our aim is to hold annual operating expense increases to less than 3%. The overall restructuring programme will put us in a better position as we seek to deliver strong results for shareholders and to maintain marketing and promotion investments at about 9% of revenues," he said.