AmEx to slash 5,400 jobs as income sinks

City A.M. Reporter
CREDIT card company American Express yesterday announced plans to slash around 5,400 jobs, and take about $594m (£367m) in after-tax charges in the fourth quarter, which will halve its net income for the period.

The New York based business said it would employ four to six per cent fewer people by the end of 2013, compared to its current headcount of 63,500.

The largest reduction would come in its travel business and would be spread proportionately between the US and overseas, it said.

“For the next two years, our aim is to hold annual operating expense increases to less than three per cent,” chief executive Kenneth Chenault said in a statement.

The $594m charges helped reduce net income to $637m from $1.19bn a year earlier – a fall of 47 per cent.

The charges are comprised of a $287m after-tax restructuring charge, in addition to other charges related to its rewards programme and reimbursements to cardholders under agreements signed with regulators.

AmEx also took a $95m charge for cardmember reimbursements for transactions going back several years.

The company said cardmember spending grew eight per cent in the fourth quarter, the third straight quarter of single-digit growth after nine quarters of double-digit growth.

“The job reductions will take place across seniority levels, businesses and staff groups,” the company said in the statement.

“The largest reductions will come in the travel businesses, which operate in an industry that is being fundamentally reinvented as a result of the digital revolution.”

Revenues rose 5.2 per cent to $8.14bn in the fourth quarter, AmEx reported.

Shares of the company rose one per cent to $61.45 in trading after the bell.

They closed at $60.79 on the New York Stock Exchange last night.