American Express to cut 5,400 jobs, take charges in fourth quarter

Thu Jan 10, 2013 5:28pm EST

An American Express sign is seen on a restaurant door in New York July 22, 2010. REUTERS/Brendan McDermid

An American Express sign is seen on a restaurant door in New York July 22, 2010.

Credit: Reuters/Brendan McDermid

(Reuters) - American Express Co said it would cut about 5,400 jobs, mainly in its travel division, and would take about $600 million in after-tax charges in the fourth quarter, which will halve its net income for the period.

The company said some of the cuts would be offset by new hiring but expects to reduce its workforce 4 to 6 percent by the end of 2013. It currently employs 63,500 people.

New York-based AmEx said 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 3 percent," Chief Executive Kenneth Chenault said in a statement.

The company said it recorded a $287 million after-tax restructuring charge in the quarter. It also booked 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 cardmember reimbursements for transactions going back several years.

The company said cardmember spending grew 8 percent in the fourth quarter, the third straight quarter of single-digit growth after nine quarters of double-digit growth.

AmEx expects to report a profit of $637 million, or 56 cents per share, including the charges.

Excluding the items, the company estimates fourth-quarter adjusted net income at $1.2 billion, or $1.09 per share.

Consolidated total revenue net of interest expense rose 5 percent to $8.1 billion in the quarter.

Analysts on average expected the company to earn $1.06 per share, excluding items, on revenue of $8.12 billion, according to Thomson Reuters I/B/E/S.

Shares of the company rose 1 percent to $61.45 in trading after the bell. They closed at $60.79 on the New York Stock Exchange on Thursday.

(Reporting by Jochelle Mendonca in Bangalore; Editing by Sriraj Kalluvila)

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Comments (8)
SanPa wrote:
I’ve noticed that financial and healthcare providers, retailers, and health product manufacturers have cutting hard of late. Home improvement has been slacking off, and restaurant traffic has declined. But grocers have been doing well, albeit with stiff price increases on prepared foods.

Jan 10, 2013 4:38pm EST  --  Report as abuse
AlkalineState wrote:
They were working for American Express. They weren’t doing anything anyway.

When’s the last time you used an Amereican Express card? Probably around the same time as your Diner’s Club card. Good times in the dinosaur kingdom :)

Jan 10, 2013 4:55pm EST  --  Report as abuse
mountainrose wrote:
must be all that automation going on these days, 100% of those 5400. Maybe they’ll just replace all bank tellers with robots, all they need is a tune up and oil change every now and then. On the positive side this should be good for earnings, 5400 less mouths to feed. On with the recovery,

Jan 10, 2013 5:00pm EST  --  Report as abuse
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