American Express to cut 5,400 jobs, take charges in fourth quarter
By David Henry and Jochelle Mendonca
(Reuters) - Credit card company American Express Co said it would cut about 5,400 jobs, or 8.5 percent of its workforce, as it restructures its business and pay legal bills.
The steps will cost the company about $600 million in charges in the fourth quarter after taxes, which will halve its net income.
Nearly $300 million of the charges are to cover restructuring, primarily in its travel division, to save money and adapt to the fact that customers increasingly book travel online and on their mobile phones instead of with travel agents.
The other half of the charges are for higher costs from customers redeeming more rewards for spending with cards, as well as $153 million of payments to reimburse customers that were overcharged or short-changed benefits.
American Express tends to cut staff at the beginning of recessions. But CEO Kenneth Chenault, speaking to stock analysts after the announcement Thursday, said spending with its cards continues to grow.
"This is not driven by our view of the macro environment," he said.
The company said the job cuts will happen over the year and come even as it hires some new employees and invests in more online customer service. The current workforce of 63,500 people will be about 4 to 6 percent smaller by the end of 2013.
The job reductions would be spread proportionately between the U.S. and international markets, New York-based AmEx said. Continued...