American Express to cut 5,400 jobs
1/11/2013LOS ANGELES — American Express Co. said today that it will slash roughly 5,400 jobs, mainly in its travel business, as it seeks to cut costs and transform its operations as more of its customers shift to online portals for booking travel plans and other needs.
The job cuts will be partly offset by jobs that the company expects to add this year, however.
All told, American Express anticipates that staffing levels will end up being between 4 percent and 6 percent lower this year than in 2012. The company 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,” CEO Kenneth Chenault.
Shares slipped 14 cents to $60.65 in after-hours trading. Shares ended regular trading up 53 cents at $60.79.
American Express said it will book an after-tax charge of $287 million due to the restructuring. It's also recording $212 million in expenses related to reward points for its cardholders and roughly $95 million in customer reimbursements and other costs.
The combined charges will reduce American Express’ fourth-quarter net income by 46 percent from a year earlier.
The company projects net income of $637 million, or 56 cents per share, compared with net income of $1.2 billion, or $1.01 per share, in the same quarter of 2011.
Excluding one-time items, fourth-quarter 2012 earnings amount to $1.2 billion, or $1.09 per share, ahead of analysts’ consensus forecast of $1.06 per share, according to FactSet.
Revenue rose 5 percent to $8.1 billion. Analysts expected $8.01 billion.
Management said spending by cardholders increased 8 percent during the quarter, despite some softening early in the quarter due to Superstorm Sandy.