American Express Co.
chairman and CEO Ken Chenault on Thursday said global business travel
operations would bear "the largest impact" of 5,400 job cuts planned
for this year. Job cuts would occur in "global business travel, where we
are reengineering the business model to reduce its cost structure and invest in
capabilities that will help us better align with the shift of customer volumes
to online channels and automated servicing areas," Chenault said during a
conference call with investors.
"The economics of
business travel have changed more dramatically over the years than any other
part of our business, but we've moved more things online and that will continue," Chenault added. "We've been ahead
of the curve over the last several years. Our intent by this restructuring is
to continue to be ahead of the curve."
American Express on at
least three previous occasions during the past eight years announced job
reductions as part of restructuring, at least partly related to the shift to
online from offline channels: in 2004, in 2008 and in 2011.
The newly announced job
cuts will occur throughout the year and be "spread proportionally between
U.S. and international markets and occur primarily with positions that do not
directly generate revenues," CFO Dan Henry told investors. Company
officials said other job cuts would be made in "cardmember servicing and
collections and staff groups."
The job cuts will result
in a net overall workforce reduction of 4 percent to 6 percent from the current
63,500 total, and prompted Amex to announce it would take a $400 million
Despite the restructuring
announcement, Amex executives said cardmember spending, revenue growth and
credit quality during the December quarter remained strong "despite an
uneven economy." Company officials plan to formally announce quarter and
year-end performance next week. Amex for the three previous quarters reported deepening declines in global corporate travel sales.
"Prior to the fourth
quarter, the single highest authorizations volume day in our history occurred
in December 2011," Chenault said. "This year, we surpassed that
approval volume level, not just once but on each of 12 separate days during the
December holiday period." Even so, he added that the "environment
continues to be challenging."
Amex officials in a
prepared release said December financial results also would include a $342
million expense for future redemptions of its Membership Rewards points by U.S.
cardmembers and $153 million charge to cover both cardmember reimbursements for
various types of transactions during the past several years and additional
expenses related to the October regulatory consent issues. When accounting for
the expenses, Amex said it would report $637 million in net income for the