Global first-quarter travel and entertainment spending volume on American Express corporate cards plummeted 21 percent year over year, the company said Friday. Airline-related global spending volume declined even more, coming in 32 percent lower than a year ago.
As dramatic as the first-quarter spending slowdown was, the current quarter likely will be even more drastically affected by the coronavirus pandemic, with Amex projecting second-quarter T&E spending to sink 95 percent year over year.
American Express's corporate card division saw strong momentum over the first two months of the year, but Amex CEO Stephen Squeri on Friday during the company's quarterly earnings call said "we're now in a different world" after the pandemic spread to North America and Europe in March.
The deterioration of the global economy stemming from the Covid-19 crisis "has dramatically impacted our volumes," Squeri said.
American Express Global Commercial Services reported $116.1 billion in card-billed business for the first quarter, down 6 percent year over year. Average quarterly cardmember spending dipped to $7,836, a 7 percent decline.
Given its bleak second-quarter outlook, Amex has set aside a total of $2.6 billion provisions for losses, more than 2.2 times higher than a year ago. The GCS division alone provisioned $762 million for potential missed payments and defaults, up from $254 million last year.