American Express more than doubled net income to $885 million in the first quarter from the same period last year, bolstered by growth in card volumes and what executives characterized as a pronounced rebound in corporate card spending. Though corporate travel revenues grew by 21 percent from the first quarter of 2009, that segment remained flat when compared with the previous quarter.
American Express global corporate travel sales hit $4.1 billion in the first three months of 2010, compared with $3.4 billion from the same period in 2009 and $4.1 billion in the fourth quarter of last year, the company reported. The numbers point to stabilization after the dramatic decline in travel that marked much of 2009, when for the full year corporate travel sales shrunk 30 percent compared with 2008
(BTNonline, Jan. 22).
Total travel sales in the first quarter grew to $5.1 billion from $4.3 billion in the same period last year. "Travel sales are strong," CFO Daniel Henry said during the company's earnings call, "both business travel and consumer travel. It reflects higher ticket prices and higher number of transactions. It also reflects customers moving from the back of the plane to the front of the plane and people taking longer flights."
Reporting 16 percent growth in total card volume, cardholder spending is "rebounding strongly from the recessionary lows of last year," American Express CEO Kenneth Chenault said in a statement. "The biggest turnarounds in spending came from corporate cardmembers and banks who issue cards on our network. Consumer and small business volumes also rose in part because of strength in travel, entertainment and other discretionary categories."
The company reported total cards in force declined by 4 percent year over year. However, "if we exclude the inactive cards we cancelled last year, it is down 1 percent," Henry told investors. He attributed the decline in cards but growth in volume to an improving discretionary spending market, a "more affluent customer base" and a strengthened corporate card segment, for which the company does not break out numbers. "Corporate card generally is more of a V. It goes down sharper than the rest of spending, and it comes back a lot steeper, and I think we are seeing that make a strong contribution here," Henry said. "We have a very strong position in corporate card."