AmEx seeks to slash 8.5% of workforce
Source: Agencies |
January 12, 2013, Saturday
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Print Edition
Print Edition
CREDIT card company American Express Co plans to 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 US$600 million in charges in the fourth quarter of last year after taxes, which will halve its net income.
Nearly US$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 US$153 million of payments to reimburse customers that were overcharged or short-changed benefits.
AmEx tends to lay off staff at the beginning of recessions. But CEO Kenneth Chenault said on Thursday that 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 4-6 percent smaller by the end of this year.
The job cuts would be spread proportionately between the US and international markets, New York-based AmEx said.
The steps will cost the company about US$600 million in charges in the fourth quarter of last year after taxes, which will halve its net income.
Nearly US$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 US$153 million of payments to reimburse customers that were overcharged or short-changed benefits.
AmEx tends to lay off staff at the beginning of recessions. But CEO Kenneth Chenault said on Thursday that 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 4-6 percent smaller by the end of this year.
The job cuts would be spread proportionately between the US and international markets, New York-based AmEx said.
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