Special Report Your Job

American Express to cut 4,000 jobs

Company slashes 6% of global workforce as part of $800 million restructuring plan.

EMAIL  |   PRINT  |   SHARE  |   RSS
 
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all CNNMoney.com RSS FEEDS (close)
By Julianne Pepitone, CNNMoney.com contributing writer

Photos
No layoffs -- ever!
The global financial crisis has led many companies to slice payrolls, but these employers are staying loyal. Meet 9 of this year's Best Companies that, as of mid-January, have never had a layoff.
How are you responding to the recent spike in gasoline prices?
  • Driving less
  • Considering a more fuel-efficient vehicle
  • Taking mass transit
  • Not doing anything

NEW YORK (CNNMoney.com) -- American Express said Monday it will cut 4,000 jobs, or 6% of its global workforce, as part of an $800 million restructuring plan.

Under the plan, the financial services company will also cut investment spending and operating costs.

The 4,000 cuts are on top of the 7,000 positions the company said in October it would eliminate, according to American Express spokeswoman Joanna Lambert.

American Express' (AXP, Fortune 500) first-quarter earnings call in April had indicated further job cuts were imminent, Lambert said. The reductions will occur across business units, markets and staff groups.

"Cuts were largely expected, but it's a sizable amount," said Jason Arnold, analyst at RBC Capital Markets.

While the company "has remained solidly profitable," it continues "to be very cautious about the economic outlook and are therefore moving forward with additional reengineering efforts to help further reduce our operating costs," chief executive Kenneth Chenault said in a prepared statement.

Severance and other costs related to the job cuts will result in a $180 million to $250 million pre-tax restructuring charge.

Cuts in marketing and business development are expected to save $500 million, while operating cost reductions should save $125 million, the company said.

The cuts are in addition to the $1.8 billion cost benefit announced in October, and the tone of Monday's release was "a little more guarded" than that of previous announcements, Arnold noted.

Credit crunch

"Our concern is that the credit issues in this country are substantial," Arnold said. "AmEx especially gets a lot of its revenue from spending, which is obviously under severe pressure."

Especially troubling, Arnold said, is the company's percentage of charge-offs - when a creditor writes off an account balance as a "bad debt" instead of an asset, usually after six months of non-payment.

AmEx's charge-offs are in the upper range compared with its competitor group, at 9.9% Arnold said.

JPMorgan Chase (JPM, Fortune 500) and Discover (DFM) have charge-offs of around 8%. Still, Bank of America (BAC, Fortune 500) and Citigroup (C, Fortune 500)'s rates exceed 10%, Arnold said.

"None of these charge-off rates are good numbers," Arnold said. "Unfortunately, with unemployment and the economic climate being what they are, it's a tough time for spending." To top of page

Features
They're hiring!These Fortune 100 employers have at least 350 openings each. What are they looking for in a new hire? More
If the Fortune 500 were a country...It would be the world's second-biggest economy. See how big companies' sales stack up against GDP over the past decade. More
Sponsored By:
More Galleries
10 of the most luxurious airline amenity kits When it comes to in-flight pampering, the amenity kits offered by these 10 airlines are the ultimate in luxury More
7 startups that want to improve your mental health From a text therapy platform to apps that push you reminders to breathe, these self-care startups offer help on a daily basis or in times of need. More
5 radical technologies that will change how you get to work From Uber's flying cars to the Hyperloop, these are some of the neatest transportation concepts in the works today. More
Sponsors
Worry about the hackers you don't know 
Crime syndicates and government organizations pose a much greater cyber threat than renegade hacker groups like Anonymous. Play
GE CEO: Bringing jobs back to the U.S. 
Jeff Immelt says the U.S. is a cost competitive market for advanced manufacturing and that GE is bringing jobs back from Mexico. Play
Hamster wheel and wedgie-powered transit 
Red Bull Creation challenges hackers and engineers to invent new modes of transportation. Play

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.