American Express to cut 4,000 jobs
Company slashes 6% of global workforce as part of $800 million restructuring plan.
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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.
"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.