American Express reports it will cut an estimated 5,400 jobs in 2013 as part of a restructuring program. While the reductions will be offset by new hires, overall staffing levels by year end 2013 are expected to be 4 to 6 percent less than the current total of 63,500, American Express said. The largest cuts will be in travel.
One element in the restructuring includes reengineering the business model in Global Business Travel to reduce its cost structure, Amex said. The company noted that the shift of customer volumes to online channels and automated servicing tools.
The job reductions will take place across seniority levels, businesses and staff groups, Amex said. "The largest reductions will come in the travel businesses, which operate in an industry that is being fundamentally reinvented as a result of the digital revolution."
Reductions will be spread proportionally between the U.S. and international markets and will primarily involve positions that do not directly generate revenue, Amex said.
“Against the backdrop of an uneven economic recovery, these restructuring initiatives are designed to make American Express more nimble, more efficient and more effective in using our resources to drive growth,” said Kenneth I. Chenault, chairman and chief executive officer.
“For the next two years, our aim is to hold annual operating expense increases to less than 3 percent. The overall restructuring program will put us in a better position as we seek to deliver strong results for shareholders and to maintain marketing and promotion investments at about 9 percent of revenues," Chenault said
Despite the restructuring, American Express said cardmember spending, revenue growth and credit quality remained strong during the fourth quarter of 2013, despite an uneven economy.
Net income for the quarter was $637 million and fourth quarter adjusted net income was $1.2 billion. For the year ago period, net income was $1.2 billion. Fourth quarter consolidated total revenues net of interest expense were $8.1 billion, up 5 percent from $7.7 billion a year ago.
Cardmember spending was 8 percent higher than a year ago, despite a brief dip in late October/early November reflecting the impact of Hurricane Sandy on consumers and businesses in the northeastern United States.
“We’ve delivered strong results since coming out of the recession and have been consistently gaining share in a very competitive U.S. industry,” said Chenault. “In addition to strengthening our ties to merchants and cardmembers, we have launched products for new customer segments, expanded into new geographies internationally, and extended our presence well beyond the traditional American Express footprint."
“All of this has been taking place at a time when technology is transforming the world of commerce, regulatory changes are reshaping the financial industry, and customer loyalty has become more important than ever," Chenault said.
“Maintaining our momentum in this environment will require us to evolve our business, embrace new technologies, become more efficient and generate resources to invest in the many growth opportunities we’ve identified," Chenault said.