American Express Plans To Eliminate 4,000 Jobs

Tuesday May 19, 2009
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American Express (AXP) announced on Monday that it is embarking on a “new company-wide reengineering initiative,” that is expected to produce savings of about $800 million through the rest of 2009.

The company plans to eliminate 4,000 jobs, about 6% of the company’s global workforce, which is expected to save $175 million, with most of the cuts coming from “business units, markets and staff groups.” The company will take a charge of $180 to $250 million pre-tax (approximately $117 to $163 million after-tax) in the second quarter as a result of the move because of severance and other job related costs.

Investment spending on marketing and business development will be reduced, producing anticipated cost benefits of approximately $500 million.

Cuts to be made in operations will come from consulting and other professional services, travel, and general overhead, with savings from such cuts estimated at $125 million.

In October 2008, the company announced a reengineering plan that is expected to save the company $1.8 billion.

In commenting on the reengineering, Chairman and CEO Kenneth Chenault stated “While we have remained solidly profitable at a time when some parts of the card industry were incurring substantial losses, we continue to be very cautious about the economic outlook and are therefore moving forward with additional reengineering efforts to help further reduce our operating costs.”

The company believes that these planned initiatives will put it in a better position “to remain profitable and free up some additional resources that will be reinvested in the business to make sure we can take competitive advantage of opportunities as the economy begins to rebound.”

May 19, 2009 | Filed Under Company News | Leave a Comment