American Express once again slashes jobs as customer defaults rise

19 May 2009

American Express, the credit card and travel company said that it would be again slash jobs, this time around 4,000 or 6 per cent of its workforce in a bid to cut costs.
The lingering recession in the US has led to a rise in defaults in Amex's credit-card business.

The New York-based company said yesterday that a new companywide reengineering initiative is expected to produce cost benefits of approximately $800 million during the remainder of 2009.

In October, Amex, the largest credit card company in the US in terms of purchases, had cut around 10 per cent of its global workforce in a bid to save almost $1.8 billion during 2009. (See: Amex to cut 7,000 jobs amidst rising defaults)

With defaults continuing unabated as unemployment soars to record levels, American Express's new reengineering plan includes a reduction of staffing levels, scaled back investment spending, and further cutbacks in operating costs.

The fourth largest US credit card issuer said that it would take a restructuring charge of approximately $180 to $250 million pre-tax in the second quarter. The charge is primarily associated with severance and other costs related to the elimination of approximately 4,000 jobs or about 6 per cent of the company's current worldwide workforce.

The reductions will be spread across business units, markets and staff groups. American Express said that the total benefit from these staffing decisions is expected to be approximately $175 million.