American Express Co. has announced to cut around 5,400 jobs in a move to control rising costs and restructure its business. The decision was taken after a majority of its customers moved to the internet for reservations of travel plans. Most of the jobs will be cut from its travel business, the company said on Thursday.
American Express said that its fourth-quarter net income will be around 56 cents per share, showing signs for reorganization. The job cuts will be partially counterbalanced by new jobs that the company aims to add this year.
"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," American Express CEO Kenneth Chenault said in a news release, according to CBS News. "For the next two years, our aim is to hold annual operating expense increases to less than 3 percent."
The company said the jobs cut will apply across all levels and divisions in its operations across the world, but will chiefly target positions that do not directly bring business. American Express said employment levels will end up between 4 and 6 percent lesser in 2013, as compared to 2012.
The company’s revenue increased 5 % to $8.1 billion, which was slightly more than analysts’ expectation of $8.01 billion.
According to reports, the credit card company plans to report full results next Thursday.
On the whole, American Express has done an excellent business following the economic recession, as upper segment customers have spent liberally. That’s because its Amex cardholders are around a third wealthier than other credit cardholders.
In spite of those achievements, the company wants to employ state-of-the-art technologies in order to become more competent, sustain its efficiency and put more money into business growth opportunities.
Reports suggest that the company also plans to renovate its cardholder servicing and recovery functions to concentrate more on internet and mobile, instead of telephone and physical mail.
“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,” said CEO Kenneth Chenault, according to the Washington Post.