American Express said
Tuesday it would cut about 4,000 jobs, or 6 percent of its worldwide
workforce, along with other reductions in spending, as the company said
it was taking a “cautious outlook” as the economy moves toward a
New York-based credit card and travel services company, which the
government recently said did not need any additional capital buffer for
the remainder of the current economic downturn, announced its cutbacks
would yield cost benefits of $800 million during the remainder of the
As one of the healthier financial institutions among the 19
major banks which the government analyzed recently the latest moves
come on top of a move to sell $3 billion in debt to investors as part
of a plan to repurchase preferred shares owned by the Federal
government. As a show of health, firms participating in the government
program to were required to demonstrate they could issue unsecured
senior debt before repurchasing preferred shares.
Last month American express reported a profit of $437 million during the first quarter of the year.
believe these efforts will put us 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,” Chairman
and Chief Executive Officer Kenneth Chenault said in a statement.
firm announced it would take up to a $250 million pre-tax charge
associated with the job cuts which includes severance pay and other
related costs. The cuts would be companywide among its business,
markets and staff groups. The firm expects to benefit by about $175
million from that move.
The firm also said it would be cutting
back on investment spending on marketing and business development to
yield a cost benefit of $500 million. The firm said it would continue
to make investments in some growth opportunities, initiatives to build
business and customer service support.
The cost benefits announced today are in addition to a previous $1.8 billion cost cutting plan announced in October of 2008.