4,800 Jobs Cut at American Express Unit : Finance: Restructuring of the troubled card and travel division will result in a $342-million charge for the quarter.
American Express Co. said Monday that it will eliminate 4,800 jobs at its card and travel division under a restructuring that resulted in a $342-million third-quarter charge against earnings.
The restructuring and other problems caused American Express to post a third-quarter loss of $205 million despite an improved operating performance by its troubled Travel Related Services unit.
American Express has faced intense pressure from other credit card issuers, which have eroded the market share of the company’s familiar green, gold and platinum cards. Also, American Express has been hurt by declining travel and consumer spending during the recession.
“The actions we’re taking at TRS represent a major step forward in the effort to enhance customer service and reduce our cost structure,” Chairman James D. Robinson said.
American Express announced in April that it planned a restructuring designed to cut costs by $1 billion by the end of 1994. The company said at the time that staff reductions would be “minimal.”
However, it said Monday that it will cut 9% of its 53,000 card and travel division employees. The company said the reductions would occur through layoffs, an early retirement program and attrition. It did not specify the number of layoffs.
The restructuring includes closing leased operating facilities in New York, Florida, Arizona and Delaware. Those operations will be transferred to American Express-owned facilities in Phoenix; Ft. Lauderdale and Jacksonville, Fla; New York City, and Greensboro, N.C.
Also, American Express said it will close some credit accounts and consolidate others into its Optima credit card operation. The company said the closures will cost $87 million.
Analysts said the restructuring was a positive step for the company, but they weren’t impressed with what analyst John Keefe called “meager” operating profits at TRS and the Shearson Lehman Bros. Inc. brokerage.
“It had to be big,” Keefe said of the revamping. “They just went too far in the wrong direction. I will expect to see more restructuring charges by TRS and American Express.”
The company’s quarterly loss contrasted with a profit of $31 million in the third quarter of 1991. Last year’s quarterly results included a $110-million restructuring charge.
On a per-share basis, American Express lost 45 cents in the quarter, contrasted with a profit of 5 cents a year earlier. Revenue rose 5% to $6.71 billion from $6.51 billion a year ago.
