American Express, also known as AmEx, is planning to cut 5,400 jobs, or 8.5 per cent of its workforce, by the end of this year in an effort to reduce expenses and restructure its travel business.
The employee restructuring reduction program will save more than $600m including after-tax charges for the company.
The company, which currently employs about 63,500 people, has decided to reduce most of the jobs in its global travel business, primarily due to the shift of customers from digital services to online. However, the company would add few positions in 2013.
Kenneth Chenault, chairman and CEO of American Express, said: “We found that online servicing is the preferred channel for many customers and clients. One outcome of this ongoing shift to online is that we can serve a growing customer base with lower staffing level.”
“Against the backdrop of an uneven economic recovery, these restructuring initiatives are designed to make American Express more nimble,” Chenault added.
For the fourth-quarter of 2012, the company reported a net income of $637m, a decline of 47 per cent compared to the same period a year ago, mainly due to higher costs including expenses tied to severance payments.
During the quarter, AmEx’s cardmember spending grew by 8 per cent compared to the same period a year ago despite the impact of hurricane Sandy on its businesses in the northeastern US.
Earlier in October 2012, AmEx has agreed to pay approximately $113m to settle allegations made by the US government related to violations of consumer protection laws “at every stage of the consumer experience”.