Credit card major American Express Co has announced it is cutting 5,400 jobs, primarily in the travel business, and take a $287 million restructuring charge associated with those layoffs.
The charge is likely to lower the company's adjusted fourth quarter net income by 46 per cent from a year earlier, the company said in a statement yesterday.
Excluding the charge, however, the company said its fourth quarter adjusted net income was $1.2 billion, or $1.09 per share.
"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 Chairman and CEO Kenneth Chenault said.
"Travel has gone through a great deal of change," Chenault said in a conference call with analysts.
The economics of corporate travel has "changed more dramatically over the years than any part of the business", he said.
American Express, the biggest US credit-card issuer by purchases, also provides clients worldwide with travel-booking and advisory services.
Competitors include Internet firms Priceline.com, the most valuable online-travel agency, and Expedia Inc. The cuts account for about 8.5 per cent of the company's 63,500 workforce, a number that will be mitigated as the company refills some jobs, according to the statement.
The total number of employees by year-end will drop by 4-6 per cent and American Express expects to hold increases in annual operating expenses to less than 3 per cent, it said.
The company said the job cuts will take place across "seniority levels, businesses and staff groups".
"The largest reductions will come in the travel businesses, which operate in an industry that is being fundamentally reinvented as a result of the digital revolution," the statement added.