American Express to Slash Another 6,500 Jobs
NEW YORK -- American Express Co. said Wednesday that it will cut as many as 6,500 additional jobs and take a fourth-quarter charge of $150 million to $180 million for the cuts and consolidation of related real-estate facilities.
The financial-services company also said it expects to earn 34 cents to 36 cents a share in the quarter, excluding the charge. The latest estimate of analysts surveyed by Thomson Financial/First Call called for the company to earn 40 cents a share.
American Express (AXP) said the job cuts will come primarily from its travel businesses, amid a sharp slowdown in that sector since Sept. 11.
The staff cuts are in addition to the 7,700 job cuts American Express announced previously this year. The total number of jobs that the firm will eliminate -- 13,200 to 14,200 -- represents about 15% of its work force as of the beginning of 2001.
"The additional steps we are announcing today will help us to generate good returns in a slower growth economy and put us in a strong position to capitalize on even a mild recovery," Kenneth I. Chenault, the company's chairman and chief executive, said in a prepared statement.
American Express expects to save $230 million to $260 million on a pretax basis in 2002 from Wednesday's job cuts. It expects to save $290 million to $315 million in 2003.
At the company's Travel Related Services unit, billed business volumes are down from last year, but have shown a stronger-than-expected rebound from the late September.
Compared to year-ago levels, billings were down about 14% in September, 10% in October and about 6% in November, reflecting continued weakness in the corporate travel and entertainment sectors. Travel sales fell about 46% in October from year-earlier levels, and about 38% in November.
Last month American Express warned that it would probably eliminate more than the 6,100 jobs it said it would cut in October. The company said at the time that of the 6,100 positions eliminated, 4,700 would come from Travel Related Services, its biggest business.
American Express ran into problems long before the terrorist attacks accelerated the economic downturn. The company misjudged how risky its junk bond portfolio was -- a stumble that resulted in two charges, the latest of which caused second-quarter earnings to drop 76%. That portfolio has since been pared. |
