Major cutbacks for Amex
(3 November 2008 – USA) American Express has announced that it will undergo a reengineering plan that will cut US$1.8 billion in costs and 7,000 jobs.
The reengineering initiatives are expected to produce cost benefits of approximately US$1.8 billion in 2009.
The expense of doing so will be a restructuring charge of approximately US$370 to US$440 million pre-tax (approximately $240 to $290 million after-tax) in the fourth quarter.
The plan includes reducing staffing levels and compensation expenses, cutting operating costs and scaling back investment spending.
The charge is partly associated with severance and other costs related to the elimination of approximately 7,000 jobs or about 10 percent of American Express’ worldwide workforce.
The reductions will occur across business units, markets and staff groups primarily focusing on management and other positions that do not interact directly with customers.
Amex is also suspending management level salary increases for 2009 and instituting a hiring freeze for open positions. The total benefit from these staffing and compensation-related decisions is expected to be approximately US$700 million in 2009.
A further US$1 billion of the savings will come from scaling back investment spending on technology, marketing and business development, and streamlining costs associated with some rewards programs.
Kenneth I. Chenault, chairman and chief executive officer of American Express said that the decision will also put the provider in a position to ramp up investment spending as economic conditions improve in order to take advantage of opportunities available over the medium to long term.
The expense of doing so will be a restructuring charge of approximately US$370 to US$440 million pre-tax (approximately $240 to $290 million after-tax) in the fourth quarter.
The plan includes reducing staffing levels and compensation expenses, cutting operating costs and scaling back investment spending.
The charge is partly associated with severance and other costs related to the elimination of approximately 7,000 jobs or about 10 percent of American Express’ worldwide workforce.
The reductions will occur across business units, markets and staff groups primarily focusing on management and other positions that do not interact directly with customers.
Amex is also suspending management level salary increases for 2009 and instituting a hiring freeze for open positions. The total benefit from these staffing and compensation-related decisions is expected to be approximately US$700 million in 2009.
A further US$1 billion of the savings will come from scaling back investment spending on technology, marketing and business development, and streamlining costs associated with some rewards programs.
Kenneth I. Chenault, chairman and chief executive officer of American Express said that the decision will also put the provider in a position to ramp up investment spending as economic conditions improve in order to take advantage of opportunities available over the medium to long term.
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