American Express plans to cut 5,400 jobs resulting in a $287 million impact related to the layoffs. Part of the cost of the company’s restructuring plans is due to the severance payments related to the elimination of the thousands of jobs. According to a press release from the company, job reductions will take place across seniority levels, businesses and staff groups. The largest reductions will take place in the travel businesses, and overall cutbacks will be spread proportionally between the U.S. and international markets. American Express said the cuts will primarily involve positions that don’t directly generate revenue.
“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,” Kenneth I. Chenault, chairman and CEO, said. “For the next two years, our aim is to hold annual operating expense increases to less than 3 percent. The overall restructuring program will put us in a better position as we seek to deliver strong results for shareholders and to maintain marketing and promotion investments at about 9 percent of revenues.”
Other parts of the restructuring program include:
- Reengineering the Global Business Travel business model to reduce cost structure and invest in capabilities that better align it with customer volumes shift to online channels and automated servicing tools
- Continuing the reconfiguration of card member servicing and collections on a global scale
- Ensuring correct organizational structure across client management and sales functions
- Consolidating similar functions and eliminating duplicate efforts wherever possible to drive efficiency
American Express expects overall staffing levels by the end of 2013 to be 4 to 6 percent less than the current total of 63,500.