American Express Lays Off 5,400

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American Express to cut 5,400 jobs

By Mr Z.
Banoosh
January 11, 2013

American Express Co. will eliminate 5,400 jobs this year, mostly in travel services, amid a huge decrease in fourth-quarter profit.

The lender posted a 47 percent drop in fourth-quarter profit and recorded after-tax charges totaling $594 million, including costs tied to severance and changes in how the firm estimates future redemptions of credit-card rewards, New York- based AmEx said Thursday in a statement.

“Travel has gone through a great deal of change,” Chief Executive Officer Kenneth I. Chenault said in a conference call with analysts. T"he economics of corporate travel has changed more dramatically over the years than any part of the business.”

American Express, the biggest U.S. 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 lender reported preliminary results ahead of its formal earnings announcement scheduled for Jan. 17. In the third quarter, travel commissions and fees declined 3.1 percent to $465 million from a year earlier, according to an Oct. 31 regulatory filing.

Fourth-quarter net income declined to $637 million from $1.19 billion a year earlier, according to the company. Adjusted profit, which excludes one-time items, was $1.09 a share, 3 cents more than the average estimate of 27 analysts surveyed by Bloomberg. The after-tax charges include $287 million in severance costs and $212 million tied to changes in how the firm calculates redemptions. Bloomberg

FACTS & FIGURES

There are over 20 million people who are either unemployed or have stopped looking for work in the United States.

While the economy, in fact, is growing again the recession officially ended in June 2009 - just a third of Americans see it that way. They’re outnumbered by the 44% who say it’s in a recession or a depression. USA Today

The advance figure for seasonally adjusted initial claims for jobless benefits was 372,000 in the week ending Dec. 29, up 10,000 from the previous weeks revised figure. Meanwhile, the four-week moving average, which helps smooth out week-to-week volatility, also edged up to 360,000. Xinhua

Due to the “dysfunction and polarization in Washington, the U.S. economy faces a prolonged weak outlook,” according to Mohamed El-Erian, Chair of the president Obama’s Global Development Council. “The new normal is sluggish growth and persistently high unemployment and concerns about debt and deficits,” El-Erian said. CNBC.

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