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Thursday, October 30, 2008

American Express to Ax 7,000 Jobs in Cost-Cutting Plan

Lauren Covello

FOXBusiness

American Express (AXP) said Thursday it plans to slash 10% of its worldwide work force as part of a reengineering program intended to reduce costs by $1.8 billion in 2009.

The company said it will lay off approximately 7,000 employees, in addition to halting management-level salary increases for the coming year and instituting a hiring freeze on open positions. The credit-card giant said the efforts will result in a $700 million savings in 2009.

American Express also said it will cut back on its investment spending on technology, marketing and business development, and will also reduce some of the costs associated with its rewards programs, hoping to save $1 billion. The company said it will reduce costs by an additional $125 million by streamlining its spending on consulting and professional services.

As a result, the company expects to incur a restructuring charge in the fourth quarter of $240 million to $290 million.

Chairman and Chief Executive Kenneth I. Chenault said the program will help American Express “manage through one of the most challenging economic environments we've seen in many decades,” and hopes that the moves will better position the company as economic conditions improve.

The company said it will continue to make major investments in selective growth opportunities and will go forward with price initiatives to generate additional revenue next year.