- The Washington Times - Thursday, December 13, 2001

NEW YORK (AP) Financial giant American Express, hit hard by the drop in travel after the September 11 attacks, said yesterday it would eliminate 5,500 to 6,500 jobs at a cost of $240 million to $280 million in severance fees and other restructuring charges in the fourth quarter.
The company, whose headquarters is in New York, also warned that its earnings in the October-December period were likely to be in a range of 34 cents to 36 cents, below the 40 cents expected by analysts surveyed by Thomson Financial-First Call and considerably less than the 50 cents recorded a year earlier.
The latest layoffs come on top of 7,700 cuts previously announced this year. Altogether, the 13,200 to 14,200 jobs eliminated amount to a 15 percent reduction in the American Express staff, which totaled 88,500 at the start of 2001.
The company had no breakdown on how many jobs overall were being cut domestically but said the cuts touched upon all divisions.
The latest cuts are taking place primarily in the travel businesses and reflect the sharp slowdown in that sector since September 11, the company said. It added that about half of those to be laid off in the latest round already have been notified, with the balance to get pink slips in 2002.
"The environment since September 11 has underscored the need for us to create greater flexibility in our cost structure so we can be more adaptable to a period of economic uncertainty," said Kenneth I. Chenault, chairman and chief executive.
American Express said it expected to save up to $260 million in 2002 as a result of the latest cutbacks.
The company said its reduced fourth-quarter earnings "reflect the impact of the September 11 terrorist attacks on the financial markets, travel, corporate spending and the overall economy."
American Express shares fell $1.38 to $32.88 yesterday on the New York Stock Exchange.
The company said the latest cutbacks were unrelated to the damage to its headquarters building adjacent to the World Trade Center.
Spokeswoman Molly Faust said that the restructuring would not affect the company's decision to return to the World Financial Center.
"We will be moving employees back in a phased approach beginning in 2002, as we announced earlier," she said.
Miss Faust also confirmed reports that American Express managers' pay has been frozen.
"Earlier in November, we communicated to employees that managers and above would not receive a merit increase for 2002," Miss Faust said. She could not provide the number of employees affected.
American Express said that travel billings were down 14 percent in September from year-earlier totals. They were down 10 percent in October and 6 percent in November. Sales also were down at American Express Financial Advisors, the company said.
"Credit trends are likely to show a modest deterioration, reflecting the increase in unemployment and the overall industry environment," American Express said.

Sign up for Daily Newsletters

Copyright © 2019 The Washington Times, LLC. Click here for reprint permission.

The Washington Times Comment Policy

The Washington Times welcomes your comments on Spot.im, our third-party provider. Please read our Comment Policy before commenting.


Click to Read More and View Comments

Click to Hide