American Express to cut 7000 jobs; scale back technology spend

American Express to cut 7000 jobs; scale back technology spend

American Express is to axe 7000 jobs and scale back technology spending and other expenses as it looks to generate $1.8 billion in savings in 2009.

The massive re-engineering plan will incur a restructuring charge of approximately $370 to $440 million pre-tax in the fourth quarter as the card scheme moves to eliminate 10% of its global workforce. The cutbacks will affect middle management and non-customer facing roles. Amex says it is also suspending salary increases for the year and imposing a hiring freeze for open positions.

The company say it will also cut back on expenses for consulting, travel and entertainment and other overheads and move to scale back investment spending on technology, marketing and business development, and streamlining costs associated with some rewards programs.

The programme follows a disappointing set of third quarter results as growth in consumer spending slowed, lending volumes moderated and the company set aside significant additional sums to cover loan loss reserves,

Kenneth Chenault, chairman and chief executive officer says: "The re-engineering program we announced today will help us to manage through one of the most challenging economic environments we've seen in many decades. It will also put us in position to ramp-up investment spending as economic conditions improve so that we can take advantage of the substantial opportunities that will be available to us over the medium to long term."

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