American Express is one of the largest credit card and travel services company in the United States. The company expressed that they are planning to eliminate approximately 4,000 jobs or six percent of its total workforce as the continued effects of the global economic crisis on economies worldwide. Unemployment is one of the undesirable effects of the major economic dilemma.
The decrease in the workforce aims for the company to save up to $800 million for the whole year. The company plans to maximize sources of income like an after-tax charge costing $117 million to $163 million. The lay-offs will occur in a variety of businesses that will save the company up to $175 million. The company also feel the need to cut down their spending on marketing and business development which will save them up to $500 million. They also feel the need to cut expenses on consulting and other services, as well as travel and overhead, which will save the company up to $125 million (Reuters).
American Express is one of the few banking companies that is subjected to the government’s “stress test”, that aims to measure the companies ability to surpass extreme recession. The conclusion of the tests revealed that the American Express needs more capital in order survive recession. However, the company is hurt by raising the credit card defaults, as many cardholders are unemployed as the result of the global economic crisis (Reuters).
The chief-executive of the company said that they grab every opportunity in the economy as it slowly regain its momentum. He said that the cost savings will be reinvested on businesses to maximize competitive advantages and assure stability of the company (Reuters). The slow recovery of the economy allow businesses to bounce back on the economic field and once again operate and provide the goods and services needed by the people.
Reuters. (2009, May 18). American Express to Cut 4,000 Jobs, Saving $175 Million. New York Times. Retrieved May 19, 2009, from http://www.nytimes.com/2009/05/19/business/19amex.html?ref=business.