In a bleak acknowledgment of the tough times ahead in the credit card industry, American Express Co. said Thursday that it plans to cut 7,000 jobs, about 10 percent of its worldwide work force, in an effort to slash costs by $1.8 billion in 2009.
The New York-based credit card issuer said it is also suspending management level salary increases next year and instituting freeze in hiring.
The job cuts will be across various business units, but will focus primarily on management positions, the company said.
American Express, who has been gearing up for a restructuring for some time now, also said it plans to scale back investments in technology and marketing and business development, and streamline costs associated with some rewards programs. The company also expects to cut expenses for consulting and other professional services, travel and entertainment and universal overhead.
As a result, American Express plans to take a restructuring charge of between $240 million and $290 million in the fourth quarter.
"We've been engaged for the past few months in an intensive, companywide review of priorities and staffing levels," said Kenneth I. Chenault, chairman and chief executive, in a statement. "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."
It just goes to show that even a company like American Express, which prides itself on catering to a more well-to-do clientele, is not immune to our economic turmoil.