American Express Co. plans to cut $500 million in expenses and eliminate as many as 4,800 jobs in its credit-card division, the Wall Street Journal reported Tuesday.
The expense cuts will come from the layoffs and from closing certain operations, possibly processing centers in Phoenix, Miami and Jacksonville, Fla., the newspaper said, quoting unidentified sources familiar with the plan.A spokesman said the company has been looking at ways to reduce costs and improve service.
He said company officials haven't decided if layoffs will occur at the American Express Traveler Cheque Operations Center, 4315 S. 2700 West, and other American Express operations in Utah.
American Express wants to slim down the business over the next two years to boost profits and be more competitive, the report said. Harvey Golub, the firm's chairman and chief executive, outlined the plan in a meeting with directors last week, the Journal quoted the sources as saying.
American Express has been analyzing operations and expenses with an eye toward lowering costs, but no decisions have yet been made on staff or expense reductions, said Mike O'Neill, a spokesman for the New York-based company.
American Express employs 71,000 people worldwide, with about 60,000 working in its Travel Related Services division, which handles the credit card business. Between 3,000 and 4,000 employees work in New York, said O'Neill.
The credit card division had $2.14 billion in expenses during the three-month period ending June 30, a 6 percent increase over the same period a year ago.
Of the total, $625 million was for staff expenses, $360 million related to losses from delinquent accounts and $273 million paid for marketing and promotions. The division earned $263 million during the period, up 13 percent from a year ago.
American Express, the third largest issuer of credit cards behind Visa and MasterCard, has been trying to recast its card business and appeal to a wider audience by developing a new family of cards that users can pay off a little at a time.