NEW YORK — In a stark acknowledgment of the tough times ahead in the credit card industry, American Express Co. said Thursday that it plans to cut 7,000 jobs, or 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 — which has reported four straight quarters of profit declines as an increasing number of consumers struggle to pay off debt — said it is also suspending management-level salary increases next year and instituting a hiring freeze.
The job cuts will be across various business units but will primarily focus on management positions, the company said.
The company has about 1,800 employees in Utah, mostly at a customer service center in Salt Lake City. Joanna Lambert, a spokeswoman for American Express in New York, said "some" employees in Utah would be affected by the job cuts, "but overall the number is very small."
She declined to be more specific, other than to say Utah would see less than the 10 percent overall company impact announced Thursday because the work in Utah focuses on customer care. Other large customer-care centers in North Carolina, Florida and Arizona will see similar job losses, she said.
Affected employees in Utah have been notified and could remain with the company until year-end. They will be offered a full severance package, outplacement assistance and other support, Lambert said.
Additionally, American Express 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 general overhead.
As a result, American Express plans to take a restructuring charge of between $240 million and $290 million in the fourth quarter.
The company has been gearing up for a big restructuring for some time, first announcing in July that it planned to reduce overall costs and staffing levels, and take a related charge during the second half of the year.
"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."
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