As part of a reengineering plan, American Express plans to cut some 7,000 jobs, or about 10% of its work force, the company said Thursday morning.
The company will cut staffing levels, reduce compensation, lower operating costs, and scale back its investment spending. "We've been engaged for the past few months in an intensive, companywide review of priorities and staffing levels," said Kenneth Chenault, chairman and chief executive at American Express. "The reengineering 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."
The company said that it would also suspend management-level salary increases for 2009 and implement a hiring freeze for open positions. These moves are expected to result in cost savings of about $700 million in 2009. The job cuts do not affect employees who deal directly with customers, American Express added.
In all, the company hopes to save $1.8 billion in 2009. American Express said that it would record a pretax charge of about $370 million to $440 million during the fourth quarter. The entire press release can be read here (link).
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