American Express is planning to cut around 5% of its global workforce as CEO Stephen Squeri looks to restructure the company. The proposed move comes even as the financial services giant reports higher quarterly profits. The announcement raises questions about how the credit card company plans to streamline its operations while maintaining business growth.
American Express plans to cut around 3,500 jobs
According to Reuters, Squeri announced the planned workforce reduction during a conference call with analysts on October 23, following the company’s quarterly earnings results.
American Express also recorded a restructuring charge in the third quarter to account for the planned job cuts.
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The company has not disclosed a detailed timeline for the reductions in the announcement reported by Reuters. The move marks a significant workforce restructuring for the credit card company, which has continued to see growth in customer spending.
Squeri said the changes were aimed at improving efficiency rather than responding to a downturn in business, according to the Associated Press.
AmEx reports higher quarterly profits
The workforce reduction comes as American Express reported a 28% rise in third-quarter profit compared with the same period last year.
The company recorded a profit of $3.71 billion, or $5.42 per share, according to the Associated Press. Excluding a one-time gain from the sale of its stake in Global Business Travel Group, its earnings stood at $4.68 per share, above Wall Street expectations.
Customer spending also remained strong. The average American Express customer spent $6,735 on their cards during the quarter, up 5% from a year earlier.
Spending on travel and entertainment rose 10%, while spending on airline tickets increased 13%, the report said.
Higher fees and rising costs shape strategy
American Express has also been making changes to its card benefits and fees. The company recently increased the annual fee for its Platinum Card from $695 to $895, while adding new benefits. According to CNBC, the company said nearly all customers who upgraded to the card with the higher annual fee had chosen to keep it.
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AmEx faces competition from rivals such as JPMorgan Chase and Capital One, which also attract customers with rewards programmes, travel perks and other cardholder benefits.
