American Express has reported net income of $1.3 billion dropped 53% from $2.81 billion one year ago. The company cited the slow economy and cutbacks in travel following Sept. 11 as reasons for the fall off.
For the fourth quarter, net income dropped 56% to $297 million from $677 million in 2000. The year and quarter ended Dec. 31, 2001.
The results include a pre tax restructuring charge of $279 million to cover costs of cutting 6,800 jobs and the consolidation of facilities to reflect the reduced staffing levels. The reductions are taking place primarily in the travel sector, deeply impacted by the events of Sept. 11. The company reported a one-time loss of $98 million resulting from the terrorist attacks, the company said.
Over the course of the year, the company eliminated 16% of its work force or 14,500 positions. The firm employed 88,500 at the start of 2001.
Travel Related Services reported net income for 2001 of $1.46 billion, down 24% from $1.93 billion a year ago. The total amount spent on American Express cards during 2001 was up slightly from year-ago levels as higher consumer card spending in the retail and everyday categories was largely offset by lower corporate card spending in the travel and entertainment sector, particularly after Sept. 11, the company said.
“While we are seeing signs of improvement in volumes, we are continuing to take a cautious view and expect the economy to remain weak throughout 2002,” American Express chairman Kenneth I. Chenault, said in a statement. “With that in mind we have lowered our risk profile and made some important changes in our business that will position us for good earnings growth in a lower revenue growth environment.”
American Express’s headquarters in the World Financial Center were evacuated Sept. 11. Executives have been working from temporary offices in and around New York City. The company expects to begin returning to the building in April, according to news reports.
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