American Express to eliminate 5,500 to 6,500 more jobs; cites travel drop-off since Sept. 11

Wednesday, December 12th 2001, 12:00 am
By: News On 6

NEW YORK (AP) _ Financial giant American Express, hit hard by the drop in travel following the Sept. 11 attacks, will eliminate 5,500 to 6,500 jobs.

The company also warned Wednesday that its earnings in the October-December period were likely to be in a range of 34 cents to 36 cents per share, below the 40 cents expected by analysts surveyed by Thomson Financial-First Call. A year earlier, earnings were at 50 cents.

It said the job cuts would cost $240 million to $280 million in severance fees and other restructuring charges in the fourth quarter.

On Tuesday, reports that American Express would freeze managers' salaries helped boost the stock 26 cents to $34.26 on the New York Stock Exchange.

Shares of American Express were off $1.57, or 4 percent, to $32.69 in late morning trading on the New York Stock Exchange.

The latest layoffs come on top of 7,700 cuts previously announced this year. Altogether, the 13,200 to 14,200 jobs eliminated amount to a 15 percent reduction in the American Express staff, which totaled 88,500 at the start of 2001.

Cuts are taking place primarily in the travel businesses and reflect the sharp slowdown in that sector since Sept. 11, the company said in a statement. It added that about half of those to be laid off in the latest round already have been notified, with the balance to get pink slips in 2002.

``The environment since Sept. 11 has underscored the need for us to create greater flexibility in our cost structure,'' said Kenneth I. Chenault, chairman and chief executive.

American Express said the latest cutbacks were unrelated to the damage to its headquarters building adjacent to the World Trade Center.

Spokeswoman Molly Faust said the restructuring would not affect the company's decision to return to the World Financial Center. ``We will be moving employees back in a phased approach beginning in 2002,'' she said.

American Express said it expected to save up to $260 million in 2002 as a result of the latest cutbacks.