On the Right Track? American Express to Cut 5,400 Jobs, Morgan Stanley Will Slash 1,600 More
(TheBlaze/AP) — American Express Co. said Thursday that it will slash about 5,400 jobs, mainly in its travel business, as it seeks to cut costs and transform its operations as more of its customers shift to online portals for booking travel plans and other needs.
The job cuts will be partly offset by jobs that the company expects to add this year.
American Express said the jobs eliminated will span employee seniority levels and divisions worldwide, but will primarily involve positions that do not directly generate revenue for the company.
All told, the company anticipates that staffing levels will end up between 4 and 6 percent lower this year than in 2012. The company currently has 63,500 employees.
“Against the backdrop of an uneven economic recovery, these restructuring initiatives are designed to make American Express more nimble, more efficient and more effective in using our resources to drive growth,” said CEO Kenneth Chenault.
Shares slipped 29 cents to $60.50 in after-hours trading. They ended regular trading up 53 cents at $60.79.
American Express said it will book an after-tax charge of $287 million due to the restructuring. It’s also recording $212 million in expenses related to reward points for its cardholders and roughly $95 million in customer reimbursements and other costs.
Additionally, the investment bank Morgan Stanley plans to cut about 1,600 jobs, nearly 3 percent of its workforce, a person familiar with the bank said Wednesday. The cuts will focus on senior ranks at the bank.
About half of the cuts will be in the U.S. Morgan Stanley’s investment banking unit has been asked to cut about 6 percent of its staff. Back-office functions, including human resources and communications, have also been asked to cut staff. The person familiar with the matter wasn’t authorized to speak on the record and insisted on remaining anonymous.
Job cuts have become common in the banking industry, which has been shrinking in the years since the financial crisis imploded.
In December, Citigroup said it would cut 11,000 jobs, about 4 percent of its total workforce, and Bank of America has also been trimming jobs.
Morgan Stanley has already been cutting back on jobs and other expenses, as it deals with a sluggish economy and new regulations that are crimping some of its former sources of revenue. As of Sept. 30, the bank had about 57,700 jobs, down about 7 percent from the roughly 62,200 it had the year before.
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