American Express to cut 4,000 jobs

American Express says it will need to write off 10% of it's outstanding credit card balances? This is depressionary stuff folks. Remember American Express cardholders are the higher income people.-Lou

American Express to cut 4,000 jobs

NEW YORK (Reuters) - American Express Co, the credit card and travel services company, on Monday said it plans to eliminate 4,000 jobs, or 6 percent of its workforce, as the weakened economy causes higher customer defaults.

The cuts are part of the New York-based company's plan to save $800 million over the rest of 2009. They are in addition to 7,000 job cuts and an expected $1.8 billion of savings from a restructuring it announced in October.

Like many rivals, American Express has been hurt by rising delinquencies among cardholders, with the U.S. unemployment rate having risen to its highest level since 1983.

On Friday, American Express said its net charge-off rate, or debt it does not expect to be repaid, rose to 10.1 percent in April from 8.8 percent in March.

"We continue to be very cautious about the economic outlook," Chief Executive Kenneth Chenault said in a statement. He said the cost savings "will be reinvested in the business to make sure we can take competitive advantage of opportunities as the economy begins to rebound."

American Express expects to take an after-tax charge of $117 million to $163 million in the second quarter, largely for severance and other costs tied to the job cuts. It said the cuts will occur throughout the company, saving $175 million.

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