American Express to Cut Costs by $1 Billion by 2018
American Express is making plans to cut costs by $1 billion over the next two years by restructuring its management team and reducing the size of its workforce. According to a memo from their CEO, Kenneth Chenault, the company is “streamlining our organization” and “leveraging policy changes” in the months ahead.
This is not the first time American Express has gone through a restructuring in an attempt to save money. In 2014, the credit card provider reduced the number of employees by 14%. There are no official numbers published for the number of employees cut in 2015, but this announcement already projects more layoffs in the years ahead.
American Express has gone through a tough time in the last year, losing out longstanding partnerships with companies like Costco and Fidelity. Fidelity maintained a 12-year relationship with American Express and Costco had a 16-year partnership. Both companies have chosen to switch to Visa for their co-branded credit cards.
While the credit card market in the United States grew by 7.8% last year, American Express only saw a 4.8% increase in purchase volume. This is a decrease from the 8.1% increase the company experienced 2014. AmEx added 2.7 million new cards in circulation in 2015, compared to 22.3 million new cards from Visa.