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Amex profits down due to business travel downturn
Profits at American Express during the fourth quarter of the year more than halved, the company has revealed.
During the three months to December 31, the company reported net income of $297 million, down 56% from $677 million a year ago. The decrease includes a restructuring charge of $279 million due to the company’s decision to axe 6,800 jobs.
Kenneth I. Chenault, chairman and chief executive officer, said: “Our 2001 results reflected the overall weakness in the economy throughout the year and the sharp slowdown in consumer spending, business travel and investment activity after the terrorist attacks of September 11.”
He added: “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. 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. As a result, we are in a stronger position to deal with a period of economic uncertainty and to take full advantage of even a modest improvement in business conditions.”
Travel Related Services (TRS) reported net income for 2001 of $1.46 billion, down 24% from $1.93 billion a year ago. For the three month period TRS reported fourth quarter net income of $170 million, a 64% decrease from the $470 million reported a year ago.
*American Express and China International Travel Services (CITS) have announced the creation of a corporate travel joint venture in the People’s Republic of China. The joint venture company will be known as CITS American Express Travel Services Limited. It will be based in Beijing and will begin operations in April 2002.
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