American Express (NYSE:AXP) announced late Thursday that it will take a $400 million charge in the fourth quarter connected to the planned layoffs of 5,400 employees this year. The announcement came as part of a preliminary report on its fourth quarter; AXP expects profits to drop 47% in the period.
The brunt of the cuts will come from the travel business. According to AmEx, the digital revolution — and the rise of operators like Priceline (NASDAQ:PCLN) and Expedia (NASDAQ:EXPE) — has changed how travelers book trips and make plans.
AMEX’s job cuts will come to about 8.5% of the work force. It’s the fourth major restructuring over the past decade, amounting to about 18,000 jobs. But the latest move should help the company achieve its goal of keeping operating expense growth to less than 3%.
American Express reports earnings Jan. 17. AXP shares were up more than 1% early Friday.
Tom Taulli runs the InvestorPlace blog IPO Playbook, a site dedicated to the hottest news and rumors about initial public offerings. He is also the author of “How to Create the Next Facebook” and “High-Profit IPO Strategies: Finding Breakout IPOs for Investors and Traders.” Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.