By Juan Lagorio
NEW YORK (Reuters) - American Express Co
"It's certainly a step in the right direction," said James Ellman, portfolio manager at hedge fund Seacliff Capital. "The company realizes that it's going to be impacted by a consumer-led recession." Its shares gained 4.6 percent in mid-day trade.
American Express will take a fourth-quarter pretax restructuring charge of $370 million to $440 million, or $240 million to $290 million after taxes, primarily linked to severance and other charges from cutting jobs that will amount to 10 percent of its work force.
The company plans to save $700 million cutting jobs, suspending management-level salary increases for 2009 and freezing hiring for open positions.
American Express also expects to save $125 million in expenses for consulting, travel and entertainment, and another $1 billion scaling back investment spending on technology, marketing and business development.
The cutbacks "will help us to manage through one of the most challenging economic environments we've seen in many decades," said Kenneth Chenault, chairman and chief executive of American Express, in a statement.
On October 20, the credit card network and lender posted lower earnings for the third quarter as it set aside more money to cover growing losses in its credit card business.
The stock jumped $1.15 at $26.36 on the New York Stock Exchange.
The shares have fallen around 50 percent this year, while the Standard & Poor's 500 index <.SPX> retreated 35 percent.
(Editing by Lisa Von Ahn/Jeffrey Benkoe
