American Express Overview: American Express is a leading credit card and travel services company. Headquartered in New York, and with major satellite operations in Fort Lauderdale and Phoenix, American Express was founded in 1850 as a shipping and expediting company, taking advantage of serious deficiencies in the U.S. Post Office, much as UPS and FedEx do today. The company's main lines of business are:
- Credit card and payment services
- Travel services
- American Express Centurion Bank (industrial lending)
- American Express Bank FSB (a federal savings bank)
Size: American Express reports these figures as of September 30, 2008:
- Employees = 66,500
- Operates in over 130 countries
- Basic cards-in-force (account holders) = 75.1 million
- Total cards-in-force = 92.1 million
Positives: Decades of aggressive advertising have made American Express one of the leading international brand names across all industries. American Express also regularly appears on surveys of the best companies to work for, and approximately 25% of its workforce has been with the company for 15 years or more, according to Fortune Magazine.
Negatives: Despite posting profits through the first 9 months of 2008, American Express has announced a "reengineering" effort aimed at reducing costs by $1.8 billion in 2009. The company will lay off roughly 10% of its workforce, or about 7,000 employees, in the fourth quarter of 2008 and will institute a hiring freeze. Management salaries also will be frozen for 2009.
On November 10, 2008, American Express received approval from the Federal Reserve to reorganize as a bank holding company, making it eligible for a federal capital infusion of up to $25 billion. While this might be counted a positive, strengthening its capital position, it also indicates that American Express foresees future declines in its operating results.
American Express has had ongoing problems defending its fee structure, which is more expensive for both cardholders and merchants than MasterCard or Visa. In the late 1980's, American Express came close to going out of business when this issue reached a crisis stage.
