Business travel sector makes loss
The American Express Company reported a 72% drop in income for the fourth quarter of 2008 from $858m in 2007 to $238m.
The global company headquartered in New York said its net income for the three months to December 31 fell by 79% from $831m in 2007 to $172m.
For the full year to December 31, Amex said its income from operation slumped from $4,126m in 2007 to $2,803m in 2008, a drop of 32%.
Its net income for the year fell by 34% from $4,012m in 2007 to $2,631m in 2008.
The company said its global commercial services division, which includes the business travel and corporate card businesses, reported a fourth-quarter net loss of $18m compared to net income of $110m a year ago.
It said total revenues net of interest expense decreased by 7% to $1bn, because of a lower spending by corporate card members as well as lower travel commissions and fees.
American Express Business Travel is the largest travel management company in the world.
Kenneth Chenault, Amex's chairman and ceo, said the economic environment was the "harshest we have seen in decades."
He added: "Nevertheless, we met our near term goals - staying liquid, staying profitable, and investing selectively to strengthen our competitive position over the longer term."
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Amex ceo Kenneth Chenault |
"We remained profitable in the quarter and generated $2.8bn in earnings for the full year 2008.
"We also continued to invest in the business, announcing a multiyear partnership with Delta Airlines this quarter, expanding our global network business and successfully integrating the corporate card business we purchased from General Electric."
But Mr Chenault said that card member spending fell by 10% year on year.
Amex said its fourth quarter figures included $421m of "re-engineering costs" mainly severance pay for redundant staff and a $106m increase in its Membership Rewards reserve after its deal with Delta Air Lines.
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