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Amex Reports Corporate Travel Sales Stabilizing After Deep 2009 Drop
Reflecting the depths reached by the corporate travel industry in 2009, American Express’ global corporate travel sales shrunk 30 percent year over year to $14.6 billion, the company announced late yesterday in its fourth-quarter earnings call. That slide, however, seems to have stabilized as its global corporate travel sales were $4.1 billion in the quarter, a more moderate 5 percent decrease compared with last year.
While its corporate travel segment awaits a return to growth, overall card member spending increases and positive credit and economic indicators spiked the company’s overall performance numbers.
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Amex reported a net income of $715 million during the quarter, a 198 percent increase over the fourth quarter of 2008—the first full reporting period following the financial industry fallout led by the collapse of Lehman Brothers and federal government bailout of AIG.
Global Commercial Services, the division where the commercial card and American Express Business Travel units sit, had a fourth-quarter net income of $117 million. In the fourth quarter of 2008, the division had a $7 million net loss.
Global commercial card billed business increased 8 percent to $31 billion during the quarter. For the full year, it was down 14 percent to $11.2 billion. According to Amex executive vice president and CFO Daniel Henry, global commercial services “was particularly strong in December” when its billed business was up 13 percent on a foreign exchange adjusted basis. Henry said December 2009 was the highest billed business month in the company’s history.
“Corporate card commercial services has historically functioned more as a V, it usually holds on longer in a slowdown, drops more sharply and then comes up sharper than the rest of the business,” said Henry during the analyst call.
During the quarter, Amex incurred a $421 million pre-tax charge for reengineering costs, primarily related to severance and staff reductions.
