American Express reported a strong third quarter, with profits rising 28% year-over-year to $3.71 billion, or $5.42 per share. The company attributed this growth to the successful transition of most of its members to a new, higher-fee Platinum Card, which saw a $200 increase in its annual fee. Despite concerns about customer retention, nearly all cardholders who were moved to the higher fee chose to keep their cards, contributing to a $400 million increase in net card fees.
The company also saw a 5% rise in average customer spending, with the typical American Express cardholder charging $6,735 last quarter. Chief Financial Officer Christophe Le Caillec noted that some of this increase was due to inflation, particularly in travel and entertainment spending, which rose 10%. Airline ticket spending alone increased by 13%, reflecting higher fuel costs and other inflationary pressures.
In a move to streamline operations, American Express announced its first major job cuts in roughly a decade, planning to reduce its workforce by 5%, or about 3,500 employees. CEO Steve Squeri emphasized that the layoffs were aimed at improving efficiency rather than indicating any downturn in business. The company also raised its full-year adjusted profit forecast to between $17.60 and $17.90 per share, up from its previous range of $17.30 to $17.90.