Attacks batter Amex profits

The American people don't leave home anymore

The financial services company American Express suffered a 60% fall in profits during the third quarter of 2001.

Amex complains of empty shopping malls

The company behind the "Don't leave home without it" slogan has found that, following the 11 September terrorist attacks on the US, people have stopped leaving home at all.

The company's earnings slipped from £737m during the third quarter of 2000 to just $298m during the same period this year.

Amex blamed the attacks for causing a slump in both shopping and travelling by the American people as holidays were cancelled and both shops and restaurants avoided.

A slump in business travel had led Amex to warn as early as last month that profits would slip.

"While we were on target to meet prior consensus for third quarter earnings, the terrorist attacks obviously had a significant impact on the overall economy and we saw clear evidence of that as consumer spending, business travel and investment activity slowed after 11 September," chairman and chief executive Kenneth Chenault said.

Existing problems

But analysts said blaming the attacks alone was a simplistic explanation.

"If you think about the effect on the travel industry and related businesses after the 11 September attacks,, there were only 19 days left in the quarter," said CS First Boston analyst Moshe Orenbuch.

"You'll have 92 days in the fourth quarter, and in that entire period you will have less travel and lower business fares."

Amex was in trouble ahead of the attacks though, hit by economic weakness, falling stock markets and losses from its own investments in the bond markets.

The company is restructuring and is cutting more than 6,000 jobs during the second half of this year.

"In light of the weak economy and financial markets, we are moving aggressively to lower our operating expenses,," said Mr Chenault.

American Express stock rose 68 cents to $30.