American Express, which is in the midst of restructuring and trimming costs to make a digital push, saw its second quarter earnings impacted by a 2% decline in its global corporate travel sales to $4.95 billion.
The earnings announcement didn’t detail the reasons behind the corporate travel drop-off, but the economic slump in Europe is undoubtedly at least one of the factors.
In a conference call with analysts, CFO Dan Henry said the company’s overall travel sales were down 1% in the quarter, and that part of the revenue decline in travel relates to the timing of supplier contracts.
To be sure, American Express is chiefly a credit card company. Although it operates one of the largest corporate travel agencies in the world, the company’s business travel and consumer travel divisions make up a relatively small part of its revenue. The travel businesses took a significant staffing hit during the restructuring process.
American Express reported today that its global commercial services unit, which saw its revenue increase a paltry 1% to $1.2 billion, experienced “higher cardmember spending, partially offset by lower business travel commission and fees.”
Those global corporate travel commissions and fees/sales stood at 7.9% in the second quarter of 2013 versus 8.1% a year earlier, the company reported.
While American Express’ corporate travel unit took a hit, the company’s smaller U.S. consumer travel business saw its sales increase 3% to $1.16 billion, while international consumer travel sales climbed 5% to $354 million.
For American Express overall, its net income in the second quarter of 2013 increased 5% to $1.4 billion on a revenue increase of 4% to $8.2 billion.