American Express retains nearly all customers moved to higher-fee Platinum card

Net card fees rise more than $400 million; average customer spending climbs 5%

American Express’s third-quarter performance came as it transitioned the vast majority of its members to a new, higher-fee Platinum Card. The company said nearly all of the customers moved to the card had decided to keep it. Net card fees, which include annual fees on cards such as Platinum, rose by more than $400 million from a year earlier.

Last year, American Express updated the Platinum Card, adding several new perks for cardmembers while raising the annual fee from $695 to $895. Reviews of the update were generally positive at the time. The biggest question for Wall Street was whether cardmembers would accept the $200 increase, even with American Express’s wealthier customer base.

The average American Express customer spent $6,735 on their cards last quarter, or $2,245 a month, up 5% from a year earlier. Cardmembers were also using their cards more, with the number of transactions per cardmember rising.

Chief Financial Officer Christophe Le Caillec said in an interview that some of the higher spending was likely tied to inflation. He pointed to a 10% increase in travel and entertainment spending compared with a year earlier, with 13% growth in dollars spent on airline tickets. Airline ticket prices rose this year because of higher fuel costs and other inflationary pressure.

American Express’s revenue and profits rose as customers both charged more on their cards and paid more to hold an American Express card. The New York company reported a third-quarter profit of $3.71 billion, up 28% from a year earlier, or $5.42 a share. Excluding a one-time gain from American Express’s sale of its stake in Global Business Travel Group, the company earned a quarterly per-share profit of $4.68, above Wall Street estimates.

The company now forecasts adjusted profit of $17.60 to $17.90 per share for the full year, raising the lower end of its previous $17.30 to $17.90 per-share forecast.

American Express said it planned to reduce its workforce by 5%, or about 3,500 employees. The announcement represented the company’s first major job cuts in roughly a decade. CEO Steve Squeri told investors the layoffs were about making the company more efficient, not a reflection of any downturn in business.

One concern among investors had been American Express’s rising operating costs. The company has had to compete with other credit-card companies, including Capital One and JPMorgan Chase, on perks and rewards that are costly to manage.