American Express Confronts Threats to Its Credit Cards
NEW YORK (AP) _ American Express Co. on Wednesday bluntly acknowledged threats to its charge card operations, including dissatisfaction among merchants and growing competition.
In a letter to shareholders, American Express' top executives said they were trying to retain the company's prestige after a backlash by some merchants, internal turmoil and a recessionary slump.
Perceiving a public relations problem with the green, gold and platinum cards, American Express Chairman James D. Robinson III and President Harvey Golub said they "want to ensure the card is welcomed _ not just accepted."
"That is not always the case today, as some of you may have experienced," their letter in the firm's 1991 annual report said. "This is unacceptable to us and is one of the major issues we are working on."
Analysts said the letter's tone reflected the troubles at the charge card and travel industry leader.
"I wouldn't say frank, I'd say contrite," said John Keefe of Lipper Analytical Securities Corp. "They have been arrogrant in the past and for a long time they deserved to be. In the last couple years things have changed. I think it's appropriate they take a look at themselves."
American Express had a profitable but nonetheless disappointing 1991.
The company was hurt by a decline in travel due to the recession, and it also faced large losses and a management overhaul at its Optima credit-card operation and complaints by merchants about high fees.
American Express made $789 million last year, up from $181 million in 1990. But that was below expectations, and was overshadowed by troubles that led to reorganization of its core Travel Related Services unit, where profits fell 59 percent.
"For years we were able to remain above the fray of credit card competition," Robinson and Golub said. …