Global first-quarter travel and entertainment spending
volume on American Express corporate cards plummeted 21 per cent year over
year, the company said Friday. Airline-related global spending volume declined
even more, coming in 32 per cent lower than a year ago.
As dramatic as the first-quarter spending slowdown was, the
current quarter likely will be even more drastically affected by the
coronavirus pandemic, with Amex projecting second-quarter T&E spending to
sink 95 per cent year over year.
American Express's corporate card division saw strong
momentum over the first two months of the year, but Amex CEO Stephen Squeri said
during the company's quarterly earnings call on Friday "we're now in a
different world" after the pandemic spread to North America and Europe in
March.
The deterioration of the global economy stemming from the
Covid-19 crisis "has dramatically impacted our volumes", Squeri said.
American Express Global Commercial Services reported US$116.1
billion in card-billed business for the first quarter, down 6 per cent year
over year. Average quarterly cardmember spending dipped to US$7,836, a 7 per cent
decline.
Given its bleak second-quarter outlook, Amex has set aside a
total of US$2.6 billion provisions for losses, more than 2.2 times higher than
a year ago. The GCS division alone provisioned US$762 million for potential
missed payments and defaults, up from US$254 million last year.