American Express 2015 Annual Report Download - page 4
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3AMERICAN EXPRESS COMPANY | ANNUAL REPORT 2015
Beyond these factors, we also continue to await the outcome of our appeal in the
Department of Justice lawsuit. The DOJ wants to ban provisions in our merchant
contracts that protect American Express from discrimination against our card
products. There was an encouraging development in December when an appeals
court ordered a temporary stay of an earlier lower court judgment against
American Express. We continue to believe that the lower court’s ruling would
provide no benefit to consumers and, instead, would harm competition.
This is a long list of challenges, longer than we’ve seen in many years. We recognize
them. We’ve been addressing them with a strong sense of urgency. And we’re
making progress on many fronts.
Over the past 12 to 18 months:
• We took decisive action in the cobrand space, accelerating contract talks with
partners. We focused on those relationships where we can earn attractive returns
and provide strong customer value, which led us to deals with Delta, Starwood,
Cathay Pacific, British Air and Charles Schwab. We did not, however, renew our
agreement with Costco because we were unable to reach terms that would have
made economic sense for our company and our shareholders. This certainly has
a significant short-term impact, but we continue to believe it was in our best long-
term interests.
• We contained operating expenses and reorganized many areas of our business.
Now we’re set to take cost reduction to the next level through the billion-dollar
improvement program we announced in January 2016.
• We ramped up spending on Card Member acquisition and brought in 7.7 million
new cards in the U.S. last year. Our investments here are paying o, and we’re now
working to turn those new accounts into additional volumes.
• We stepped up investments in our international business with strong results.
Adjusted billed business rose by 12 percent last year.2
• We expanded our merchant network, adding more than 1.2 million new merchants
globally in 2015. With our OptBlue program, we’re continuing our eorts to move
toward parity coverage with the other card networks in the U.S.
Our Response