American Express' Travel Venture Faces Slow Regulatory Process

American Express' joint travel venture may get delayed as it awaits regulatory approval, CFO Jeff Campbell told investors Jan 16.

American Express recently agreed to sell half of its business travel unit in a $900 million deal that creates a joint venture with a group that includes Qatar's sovereign wealth fund.

"We plan to close by the end of the second quarter, but there are regulatory steps that could delay the closing date," Campbell said during American Express' first-quarter earnings call.

The new unit will use the American Express brand and will be led by Bill Glenn, American Express' president of global commercial services. Amex could receive approval very late in the second quarter, which could push back the company's second-quarter earnings release date, Campbell said, without proving details on why it expects delays.

The company also hopes to realize a pre-tax gain of up to $700 million, Campbell said. "We plan to use a substantial portion of any gain to position the company for future growth. This will include new initiatives such as Amex Everyday, Serve and other efforts."

American Express will provide additional details on the venture in its next quarterly earnings report, Campbell said.

American Express reported first quarter net earnings of $1.4 billion, up from $1.3 billion in 2013. Diluted earnings per share rose 16% to $1.33, up from $1.15 a year ago. The average estimate of 27 analysts surveyed by Bloomberg was $1.30 per share; and revenue increased 4% to $8.2 billion.

U.S. Card Services reported first-quarter net income of $876 million, up 9% from 2013. International Card services reported first-quarter net income of $159 million, down 11% from 2013. While there was a slowdown in the U.S. early in the quarter, Campbell attributed that to the harsh weather and said U.S. performance improved later in the quarter.

The company is off to a "good start" in 2014, said Kenneth Chenault, chairman and CEO of American Express in a release the accompanied the earnings, noting that earnings per share exceed Amex's long-term target, and cardmember spending is up 6% globally. American Express also recently launched initiatives targeting small merchants, expanded its loyalty coalition business into Italy and "performed well" in the Federal Reserve's annual stress test.

During the quarter, American Express revamped its Open small business credit card in a way that allows the card's rewards to change as the business evolves.

Other recent initiatives include a taxi promotion featuring Isis, the telecom-led mobile payments venture; technology initiatives designed for the underbanked; and the Everyday card, which grants access to rewards programs and is EMV compliant.

"All of these steps are part of a broader strategy to reach new segments and make our brand more welcoming and inclusive," Campbell said.