(Bloomberg) -- American Express Co. is learning how expensive it is to keep an airline happy.
AmEx has been focused on rolling out new cards with many of its larger co-brand partners, and renewed its deal with its largest one, Delta Air Lines Inc., in April. That helped push spending on cardholder rewards to a record $2.65 billion in the second quarter, topping the $2.64 billion average of analysts’ estimates.
The firm’s discount revenue -- the fees it collects from merchants each time a consumer swipes a card at checkout -- climbed 6% to $6.58 billion, falling short of analyst projections.The firm left its profit forecast for the year unchanged at $7.85 to $8.35 a share, and reaffirmed its projection that revenue will grow 8% to 10%. The company expects profit to be more in line with the middle of that guidance range, it said on a conference call.Customer spending on the firm’s cards swelled 5% to $311.7 billion in the second quarter, below the $317.2 billion average estimate. “This spending is occurring against the backdrop of an economy that is growing at a steady, but modest pace relative to 2018,” Chief Executive Officer Stephen Squeri said in the statement.
Shares slipped 0.8% to $127.36 at 9:32 a.m. in New York. They gained 33% this year through Thursday, outpacing the 18% increase in the S&P 500 Financials Index.
What Bloomberg Intelligence Says
“American Express revenue may rise 7-8% long term, our scenario analysis shows, driven by high-spending U.S. consumers and the ability to use its position as the dominant business-card issuer to boost B2B payments." David Ritter, financials analystClick here to read the research.
Read the full statement here.
(Adds comment on guidance in third bullet point, updates share performance.)
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