Lufthansa To Lay Off 3,500 In Restructuring

Deutsche Lufthansa AG (FRA: LHA) announced Thursday it will lay off 3,500 administrative employees over the next couple of years as part of its plan to save $2 billion by 2014.

The news comes a day after the airline announced a first-quarter operating loss of €381 million ($499 million), compared to a loss of €169 million a year earlier. The company reported a net loss of €379 million in the last quarter, narrowing the loss by 22 percent, or €507 million, from the previous year's first quarter.

Increased fuel costs, the air traffic tax imposed in Germany and Austria and the costs of emissions trading in force in Germany since 2012 all had an adverse effect on the group's operating result, said a company statement.

CEO Christoph Franz said in a statement that reorganizing and streamlining administrative functions is the only way to safeguard jobs for the long term and create new openings.

The company has said restructuring costs will hurt performance in this fiscal year. European carriers have been hard-hit by the European sovereign debt crisis. The International Air Transport Association predicted in March that carriers could lose between $600 million and $1.9 billion this year, depending on oil prices.

Lufthansa shares rose 1.07 percent to €9.81 at market close in Frankfurt.