05/03/2012 03:45 EDT | Updated 07/02/2012 05:12 EDT

Airline Lufthansa says 3,500 administrative jobs will go as it seeks to cut costs

FRANKFURT - Airline Lufthansa AG says it will shed 3,500 office jobs to cut costs and boost lagging profits.

The news Thursday follows the announcement of a €397 million ($521 million) loss in the first quarter because of higher fuel costs and taxes.

The company said it would achieve the workforce reduction "in the coming years" by combining redundant functions and dropping "activities that do not create added value for our customers." Some functions could be outsourced, it added.

The cuts are part of a cost-reduction program that started at the beginning of the year and aims to improve the company's operating profit by €1.5 billion compared to 2011 by the end of 2014.

CEO Christoph Franz said the job reductions would be carried out using "socially acceptable" measures, which can include not replacing people who leave. But he added that cuts were unavoidable.

"Only if we restructure our administrative functions and accept a workforce reduction can we keep jobs long-term and create new ones," Franz said in a statement.

Lufthansa employed 120,898 people as of the end of March.