Lufthansa CEO Carsten Spohr said the job cull would help the group achieve “savings of €90 million per year” by 2021. In a separate statement, Austrian Airlines said the job cuts would take place over the next two years.
Thursday's announcements came as Lufthansa faced a major strike by German cabin crew on Thursday, the first of a two-day walkout that has led to 1,300 flight cancellations.
The small carrier was locked “in the mother of all battles” in Vienna with low-cost rivals Ryanair and Wizz Air, Spohr told reporters in a conference call after announcing a rise in the group's third-quarter revenues.
News of the jobs cull sent shares in Lufthansa soaring by 8.8 percent to €17.6 by 12:40 pm, putting it at the top of the blue-chip DAX index in Frankfurt.
“We have to reposition ourselves to be able to survive in the brutal competition with budget carriers,” Austrian Airlines boss Alexis von Hoensbroech said in a separate statement.
The planned job cuts amount to a loss of 700 to 800 full-time jobs by the end of 2021, out of a total workforce of 7,000 people, the statement added.
Most of the job losses will come from not replacing departing workers.
The Lufthansa group — which also includes Eurowings, Brussels and Swiss airlines — earlier on Thursday said it was on track to meet its full-year outlook despite a “challenging market environment”.
The carrier booked a net profit of €1.15 billion between July and September, up four percent year-on-year.
But the jump was mainly thanks to accounting effects, with the group's operating profit adjusted for some one-off items, actually falling eight percent to €1.3 billion.
Lufthansa said it had faced higher than expected fuel costs that were only partially offset by cost-cutting efforts.
And like rival airlines it was grappling with “a general slowdown in the global economy”, it said in a statement.
Revenues for the period were up two percent to €10.2 billion.
Lufthansa's chief financial officer Ulrik Svensson said it was “vital” that the group took action “to further reduce our costs”.
Aside from the job losses at Austrian Airlines, the group is hoping that a renewed focus on the Vienna hub and aircraft replacements will further trim costs at the struggling subsidiary.
Looking ahead, Lufthansa said it was on track to meet its 2019 goals.
It continues to expect adjusted earnings before tax and interest of €2.0-€2.4 billion while revenues are predicted “to rise by a single-digit percentage amount”.
But it lowered its earnings outlook for Lufthansa Cargo, blaming “current weak market demand”.
The group's total fuel costs for the year are expected to reach €6.8 billion, €650 million more than in 2018.