Austrian Airlines is to shed 1,000 full-time positions by the middle of next year as part of efforts to shape the carrier into a sustainable business.
The decision follows the company's €225 million ($315 million) restructuring initiative, details of which it disclosed earlier this year.
While these measures have already been introduced, the company says it needs to turn its attention to improving its financial results in the medium term. It is aiming for a €200 million improvement by 2012.
Austrian says it will try to achieve the headcount reduction through "mutually-agreed solutions, outplacements and by not refilling vacancies" - although it warns that lay-offs will be inevitable.
"Talks on the issue have already begun with the works councils affected," it adds.
Chief operations officer Peter Malanik says: "The [economic] situation has also shown just how important it is that the company be restructured, if it is to be well-positioned for the future and better-placed to resist downturns.
Austrian is to cut some 300 positions in its sales and network operations, separating the divisions and restructuring them.
Lufthansa is in the process of acquiring Austrian but the process has been set back by a European Commission decision to hold a more exhaustive inquiry into the deal.