SRT may shed 200 jobs over loss of key contracts

Up to 200 jobs could be lost at Dublin-based aircraft maintenance company SR Technics (SRT) after it was revealed that the company will retain just one of four key contracts with Aer Lingus, its biggest customer.

This emerged yesterday after Aer Lingus revealed details of its review of aircraft maintenance.

Switzerland-based SR Technics has retained the line maintenance contract, but will surrender work for base maintenance, components and wheels and brakes.

It is understood that the firm is now targeting annual cost savings at its Dublin operation of €5 million a year.

It is believed to be considering introducing a pay freeze to help achieve this saving and has indicated to the Government that 150-200 jobs could go here.

SRT employs about 1,200 full-time staff in Dublin and up to 300 seasonal workers. It welcomed news of the contract win but said it would have to review its operations in light of Aer Lingus's decision.

The company is thought to be looking at staff's terms and conditions, including the length of the working day, annual holiday entitlements, overtime arrangements and rostering.

Aer Lingus said it had entered "exclusive final contract negotiations" with the successful suppliers, following a competitive tender process for the provision of maintenance services.

Sabena Technics/TAT Group secured Aer Lingus's base maintenance contract. This will be located in Dinard and Bordeaux in France. Lufthansa Technik in Hamburg and Honeywell International in Toulouse will handle components, while Goodrich Corporation in the UK will look after wheels and brakes.

The tender process was handled by Oliver Wyman, a firm of management consultants.

The contracts will be awarded for 10-year periods up to 2018. It is understood that the SRT contract includes a provision for the terms to be renegotiated by Aer Lingus after five years. Analysts have suggested that Aer Lingus could save up to 10 per cent on its maintenance costs from this arrangement.

The contract was thought to be worth about €65 million a year to SR Technics. The current deal expires in October 2008.

Aer Lingus chief executive Dermot Mannion said he was pleased that the tender process had "yielded significant and necessary cost savings" for the airline. "Overall, we expect more than 50 per cent of our engineering spend to remain in Ireland over the period," he said. "The ongoing delivery of necessary cost savings is all the more important, given difficult trading conditions across the industry."

Line maintenance includes routine checks of in-service aircraft. It also includes ground handling and de-icing. Base maintenance involves aircraft being removed from service for a rigorous airframe and systems inspection at 20-month intervals. The checks are carried out in hangars and take four days to complete.