ANALYSIS:The loss of three Aer Lingus contracts was a key factor in the closure decision by SR Technics, write BARRY O'HALLORANand CIARAN HANCOCK
AIRCRAFT MAINTENANCE specialist SR Technics may have been planning to pull out of Ireland since last year, as it began talks on the sale of the lease on its Dublin facility three months ago.
The Swiss group announced yesterday that it intends closing its Dublin airport operation with the loss of 1,135 jobs, and said it will open “consultations” with trade unions on its redundancy plans.
The Dublin Airport Authority (DAA) yesterday confirmed that it had acquired the lease on SR Technics’ facility at the airport.
It is understood that the company approached the airport manager in mid-November about the sale of the lease, although the deal was only signed yesterday.
This is sure to anger workers who had to wait until yesterday before learning their fate.
The company said it does not comment on the timing of talks or transactions in which it is involved.
A spokesman for Unite, which represents many of SR Technics’ Irish workers, confirmed yesterday that the company’s announcement came as a “complete surprise” to employees.
He pointed out that following talks which led to a change of work practices at the Dublin airport facility, SR Technics’ chief executive, Bernd Kessler, told staff that the group had a long-term future in Ireland.
A company spokesman yesterday said he could not comment on the union’s statement as he had not seen it.
The loss last June of three Aer Lingus contracts was a key factor in its decision. The maintenance deals covered work on Airbus jets used by the former State airline and were part of an overall package worth about €47 million a year to SR Technics.
Aer Lingus put the contracts out to tender when they ran out last year. SR’s rivals, Sabina Technics and Sogerma Services, won out in this process, leaving the Swiss group with the less labour-intensive line maintenance agreement. Aer Lingus is on record as saying that the new contracts will save it €25 million annually.
SR’s spokesman yesterday confirmed that the Aer Lingus contracts were a very substantial part of its business. He pointed out that before losing the contracts, the company did most of the airline’s fleet maintenance.
The contracts date back to the old Team Aer Lingus business, which did the airline’s maintenance as well as handling business from other carriers.
In 1998, the then State airline sold Team Aer Lingus to Danish player FLS. As part of the deal, Aer Lingus agreed a 10-year maintenance contract with the buyer which was worth €35.6 million annually for the first five years, rising to €47 million per annum after that.
SR Technics inherited these agreements when it bought the business from FLS in 2004. As part of the original transfer of the Team Aer Lingus business, a large number of workers held “letters of comfort”, which underwrote certain rights and conditions that they enjoyed as Aer Lingus employees.
The majority of them were bought out of these letters of comfort when SR Technics took over. The company’s spokesman said that a minority of staff still held these letters of comfort.
He added that the issue would be dealt with as part of the consultation process with the unions. Earlier this year, SR also lost a maintenance deal with Gulf Air. Its spokesman told The Irish Times that it has to compete with operations in low-cost countries for much of its work. He pointed out that its rivals, which include maintenance operations owned by Lufthansa and KLM Air France, have facilities in places such as eastern Europe, Malta and Asia, where labour costs are lower than in Ireland.