The Danish firm FLS Aerospace, which employs more than 1,500 workers at Dublin Airport, is facing a possible takeover by a Swiss air maintenance firm.

A spokesman for FLS Industries, which owns the aerospace business, said it had entered into discussions with SR Technics about a possible deal. However, he declined to discuss the implication for the Irish workforce at this stage.

FLS Aerospace has major operations in Dublin, Manchester and Stansted. Due to the slump in the airline business, its profits have been eroded in recent times, with the Irish operation producing a pre-tax loss of €1.3 million last year.

FLS entered the Republic in December 1998 following its takeover of Team Aer Lingus. Since then, it has built up a considerable client list, with Aer Lingus and Ryanair among its customers. Recently it added Virgin Atlantic to its Irish client base.

Despite this, the Irish facility, like the others, has struggled to maintain profitability. A few months ago the company's parent, FLS Industries, indicated it was anxious to exit from air maintenance work. Earlier this year it sold off a small air maintenance operation in Copenhagen.

A report in recent days in the air trade title, Air Transport Intelligence, said an acquisition was in the offing, although it was not clear whether SR Technics, formerly a part of Swiss Air, would bid for the whole company. A spokeswoman for FLS Aerospace Ireland declined to comment and said any sale was strictly a matter for the parent company.

SR Technics was the result of a management buyout (MBO) last year, although much of the finance for the MBO was provided by the UK venture capital house 3i.

3i is now expected to play a major part in any acquisition of FLS Aerospace, mainly because SR Technics has also suffered since 2001 because of the slump in the airline business.

One of the biggest contracts held by FLS Aerospace in Britain is with low-cost carrier Easyjet. It is likely that whoever buys the company will want assurances that this contract has a long-term future.

The last set of accounts filed by FLS Aerospace Ireland, for 2002, show that margins are under pressure. While turnover of €124 million was produced by the Dublin facility, the cost of sales reduced this figure to an €18 million gross profit. Further operating expenses and restructuring costs transformed it into a loss of more than €500,000.

In 2001, the Irish company made a €2.1 million provision to reduce the company's workforce. Staff numbers fell subsequently in 2002, but this arose because of natural attrition rather than forced redundancies. The €2.1 million provision was consequently released back into the profit and loss account.