Dublin-based aircraft maintenance group SR Technics has lost two of its four contracts with Aer Lingus and fears have been expressed within the company that the loss of the other remaining business could put it out of business.
An internal document, circulated among SRT's management, said the company is "very vulnerable" to the potential loss of a major portion of the Aer Lingus maintenance contract.
It added that closure of the company was a "likely scenario" if the contracts were lost.
Trade union representatives are due to meet with management at SRT today to discuss the implications of this.
Aer Lingus put its 10-year maintenance contract out to tender in November, hiring consultants Oliver Wyman to handle the process.
Two of the contracts have since been awarded - those for wheels and brakes, and components. Neither went to SR Technics.
The major part of the business, however, is base (airframes) maintenance and line maintenance.
Both of these are labour intensive activities and form the bulk of the contracts.
The contracts are awarded following a two-day beauty parade of shortlisted companies.
According to the internal document, retaining these two contracts would "provide a platform" to allow SRT consolidate the productivity gains achieved by recent restructuring and allow it to grow the component repair business.
Aer Lingus said yesterday that the remaining two contracts had yet to be awarded and indicated that SRT was still in the running on them.
Enda Corneille, Aer Lingus's director of corporate affairs, said an announcement on the contracts would be made in mid to late February.
SRT, a Swiss-domiciled company, was previously known as Team Aer Lingus, a former subsidiary of the airline that was sold to FLS in the late 1990s. The current contract, which is for 10 years, is a legacy of that sale.
The operation at Dublin airport employs about 1,200 full-time staff and 300 seasonal workers and has six maintenance hangars. It is thought to contribute about €100 million to the local economy.
Aer Lingus is SRT's biggest customer, with the contract believed to be worth €65 million a year.
Latest accounts for SRT's Dublin operation show it made an operating loss of €1.6 million on turnover of €128 million in the year to the end of December 2006.
This compared with an operating loss of €9.4 million in 2005, due largely to the cost of restructuring the business.
Unite is the main trade union group at SRT.
Unions argue that the loss of the Aer Lingus contract would be yet another example of the effects of privatisation on the airline.
This was denied by Mr Corneille. "We would have had to put these contracts out to tender even if we were in State ownership under rules governing semi-State companies," Mr Corneille said. "It's a major cost and this was absolutely the right thing for us to do."