Losses double to €21m at SR Technics

Losses at the Irish base of aircraft maintenance company SR Technics almost doubled last year, mainly due to asset write-downs and restructuring costs, accounts lodged with the Companies Office show.

The company, which maintains aircraft for companies like Aer Lingus, Ryanair and EasyJet, recently announced plans to cut 200 jobs at its base in Dublin airport. The accounts for 2004 indicate the serious challenge the company is facing as competition from Asia and eastern Europe continues.

The Irish operation, formerly called FLS Aerospace Ireland and prior to that TEAM Aer Lingus, had a turnover in 2004 of €119 million, down from €123 million.

Pretax losses were up to €21 million from €11.2 million the year before, an increase of 92 per cent.

SR Technics, a Swiss firm, purchased FLS Aerospace, including the Irish operation, in June 2004. SR Technics says, since then, the Dublin business has undergone an "in-depth and focused integration process" which has been very successful.

"The company has recognised significant losses during the year as a result of the acquisition and restructuring-related activity. However, we believe the actions will give the company a good platform for increased profitability in the future."

Following the takeover of FLS, the management carried out a review of the business. This included a detailed review of its assets and, in the profit and loss account for 2004, a write-off of €5.3 million is included. Also included are general restructuring costs of more than €5 million. These two items seriously dented the company's profitability, although in 2003, FLS also wrote off certain assets amounting to €7.9 million. At the end of 2004 the company had retained losses of €30.5 million.

Of its €119 million turnover, some €61 million came from Europe, with €56 million arising in the Republic. Markets in the rest of the world chipped in €1.9 million.

The segmental turnover figures show that Ireland's importance to the company is declining sharply. While local contracts provided €56 million in 2004, this was down from €68 million the year before, a drop of more than 17 per cent.

By contrast, European turnover was up significantly to €61 million, from €48 million the year before, a jump of 27 per cent. The accounts show that, in 2004, the company employed 1,318 people, down from 1,475.

The aircraft maintenance business has become highly competitive in the last decade with airline customers seeking significant discounts for large contracts. Airlines also review contracts at mid-term point and often seek to drive costs down further. Several large airlines are also carrying out maintenance in-house.

The other major problem for companies like SR Technics is that modern Boeing and Airbus aircraft generally need less maintenance than earlier models, particularly the modern fleets of the major European carriers.