A week after the sudden announcement that SR Technics will be opening an aircraft maintenance facility in Malta, facts have come to this paper’s notice which reveal that the company closed down its Ireland facility under a cloud.

Earlier this year, SRT began closing its Dublin facility, and it is expected to be fully closed by the end of the year. The company paid slightly more than statutory redundancy and also left a deficit of just under e26m in the pension fund.

In doing so, they ignored the recommendations of the Irish Labour Court, which recommended doubling the redundancy payment and also to fully fund the pension scheme. As far as is known, this is the first time ever that a company ignored the Irish Labour Court’s recommendations.

The deficit in the pension fund will leave future pensioners with about one third of what they would normally have received on retirement.

The announcement that SRT is coming to Malta, where it will service all the easyJet planes on a 10-year contract, was made in the full panoply of important State announcements with a press conference at the Auberge de Castile by Prime Minister Lawrence Gonzi.

The announcement also came in handily between the reply by the Leader of the Opposition on Monday to the Budget Speech and Dr Gonzi’s reply on Wednesday, when the Prime Minister spent the first part speaking about this investment as a sign of SRT’s trust in Malta in the context of a world recession.

Even so, this paper’s report of the announcement had also referred to a CNN news report which pointed out at a different interpretation of SRT’s coming to Malta.

CNN reported that easyJet raised its cost savings estimate to $320 million by 2012, following the renegotiation of a major engineering contract that will save it $295 million over the next 11 years.

The company has taken steps to contain costs over the year, retiring 19 high-cost aircraft and it announced it had renegotiated a $1.6 billion maintenance agreement with SR Technics to save $295 million over the next 11 years.

The problems at SRT in Ireland began last January but were already looming as from last year. In February 2008 RTÉ News reported quoting an internal document that SRT needed e9.8m of investment in 2008 and a further e12.5m over the following four years.

It was targeting a minimum annual cost reduction of e5m, and planned to achieve this by a ‘hiring freeze and head count reduction’.

The document pointed out that funding for a redundancy plan was not available.

It warned that conditions of employment concessions must contribute significantly to the e5m target.

If that could not be achieved, a pay freeze from April 2008, which would generate full-year savings of e2m, must be considered, the document said.

Staff working conditions to be targeted for cutbacks included extending the working day, company holidays and annual leave.

It would also focus on sick leave payments, overtime, rosters, and contract cleaning.

Then, on 8 January this year it was announced that the company had lost one of its largest customers – Gulf Air.

Just a week later, on 17 January, SRT was reported to be facing losing a key maintenance contract with Aer Lingus.

According to an SR Technics document presented to staff representatives, the Aer Lingus preference was to take the key routine maintenance contract in-house, in which case the Irish operation would be closed.

Previously Aer Lingus had decided to award two of the four maintenance contracts, one for brakes and wheels, and one for components, to other companies.

The company then announced in February that it was to close its plant at Dublin Airport with the loss of around 1,100 jobs. Up to 600 people were to be made redundant by the company at one go.

On 24 March the troubled aviation firm said it was not in a position to make good the deficit in its workers’ pension fund as recommended by the Labour Court.

The Irish Times reported that in a statement following the court’s recommendations, the company said its redundancy budget was limited by commercial and financial constraints and it was not in a position to increase the funds which had already been made available.

It has been reported that the deficit in the pension fund at SR Technics could be as high as e26 million.

Earlier, the Labour Court advised that SR Technics should make good the shortfall in the company’s defined benefit scheme and also any shortfall in the Irish Airline Superannuation Scheme, to which some of the employees belong.

It said that the ex gratia payment of one week’s pay per year of service which it has offered to staff being made redundant should be effectively doubled in addition to the statutory two weeks’ pay per year of service.

The Labour Court recommended that in view of the imminence of lay-offs, staff should receive payments in lieu of notice, which will run from two to eight weeks pay, depending on length of service.

But the company said: “The stand alone financial position of the Irish operation is such that, in normal circumstances and without the goodwill of SR Technics Group, the wind down of the company would require a liquidation resulting in statutory redundancy payments only to employees.”

The firm said the running cost of the Dublin operation came to about e2 million a week and there was an insufficient level of business to fund these costs.

It said it fully understood the difficult labour market conditions faced by its employees and “has already provided funding for the redundancy package in excess of the statutory minimum requirement”.

“Due to the financial and commercial challenges which the SR Technics Group is facing as a result of the severe downturn in the global aviation sector, it is unable to provide additional funds for the redundancy budget or to finance any pension fund deficit.”

Iris trade union Siptu described the firm’s response to the Labour Court recommendations as “mean fisted” but not surprising.

Branch organiser Past Ward said: “In stating that the company should meet the deficit in the employees’ pension funds the court was doing no more than asking SR Technics to meet its moral and financial obligations to the workers.”

Mr Ward said: “They have not only treated their workers with disrespect but the Labour Court and the Labour Relations Commission as well.

“This is a company backed by some of the wealthiest business people in the world, including Mubadala, the sovereign investment vehicle for the Emirate of Abu Dhabi, yet it says it can barely afford to pay statutory redundancy to its workers, 60 per cent of which will be refunded by the Irish taxpayer,” he added.