John Holland Aviation Services (JHAS) has laid off 40 workers from its base at Melbourne Airport.
AAP reports that the decision comes after Virgin Australia reduced the size of its aircraft maintenance contract with JHAS. The 40 redundant employees will include engineers and technical staff.
On Wednesday a company spokeswoman confirmed that a reduced demand for maintenance services was behind the decision.
"A reduced requirement for onshore heavy maintenance services as a result of economic conditions and the high Australian dollar have resulted in 40 redundancies becoming necessary," she said.
The lay-offs follow last year’s decision by Qantas to sack 400 workers from its engineering workforce.
As SMH reports, Virgin’s fleet of younger planes requires less maintenance than older aircraft. As such, there is less need for John Holland’s maintenance services.
In addition, Virgin's alliance partner and major shareholder, Air New Zealand, is completing more of the heavy maintenance work on Virgin aircraft at its Christchurch engineering base.
According to the aircraft engineers' union the fact that the Australian dollar has recently dropped and stabilised tends to contradict John Holland's decision to cut jobs.
Australian Licensed Aircraft Engineers Association (ALAEA) president Paul Cousins told AAP on Wednesday, "It actually makes it a lot more worthwhile to do your work in Australia than offshore."
Given that these aren’t the first redundancies to hit the company this year, he added, "The morale isn't so good there because week to week, the guys and girls don't know if they're going to be threatened with redundancy."
Cousins also raised concerns that JHAS may eventually be closed.
"The reductions over the last six months show that John Holland is not securing any further aviation work. There is a concern that they would look to shed their aviation responsibilities," he said.