UK aircraft-maintenance interests are to complain to the European Commission about the Irish Government's plan to bail out troubled Shannon Aerospace (SAL).

SAL airline shareholders Swissair and Lufthansa concede that the overhaul concern faces collapse without the proposed injection of Ir£12 million (£11.9 million). They blame ruinous pricing in the maintenance marketplace together with the loss of work stemming from the collapse and takeover of the third shareholder - GPA.

SAL head of marketing Roger Haslimeier says: "The underlying problem is over-capacity in the market. We have sufficient work, but with the rates in the market these days no facility can make money. We are competing with airline flag-carriers who are living from their parent-airline revenues that subsidise the third-party work and lets them sell under their costs."

The Society of British Aerospace Companies is being used to channel the UK concerns. Director-general Sir Barry Duxbury says that he has drawn the matter to the attention of the UK Government and the European Commission. Third-party-maintenance specialist FLS Aerospace of Stansted is known to be a party to the complaint, which also includes objections to Irish aid for TEAM Aer Lingus.

Under the proposed restructuring, 30% shareholder GPA will pump Ir£12 million into the company and give a promise of "substantial" future work, but will then give up its stake, leaving the airline partners with 50% each. General Electric Capital Aviation Services-owned GPA declines to comment.

The Irish Government will put in two Ir£6 million tranches in 1995 and 1996. Crucially, the plan depends on Swissair and Lufthansa, which created SAL with GPA in 1990, putting work into SAL for the first time. They have previously not done so, mainly because they feared the fury of domestic trade unions, but also because a projected Lufthansa maintenance overload was unexpectedly absorbed by the former Interflug base at Schonefeld, Berlin. It is unclear how those hurdles will be overcome.

Swissair says: "The circumstance in SAL was that GPA would have 800-900 aircraft and that it would supply work to SAL. That has changed and the orders are not as we anticipated."

Source: Flight International