The aviation business of Leighton subsidiary John Holland has laid off 40 engineers and technical staff at its largest engineering base after Virgin Australia reduced the size of its aircraft maintenance contract.
The latest job cuts are a further blow to Victoria's aircraft engineering industry, less than a year after Qantas shut its heavy maintenance base at Melbourne Airport. Qantas has previously flagged it will reduce its bases for heavy aircraft maintenance in Australia from two to one.
The redundancies at John Holland Aviation Service's base at Melbourne Airport total about a 10th of its national workforce.
The loss of jobs follows a decision by Virgin to reduce its contract because its fleet of younger planes requires less maintenance than older aircraft. Virgin's alliance partner and major shareholder, Air New Zealand, is also carrying out more of the heavy maintenance work on Virgin planes in Christchurch.
The John Holland contract was for maintenance of Virgin's Boeing 737 and Embraer aircraft. John Holland blamed the job losses in Melbourne on reduced work due to "economic conditions and the high Australian dollar".
A spokeswoman said the workers would receive their full entitlements.
But the aircraft engineers' union said the latest redundancies raised concerns John Holland would consider closing the aviation division.
"The reductions over the last six months show that John Holland is not securing any further aviation work," Australian Licensed Aircraft Engineers Association president Paul Cousins said. "There is a concern that they would look to shed their aviation responsibilities."
Mr Cousins said the union had been trying to work with the local industry to ensure John Holland's aviation division had a more consistent flow of maintenance work.
John Holland played down the concerns and said it remained the largest independent aviation maintenance business in Australia, supporting more than 80 customers. "JHAS will continue to adapt to meet the various maintenance strategies of its customer base," the spokeswoman said.
It has had six other redundancies this year.