Forty people have been laid off at the aviation arm of construction giant John Holland.
John Holland Aviation Services (JHAS) confirmed on Wednesday that it has laid off 40 engineers and technical staff at its Melbourne Airport base.
The aviation business said demand for maintenance services from airlines had weakened.
"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," a spokeswoman said on Wednesday.
The lay-offs follow Virgin's decision to cut back its heavy maintenance contract with John Holland, as operators increasingly consolidate their aircraft maintenance work.
Last year Qantas cut 400 workers in an overhaul of its engineering operations.
John Holland is a subsidiary of Leighton, Australia's largest project development and contracting group.
Australian Licensed Aircraft Engineers Association (ALAEA) president Paul Cousins said the recent lower Australian dollar contradicted John Holland's decision to cut jobs.
"It actually makes it a lot more worthwhile to do your work in Australia than offshore," he told AAP on Wednesday.
The redundancies are the second round to hit John Holland's aviation arm this year.
"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."
Mr Cousins said aircraft engineers are increasingly worried management will minimise running costs due to shrinking contracts.
"They're going to offer the easier path and lay off people rather than look for other (contract) work," he said.
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