Staff at the airport were informed of the move last week as the airline took delivery of the first aircraft in its new 133m fleet and its owner Padraig O Ceidigh unveiled plans to list it on the stock exchange.

The airline plans to transfer the 41 staff involved to another company, Sky Handling, on 25 June and is understood to be offering them a farewell payment of 500 per year of service to ensure that they move.

The only staff who will remain directly employed by the airline at Dublin Airport will be workers at its ticket desk and its duty managers, who deal with customer queries.

According to union sources, the workers have been outraged by the move, particularly as Aer Arann has refused to discuss the transfer with their union, Siptu. According to correspondence seen by this newspaper, the airline told Siptu that the company was arranging individual meetings for staff members instead.

The staff have already undertaken some unofficial action and refused to cooperate with the press launch of the airline's new ATR72-500 plane at Dublin Airport last Tuesday.

The launch included a demonstration flight in the plane, which took off 45 minutes late after managers were forced to conduct pre-take-off ground operations and fill out technical paperwork themselves as journalists waited.

It is understood that Siptu has now asked the Labour Relations Commission to intervene in the dispute before it escalates into fullblown industrial action, which would leave thousands of passengers stranded.

A Siptu source said that the workers were particularly upset that they had been given such short notice of the transfer and that the farewell payment seemed "miserly" when compared with their contribution to the airline's success and previous transfer deals.

In a similar situation six years ago, British Midland paid its Dublin staff the equivalent of 2,300 per year of service when they were transferred to ground handling company Aviance.

The union has also claimed that the transfer proposals sent to staff by Sky Handling are confusing and are unclear on issues such as shift payments, attendance bonuses and basic allowances.

At one point, the proposals appear to indicate that staff will each get an estimated basic shift allowance of 3,560 per year. However, the document subsequently refers to the allowance as being guaranteed.

"We're leaning more and more towards balloting our members for industrial action, which would lead to significant work stoppages at the airline, " said a union source.

Aer Arann's chief executive Garry Cullen, however, claimed that the majority of staff at Dublin were happy that their jobs were secure as a result of the transfer. He admitted that a few staff were upset to be leaving "the strong family atmosphere" at the airline. He admitted, however, that the press flight had been delayed due to an issue with the flight's paperwork.

He said that the airline was simply reverting its Dublin operations to their position five years ago, when Aer Arann outsourced most of its functions there.

He said there had been no discussions with Siptu because the airline did not recognise trade unions.

"In 2003, Aer Arann was growing in Dublin and we took the view that due to the expansion opportunities, it would more economical to do passenger handling and technical operations ourselves, " he said.

"However, while Aer Arann has grown substantially, the growth plan for Dublin hasn't materialised. Sky and Servisair [another handling company] then approached us and when we ran the numbers, we found it made no economic sense for us."