FERRY company chiefs are to axe staff and slash services after a dramatic £1.4m slump in business, the Daily Echo can reveal.

Internal Red Funnel documents leaked to the Daily Echo reveal many sailings are running at a loss, while repairs and fuel costs are spiralling £660,000 over budget.

Bosses warn that while their ships have 15 years of life, at current profit levels it would take 50 years to save up enough money to replace them.

In a bid to get back on course, high-speed crossings are being cut by 17 per cent and night-time services will be axed.

A “small number” of jobs will go just under a year after the firm shed around 50 staff.

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The leak reveals discount offers to lure in punters and turn the tide have had just a “modest positive effect” despite prices being slashed in half on some crossings.

Many high-speed services sail at a loss and “most of the night sailings lose money”, with only the 10pm and 6.30am ferries bringing a profit, the documents show.

Matt Tipper, regional industrial organiser for the Unite union, said: “We are in negotiations with the employer at the moment and are striving to save any jobs which have been earmarked for loss.”

It’s a far cry from 2007 when wealthy buyers outbid each other to win the prize of Red Funnel, with insurance giant The Prudential eventually paying an estimate-shattering £200m at the peak of the financial boom.

The deal was hailed as good news for staff and customers, but business has dwindled ever since, leaving the sale price looking ever more disconnected from the reality on the water.

The then Red Funnel management team made a £32.5m profit selling the firm, which has operated services between Southampton and the Isle of Wight since 1861.

James Fulford, Red Funnel chief executive, said: “We have been one of very few transport operators to provide peak-hour commuter frequencies throughout the day, seven days a week.

“Given fuel and rapidly rising repair costs and the eventual need to save up for fleet replacement this is no longer sustainable.”

He added: “This new timetable has been designed to align capacity with demand through the winter when many sailings have carried far fewer people than is required to break even.

“It has, however, offered the opportunity to introduce cheaper off-peak leisure fares.”