Wightlink has announced it is making 40 staff redundant and reducing sailings amid “a difficult economic climate”.
The company's final salary pension scheme is also being closed and eight sailings face the axe because of poor usage.
On average some overnight sailings are 93 per cent empty for passengers and vehicle decks 80 per cent empty.
The cuts are blamed on the impact the wet summer had on tourism on the Isle of Wight, rising fuel costs and increasing regulations.
Chief Executive Russell Kew said “Wightlink has a long and proud history of serving the Isle of Wight, and we are determined to protect that heritage.
“These changes are a realistic response to the challenges which our business faces in today's difficult economic climate and will help to secure our vital service for passengers into the future as well as providing sustainable employment for our staff.”
It is also hoped the cost cutting measures will help fund new ships which Wightlink will soon require for the Portsmouth-Fishbourne route.