Nova Scotia offers $12M to keep Yarmouth ferry afloat

The Nova Scotia government has come to the financial aid of a struggling ferry service between Yarmouth and Maine.

Covering the losses of Bay Ferries Ltd. will help ensure its high-speed ferry, called the Cat, continues operating this year, the province said Thursday.

It's not known how much the bailout will cost, but the province said it will not exceed $12 million.

Murray Scott, minister of economic and rural development, said the province will "work with all partners to develop a more permanent solution" for Bay Ferries.

"Without this immediate assistance the service would not be able to continue," Scott said in a statement.

The ferry service, which employs 100 people in Yarmouth, has struggled for a variety of reasons, ranging from rising fuel costs, the value of the Canadian dollar, and a drop in the number of American tourists visiting Nova Scotia.

The federal government has committed $1 million to a federal-provincial study of the transportation needs in southwestern Nova Scotia before a final decision is made on the ferry's future.

Bay Ferries is a wholly owned subsidiary of Charlottetown-based NFL Holdings Ltd.

Mark MacDonald, president and CEO of Bay Ferries, said the company has been working hard to maintain the "vital connection" between Yarmouth and Maine for the past 12 years.

"For nine of those years, we proudly operated without government assistance, but now require support to continue to operate out of Yarmouth," MacDonald said in a statement.

The Cat operates between Yarmouth and two ports in Maine, Bar Harbor and Portland.

In 2008, 85,000 customers used the ferry service.