Irish ferry group Celtic Link is losing as much as €100,000 a day as a Greek ship it was due to charter in January has been held in British waters because of the poor state of the vessel.

Celtic Link was due to start operating a freight service between Portsmouth and Cherbourg in January using the Celtic Mist, but the start date was delayed because the ship was not ready. Earlier this week the vessel was reported to the British Maritime Coastguard Authority after an inspector from the International Transport Federation (ITF) described it as being "fit for not much more than scrap".

Paul Tyrrell, chief executive of Celtic Ferries, said the ship was still the property of its Greek owners, Jay Management, and that he would not take control of it until all health and safety requirements had been met.

In the meantime, the Wexford-based group is losing significant amounts of money as companies that were booked on to the service have had to find alternative methods of travel.

The Celtic Mist is capable of carrying 110 articulated lorries and was due to make one return journey a day, six days a week. The market rate for such a journey, which would be available only to freight operators, is about €450 a day, meaning that losses are considerable.

The ship's owners, Jay Management, declined to comment. The ship is currently in Southampton where it will undergo extensive repair work.