The ferry connecting Nova Scotia and New Brunswick will stop sailing at the end of October, putting more than 100 people out of work.

Bay Ferries president Mark MacDonald broke the news to employees Friday morning, saying the route between Digby and Saint John is not making money.

"At the moment our company is not in a position that we can absorb the loss and the risk any longer," he told CBC News.

The Princess of Acadia has been crossing the Bay of Fundy since the early 1970s. In 1997, the federal government privatized ferry service and Bay Ferries took it over.

The company says traffic peaked in 1998 with about 190,000 passengers, but it has dropped by 25 per cent since then.

Faced with higher fuel prices, a reduction in the tourism and forest industries, and improved highways in the two provinces, MacDonald said the company has no choice but to cancel the route after Oct. 31.

Bay Ferries considered offering only seasonal service, he added, but concluded that wouldn't be feasible.

"At the end of the day we have to look at the economics," MacDonald said.

Larry Wark, Atlantic director for the Canadian Auto Workers, the union representing ferry employees, says he was shocked to hear the news.

He doesn't expect the federal government to help keep the ferry running, but says the two provincial governments may be willing to step in.

"Whether the two provinces can come up with a plan or if there's a different schedule, I don't know what the outcome will be," Wark said.

The MLA for Digby, Liberal Harold Theriault, says many businesses in Nova Scotia rely on the ferry to get their goods to market, so he urges the government to subsidize the service.

"Without the ferries down in western Nova Scotia, it's going to [have] an impact on everyone here," Theriault said.

But Nova Scotia Economic Development Minister Richard Hurlburt says it's too early to talk about a subsidy.

"I believe it's essential that we keep that service in Southwest Nova, but we have to look at the cost for the taxpayers of the province," Hurlburt said.

Any solution has to include New Brunswick, the federal government and Bay Ferries, he added.

The Princess of Acadia is currently in service year round, except for a few days in December and February. A one-way ticket for a small car in the peak summer season is $80, plus taxes.