Ferry giant P&O today sparked fears that jobs will be axed after warning staff there's "serious concern" about its performance.

The firm, which employs around 2,000 people in Dover, has blamed competition from Eurotunnel and tough market conditions.

In a memo to staff, chief executive Helen Deeble said: "Trading remains tough right around the business.

"Our industry is still in the grip of strong recessionary pressures and our belief is that it is going to take a very long time before things return to normal.

"As a result, all of our sectors are struggling at present."

Staff were warned this was due to strong competition which is hitting P&O's business hard.

The memo added: "This attack, in the form of a price war, emanates primarily from Eurotunnel which has slashed its freight rates to win back the market share it lost to us after the tunnel fire in the autumn of 2008.

"This has cost us a loss of freight volume and a significant downturn in revenues due to the lower prices we are having to charge our customers.

"At the same time, Eurotunnel and ferry competitors are piling on more pressure with weekend promotions that have further depressed freight rates and we have been forced to fight back with special freight deals of our own.

"The squeeze also applies to our Short Sea tourist business where ferry competitors with lower costs than ours are constantly reducing their prices.

"This all means we are being forced to reduce costs throughout the business in order to be able to compete.

"It is therefore important I highlight to you at the earliest opportunity that our current performance is of serious concern and that it is going to require urgent attention.

"We have also started to communicate these messages to the European Works Council and to the trades unions representing members of our workforce.

"The board is currently considering all of its options. No decisions have yet been taken but we will have completed our assessment in time for the preparation of next year’s budget in the early autumn.

"We will keep you informed accordingly."