The al-Salam Boccaccio '98 has a capacity of more than 1,400. Photo: Yvan Perchoc/www.faktaomfartyg.com
Fourteen bodies and about 100 survivors have so far been pulled from the water, Egyptian officials said.
The al-Salam Boccaccio '98 went down about 80km (50 miles) off the Egyptian coast during an overnight journey from Duba in Saudi Arabia to Safaga.
Rescue boats and helicopters are searching the area, but are being hampered by poor weather.
The cause of the sinking is not known, but there were high winds when it left Duba.
Most of the passengers were Egyptians working in Saudi Arabia, but some were said to be pilgrims returning from Mecca.
There were about 100 people from other countries, including Saudis and Sudanese, Capt Maher said.
"We don't know how many casualties there are or how the ship sank," he said.
The head of administration at el-Salam Maritime Transport, Adel Shukri, said he was not aware of any SOS from the crew.
The 35-year-old ship had been due to arrive at Safaga at about 0300 local time (0100 GMT).
Why?
Four Egyptian frigates were looking for survivors, said Egyptian Transport Minister Mohammed Lutfy Mansour.
SHIPPING DISASTERS 2002: Joola, Senegal, more than 1,800 1996: Bukoba, Tanzania, more than 500 1994: Estonia, Estonia, 852 1991: Salem Express, Egypt, 464 1987: Dona Paz, Philippines, 4,375 1954: Toya Maru, Japan, 1,172 1948: Kiangya, China, 3,920 1912: Titanic, UK, 1,503 killed
Britain has sent the warship HMS Bulwark to help and it will arrive in a day-and-a-half, the Royal Navy said.
A spokesman for the Egyptian embassy in London, Ayman al-Kaffas, said there was "a vast area of water" for the rescue operation to cover.
Asked about the delay in the disappearance being reported, he said the rescue operation had started just after midnight, within an hour or an hour-and-a-half of the ship going missing.
AL-SALAM 98 Capacity: 1,487 Built: Italy 1970 Length: 118m (388ft) Gross tonnage: 11,779t Owner: El-Salam Maritime
The general manager of the Saudi branch of maritime insurance company Lloyds said the ship had met all safety requirements.
"The vessel was well equipped with all lifeboats and all her certificates were valid, " Nizam Siddiqui said.
He ruled out the possibility of a collision with another ship, saying the other vessel would have reported the incident.
Shipping expert Paul Beaver told the BBC that overloading should not have been a problem.
There was a possibility one or more of the vehicles the ship was transporting could have moved, particularly in bad weather, he said.
A sister ship of the al-Salam '98 sank in the Red Sea in October after a collision. Two people were killed and 40 injured.
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Location map of the accident
An investigation has been commenced by Egypt into the Friday sinking of one of El Salam's passenger ferries in the Red Sea. M/V al-Salam Boccaccio 98 was carrying 1408, including many Egyptians returning from work in Saudi Arabia. The ship left from the port of Dubah in Saudi Arabia enroute to the port of Safaga in Egypt. On the west coast of Saudi Arabia during the night a sandstorm occurred due to high winds.

David Osler of  Lloyd's List has said of the ship that "It's a roll-on, roll-off ferry, and there is big question mark over the stability of this kind of ship," he continued and said that "It would only take a bit of water to get on board this ship and it would be all over. ... The percentage of this type of ferry involved in this type of disaster is huge." 

Mamdouh Ismail, head of Al-Salaam Maritime Transport Company, stated that another one of El Salam's ferries, Saint Catherine received a distress call from one of the lifeboats of the Boccaccio when it arrived in Dubah from Safaga. The Saint Catherine notified its company headquarters, and El Salam reported it to Egyptian authorities.

According to a statement given to the ''Associated Press'' by Ismail, the ferry was carrying 96 crew members, 1,200 Egyptians, and 112 other passengers. A Transport Ministry spokesman has stated that 314 people have been rescued. More than 185 bodies have been recovered from the sea according to an Egyptian police official who has requested anonymity.

Four rescue ships from Egypt arrived Friday afternoon, approximately ten hours after the sinking of the 35-year-old ferry in the night near the Egyptian port of Hurghada. Aid from Britain and the United States was initially refused. Later, both the British HMS Bulwark and the US P3-Orion maritime naval patrol aircraft were recalled, but due to its distance at the later time, the request for the return of the Bulwark was called off by Egypt.