Australian supermaxi Perpetual Loyal is on track to smash the record time for the Sydney to Hobart race by several hours, as disaster struck eight-time winner Wild Oats XI.

Local favourite Wild Oats -- the race's most successful yacht -- was forced to retire from the gruelling contest with keel damage, losing the chance to capitalise on favourable winds that saw the leaders chase record times.

The chance to beat the record of 1 day 18hrs 23mins 12secs, set by Wild Oats in 2012, instead fell to Loyal skippered by Anthony Bell.

Loyal was last at some 37 nautical miles southeast of St Helens Point off Tasmania, and could finish the race as early as midnight (1300 GMT Tuesday), organisers the Cruising Yacht Club of Australia (CYCA) said.

CYCA's Commodore John Markos told reporters Tuesday afternoon the favourable conditions "will make it a pretty hard record to break" if a new time is set early Wednesday.

Bell, in a bid to become more competitive, brought in half the world-class crew of America's Comanche, which took out line honours last year.

He had predicted his heavy but powerful vessel would struggle in the light winds against leaner boats.

But the supermaxi shot out of Sydney harbour Monday into an early lead, followed by Hong Kong businessman Seng Huang Lee's entrant Scallywag.

- Disappointment for favourite -

It was the second straight year that Wild Oats had to pull out from the 628-nautical-mile (1,163 kilometre) event along Australia's east coast, with a mainsail rip thwarting her ambitions in 2015. 

The Wild Oats team said in a Facebook post that the supermaxi was forced to withdraw from the bluewater classic due to the "failure of the hydraulic keel control mechanism".

The keel helps to counteract the weight of the wind on the sails and enables the yacht to remain more upright.

The yacht was leading the field in the middle of the Bass Strait when the failure occurred, the team said, adding that none of the 22-man crew were hurt.

Citing the safety of the crew, skipper Mark Richards made the call to retire from the race, with the yacht set to reach the town of Eden some 480 kilometres south of Sydney by 11pm.

The setback occurred months after Wild Oats owner, multi-millionaire Australian winemaker Bob Oatley, died aged 87.

- Favourable winds -

Chasing Loyal was New Zealand's Giacomo, followed by Scallywag, Maserati and Beau Geste.

Giacomo is aiming to be crowned the overall winner -- which is handicap honours for the vessel that performs best according to size.

"We're feeling real good. We're powering along," said Giacomo's sailing master Steve Cotton Tuesday afternoon.

"We're approaching Tasmania in 20 to 24 knots of easterly wind, and the boat really likes this angle. We're pushing really hard."

Earlier David Witt, at the helm of Scallywag, correctly predicted a record was on.

"If I had to write a forecast for us, it would be this one," he said Monday. "Light air just forward of the beam really suits us."

The hardest part of this year's race could prove to be the finale along the Tasmanian Coast and up the fickle Derwent River leading to Hobart's Constitution Dock, where windless patches can halt a boat for hours while others sail through on a breeze.

Storms are a regular hazard in one of the world's most challenging races. Six men died, five boats sank and 55 sailors were rescued in 1998 when a deep depression hit the Tasman Sea.

Apart from Wild Oats, two other vessels have been forced to retire this year. Freyja, a 71-year-old timber cruiser, blew out her headsail just beyond the Heads and Dare Devil broke a rudder, leaving 86 yachts at sea.

Source: AFP