While the company has been an artistic success during his tenure, staging a well received Ring cycle in 2003, it has struggled financially, and Armstrong was sometimes accused of overspending. In June, company officials agreed to shut down for the 2005-06 season and cut 88 jobs as part of a Ô£7 million bailout deal with the Scottish Executive.

Armstrong was a vocal critic of the cuts, and it was not expected that he would remain through the end of the dark period in 2006. He has agreed, however, to serve as artistic advisor over the next two years.

"We will be extremely sorry to say goodbye to Richard at the end of this season, but are delighted that he will still be involved with the company over the next couple of years," chief executive Christopher Barron said in a statement. "Richard's achievements over his 12 years tenure are immense and the quality of the company we are today is a direct result of his uncompromising artistic direction."

According to the London Guardian, Armstrong is a likely candidate for the music director position at the English National Opera, which Paul Daniels will vacate next year.