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This morning, Canadian Pacific became the sixth Class I to report double-digit drops in second-quarter revenue and expenses.

CP’s total revenue of $1 billion fell 21 percent compared with second-quarter 2008’s total as total carloads tumbled from 745,000 in the year-ago period to 564,200. The results include the Dakota, Minnesota & Eastern Railroad’s financials, which now are consolidated with CP’s. Grain revenue increased from $211 million to $252 million, but coal, sulphur/fertilizers, forest products, industrial/consumer products, automotive and intermodal revenue fell substantially.

CP also announced that second-quarter net income rose 2 percent to $145 million and diluted earnings per share declined 7 percent to 86 cents. However, excluding a foreign exchange gain and loss on long-term debt and other items, income declined 33 percent to $92 million and diluted earnings per share decreased 39 percent to 54 cents compared with second-quarter 2008.

"The recession continues to have a significant impact on our business, and although freight volumes appear to have stabilized, we have not yet seen a sustained recovery in traffic," said CP President and Chief Executive Officer Fred Green in a prepared statement.

Despite the economic challenges, CP improved its operating ratio 1.2 points to 77.9 and cut operating expenses 23 percent to $737 million compared with second-quarter 2008 figures. Fuel costs plummeted from $240 million to $109 million, and compensation/benefits, materials and purchased services costs dropped more than 10 percent.

"In this economic climate, we continue to manage what is in our control, and I am pleased with our cost-management efforts,” said Green.

CP also announced that it now expects the 2009 capital program to range between $800 million and $820 million vs. a previous outlook of $720 million to $740 million in part because of operating lease buy-outs.