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Large drops in potash, Canadian coal and automotive traffic in the first quarter led to 2,400 layoffs at Canadian Pacific, as well as drop-offs in revenue, income and earnings.

Yesterday, CP reported first-quarter earnings of 32 cents per share, down 34 percent compared with first-quarter 2008 earnings. Excluding foreign exchange gains and losses on long-term debt and other specified items, earnings per share fell 55 percent to 28 cents per share.

CP’s results — which were released on a pro forma basis, consolidated with the Dakota, Minnesota & Eastern Railroad Corp.’s results — also show total revenue declined 13 percent to $873 million, income plunged 54 percent to $44 million and traffic volume tumbled 19 percent to 576,300 units compared with first-quarter 2008 totals. Potash carloads plummeted 70 percent, automotive carloads plunged 43 percent and Canadian coal carloads fell 30 percent.

Revenue drops — five of seven business lines registered double-digit revenue decreases on a pro forma basis — partially were offset by a favorable impact of the weaker Canadian dollar vs. the U.S. dollar and “solid” pricing, CP officials said in a prepared statement. However, the Class I’s operating ratio on a pro forma basis rose 4.6 points to 87.

In the good news department, quarterly operating expenses decreased 8 percent to $760 million primarily because of the effects of lower volumes, reduced fuel prices and cost-control efforts.

“As we experienced rapidly declining volumes in the quarter, we successfully reduced variable expenses while delivering consistent service to our customers,” said CP President and Chief Executive Officer Fred Green. “The assessment of our fixed-cost structure is redefining our key business processes.”

Those assessments continue, entailing “major change,” and the transformational impact will take longer to mature, he said.

“Process is under way using various vehicles, including working notice to phase out approximately 300 supervisory positions,” said Green. “In addition, we are consolidating support yards and pursuing a smaller network of high-productivity mechanical shops.”

CP also announced it will reduce its 2009 capital program from a previously stated $650 million-to-$670 million range to a $590 million-to-$600 million range. Last year, the Class I’s capital program totaled about $820 million on a pro forma basis.