Canadian Pacific Railway says its earnings for the first quarter will likely come in below analysts' expectations, due to rising fuel costs and the effects of severe winter weather, and that it will be cutting its payroll by 300 jobs this year.

The company said half of the cuts will come through attrition, meaning layoffs appear likely. CPR has already imposed a hiring freeze on everything but entry-level positions.

The company said it expects to make 21 cents to 25 cents a share for the quarter, "which is below the current consensus." Analysts surveyed by Thomson Financial/First Call were forecasting CPR would make 37 cents a share in the first quarter of 2003.

CPR said the entire transportation industry is feeling the effects of high fuel prices driven by global uncertainty in energy markets. Winter weather conditions in North America have been disruptive to CPR's operations and to its connecting carriers, the company said.

"These circumstances are extraordinary and CPR has managed them extremely well," Rob Ritchie, the railway's president and CEO, said. "Our recovery from each weather-related challenge has been swift and effective but we have felt the cumulative effects on efficiency and productivity.

"Our fuel cost management program, which includes a significant hedge, has helped mitigate the impact of high world prices, but it cannot fully offset the effect of prices that remain stubbornly above $35 US a barrel."