Almost 2,000 workers for the Canadian Pacific group, which operates Bermuda's Princess hotels, are in line to lose their jobs, the Calgary-based conglomerate revealed yesterday.

The cuts were announced as the group's second-quarter results showing an overall loss of C$104 million was notched up -- the figure having plummeted from a C$171 million profit in the same period a year ago.

Company chiefs blamed the poor results largely on a plan to cut 10 percent of the railway division staff in sweeping moves which would see a C$302 million post-tax restructuring charge slapped on the company.

But they said the inclusion of Bermuda's Hamilton and Southampton Princess Hotels on the company's books helped drive operating income for their resort subsidiary, Canadian Pacific Hotels, up C$28 million to C$67 million for the quarter.

Overall for the whole empire, quarterly revenues totalled C$828.5 million, down four percent on last year.

Last August the group took over the Princess chain, including the two Bermuda resorts. Since then Canadian Pacific has announced a proposed deal which would see it join with prestigious US chain Fairmont Hotel Management, which is famous for New York's Plaza Hotel.

That agreement is due to be finalised later this year.

The company released a statement in April that it had "formed a new management group which will operate the Canadian Pacific Hotels but Canadian Pacific is still the controlling partner of that partnership''.

Local hotel brass said at the time that it was hoped the Fairmont deal would unlock lucrative marketing deals for the massive US market which was largely untapped.

Yesterday's results followed on the tail of Canadian Pacific's pledge to "back Bermuda tourism'' with a massive transformation of their Southampton Princess resort, announced earlier this week.

Rejuvenated groups, pool and private beach were touted as possibilities as well as a huge spa complex and exclusive "club'' floor.

The $40 to $50 million five-year programme would add many new features to the site and bring it into line with top US resorts.

Not to be left out, the Hamilton Princess would also be pampered with a substantial renovation scheme and the investment was to extend to extra training for hotel staff.

However, yesterday's news was not so upbeat for the overall group, which also has rail and energy interests.

Bosses announced 1,900 of the railway division's 19,000 workers would lose jobs in a move aimed to cut operating costs down into line with major rival Canadian National Railway Co.

The restructuring charge, mostly representing the much-anticipated job cuts, would push the company's second-quarter net loss down to 32 Canadian cents a share from a year earlier when it was 51 cents a share.

Excluding the after-tax charge, Canadian Pacific's profit rose 16 percent to C$198 million or 59 cents a share.

Canadian Pacific CEO David O'Brien said heavy cost cutting in the rail division was on the drawing board after three years of investment and declining returns from the shipping of commodities like coal and fertilisers.

"We are now in a position to drive the assets, increase productivity and strengthen the overall cost structure of the railroad,'' he said in a statement.

Railway freight revenues fell four percent while the shipping division's operating income dropped C$19 to C$26 million in the quarter because of deterioration in rates over the past year, the company said.

But there was a little good news.

Improvements in oil and gas markets boosted returns 90 percent on last year's results to $63.9 million at PanCanadian Petroleum Ltd. -- of which Canadian Pacific owns 87 percent.