Jul. 26, 2009 (United Press International) -- Via Rail Canada (NYSE:CNI) (TSX:CNR) temporarily laid off some 2,000 employees, and rail service stopped across the country, the railroad said Saturday.

All the employees had jobs aboard trains and were laid off after locomotive engineers walked off the job, Malcolm Andrews, a Via Rail spokesman, told CBC News.

"We have no choice, of course," Andrews said. "The layoffs are a necessary part of an unfortunate process like this one simply because it's a process over which we don't have entire control, and there are pretty significant costs involved in paying salaries of all those people."

Contract negotiations between the railroad and the Teamsters Canada Rail Conference, which represents 340 locomotive engineers and yardmasters, broke down Thursday.

The engineers union is seeking higher wages, better training and scheduling changes that would give them two straight days off, CBC said.

Andrews said the company and union had met with a mediator Saturday and that he hopes an agreement would quickly restore rail service and bring employees back to work.