Air Canada gave the clearest signal yet on Friday that its financial condition is substantially improving after dealing with the darkest days of the pandemic.

In a release, the airline said it was exiting the government support program after tapping less than half of the $5.375 billion that it lined up in April.

Air Canada said it only availed itself of $1.2 billion in federal financing earmarked for refunding tickets that were originally meant to be non-refundable, and that $3.975 billion was not used.

Chief Executive Officer Michael Rousseau said in a statement it was a "convincing sign" of his company's progress after the travel industry was battered by COVID-19.

"We deeply appreciate the Government of Canada's support as this helped maintain a level playing field at a time when governments around the world, recognizing the importance of air travel to their economies, were also assisting their national carriers," he added.

Air Canada arranged the financial lifeline via the Large Employer Emergency Financing Facility (LEEFF) program in April in one of Rousseau’s first acts as chief executive after taking the reins from Calin Rovinescu in February.

Since then, the airline has been able to raise $7.1 billion by going to market in the third quarter. As of Sept. 30, Air Canada said it had $14.4 billion in unrestricted liquidity – which included the nearly $4 billion in federal support that’s now being cancelled.

The arrangement with the government included warrants allowing the feds to pick up 14.6 million shares in Air Canada over a 10-year term at a price of $26.27 apiece. Air Canada pointed out on Friday that half of the warrants are immediately being cancelled and said it would seek TSX approval to cancel the balance of vested warrants at fair market value.

However, the government does continue to hold a six per cent stake in Air Canada as a result of $500 million it paid in April to buy shares at $23.18 apiece.

“While not entirely surprising, we view this development as slightly positive since it provides confirmation that the company is confident in its ability to be self sufficient with its existing and market-based access to capital resources through the remainder of the impact from the pandemic,” said TD Securities Analyst Tim James in a report to clients. James has a buy recommendation on Air Canada, with a price target of $32.00 per share.