Air Canada AC-T has repaid $462-million it borrowed from the Canadian government to buy planes during the pandemic, as Canada’s largest airline shores up its balance sheet amid strong demand for travel.

The carrier said Friday that it has paid back Export Development Canada the balance of a 2020 credit facility used to buy 14 Airbus A220 planes and repaid $127-million to the Export-Import Bank of the United States for the purchase of four Boeing 787s. The latter repayment is partial, and both loans are subject to unspecified accrued interest.

In June, Air Canada repaid another EDC loan, worth $650-million, for the purchase of 19 A220s.

“One of Air Canada’s top priorities following the pandemic is to deleverage and since late last year we have now prepaid approximately $1.87-billion in debt” and reduced annual interest expenses by $158-million, the airline said in a statement.

Air Canada placed its first order for the Mirabel, Que.-made A220, then called the Bombardier C-Series, in 2016. The airline has since placed more orders and now flies 33 of the planes, with more on the way. The narrow-body 300 series of the A220 used by Air Canada seats 137, with a range of about 6,000 kilometres.

Chris Murray, an analyst with ATB Capital Markets, said the repayments signal that Air Canada has returned to a “normalized operating environment” after COVID-19 halted much of the world’s air travel and sent the aviation industry into financial straits.

“With significant liquidity in place and demand conditions remaining robust, we expect the deleveraging process to continue, positioning the company to return to an investment-grade credit rating over the medium term,” Mr. Murray said in a research note.

Air Canada made a profit of $84-million as demand for air travel rebounded in the first six months of 2023. The carrier lost $1.3-billion in the same period in 2022.

Walter Spracklin, an analyst at Royal Bank of Canada, said news of the repayments is positive for Air Canada, which is capitalizing on strong demand for seats and lower fuel costs to cut debt. “The company continues prioritizing debt reduction by paying down debt and purchasing new aircraft with cash vs. financing,” Mr. Spracklin said in a note to clients.

However, the rebound in demand has been accompanied by persistent shortages of pilots, baggage handlers and other personnel, which have disrupted Air Canada’s operations. The airline recently blamed crew shortages for a reduction in its schedule from Calgary.

Air Canada’s share price was little changed in Friday trading on the Toronto Stock Exchange and is up about 11 per cent this year.