Air Canada posted a staggering $1.16 billion loss in the fourth quarter of 2020, a result that caps off what the company's chief executive called the bleakest year in aviation history.

Despite the losses, Air Canada president and CEO Calin Rovinescu said on a call with analysts Friday morning that he was encouraged by the progress of recent talks with the federal government about a bailout package for the sector, which have been ongoing for months without a resolution.

"While there is no assurance at this stage that we will arrive at a definitive agreement on sector support, I am more optimistic on this front for the first time," Rovinescu said.

The discussions have ramped up over the last several weeks, reaching a pace that Rovinescu called a negotiation. Any deal would include a resolution on passenger refunds, a plan for returning service to regional markets and financial support for the aerospace sector, Rovinescu said.

Rovinescu also hinted at potential reforms coming to Canada's travel restrictions this spring, saying that he expected an increased COVID-19 testing program to replace some quarantine measures by the time airlines are scheduled to resume many flights on April 30.

The company released its earnings report on the heels of last night's news that the Canadian government approved Air Canada's $190-million purchase of Transat A.T.

WestJet objects

In a statement Friday, WestJet Airlines Ltd. criticized the government's approval of the deal, saying the acquisition would be harmful for consumers.

"This decision shows blatant disregard for all Canadians who believe in healthy competition," WestJet president and CEO Ed Sims said. "When Canadians look to explore the world and reunite with family and friends once again, they will face fewer choices and higher fares."

Air Canada reported a fourth quarter net loss of $3.91 per diluted share, compared with profit of 56 cents per diluted share or $152 million a year earlier.

The airline's operating revenue dropped to $827 million in the fourth quarter, down from $4.43 billion in the same three months of 2019, as the COVID-19 pandemic has hampered air travel.

Analysts polled by financial data firm Refinitiv expected Air Canada to lose $735.67 million or $2.84 per share, on revenue of $885.36 million.

For the full-year, Air Canada lost $4.65 billion or $16.47 per diluted share on $5.83 billion of revenues. That compared with a profit of $1.48 billion or $5.44 per share on $19.13 billion of revenues in 2019.