Air Canada has said it is cutting 1,900 staff, due to a drop in bookings after the government imposed new stricter travel restrictions to slow the spread of Covid-19.

The move involves cutting around 1,700 employees at the nation's flagship airline, plus another 200 at its regional carriers.

The airline also confirmed that it is cutting its planned flight capacity by 25%, after Ottawa started requiring travellers to obtain a negative Covid-19 test before being allowed into the country.

The measure was introduced last week following a public outcry over Canadians -- including senior government officials -- ignoring public health warnings against non-essential travel in order to sunbathe in tropical destinations over the winter.

Since its implementation, "we have seen an immediate impact" on bookings, Air Canada executive vice president Lucie Guillemette said in a statement.

As a result, she said, the company "made the difficult but necessary decision to further adjust our schedule and rationalize our transborder, Caribbean and domestic routes to better reflect expected demand and to reduce cash burn."

Several federal officials, Ontario's finance minister, a hospitals head, and the chief of staff to Alberta's premier were among those forced out of their jobs after it was revealed they'd spent Christmas holidays in the Caribbean, Hawaii and other hotspots, while parts of Canada were under lockdowns.

Both Air Canada and its main domestic competitor Westjet have laid off or furloughed nearly half of their workforce since the start of the pandemic, or 20,000 and 8,000 jobs, respectively.

The two airlines are currently in talks with Ottawa seeking a bailout.