Winnipeg mayor Sam Katz says Winnipeg's reputation has been trashed by an Air Canada memo suggesting the city isn't safe. The airline pulled its contract with a downtown hotel earlier this week, citing safety concerns for its staff.

Wednesday, Air Canada said its decision was not based solely on safety concerns, but also on cheaper rates.

Adam Warsame has had a local business downtown for the past two years. While he says he hasn't had any problems, neighbouring businesses have been vandalized.

"I don't really feel safe," explains Warsame. "But in reality I haven't seen a lot of trouble."

"I think it definitely painted our city in a negative manner," said Katz. "I think that was totally unfortunate."

In a memo to staff Air Canada said, ""Recent environmental issues have forced approximately 1,000 displaced people from rural Manitoba to numerous hotels in the downtown area. Instances of public intoxication, resulting in several downtown locations being susceptible to crimes of violence and opportunity, have been observed by local Police," read the memo.

Katz said Air Canada has since apologized and reassured him it will once again consider doing business downtown when its new contract is up next year. Still, the mayor said the damage is done.

The Assembly of Manitoba Chiefs says sorry isn't enough. It's demanding Air Canada explain, in detail, what is being done to rectify what it calls racist comments used by the airline. It's given the company 48 hours to respond to its letter saying failure to do so could result in further action.

Katz said the airline has assured him the reason for the move was based on cheaper rates.

-With a report from CTV's Caroline Barghout