"I think I would just ignore, it is local news doing a story on a lost dog. Their entire government is shut down and about to default and this is how the US media spends its time," the station said the email read.
Word quickly spread online, with many voicing their outrage over the company's response.
"If you ever fly with your pet, you might not want to choose Air Canada," one wrote on Twitter.
The airline addressed the controversy in a statement Friday.
"Air Canada acknowledges inappropriate comments were made in response to a reporter's follow-up questions for additional details regarding Larry," it said.
"However, Air Canada has been providing the best available information to media on this matter. These comments do not reflect Air Canada's standards or professionalism, and do not refer to the search for Larry by Air Canada employees which is ongoing."
Larry's temporary owner said she was furious when she heard about the message.
"I was angry... (but) I was not surprised that someone could be that stupid. It was an incredibly stupid, very cold, callous email," Jutta Kulic said from Sacramento, California, where she is travelling for a dog show.
Kulic, who lives in Ohio, said she was taking care of Larry after his owner, a friend of hers, died of cancer. The friend wanted her dogs placed in "loving homes," she said. Larry was on his way to Canada, when he vanished, she said.
He was placed in a crate secured with several zip ties and Kulic said she gave staff specific instructions not to take him out.
Air Canada said staff continues to search for Larry and have put up posters near the airport.
Kulic, meanwhile, said she's received reports of sightings and has reason to believe Larry was struck by a vehicle on a highway on-ramp sometime this week.
But no remains have been found and she said she's not sure whether he survived.
- AP