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A Bombardier Global 7000 business jet, rear, is parked next to a Learjet 75 during the National Business Aviation Association conference and expo, at the Henderson Executive Airport, in Henderson, Nev., on Oct. 8, 2017.DAVID BECKER/Reuters

Bombardier Inc. is ceasing production of its Learjet luxury aircraft later this year and slashing another 1,600 jobs as the Canadian manufacturer tries to stabilize its business amid a global health crisis.

The moves are part of an overall effort to shave US$400-million in annual costs by 2023 and come in addition to a plan announced in June to cut 2,500 jobs, the Montreal-based company said in its fourth-quarter earnings release Thursday. Its goal is to be able to operate profitably in the months ahead and set itself up for an economic recovery.

“The longer-term fundamentals of the private jet market are positive. But the question is how long it will take to come back and whether Bombardier will be sufficiently resilient to absorb the shock,” said Louis Hébert, professor at Montreal’s HEC business school.

Bombardier, controlled by the company’s founding Bombardier-Beaudoin family, is today a shadow of its former self. Asset sales and closings since 2015 have left the manufacturer a much-shrunken entity.

Gone are the company’s downtown Montreal headquarters, which offered its senior executives breathtaking views extending across the horizon from 30 floors up. They’ve been relocated to Dorval near a Bombardier industrial plant with views of runways on both sides. Gone too is the ambition to break the commercial airliner duopoly enjoyed by Boeing Co. and Airbus SA. By the end of the year, Bombardier now expects it will employ barely 13,000 people worldwide, down from 60,400 at the end of 2019.

Bombardier currently makes Learjet, Challenger and Global jet models at prices ranging from US$9.9-million to US$75-million. Chief executive Eric Martel is steering the company into a new future as a stand-alone maker of private luxury jets after it sold off its commercial aircraft manufacturing capability to Airbus, Mitsubishi Heavy Industries Ltd. and Longview Aviation Capital Corp. It then unloaded its train unit to France’s Alstom SA for net proceeds of US$3.6-billion in a transaction that closed last month.

This year will be one of transition as Bombardier’s senior leadership reorganizes the company’s factory operations and white-collar work force to match a business expected to generate revenue from 110 to 120 jets, the company said Thursday. The plan is to rightsize, pay down debt, finesse production of the new Global 7500 jet to move past the early money-losing phase, and ramp up revenue from maintaining and servicing planes while trying to win new orders.

“We’re conservative for this year as there’s still a bit of uncertainty,” Mr. Martel said. “But we foresee the future being a lot more solid.”

Air travel has collapsed amid the COVID-19 pandemic, which has prompted governments to close borders and issue stay-at-home orders. The luxury private-jet market, however, is among the potential bright spots. It’s poised to rebound as wealthier people adopt private flying in increasing numbers to avoid airport crowds, said bankers speaking at a recent corporate jet investor conference earlier this month.

Sales of pre-owned business jets were strong in 2020, with transactions climbing 13 per cent, according to the latest data from market research firm AMSTAT. Normally, what’s good for the used market is good for new sales and vice versa, meaning it’s possible that new sales will catch up this year to the strength seen in the pre-owned market, industry analyst Brian Foley said.

In addition, the use of corporate jets is off by just 10 to 15 per cent even though they’re principally used for business travel, which has fallen off a cliff. This suggests that when business travel does return, utilization could easily surpass prepandemic levels and stimulate new sales, Mr. Foley said.

“The desire to fly privately and avoid the airlines has not yet boosted the financial performance of charter, fractional or new aircraft manufacturers. Still, there’s room to be hopeful for each of them.”

Mr. Martel said he’s encouraged by the momentum Bombardier experienced in the last three months of 2020. The company delivered 44 private jets during the quarter and booked 43 new orders. But he said it will likely take “a few years” for the industry to return to pre-COVID delivery levels, which is why the company is resetting itself to operate on a lower-cost basis.

About 700 workers in Montreal and 100 in Toronto are among those who will lose their jobs with the new round of cuts, a Bombardier spokesman confirmed. The balance of the cuts affect employees in the United States as well as contract workers.

Restructuring will also happen on the factory floor as Bombardier looks for ways to consolidate aircraft output and options for underused hangar and industrial space. For example, Mr. Martel said Bombardier will look to sell a piece of a four-million-square-foot property on which its Saint-Laurent plant in Montreal stands and use the proceeds to reorganize the facility.

In Quebec City, Premier François Legault said his government would be open to offering financial assistance to Bombardier if needed in the months ahead if it agreed to unspecified “guarantees” and minimum employment. But, he said: “We can’t maintain jobs when fewer planes are being bought.”

Bombardier shares fell 16.4 per cent Thursday to close at 61 cents on the Toronto Stock Exchange.

The company’s main task now is to rebuild investor confidence, National Bank analyst Cameron Doerksen said in a note. It will need to show “concrete progress on improving margins, better free cash flow and lowering leverage before the stock can become more investable,” he said.

Even after the proceeds from the train unit sale, Bombardier’s debt levels remain too high for what is a cyclical business, the analyst said. He expects the company to end 2022 with a ratio of net debt to earnings before interest taxes, depreciation and amortization of 6.3 times when the business should be operating at closer to a leverage level of two times.

Learjet is a storied brand but questions about Bombardier’s intentions for the business have lingered for years. The unit faces significant competition from rivals in the entry-level segment in which it plays, particularly from newcomer Pilatus as well as Embraer and Cessna.

Selling Learjet instead of closing it might have enabled a competitor, said Rolland Vincent, director of Jetnet IQ, a market-intelligence service for business aviation. But the jet’s heyday was years ago and making them was likely only marginally profitable for Bombardier because current production rates are barely one plane a month, he said. “It’s always been a small part of the business that took up a lot of management effort.”

For the fourth quarter ended Dec. 31, Bombardier generated free cash flow of US$523-million from continuing operations before interest and taxes, which it said was ahead of plan. The company tallied a net loss of US$337-million on revenue of US$2.3-billion for the period and delivered 114 jets during all of 2020.

In providing a financial forecast, the company said its adjusted EBITDA should top US$500-million this year while adjusted EBIT should be more than US$100-million. It is forecasting free cash flow usage in 2021 of better than US$500-million, higher than what analysts expected.

The manufacturer plans to provide details on its debt repayment plan at an investor day scheduled for March 4.

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