Boeing-backed UK rocket engine maker seeks savings as cash wanes

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Reaction Engines Ltd, a UK company behind a rocket engine designed for hypersonic flight that is backed by industry heavyweights such as Boeing Co, is examining ways to cut costs to delay asking shareholders for more funds. The company, which has raised more than £150 million ($191 million) from investors, will run out of cash by the end of June unless it raises more, it warned in accounts filed last month at Companies House, the UK registry. Reaction warned there was a “material uncertainty” over its ability to continue operating as a going concern, but said it was confident of making ends meet.
The company, which also counts Rolls-Royce Holdings Plc and BAE Systems Plc as shareholders, is looking at cutting back capital expenditure and scrapping a planned relocation of its headquarters, according to Chief Executive Officer Mark Thomas. He declined to comment on potential job cuts, but said the company should survive without another significant funding round this year. “The year 2024 is probably a year of uncertainty for many people, particularly with elections,” Thomas said in an interview.

Mach 25
The Oxfordshire-based company, which was founded in 1989, is developing a new type of engine aimed at powering aircraft to five times the speed of sound in the atmosphere and Mach 25 for space access. The powerplant breathes air to cool parts, which at high speed can become hotter than 1,000C (1,832F), so that they don’t melt. Notable shareholders include US hedge fund Elliott Investment Management LP. Boeing is an investor through AEI HorizonX, its former venture capital arm, which was spun out of the company in 2021 and is now a partnership with private equity firm AE Industrial Partners.
The UK government is an investor through its National Security Strategic Investment Fund and has also provided grant funding. Reaction lost £28.7 million in 2022 on a pretax basis, more than the £20.3 million it lost a year earlier, the accounts show. It generated revenue of £4.7 million in 2022, less than the £7.2 million in the prior year.
However, revenue reached four times that amount in 2023, according to Thomas. He said the company had made progress in securing commercial deals for its heat exchange technology, now used in Formula One race cars, which would help to limit losses. It is also targeting commercial revenue from sustainable aviation and clean energy.
Last year, Reaction partnered with Richard Branson’s Virgin Galactic Holdings Inc to explore developing a space plane as part of a UK Space Agency program. It has previously conducted tests funded by the US government’s Defense Advanced Research Projects Agency.
Reaction is chaired by Philip Dunne, the UK member of Parliament who previously served as a defense minister.