Reaction Engines, Backed by Rolls-Royce and Boeing, Seeks Cost-Cutting Measures to Meet Cash Deadline

Insider Brief:

• Reaction Engines, a UK-based space and technology company is implementing cost-cutting measures to secure its financial stability and avoid seeking additional funding from shareholders.
• The company is currently developing a rocket engine for hypersonic flight and has previously raised £150m from major aerospace backers like Rolls-Royce, Boeing, and BAE Systems.
• While facing uncertainties, Reaction Engines remains committed to its growth, with plans reported in 2022 about a pre-IPO funding round and potential listing on public markets by 2024.

Reaction Engines, a UK-based space and technology company that is developing a rocket engine for hypersonic flight, is implementing cost-cutting measures to secure its financial stability and avoid seeking additional funding from shareholders. Despite having raised £150m from major aerospace backers like Rolls-Royce, Boeing, and BAE Systems, the company faces a potential cash shortage by June, as indicated in its latest Companies House filing.

While acknowledging a “material uncertainty” about its ongoing financial viability, Reaction Engines remains optimistic about managing risks, citing past success in securing external investments. The company received equity investments of £23.5m in 2021 and £41m in 2022, despite recording a pre-tax loss of nearly £30m in the latter year.

In an interview with Bloomberg, CEO Mark Thomas refrained from commenting on potential job cuts but hinted at possible reductions in capital expenditure and the cancellation of a planned headquarters relocation. The company, founded in 1989 by former Rolls-Royce engineers Richard Varvill and John Scott-Scott, is also considering adjustments amidst a challenging economic landscape in 2024.

While facing uncertainties, Reaction Engines remains committed to its growth, with plans reported in 2022 about a pre-IPO funding round and potential listing on public markets by 2024. The company’s spokesperson highlighted its success in commercializing unique heat exchanger technology across various applications, including motorsport, sustainable aviation, and high-speed flight. Despite the challenges, Reaction Engines expresses confidence in unlocking the significant potential of its technology and continuing to receive strong support from its shareholders.

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