UK advanced propulsion developer Reaction Engines is to close down after it collapsed into administration having failed to secure additional funding.
Sarah O’Toole, Peter Dickens and Edward Williams of accountancy firm PwC were appointed as joint administrators of the firm on 31 October.
Although some employees will be retained to fulfil existing orders and support winding-down operations, 173 of the 208 staff members were immediately made redundant.
An Oxford University spin-out, Reaction has been developing its pioneering hypersonic synergetic air-breathing rocket engine (SABRE) for the last 35 years.
It foresaw widespread applications for the SABRE technology in the defence and civil markets but latterly had also identified near-term uses for its advanced heat-exchangers.
Funding for the company had mainly been from grants and equity raises, with investors including the United Arab Emirates’ Strategic Development Fund (SDF) and aerospace primes BAE Systems, Boeing and Rolls-Royce.
SDF’s interest – which required government approval – saw it lead a 2023 funding round that raised a total of £40 million ($47.7 million).
BAE Systems backed Reaction in 2015 with a £20.6 million investment, while Boeing and Rolls-Royce came on board as part of a £26.5 million raise in 2018.
PwC says the company had sought to raise additional funds but “unfortunately, these attempts were unsuccessful”, leaving the directors with no alternative but to place the firm in administration.
Its most recent accounts, published on 17 December 2023 but covering the period ended 31 December 2022, warned that additional financing would be required by June 2024 “when cash reserves would be depleted”.
Revenue for the period stood at £4.7 million and Reaction booked an operating loss of £28.8 million.
BAE Systems, which company records indicate held 1.15 million ‘B Ordinary’ shares, says: “We recognise this is a difficult time for everyone at Reaction Engines and we’re keen to explore potential employment opportunities which may be of interest for those affected.”
For its part, Rolls-Royce – which held 625,000 ‘D Ordinary’ shares – says: “We are saddened that Reaction Engines has gone into administration. Our first thoughts are with the company and its employees as it navigates this difficult time.”
Neither company offered any comment on their financial interest in Reaction.
It is understood that BAE Systems has, for several years, been looking at multiple avenues to exploit Reaction’s technology and still retains an interest in its potential.
Both BAE Systems and Reaction were part of a UK Ministry of Defence framework agreement signed in May 2024 to develop a “sovereign hypersonic strike capability”.
Up to 90 organisations were accepted on the framework, allowing them to bid for a share of a total of £1 billion in funding divided across eight lots.
Although Reaction had not secured a customer for its SABRE powerplant, it seemingly had a clearer route to commercialisation of its heat-exchangers.
Cranfield Aerospace Solutions (CAeS) – another company in which SDF has made a significant investment – had selected Reaction’s thermal management technology as the “preferred solution” for its Fresson hydrogen fuel cell powertrain.
Although CAeS says it has “already received sufficient support, parts and information from Reaction Engines” to equip its Britten-Norman BN2 Islander-based demonstrator, it is evaluating alternatives for the production version.
“We are of course engaging with other suppliers who offer advanced heat exchanger products that will provide suitable alternatives,” it says.
