Reaction Engines, the British hypersonic aviation pioneer, has gone into administration after weeks of discussions with potential backers failed to result in a rescue deal.
Sky News has learned that 173 of the company’s 208 staff were made redundant on Thursday morning by PricewaterhouseCoopers (PwC), the administrators.
The collapse of a company which manufactures advanced cooling technology for engines also poses a problem for a quartet of Formula One racing teams that use engines supplied by Mercedes-Benz.
Negotiations to secure approximately £20m in additional funding to keep Reaction Engines afloat had initially centered on the UAE’s Strategic Development Fund (SDF), the investment arm of the UAE’s Tawazun Council.
However, these talks began to falter earlier this month, with strategic shareholders BAE Systems and Rolls-Royce Holdings unwilling to provide sufficient capital to rescue the company.
In a statement on Thursday, Sarah O’Toole, joint administrator and partner at PwC, said: “It’s with great sadness that a pioneering company with a 35-year history of spearheading aerospace innovation has unfortunately been unable to raise the funding required to continue operations.
“We know this is a deeply uncertain and unsettling time for the Company’s talented and dedicated employees.
“We are committed to providing them with all the necessary support at this time.”
Sky News had previously disclosed that administrators were expected to be appointed on Thursday.
Under the previous discussions, SDF would have emerged as the single biggest investor in Reaction Engines, which has developed cooling technology aimed at powering aircraft to Mach 25 – or 19,000 miles per hour – outside the Earth’s atmosphere.
According to Reaction Engines’ most recent update to shareholders, it increased its commercial revenues by over 400% last year and is believed to have a strong pipeline of contract and R&D opportunities.
In January last year, Reaction Engines announced that it had raised £40m of additional equity, bringing the total sum from investors to around £150m.
Established in 1989, the company is chaired by Philip Dunne, a former defense minister.
“The company has primarily been funded by grants and equity fundraises, given its R&D focus,” PwC stated.
“The company had been pursuing opportunities to raise further funds, but unfortunately, these attempts were unsuccessful.
“Consequently, the Directors have been left with no alternative but to place the Company into administration.
Reaction Engines’ remaining employees will be kept temporarily at its Oxfordshire base “to complete a number of existing orders and support in winding down operations,” PwC added.