Imagine you could catch a plane from London to Sydney that took four hours, instead of 22.
This was the exciting idea kindled by Reaction Engines, an Oxfordshire start-up that evoked the spirit of the famous British-Franco project Concorde.
With one of the company’s revolutionary hybrid engines, futuristic space planes would be able to exit the world’s atmosphere and accelerate to speeds of 19,000 miles per hour – dramatically cutting journey times between our farthest-flung cities.
In 2013, Reaction was feted by experts and the UK government as a British champion poised to “revolutionise air travel and reduce the cost of reaching space”.
It led to an award of more than £60m in taxpayer grants to help commercialise the breakthrough technology, including the cooling system that was at the heart of its success.
But just over a decade later, the company has been forced into sharp manoeuvres to shore up its finances amid concerns the original project looks like a boondoggle.
Earlier this month, Reaction executives warned staff that the company would have to raise more cash after missing internal performance targets and racking up further losses.
Philip Dunne, the company’s chairman and a former defence minister, warned there was still a “mismatch” between the company’s expenditure and revenues even after a round of belt-tightening.
Reaction’s list of backers remains impressive, with Rolls-Royce, BAE Systems, Boeing and Schroders among them. And discussions between various shareholders are ongoing about how to help the company.
Yet Dunne admitted that raising money today would be “tougher”, as higher interest rates and a shaky global economy deter investors.
The company has raised more than £150m in the past, including £40m provided by a United Arab Emirates’ sovereign wealth fund.
But the company has also burned through at least £125m since 2012, according to an analysis of the company’s operating losses in accounts reviewed by The Telegraph.
According to Dunne, it made further losses in 2023 and 2024 – which so far remain undisclosed.
Against this backdrop, executives are scrambling to raise cash and grow the company’s income. But in order to do so, they will have to confront the question of what Reaction’s technology is now for, says aerospace analyst Nick Cunningham, of Agency Partners.
“It’s super clever technology, incredibly ambitious - brilliant, even,” says Cunningham. “But what’s it for?”
Reaction was founded in 1989 by engineers Alan Bond, Richard Varvill and John Scott-Scott, the latter two who had worked on a Rolls-Royce-led project in the 1980s to develop a single-stage-to-orbit aircraft known as Hotol (Horizontal Take-Off and Landing).
That same year, Hotol had been dropped by the British government following persistent concerns about its purpose and astronomical development costs.
From these ashes, Reaction developed Sabre, or the Synergetic Air-Breathing Rocket Engine, which would power a conceptual space plane known as “Skylon”.
Sabre’s truly revolutionary feature is its heat management system, which can chill incoming air from 1,800F (1,000C) to zero using tiny tubes of supercooled helium.
This allows the air-breathing engine to take off like a normal jet engine before switching to rockets and accelerating to even faster speeds – while not overheating.
Originally, alongside suggestions of passenger services, the commercial argument for Sabre was that it would give customers a reusable, low-cost way to put heavy payloads such as satellites into orbit, providing an alternative to costly single-use rocket boosters.
But that vision has since been eclipsed by events.
The arrival of Elon Musk’s company, SpaceX, has upended the private launch market, with the billionaire’s reusable Falcon rockets able to put a small satellite in space for as little as $300,000 – pocket change compared to what it used to cost.
This raises the question of whether sinking further millions into the development of Sabre still represents a good investment, says Cunningham.
Worse still, the idea of sending passenger aircraft into space is also being looked at by SpaceX.
“There’s a worry that Reaction has been out-competed by something closer to conventional technology before it’s even got started,” explains Cunningham.
Against that backdrop, the company has parked work on Sabre and pivoted swiftly towards different applications of its technology, which remain highly promising, according to insiders.
Under this new strategy, Reaction is looking to sell its pioneering heat management system to the defence, civil aerospace, motorsport and energy sectors.
And rather than focus on using its engine technology on aircraft that go into orbit, the company is now developing in-atmosphere hypersonic projects only.
That includes a partnership with the Ministry of Defence and various UK government agencies to develop hypersonic weapons, with hypersonic surveillance aircraft possible as well.
In motorsport, Reaction’s technology is being used by unnamed Formula 1 teams to improve car performance and by electric car companies to improve battery cooling.
Meanwhile, the company believes it can help to improve efficiency in power generation, carbon capture and gas compression in the energy sector, while investors such as Rolls-Royce remain keenly interested in performance gains Reaction could help to eke out from their commercial jet engines.
According to a source close to the company, this renewed focus helped to increase commercial revenues by 400pc last year – implying sales of about £12m.
Yet the company is still facing large losses and expects to be reliant on investor funding for at least the next few years.
Meanwhile, rivals are catching up. American start-up Hermeus is also developing hypersonic technology and has raised $100m from investors including OpenAI boss Sam Altman. Others include Switzerland-based Destinus and US-based Intergalactic.
A source close to the company notes these rival firms boast deep-pocketed backers and questions whether Reaction could become yet another British company with a bright idea that fails to get the support it needs.
But Cunningham says the company must also address a lingering sense that this is “a very clever technology that’s looking for a purpose”.
“It’s still not totally clear what the market is for these things,” he says. “It does sound like they’ve realised the original purpose is just not going to work any longer.
“But are the other niches they’re talking about big enough to justify the development costs? I don’t know the answer to that.
“Hopefully, it can be used for other things. It is basically an incredibly efficient heat exchanger – and there are lots of applications for heat exchangers in this world, you can see Rolls-Royce being very keen on this.
“But it’s quite a long way short of the original grand ambition.”
Reaction Engines declined to comment.
The company has previously pointed to its “successful track record of raising capital” and says that, like any other technology company, it will have “further fundraising requirements as it progresses with building commercial revenues”.
The UK Space Agency (UKSA) says the funding the Government provided to the company helped to “de-risk” the Sabre engine and unlock an estimated £380m in benefits to the British economy, although it did not explain how that figure was reached.
Testing on Sabre was never fully completed and Reaction did not respond when asked whether test flights are still planned for the mid-2020s, as previously claimed.
A UKSA spokesman adds: “We continue to engage regularly with Reaction Engines and deliver strategic programmes that catalyse private investment into the space sector, support the development of British technologies and intellectual property, and generate growth across the country.”
According to insiders, Reaction hasn’t abandoned Sabre and still wants to develop the technology in future.
For now though, the thrilling dream of circling the world in a space plane remains firmly parked on the runway.
Disclaimer: The copyright of this article belongs to the original author. Reposting this article is solely for the purpose of information dissemination and does not constitute any investment advice. If there is any infringement, please contact us immediately. We will make corrections or deletions as necessary. Thank you.
