Reaction Engines reassures staff about salary payments amid rescue talks | Money News

Reaction Engines, the British hypersonic aviation pioneer, has moved to reassure employees that they will be paid this month as talks aimed at rescuing the company continue.

Sky News understands that staff at Reaction Engines were told this week that it would meet its payroll obligations for October amid growing doubts about its survival.

The company has been in talks for weeks about a deal to secure about £20m of additional funding.

However, the prospects of a successful capital-raise appeared to have receded at the weekend when it emerged that negotiations with the UAE’s Strategic Development Fund, the investment arm of the UAE’s Tawazun Council, about it anchoring a recapitalisation had begun to falter.

Reaction Engines is now said to be engaged in active pursuit of several other investment options.

Time is running out to secure a financial package that would prevent the company falling into administration, though, with PricewaterhouseCoopers on standby to be appointed as early as next week, according to a person close to Reaction.

Its strategic shareholders, BAE Systems and Rolls-Royce Holdings, are thought to have been asked to agree more flexible terms with the company.

Under the earlier discussions, SDF would have emerged as the single-biggest investor in Reaction Engines, which has developed cooling technology which is aimed at powering aircraft to Mach 25 – or 19,000 miles per hour – outside the Earth’s atmosphere.

Sky News revealed earlier this month that the company had opened talks with the government about the deal, because of the sensitive defence and security implications in the context of the National Security and Investment Act.

A Reaction Engines spokesman declined to say how many staff the company currently employed.