Astra’s spacecraft engine business gets a new subsidiary

Astra has announced that it is separating its spacecraft engine business into an independent, new subsidiary.

According to reports, Astra is separating its spacecraft engine business into an entirely owned subsidiary in a corporate transformation that will offer more flexibility in hiring and financing.

Astra Spacecraft Engines, Inc., the new subsidiary, was established in Delaware on June 5 and registered with the state of California on June 13, according to corporate records. However, a source claims that the new agreement has been planned for some time.

The restructuring had two operational and financial goals in mind.

American launch companies are subject to stringent export control regulations known as the International Traffic in Arms Regulations (ITAR), while companies that manufacture spacecraft components are typically governed by a separate set of regulations known as the Export Administration Regulations (EAR). Although they have a lot in common, they also differ significantly in important ways, including who the company can sell to and even the requirements for internal IT.

Notably, the restructuring also makes new financing options and structures available. For instance, Astra might borrow money against the subsidiary to continue funding the expansion of its launch business. This adaptability is unquestionably essential for Astra, which is dealing with declining cash reserves. The company had $62.7 million at the end of the first quarter of 2023 and expects to have about half that amount at the end of the second quarter.

Astra's then-chief financial officer, Axel Martinez, told investors that the company was carefully assessing funding options to further extend its financial runway.