Astra is carving out its spacecraft engine business as a wholly-owned subsidiary, a corporate restructuring that will provide greater flexibility in hiring and financing, according to documents viewed by TechCrunch and a person familiar with the matter.

The new subsidiary, Astra Spacecraft Engines, Inc., was incorporated in Delaware on June 5 and filed with the state of California on June 13, corporate records show. However, the new arrangement has been in the works for some time, according to the source, who declined to be named for this story.

There were two motives for the restructuring, related to operations and financing, the person said. American launch companies are governed by strict export control rules known as International Traffic in Arms Regulations (ITAR), while spacecraft component businesses are generally under the aegis of a different set of restrictions called Export Administration Regulations (EAR). While the two overlap substantially, they have key differences, related to who the company can sell to and even internal IT requirements.

There are also differences in hiring. Under ITAR restrictions, companies need to obtain an export license to hire a non-U.S. person (which includes U.S. citizens, green card holders, and other very specific groups). In practice, this makes bringing in talent from outside the U.S. very difficult. In contrast, EAR restrictions do not require the company to obtain an export license prior to hiring someone from outside the U.S. Astra has had to turn away “high-caliber” candidates for its spacecraft engine business due to ITAR restrictions, the person said.

Hiring for spacecraft propulsion engineers is likely top of mind for Astra. The company acquired electric propulsion company Apollo Fusion in July 2021, right after going public via SPAC merger. But according to LinkedIn, of the employees that list Apollo Fusion under their prior work experience, nearly all of them have since moved on from Astra. That includes Apollo CTO Ben Longmier, who is now with SpaceX, and VPs Jorge Delgado and Mark Hopkins.

Notably, the restructure also unlocks new financing structures and options. For example, Astra could take out a loan against the subsidiary to further finance the development of its launch business. Such flexibility is no doubt of crucial for Astra, which is facing dwindling cash reserves: the company ended the first quarter of 2023 with $62.7 million and anticipates ending the second quarter with around half that.

At the time, Astra CFO Axel Martinez told investors that the company was “thoughtfully evaluating financing opportunities to further extend our financial runway.”

Astra establishes subsidiary for spacecraft engine business by Aria Alamalhodaei originally published on TechCrunch