Reaction Engines, the UK company behind the reusable SABRE jet-cum-rocket engine that could dramatically alter air and space travel, has secured the final piece of funding that will allow for the creation of a SABRE demonstrator engine by 2020.

At the Farnborough Air Show on Tuesday, Reaction Engines signed a £10 million development contract with the European Space Agency. In turn, this commitment from the ESA unlocked a £50 million grant from the UK Space Agency (which is an executive agency of the government).

Back in November 2015, BAE Systems—the massive defence and aerospace multinational based in the UK—invested £20.6 million in Reaction Engines; in return, it picked up 20 percent of the company's share capital, while also agreeing to provide industrial and technological support during the development phase.

According to Reaction Engines, there's now enough money and technological expertise in place to create a ground-based SABRE demonstrator engine by 2020.

SABRE, if you haven't heard of it before, stands for Synergistic Air-Breathing Rocket Engine. Despite the rather buzzwordy name, the engine is fundamentally a hybrid rocket-jet engine: at low altitudes it's a jet engine, at higher altitudes it's a rocket engine.

The engine, in theory, will be able to provide enough thrust to get a spaceplane from sea-level tarmac all the way to low-Earth orbit (i.e. single-stage-to-orbit, SSTO). "Air-breathing" is the key element here; usually, above a certain altitude, the air is too thin (i.e. there's not enough oxygen) for a jet engine to operate. SABRE, however, can apparently reach Mach 5.5 at 28.5km (17.7mi) before it has to switch over to stored liquid oxygen, which then takes the air/spacecraft to orbital velocity (Mach 25-ish).

The secret sauce, according to Reaction Engines, is a pre-cooling heat exchanger, which can cool incoming air from 1,000C to -150C in one millisecond. To prevent the formation of ice crystals, the company injects methanol (i.e. antifreeze) into the cooling matrix.

“We have multiple injection and extraction points in the matrix, but the overall effect is the mix of methanol and water is actually flowing forward in the matrix against the airflow direction," said the company's technical director Richard Varvill last year.

The eventual goal, no doubt many years from now, is for SABRE to power a spaceplane called the Skylon. Not much has been said about the Skylon in recent years, though. When it was first mooted back in 2004, the Skylon was meant to significantly cut the cost of putting stuff into orbit—but a lot has changed since then, most notably SpaceX and Blue Origin's efforts at landing space rockets back on Earth.