For the final stage of a launch vehicle with powered–coasting–powered multi-phase flight, this paper investigates the joint reconfiguration method to determine subsequent flight trajectory and degraded orbit after power system failure in the first powered phase. While power system failures due to mass–flow–rate drop have been thoroughly studied in the existing literature, this paper focuses on the more challenging specific impulse drop failures, which result in loss of total launcher energy. This paper aims to design a fault-tolerant guidance method with onboard potential and to analyze the survivability and characteristics of the launcher in the event of such a failure. In the problem modeling, the strong nonlinearity of the orbital elements as terminal constraints is eliminated by analyzing the orbital properties in the orbital coordinate system to establish the primal trajectory optimization problem. For this multi-phase trajectory optimization problem, a joint optimization algorithm for the degradation orbit and the flight trajectory, based on convex optimization and Radau pseudospectral method, is designed to achieve autonomous mission reconfiguration. The algorithm introduces the relaxation–penalization idea, where the terminal constraints are relaxed and penalized in the performance index, allowing the algorithm to adaptively form an optimal degradation circular or elliptical orbit based on the remaining capacity of the launch vehicle. Simulation experiments demonstrate the effectiveness and superiority of the mission reconfiguration algorithm. Finally, the paper presents the first analysis of the optimal allocation of flight time between the first powered phase, the coasting phase, and the second powered phase in a propellant depletion scenario following the launcher power system failure.