Spirit Airlines in talks with Castlelake for a potential takeover, CNBC reports

Jan 22 (Reuters) – Spirit Airlines is in talks with investment firm Castlelake for a potential takeover of the bankrupt carrier, CNBC News reported on Thursday, citing people familiar with the matter.

Frontier Airlines had been in talks with Spirit for a potential merger, but the report said that the low-cost rival was unable to secure a deal.

Spirit’s future appears increasingly uncertain, with cash running low during its bankruptcy proceedings, which began in August, marking its second filing in less than a year.

It was not immediately clear if Spirit’s bondholders and Castlelake would reach a deal or the form it could take, the report added.

In August, Castlelake had launched Merit AirFinance, an aviation lending platform backed by $1.8 billion in deployable capital, which aims to provide debt financing to airlines and aircraft lessors for new and used aviation assets.

Spirit declined to comment on the matter. Castlelake did not immediately respond to a Reuters request for a comment.

Spirit has seen a string of failed merger attempts since 2022, starting with a cash-and-stock deal with Frontier that was later derailed by a rival bid from JetBlue Airways.

That transaction was ultimately blocked on antitrust grounds by a federal court in January 2024.

Spirit, best known for its bright yellow all-Airbus fleet, built its brand around affordable fares for budget-conscious travelers ready to forgo add-ons such as checked bags and seat assignments.

However, that demand tapered off quickly after the pandemic, as passengers preferred to opt for comfort and experience-based travel, leaving ultra-low-cost carriers struggling to adapt.

Last month, the airline secured an additional $100 million in emergency financing to support operations and restructuring while under court protection.

(Reporting by Shivansh Tiwary, Abhinav Parmar and Nathan Gomes in Bengaluru; Editing by Shailesh Kuber and Vijay Kishore)