Spirit Airlines in Takeover Talks With Castlelake After Frontier Deal Fails
Spirit Airlines is in discussions with investment firm Castlelake over a potential takeover, according to a report by CNBC. The talks come after negotiations between Spirit and fellow low-cost carrier Frontier Airlines collapsed, leaving the financially distressed airline searching for alternative solutions as it restructures under Chapter 11.
CNBC reported that while discussions between Spirit and Castlelake are ongoing, there is no certainty that a transaction will be concluded. Any deal would likely depend on the outcome of negotiations with creditors and regulators, as well as Spirit’s ability to stabilise operations during the restructuring process.
Castlelake has been an active player in aviation finance for several years, with investments spanning aircraft leasing, lending, and structured finance. In August 2025, the firm announced the launch of Merit Air Finance, a dedicated aviation lending platform with a capital allocation of USD1.8 billion. The move signalled Castlelake’s intention to deepen its exposure to the aviation sector at a time when airlines and lessors face elevated financing needs.
Spirit Airlines is currently undergoing its second consecutive Chapter 11 restructuring, underscoring the severity of its financial challenges. The airline has struggled with rising costs, weak yields, and intense competition in the US domestic market, particularly from larger network carriers and better-capitalised low-cost rivals.
According to reports, Spirit came close to ceasing operations in mid-December before securing emergency funding of USD50 million, providing short-term liquidity to keep the airline flying. The narrow escape highlighted the fragile nature of the carrier’s financial position and the urgency of reaching a broader restructuring or ownership solution.
In early January, Spirit’s pilots’ union publicly urged the airline’s bondholders to honour previously agreed funding commitments and warned against forcing the carrier into liquidation. The union argued that liquidation would destroy significant value, cost thousands of jobs, and further reduce competition in the US airline market.
A potential takeover by Castlelake could provide Spirit with access to fresh capital and financial expertise, although it would likely involve a substantial overhaul of the airline’s balance sheet and business strategy. Analysts note that private investment firms typically seek tighter cost controls, simplified operations, and improved asset utilisation when stepping into distressed airline situations.
The failure of talks with Frontier marked the end of a potential airline-led consolidation path for Spirit, following earlier blocked merger attempts in the US market. With that option off the table, a financial sponsor-backed restructuring now appears increasingly likely.
As negotiations continue, Spirit’s future remains uncertain. Any takeover or recapitalisation deal will need to navigate complex creditor negotiations, regulatory scrutiny, and labour considerations, while ensuring the airline can remain operational in one of the world’s most competitive aviation markets.
Related News: https://airguide.info/category/air-travel-business/airline-finance/
Sources: AirGuide Business airguide.info, bing.com, ch-aviation.com