US low-fare operator Spirit Airlines is reportedly in discussions with the alternative investment firm Castlelake regarding a potential takeover.
The news, first reported by CNBC on Thursday, comes as Spirit is in its second Chapter 11 bankruptcy filing in less than a year. The Florida-based airline is attempting a “strategic transaction” to secure its long-term future after a series of failed merger attempts with rival carriers.
An investment firm with approximately USD 33 billion in assets, Castlelake is experienced in aviation finance. Last year, it launched Merit AirFinance, a USD 1.8 billion fund dedicated to aircraft and engine debt capital.
Castlelake’s interest may be driven by Spirit’s physical assets. Unlike a traditional airline merger, a takeover by an investment firm could involve a significant restructuring of these assets to satisfy creditors.
The airline has already taken drastic measures to stay afloat, including furloughing staff, cutting routes and downsizing its fleet.
It is also negotiating pay reductions with unions to unlock emergency funding.
Earlier this month, the Air Line Pilots Association (ALPA) urged bondholders to release remaining funding commitments, warning that without a deal, the airline risks a disorderly shutdown that could leave passengers stranded and thousands unemployed.
Under the terms of the Chapter 11 protection, any agreement with Castlelake must be approved by the U.S. Bankruptcy Court.
Credits: Spirit Airlines
