Spirit Airlines has attracted new interest from investment firm Castlelake, which has entered discussions about a potential acquisition of the bankrupt ultra-low-cost carrier. The talks come after a prior proposal from Frontier Group Holdings was determined to be unworkable, people familiar with the matter told Reuters Thursday.
Spirit filed for Chapter 11 bankruptcy protection in August, marking its second filing in less than a year as the airline continues to search for a viable path forward.
Executives and advisors told a U.S. Bankruptcy Court judge this week that Spirit has undergone significant restructuring since its latest filing.
“This is a very different Spirit. It’s smaller, it’s tighter, it’s better,” said Marshall Huebner of Davis Polk & Wardwell, who is representing the airline, during the hearing.
While Castlelake’s discussions may not result in a completed transaction, their involvement has renewed hopes that Spirit could exit bankruptcy through a sale rather than further downsizing or liquidation.
Spirit Airlines has remained operational during the bankruptcy process with the support of its creditors, securing additional financing in December that the airline said was tied to progress on a reorganization or strategic transaction, according to CNBC.
The Air Line Pilots Association has publicly urged bondholders to release additional funding to avoid liquidation, warning in a January letter that such an outcome would end the South Florida-based airline. Castlelake has been active in aviation finance in recent years and in August launched Merit AirFinance, a new aviation lending platform backed by $1.8 billion in deployable capital, Reuters reported.
