Spirit Airlines is in talks with alternative investment firm Castlelake over a potential takeover, as the struggling carrier searches for a path forward following its second Chapter 11 bankruptcy filing for 2025, in period of less than a year.
Citing people familiar with the discussions, CNBC reported that Spirit has not reached a merger agreement with fellow ultra-low-cost carrier Frontier Airlines, despite renewed talks in recent months, and may instead pursue a sale to Castlelake.
Neither Spirit nor Castlelake have commented on the report.
Spirit filed for Chapter 11 bankruptcy protection in August 2025, after its previous turnaround plan failed to stabilize the business. The airline has since cut capacity, reduced its fleet and laid off employees in an effort to conserve cash. Pilots last year agreed to pay concessions totaling about $100 million, according to the Air Line Pilots Association, which urged creditors to support Spirit’s restructuring and avoid liquidation.
The potential Castlelake deal would likely require the involvement of Spirit’s bondholders, though the structure and valuation of any transaction remain unclear. Castlelake, based in Minneapolis, manages about $33 billion in assets and has become increasingly active in aviation finance.
In August 2025, Castlelake launched a new aviation lending platform, Merit AirFinance, with around $1.8 billion in deployable capital. At the time, the firm said the unit would provide debt financing to airlines and leasing companies for new and used aircraft. Castlelake has deployed more than $5 billion to airlines and lessors since 2020, according to company statements.
In a filing with the US Securities and Exchange Commission in October 2025, Spirit disclosed that it was exploring a path forward, including a merger or sale, and was in discussions with multiple interested parties. Two months later, Bloomberg reported that Spirit was again in talks with Frontier, reviving a long-running potential tie-up between the two ultra-low-cost carriers.
Frontier previously attempted to acquire Spirit in 2022, but Spirit shareholders rejected the deal. The airlines revisited merger discussions in 2024 without success, and in January 2025 Frontier offered to buy Spirit for roughly $2.1 billion in cash and stock as Spirit prepared to exit bankruptcy. This proposal was also rejected.
Spirit’s troubles deepened after a federal judge blocked its planned acquisition by JetBlue Airways on antitrust grounds in 2024. This left the airline to navigate rising labor costs, shifting consumer preferences, and an oversupply of domestic capacity without the scale advantages of larger competitors.
Spirit has since attempted to attract higher-spending travelers through bundled fares and upgraded seating options, though those efforts have yet to reverse its fortunes.