Spirit Airlines is in talks with Castlelake for a potential takeover as it seeks a path out of bankruptcy. Frontier Airlines previously considered a merger with Spirit but didn’t secure a deal. Spirit has amended agreements with creditors to receive immediate funding, contingent on progress towards reorganization or a strategic transaction.

Castlelake, an alternative investment firm, has been active in aviation finance and recently launched Merit AirFinance with $1.8 billion in deployable capital. Spirit has slashed flights, reduced fleet, and cut jobs to save money. Unions agreed to pay cuts for pilots and flight attendants to support restructuring and avoid liquidation.

Spirit Airlines faced challenges after the pandemic with rising costs, changing customer preferences, and oversupply of domestic flights driving down airfare. Pratt & Whitney engine recalls grounded Airbus aircraft, and a planned acquisition by JetBlue was blocked as anticompetitive. Spirit tried to attract higher-spending customers by offering roomier seats and bundled fares to compete with larger rivals.

Read more at CNBC: Spirit Airlines in deal talks with investment firm Castlelake