Los Angeles-based private equity firm Oaktree Capital Management has invested $125 million (€98.5 million) in equity in US discount carrier Spirit Airlines.
The capital, which gives Oaktree a controlling stake in the company, will be used to finance the acquisitions of new aircrafts to replace Spirit’s current fleet of 32 MD-80s. Currently, Spirit is the 14th largest airline in the country and the largest one that is privately held in the US, according to a press statement.
Low-cost airlines have been experiencing astonishing growth over the last decade, attracting passengers with lower rates and less-busy US airports. Smaller airlines have been much healthier than larger, established airlines post-9/11, in large part due to their business models, which are based on direct city-to-city flights rather than the traditional hub-connector models of large airlines.
According to the statement, Spirit doubled its revenues to $450 million in 2003 through a series of technological and customer service improvements, including a new class of service a notch above coach but still below business called Spirit Plus.
In a statement, Oaktree managing director Ronald Beck said Spirit’s “strong management team, strategic low-cost business model and … capitalization” will help it continue growing in the discount carrier industry.
Oaktree Capital Management manages funds of more than $2.5 billion in committed capital. The firm most recently closed its debut mezzanine fund on $800 million.