Back
Business

Allegiant Travel Acquires Sun Country Airlines in $1.5 Billion Deal

Generated on: Last updated: 5 sources
View source

Allegiant Travel Company Completes Acquisition of Sun Country Airlines in $1.5 Billion Deal

The transaction creates the eighth-largest U.S. airline by seat capacity, combining two leisure-focused carriers.

Allegiant Travel Company completed its acquisition of Sun Country Airlines in a cash and stock transaction valued at approximately $1.5 billion, including $0.4 billion of Sun Country's net debt. The deal, announced on January 11, 2026, and finalized Wednesday, brings together two leisure-focused carriers.

Transaction Details

Under the terms of the agreement:

  • Sun Country shareholders will receive 0.1557 shares of Allegiant common stock and $4.10 in cash for each Sun Country share.
  • The implied value per Sun Country share is $18.89, representing a 19.8% premium over its January 9, 2026, closing price of $15.77.
  • Upon completion, Allegiant shareholders are projected to own approximately 67% of the combined entity, with Sun Country shareholders owning 33%.

Combined Operations and Scale

The merger creates a combined airline with:

  • Approximately 195 aircraft
  • Service to nearly 175 cities across more than 650 routes
  • A combined customer base of 22 million annual passengers
  • 21 million Allegiant loyalty members and 2 million Sun Country loyalty members

Allegiant becomes the eighth-largest U.S. airline by seats, according to Cirium data.

Network and Route Expansion

The merged entity will offer expanded leisure travel options, including:

  • 551 existing Allegiant routes
  • 105 existing Sun Country routes
  • Access to 18 international destinations via Sun Country's existing network across Mexico, Central America, Canada, and the Caribbean

Diversified Operations

Sun Country brings additional revenue streams to the combined company:

  • Air cargo operations for Amazon Prime Air
  • Charter contracts with casinos, sports teams, and the U.S. Department of Defense
  • Other cargo partnerships

Leadership and Structure

  • Gregory C. Anderson, current Allegiant CEO, will serve as Chief Executive Officer of the combined company.
  • Robert Neal will serve as President and Chief Financial Officer.
  • Jude Bricker, current Sun Country President & CEO, will join the Board of Directors.
  • The Board of Directors will expand to 11 members, including two additional Sun Country board members.
  • Maury Gallagher will remain Chairman.

The combined company is headquartered in Las Vegas, with a significant operational presence maintained in Minneapolis-St. Paul.

Minneapolis-St. Paul International Airport (MSP) becomes the combined airline's largest base by flights and seats, while Harry Reid International Airport (LAS) in Las Vegas is the fifth-largest base.

Brand and Integration Timeline

Both airlines will continue to operate separately in the near term, maintaining their respective brands, booking portals, and loyalty programs. The companies plan to combine operations under the Allegiant name once a single operating certificate is obtained from the Federal Aviation Administration (FAA).

The integration of brands and loyalty programs is expected within 18 to 24 months, or by May 2028.

Financial Projections

  • Allegiant anticipates achieving $140 million in annual synergies within three years post-closing, primarily from network expansion, scale efficiencies, fleet optimization, and procurement.
  • The transaction is projected to be accretive to earnings per share one year after closing.
  • The combined company expects Net Adjusted Debt to EBITDAR to be less than 3.0x at closing.
  • Allegiant reported a $42.5 million profit for the first quarter, up 32% year-over-year.
  • The company expects a 6.5% capacity reduction in Q2 compared to last year and flat to slightly lower capacity in Q3.

Industry Context

The acquisition closes amid rising jet fuel costs, which have roughly doubled since February due to geopolitical tensions. The merger follows the shutdown of Spirit Airlines on May 2, which was the largest U.S. airline collapse in a generation.

Smaller budget airlines like Allegiant and Sun Country compete against larger carriers (Delta, American, United, Southwest) which hold approximately 80% domestic market share.

Broader merger discussions are ongoing in the U.S. airline industry, including United Airlines' approach to American Airlines and JetBlue's reported search for a merger partner.

Transportation Secretary Sean Duffy has indicated there may be room for some mergers in the aviation industry. The Association of Value Airlines requested $2.5 billion from the Trump administration to offset fuel costs, but Transportation Secretary Sean Duffy indicated it was unnecessary.

Approval and Timeline

The transaction received unanimous approval from both companies' boards of directors. It closed following receipt of U.S. federal antitrust and other regulatory approvals, as well as approval from both companies' shareholders.