Allegiant to Acquire Sun Country in $1.5 Billion Deal to Strengthen Leisure Airline Presence

Allegiant Travel Co. has agreed to acquire Sun Country Airlines Holdings Inc. in a $1.5 billion cash-and-stock deal, the companies announced. The transaction includes Sun Country's debt and values its shares at $18.89, a 19.8% premium to its closing price of $15.77 on January 9.

The acquisition brings together two budget carriers focused on leisure travel, charter operations, and ancillary revenue. Allegiant CEO Gregory Anderson said the deal will expand reach to more vacation destinations, including international routes. Sun Country CEO Jude Bricker added that the transaction offers value to shareholders while allowing the airline to continue its growth strategy.

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. Allegiant shares closed at $94.97 on January 8, giving the company a market capitalization of $1.68 billion.

The combined company will operate approximately 195 aircraft and offer more than 650 routes, including 18 international destinations in Mexico, Canada, the Caribbean, and Central America. The deal is expected to generate $140 million in annual synergies within three years and will be accretive to earnings per share in the first year.

The transaction is expected to close in the second half of 2026 and is subject to antitrust and regulatory approvals. Both airlines will continue to operate separately until the deal is finalized and a single operating certificate is issued by the Federal Aviation Administration.

Why Did This Happen?

The deal aligns with a broader trend of consolidation in the U.S. airline industry, driven by rising costs and the need for operational efficiency. Airlines have been focusing on cost-cutting and improving service reliability. Allegiant and Sun Country are combining to create a stronger leisure-focused carrier, leveraging complementary networks and fleet efficiencies.

Sun Country's long-term cargo agreement with Amazon Prime Air also adds diversification to Allegiant's predominantly leisure business. This expansion into cargo and charter operations may help the combined entity navigate market volatility and customer behavior shifts.

What Are Analysts Watching Next?

Allegiant shareholders are expected to own 67% of the combined company on a fully diluted basis, with Sun Country shareholders holding the remaining 33%. Allegiant CEO Gregory Anderson will lead the new entity, with Robert Neal serving as president and chief financial officer. Jude Bricker will join the board of directors.

Industry analysts are watching for regulatory responses, particularly in light of previous antitrust concerns surrounding other airline mergers. JetBlue's $3.8 billion purchase of Spirit Airlines was blocked in 2024 over competition concerns. Frontier Airlines has also faced regulatory rejections in its attempts to buy Spirit, which filed for bankruptcy twice.

The deal's success will also depend on market conditions and consumer demand for affordable air travel. Allegiant shares have risen 11% year to date but are down nearly 6% over the past 12 months. Sun Country shares are up nearly 10% this year but have declined slightly over the past year.

How Does This Affect the Industry?

The acquisition marks another step in the ongoing consolidation of budget airlines. Other recent examples include Alaska Air Group's 2024 acquisition of Hawaiian Airlines for $1 billion. The industry has faced challenges including tariffs, federal shutdowns, and rising expenses post-pandemic.

With more than 22 million passengers annually, the combined company will have a significant presence in the U.S. leisure travel market. The deal is expected to improve scheduling flexibility, on-time performance, and customer access to affordable air travel.

The transaction's impact on competition, pricing, and regulatory scrutiny will likely be closely monitored by market participants and industry observers. Allegiant and Sun Country will continue to operate separately until the regulatory and operational integration is complete.