Prime Highlights:
- Allegiant and Sun Country will join forces to form a stronger, more competitive leisure-focused airline.
- Sun Country’s charter flights and Amazon delivery services will continue under the merger.
Key Facts:
- The deal is valued at $1.5 billion, including $400 million in debt.
- After the merger, Allegiant shareholders will own 67% of the combined airline, and Sun Country shareholders will hold 33%.
Background:
Las Vegas-based Allegiant Air plans to buy rival low-cost airline Sun Country in a $1.5 billion cash and stock deal, which includes $400 million in debt. The merger is expected to create one of the top leisure-focused airlines in the U.S., according to Allegiant CEO Greg Anderson.
Anderson said the two airlines complement each other and will form a stronger, more competitive airline serving vacation travelers. Both carriers mainly fly passengers from smaller cities to popular holiday destinations and have almost no overlap in their routes.
The deal will also keep Sun Country’s charter flights and Amazon delivery services, which were important in shaping the merger. The CEOs of both airlines discussed the plan with Amazon before moving forward.
The merger happens as U.S. budget airlines deal with higher costs and more flights. Allegiant and Sun Country have handled this well, staying profitable compared to bigger airlines. Deutsche Bank predicts operating margins of 9.3% for Allegiant and 11.7% for Sun Country in 2026, similar to major airlines like Delta and United.
Sun Country shareholders will receive about a 20% premium, valuing their shares at $18.89 each. After the merger, Allegiant will own 67% and Sun Country 33% of the new airline.
The merger still needs approval from regulators, which will test the government’s approach to airline combinations. Allegiant is confident the deal will pass, pointing to the airlines’ different routes and low overlap. If approved, Greg Anderson will be CEO of the combined airline, while Sun Country CEO Jude Bricker will join Allegiant’s board. The companies aim to finalize the merger in the second half of this year.