I’m not surprised that we’re seeing an ultra-low-cost carrier (ULCC) merger to kick off the new year, though I am surprised at the parties involved.
Allegiant is Purchasing Sun Country in a $1.5 Billion Deal
Allegiant and Sun Country Airlines have announced a definitive merger agreement that will see the former acquire the latter in a cash and stock transaction. The transaction values Sun Country at roughly $1.5 bullion, including $400 million in Sun Country debt. Upon closing, existing Sun Country shareholders will own approximately 33% of the combined company.
As part of the deal, Sun Country shareholders will receive 0.1557 shares of Allegiant common stock and $4.10 in cash for each Sun Country share owned. This represents a premium of 19.8% over Sun Country’s closing share price of $15.77 on January 9, 2026.
According to the airlines, the combination will create a leading leisure-focused U.S. airline. The combines carrier will be able to offer expanded service to more destinations across the United States and abroad. Both airlines focus on point-to-point leisure routes, making this a logical tie up.
Gregory C. Anderson, Allegiant CEO, said this about the merger:
“This combination is an exciting next chapter in Allegiant and Sun Country’s shared mission in providing affordable, reliable, and convenient service from underserved communities to premier leisure destinations. We have long admired Sun Country for their well-run, flexible, and diversified business model that optimizes for year-round utilization and strong margins. Together, our complementary networks will expand our reach to more vacation destinations including international locations. With our combined strengths– including operational excellence, consistent profitability, strong balance sheets, and fleet ownership, we will create an even more resilient and agile airline that delivers greater value to travelers, partners, Team Members, shareholders, and the communities we serve.”
Jude Bricker, Sun Country President & CEO, added:
“Over Sun Country’s 43-year history, we have grown to become one of the nation’s most respected low-cost, leisure airlines with a unique business model for serving scheduled service and charter passengers as well as delivering cargo, with a strong brand and deep roots in Minnesota. Today marks an exciting next step in our history as we join Allegiant to create one of the leading leisure travel companies in the U.S. We are two customer-centric organizations, deeply committed to delivering affordable travel experiences without compromising on quality. Importantly, we believe this transaction delivers significant value to Sun Country shareholders and an opportunity to continue to benefit from our growth plans as a combined company.”
Prior to the close of the deal, the two airlines will continue to operate under their respective brands. Following close, the two companies will retain the Allegiant brand though they will operate separately until they obtain a single operating certificate from the FAA.
My Thoughts
As I mentioned above, I’m not surprised that we’re seeing consolidation in the ULCC space. However, candidly, I expected we would be seeing a merger between Spirit and Frontier. The tie up between Allegiant and Sun Country certainly wasn’t one that I saw coming but, it makes plenty of sense.
Allegiant and Sun Country both operate Boeing 737 family aircraft, Allegiant also operates Airbus A320 family jets, and the two airlines focus on point-to-point leisure routes. Both carriers have a robust charter business and their route networks have virtually no overlap. In fact, according to IshrionA, they only overlap on a single route: Appleton (ATW) to Fort Myers (RSW).
Sun Country’s business is highly seasonal with its operations primarily focused on flying snowbirds south for the winter. The carrier has a massive operation at Minneapolis–Saint Paul International Airport (MSP) for just this purpose. With the seasonality of Sun Country’s business, I’m sure Allegiant will find additional uses for those aircraft.
Sun Country also operates a fleet of freighters on behalf of Amazon’s Prime Air and, while no official announcement has been made, I would assume that the cargo flying will remain for the foreseeable future.
I don’t see any major regulatory hurdles here and I assume that this deal will close without issue. Long term, this could be bad news for Delta travelers in MSP as Sun Country has historically kept fares there low. If Allegiant looks to dramatically adjust its route map from the airport, Allegiant typically prefers to fly to smaller cities that lack service, Delta will be licking its chops.
Summary
It was a surprising Sunday with Allegiant and Sun Country announcing their plans to merge. While the announcement caught me off guard, I believe that this merger makes plenty of sense. The two airlines have similar operations with very little overlap and it will be interesting to see what the combined carrier decides to do with its Minneapolis/St. Paul hub.