Wow: Allegiant & Sun Country Merging, As Two Leisure Airlines Seek Synergies

There’s more consolidation coming to the US airline industry, and I can’t say this merger is particularly surprising.

Allegiant acquiring Sun Country in $1.1 billion deal

Allegiant Air and Sun Country Airlines have announced a definitive merger agreement, under which Allegiant will acquire Sun Country for $1.5 billion, including taking over $400 million of Sun Country’s net debt (so it’s a roughly $1.1 billion deal). Upon closing (which is expected in the second half of 2026), Allegiant and Sun Country shareholders will own approximately 67% and 33% of the new combined company, respectively.

This is a cash and stock transaction at an implied value of $18.89 per Sun Country share. Sun Country shareholders will receive 0.1557 shares of Allegiant common stock and $4.10 in cash for each Sun Country share owned, representing a premium of 19.8% over Sun Country’s closing share price of $15.77 on January 9, 2026, and 18.8% based on the 30-day volume-weighted average price.

The combination is described as creating a leisure focused airline, expanding service to more popular vacation destinations across the United States, as well as international destinations, and providing more people with access to affordable, convenient air travel.

For the time being, the two companies will continue to operate independently as before, until they’re on a single operating certificate. However, in the long run, the plan is for the Allegiant brand to survive, and the Sun Country brand to go away.

For those not familiar with the two carriers:

• Allegiant has a fleet of roughly 130 aircraft, including Airbus A320 and Boeing 737 family aircraft; the airline operates point-to-point leisure routes, primarily out of secondary airports
• Sun Country has a fleet of roughly 65 Boeing 737 aircraft (20 of which are cargo planes operated for Amazon Air), and the carrier’s passenger network is heavily centered around leisure routes from Minneapolis (MSP)

Here’s how Allegiant CEO Gregory Anderson describes this:

“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.”

Meanwhile here’s how Sun Country CEO Jude Bricker describes this:

“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.”

This seems like sensible airline consolidation

The US airline industry has of course seen a lot of consolidation over the years, and pickings are getting slim. Of the remaining airlines, I’d say a merger between Allegiant and Sun Country is about as logical and non-objectionable as any combination you could find, and it’s one that has been rumored for a very long time.

Even as the primarily domestic leisure airlines in the United States have mostly struggled, Allegiant and Sun Country have been the two exceptions, as they’ve been performing relatively well. That’s because they’ve both carved out niches, unlike carriers like Frontier, Spirit, etc., which simply try to poach passengers from the legacies, without sufficient competitive advantages.

There’s a lot of upside with this combination:

• Both companies are super innovative with their route networks, with Allegiant largely flying in markets where there’s no competition, and Sun Country being so heavily focused on Minneapolis
• There are of course synergies in combining two companies, and also more upside in terms of loyalty
• Given the heavy seasonality of Sun Country’s network, there’s value in better being able to allocate resources
• I don’t think the diversified fleet is much of an issue, given that Allegiant is currently transitioning from Airbus to Boeing aircraft anyway

I can’t imagine there will be any significant regulatory issues with this deal, since both carriers are ultra low cost and haven’t really competed. The only thing I’ll say is that a premium of under 20% isn’t exactly that much upside for Sun Country shareholders, compared to some past deals.

Admittedly it was an extreme example, but Alaska acquired Hawaiian for $18 per share, while Hawaiian’s stock was trading for under $5. I guess the idea is that the deal partly includes Allegiant stock, and if you assume Sun Country will perform well in the long run, then maybe Allegiant will as well.

As I see it, the only real potential downside is that labor costs could go up a bit, since combining workgroups almost always leads to more lucrative contracts, given the leverage that the unions have.

Bottom line

Allegiant will be acquiring Sun Country, as two of the country’s most successful leisure airlines seek synergies. This is a logical combination, especially since the airlines have virtually no overlapping routes. Allegiant is heavily focused on smaller airports without much other service, while Sun Country is heavily focused on Minneapolis, and other seasonal leisure routes, though largely to and from major airports.

What do you make of this merger between Allegiant and Sun Country?