^{Photo: Bloomberg.com}

A Major Consolidation in Budget Aviation

Allegiant Travel announced it will acquire rival low-cost carrier Sun Country Airlines in a $1.5 billion cash-and-stock transaction, including debt, marking one of the most significant consolidation moves among U.S. leisure airlines in recent years.

The deal brings together two carriers focused heavily on vacation travel, particularly routes serving sun-and-beach destinations, at a time when smaller airlines are under growing pressure from higher operating costs and expanded domestic capacity.

Allegiant CEO Greg Anderson said the combination would create a stronger, more competitive airline focused squarely on leisure travelers, while preserving each carrier’s core strengths.

Deal Structure and Shareholder Impact

Under the terms of the agreement, Sun Country shareholders will receive an implied value of $18.89 per share, representing a premium of nearly 20 percent over the airline’s closing price of $15.77 on Friday.

Ownership of the combined airline will be split roughly 67 percent for Allegiant shareholders and 33 percent for Sun Country shareholders. The transaction also assumes approximately $400 million in Sun Country’s net debt.

The companies expect the merger to close in the second half of the year, pending regulatory approval.

Why the Airlines Fit Together

Executives from both companies emphasized that their route networks overlap very little, a factor they believe will be central to winning regulatory approval. Allegiant is based in Las Vegas, while Sun Country operates out of Minneapolis, and both specialize in point-to-point leisure routes rather than hub-and-spoke networks.

Sun Country also brings a diversified business model, including charter flights and a contracted cargo operation with Amazon. Anderson said the Amazon flying agreement will continue after the merger and described it as a critical component of Sun Country’s value. Executives from both airlines discussed the proposed deal with Amazon before moving forward.

Competing in a Market Dominated by Giants

The merger highlights the growing challenge faced by smaller airlines competing against the industry’s largest players. Delta Air Lines, American Airlines, United Airlines, and Southwest Airlines together control roughly 70 percent of the U.S. domestic market, according to federal data covering the 12 months ended Oct. 31.

Budget and leisure-focused carriers have struggled to keep costs in check following the pandemic, as fuel prices, labor expenses, and aircraft availability have all climbed. At the same time, increased domestic capacity has intensified fare competition, squeezing margins.

By combining scale and resources, Allegiant and Sun Country aim to better withstand these pressures while maintaining their low-cost focus.

Leadership and Governance Changes

If the deal is approved, Allegiant CEO Greg Anderson will lead the combined airline. Sun Country CEO Jude Bricker, who previously served as Allegiant’s chief operating officer, will join Allegiant’s board of directors.

Anderson said Allegiant first approached Sun Country in late fall, as both companies assessed long-term strategies in an increasingly competitive environment.

Regulatory Test Ahead

The merger will test how the current administration approaches airline consolidation. In recent years, regulators have taken a tougher stance on competition in the airline industry.

A federal judge blocked JetBlue Airways’ proposed acquisition of Spirit Airlines on antitrust grounds, a decision that contributed to Spirit’s ongoing financial distress. Earlier consolidation attempts involving Spirit and Frontier Airlines also failed to materialize.

However, regulators approved Alaska Air’s nearly $2 billion acquisition of Hawaiian Airlines in 2024, suggesting that deals viewed as limited in competitive overlap may still clear regulatory hurdles.

Allegiant executives said they are confident this transaction meets that standard.

What Comes Next

Allegiant and Sun Country executives are scheduled to hold a joint investor and analyst call on Monday morning to outline the strategic rationale, financial expectations, and integration plans for the combined airline.

If approved, the deal would reshape the U.S. leisure travel landscape, creating a larger budget airline better positioned to compete on costs, expand destinations, and navigate the increasingly complex economics of post-pandemic air travel.