Allegiant Buys Sun Country in $1.5 Billion Deal

Allegiant will buy Sun Country in a $1.5 billion deal, bringing further consolidation to the US aviation market. The deal will see Allegiant as the surviving brand, with Sun Country operations folding into the Allegiant business model.

The companies project cost synergies to the tune of $140 million within three years and EPS-accretive results within one year.

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Sun Country’s MSP base will be added to Allegiant’s sprawling network, increasing the routes served by nearly 20%. Six airports in the combined network serve more than 500 monthly departures in January 2026. Another 8 top 150 monthly departures.

Based on current published schedules MSP would be the largest base by flight frequencies or destinations served.

The company claims “Integrated scheduling and fleet management will enhance on-time performance.” It is unclear what this really means or how it would work in practice. Any of the systems they’re using today should be able to manage the scheduling. Just adding more planes into the mix does not change that efficiency, especially around on-time performance.

The acquisition comes just a few months after Allegiant finally pulled the plug on its SunSeeker Resort play. That effort resulted in a $332 million write-off a year ago, though also a cash infusion of $200 million when it finally sold to Blackstone mid-year.

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Smoothing Peaks and Troughs

A major selling point for the deal is the promise of easier adjustment to seasonal demand peaks. Some of this comes through growing the charter capacity with Allegiant’s larger fleet, while taking advantage of Sun Country’s contracts with casinos, Major League Soccer, collegiate sports teams, and the Department of Defense. The companies also suggest the larger combined operation will allow it to more rapidly adjust and expand “passenger and charter routes to support emerging vacation trends and expertly matching demand trends.”

It will also keep its Amazon freighter contract in play. As with the other Sun Country contracts, Allegiant believes with will help smooth the seasonality of its operations.

International Opportunities

Allegiant also touts “Sun Country’s vast international network across Mexico, Central America, Canada, and the Caribbean” as a compelling part of the deal. That is a bit of a stretch, but still a significant factor at play.

Sun Country’s international operations are well established, while Allegiant has none. The latter aimed to address that problem with a Mexican joint venture announced in December 2021. Alas, geopolitics are a mess and the US-Mexico transborder aviation situation has devolved significantly since that application went in. In many ways this seems to be Allegiant moving on from that plan.

At the same time, however, it is unclear that Allegiant will be able to fully take advantage of Sun Country’s international reach. One major limiting factor is understood to center around crew duty day limits and a need to return to base at the end of the day rather than overnight at a destination. It is unclear how that would work, assuming the Allegiant work rules remain in effect as the surviving entity, following the merger.

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Loyalty and Scale

Lots of things work better for commercial airlines at scale. The combined fleet of nearly 200 aircraft, with 30 orders pending and 80 options, helps on that front. Pushing some of the MAX into MSP to boost capacity in critical markets seems like a useful opportunity. Sun Country CEO Jude Bricker (who will join the Board but step down from day-to-day operations at close) has previously shared that his airline runs very high load factors and could potentially use larger aircraft in some markets.

At that size the combined carrier can somewhat reasonably continue to operate the mixed Airbus/Boeing fleet, though getting to a single type would still probably be a favorable position eventually. Allegiant was moving that direction with its 737 MAX order, and Sun Country generally seems happy with its 737 fleet.

Scale also helps drive value with an airline loyalty program. The release mentions 21 million members in the Allegiant program and another 2 million on the Sun Country side. That’s still small in the co-brand world, though there’s likely little overlap given the near nil market overlap of the two carriers.

Will it Work?

Mergers are messy. They’re ripe with opportunities to scare off long-time customers and see operational snafus ruin hard-earned reputations. But they also can help boost margins and drive increased efficiency in purchasing and other back office areas.

This one is relatively small. The combined pair will operate 15% fewer flights than the currently shrunken Spirit Airlines in January 2026. It is still less than half the size of JetBlue. The combination does, however, push them back to double the size of rapidly growing Breeze Airways.

And at that small size it is also very hard to be successful as a standalone. Even the larger ones argue they need to be bigger to have a fighting chance. The scale should help a bit on that front.