In a notable development within the U.S. airline sector, Allegiant Travel Company (NASDAQ: ALGT) announced on Sunday a definitive agreement to acquire Sun Country Airlines Holdings Inc. (NASDAQ: SNCY). The transaction is valued at roughly $1.5 billion and is structured to provide Sun Country's shareholders with a combination of cash and Allegiant stock.
Under the terms, Sun Country investors will be granted 0.1557 shares of Allegiant common stock plus $4.10 in cash for each Sun Country share held. This package implies an aggregate value of $18.89 per Sun Country share, representing an approximate 20% premium over Sun Country's closing price on January 9.
The finalized merger contemplates the creation of a larger airline entity focused predominantly on leisure travel. The combined company is expected to handle about 22 million passengers every year, serving nearly 175 cities via more than 650 flight routes. The fleet size will encompass approximately 195 aircraft. Allegiant’s established strength arises from its focus on smaller regional markets, which will complement Sun Country's existing service footprint that largely covers larger urban centers and international leisure destinations. This complementary alignment is projected to broaden nonstop service options to popular vacation spots, thereby expanding customer choice.
Beyond scheduled passenger flights, the strategic outlook includes diversified revenue sources. Sun Country holds several long-term contracts in cargo and charter services, notably including a multi-year agreement with Amazon Prime Air, the drone delivery initiative operated by Amazon.com, Inc. (NASDAQ: AMZN). Additional charter agreements serve professional sports teams, casino enterprises, and government agencies. Allegiant’s own charter service further enhances the steadiness of cash flows across varying travel demand cycles.
Financially, Allegiant anticipates achieving $140 million in annual cost and revenue synergies by the third year post-merger. These efficiencies are expected to enhance the combined company’s earnings per share as early as the first full year of operations. Management projects the company’s net leverage ratio to be below 3.0x at the transaction’s closing, underscoring a commitment to maintaining financial flexibility and balance sheet strength.
Board approvals have been secured from both Allegiant and Sun Country. The merger is planned to close in the latter half of 2026, subject to customary regulatory clearances and shareholder consent. Post-merger, Allegiant will retain its headquarters in Las Vegas while sustaining a major presence in the Minneapolis–St. Paul area, reflecting Sun Country's regional roots.
Regarding liquidity, Allegiant reported a total of $1.2 billion available as of September 30, 2025, which includes nearly $1 billion in cash and investments plus $175 million from undrawn revolving credit lines, providing substantial financial resources to support the integration and operational needs of the combined airline.
Market reactions have diverged following the announcement. Allegiant’s stock price declined by 2.10% to $92.98 during premarket trading on Monday, while shares of Sun Country surged by 12.87%. This movement reflects investor sentiment and the premium embedded in the transaction for Sun Country shares.