Allegiant Airlines Acquires Sun Country Airlines for $1.5 Billion

Allegiant Airlines, a Nevada-based carrier, has confirmed its acquisition of Sun Country Airlines, a Minneapolis-based carrier. Both carriers are ultra-low-cost carriers, though they are smaller and less widely recognized than Frontier Airlines, Spirit Airlines, and Southwest Airlines. Allegiant’s acquisition will provide them with access to 68 Boeing 737-800 aircraft previously owned by Sun Country, in addition to their current fleet of approximately 110 aircraft.

While both carriers are low-cost carriers, Sun Country Airlines operates on a hub-and-spoke model, while Allegiant operates on a point-to-point model. This means that Sun Country Airlines has a central hub, while Allegiant Airlines does not. As a result, operations are expected to remain largely unchanged. However, long-term adjustments may include further expansion from Minneapolis, Sun Country Airlines’ hub, and the merging of loyalty programs.

The acquisition will significantly change the ownership structure of the two companies. Allegiant Airlines will own approximately 67% of the combined company, while Sun Country Airlines will own approximately 33%. Sun Country Airlines shareholders will receive 0.1557 shares of Allegiant Airlines and $4.10 in cash for each of their shares. This represents a 19.8% premium over Sun Country Airlines’ Friday closing price and an 18.8% premium over the 30-day volume-weighted average price.

Allegiant Airlines projects $140 million in synergies by the third year of the merger. The deal includes 22 million annual customers, nearly 175 cities, and over 650 routes. Allegiant Airlines currently has 195 aircraft in service, with 30 on order and 80 options.