Allegiant Travel Company completed its acquisition of Sun Country Airlines on Wednesday, closing a $1.5 billion cash-and-stock deal that brings together two low-cost carriers focused on leisure travel.
The transaction received required regulatory approvals and shareholder sign-off from both companies, Allegiant said. Across the merged network, roughly 175 cities and more than 650 routes will be covered by a fleet of 195 aircraft, serving an estimated 22 million passengers a year.
"Today marks a defining moment in Allegiant's history as we officially join forces with Sun Country to create the leading leisure-focused airline in the United States," Allegiant CEO Gregory Anderson said in a statement. "By bringing together two strong airlines with similar business models, we are creating a more differentiated and durable airline."
For travelers, the transition will be invisible in the short term — each airline keeps its own brand, and passengers use the same booking channels and customer service contacts they always have. Neither loyalty program — Allegiant Allways Rewards nor Sun Country Rewards — will be merged in the immediate term. Allegiant said it will introduce benefits over time to give customers access to the combined network.
Jobs on the operational side are not at risk, the company said, though back-office and administrative functions could see redundancies as the two organizations are brought together. Sun Country's hub at Minneapolis-St. Paul will remain an important operating center for the combined company.
The company has projected roughly $140 million in yearly cost and revenue gains to be unlocked over a three-year integration window, stemming from fleet efficiencies, expanded scale, and procurement savings. The transaction is expected to be accretive to earnings per share in the first full year after closing, the company said.
Sun Country's revenue streams — including cargo flying for Amazon $AMZN Prime Air and charter contracts with casinos, Major League Soccer teams, collegiate sports programs, and the Department of Defense — complement Allegiant's existing charter business. The combined company also has 30 aircraft on order and options on 80 more.
Greg Anderson will serve as CEO of the combined company, with Robert Neal as president and CFO. Jude Bricker, Jennifer Vogel, and Thomas C. Kennedy were appointed to Allegiant's board of directors. Sun Country stock has ceased trading on the Nasdaq $NDAQ; Allegiant Travel Company will continue trading under the ticker symbol ALGT.
The deal closes as the budget airline sector faces strain from a sharp rise in jet fuel costs. Speaking with CNBC, Anderson described a discipline of shrinking the schedule when demand fades — grounding planes mid-week in slow months like September — and pushing seats aggressively when travelers are most willing to pay, a philosophy he summed up as prioritizing margin over volume.
The acquisition comes weeks after Spirit Airlines shut down, the largest U.S. airline collapse in a generation. Spirit's CEO cited the rapid rise in fuel costs as the decisive factor in the carrier's wind-down, which stranded roughly 1.8 million reservations. Budget carriers are disproportionately exposed to fuel swings, ABC News noted, because the narrow cost structures that define the low-cost model leave little cushion when expenses climb.