It was just another peaceful Sunday until the press release crossed the wire. Allegiant has decided to buy Sun Country, and unless it’s just about growing for growth’s sake, I find myself struggling to understand why. So, come take a stroll with me as I go down this path trying to reason through this one.
Allegiant will be the acquiring airline and the surviving carrier with two-thirds of the combined company while Sun Country shareholders will have one-third. Allegiant CEO Greg Anderson and President BJ Neal will remain in their roles. Sun Country CEO Jude Bricker will split his time between being on the board and counting his money.
In the nine months ending September 2025, Allegiant generated $1.95 billion in revenue with a fleet at the end of the quarter of 82 A320s, 29 A319s, and 10 B737-MAX8 200s. Sun Country pushed out $846 million in revenue with a fleet of 50 B737NG passenger aircraft (five of which were leased out) and 20 cargo B737NG airplanes flying for Amazon during the same period.
Let’s get the easy part out of the way. I can absolutely see why Sun Country likes this plan. Allegiant will pay a 20 percent premium over Sun Country’s current share price, and that’s after the stock’s recent run-up. Sun Country walks away feeling pretty good about itself. CEO Jude Bricker told us regarding mergers on The Air Show podcast back in September:
[Sun Country is] mostly a spectator, because we have a very different business with high margins. So it’d be a challenge, I think, for us to participate, but it certainly makes sense. And I’m pro-consolidation, but it’s clearly an administrative backdrop that is constructive. The low-cost space is struggling. They’re looking for catalysts. I don’t know what else it’s going to take to get airlines together.
Well, apparently he got a good offer, and now he can participate. Good for him.
Where I’m struggling is understanding what Allegiant will be getting out of this. We have two airlines with two, shall we say, adjacent models. Both airlines love the idea of getting aircraft for cheap. Allegiant used to only want used, previous-generation aircraft like Sun Country — Jude Bricker, after all, came from Allegiant — but it has changed its tune with its Boeing 737 MAX order. Still, both airlines can utilize their fleets sparingly to only fly when demand exists. That’s a far cry from Frontier and Spirit which have high aircraft costs and have a strong incentive to fly them hard to spread out costs.
Allegiant originally had the model of connecting smaller cities to large destination bases less-than-daily. This is the flagship Las Vegas and Florida model which brings people in from places that have limited or no other service. Over the years, Allegiant has grown into smaller bases like Asheville, Knoxville, Nashville, and any other “ville” you can think of. It still focuses on connecting cities with no nonstop service today, but it’s not always tiny origin to massive destination anymore.
Sun Country, meanwhile, is all about Minneapolis/St Paul when it comes to scheduled service. It operates there thanks to Delta’s generosity and willingness to not kill the airline. Other than some summer DFW flying, it has very few routes that do not touch MSP.
Both airlines have robust charter operations, though Sun Country also has the added bonus of a 20-strong fleet that flies cargo for Amazon.
With this different network strategy, there’s no reason for me to bother showing you a route map. They have quite literally… ONE overlapping route. Both airlines fly Appleton (WI) to Fort Myers in the winter. Allegiant has already started for the season, but Sun Country won’t begin until late January. Both will be done by May. There is no other overlap. If there’s one thing that doesn’t concern me, it’s the ability to get regulatory approval for this deal.
But what exactly is it that Allegiant will be gaining here? That’s where things get pretty thin. Let’s take a walk over to the merger website which has been titled “Soaring for Leisure.” Is it required that merger websites have the most corny names possible? Anyway, there are six “significant benefits” lined up:
- Complementary footprint: Well yes, it does by nature expand the footprint of the airline, but 1+1 does not necessarily equal three just because you get bigger.
- Seasonal scheduling agility: The airlines can now match capacity to demand during the peaks… but I think both airlines have the same winter/spring break peak so….
- Dynamic route planning: Sun Country can quickly adjust its schedule already, so I guess Allegiant wants to be able to do that better and doesn’t want to invest in the tech to enable it?
- Diversified operations: Cargo can, yes, help make money when scheduled service doesn’t… but it’s not like this creates agility with planes moving between those operations. It may indeed create a more stable revenue stream, but I’m not sure how much that matters for Allegiant.
- Point-to-point efficiency: The idea is to connect more places to more popular leisure destinations, but Sun Country only really helps with that from MSP, and it already has it pretty well-covered. Maybe this is about things like MSP – Asheville which Sun Country tried and jettisoned. It would seem like a natural under Allegiant.
- Fleet flexibility: I guess adding a new fleet, the B737NGs, to Allegiant’s current fleet might do something. It gets back to the old strategy of having older airplanes that are cheap. But again I don’t know why you need Sun Country to do that.
In addition to this, Sun Country does fly internationally while Allegiant does not. So this could be very Southwest-AirTranesque… if you can’t build it yourself, just buy it to give you the push you need.
When you add this all up, what does Allegiant really get? First, it gets an MSP hub and hopes that Delta is comfortable with this change in ownership. Delta-willing, it gets the ability to sell a lot more credit cards in the region too. Of course, if Delta isn’t willing… well, that is very bad news.
Allegiant gets a tech upgrade apparently, and it picks up some more used airplanes. Oh, and it does get a 20-plane deal with Amazon to carry packages around. Let’s not forgot, it also gets itself a substantially richer pilot contract from the Sun Country side. I can’t imagine that’s great news. It’s going to be an interesting labor integration.
Perhaps more than anything, with the acquisition of Sun Country, Allegiant just gets… more. Maybe this will help the airline to get more credit card sign-ups or more loyalty in general thanks to the added heft. I just have trouble seeing how that’s the case. But I am also commenting on this earlier than I should.
There is a call scheduled for shortly after this post goes live to talk about it more, and maybe there will be some revelation about how this is going to do such great things. Undoubtedly if that’s the case, I will have plenty more to write on this story. Congratulations to Sun Country on doing this deal. As for Allegiant… congratulations? We’ll see how this plays out.
