Analysis Report on Allegiant's Acquisition of Sun Country Airlines

According to the official announcement, Allegiant Travel Company (NASDAQ: ALGT) announced on January 11, 2026 that it had reached a definitive merger agreement with Sun Country Airlines (NASDAQ: SNCY) to acquire Sun Country for a total enterprise value of approximately

[1]. The transaction uses a mixed consideration structure of cash and stock, with specific terms as follows:

Transaction Elements	Details
Consideration Structure	Each share of Sun Country stock will receive 0.1557 shares of Allegiant common stock + $4.10 in cash
Transaction Premium	19.8% premium over Sun Country’s closing price on January 9, 2026; 18.8% premium over the 30-day volume-weighted average price
Enterprise Value	Approximately $1.5 billion (including Sun Country’s net debt of approximately $400 million)
Ownership Structure	Upon completion: Allegiant shareholders will own approximately 67%, Sun Country shareholders will own approximately 33% (on a fully diluted basis)
Expected Completion Date	Second half of 2026 (subject to regulatory approval and shareholder vote)

• Post-Merger CEO
  : Gregory C. Anderson, Allegiant’s current CEO, will continue to serve as the CEO of the combined company
• President and CFO
  : Robert Neal, Allegiant’s current CFO, will serve as the President and CFO of the combined company
• Board Integration
  : Jude Bricker, CEO of Sun Country, will join Allegiant’s board of directors, along with 2 additional Sun Country directors, expanding the board to 11 seats
• Headquarters
  : The headquarters will remain in Las Vegas, while maintaining Sun Country’s significant business presence in Minneapolis-Saint Paul

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The U.S. low-cost airline market is facing continuous integration pressure. Dave Davis, CFO of Sun Country, stated at the Barclays Industrial Select Conference in February 2025: “We believe a combination of Sun Country with certain competitors makes sense… I am convinced that some consolidation is coming.”[2] This indicates that this acquisition is a direct reflection of industry trends, rather than an isolated transaction.

Allegiant focuses on serving small and medium-sized cities in the U.S., with its route network covering approximately 150 destinations; while Sun Country has significant advantages in large-city hubs and international routes. After the merger, the combined company will gain

(including Mexico, Central America, Canada, and the Caribbean region). This complementarity will enable the combined company to cover nearly and [1].

Business Segment	Allegiant	Sun Country	Post-Merger Value
Passenger Services	Core business, focusing on leisure travelers	Approximately 18% of revenue comes from passenger services	Strengthened core business
Charter Services	Charter flights for casinos and sports teams	Long-term contracts (casinos, sports teams, Department of Defense)	Significantly enhanced
Cargo Services	Limited participation	Core partner of Amazon Prime Air (12 cargo aircraft, to be expanded to 20 by 2030)[3]	Strategic entry
Frequent Flyer Program	210,000 members	20,000 members	230,000-member base

This diversified business structure will significantly reduce the risk of seasonal fluctuations and provide the company with a more stable annual revenue stream. Sun Country’s cargo business and its long-term contract with Amazon (until 2030) are particularly strategically valuable, providing the combined company with access to the high-growth e-commerce logistics sector.

The merged fleet will reach a scale of

, with an additional 30 confirmed orders and 80 options. Allegiant operates an Airbus fleet, while Sun Country mainly uses Boeing 737s. This mixed fleet configuration will allow the company to flexibly allocate aircraft according to different route demands, optimizing asset utilization and fuel efficiency.

The combined company will become one of the largest leisure-oriented airlines in the U.S., serving

, representing an approximate 22% increase from Allegiant’s standalone annual passenger volume of 18 million. This scale will enable it to better compete with low-cost rivals such as Frontier Airlines and Spirit Airlines, as well as the four major airline giants (American Airlines, Delta Air Lines, United Airlines, and Alaska Airlines) in the leisure travel market.

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Management expects the transaction to achieve

within three years of completion, with main sources as follows:

Synergy Type	Estimated Annual Value	Implementation Path
Scale Efficiency	Approximately $45 million	Enhanced procurement bargaining power, shared service infrastructure
Fleet Optimization	Approximately $35 million	Cross-fleet allocation, route optimization, shared maintenance resources
Procurement Savings	Approximately $30 million	Centralized procurement of parts, optimized fuel costs
Revenue Growth	Approximately $30 million	Network expansion, cross-selling, integration of membership systems

• EPS Accretion
  : Management expects the transaction to achieve earnings per share accretion in the first year after completion
• Liability Structure
  : The combined company is expected to have a net adjusted debt/EBITDAR ratio of less than
  3.0x
  , maintaining a healthy balance sheet
• Market Reaction: ALGT Stock Performance

According to the latest trading data, Allegiant’s stock has performed strongly over the past 60 trading days:

• The stock price has risen from approximately $65 in mid-October 2025 to the current
  $94.97
  , representing an increase of approximately
  45.8%
  [0]
• The stock performance has significantly outperformed the broader market, indicating market recognition of management’s strategy

1. Revenue Diversification
   : The addition of cargo and charter services will reduce revenue volatility and improve earnings predictability
2. Market Expansion
   : Gaining international route operation capabilities, opening up new revenue streams
3. Scale Effect
   : The expanded cost base will spread fixed costs, improving unit economic efficiency
4. Customer Stickiness
   : The combined frequent flyer membership base will reach 230,000, enhancing customer loyalty

Sun Country shareholders will receive an approximate 20% premium, which reflects:

• Management’s recognition of the potential of Sun Country’s cargo business (TD Cowen has raised Sun Country’s target price to $21)[4]
• The ability to participate in the growth opportunities of a larger-scale company
• The immediate value of a diversified investment portfolio

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• Antitrust Review
  : The transaction requires approval from U.S. federal antitrust regulators. Historically, airline M&A transactions often face strict antitrust reviews
• Route Overlap Review
  : Regulators will assess whether the merger will reduce competition on specific routes

• Cultural Integration
  : There may be differences in corporate culture and management styles between Allegiant and Sun Country
• Operational Integration
  : Dual-brand operation will need to be maintained in the initial stage of the merger until a single operating certificate from the FAA is obtained
• IT System Integration
  : The integration of reservation systems, frequent flyer programs, and operational systems requires significant investment and time

• Macroeconomic Fluctuations
  : Leisure travel demand is sensitive to economic cycles
• Fuel Price Volatility
  : Although the company can pass on fuel risks to customers, profit margins may still be affected
• Increased Competition
  : Other low-cost airlines may adopt aggressive pricing strategies in response to market share changes

• Uncertainty regarding the transaction completion date
• Potential variables in shareholder voting
• Integration costs may be higher than expected

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Indicator	Data
Median Target Price	$98.00[0]
Target Price Range	$85.00 - $105.00
Current Stock Price	$94.97
Potential Upside	Approximately 3.2%
Analyst Consensus	Hold
Percentage of Buy Ratings	40%
Percentage of Hold Ratings	60%

• January 9, 2026
  : Susquehanna maintains a Neutral rating
• January 8, 2026
  : Citi raises the target price from $88 to
  $109
  [5]
• January 6, 2026
  : BofA Securities upgrades the rating from “Underperform” to “Neutral”

• Clear M&A strategic logic, strong network and business complementarity
• Management’s expected synergies are achievable
• Current ALGT stock performance is strong, with positive market sentiment
• The combined company maintains a sound financial position

• Uncertainty regarding regulatory approval
• Integration execution risks
• Current valuation has partially reflected growth expectations (only 3.2% upside from the median target price)

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Allegiant’s $1.5 billion acquisition of Sun Country Airlines is one of the most strategically significant M&A transactions in the U.S. airline industry in 2026. From the perspective of M&A logic, the transaction achieves three strategic goals:

(combination of small and medium-sized cities with large cities/international routes), (full layout of passenger, charter, and cargo services), and (annual synergies of $140 million).

For Allegiant shareholders, the transaction is expected to achieve EPS accretion in the first year after completion and enhance long-term value creation capabilities through business diversification. However, investors need to pay attention to regulatory approval progress, integration execution, and current valuation levels.

From an industry perspective, this transaction marks the beginning of an integration wave in the U.S. low-cost airline market. It is expected that more similar transactions will occur in the future to cope with competitive pressure from the four major airline giants and the demand for economies of scale.

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[1] PR Newswire - Allegiant and Sun Country Airlines to Combine (January 11, 2026)
https://www.prnewswire.com/news-releases/allegiant-and-sun-country-airlines-to-combine-creating-a-leading-more-competitive-leisure-focused-us-airline-302658024.html

[2] Flight Global - ‘Combinations are coming’: Sun Country adds to airline consolidation chatter (February 20, 2025)
https://www.flightglobal.com/strategy/combinations-are-coming-sun-country-adds-to-airline-consolidation-chatter/161908.article

[3] Wikipedia - Sun Country Airlines
https://en.wikipedia.org/wiki/Sun_Country_Airlines

[4] Yahoo Finance - What Is Shaping The Evolving Story For Sun Country Airlines
https://finance.yahoo.com/news/shaping-evolving-story-sun-country-131211220.html

[5] Yahoo Finance - Allegiant Travel price target raised to $109 from $88 at Citi (January 8, 2026)
https://finance.yahoo.com/news/allegiant-travel-price-target-raised-124607556.html

[0] Jinling AI Brokerage API Market Data