Allegiant to Buy Sun Country Airlines in $1.5 Billion Deal

The combination of the two small, budget airlines comes as low-cost carriers have struggled with high costs and competition.

Allegiant Travel said on Sunday that it plans to buy Sun Country Airlines in a $1.5 billion deal.

The combination of the two small, budget airlines comes as low-cost carriers have struggled with high costs and competition in recent years, putting pressure on some to seek out growth and scale through mergers.

Allegiant and Sun Country generally focus on providing cheap flights to people traveling for fun or to visit friends and family. Together, they expect to serve almost 175 cities in the U.S. and other nearby countries.

“This combination is an exciting next chapter in Allegiant and Sun Country’s shared mission in providing affordable, reliable, and convenient service from underserved communities to premier leisure destinations,” Gregory C. Anderson, Allegiant’s chief executive, said in a statement.

Allegiant said it plans to pay for the deal, which includes $400 million of Sun Country’s debt, with stock and cash. Sun Country shareholders would receive a nearly 20 percent premium for their shares, based on the stock prices of both airlines as of Friday. The combined company will be headquartered in Las Vegas, where Allegiant is based. It will maintain “a significant presence” in Minneapolis-St. Paul, where Sun Country is based, the airlines said in a news release. The airlines expect to complete the transaction in the second half of this year.

The deal is subject to regulatory approval. Airline mergers are often fraught: Integrating technology and workforces smoothly can be difficult to pull off.

News of the deal comes as discount airlines, a diverse group of companies, have struggled amid rising competition, higher costs and an increasing willingness among consumers to shell out for perks like seats with additional legroom.

Spirit Airlines, which has filed for bankruptcy twice since late 2024, was particularly hard-hit by an oversupply of flights on important routes. A widespread engine problem also disproportionately affected Spirit’s planes and the airline faced head-to-head competition in many markets with the nation’s largest carriers, which have successfully competed against budget airlines with restrictive “basic economy” fares.

Spirit had tried to sell itself to JetBlue Airways, but that plan was challenged by the Justice Department under President Joseph R. Biden Jr. and blocked by a federal judge in 2024. Experts expect the Trump administration to be more permissive of such deals.

But Allegiant and Sun Country have avoided the worst of those problems, thanks in part to operating flights with limited competition.

Allegiant took a big loss in 2024, but reported profits in the previous three years. It and Spirit adopted a business model focused on cutting costs about two decades ago. But Allegiant faces no competition on about 75 percent of its routes. It also earns revenue from its airline credit card and by selling travel packages including hotel rooms, ground transportation and other services.

Sun Country, a smaller carrier, has reported profits in each of the past few years. It primarily operates flights to and from Minneapolis-St. Paul International Airport, but the airline also earns about 20 percent of its revenue from charter flights and about 10 percent from operating cargo flights for Amazon.

In a statement, the airlines said that they would serve more than 650 routes collectively, with about 195 aircraft. Allegiant shareholders are expected to own about two-thirds of the combined company, with the remaining third owned by Sun Country shareholders.

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