An Allegiant Airlines jet flies out of Las Vegas Airport.
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Allegiant said Sunday it is acquiring fellow budget carrier Sun Country in a $1.5 billion cash and stock deal.
The plan for a combination comes as budget airlines in the U.S. have faced a surge in costs following the pandemic and the increase in domestic capacity.
The transaction has an implied value of $18.89 for each Sun Country share. That carrier’s shareholders will receive 0.1557 shares of Allegiant common stock and $4.10 in cash for each Sun Country share owned, Allegiant said Sunday.
The deal is a premium of almost 20% over Sun Country’s closing stock price of $15.77 on Friday, the airline said.
The carriers’ executives will hold a special conference call on Monday at 8:30 a.m. ET to discuss the deal.
In an interview with CNBC, Allegiant Air CEO Greg Anderson expressed confidence that the deal would be approved, noting that the two carriers have little network overlap. Allegiant approached Sun Country in late fall, he said, adding that Sun Country’s contracted flying agreement with Amazon is set to continue.
The deal will test the Trump administration’s appetite for an airline merger.
The Biden administration challenged JetBlue Airways’ acquisition of Spirit Airlines, which is now in its second bankruptcy and fighting for survival. A federal judge sided with the Biden Justice Department and blocked the JetBlue-Spirit deal.
The Biden administration, however, did clear Alaska Air’s nearly $2 billion acquisition of Hawaiian Airlines in 2024.
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