Sun Country Airlines soars on news of combination with Allegiant

Shares of small-cap airline Sun Country jumped almost 11% on Monday, January 12, to their highest level since mid-2023, after the carrier agreed to a combination with rival Allegiant Air. The transaction is set to reshape the U.S. low-cost airline market, creating the second largest ultra-low-cost carrier behind Spirit Airlines, Forbes wrote.

Sun Country shares rose 10.6% on Monday to $17.40 per share, their highest level since mid-2023. Investors reacted to the announcement that the carrier would combine with peer Allegiant Air, which the companies disclosed on Sunday.

Under the terms of the transaction, Allegiant will acquire Sun Country at an implied value of $18.90 per share, about 20% above Sun Country’s Friday closing price, the last trading day before the announcement.

Allegiant will pay with both cash and stock. After the deal closes, Allegiant shareholders will own approximately 67% of the combined company, while Sun Country shareholders will hold the remaining 33%.

The transaction is expected to close in the second half of 2026. The boards of directors of both companies have already approved the deal, which now requires shareholder and regulatory approvals.

Shares of Allegiant Travel Co., the parent of Allegiant Air, reacted with a 6.3% decline on Monday to $89.00 per share.

Allegiant has historically struggled to expand outside of the U.S. and has long sought a more diversified business, Forbes wrote. The merger gives Allegiant access not only to Sun Country’s established network in Mexico, Central America, and the Caribbean, but also to its air cargo partnership with Amazon.

“Sun Country’s system, know-how, and passenger base in serving non-U.S. markets should pull forward the international expansion opportunity for Allegiant,” Savanthi Syth, an analyst at Raymond James covering the airline sector, wrote in a note cited by Forbes. Sun Country’s cargo operation should “help offset the seasonality inherent in leisure travel,” she added.

The combined airline will serve more than 22 million passengers a year across more than 650 routes. The deal is also expected to strengthen Allegiant’s financial profile. The company said the transaction will be accretive to earnings per share in the first year after closing, while annual synergies are projected to reach $140 million by the third year.

After the merger, Allegiant will operate about 195 aircraft, making it the second largest ultra-low-cost carrier in the U.S. behind Spirit Airlines, Forbes wrote. Spirit, which has been struggling financially, filed for its second Chapter 11 bankruptcy in August 2025. On Monday, its shares fell nearly 12% to about $0.20 per share in over-the-counter trading.

The announcement of the Allegiant and Sun Country combination follows Alaska Air Group’s acquisition of Hawaiian Airlines in September 2025, Bloomberg points out. Through mergers, second-tier airlines are seeking to strengthen their positions and compete with the dominant U.S. carriers, as pressure from larger airlines has pushed the low-cost business model closer to its limits, Bloomberg writes.