US low-cost carriers (LCCs) Allegiant and Sun Country have announced plans to merge operations in a deal worth US$1.5 billion.
If approved by regulators, through the merger the airlines will service nearly 175 destinations across 650 routes. Allegiant Travel Company say they expect the announcement to take effect in the second half of 2026, ultimately generating US$140 million in synergies in the first three years.
Gregory C. Anderson, Allegiant CEO, said,
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. We have long admired Sun Country for their well-run, flexible, and diversified business model that optimizes for year-round utilisation and strong margins. Together, our complementary networks will expand our reach to more vacation destinations including international locations.
Based in Minneapolis, Sun Country flies to a number of destinations in Mexico and the Caribbean. This will significantly enhance Allegiant’s domestic route network, connecting more customers to airports overseas. The airlines say the merger will boost operational efficiency, enhance loyalty offerings, improve growth opportunities, and build financial resilience.
Commentators have noted that the unexpected announcement highlights the fragile state of LCC operations in the US. Posting on LinkedIn, industry expert Edward Russell said:
The fact that Allegiant and Sun Country want to do a deal is the latest signal that the environment for US ultra low-cost carriers remains tough, and even these unique airlines see a need for scale in the post-pandemic economic environment characterised by higher costs and a challenging demand environment at the low end of air travel (whereas premium air travel is booming).
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