Shares of the budget airline Sun Country were flying today after the carrier announced an upcoming merger with Las Vegas-based competitor Allegiant.
In a press release published on January 11, Allegiant Air shared its plan to acquire Minneapolis-based Sun Country Airlines in a $1.5 billion cash and stock transaction, which is expected to close in the second half of 2026.
Per the release, the merger will bring together a shared customer pool of nearly 22 million annual fliers across 175 cities and more than 650 routes. It will also give Allegiant access to Sun Country’s multiyear partnership delivering packages with Amazon Prime Air, which Allegiant CEO Greg Anderson told CNBC was a major part of the deal.
News of the acquisition comes as other budget carriers, like Spirit Airlines, struggle to compete in an increasingly exclusive airline industry. As of market close on Monday, Allegiant’s stock was down about 6%, whereas Sun Country’s shares soared by more than 10%.
Budget air carriers fight an uphill battle
For small, low-cost air carriers, profitable business is a turbulent affair.
According to October data from the U.S. Bureau of Transportation, a whopping 68.5% of total airline market share in the U.S. is cornered by four major companies: Delta, American, Southwest, and United. As those four powerhouses leverage their outsize financial power to battle it out over offering more and more premium perks for fliers, smaller companies are left struggling to keep up.
One example of this pattern is Spirit Airlines, the beleaguered carrier that has filed for Chapter 11 bankruptcy twice since November 2024. Spirit hasn’t made a profit since 2019—indeed, as of late 2024, it had lost more than $2.4 billion since that time, as it was unable to recover from pandemic-based losses.
The company attempted to lessen its debt load through a proposed sale to JetBlue, but that ultimately fell through in 2022 when it was challenged by the Department of Justice. In recent months, Spirit has announced its second bankruptcy, canceled all routes to 12 major cities, and furloughed 1,800 flight attendants.
While corporate mishandling is certainly partially responsible for Spirit’s troubles, its difficulties reflect larger hurdles for small air carriers in an industry where resources have become increasingly siloed. One way to address those issues—as demonstrated by Spirit’s attempted sale to JetBlue—is to merge with another company. Now, Allegiant and Sun Country appear to be attempting something similar by pooling their aircraft, routes, and flier bases to meet traveler demands.
“The combination will create a leading leisure-focused U.S. airline,” the press release says, “expanding service to more popular vacation destinations across the United States, as well as international destinations, and providing more people with access to affordable, convenient air travel.”