The new combined operation is slated to serve 22 million passengers annually in nearly 175 cities, utilizing nearly 200 aircraft, and plans to focus on popular vacation destinations both domestically and globally.
"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,” Allegiant CEO Gregory C. Anderson said in the statement.
“We have long admired Sun Country for their well-run, flexible, and diversified business model that optimizes for year-round utilization and strong margins. Together, our complementary networks will expand our reach to more vacation destinations including international locations.”
Under the agreement, Allegiant will acquire Sun Country Airlines in a cash and stock transaction at an implied value of $18.89 per Sun Country share. Shareholders will receive 0.1557 shares of Allegiant common stock and $41.50 in cash for each Sun Country share. The deal represents 19.8 percent over Sun Country’s closing share price of $15.77 on Jan 9.
Currently, Sun Country is valued at nearly $1.5 billion, including its $400 million net debt. Following the closing, Allegiant and Sun Country shareholders will own close to 67 percent and 33 percent, respectively, of the combined company.
After the merger is closed, the airline will operate under the Allegiant name, with its headquarters in Las Vegas. However, it will continue to maintain a significant presence in Minneapolis-St. Paul. Each airline will operate separately until the merged company receives a single operating certification from the Federal Aviation Administration. There will be no immediate impact on ticketing, flight schedules, or travel experiences.
“Today marks an exciting next step in our history as we join Allegiant to create one of the leading leisure travel companies in the U.S.,” Sun Country CEO Jude Bricker said in the statement. “We are two customer-centric organizations, deeply committed to delivering affordable travel experiences without compromising on quality.”
The merged airline will now be able to offer more than 650 routes, expanding nonstop service to popular vacation spots and also focusing on underserved markets throughout the United States. International flights will include Canada, Mexico, Central America, and the Caribbean.
In addition, the new airline will offer an enhanced loyalty rewards program, expanding frequent flyer and membership benefits. The company also expects to hire more employees and create new roles, as well as cross-training.
According to the statement, both airlines have been profitable, and Allegiant expects the merged operation to generate about $140 million annually within three years following the closing. Allegiant noted it expects substantial savings from combined procurement and fleet optimization.
The fleet will include Airbus and Boeing aircraft, as well as possible additional aircraft from new and existing markets. The combined airline will offer 195 planes, with another 30 on order.
Founded in 1997, Allegiant has served communities across the nation, offering industry-low average fares. Sun Country, operating since 1982, is also billed as a lower-cost air carrier, offering domestic as well as international flights.