Two budget airlines are set to combine forces, and investors on Wall Street are responding positively to the merger.

Sun Country Airlines Shares Climb After Merger Announcement with Allegiant

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Sun Country Airlines experienced a surge in its stock price on Monday following the announcement of its planned merger with Allegiant, another budget airline.

Main Highlights

• The news of Sun Country's intention to join forces with Allegiant, a fellow low-cost carrier, led to a notable increase in Sun Country's share value.
• Industry analysts praised the merger, describing it as a union between two efficiently managed, affordable airlines.

Investors are optimistic about Sun Country Airlines’ future after the company revealed plans to combine with another ultra-low-cost airline.

On Monday, Sun Country (SNCY) shares jumped approximately 12% after the company agreed to merge with Allegiant Travel Company (ALGT). The goal is to establish a major leisure-focused airline in the United States. In contrast, Allegiant’s stock dropped by about 6%.

Under the agreement, Allegiant, headquartered in Las Vegas, will acquire Sun Country, based in Minneapolis, for $1.5 billion in a combination of cash, stock, and the assumption of $400 million in net debt.

This merger could signal further consolidation among budget airlines. Spirit Aviation (FLYY), which owns Spirit Airlines, entered Chapter 11 bankruptcy proceedings for the second time in less than a year in late August. Meanwhile, Frontier Group (ULCC), the parent company of Frontier Airlines, recently replaced its longtime CEO Barry Biffle after a significant drop in its stock price.

Implications for Investors

The proposed merger between these two low-cost airlines may pave the way for additional consolidation within the industry. Investors welcomed the announcement, viewing both companies as consistently profitable and serving markets that complement each other.

Once the transaction is finalized—anticipated in the latter half of 2026—shareholders of Allegiant and Sun Country will own roughly 67% and 33%, respectively, of the new entity, which will operate under the Allegiant brand. Both airlines will continue to function independently until they receive a unified operating certificate from the Federal Aviation Administration.

Gregory Anderson, Allegiant’s current CEO, will lead the merged company, while Jude Bricker, CEO of Sun Country, will join the board and act as an advisor. The headquarters will remain in Las Vegas, but the company will also maintain a strong presence in Minneapolis-St. Paul.

According to the official statement, "Allegiant and Sun Country are positioned to build one of the industry’s most flexible and robust airline models, capable of adapting swiftly to evolving market trends, passenger preferences, and the needs of charter and cargo clients."

Regulatory challenges are expected to be minimal, as the two airlines primarily serve different markets. Allegiant focuses on routes from smaller cities with limited competition, while Sun Country operates cargo flights for Amazon (AMZN), charter services, and scheduled flights across the U.S. and to destinations in Mexico, Canada, Central America, and the Caribbean.

Analyst Perspective

Deutsche Bank analysts described the merger as a partnership between two well-managed, low-fare airlines with consistently strong profit margins. "As two of the most profitable carriers in the sector, we consider them equals, especially since they are the only low-cost airlines to maintain steady profitability," the analysts noted.