Allegiant Air and Sun Country Airlines officially closed their merger on Wednesday, less than two weeks after Spirit Airlines unexpectedly collapsed.
The $1.5 billion cash-and-stock deal, which includes debt, allows the two smaller regional airlines to fill the void left by the now-defunct budget carrier. Allegiant is based in Las Vegas, and Sun Country is based in Minneapolis.
The merger will “create the leading leisure-focused airline” in the nation, according to Allegiant, as the aviation industry remains in flux with surging fuel prices caused by the Iran war.
“By bringing together two strong airlines with similar business models, we are creating a more differentiated and durable airline – one well positioned to deliver lasting value for our customers, team members, and shareholders,” Allegiant CEO Gregory Anderson said in a statement.
There will be no immediate changes for Allegiant and Sun Country customers as both airlines will remain separate for now.
In the long term, the combined entity will operate under the Allegiant brand and keep its headquarters in Las Vegas while adding more flights to its network. Sun Country will retain its presence in the Minneapolis-St. Paul area.
With the merger, both low-cost airlines will operate more than 650 flight routes with connections to nearly 175 U.S. cities and an expanded aircraft fleet. Allegiant itself operates 551 routes to over 100 airports across the country, with the remaining routes operated by Sun Country.
Both airlines are smaller than the airline industry’s leaders. American Airlines operates more than 2,700 flight routes to more than 350 destinations across 60 countries, and United Airlines provides over 1,000 unique routes to roughly 390 destinations in 74 countries.
United, American, Delta Air Lines, and Southwest Airlines collectively dominate about 80% of the domestic market.
Allegiant has touted the benefit for customers of having more access to leisure destinations in the United States and select international markets.
The deal will result in greater revenue for the combined company. As part of the agreement, Sun Country is lending its cargo operations to Amazon Prime Air and charter flight contracts with casinos, sports teams, and the War Department to Allegiant’s existing charter business.
Allegiant is over $500 million more valuable in market capitalization than Sun Country.
CROWDFUNDING CAMPAIGN TO BUY SPIRIT AIRLINES TAKES OFF TO THE TUNE OF $337 MILLION
Spirit’s absence has been felt acutely across the aviation industry, with fewer flights to smaller airports. Arnold Palmer Regional Airport, located about 45 miles southeast of Pittsburgh, now has an empty flight schedule because Spirit was the only airline that served passengers there. Mass layoffs, which affected roughly 17,000 employees, were also a result of Spirit’s closure.
Rising oil costs linked to the war with Iran placed enormous stress on Spirit in its final days. The budget carrier’s financial troubles also stemmed from its failed $3.8 billion merger with JetBlue Airways. In 2024, a federal judge blocked the deal at the request of the Justice Department. Following the decision, Spirit filed for bankruptcy twice in less than a year.