Allegiant Air closes $1.5 billion Sun Country acquisition

Allegiant Travel Company completed its acquisition of Sun Country Airlines connected Wednesday, closing a $1.5 cardinal cash-and-stock woody that brings unneurotic 2 low-cost carriers focused connected leisure travel.

The transaction received required regulatory approvals and shareholder sign-off from some companies, Allegiant said. Across the merged network, astir 175 cities and much than 650 routes volition beryllium covered by a fleet of 195 aircraft, serving an estimated 22 cardinal passengers a year.

"Today marks a defining infinitesimal successful Allegiant's past arsenic we officially articulation forces with Sun Country to make the starring leisure-focused hose successful the United States," Allegiant CEO Gregory Anderson said successful a statement. "By bringing unneurotic 2 beardown airlines with akin concern models, we are creating a much differentiated and durable airline."

For travelers, the modulation volition beryllium invisible successful the abbreviated word — each hose keeps its ain brand, and passengers usage the aforesaid booking channels and lawsuit work contacts they ever have. Neither loyalty programme — Allegiant Allways Rewards nor Sun Country Rewards — volition beryllium merged successful the contiguous term. Allegiant said it volition present benefits implicit clip to springiness customers entree to the combined network.

Jobs connected the operational broadside are not astatine risk, the institution said, though back-office and administrative functions could spot redundancies arsenic the 2 organizations are brought together. Sun Country's hub astatine Minneapolis-St. Paul volition stay an important operating halfway for the combined company.

The institution has projected astir $140 cardinal successful yearly outgo and gross gains to beryllium unlocked implicit a three-year integration window, stemming from fleet efficiencies, expanded scale, and procurement savings. The transaction is expected to beryllium accretive to net per stock successful the archetypal afloat twelvemonth aft closing, the institution said.

Sun Country's gross streams — including cargo flying for Amazon Prime Air and charter contracts with casinos, Major League Soccer teams, collegiate sports programs, and the Department of Defense — complement Allegiant's existing charter business. The combined institution besides has 30 craft connected bid and options connected 80 more.

Greg Anderson volition service arsenic CEO of the combined company, with Robert Neal arsenic president and CFO. Jude Bricker, Jennifer Vogel, and Thomas C. Kennedy were appointed to Allegiant's committee of directors. Sun Country banal has ceased trading connected the Nasdaq; Allegiant Travel Company volition proceed trading nether the ticker awesome ALGT.

The woody closes arsenic the fund hose assemblage faces strain from a crisp emergence successful pitchy substance costs. Speaking with CNBC, Anderson described a subject of shrinking the docket erstwhile request fades — grounding planes mid-week successful dilatory months similar September — and pushing seats aggressively erstwhile travelers are astir consenting to pay, a doctrine helium summed up arsenic prioritizing borderline implicit volume.

The acquisition comes weeks aft Spirit Airlines unopen down, the largest U.S. hose illness successful a generation. Spirit's CEO cited the accelerated emergence successful substance costs arsenic the decisive origin successful the carrier's wind-down, which stranded astir 1.8 cardinal reservations. Budget carriers are disproportionately exposed to substance swings, ABC News noted, due to the fact that the constrictive outgo structures that specify the low-cost exemplary permission small cushion erstwhile expenses climb.