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Acquisition of Sun Country Airlines Holdings, Inc.
 6 Months Ended
Jun. 30, 2026
Business Combination, Asset Acquisition, Transaction between Entities under Common Control, and Joint Venture Formation [Abstract]  
Acquisition of Sun Country Airlines Holdings, Inc. Acquisition of Sun Country
On May 13, 2026, the Company acquired all of the issued and outstanding shares of capital stock of Sun Country, for total merger consideration of approximately $976.0 million. This acquisition, which was accounted for as a business combination, is intended to further the Company’s ambition to be a leading leisure-focused U.S. airline, expanding service to more markets across the United States, as well as international destinations, and providing more people with access to affordable, convenient air travel. Information regarding the purchase accounting applied is as follows:

Purchase Consideration

At the effective time of the Merger, each outstanding share of Sun Country common stock, par value $0.01 per share, was converted into the right to receive $4.10 in cash, without interest, and 0.1557 shares of Allegiant common stock, par value $0.001 per share. Certain outstanding Sun Country equity awards were replaced or accelerated in connection with the acquisition. In addition, purchase consideration includes certain change in control payments, including the settlement of warrants issued to Amazon and a tax receivable agreement with pre-IPO shareholders of Sun Country.

The total purchase consideration was as follows:
(in thousands)May 13, 2026
Merger consideration
     Cash$223,431 
     Shares 634,788
Add: Pre-combination value of replaced and accelerated equity awards21,173
Add: Consideration paid with respect to Amazon warrants16,185
Add: Termination payment under Tax Receivable Agreement80,461
Total purchase consideration$976,038 

Preliminary Purchase Price Allocation

The excess of the purchase price over identifiable intangible assets and net tangible assets in the amount of $465.7 million was allocated to goodwill. The fair values assigned to assets acquired and liabilities assumed are based on management’s best estimates and assumptions as of the acquisition date and are considered preliminary pending finalization of closing balance items as well as valuation analyses pertaining to assets acquired and liabilities assumed. During the measurement period, which may not exceed one year from the acquisition date in accordance with Accounting Standards Codification 805, Business Combinations, the Company may record adjustments to the preliminary fair values of assets acquired and liabilities assumed. Any measurement-period adjustments identified will be recorded with a corresponding adjustment to goodwill. The following table presents the preliminary allocation of the purchase price as of the acquisition date:
(in thousands)Purchase Price Allocation
Cash and cash equivalents$119,618 
Restricted cash20,272
Short-term investments47,134
Accounts receivable77,010
Short term lessor maintenance deposits37,268
Expendable parts, supplies and fuel, net12,356
Prepaid expenses and other current assets23,510
Property and equipment, net1,048,057
Goodwill465,719
Other intangible assets21,600
Long-term investments4,980
Operating lease right-of-use assets, net10,819
Deposits and other assets85,322
Total assets acquired1,973,665
Accounts payable97,108
Accrued liabilities65,253
Current operating lease liabilities3,756
Air traffic liability137,306
Current loyalty program liability9,495
Current maturities of long-term debt and finance lease obligations, net of related costs137,114
Long-term debt and finance lease obligations, net of current maturities and related costs433,150
Deferred income taxes89,496
Noncurrent operating lease liabilities8,725
Noncurrent loyalty program liability4,890
Other noncurrent liabilities11,334
Liabilities assumed997,627
Total consideration$976,038 

Goodwill is primarily attributed to the assembled workforce and anticipated synergies and economies of scale expected from the integration of the Sun Country business. The synergies include certain cost savings, operating efficiencies and other strategic benefits projected to be achieved as a result of the Sun Country acquisition. The goodwill was assigned to the Sun Country reporting segment and the amount recognized is not deductible for tax purposes.

The operating results of Sun Country have been included in the Company's consolidated financial statements for the three and six months ended June 30, 2026 from the acquisition date of May 13, 2026.

Intangible assets

The estimated fair value and weighted average useful life of the Sun Country intangible assets are as follows:
Fair Value (in thousands)Weighted Average Useful Life
Trademarks$13,2002 Years
Customer Relationships8,4002 Years
Total$21,600

The trademarks represent the right to use the Sun Country trade names currently used in its operations. The Company has determined the trademarks to be finite-lived intangible assets, as the Company plans to phase out the trademarks as Sun Country is integrated into the Allegiant Air network. Customer relationships include the value of relationships acquired under the Sun Country co-brand credit card. The useful life was derived from the time period over which the majority of the cash flows are expected to be generated. These finite-lived intangible assets will be amortized using the straight-line method over the useful life for the amortization of the associated intangible asset. At June 30, 2026, the amortization expense and accumulated amortization of the Company's intangible assets was $1.4 million.
Acquisition-related costs

During the six months ended June 30, 2026, the Company incurred costs directly attributable to the acquisition of $64.8 million. These costs are presented within the special charges line item within the consolidated statements of operations. Refer to Note 3 for further information on special charges.

Employee Benefit Plans

In connection with the acquisition, the Company registered 874,302 shares of common stock issuable in connection with the SCA Acquisitions Holdings, LLC Amended and Restated Incentive Equity Plan, dated as of July 1, 2019 (the "2019 Plan") and the Sun Country Airlines Holdings, Inc. 2021 Omnibus Incentive Plan ("the 2021 Plan", and together with the 2019 Plan, the "Plans"). Unvested restricted stock units ("RSUs") and performance stock units ("PSUs") outstanding under the Plans were converted to Allegiant Travel Company RSUs, and all options outstanding under the Plans were converted to Allegiant Travel Company options as provided in the merger agreement. A summary of the Plan activity is presented below:

Shares(1)
Restricted stock units granted to Sun Country holders268,627
Vested(127,321)
Forfeited(4,943)
Non-vested at June 30, 2026136,363
(1) All RSUs had a grant date fair value of $75.21, which was the Allegiant Travel Company stock price at the date of acquisition, May 13, 2026.

The total fair value of RSUs issued in conjunction with the acquisition was $19.5 million. $3.7 million of the fair value was allocated to purchase consideration as the pre-acquisition value of the RSUs, and $10.3 million of the fair value was recognized as employee separation expense within special charges during the three months ended June 30, 2026. The remaining $5.6 million of unrecognized compensation cost will be recognized as salaries and wages expense through the remaining weighted average term of 1.2 years.

All Sun Country stock options were vested prior to the acquisition. Outstanding Sun Country options were converted to 324,059 Allegiant Travel Company options as provided in the merger agreement. The fair value of the converted stock options was $17.5 million, the entirety of which was recognized as purchase consideration. There have been no exercises of these options as of June 30, 2026. The weighted average exercise price of the outstanding stock options is $32.96.

Pro forma impact of the acquisition

The unaudited pro forma financial information presented below represents a summary of the consolidated results of operations for the Company and Sun Country as if the acquisition had been consummated as of January 1, 2025. The pro forma results do not include any anticipated synergies, or other expected benefits of the acquisition. Accordingly, the unaudited pro forma financial information below is not necessarily indicative of either future results of operations or results that might have been achieved had the acquisition been consummated as of January 1, 2025.

The pro forma information includes adjustments for estimated acquisition-related costs of $73.0 million assumed to have been incurred on January 1, 2025.

Three Months Ended June 30,Six Months Ended June 30,
(in thousands)2026202520262025
Operating revenues$1,077,194$953,005$2,147,991$1,978,728
Net income65,011(54,409)96,895(58,578)