Amazon will outsource two additional cargo aircraft to Sun Country Airlines this year after being notified of merger discussions with Allegiant Travel Co., signaling the retailer giant’s interest in maintaining their flying partnership, executives for the two low-cost carriers said Monday.
Sun Country Airlines (NASDAQ: SCNY) will be acquired by Allegiant (NASDAQ: ALGT) in a cash-and-stock transaction worth about $1.5 billion, including $400 million in debt, that will create one of the largest leisure-focused airlines, the companies announced Sunday afternoon.
The combined company will gain flexibility with increased capacity to meet vacation demand during peak travel seasons, while leveraging year-round charter and cargo business that provide consistent revenue and stable crew and aircraft utilization, according to the announcement.
Sun Country flies 20 Boeing 737-800 converted freighter aircraft in Amazon’s air logistics network. It started providing outsourced airlift with a dozen jets in early 2020 as part of a strategy to diversify its highly seasonal business flying passengers to sun-and-fun destinations. Amazon last year transferred eight additional leased cargo jets to Sun Country, which is responsible for providing crews and maintenance.
The airline also operates charter flights under contract with the Department of Defense, Major League Soccer, casinos and collegiate sports teams. All three lines of business share the 737-800 platform, crews and other resources, which management highlights as a key reason for higher margins than competitors.
Allegiant and Sun Country leaders said they were engaged with Amazon from the beginning of the merger process and that cargo will remain a key driver of revenue growth.
“The cargo part is very important to the Sun Country business. We expect that to continue on with the combined company,” said Allegiant CEO Greg Anderson during a Monday morning conference call with analysts. “We’ve had multiple discussions leading up to this announcement with Amazon. We visited them in person in Seattle. … So we’re confident in this partnership continuing and we look forward to maintaining the same reliable service levels that are being provided today by the Sun Country team around the cargo flying.”
Sun Country CEO Jude Bricker said Amazon, knowing that the acquisition was happening, committed to place two additional 737-800 freighters with Sun Country this year, bringing the cargo fleet to 22 aircraft.
“Our cargo partnership with Amazon has become an increasingly important contributor to our overall revenue. If you think about the growth we can offer Allegiant through the combination, this is another important pillar,” Bricker said.
Sun Country anticipates delivery of the two freighters during the spring for entry into service by the summer, spokeswoman Wendy Burt said in an email response.
Long-term fixed fee contracts, like the one with Amazon, are highly desirable, said Allegiant CFO Robert J. Neal. “As we kind of get into it, we’ll review profitability like we would do otherwise and then kind of make sure that we’re continuing to grow in a prudent way across all three channels.”
Having more than 20 crew bases across the United States will make it easier to swap crews without paying commuting costs and support the Amazon cargo operation, Neal added.
Sun Country recently announced plans to open a new operational base at Cincinnati/Northern Kentucky International Airport at the end of January to better support the company’s increased cargo operations at Amazon’s U.S. superhub and future growth plans in its scheduled passenger network. The airline currently shares facilities with other carriers.
This is the second time in two years that Amazon has dealt with a partner airline being acquired. In October 2024, Alaska Airlines completed the takeover of Hawaiian Airlines, which operates 10 Airbus A330-300 freighter aircraft on Amazon’s behalf.
Las Vegas-based Allegiant (NASDAQ: ALGT) said its offer represents a premium of 19.8% over Sun Country’s closing share price of $15.77 on Jan. 9. Allegiant and Sun Country shareholders will own about 67% and 33%, respectively, of the combined company.
Allegiant said it expects to achieve $140 million in annual cost savings from size efficiencies, fleet optimization and procurement within three years of integration. The combined airline would serve about 22 million passengers annually across nearly 175 cities, operating more than 650 routes with a fleet of about 195 aircraft. Both companies concentrate on leisure customers in underserved communities.
The new Allegiant will be based in Las Vegas, with extensive operations in Minneapolis — Sun Country’s headquarters and base of operations.
The deal underscores the challenges low-budget airlines have competing with the large network carriers and why there is intense interest in mergers to gain economic scale. Spirit Airlines, for example, is in bankruptcy for the second time in less than a year as it downsizes to shed unsustainable costs. Its financial condition worsened after a federal judge blocked an attempted merger with JetBlue on consumer protection grounds.
Sun Country has been able to stay profitable for 13 consecutive quarters thanks to its diversified business model and focus on Midwest leisure travelers. Through three quarters, ended Sept. 30, revenue was up 3.7% year over year to $846 million. The company generated $44.7 million in net income, up 13%.
Cargo revenue grew 36%, to $107 million, as Sun Country’s fleet absorbed eight additional freighters in 2025. Management has said it expects cargo revenue to reach at least $215 million in the current fiscal year.
Both Sun Country and Allegiant are currently in labor talks with their respective pilot unions. Sun Country has about 700 pilots. Allegiant employs 1,400 pilots.
Analysts were positive about the merger of companies with similar business models. The combination makes strategic sense, said Susquehanna Christopher Stathoulopoulos, because both companies are based on flexible capacity and low-utilization models that blend scheduled service with charter service that provides counter-cyclical business, with limited city overlaps and complementary route networks. The deal also removes two potential bidders for Spirit Airlines, he added.
Allegiant expects to close the transaction in the second half of 2026. If the deal doesn’t go through by Jan. 11, 2027 because Allegiant changes its mind, Allegiant will pay a $52 million breakup fee. Sun Country’s termination fee is $33 million. And Allegiant will pay Sun Country $30 million if the sale doesn’t receive regulatory approval.
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Sun Country to operate 20 Amazon cargo jets by peak season
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