Allegiant to take over Sun Country’s Amazon freight operations

Amazon Expands Cargo Partnership with Sun Country Amid Allegiant Merger

Amazon has decided to assign two more cargo planes to Sun Country Airlines this year, following news of merger talks between Sun Country and Allegiant Travel Co. This move highlights Amazon’s commitment to its ongoing cargo collaboration, according to statements from executives at both airlines.

Allegiant (NASDAQ: ALGT) is set to acquire Sun Country Airlines (NASDAQ: SCNY) in a deal valued at approximately $1.5 billion, which includes $400 million in debt. This cash-and-stock transaction, announced on Sunday, will result in one of the largest airlines focused on leisure travel.

The merger will allow the combined airline to better handle surges in vacation travel, while also benefiting from steady revenue streams provided by charter and cargo operations. These business lines help ensure consistent aircraft and crew utilization throughout the year.

Currently, Sun Country operates 20 Boeing 737-800 freighters for Amazon’s air logistics network. The partnership began in early 2020 with 12 aircraft, as Sun Country sought to balance its seasonal passenger business by expanding into cargo. Last year, Amazon transferred eight more leased freighters to Sun Country, which manages both crew and maintenance for these planes.

Beyond cargo, Sun Country also provides charter flights for organizations such as the Department of Defense, Major League Soccer, casinos, and college sports teams. All these services utilize the 737-800 platform and share resources, a strategy that management credits for the airline’s strong profit margins.

Leaders from both Allegiant and Sun Country emphasized that Amazon was involved from the outset of merger discussions, and that cargo operations will remain a crucial part of the new company’s growth strategy.

“Cargo is a vital part of Sun Country’s business, and we expect it to continue as we combine our companies,” said Allegiant CEO Greg Anderson during a Monday call with analysts. “We’ve had several conversations with Amazon, including in-person meetings in Seattle, and we’re confident this partnership will endure. We aim to maintain the high service standards Sun Country currently provides for Amazon’s cargo flights.”

Sun Country CEO Jude Bricker added that Amazon, aware of the upcoming acquisition, has agreed to allocate two additional 737-800 freighters to Sun Country this year, increasing the total cargo fleet to 22 aircraft.

“Our relationship with Amazon has become a key revenue driver for us. This partnership is an important asset that we bring to the combined company,” Bricker noted.

Upcoming Fleet Expansion and Operational Growth

According to spokesperson Wendy Burt, Sun Country expects to receive the two new freighters in the spring, with plans to have them operational by summer.

Allegiant CFO Robert J. Neal highlighted the value of long-term fixed-fee contracts like the one with Amazon, stating, “We’ll continue to assess profitability and ensure prudent growth across all business segments.”

With more than 20 crew bases nationwide, Sun Country will be able to efficiently rotate crews for Amazon’s cargo operations, reducing commuting expenses and supporting the expanding network.

Sun Country also plans to open a new operational base at Cincinnati/Northern Kentucky International Airport by the end of January. This move will support increased cargo activity at Amazon’s U.S. superhub and future growth in scheduled passenger service. Currently, Sun Country shares facilities with other airlines at the airport.

This marks the second time in two years that Amazon has experienced a partner airline being acquired. In October 2024, Alaska Airlines completed its purchase of Hawaiian Airlines, which operates 10 Airbus A330-300 freighters for Amazon.

Merger Highlights and Financial Details

Allegiant’s offer represents a 19.8% premium over Sun Country’s closing share price of $15.77 on January 9. After the merger, Allegiant shareholders will own about 67% of the new company, while Sun Country shareholders will hold the remaining 33%.

The combined airline expects to realize $140 million in annual savings within three years by optimizing fleet and procurement. Together, they will serve around 22 million passengers each year, flying to nearly 175 cities on more than 650 routes with a fleet of roughly 195 aircraft. Both airlines primarily target leisure travelers in underserved markets.

The new Allegiant will be headquartered in Las Vegas, with significant operations in Minneapolis, where Sun Country is based.

This merger reflects the challenges faced by budget airlines as they compete with larger carriers, and the growing trend toward consolidation for greater efficiency. For example, Spirit Airlines recently filed for bankruptcy for the second time in a year after a blocked merger with JetBlue, highlighting the financial pressures in the industry.

Sun Country has maintained profitability for 13 straight quarters, thanks to its diversified business model and focus on Midwest leisure travel. Through the first three quarters ending September 30, revenue rose 3.7% year-over-year to $846 million, with net income up 13% to $44.7 million.

Cargo revenue jumped 36% to $107 million as Sun Country added eight more freighters in 2025. Management projects cargo revenue will reach at least $215 million this fiscal year.

Both airlines are currently negotiating with their respective pilot unions. Sun Country employs about 700 pilots, while Allegiant has 1,400 pilots on staff.

Industry analysts have responded positively to the merger, noting the strategic fit between the two airlines’ flexible, low-utilization business models, which combine scheduled and charter services with minimal route overlap. The deal also removes two potential bidders for Spirit Airlines.

Allegiant expects to finalize the acquisition in the second half of 2026. If the deal is not completed by January 11, 2027, due to Allegiant backing out, Allegiant will pay a $52 million breakup fee. Sun Country’s termination fee is set at $33 million, and Allegiant will pay Sun Country $30 million if regulatory approval is not obtained.