Wow: Allegiant & Solar Nation Merging, As Two Leisure Airways Search Synergies

There’s extra consolidation coming to the US airline trade, and I can’t say this merger is especially stunning.

Allegiant buying Solar Nation in $1.1 billion deal

Allegiant Air and Solar Nation Airways have introduced a definitive merger settlement, beneath which Allegiant will purchase Solar Nation for $1.5 billion, together with taking on $400 million of Solar Nation’s internet debt (so it’s a roughly $1.1 billion deal). Upon closing (which is anticipated within the second half of 2026), Allegiant and Solar Nation shareholders will personal roughly 67% and 33% of the brand new mixed firm, respectively.

It is a money and inventory transaction at an implied worth of $18.89 per Solar Nation share. Solar Nation shareholders will obtain 0.1557 shares of Allegiant widespread inventory and $4.10 in money for every Solar Nation share owned, representing a premium of 19.8% over Solar Nation’s closing share value of $15.77 on January 9, 2026, and 18.8% based mostly on the 30-day volume-weighted common value.

The mixture is described as making a leisure centered airline, increasing service to extra standard trip locations throughout the USA, in addition to worldwide locations, and offering extra folks with entry to inexpensive, handy air journey.

In the interim, the 2 firms will proceed to function independently as earlier than, till they’re on a single working certificates. Nonetheless, in the long term, the plan is for the Allegiant model to outlive, and the Solar Nation model to go away.

For these not acquainted with the 2 carriers:

• Allegiant has a fleet of roughly 130 plane, together with Airbus A320 and Boeing 737 household plane; the airline operates point-to-point leisure routes, primarily out of secondary airports
• Solar Nation has a fleet of roughly 65 Boeing 737 plane (20 of that are cargo planes operated for Amazon Air), and the provider’s passenger community is closely centered round leisure routes from Minneapolis (MSP)

Right here’s how Allegiant CEO Gregory Anderson describes this:

“This mix is an thrilling subsequent chapter in Allegiant and Solar Nation’s shared mission in offering inexpensive, dependable, and handy service from underserved communities to premier leisure locations. We’ve lengthy admired Solar Nation for his or her well-run, versatile, and diversified enterprise mannequin that optimizes for year-round utilization and robust margins. Collectively, our complementary networks will increase our attain to extra trip locations together with worldwide areas. With our mixed strengths– together with operational excellence, constant profitability, robust steadiness sheets, and fleet possession, we are going to create an much more resilient and agile airline that delivers larger worth to vacationers, companions, Group Members, shareholders, and the communities we serve.”

In the meantime right here’s how Solar Nation CEO Jude Bricker describes this:

“Over Solar Nation’s 43-year historical past, we’ve got grown to change into one of many nation’s most revered low-cost, leisure airways with a singular enterprise mannequin for serving scheduled service and constitution passengers in addition to delivering cargo, with a powerful model and deep roots in Minnesota. At the moment marks an thrilling subsequent step in our historical past as we be a part of Allegiant to create one of many main leisure journey firms within the U.S. We’re two customer-centric organizations, deeply dedicated to delivering inexpensive journey experiences with out compromising on high quality. Importantly, we imagine this transaction delivers important worth to Solar Nation shareholders and a possibility to proceed to profit from our progress plans as a mixed firm.”

This looks like smart airline consolidation

The US airline trade has in fact seen loads of consolidation through the years, and pickings are getting slim. Of the remaining airways, I’d say a merger between Allegiant and Solar Nation is about as logical and non-objectionable as any mixture you possibly can discover, and it’s one which has been rumored for a really very long time.

Even because the primarily home leisure airways in the USA have principally struggled, Allegiant and Solar Nation have been the 2 exceptions, as they’ve been performing comparatively nicely. That’s as a result of they’ve each carved out niches, not like carriers like Frontier, Spirit, and so forth., which merely attempt to poach passengers from the legacies, with out enough aggressive benefits.

There’s loads of upside with this mix:

• Each firms are tremendous revolutionary with their route networks, with Allegiant largely flying in markets the place there’s no competitors, and Solar Nation being so closely centered on Minneapolis
• There are in fact synergies in combining two firms, and likewise extra upside by way of loyalty
• Given the heavy seasonality of Solar Nation’s community, there’s worth in higher with the ability to allocate sources
• I don’t assume the diversified fleet is far of a difficulty, on condition that Allegiant is at present transitioning from Airbus to Boeing plane anyway

I can’t think about there might be any important regulatory points with this deal, since each carriers are extremely low value and haven’t actually competed. The one factor I’ll say is {that a} premium of beneath 20% isn’t precisely that a lot upside for Solar Nation shareholders, in comparison with some previous offers.

Admittedly it was an excessive instance, however Alaska acquired Hawaiian for $18 per share, whereas Hawaiian’s inventory was buying and selling for beneath $5. I assume the thought is that the deal partly contains Allegiant inventory, and in the event you assume Solar Nation will carry out nicely in the long term, then perhaps Allegiant will as nicely.

As I see it, the one actual potential draw back is that labor prices may go up a bit, since combining workgroups virtually at all times results in extra profitable contracts, given the leverage that the unions have.

Backside line

Allegiant might be buying Solar Nation, as two of the nation’s most profitable leisure airways search synergies. It is a logical mixture, particularly because the airways have just about no overlapping routes. Allegiant is closely centered on smaller airports with out a lot different service, whereas Solar Nation is closely centered on Minneapolis, and different seasonal leisure routes, although largely to and from main airports.

What do you make of this merger between Allegiant and Solar Nation?