Allegiant firms six more Boeing jets for 2028, over $720M at list

Allegiant Air has flown since 1999, and its Las Vegas parent, Allegiant Travel, closed the purchase of Sun Country Airlines on May 13, 2026.¹ Each Sun Country share became $4.10 in cash plus 0.1557 Allegiant shares, and with an $80.5 million tax receivable agreement payout and $16.2 million for Amazon warrants, total merger consideration was about $976.0 million.² The combined company serves about 22 million customers a year on more than 650 routes, and it had 195 aircraft at closing.³ Sun Country also flies cargo for Amazon on 22 planes subleased from Amazon. About 93% of its 2025 capacity touched Minneapolis-St. Paul airport, which is also a large Delta Air Lines hub.⁴

The second quarter was the first to include Sun Country, counted only from May 13. Revenue was $943.5 million, and the original Allegiant airline raised unit revenue, its revenue per seat flown one mile, by 24.6% while flying 6.8% less capacity.¹ Costs rose too. Fuel cost $4.14 a gallon, 71.1% more than a year earlier, and Allegiant Air's cost per seat mile excluding fuel and special charges rose 6.4% to 8.17 cents.² Under standard accounting the company lost $0.21 a share in the quarter, while its adjusted figure, which leaves out special charges, was a profit of $2.19 a share.³ Special charges were $66.0 million, and $55.2 million of that was the cost of buying and integrating Sun Country.⁴

Allegiant's Boeing deal dates to 2021: 50 firm 737 MAX jets plus options on up to 80 more. Twenty had arrived by June 30, and the company expected seven more in the second half of 2026.¹ At June 30 it had firm commitments for 30 aircraft due between 2026 and 2028.² Allegiant also reworked its debt this year. It sold $650.0 million of 7.125% secured notes due 2031 and bought back $377.5 million of its 7.250% notes due 2027.³ With $570.3 million of Sun Country debt taken on, total debt and finance leases reached $2.8 billion at June 30.⁴

The stock closed at $70.37 on October 22 and was $67.67 at the 16:00 close on October 23, down 3.8%, while the S&P 500 fund (SPY) fell 0.5% over the same span.¹ The 8-K was filed on October 23, but our record does not show the time, so we cannot say whether the drop came before or after the news.² That day Brent crude oil rose 3.1% to $116.72 a barrel, its highest since April 29, as worries grew that the conflict with Iran could escalate.³ The merger targets at least $140 million a year of savings within three years, and the August 4 full-year guide of adjusted earnings above $6.00 a share assumed fuel of $3.70 a gallon, set before Brent reached $116.72 on October 23.⁴ Our price file starts in mid-September. Since then the stock's highest close was $81.67 on September 22 and its lowest was $66.27 on October 19, so we cannot confirm a full-year trading range.⁵ The stock ended 2025 at $85.27, and Allegiant valued its shares at $75.21 on the day the Sun Country deal closed.⁶

On October 19, Allegiant Air signed supplemental agreements with Boeing that exercise the first six options under the 2021 purchase agreement. The six will be 737-8 jets scheduled for delivery in 2028.¹ Boeing gets six more firm sales, and Allegiant gets six more 2028 delivery slots under a contract it already holds. The filing quotes only a list price, more than $720 million in total, and says real prices are subject to discounts and price escalations through delivery.² The size of the discounts is not given, so what Allegiant will pay is unknown.³

The rest of the order shows how the cash moves. Allegiant pays Boeing deposits before each jet arrives, and those deposits came to $219.9 million in the first half of 2026.¹ It borrows against them. A $231.0 million facility funds part of the pre-delivery payments due to Boeing for certain 737 MAX jets, and its loans are secured by the purchase contracts for those jets.²

At list, the six jets cost more than $120 million each. The total equals about 39% of the company's market value of about $1.85 billion, based on 27,337,755 shares and the $67.67 price.¹ It is also more than the $640 million to $660 million Allegiant planned to spend on aircraft in all of 2026.² The bill is spread out, though. The jets arrive in 2028, deposits come before delivery, and list price is not the price paid.³

Twenty jets had arrived by June 30 and 22 by October 23, so 2 arrived after June. In August Allegiant expected seven in the second half of 2026; if that still holds, 5 more must arrive before year end.¹ That leaves 34 firm jets still to come. The company lists its reliance on Boeing to deliver on time as a risk.²

At June 30 Allegiant had $1.1 billion of cash and investments, $250.0 million of unused revolving credit lines it can draw and repay, and total liquidity of $1.3 billion.¹ Big bills come soon. About $196.6 million of debt was due in the rest of 2026, and $273.0 million of accrued pilot retention bonuses is payable no later than the fourth quarter, about $470 million together.² Another $284.2 million of debt falls due in 2027. The 2031 notes require at least $300.0 million of liquidity, and a breach would add 2.0% a year of interest on those notes.³

New money has come in since June. On October 13 Allegiant drew the entire $177.5 million of a fixed-rate loan secured by aircraft, repaid quarterly from July 2027 over five to six years.¹ Before the third quarter ended it also drew $71.8 million of the Boeing deposit facility, leaving $159.3 million unused. Those loans float with a short-term benchmark rate and are due at delivery, and no later than March 31, 2028.² Operating cash flow was $314.1 million in the first half but only $46.0 million in the second quarter. Allegiant guided 2026 capital spending to $830 million to $870 million, counting aircraft, heavy maintenance and other items.³

Debt is heavy against earnings. As a rough guide, net debt of $1.7 billion is about 2.7 times four quarters of the second quarter's $157.7 million of adjusted earnings before interest, taxes, depreciation and amortization.¹ That shortcut cuts both ways. Sun Country counted only from May 13, which understates earnings, but the third quarter was guided to an adjusted operating margin of 1.0% to 3.0%, against 9.2% in the second quarter.² In the second quarter, operating income under standard accounting was $21.1 million, about half the $40.1 million interest bill. Adjusted operating income of $87.1 million covered interest about 2.2 times, and third-quarter interest expense was guided to about $50 million.³

The share count jumped this year. Allegiant issued about 8.6 million shares for Sun Country and had 27,337,755 shares out at July 31.¹ Converted Sun Country options add 324,059 shares at an average exercise price of $32.96, about 27.7 million shares counting them. Sun Country holders also got 268,627 restricted stock units.² The dividend is suspended, and there were no open-market buybacks in the first half.³ If trouble comes, lenders with specific collateral are paid first. The aircraft loan is secured by planes and the deposit loans by the purchase contracts, while the 2031 notes rely on other assets because their collateral excludes aircraft and engines. Shareholders stand behind all of them.⁴

The same 8-K signs the top four managers through 2029. Chief executive Gregory Anderson's base salary rises to $750,000 from $600,000 in 2025, a 25% raise, with a target cash bonus of 180% of salary and a target stock grant of 300%.¹ At target, that is $1.35 million of bonus and $2.25 million of stock a year. Robert Neal, president and finance chief, keeps a $525,000 salary through 2029, and the commercial and operating chiefs get $475,000 each.² The four base salaries total about $2.2 million, small next to the company. Each manager's severance includes salary continuation, a cash bonus and faster vesting of some stock grants, and company policy caps cash severance at three times salary plus the prior year's bonus unless stockholders approve more.³ Anderson's latest insider filing shows 4,832 shares withheld for tax, not an open-market sale.⁴

The bull case is that Allegiant is buying growth it can sell. Unit revenue at the original airline rose 24.6% in the second quarter, planes were 85.7% full, and management expects third-quarter unit revenue growth about in line.¹ The 737 MAX share of flying nearly doubled in a year, to 21% of seat miles, and the August full-year guide called for adjusted earnings above $6.00 a share at a $3.70 fuel assumption.² Firming options for 2028, right after lining up new aircraft loans, suggests management expects to fund them.³

The bear case, strongest point first. Fuel is the biggest swing: Allegiant does not hedge it, and it was 31.0% of first-half operating costs.¹ Second, earnings are thin against debt, with the third quarter guided to an adjusted loss of up to $1.00 a share and interest costs rising. Third, other costs are climbing: cost per seat mile excluding fuel rose 6.4%, and the company was still evaluating the cost of a pilot contract ratified July 31 that raises pay and benefits.² Fourth, Sun Country brings its own risks. It does not meet the reliability standards that avoid penalties under its Amazon cargo deal, and a single operating certificate for both airlines is not expected until 2028.³ Adding a commitment worth about 39% of market value at list, before these questions settle, is the bear's core worry.⁴

Management's own targets, which are goals and not results, are full-year 2026 adjusted earnings above $6.00 a share and at least $140 million a year of merger savings within three years. It also expects one operating certificate from the Federal Aviation Administration in 2028.

The first test is the third-quarter results call on November 4. A deep cut to the full-year guide, or a cash pile shrunk by the fourth-quarter pilot bonus payments, would make this order look early.¹ A guide held near $6.00, with liquidity far above the $300.0 million floor, would back the bull case. The first interest payment on the 2031 notes is due January 1, 2027.² The 2026 annual report is to carry the Boeing supplements, though past Boeing exhibits left out confidential terms, so the real price may stay hidden.³ The deposit loans must be repaid by March 31, 2028, the year the six jets are due.⁴

The 8-K came out on October 23, the same day the stock fell 3.8%, and our record does not show whether that drop came before or after the filing.¹ Our call is that the stock will not close above $75.21, its value when the Sun Country deal closed, on the first trading day after results. That is about 11% above the last price, and getting there would take results well above a guide for a third-quarter loss, from an airline that does not hedge fuel.²

The 8-K gives only a list price above $720 million and says prices are subject to discounts and escalations through delivery.¹ The supplements are to be filed with the 2026 annual report, but past Boeing exhibits left out confidential terms, so the net price and deposit timing may stay hidden.²

No filing names financing for these six jets. The Boeing deposit facility covers certain 737 MAX jets without naming them, and its loans are due no later than March 31, 2028.

Allegiant's spending guide covers only 2026, so the cost of the 34 jets still to come is not laid out by year.

Pilots ratified a contract on July 31 that raises pay and benefits, and the company was still evaluating its financial impact.

The 8-K does not say why the options were exercised now, or whether the six jets will add flying or replace older planes.

The 8-K lists the kinds of severance in the new agreements but gives no multiples or dollar amounts.