UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
| ☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||||
For the quarterly period ended June 30, 2026 | ||||||||
| or | ||||||||
| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||||
For the transition period from _______ to_______
Commission File Number 001-33166
Allegiant Travel Company
(Exact Name of Registrant as Specified in Its Charter)
| Nevada | 20-4745737 | |||||||
| (State or Other Jurisdiction of Incorporation or Organization) | (IRS Employer Identification No.) | |||||||
| 1201 North Town Center Drive | ||||||||
| Las Vegas, | Nevada | 89144 | ||||||
| (Address of Principal Executive Offices) | (Zip Code) | |||||||
Registrant’s Telephone Number, Including Area Code: (702) 851-7300
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol | Name of each exchange on which registered | ||||||||||||
| Common stock, par value $0.001 | ALGT | NASDAQ Global Select Market | ||||||||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
| Large accelerated filer | ☒ | Accelerated filer | ☐ | |||||||||||
| Non-accelerated filer | ☐ | Smaller reporting company | ☐ | |||||||||||
| Emerging growth company | ☐ | |||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of July 31, 2026, the registrant had 27,337,755 shares of common stock, $0.001 par value per share, outstanding.
ALLEGIANT TRAVEL COMPANY
FORM 10-Q
TABLE OF CONTENTS
| PART I. | FINANCIAL INFORMATION | |||||||
| ITEM 1. | ||||||||
| ITEM 2. | ||||||||
| ITEM 3. | ||||||||
| ITEM 4. | ||||||||
| PART II. | OTHER INFORMATION | |||||||
| ITEM 1. | ||||||||
| ITEM 1A. | ||||||||
| ITEM 2. | ||||||||
| ITEM 3. | ||||||||
| ITEM 4. | ||||||||
| ITEM 5. | ||||||||
| ITEM 6. | ||||||||
2
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
ALLEGIANT TRAVEL COMPANY
CONSOLIDATED BALANCE SHEETS
(in thousands)
| June 30, 2026 | December 31, 2025 | ||||||||||
| (unaudited) | |||||||||||
| CURRENT ASSETS | |||||||||||
| Cash and cash equivalents | $ | 508,684 | $ | 172,696 | |||||||
| Restricted cash | 36,112 | 18,064 | |||||||||
| Short-term investments | 544,791 | 632,959 | |||||||||
| Accounts receivable | 107,278 | 57,110 | |||||||||
| Expendable parts, supplies and fuel, net | 55,284 | 34,431 | |||||||||
| Short-term lessor maintenance deposits | 37,555 | — | |||||||||
| Prepaid expenses and other current assets | 68,186 | 52,393 | |||||||||
| TOTAL CURRENT ASSETS | 1,357,890 | 967,653 | |||||||||
| Property and equipment, net | 4,228,694 | 2,947,536 | |||||||||
| Long-term investments | 15,511 | 32,823 | |||||||||
| Goodwill and intangible assets | 485,909 | — | |||||||||
| Deferred major maintenance, net | 149,155 | 148,506 | |||||||||
| Operating lease right-of-use assets, net | 69,399 | 63,389 | |||||||||
| Deposits and other assets | 137,907 | 49,494 | |||||||||
| TOTAL ASSETS: | $ | 6,444,465 | $ | 4,209,401 | |||||||
| CURRENT LIABILITIES | |||||||||||
| Accounts payable | $ | 139,849 | $ | 64,506 | |||||||
| Accrued liabilities | 264,837 | 186,019 | |||||||||
| Accrued pilot retention bonus | 272,982 | 235,887 | |||||||||
| Current operating lease liabilities | 14,362 | 10,936 | |||||||||
| Air traffic liability | 570,631 | 363,328 | |||||||||
| Current loyalty program liability | 50,794 | 39,711 | |||||||||
| Current maturities of long-term debt and finance lease obligations, net of related costs | 318,676 | 118,075 | |||||||||
| TOTAL CURRENT LIABILITIES | 1,632,131 | 1,018,462 | |||||||||
| Long-term debt and finance lease obligations, net of current maturities and related costs | 2,460,778 | 1,681,541 | |||||||||
| Deferred income taxes | 413,507 | 305,416 | |||||||||
| Noncurrent operating lease liabilities | 58,343 | 54,170 | |||||||||
| Noncurrent loyalty program liability | 41,784 | 37,921 | |||||||||
| Other noncurrent liabilities | 60,548 | 59,214 | |||||||||
| TOTAL LIABILITIES: | 4,667,091 | 3,156,724 | |||||||||
| SHAREHOLDERS' EQUITY | |||||||||||
Common stock, par value $0.001 | 26 | 26 | |||||||||
| Treasury shares | (682,331) | (682,511) | |||||||||
| Additional paid in capital | 1,456,769 | 771,967 | |||||||||
| Accumulated other comprehensive income, net | 6,741 | 4,644 | |||||||||
| Retained earnings | 996,169 | 958,551 | |||||||||
| TOTAL EQUITY: | 1,777,374 | 1,052,677 | |||||||||
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY: | $ | 6,444,465 | $ | 4,209,401 | |||||||
The accompanying notes are an integral part of these consolidated financial statements.
3
ALLEGIANT TRAVEL COMPANY
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
(unaudited)
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| OPERATING REVENUES: | |||||||||||||||||||||||
| Passenger | $ | 822,491 | $ | 617,908 | $ | 1,494,290 | $ | 1,234,658 | |||||||||||||||
| Third party products | 45,758 | 33,649 | 88,093 | 68,852 | |||||||||||||||||||
| Fixed fee contracts | 45,723 | 17,019 | 63,846 | 33,271 | |||||||||||||||||||
| Cargo | 27,586 | — | 27,586 | — | |||||||||||||||||||
| Other | 1,932 | 20,808 | 2,106 | 51,677 | |||||||||||||||||||
| Total operating revenues | 943,490 | 689,384 | 1,675,921 | 1,388,458 | |||||||||||||||||||
| OPERATING EXPENSES: | |||||||||||||||||||||||
| Aircraft fuel | 307,669 | 165,752 | 487,910 | 332,085 | |||||||||||||||||||
| Salaries and benefits | 250,318 | 214,102 | 468,403 | 445,541 | |||||||||||||||||||
| Station operations | 95,551 | 75,248 | 172,033 | 148,753 | |||||||||||||||||||
| Depreciation and amortization | 70,709 | 68,519 | 128,635 | 131,830 | |||||||||||||||||||
| Maintenance and repairs | 49,252 | 36,379 | 84,469 | 71,233 | |||||||||||||||||||
| Sales and marketing | 35,194 | 26,837 | 63,394 | 51,933 | |||||||||||||||||||
| Aircraft rent | 7,015 | 11,023 | 14,476 | 16,942 | |||||||||||||||||||
| Other | 40,716 | 41,089 | 60,649 | 76,259 | |||||||||||||||||||
| Special charges, net of recoveries | 65,952 | 117,924 | 93,734 | 116,369 | |||||||||||||||||||
| Total operating expenses | 922,376 | 756,873 | 1,573,703 | 1,390,945 | |||||||||||||||||||
| OPERATING INCOME (LOSS) | 21,114 | (67,489) | 102,218 | (2,487) | |||||||||||||||||||
| OTHER (INCOME) EXPENSES: | |||||||||||||||||||||||
| Interest income | (8,840) | (10,359) | (17,554) | (22,294) | |||||||||||||||||||
| Interest expense | 40,072 | 35,756 | 69,299 | 76,540 | |||||||||||||||||||
| Capitalized interest | (4,937) | (4,562) | (9,227) | (11,050) | |||||||||||||||||||
| Other, net | 39 | 240 | (1,105) | 941 | |||||||||||||||||||
| Total other expenses | 26,334 | 21,075 | 41,413 | 44,137 | |||||||||||||||||||
| INCOME (LOSS) BEFORE INCOME TAXES | (5,220) | (88,564) | 60,805 | (46,624) | |||||||||||||||||||
| INCOME TAX PROVISION (BENEFIT) | (360) | (23,398) | 23,187 | (13,560) | |||||||||||||||||||
| NET INCOME (LOSS) | $ | (4,860) | $ | (65,166) | $ | 37,618 | $ | (33,064) | |||||||||||||||
| Earnings (loss) per share to common shareholders: | |||||||||||||||||||||||
| Basic | $ | (0.21) | $ | (3.62) | $ | 1.80 | $ | (1.84) | |||||||||||||||
| Diluted | $ | (0.21) | $ | (3.62) | $ | 1.80 | $ | (1.84) | |||||||||||||||
| Shares used for computation: | |||||||||||||||||||||||
| Basic | 22,852 | 17,995 | 20,542 | 17,989 | |||||||||||||||||||
| Diluted | 22,852 | 17,995 | 20,634 | 17,989 | |||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
4
ALLEGIANT TRAVEL COMPANY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
(unaudited)
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| NET INCOME (LOSS) | $ | (4,860) | $ | (65,166) | $ | 37,618 | $ | (33,064) | |||||||||||||||
| Other comprehensive income (loss): | |||||||||||||||||||||||
| Change in available-for-sale securities, net of tax | 3,338 | 305 | 2,097 | (505) | |||||||||||||||||||
| TOTAL COMPREHENSIVE INCOME (LOSS) | $ | (1,522) | $ | (64,861) | $ | 39,715 | $ | (33,569) | |||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
5
ALLEGIANT TRAVEL COMPANY
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(in thousands)
(unaudited)
| Three Months Ended June 30, 2026 | |||||||||||||||||||||||||||||||||||||||||
| Common stock outstanding | Par value | Additional paid-in capital | Accumulated other comprehensive income | Retained earnings | Treasury shares | Total shareholders' equity | |||||||||||||||||||||||||||||||||||
| Balance at March 31, 2026 | 18,447 | $ | 26 | $ | 774,181 | $ | 3,403 | $ | 1,001,029 | $ | (682,566) | $ | 1,096,073 | ||||||||||||||||||||||||||||
| Share-based compensation | 289 | — | 13,529 | — | — | — | 13,529 | ||||||||||||||||||||||||||||||||||
| Shares repurchased by the Company and held as treasury shares | (71) | — | — | — | — | (5,441) | (5,441) | ||||||||||||||||||||||||||||||||||
| Stock issued under employee stock purchase plan | 75 | — | — | — | — | 5,676 | 5,676 | ||||||||||||||||||||||||||||||||||
| Shares issued for acquisition | 8,601 | — | 669,059 | — | — | — | 669,059 | ||||||||||||||||||||||||||||||||||
| Other comprehensive income | — | — | — | 3,338 | — | — | 3,338 | ||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | (4,860) | — | (4,860) | ||||||||||||||||||||||||||||||||||
| Balance at June 30, 2026 | 27,341 | $ | 26 | $ | 1,456,769 | $ | 6,741 | $ | 996,169 | $ | (682,331) | $ | 1,777,374 | ||||||||||||||||||||||||||||
| Six Months Ended June 30, 2026 | |||||||||||||||||||||||||||||||||||||||||
| Common stock outstanding | Par value | Additional paid-in capital | Accumulated other comprehensive income | Retained earnings | Treasury shares | Total shareholders' equity | |||||||||||||||||||||||||||||||||||
| Balance at December 31, 2025 | 18,378 | $ | 26 | $ | 771,967 | $ | 4,644 | $ | 958,551 | $ | (682,511) | $ | 1,052,677 | ||||||||||||||||||||||||||||
| Share-based compensation | 359 | — | 15,743 | — | — | — | 15,743 | ||||||||||||||||||||||||||||||||||
| Shares repurchased by the Company and held as treasury shares | (72) | — | — | — | — | (5,496) | (5,496) | ||||||||||||||||||||||||||||||||||
| Stock issued under employee stock purchase plan | 75 | — | — | — | — | 5,676 | 5,676 | ||||||||||||||||||||||||||||||||||
| Shares issued for acquisition | 8,601 | — | 669,059 | — | — | — | 669,059 | ||||||||||||||||||||||||||||||||||
| Other comprehensive income | — | — | — | 2,097 | — | — | 2,097 | ||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | 37,618 | — | 37,618 | ||||||||||||||||||||||||||||||||||
| Balance at June 30, 2026 | 27,341 | $ | 26 | $ | 1,456,769 | $ | 6,741 | $ | 996,169 | $ | (682,331) | $ | 1,777,374 | ||||||||||||||||||||||||||||
| Three Months Ended June 30, 2025 | |||||||||||||||||||||||||||||||||||||||||
| Common stock outstanding | Par value | Additional paid-in capital | Accumulated other comprehensive income | Retained earnings | Treasury shares | Total shareholders' equity | |||||||||||||||||||||||||||||||||||
| Balance at March 31, 2025 | 18,261 | $ | 26 | $ | 763,767 | $ | 3,139 | $ | 1,035,350 | $ | (689,551) | $ | 1,112,731 | ||||||||||||||||||||||||||||
| Share-based compensation | (15) | — | 3,135 | — | — | — | 3,135 | ||||||||||||||||||||||||||||||||||
| Shares repurchased by the Company and held as treasury shares | (7) | — | — | — | — | (350) | (350) | ||||||||||||||||||||||||||||||||||
| Stock issued under employee stock purchase plan | 112 | — | — | — | — | 5,266 | 5,266 | ||||||||||||||||||||||||||||||||||
| Other comprehensive income | — | — | — | 305 | — | — | 305 | ||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | (65,166) | — | (65,166) | ||||||||||||||||||||||||||||||||||
| Balance at June 30, 2025 | 18,351 | $ | 26 | $ | 766,902 | $ | 3,444 | $ | 970,184 | $ | (684,635) | $ | 1,055,921 | ||||||||||||||||||||||||||||
6
| Six Months Ended June 30, 2025 | |||||||||||||||||||||||||||||||||||||||||
| Common stock outstanding | Par value | Additional paid-in capital | Accumulated other comprehensive income | Retained earnings | Treasury shares | Total shareholders' equity | |||||||||||||||||||||||||||||||||||
| Balance at December 31, 2024 | 18,408 | $ | 26 | $ | 760,600 | $ | 3,949 | $ | 1,003,248 | $ | (678,431) | $ | 1,089,392 | ||||||||||||||||||||||||||||
| Share-based compensation | (15) | — | 6,302 | — | — | — | 6,302 | ||||||||||||||||||||||||||||||||||
| Shares repurchased by the Company and held as treasury shares | (154) | — | — | — | — | (11,470) | (11,470) | ||||||||||||||||||||||||||||||||||
| Stock issued under employee stock purchase plan | 112 | — | — | — | — | 5,266 | 5,266 | ||||||||||||||||||||||||||||||||||
Other comprehensive loss | — | — | — | (505) | — | — | (505) | ||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | (33,064) | — | (33,064) | ||||||||||||||||||||||||||||||||||
| Balance at June 30, 2025 | 18,351 | $ | 26 | $ | 766,902 | $ | 3,444 | $ | 970,184 | $ | (684,635) | $ | 1,055,921 | ||||||||||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
7
ALLEGIANT TRAVEL COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
| Six Months Ended June 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| Net cash provided by operating activities | 314,145 | 283,647 | |||||||||
| Cash flows from investing activities: | |||||||||||
| Purchase of investment securities | (261,697) | (477,669) | |||||||||
| Proceeds from maturities of investment securities | 422,767 | 387,660 | |||||||||
| Aircraft pre-delivery deposits | (219,858) | (9,680) | |||||||||
| Purchase of property and equipment, including capitalized interest | (166,138) | (177,222) | |||||||||
| Acquisition of Sun Country, net of cash acquired | (167,071) | — | |||||||||
| Other investing activities | 20,818 | 35,069 | |||||||||
| Net cash used in investing activities | (371,179) | (241,842) | |||||||||
| Cash flows from financing activities: | |||||||||||
| Proceeds from the issuance of debt and finance lease obligations | 895,163 | 323,781 | |||||||||
| Repurchase of common stock | (838) | (11,470) | |||||||||
| Principal payments on debt and finance lease obligations | (474,431) | (432,629) | |||||||||
| Debt issuance costs | (14,400) | (3,171) | |||||||||
| Other financing activities | 5,576 | 7,266 | |||||||||
| Net cash provided by (used in) financing activities | 411,070 | (116,223) | |||||||||
| NET CHANGE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH | 354,036 | (74,418) | |||||||||
| CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT BEGINNING OF PERIOD | 190,760 | 302,319 | |||||||||
| CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT END OF PERIOD | $ | 544,796 | $ | 227,901 | |||||||
| CASH PAYMENTS FOR: | |||||||||||
| Interest paid, net of amount capitalized | $ | 59,798 | $ | 57,969 | |||||||
| Income tax refunds | (450) | (14,954) | |||||||||
| SUPPLEMENTAL DISCLOSURE OF NONCASH TRANSACTIONS: | |||||||||||
| Right-of-use (ROU) assets acquired | $ | 1,406 | $ | — | |||||||
| Purchases of property and equipment in accrued liabilities and other | 26,200 | 53,324 | |||||||||
| Shares issued for acquisition of Sun Country | 669,069 | — | |||||||||
The accompanying notes are an integral part of these consolidated financial statements.
8
ALLEGIANT TRAVEL COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Note 1 — Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited consolidated financial statements include the accounts of Allegiant Travel Company (the “Company” or "Allegiant") and its majority-owned operating subsidiaries, including Allegiant Air, LLC ("Allegiant Air") and Sun Country, Inc., whose parent company, Sun Country Airlines Holdings, Inc. ("Sun Country"), was acquired on May 13, 2026. Purchase accounting impacts resulting from the acquisition of Sun Country are included as of that date. Financial results for periods prior to May 13, 2026, do not include Sun Country results. The Company's investments in unconsolidated affiliates, which are 50 percent or less owned, are accounted for under the equity or cost method, and are insignificant to the consolidated financial statements. All intercompany balances and transactions have been eliminated.
These unaudited consolidated financial statements reflect all normal recurring adjustments which management believes are necessary to present fairly the financial position, results of operations, and cash flows of the Company for the respective periods presented. Certain information and footnote disclosures normally included in the annual consolidated financial statements prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP") have been omitted pursuant to the rules and regulations of the Securities and Exchange Commission for Form 10-Q. These unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements of the Company and notes thereto included in the annual report of the Company on Form 10-K for the year ended December 31, 2025 and filed with the Securities and Exchange Commission.
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities, at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from these estimates.
Operating results for the three and six months ended June 30, 2026 are not necessarily indicative of operating results for the entire year due to the seasonal nature of leisure travel, the volatility of aircraft fuel prices, other macroeconomic factors as well as the acquisition of Sun Country during second quarter 2026.
The Company has reclassified certain prior period amounts to conform to the current period presentation.
Significant Accounting Policies
Except as described below, there have been no material changes to the Company's significant accounting policies described in Note 2 to the audited financial statements included in the Company's Annual Report on Form 10‑K for the year ended December 31, 2025. As a result of the completion of the acquisition of Sun Country on May 13, 2026, the Company adopted the following accounting policies related to Sun Country's business.
Revenue Recognition
Cargo
In June 2024, Sun Country entered into the Amended and Restated Air Transportation Services Agreement ("ATSA") with Amazon.com Services, LLC ("Amazon"). Under this agreement, the Company operates a fleet of 737-800 cargo aircraft on behalf of Amazon. The ATSA includes an initial six-year term, which expires in October 2030. The agreement includes two additional, two-year renewal terms exercisable at Amazon's option, and a subsequent three-year renewal term subject to mutual written agreement, which, if not agreed to, will trigger a final two-year wind-down term. The ATSA has annual rate escalations.
The cargo fleet of 22 aircraft is subleased directly from Amazon and the Company operates them pursuant to the ATSA. The sublease arrangement does not qualify as a lease because the Company does not control the use of the aircraft. As such, no right-of use asset or lease liability is recognized in the consolidated financial statements for the Amazon arrangement.
The ATSA contains three performance obligations: Flight Services, Heavy Maintenance and Fuel. As Sun Country is the principal in providing Flight Services, revenue and related costs are recognized gross on the Statement of Income. Flight Services revenue is recognized when transportation services are provided. The Company acts as the agent in providing the Heavy Maintenance and Fuel performance obligations, which are reimbursed by Amazon based on the actual costs incurred. Reimbursements for heavy maintenance and fuel consumption are recognized in revenue, net of the actual amount of costs for heavy maintenance and fuel which are incurred to fulfill the performance obligations.
9
The ATSA with Amazon consists of three main components of consideration: a fixed amount is received each month per aircraft, a fixed amount is received each month per flight, and an amount per block hour is received each month. The ATSA contains a Service Level Agreement ("SLA") which provides for penalties for certain delays and cancellations. The SLA can result in a bonus or penalty for each month depending on the Company's performance. Each reporting period, the Company updates its estimate of variable consideration over the contract term and treats the adjustment as an adjustment to the total transaction price. When updating the estimate, the Company considers whether there are any changes in expected usage, performance-based bonuses or penalties, and changes in reimbursable costs. The transaction price is allocated to the performance obligations based on their relative standalone selling price.
In connection with the ATSA, Sun Country issued warrants to Amazon which allowed for the purchase of Sun Country's common stock. On the acquisition date, all of these warrants vested pursuant to the warrant agreement and were exercised on a net settlement basis into Sun Country shares, for which the Company paid merger consideration to Amazon. In connection with these warrants, the Company recorded a contract asset in the opening post-acquisition balance sheet. This contract asset will be amortized against cargo revenue over the remaining term of the ATSA through a reduction to the transaction price for Flight Services.
Lessor Maintenance Deposits
Certain of the Company's aircraft lease agreements acquired from Sun Country provide that the Company pay maintenance reserves monthly to aircraft lessors to be held as collateral in advance of major maintenance activities required to be performed by the Company. Generally, maintenance reserve payments are variable based on actual flight hours or cycles. These lease agreements provide that maintenance reserves are reimbursable to the Company upon completion of the maintenance event in an amount equal to the lesser of (1) the amount of the maintenance reserve held by the lessor associated with the specific maintenance event or (2) the qualifying costs related to the specific maintenance event.
Maintenance reserve payments that are expected to be recoverable via reimbursable expenses are reflected as Short-term lessor maintenance deposits and in deposits and other assets on the accompanying Consolidated Balance Sheets. These deposits are expected to be reimbursed to the Company upon performance of maintenance activities or used towards the purchase of the aircraft at the end of the lease. Lessor maintenance deposits deemed improbable of recovery are expensed as incurred and recorded within aircraft rent.
The Company made certain assumptions at the inception of the lease and at each balance sheet date to determine the recoverability of maintenance deposits. These assumptions are based on various factors, such as the estimated time between the maintenance events, the estimated cost of such maintenance events, the date the aircraft is due to be returned to the lessor, and the estimated number of flight hours and cycles the aircraft is expected to fly before it is purchased or returned to the lessor. Changes in estimates are accounted for on a prospective basis. As of June 30, 2026, all maintenance deposits recorded in the consolidated balance sheet as of June 30, 2026, which include $37.6 million of short term deposits and $15.5 million of noncurrent deposits included in deposits and other assets, are estimated to be recoverable either through reimbursable maintenance events or through application towards the purchase of the aircraft.
Goodwill and Other Intangible Assets
Goodwill represents the excess purchase price over the estimated fair value of net assets acquired in the Sun Country acquisition. Other intangible assets with finite lives represent customer relationships in the co-brand credit card program and the trade name acquired in the Sun Country acquisition. Goodwill is tested for impairment at least annually, or more frequently if events or changes in circumstances indicate that it might be impaired. Goodwill is tested at the reporting unit level. The Company has two reporting units: Allegiant Air and Sun Country. All of the Company's Goodwill balance is associated with the Sun Country reporting unit.
Other intangible assets with finite lives are amortized over an estimated useful life. The estimated useful life for the customer relationships and trade name acquired from Sun Country is two years.
The value of Goodwill is assessed under either a qualitative or quantitative approach. Under a qualitative approach, the Company considers various market factors, including certain key assumptions, such as the market value of the airline and other airlines, fuel prices, the overall economy, passenger yields and changes to the regulatory environment. The Company analyzes these factors to determine if events and circumstances have affected the fair value of Goodwill. If it is determined that it is more likely than not that the asset may be impaired, the Company uses a quantitative approach to determine the reporting unit or intangible asset’s fair value incorporating the key assumptions listed below. An impairment charge is recorded for the amount of carrying value that exceeds the determined fair value as of the testing date.
10
When the Company evaluates Goodwill for impairment using a quantitative approach, the Company utilizes market and income approach valuation techniques. These measurements include the following key assumptions, 1) forecasted revenues, expenses and cash flows, 2) current discount rates, 3) comparative market multiples, 4) observable market transactions, and 5) anticipated changes to the regulatory environment. These assumptions are consistent with those that hypothetical market participants would use. Because the Company is required to make estimates and assumptions when evaluating Goodwill for impairment, actual amounts may differ materially from these estimates.
The Company has not identified any triggering events during the six months ended June 30, 2026.
Refer to Note 2 for further discussion on the Sun Country acquisition, including certain impacts on our Consolidated Financial Statements.
Note 2 — 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 awards | 21,173 | ||||
| Add: Consideration paid with respect to Amazon warrants | 16,185 | ||||
| Add: Termination payment under Tax Receivable Agreement | 80,461 | ||||
| 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:
11
| (in thousands) | Purchase Price Allocation | ||||
| Cash and cash equivalents | $ | 119,618 | |||
| Restricted cash | 20,272 | ||||
| Short-term investments | 47,134 | ||||
| Accounts receivable | 77,010 | ||||
| Short term lessor maintenance deposits | 37,268 | ||||
| Expendable parts, supplies and fuel, net | 12,356 | ||||
| Prepaid expenses and other current assets | 23,510 | ||||
| Property and equipment, net | 1,048,057 | ||||
| Goodwill | 465,719 | ||||
| Other intangible assets | 21,600 | ||||
| Long-term investments | 4,980 | ||||
| Operating lease right-of-use assets, net | 10,819 | ||||
| Deposits and other assets | 85,322 | ||||
| Total assets acquired | 1,973,665 | ||||
| Accounts payable | 97,108 | ||||
| Accrued liabilities | 65,253 | ||||
| Current operating lease liabilities | 3,756 | ||||
| Air traffic liability | 137,306 | ||||
| Current loyalty program liability | 9,495 | ||||
| Current maturities of long-term debt and finance lease obligations, net of related costs | 137,114 | ||||
| Long-term debt and finance lease obligations, net of current maturities and related costs | 433,150 | ||||
| Deferred income taxes | 89,496 | ||||
| Noncurrent operating lease liabilities | 8,725 | ||||
| Noncurrent loyalty program liability | 4,890 | ||||
| Other noncurrent liabilities | 11,334 | ||||
| Liabilities assumed | 997,627 | ||||
| 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 | $13,200 | 2 Years | ||||||
| Customer Relationships | 8,400 | 2 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.
12
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 holders | 268,627 | |||||||
| Vested | (127,321) | |||||||
| Forfeited | (4,943) | |||||||
| Non-vested at June 30, 2026 | 136,363 | |||||||
(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) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Operating revenues | $1,077,194 | $953,005 | $2,147,991 | $1,978,728 | |||||||||||||||||||
| Net income | 65,011 | (54,409) | 96,895 | (58,578) | |||||||||||||||||||
13
Note 3 — Special Charges
Allegiant Air and Sun Country
The Company has identified airframes for early retirement to coincide with 737 MAX aircraft deliveries as scheduled under an amendment to the Company's agreement with The Boeing Company signed in September 2023. To date, the Company has retired a total of 17 airframes under this plan. The remaining airframes are to be retired between August 2026 and January 2027. The accelerated depreciation on these airframes resulting from a change in the estimated useful life is recorded as a special charge during the three and six months ended June 30, 2026 and 2025.
In fourth quarter 2025, the Company committed to a plan to redevelop certain internal-use software to better suit operational needs. As a result, the estimated useful life of the existing internal-use software asset was shortened, and the accelerated amortization resulting from the change in estimated useful life is recorded as a special charge during the three and six months ended June 30, 2026.
On May 13, 2026, the Company completed its acquisition of Sun Country. During the three and six months ended June 30, 2026, the Company incurred costs directly related to integration and other transaction costs, which included legal and professional fees, change in control payments, and other employee-related expenses. These costs are presented as special charges in the Company's consolidated statements of income. The Company expects to incur additional acquisition-related costs in the future as the integration continues. The acquisition is more fully discussed in Note 2.
In second quarter 2025, the Company recorded $12.1 million of special charges related to corporate restructuring efforts taken in response to softness in air travel demand due to heightened macroeconomic uncertainty. These efforts included voluntary separation packages offered to corporate and operational personnel, termination of certain marketing agreements and abandonment of certain IT assets no longer being used.
During the six months ended June 30, 2026, the Company recorded an allowance for credit losses related to a note receivable arising from the Company's financing of the purchase of two flight simulators by a third party in 2016 and 2017. The counterparty to the note receivable declared bankruptcy during first quarter 2026, which led the Company to conclude that a credit loss is probable for the full amount outstanding. The Company continues to evaluate the matter, and the allowance may be adjusted as additional information becomes available.
Sunseeker Resort
In second quarter 2025, the Company recorded special charges of $102.2 million related to the sale of Sunseeker Resort at Charlotte Harbor (the "Resort" or "Sunseeker Resort") and the associated Aileron Golf Course. The sale was completed on September 4, 2025. In addition, the Resort was impacted by weather events occurring between 2022 and 2024, with the related costs and insurance recoveries recorded within special charges as incurred. No further insurance recoveries are expected.
Special Charges Table
The table below summarizes special charges recorded during the three and six months ended June 30, 2026, and 2025.
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| (in thousands) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Accelerated depreciation on airframes identified for early retirement | $ | 1,305 | $ | 2,501 | $ | 2,652 | $ | 3,892 | |||||||||||||||
| Accelerated amortization of software identified for redevelopment | 9,960 | — | 19,920 | — | |||||||||||||||||||
| Integration costs | 55,237 | — | 64,794 | — | |||||||||||||||||||
| Organizational restructuring | — | 12,095 | — | 12,095 | |||||||||||||||||||
| Credit loss on note receivable | — | — | 7,019 | — | |||||||||||||||||||
| Airline special charges | 66,502 | 14,596 | 94,385 | 15,987 | |||||||||||||||||||
| Sunseeker special charges, net of insurance recoveries | (550) | 103,328 | (651) | 100,382 | |||||||||||||||||||
| Total special charges | $ | 65,952 | $ | 117,924 | $ | 93,734 | $ | 116,369 | |||||||||||||||
14
Note 4 — Revenue Recognition
Passenger Revenue
Passenger revenue is the most significant category in the Company's reported operating revenues, as outlined below:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| (in thousands) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Scheduled service | $ | 411,461 | $ | 247,208 | $ | 749,760 | $ | 530,576 | |||||||||||||||
| Ancillary air-related charges | 390,538 | 352,873 | 703,188 | 668,152 | |||||||||||||||||||
| Loyalty redemptions | 20,492 | 17,827 | 41,342 | 35,930 | |||||||||||||||||||
| Total passenger revenue | $ | 822,491 | $ | 617,908 | $ | 1,494,290 | $ | 1,234,658 | |||||||||||||||
Sales of passenger tickets not yet flown are recorded in air traffic liability. As of June 30, 2026, the air traffic liability balance was $570.6 million, of which approximately $523.6 million was related to forward bookings, with the remaining $47.0 million related to credit vouchers for future travel.
The normal contract term of passenger tickets is 12 months and passenger revenue associated with future travel will principally be recognized within this time frame. Of the $363.3 million that was recorded in the air traffic liability balance as of December 31, 2025, approximately 90.6 percent was recognized into passenger revenue during the six months ended June 30, 2026. The amount recognized in 2026 from the prior year-end air traffic liability balance does not include Sun Country passenger revenue as air traffic liability attributable to Sun Country was not included in the Company's prior year-end balance.
The Company periodically evaluates the estimated amount of credit vouchers expected to expire unused and any adjustment is removed from air traffic liability and included in passenger revenue in the period in which the evaluation is complete.
Contract Assets
The Company's contract assets primarily relate to unamortized costs incurred by Sun Country to prepare the Amazon cargo aircraft for service, as well as the value of the Amazon warrants that will be amortized against cargo revenue over the remaining term of the ATSA. The balances as of June 30, 2026, which are approximately $35.0 million, are included in Prepaid Expenses and Other Current Assets and Deposits and Other Assets on the Condensed Consolidated Balance Sheet.
Loyalty redemptions
In connection with Allegiant's co-brand credit card program and Allways Rewards® loyalty program, as well as Sun Country's co-brand credit card program and the Sun Country Rewards loyalty program, the Company has a performance obligation to its members to honor future travel award redemptions. The accounting for and recognition of the loyalty program redemptions are discussed in the Summary of Significant Accounting Policies in the Company's annual 10-K filing.
The following table presents the activity of the co-brand credit cards and the loyalty programs as of the dates indicated:
| Six Months Ended June 30, | |||||||||||
| (in thousands) | 2026 | 2025 | |||||||||
| Balance at January 1 | $ | 77,632 | $ | 80,711 | |||||||
| Points acquired from Sun Country as of May 13 | 14,385 | — | |||||||||
Points awarded (deferral of revenue)(1) | 42,103 | 37,306 | |||||||||
Points redeemed (recognition of revenue)(1)(2) | (41,542) | (35,947) | |||||||||
Balance at June 30(3) | $ | 92,578 | $ | 82,070 | |||||||
(1)Includes issuance and redemption of Sun Country Rewards loyalty points after May 13, 2026.
(2)Revenue recognized from points redeemed includes points issued under the respective loyalty programs during the period and points that were included in the loyalty program liability at the beginning of the period. Allegiant's and Sun Country's loyalty programs are administered and accounted for separately.
(3) The current portion of the loyalty program liability represents the estimate of revenue to be recognized in the next 12 months based on historical trends, with the remaining balance reflected in noncurrent liabilities expected to be recognized into revenue in periods thereafter.
15
Third Party Products Revenue
Third party products revenue primarily includes revenue associated with Allegiant and Sun Country's loyalty programs, which is comprised of the marketing component of point sales to the co-brand credit card provider and other marketing related payments, totaled $51.0 million and $35.9 million for the six months ended June 30, 2026 and 2025, respectively. The accounting and recognition of marketing services related to Allegiant's loyalty program are discussed in the Summary of Significant Accounting Policies in the Company's annual 10-K filing. The remaining amounts included within third party products revenue relate mostly to sales of travel insurance, hotel rooms, rental cars and ticket attractions.
Resort Revenue
The sale of Sunseeker Resort was completed on September 4, 2025. As such, only the revenues during the three and six months ended June 30, 2025 are presented in the table below:
| (in thousands) | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | |||||||||
| Rooms | $ | 8,732 | $ | 24,163 | |||||||
| Food and beverage | 7,766 | 17,728 | |||||||||
| Other | 4,136 | 9,431 | |||||||||
| Total resort revenue | $ | 20,634 | $ | 51,322 | |||||||
Revenue from banquets, golf, retail, and spa services was included in other resort revenue. Resort revenue was recognized as the underlying services or goods were provided, with minimal timing differences between service delivery and payment.
Note 5 — Property and Equipment
The following table summarizes the Company's property and equipment as of the dates indicated:
| (in thousands) | June 30, 2026 | December 31, 2025 | |||||||||
| Flight equipment | $4,890,332 | $ | 3,584,212 | ||||||||
| Computer hardware and software | 365,208 | 339,441 | |||||||||
| Land and buildings/leasehold improvements | 103,751 | 83,304 | |||||||||
| Other property and equipment | 151,219 | 118,894 | |||||||||
| Total property and equipment | 5,510,510 | 4,125,851 | |||||||||
| Less accumulated depreciation and amortization | (1,281,816) | (1,178,315) | |||||||||
| Property and equipment, net | $4,228,694 | $ | 2,947,536 | ||||||||
As of June 30, 2026, the Company had firm commitments to purchase 30 aircraft which are expected to be delivered between 2026 and 2028.
Note 6 — Long-Term Debt
The following table summarizes the Company's long-term debt and finance lease obligations, net of related costs, as of the dates indicated:
| (in thousands) | June 30, 2026 | December 31, 2025 | |||||||||
| Fixed-rate debt and finance lease obligations due through 2032 | $ | 1,860,678 | $ | 1,062,935 | |||||||
| Variable-rate debt due through 2038 | 918,776 | 736,681 | |||||||||
| Total long-term debt and finance lease obligations, net of related costs | 2,779,454 | 1,799,616 | |||||||||
| Less current maturities, net of related costs | 318,676 | 118,075 | |||||||||
| Long-term debt and finance lease obligations, net of current maturities and related costs | $ | 2,460,778 | $ | 1,681,541 | |||||||
| Weighted average fixed-interest rate on debt | 5.7% | 6.7% | |||||||||
| Weighted average variable-interest rate on debt | 5.8% | 5.9% | |||||||||
16
Maturities of long term debt as of June 30, 2026, for the next five years and thereafter, in the aggregate, are:
| (in thousands) | As of June 30, 2026 | ||||
| Remaining in 2026 | $ | 196,647 | |||
| 2027 | 284,173 | ||||
| 2028 | 283,169 | ||||
| 2029 | 361,867 | ||||
| 2030 | 266,920 | ||||
| 2031 | 829,283 | ||||
| Thereafter | 557,395 | ||||
| Total debt and finance lease obligations, net of related costs | $ | 2,779,454 | |||
Senior Secured Notes
In June 2026, the Company issued $650.0 million in aggregate principal amount of 7.125% Senior Secured Notes due 2031 (the “2031 Notes”) pursuant to an Indenture, dated as of June 24, 2026. The 2031 Notes are secured by first priority security interests in, subject to permitted liens, substantially all of the property and assets of the Company and its subsidiaries, except that the collateral package excludes aircraft, aircraft engines, real property and certain other assets. The collateral also secures the Company's senior secured revolving loan facility on a pari passu basis. The 2031 Notes bear interest at a fixed rate of 7.125 percent per annum, payable in cash on January 1 and July 1 of each year, beginning January 1, 2027. The 2031 Notes will mature on July 1, 2031.
The 2031 Notes contain certain covenants that limit the ability of the Company to, among other things: (i) make restricted payments; (ii) incur certain indebtedness or issue preferred stock; (iii) create or incur certain liens; (iv) dispose of loyalty program or brand intellectual property collateral; (v) merge, consolidate or sell all or substantially all assets; and (vi) enter into certain transactions with affiliates.
The 2031 Notes also require the Company to comply with certain affirmative covenants, including maintaining a minimum aggregate amount of liquidity of $300.0 million. If the Company fails to satisfy the minimum liquidity requirement, the Company will be required to pay additional interest on all outstanding 2031 Notes in an amount equal to 2.0% per annum of the principal amount of such 2031 Notes until the Company demonstrates compliance with the liquidity requirement.
The Company used the net proceeds from the sale of the 2031 Notes, to fund the purchase and redemption of approximately $377.5 million aggregate principal amount of its outstanding 7.250% Senior Secured Notes due 2027 pursuant to a tender offer and to pay related accrued interest and satisfy transaction fees and expenses. The remaining proceeds will be used for general corporate purposes.
In July 2026, the Company repurchased an additional $17.4 million aggregate principal amount of the 7.250% Senior Secured Notes due 2027 pursuant to the tender offer.
17
Consolidated Variable Interest Entities
The Company evaluates ownership, contractual lease arrangements and other interests in entities to determine if they are variable interest entities ("VIEs") based on the nature and extent of those interests. The Company consolidates a VIE when, among other criteria, it has the power to direct the activities that most significantly impact the VIE’s economic performance as well as the obligation to absorb losses or the right to receive benefits of the VIE, thus making the Company the primary beneficiary of the VIE.
In March 2026, the Company, through a wholly owned subsidiary, entered into similarly structured agreements with trusts to borrow $20.5 million collateralized by aircraft engines. The trusts were funded at inception. The borrowings bear interest at fixed rates and are payable in monthly installments through March 2031, at which time the Company will have purchase options at fixed amounts.
Revolving Credit Facilities
In March 2021, the Company entered into a revolving credit facility, which, as amended to date, entitles it to borrow up to $100.0 million. In April 2025, the agreement was amended to extend the maturity date to April 2028. The borrowing ability under the facility is based on the value of the aircraft and engines placed into the collateral pool. Amounts drawn under the facility will bear interest at a floating rate based on SOFR. As of June 30, 2026, the facility remains undrawn.
In August 2022, the Company entered into a credit agreement that provided a senior secured revolving loan facility of $75.0 million, with an original term of 57 months. The facility is secured by the same collateral that secures the 2027 Senior Secured Notes and 2031 Senior Secured Notes, and borrowings under the facility will bear interest at a floating rate based on SOFR. In December 2025, the Company amended the revolving loan facility to increase the total commitment to $150.0 million and extend the maturity date to December 5, 2030. As of June 30, 2026, the facility remains undrawn.
Debt Secured by Aircraft
In April 2026, the Company entered into credit agreements providing financing commitments of up to $176.0 million, to be secured by new aircraft upon delivery. During the three months ended June 30, 2026, the Company borrowed $44.0 million under the agreements and $132.0 million remained undrawn as of June 30, 2026. The loans bear interest at a variable rate based on three-month SOFR and are payable in quarterly installments over a term of 10 years.
In April 2026, the Company entered into a credit agreement providing financing commitments of up to $115.0 million secured by aircraft. During the three months ended June 30, 2026, the Company borrowed the entirety of the $115.0 million available under the agreement, resulting in the facility being fully drawn. The borrowing carries a variable interest rate based on three-month SOFR, matures in three years, and is payable in quarterly installments with a balloon payment at maturity.
In May 2026, the Company entered into a credit agreement with a borrowing capacity of up to $85.6 million to be secured by unencumbered aircraft and new aircraft upon delivery. During the three months ended June 30, 2026, the Company borrowed approximately $40.6 million under the agreement and $45.0 million remains undrawn as of June 30, 2026. The borrowing bears interest at a variable rate based on three-month SOFR and is payable in quarterly installments over a term of 12 years.
PDP Financing
In November 2023, the Company entered into a pre-delivery deposit financing facility to borrow up to $158.0 million, secured by the Company's purchase rights for certain Boeing 737 MAX aircraft. The facility bears a floating interest rate based on SOFR and was originally due upon delivery of each aircraft or no later than June 30, 2025. In April 2025, the Company entered into an amendment to extend the maturity date of the agreement to no later than March 2027. The Company drew a total of $132.6 million on the facility between November 2023 and February 2024, and drew the remaining $25.1 million of available capacity during the three months ended June 30, 2026. During the second quarter of 2026, the Company made prepayments totaling $13.8 million as aircraft were delivered to the Company.
Debt and Finance Leases Assumed in Sun Country Acquisition
The Company assumed debt and finance lease obligations totaling $570.3 million in the acquisition of Sun Country as further described below.
2025 Term Loan Facility
In September 2025, Sun Country entered into a term loan facility (the "2025 Term Loan Facility") and pledged five aircraft as collateral. The 2025 Term Loan Facility bears interest at a fixed rate and is repaid in quarterly installments with a balloon payment upon maturity in September 2032. The fair value of the facility was $103.6 million as of the acquisition date.
18
2022 Enhanced Equipment Trust Certificates ("2022-1 EETC")
In March 2022, Sun Country arranged for the issuance of the 2022-1 EETC and pledged 13 aircraft as collateral. The equipment notes bear interest at a fixed rate and are repaid in semiannual principal and interest payments each March and September, through March 2031. The fair value of the equipment notes outstanding under the 2022-1 EETC was $102.1 million as of the acquisition date.
2019 Enhanced Equipment Trust Certificates ("2019-1 EETC")
In December 2019, Sun Country arranged for the issuance of the 2019-1 EETC and pledged 13 aircraft as collateral. The equipment notes bear interest at a fixed rate and are repaid in semiannual principal and interest payments each June and December, through December 2027. The fair value of the equipment notes outstanding under the 2019-1 EETC was $101.4 million as of the acquisition date.
Finance Leases
As of June 30, 2026, Sun Country was party to 13 aircraft leases, all of which are classified as finance leases. The lease agreements generally include an option or obligation to purchase the aircraft at the end of the lease term. As the leases were not modified in connection with the acquisition, lease classification was not reassessed. The carrying amount of these lease liabilities was $263.2 million as of the acquisition date, and the lease terms end between 2026 and 2031.
Note 7 — Income Taxes
The Company recorded a $0.4 million income tax benefit at a 6.9 percent effective tax rate and a $23.4 million income tax benefit at a 26.4 percent effective tax rate for the three months ended June 30, 2026 and 2025, respectively. The effective tax rate for the three months ended June 30, 2026 differed from the statutory federal income tax rate of 21.0 percent primarily due to costs incurred as a result of the Sun Country acquisition, state income taxes, and the impact of permanent book-tax differences.
The Company recorded a $23.2 million income tax expense at an effective tax rate of 38.1 percent and a $13.6 million income tax benefit at a 29.1 percent effective tax rate for the six months ended June 30, 2026 and 2025, respectively. The effective tax rate for the six months ended June 30, 2026 differed from the statutory federal income tax rate of 21.0 percent primarily due to costs incurred as a result of the Sun Country acquisition, state income taxes, and the impact of permanent book-tax differences.
Note 8 — Fair Value Measurements
The Company utilizes the market approach to measure the fair value of its financial assets. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets. The assets classified as Level 2 primarily utilize quoted market prices or alternative pricing sources including transactions involving identical or comparable assets and models utilizing market observable inputs for valuation of these securities. No changes in valuation techniques or inputs occurred during the six months ended June 30, 2026.
19
Financial instruments measured at fair value on a recurring basis:
| As of June 30, 2026 | As of December 31, 2025 | ||||||||||||||||||||||||||||||||||
| (in thousands) | Total | Level 1 | Level 2 | Total | Level 1 | Level 2 | |||||||||||||||||||||||||||||
| Cash equivalents | |||||||||||||||||||||||||||||||||||
| Money market funds | $ | 238,036 | $ | 238,036 | $ | — | $ | 42,833 | $ | 42,833 | $ | — | |||||||||||||||||||||||
| US Government and agency obligations | 29,331 | — | 29,331 | 16,901 | — | 16,901 | |||||||||||||||||||||||||||||
| Commercial paper | 22,591 | — | 22,591 | 14,712 | — | 14,712 | |||||||||||||||||||||||||||||
| Municipal debt securities | 9,280 | — | 9,280 | 4,520 | — | 4,520 | |||||||||||||||||||||||||||||
| Corporate debt securities | 5,246 | — | 5,246 | 5,713 | — | 5,713 | |||||||||||||||||||||||||||||
| Total cash equivalents | 304,484 | 238,036 | 66,448 | 84,679 | 42,833 | 41,846 | |||||||||||||||||||||||||||||
| Short-term | |||||||||||||||||||||||||||||||||||
| Corporate debt securities | 264,679 | — | 264,679 | 337,988 | — | 337,988 | |||||||||||||||||||||||||||||
| US Government and agency obligations | 122,912 | — | 122,912 | 67,696 | — | 67,696 | |||||||||||||||||||||||||||||
| Commercial paper | 106,835 | — | 106,835 | 179,697 | — | 179,697 | |||||||||||||||||||||||||||||
| Certificates of deposit | 23,033 | — | 23,033 | 27,960 | — | 27,960 | |||||||||||||||||||||||||||||
| Municipal debt securities | 27,332 | — | 27,332 | 19,618 | — | 19,618 | |||||||||||||||||||||||||||||
| Total short-term | 544,791 | — | 544,791 | 632,959 | — | 632,959 | |||||||||||||||||||||||||||||
| Long-term | |||||||||||||||||||||||||||||||||||
| Corporate debt securities | 15,017 | — | 15,017 | 30,127 | — | 30,127 | |||||||||||||||||||||||||||||
| US Government and agency obligations | 494 | — | 494 | 2,696 | — | 2,696 | |||||||||||||||||||||||||||||
| Total long-term | 15,511 | — | 15,511 | 32,823 | — | 32,823 | |||||||||||||||||||||||||||||
| Total financial instruments | $ | 864,786 | $ | 238,036 | $ | 626,750 | $ | 750,461 | $ | 42,833 | $ | 707,628 | |||||||||||||||||||||||
None of the Company's long-term debt is publicly traded. The Company has determined the estimated fair value of all of its debt to be Level 3, as certain inputs used to determine the fair value of these agreements are unobservable and, therefore, could be sensitive to changes in inputs. The Company utilizes the discounted cash flow method to estimate the fair value of Level 3 debt.
Carrying value and estimated fair value of long-term debt, including current maturities and without reduction for related costs, are as follows:
| As of June 30, 2026 | As of December 31, 2025 | ||||||||||||||||||||||||||||
| (in thousands) | Carrying Value | Estimated Fair Value | Carrying Value | Estimated Fair Value | Fair Value Level | ||||||||||||||||||||||||
| Long-term debt | $ | 2,160,306 | $ | 2,113,432 | $ | 1,413,205 | $ | 1,424,251 | 3 | ||||||||||||||||||||
Due to the short-term nature, carrying amounts of cash, restricted cash, accounts receivable and accounts payable approximate fair value.
Note 9 — Earnings per Share
Basic and diluted earnings per share are computed pursuant to the two-class method. Under this method, the Company attributes net income to two classes: common stock and unvested restricted stock. Unvested restricted stock awards granted to employees under the Company’s Long-Term Incentive Plan or the Sun Country Airlines Holdings, Inc. 2021 Omnibus Incentive Plan are considered participating securities as they receive non-forfeitable rights to cash dividends at the same rate as common stock.
Diluted net income per share is calculated using the more dilutive of the two methods. Under both methods, the exercise of employee stock options is assumed using the treasury stock method. The assumption of vesting of restricted stock, however, differs:
1.Assume vesting of restricted stock using the treasury stock method.
20
2.Assume unvested restricted stock awards are not vested, and allocate earnings to common shares and unvested restricted stock awards using the two-class method.
The following table sets forth the computation of net income per share, on a basic and diluted basis, for the periods indicated (share count and dollar amounts other than per-share amounts in the table are in thousands):
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Basic: | |||||||||||||||||||||||
| Net income (loss) | $ | (4,860) | $ | (65,166) | $ | 37,618 | $ | (33,064) | |||||||||||||||
| Less income allocated to participating securities | — | — | (540) | — | |||||||||||||||||||
| Net income (loss) attributable to common stock | $ | (4,860) | $ | (65,166) | $ | 37,078 | $ | (33,064) | |||||||||||||||
| Earnings (loss) per share, basic | $ | (0.21) | $ | (3.62) | $ | 1.80 | $ | (1.84) | |||||||||||||||
| Weighted-average shares outstanding | 22,852 | 17,995 | 20,542 | 17,989 | |||||||||||||||||||
| Diluted: | |||||||||||||||||||||||
| Net income (loss) | $ | (4,860) | $ | (65,166) | $ | 37,618 | $ | (33,064) | |||||||||||||||
| Less income allocated to participating securities | — | — | (538) | — | |||||||||||||||||||
| Net income (loss) attributable to common stock | $ | (4,860) | $ | (65,166) | $ | 37,080 | $ | (33,064) | |||||||||||||||
| Earnings (loss) per share, diluted | $ | (0.21) | $ | (3.62) | $ | 1.80 | $ | (1.84) | |||||||||||||||
| Weighted-average shares outstanding | 22,852 | 17,995 | 20,542 | 17,989 | |||||||||||||||||||
| Dilutive effect of outstanding stock awards | — | — | 197 | — | |||||||||||||||||||
| Adjusted weighted-average shares outstanding under treasury stock method | 22,852 | 17,995 | 20,739 | 17,989 | |||||||||||||||||||
| Participating securities excluded under two-class method | — | — | (105) | — | |||||||||||||||||||
| Adjusted weighted-average shares outstanding under two-class method | 22,852 | 17,995 | 20,634 | 17,989 | |||||||||||||||||||
Note 10 — Contingencies
The Company is subject to certain legal and administrative actions it considers routine to its business activities. The Company believes the ultimate outcome of any potential and pending legal or administrative matters will not have a material adverse impact on its financial position, liquidity or results of operations.
In 2025, Allegiant Air received a formal assessment of $9.9 million from the Transportation Security Administration ("TSA") related to the remittance of TSA security fees for the period covering October 1, 2019 to December 31, 2022. The Company disputes the TSA's interpretation of the applicable regulations and believes the assessment is without merit. The Company currently has a pending case in the U.S. Court of Appeals for the Ninth Circuit regarding this matter. Oral arguments were held on April 15, 2026, and the court decision is currently pending. Sun Country is in the initial stages of a similar TSA audit and has not received any formal assessment or preliminary findings. Based on the information that is currently available, the Company does not believe a loss in this matter is probable and no corresponding liability has been recorded. The Company does not expect that any potential liability arising for periods subsequent to the 2019 to 2022 audit assessment period will be material to the consolidated financial statements.
Note 11 — Segments
Operating segments are components of a company for which separate financial and operating information is regularly evaluated and reported to the Chief Operating Decision Maker ("CODM") and is used to allocate resources and analyze performance. The Company's CODM is the CEO. The CODM assesses segment performance and makes resource allocation decisions using information about each operating segment's operating income.
Following the acquisition of Sun Country on May 13, 2026, the Company operates Allegiant Air and Sun Country as separate brands under separate FAA operating certificates. The CODM reviews financial results for two operating segments, Allegiant Air and Sun Country. As a result, the Company determined Sun Country was an operating and reportable segment beginning in the second quarter of 2026.
21
During 2025, the CODM reviewed separate financial information and made resource allocation decisions for the Company's two operating segments, Allegiant Air and Sunseeker Resort, using operating income and pretax income as the measures of segment profit or loss. The Resort was sold in September 2025 and deconsolidated from the Company's financial statements as of that date.
Allegiant Air Segment
The Allegiant Air segment includes scheduled service air transportation, ancillary air-related products and services, third party products and services, fixed fee contract air transportation and other airline-related revenue.
Sun Country Segment
The Sun Country segment includes scheduled service air transportation, ancillary air-related products and services, fixed fee contract air transportation, cargo transportation, third party products and services, and other airline-related revenue.
Sunseeker Resort Segment
The Company's consolidated financial statements for 2025 include the operating results of Sunseeker Resort through the completion of the sale of the Resort's assets on September 4, 2025. The Sunseeker Resort segment included hotel rooms and suites for occupancy, group meeting facilities, food and beverage options, Aileron Golf Course and other Resort amenities.
Segment profit or loss, revenues, significant segment expenses, and asset information for each of the Company's operating segments are set forth below. Sun Country profit and loss is included beginning from May 13, 2026 and forward.
| Three Months Ended June 30, 2026 | |||||||||||||||||
| (in thousands) | Allegiant Air | Sun Country | Consolidated | ||||||||||||||
| OPERATING REVENUES: | |||||||||||||||||
| Scheduled service | $ | 347,853 | $ | 63,608 | $ | 411,461 | |||||||||||
| Ancillary air-related charges | 349,365 | 41,173 | 390,538 | ||||||||||||||
| Loyalty redemptions | 19,798 | 694 | 20,492 | ||||||||||||||
| Third party products | 44,483 | 1,275 | 45,758 | ||||||||||||||
| Fixed fee contracts | 14,523 | 31,200 | 45,723 | ||||||||||||||
| Cargo | — | 27,586 | 27,586 | ||||||||||||||
| Other | 185 | 1,747 | 1,932 | ||||||||||||||
| Total operating revenues | $ | 776,207 | $ | 167,283 | $ | 943,490 | |||||||||||
| OPERATING EXPENSES: | |||||||||||||||||
| Aircraft fuel | 265,123 | 42,546 | 307,669 | ||||||||||||||
| Salaries and benefits | 201,337 | 48,981 | 250,318 | ||||||||||||||
| Station operations | 76,139 | 19,412 | 95,551 | ||||||||||||||
| Depreciation and amortization | 58,521 | 12,188 | 70,709 | ||||||||||||||
| Maintenance and repairs | 39,349 | 9,903 | 49,252 | ||||||||||||||
| Sales and marketing | 29,860 | 5,334 | 35,194 | ||||||||||||||
| Aircraft rent | 7,015 | — | 7,015 | ||||||||||||||
Other operating expense(1) | 29,263 | 11,453 | 40,716 | ||||||||||||||
| Special charges, net of recoveries | 39,514 | 26,438 | 65,952 | ||||||||||||||
| Total operating expenses | 746,121 | 176,255 | 922,376 | ||||||||||||||
| OPERATING INCOME (LOSS) | 30,086 | (8,972) | 21,114 | ||||||||||||||
| OTHER (INCOME) EXPENSES: | |||||||||||||||||
| Interest income | (8,093) | (747) | (8,840) | ||||||||||||||
| Interest expense | 35,200 | 4,872 | 40,072 | ||||||||||||||
| Capitalized interest | (4,937) | — | (4,937) | ||||||||||||||
| Other non-operating expense | 74 | (35) | 39 | ||||||||||||||
| INCOME (LOSS) BEFORE INCOME TAXES | $ | 7,842 | $ | (13,062) | $ | (5,220) | |||||||||||
| Capital expenditures | $ | 183,243 | $ | 4,887 | $ | 188,130 | |||||||||||
22
| Three Months Ended June 30, 2025 | |||||||||||||||||
| (in thousands) | Allegiant Air | Sunseeker | Consolidated | ||||||||||||||
| OPERATING REVENUES: | |||||||||||||||||
| Passenger | $ | 617,908 | $ | — | $ | 617,908 | |||||||||||
| Third party products | 33,649 | — | 33,649 | ||||||||||||||
| Fixed fee contracts | 17,019 | — | 17,019 | ||||||||||||||
| Other | 174 | 20,634 | 20,808 | ||||||||||||||
| Total operating revenues | $ | 668,750 | $ | 20,634 | $ | 689,384 | |||||||||||
| OPERATING EXPENSES: | |||||||||||||||||
| Aircraft fuel | 165,752 | — | 165,752 | ||||||||||||||
| Salaries and benefits | 203,485 | 10,617 | 214,102 | ||||||||||||||
| Station operations | 75,248 | — | 75,248 | ||||||||||||||
| Depreciation and amortization | 64,961 | 3,558 | 68,519 | ||||||||||||||
| Maintenance and repairs | 36,379 | — | 36,379 | ||||||||||||||
| Sales and marketing | 25,119 | 1,718 | 26,837 | ||||||||||||||
| Aircraft rent | 11,023 | — | 11,023 | ||||||||||||||
Other operating expense(1) | 29,031 | 12,058 | 41,089 | ||||||||||||||
| Special charges, net of recoveries | 14,595 | 103,329 | 117,924 | ||||||||||||||
| Total operating expenses | 625,593 | 131,280 | 756,873 | ||||||||||||||
| OPERATING INCOME (LOSS) | 43,157 | (110,646) | (67,489) | ||||||||||||||
| OTHER (INCOME) EXPENSES: | |||||||||||||||||
| Interest income | (10,359) | — | (10,359) | ||||||||||||||
| Interest expense | 28,121 | 7,635 | 35,756 | ||||||||||||||
| Capitalized interest | (4,562) | — | (4,562) | ||||||||||||||
| Other non-operating expense | 240 | — | 240 | ||||||||||||||
| INCOME (LOSS) BEFORE INCOME TAXES | $ | 29,717 | $ | (118,281) | $ | (88,564) | |||||||||||
| Capital expenditures | $ | 137,717 | $ | 1,036 | $ | 138,753 | |||||||||||
23
| Six Months Ended June 30, 2026 | |||||||||||||||||
| (in thousands) | Allegiant Air | Sun Country | Consolidated | ||||||||||||||
| OPERATING REVENUES: | |||||||||||||||||
| Scheduled service | $ | 686,152 | $ | 63,608 | $ | 749,760 | |||||||||||
| Ancillary air-related charges | 662,015 | 41,173 | 703,188 | ||||||||||||||
| Loyalty redemptions | 40,648 | 694 | 41,342 | ||||||||||||||
| Third party products | 86,818 | 1,275 | 88,093 | ||||||||||||||
| Fixed fee contracts | 32,646 | 31,200 | 63,846 | ||||||||||||||
| Cargo | — | 27,586 | 27,586 | ||||||||||||||
| Other | 359 | 1,747 | 2,106 | ||||||||||||||
| Total operating revenues | $ | 1,508,638 | $ | 167,283 | $ | 1,675,921 | |||||||||||
| OPERATING EXPENSES: | |||||||||||||||||
| Aircraft fuel | 445,364 | 42,546 | 487,910 | ||||||||||||||
| Salaries and benefits | 419,422 | 48,981 | 468,403 | ||||||||||||||
| Station operations | 152,621 | 19,412 | 172,033 | ||||||||||||||
| Depreciation and amortization | 116,447 | 12,188 | 128,635 | ||||||||||||||
| Maintenance and repairs | 74,566 | 9,903 | 84,469 | ||||||||||||||
| Sales and marketing | 58,060 | 5,334 | 63,394 | ||||||||||||||
| Aircraft rent | 14,476 | — | 14,476 | ||||||||||||||
Other operating expense(1) | 49,196 | 11,453 | 60,649 | ||||||||||||||
| Special charges, net of recoveries | 67,296 | 26,438 | 93,734 | ||||||||||||||
| Total operating expenses | 1,397,448 | 176,255 | 1,573,703 | ||||||||||||||
| OPERATING INCOME (LOSS) | 111,190 | (8,972) | 102,218 | ||||||||||||||
| OTHER (INCOME) EXPENSES: | |||||||||||||||||
| Interest income | (16,807) | (747) | (17,554) | ||||||||||||||
| Interest expense | 64,427 | 4,872 | 69,299 | ||||||||||||||
| Capitalized interest | (9,227) | — | (9,227) | ||||||||||||||
| Other non-operating expense | (1,070) | (35) | (1,105) | ||||||||||||||
| INCOME (LOSS) BEFORE INCOME TAXES | $ | 73,867 | $ | (13,062) | $ | 60,805 | |||||||||||
| Capital expenditures | $ | 359,183 | $ | 4,887 | $ | 364,070 | |||||||||||
24
| Six Months Ended June 30, 2025 | |||||||||||||||||
| (in thousands) | Allegiant Air | Sunseeker | Consolidated | ||||||||||||||
| OPERATING REVENUES: | |||||||||||||||||
| Passenger | $ | 1,234,658 | $ | — | $ | 1,234,658 | |||||||||||
| Third party products | 68,852 | — | 68,852 | ||||||||||||||
| Fixed fee contracts | 33,271 | — | 33,271 | ||||||||||||||
| Other | 355 | 51,322 | 51,677 | ||||||||||||||
| Total operating revenues | $ | 1,337,136 | $ | 51,322 | $ | 1,388,458 | |||||||||||
| OPERATING EXPENSES: | |||||||||||||||||
| Aircraft fuel | 332,085 | — | 332,085 | ||||||||||||||
| Salaries and benefits | 423,859 | 21,682 | 445,541 | ||||||||||||||
| Station operations | 148,753 | — | 148,753 | ||||||||||||||
| Depreciation and amortization | 124,672 | 7,158 | 131,830 | ||||||||||||||
| Maintenance and repairs | 71,233 | — | 71,233 | ||||||||||||||
| Sales and marketing | 48,489 | 3,444 | 51,933 | ||||||||||||||
| Aircraft rent | 16,942 | — | 16,942 | ||||||||||||||
Other operating expense(1) | 51,107 | 25,152 | 76,259 | ||||||||||||||
| Special charges, net of recoveries | 15,987 | 100,382 | 116,369 | ||||||||||||||
| Total operating expenses | 1,233,127 | 157,818 | 1,390,945 | ||||||||||||||
| OPERATING INCOME (LOSS) | 104,009 | (106,496) | (2,487) | ||||||||||||||
| OTHER (INCOME) EXPENSES: | |||||||||||||||||
| Interest income | (22,294) | — | (22,294) | ||||||||||||||
| Interest expense | 57,070 | 19,470 | 76,540 | ||||||||||||||
| Capitalized interest | (11,050) | — | (11,050) | ||||||||||||||
| Other non-operating expense | 941 | — | 941 | ||||||||||||||
| INCOME (LOSS) BEFORE INCOME TAXES | $ | 79,342 | $ | (125,966) | $ | (46,624) | |||||||||||
| Capital expenditures | $ | 220,853 | $ | 1,442 | $ | 222,295 | |||||||||||
(1) Other operating expenses for the Allegiant Air and Sun Country segments consist of insurance, crew training and travel, legal expense, information technology, gains and losses on the sale of flight equipment, and other general and administrative expenses. Other operating expenses in the Sunseeker segment consist of food and beverage cost of goods sold, contract labor, property tax, insurance, and other general and administrative expenses.
Total assets were as follows as of the dates indicated:
| (in thousands) | As of June 30, 2026 | As of December 31, 2025 | |||||||||
| Allegiant Air | $ | 4,524,180 | $ | 4,209,401 | |||||||
| Sun Country | 1,920,285 | — | |||||||||
| Consolidated | $ | 6,444,465 | $ | 4,209,401 | |||||||
25
Note 12 — Subsequent Events
On July 1, 2026, the Company borrowed the remaining $45.0 million available under a credit agreement with a borrowing capacity of up to $85.6 million. Following this drawdown, the facility was fully utilized. The borrowing is secured by aircraft and bears interest at a variable rate based on three-month Term SOFR, payable in quarterly installments over a term of 12 years.
On July 17, 2026, the Company repaid approximately $11.3 million outstanding under its pre-delivery deposit financing facility related to Boeing 737 MAX aircraft purchase rights. Following the repayment, the facility was fully repaid with no outstanding borrowings remaining.
On July 27, 2026, the Company entered into a new pre-delivery payment financing facility providing commitments of up to $231.0 million to fund pre-delivery payment obligations associated with future Boeing 737-8 aircraft deliveries. The facility is secured by purchase price assignments related to the underlying aircraft and bears interest at a variable rate based on one-month SOFR. As of August 10, 2026, no amounts had been drawn under the facility.
On July 24, 2026, the Company entered into a new aircraft financing facility providing commitments of up to $177.5 million. The facility is secured by certain aircraft and bears interest at a fixed rate based on SOFR plus an applicable margin determined at the time of drawdown. As of August 10, 2026, no amounts had been drawn under the facility.
During July 2026, the Company borrowed an additional $132.0 million under a previously disclosed aircraft financing credit agreement. The borrowings were secured by recently delivered aircraft and fully utilized the remaining borrowing capacity available under the credit agreement.
Subsequent to June 30, 2026, the Company executed amendments to extend the lease terms for two Boeing 737-900ER aircraft currently leased to a third-party operator through the fourth quarter of 2029.
On July 31, 2026, the Company's pilots ratified a new collective bargaining agreement. The Company is evaluating the financial impact of the agreement, including the payment of accrued pilot retention bonuses and future compensation and benefit costs.
26
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis presents factors that had a material effect on our results of operations during the three and six months ended June 30, 2026 and 2025. Also discussed is our financial position as of June 30, 2026 and December 31, 2025. You should read this discussion in conjunction with our unaudited consolidated financial statements, including the notes thereto, appearing elsewhere in this Form 10-Q and our consolidated financial statements appearing in our annual report on Form 10-K for the year ended December 31, 2025. This discussion and analysis contains forward-looking statements. Please refer to the section below entitled “Cautionary Note Regarding Forward-Looking Statements” for a discussion of the uncertainties, risks and assumptions associated with these statements.
Second Quarter 2026 Highlights
Second quarter 2026 highlights include the following. Note that second quarter consolidated results include Sun Country operations only from and after the May 13, 2026 closing date of the transaction until the period end on June 30, 2026 (the "stub period").
•On May 13, 2026, we completed the acquisition of Sun Country just four months after announcing the transaction.
•Consolidated total operating revenue of $943.5 million
•Record Allegiant Air revenue of $776.2 million, up 16.1 percent year over year on 6.8 percent less capacity compared to the prior year quarter
•Allegiant Air quarterly TRASM record of 14.42 ¢, up 24.6 percent year over year
•Consolidated third-party products revenue of $45.8 million
◦Allegiant Air third-party products revenue of $44.5 million, up 32.2 percent year over year driven by cobrand remuneration
•Available seat miles per gallon of fuel of 86.2
•Allegiant Air available seat miles per gallon of fuel of 85.4, up 0.8 percent year over year
•$41.2 million in total Allegiant Air cobrand credit card remuneration received, up 23.6 percent year over year
•Received proceeds of $874.7 million from debt financings during the quarter
◦Issued $650.0 million Senior Secured Notes due 2031 and used the proceeds to refinance $377.5 million of our Senior Secured Notes due 2027.
◦Received proceeds of $224.7 million from debt secured by aircraft and aircraft related assets
Subsequent Events
•In July, entered a 12-month exclusive distribution agreement with Expedia Group, Allegiant's first-ever authorized online travel agency ("OTA") partner, bringing the company's nonstop network to all of Expedia Group's U.S. brands and expanding reach to new leisure customers
•In July, announced enhancements to the onboard experience, including complimentary inflight beverage service on all Allegiant flights beginning August 1, 2026, and Allegiant First, a new premium seating tier scheduled to debut on select aircraft in spring 2027
•On July 31, a new collective bargaining agreement with the International Brotherhood of Teamsters representing the Allegiant pilots was ratified with nearly 80 percent of votes in favor
27
AIRCRAFT
The following table sets forth the aircraft in service and operated by us as of the dates indicated:
| June 30, 2026 | December 31, 2025 | ||||||||||
| Passenger service | |||||||||||
Airbus A320(1) | 77 | 79 | |||||||||
Airbus A319(2) | 28 | 28 | |||||||||
| Boeing 737 MAX 8200 | 19 | 16 | |||||||||
Boeing 737-800 (Sun Country)(3) | 44 | — | |||||||||
| Boeing 737-900ER (Sun Country) | 3 | — | |||||||||
| Total aircraft in passenger service | 171 | 123 | |||||||||
| Boeing 737-800 in cargo service | 22 | — | |||||||||
| Aircraft held for operating lease | |||||||||||
Boeing 737-800(4) | 1 | — | |||||||||
| Boeing 737-900ER | 2 | — | |||||||||
| Total | 196 | 123 | |||||||||
(1)Includes 23 aircraft under finance lease and 9 aircraft under operating lease as of June 30, 2026 and December 31, 2025. Excludes one aircraft under operating lease as of June 30, 2026 and three aircraft under operating lease as of December 31, 2025, which were removed from service pending redelivery.
(2)Excludes three aircraft under operating lease that were removed from service pending redelivery as of December 31, 2025.
(3)Includes 12 aircraft under finance lease as of June 30, 2026.
(4)Includes one aircraft under finance lease as of June 30, 2026.
As of June 30, 2026, we are party to forward purchase agreements for 30 aircraft with deliveries expected between 2026 and 2028.
Due to the heavy maintenance needs on certain aging Airbus airframes and capacity constraints at the maintenance, repair, and overhaul contractors, we identified aging airframes for early retirement to coincide with the delivery schedule for our 737 MAX aircraft provided in an amendment to our Boeing purchase agreement signed in September 2023. As of June 30, 2026, 17 airframes have been retired, with seven additional retirements scheduled between July 2026 and January 2027. The accelerated depreciation resulting from the revised estimated useful life of these aircraft is recorded as a special charge in the consolidated financial statements, including $1.3 million recognized in second quarter 2026. The engines from these aircraft will be retained for future overhaul cost mitigation and may be sold on an opportunistic basis if we determine the engine has no better economic use in our operating fleet.
NETWORK
As of June 30, 2026, and with the Sun Country acquisition, we were selling 675 routes versus 579 as of the same date in 2025. Network growth in the future will continue to be affected by high fuel prices, the timing of aircraft deliveries, aircraft in heavy maintenance, crew availability, airport construction and disruption, trends in domestic, leisure air travel demand and other factors such as macroeconomic conditions and geopolitical unrest. We have identified over 1,400 incremental domestic nonstop routes as opportunities for future network growth, of which over 75 percent currently have no non-stop service. The Allegiant Air network included 90 origination cities and 34 leisure destinations, as of June 30, 2026.
Sun Country's largest and primary base is Minneapolis-Saint Paul International Airport ("MSP"), where it is the largest low-cost carrier and the second largest airline overall. Our MSP network served approximately 96 markets as of June 30, 2026. As of that date, Sun Country also served approximately 17 non-MSP markets and was selling a total of 109 routes.
TRENDS
Acquisition of Sun Country Airlines
In May 2026, we closed on our agreement to acquire Sun Country. We believe the transaction aligns with our long-term strategic objectives and is expected to enhance our network breadth, operational flexibility, and ability to respond to demand shifts, while supporting the passenger and cargo operations of both airlines. The acquisition of Sun Country involves the integration of Sun Country’s business with our existing business, which is a complex, costly, and time-consuming process. Integration of the two companies is underway.
28
Both companies continue to operate as separate airlines under FAA rules. We have applied with the FAA for a single operating certificate which we currently expect will be obtained in 2028. Our ability to combine operations will be limited until we receive a single operating certificate and there are joint collective bargaining agreements in place with the various unionized work groups.
Aircraft Fuel
The cost of fuel, including refining costs and applicable crack spreads, remains volatile, and is influenced by numerous economic and geopolitical factors beyond our control or prediction, including geopolitical conflict and war. The recent escalation of hostilities in the Middle East has significantly impacted the market prices of products that are derived from crude oil. Our second quarter fuel expense was $307.7 million or $4.14 per gallon, which is 71.1 percent higher than the $2.42 per gallon we paid in second quarter 2025. As hostilities and uncertainty continue in the Middle East, we may continue to see significant increases in fuel costs that will materially impact our overall cost structure, operating results and profitability. We have not used financial derivative products to hedge against fuel price volatility, nor do we have any plans to do so in the future.
Demand Environment
Although air travel demand in the first half of 2026 has been strong, demand could be impacted in the future by macroeconomic, geopolitical, and airline industry events as it has in the past. During 2026, we strategically reduced off-peak day of week capacity and, in turn, increased peak day ASMs on fewer total aircraft year-over year. For Allegiant Air, this contributed to a 4.0 percentage point increase in load factor on a 6.2 percent decrease in scheduled service capacity in second quarter 2026. Our unique model is predicated around expanding and contracting capacity to meet seasonal leisure travel demands. We expect to continue to manage our peak period utilization as the demand environment allows.
Commercial Initiatives
In July 2026, we entered into a 12-month exclusive distribution agreement with Expedia Group to be Allegiant Air's first-ever authorized online travel agency ("OTA") partner, bringing our nonstop network to all of Expedia Group's U.S. brands and expanding reach to new leisure customers. Early results are promising, comprising of approximately 3% of bookings since the launch, with meaningfully more than half of those bookings from net new customers.
We have also announced enhancements to our onboard experience. Beginning August 1, 2026, all Allegiant Air flights will include a complimentary inflight beverage service. We have also announced Allegiant First, a new premium seating tier scheduled to debut on future MAX deliveries, with service expected to begin in spring 2027. The introduction of Allegiant First will feature a redesigned and enhanced cabin with eight new Allegiant First seats with minimal impact to seating capacity. The new seating to be included on these future deliveries will feature improved seat cushions and in-seat power in all cabins.
Boeing Agreement
We have signed an agreement and amendments with Boeing to purchase 50 newly manufactured 737 MAX aircraft with options to purchase up to an additional 80 737 MAX aircraft. We have taken delivery of 20 737 MAX aircraft from this order through June 30, 2026, and all of these aircraft are currently in revenue service. We believe this new aircraft purchase is complementary with our low-cost strategy based on our intent to retain ownership of the aircraft, the longer useful life for depreciation purposes, and expected fuel savings and operational reliability from the use of these new aircraft. Our 737 MAX aircraft represented approximately 21% of our ASMs in second quarter 2026 as compared to 11% during the same period 2025.
We currently expect seven aircraft to be delivered to us in the last six months of 2026 with the remaining aircraft under contract to be delivered in 2027 and 2028. Delays in aircraft deliveries could impact our ability to schedule additional growth when the demand environment allows.
Union Negotiations
The Allegiant Air pilots, who are represented by the International Brotherhood of Teamsters (“IBT”), ratified a new collective bargaining agreement on July 31, 2026. Among other new and modified terms, that new agreement provides for increased compensation and enhanced benefits to the Allegiant Air pilot group and contains improvements to the scheduling process for the Company. In addition, pursuant to the terms of that agreement, the pilot retention bonuses we have accrued will be payable no later than fourth quarter 2026.
In 2026, the collective bargaining agreement between Allegiant Air and its air dispatchers represented by the IBT became amendable under the Railway Labor Act (“RLA”). The parties are engaged in negotiations over new and modified rates of pay, rules, and working conditions pursuant to the procedures set forth in Section 6 of the RLA.
In 2025, the collective bargaining agreement covering the Sun Country pilots, who are represented by the Air Line Pilots Association (“ALPA”), became amendable. The parties continue to engage in negotiations under Section 6 of the RLA for a new agreement addressing rates of pay, rules, and working conditions for those employees.
29
In order to fully integrate the pre-merger union represented employee groups of Allegiant Air and Sun Country, we may be required to negotiate joint collective bargaining agreements covering the respective combined crafts or classes of employees. Where necessary, these negotiations will likely begin after a single post-merger representative has been certified by the National Mediation Board.
30
RESULTS OF OPERATIONS
Items affecting comparability
As the acquisition of Sun Country was completed on May 13, 2026, the three and six months ended June 30, 2026 include the results of Sun Country for the period May 13, 2026 through June 30, 2026, while the comparative periods in 2025 do not. Consolidated revenue and expenses all increased compared to the prior period due to the incorporation of Sun Country's operations into the Company. As a result, the below discussion of changes to our revenue and expenses compared to the prior year largely focuses on material factors independent of the acquisition.
Comparison of three months ended June 30, 2026 to three months ended June 30, 2025
Operating Revenue
| Three Months Ended June 30, 2026 | Three Months Ended June 30, 2025 | Percent Change | |||||||||||||||||||||||||||||||||||||||
| Operating Revenues (in thousands) | Allegiant Air | Sun Country* | Consolidated | Allegiant Air | Sunseeker | Consolidated | YoY | ||||||||||||||||||||||||||||||||||
| Passenger | $ | 717,016 | $ | 105,475 | $ | 822,491 | $ | 617,908 | $ | — | $ | 617,908 | 33.1 | % | |||||||||||||||||||||||||||
| Third party products | 44,483 | 1,275 | 45,758 | 33,649 | — | 33,649 | 36.0 | % | |||||||||||||||||||||||||||||||||
| Fixed fee contracts | 14,523 | 31,200 | 45,723 | 17,019 | — | 17,019 | 168.7 | % | |||||||||||||||||||||||||||||||||
| Cargo | — | 27,586 | 27,586 | — | — | — | NM | ||||||||||||||||||||||||||||||||||
| Resort and other | 185 | 1,747 | 1,932 | 174 | 20,634 | 20,808 | (90.7) | % | |||||||||||||||||||||||||||||||||
| Total operating revenues | $ | 776,207 | $ | 167,283 | $ | 943,490 | $ | 668,750 | $ | 20,634 | $ | 689,384 | 36.9 | % | |||||||||||||||||||||||||||
NM Not meaningful
* Sun Country numbers only after May 13, 2026
Passenger revenue. Passenger revenue for second quarter 2026 increased $204.6 million or 33.1 percent, of which Sun Country contributed $105.5 million during the stub period.
The remaining change is attributable to strength in demand, which drove a 17.9 percent increase in average total fare for Allegiant Air, including a 39.9 percent increase in average scheduled service base fare. Allegiant Air scheduled service passengers decreased by 0.8 percent on a capacity reduction of 6.2 percent, resulting in a 4.0 percentage point increase in the Allegiant Air load factor.
Third party products revenue. Third party products revenue increased $12.1 million or 36.0 percent, of which Sun Country contributed $1.3 million during the stub period.
The remaining increase is attributable to a $9.3 million increase in the marketing component of Allegiant Air's co-brand remuneration and smaller increases in Allegiant Air's third party rental car and travel insurance revenue. These increases were slightly offset by a decrease in hotel room revenue.
Fixed fee contract revenue. Fixed fee contract revenue increased $28.7 million, all of which was attributable to Sun Country during the stub period.
Allegiant Air fixed fee revenue decreased $2.5 million driven by fewer charter flights flown during the quarter.
Cargo revenue. Cargo revenue was $27.6 million, which was wholly attributable to the acquisition of Sun Country, and which was generated during the stub period.
Resort and other revenue. Resort and other revenues decreased by $18.9 million due to the sale of Sunseeker Resort in September 2025.
Operating Expenses
The following table presents airline only operating unit costs on a per available seat mile (ASM) basis, defined as Operating CASM, for the indicated periods. Excluding fuel on a per ASM basis provides management and investors the ability to measure and monitor our cost performance absent fuel price volatility. Both the cost and availability of fuel are subject to many economic and political factors beyond our control. We also show Operating CASM excluding fuel costs, special charges, and cargo expenses. Excluding fuel costs, special charges, and cargo expenses allows management and investors to better compare our airline unit costs with those of other airlines. Sun Country cargo expenses (which are included in salaries and benefits, station operations, depreciation and amortization, maintenance and repairs, and other expenses in our consolidated statements of income) are excluded as those expenses do not drive ASMs.
31
| Three Months Ended June 30, 2026 | Three Months Ended June 30, 2025 | Percent Change | |||||||||||||||||||||||||||
| Airline Unitized costs (in cents) | Allegiant Air | Sun Country* | Consolidated | Allegiant Air | Allegiant Air | ||||||||||||||||||||||||
| Aircraft fuel | 4.90 | ¢ | 4.26 | ¢ | 4.80 | ¢ | 2.86 | ¢ | 71.3 | % | |||||||||||||||||||
| Salaries and benefits | 3.72 | 4.90 | 3.91 | 3.51 | 6.0 | ||||||||||||||||||||||||
| Station operations | 1.41 | 1.94 | 1.49 | 1.30 | 8.5 | ||||||||||||||||||||||||
| Depreciation and amortization | 1.08 | 1.22 | 1.10 | 1.12 | (3.6) | ||||||||||||||||||||||||
| Maintenance and repairs | 0.73 | 0.99 | 0.77 | 0.63 | 15.9 | ||||||||||||||||||||||||
| Sales and marketing | 0.55 | 0.53 | 0.55 | 0.43 | 27.9 | ||||||||||||||||||||||||
| Aircraft rent | 0.13 | — | 0.11 | 0.19 | (31.6) | ||||||||||||||||||||||||
| Other | 0.55 | 1.15 | 0.64 | 0.50 | 10.0 | ||||||||||||||||||||||||
| Special charges | 0.73 | 2.64 | 1.03 | 0.25 | NM | ||||||||||||||||||||||||
| Airline operating CASM | 13.80 | ¢ | 17.63 | ¢ | 14.40 | ¢ | 10.79 | ¢ | 27.9 | ||||||||||||||||||||
| Airline operating CASM, excluding fuel | 8.90 | ¢ | 13.37 | ¢ | 9.60 | ¢ | 7.93 | ¢ | 12.2 | ||||||||||||||||||||
| Cargo expenses | — | ¢ | 2.40 | ¢ | 0.38 | ¢ | — | ¢ | NM | ||||||||||||||||||||
| Airline operating CASM, excluding fuel, special charges, and cargo | 8.17 | ¢ | 8.33 | ¢ | 8.19 | ¢ | 7.68 | ¢ | 6.4 | ||||||||||||||||||||
NM Not meaningful
* Sun Country numbers only after May 13, 2026
Airline operating CASM, excluding fuel, special charges and cargo expenses. Allegiant Air operating CASM, excluding fuel and special charges, increased 6.4 percent to 8.17 ¢ in second quarter 2026 from 7.68 ¢ in second quarter 2025. The increase was primarily driven by a 6.8 percent decrease in Allegiant Air capacity compared to the prior year quarter, which resulted in higher unit costs across most expense categories. CASM-ex was also impacted by the year-over-year expense increases discussed below.
Sun Country CASM, excluding fuel, special charges, and cargo expenses, was 8.33 ¢ in second quarter 2026 (after May 13, 2026) and drove a 0.02 ¢ spread between Allegiant Air and Consolidated adjusted CASM.
Aircraft fuel expense. Aircraft fuel expense increased by $141.9 million or 85.6 percent, of which Sun Country contributed $42.5 million during the stub period.
The remaining increase of $99.4 million was driven by an increase in Allegiant Air fuel cost per gallon to $4.19 from $2.42 in the prior year quarter as a result of the geopolitical unrest in the Middle East. Increased fuel costs were partially offset by a decrease in Allegiant Air consumption consistent with a 6.8 percent decrease in total system ASMs and a 0.7 percent improvement in fuel efficiency as the percentage of ASMs flown by MAX aircraft continues to increase.
Salaries and benefits expense. Salaries and benefits expense increased by $36.2 million or 16.9 percent, of which Sun Country contributed an increase of $49.0 million during the stub period, offset by a decrease of $10.6 million resulting from the sale of Sunseeker Resort.
The remaining decrease of $2.1 million was driven by organizational restructuring initiatives implemented by Allegiant Air during 2025, which resulted in a 4.9 percent reduction in full-time equivalent Allegiant Air employees, offset by increased wages for certain employee workgroups due to contractual and annual merit raises.
Station operations expense. Station operations expense increased $20.3 million or 27.0 percent, of which Sun Country contributed $19.4 million during the stub period.
Depreciation and amortization expense. Depreciation and amortization expense increased by $2.2 million or 3.2 percent. Sun Country contributed an increase of $12.2 million during the stub period, and the sale of Sunseeker Resort resulted in a decrease of $3.6 million.
The remaining decrease of $6.4 million was driven primarily by lower Allegiant Air heavy maintenance amortization resulting from a low volume of recent engine overhauls and 12 capitalized overhauls which became fully amortized since the prior year quarter.
Maintenance and repairs expense. Maintenance and repairs expense increased $12.9 million, or 35.4 percent, of which Sun Country contributed $9.9 million during the stub period.
The remaining increase of $3.0 million was driven by a higher volume of Allegiant Air engine check and repair costs and rotable part repairs compared to the prior year quarter.
32
Sales and marketing expense. Sales and marketing expense increased $8.4 million or 31.1 percent, of which $5.3 million was contributed by Sun Country during the stub period and a decrease of $1.7 million was attributable to the sale of Sunseeker Resort.
The remaining increase of $4.7 million was primarily driven by higher Allegiant Air credit card processing fees consistent with the increase in Allegiant Air passenger revenue compared to the prior year quarter.
Aircraft rent. Aircraft rent decreased $4.0 million as a result of lease return costs accrued during the prior year quarter that were not present in second quarter 2026 and as a result of seven leased aircraft which were returned to the lessor from operating leases since June 30, 2025.
Other operating expense. Consolidated other operating expenses were relatively flat quarter over quarter as $11.5 million of other operating expenses contributed by Sun Country during the stub period were more than offset by a decrease of $12.1 million resulting from the sale of Sunseeker Resort.
Special charges. Special charges were $66.0 million in second quarter 2026, of which $55.2 million relates to costs of the Sun Country acquisition and integration, $10.0 million relates to accelerated amortization of software identified for redevelopment, and $1.3 million relates to accelerated depreciation of airframes identified for early retirement.
During second quarter 2025, special charges included a $102.2 million write-down of Sunseeker Resort assets as a result of the agreement to sell the Resort, $12.1 million of organizational restructuring charges, and $2.5 million from accelerated depreciation of airframes identified for early retirement.
33
Comparison of six months ended June 30, 2026 to six months ended June 30, 2025
Operating Revenue
| Six Months Ended June 30, 2026 | Six Months Ended June 30, 2025 | Percent Change | |||||||||||||||||||||||||||||||||||||||
| Operating Revenues (in thousands) | Allegiant Air | Sun Country* | Consolidated | Allegiant Air | Sunseeker | Consolidated | YoY | ||||||||||||||||||||||||||||||||||
| Passenger | $ | 1,388,815 | $ | 105,475 | $ | 1,494,290 | $ | 1,234,658 | $ | — | $ | 1,234,658 | 21.0 | % | |||||||||||||||||||||||||||
| Third party products | 86,818 | 1,275 | 88,093 | 68,852 | — | 68,852 | 27.9 | % | |||||||||||||||||||||||||||||||||
| Fixed fee contracts | 32,646 | 31,200 | 63,846 | 33,271 | — | 33,271 | 91.9 | % | |||||||||||||||||||||||||||||||||
| Cargo | — | 27,586 | 27,586 | — | — | — | NM | ||||||||||||||||||||||||||||||||||
| Resort and other | 359 | 1,747 | 2,106 | 355 | 51,322 | 51,677 | (95.9) | % | |||||||||||||||||||||||||||||||||
| Total operating revenues | $ | 1,508,638 | $ | 167,283 | $ | 1,675,921 | $ | 1,337,136 | $ | 51,322 | $ | 1,388,458 | 20.7 | % | |||||||||||||||||||||||||||
NM Not meaningful
* Sun Country numbers only after May 13, 2026
Passenger revenue. Passenger revenue increased $259.6 million or 21.0 percent, of which $105.5 million was contributed by Sun Country during the stub period.
The remaining increase is attributable to strength in demand, which drove a 14.0 percent increase in average total fare for Allegiant Air, including a 29.2 percent increase in scheduled service base fare. Allegiant Air passengers decreased by 0.7 percent on a scheduled service capacity reduction of 6.0 percent, resulting in a 3.9 percentage point increase in Allegiant Air load factor.
Third party products revenue. Third party products revenue increased $19.2 million or 27.9 percent, of which $1.3 million was contributed by Sun Country during the stub period.
The remaining increase is attributable to a $14.4 million increase in the marketing component of Allegiant Air co-brand remuneration and smaller increases in Allegiant Air's third party rental car and travel insurance revenue. These increases were slightly offset by a decrease in hotel room revenue.
Fixed fee contract revenue. Fixed fee contract revenue increased $30.6 million or 91.9 percent, all of which is attributable to an increase of $31.2 million contributed by Sun Country during the stub period.
The remaining decrease is attributable to a 13.7 percent decrease in Allegiant Air charter departures compared to the prior year period.
Cargo revenue. Cargo revenue was $27.6 million, which was wholly attributable to the acquisition of Sun Country, and which was generated during the stub period.
Resort and other revenue. Resort and other revenue decreased $49.6 million due to the sale of Sunseeker Resort in September 2025.
Operating Expenses
The following table presents airline only operating unit costs on a per available seat mile (ASM) basis, defined as Operating CASM, for the indicated periods. Excluding fuel on a per ASM basis provides management and investors the ability to measure and monitor our cost performance absent fuel price volatility. Both the cost and availability of fuel are subject to many economic and political factors beyond our control. Excluding fuel costs, special charges, and cargo expenses allows management and investors to better compare our airline unit costs with those of other airlines. Sun Country cargo expenses (which are included in salaries and benefits, station operations, depreciation and amortization, maintenance and repairs, and other expenses in the Company's consolidated statements of income) are excluded as those expenses do not drive ASMs.
34
| Six Months Ended June 30, 2026 | Six Months Ended June 30, 2025 | Percent Change | |||||||||||||||||||||||||||
| Airline Unitized costs (in cents) | Allegiant Air | Sun Country | Consolidated | Allegiant Air | Allegiant Air | ||||||||||||||||||||||||
| Aircraft fuel | 4.23 | ¢ | 4.26 | ¢ | 4.23 | ¢ | 2.95 | ¢ | 43.4 | % | |||||||||||||||||||
| Salaries and benefits | 3.98 | 4.90 | 4.06 | 3.77 | ¢ | 5.6 | |||||||||||||||||||||||
| Station operations | 1.45 | 1.94 | 1.49 | 1.32 | 9.8 | ||||||||||||||||||||||||
| Depreciation and amortization | 1.11 | 1.22 | 1.11 | 1.11 | — | ||||||||||||||||||||||||
| Maintenance and repairs | 0.71 | 0.99 | 0.73 | 0.63 | 12.7 | ||||||||||||||||||||||||
| Sales and marketing | 0.55 | 0.53 | 0.55 | 0.43 | 27.9 | ||||||||||||||||||||||||
| Aircraft rent | 0.14 | — | 0.13 | 0.15 | (6.7) | ||||||||||||||||||||||||
| Other | 0.46 | 1.15 | 0.54 | 0.46 | — | ||||||||||||||||||||||||
| Special charges | 0.63 | 2.64 | 0.81 | 0.14 | NM | ||||||||||||||||||||||||
| Airline operating CASM | 13.26 | ¢ | 17.63 | ¢ | 13.65 | ¢ | 10.96 | ¢ | 21.0 | ||||||||||||||||||||
| Airline operating CASM, excluding fuel | 9.03 | ¢ | 13.37 | ¢ | 9.42 | ¢ | 8.01 | ¢ | 12.7 | ||||||||||||||||||||
| Cargo expenses | — | ¢ | 2.40 | ¢ | 0.21 | ¢ | — | ¢ | NM | ||||||||||||||||||||
| Airline operating CASM, excluding fuel, special charges, and cargo | 8.40 | ¢ | 8.33 | ¢ | 8.40 | ¢ | 7.87 | ¢ | 6.7 | ||||||||||||||||||||
Airline operating CASM, excluding fuel and special charges. Allegiant Air operating CASM, excluding fuel and special charges, increased by 6.7 percent to 8.40 ¢ compared to 7.87 ¢ for the same period in 2025. The increase was primarily driven by a 6.3 percent reduction in capacity compared to the prior year period, which resulted in higher unit costs across most expense categories. CASM-ex was also impacted by the year-over-year expense increases discussed below.
Sun Country CASM, excluding fuel, special charges, and cargo expenses, was 8.33 ¢ during the stub period and did not drive any significant change to Consolidated CASM for the period.
Aircraft fuel expense. Aircraft fuel expense increased $155.8 million or 46.9 percent, of which Sun Country contributed $42.5 million during the stub period.
The remaining increase of $113.3 million was driven by an increase in Allegiant Air fuel cost per gallon to $3.63 from $2.51 in the prior year period as a result of the geopolitical unrest in the Middle East. Increased fuel costs were partially offset by a decrease in Allegiant Air consumption consistent with a 6.3 percent decrease in total system ASMs and a 1.0 percent increase in fuel efficiency as the percentage of ASMs flown by MAX aircraft continues to increase.
Salaries and benefits expense. Salaries and benefits expense increased by $22.9 million or 5.1 percent. Sun Country contributed an increase of $49.0 million during the stub period, and a decrease of $21.7 million resulted from the sale of Sunseeker Resort.
The remaining decrease of $4.4 million was primarily driven by organizational restructuring initiatives implemented at Allegiant Air during 2025, which resulted in a 4.9 percent reduction in Allegiant Air full-time equivalent employees, offset by increased wages for certain employee workgroups due to contractual and annual merit raises.
Station operations expense. Station operations expense increased $23.3 million or 15.7 percent, of which Sun Country contributed $19.4 million during the stub period.
The remaining increase of $3.9 million was primarily driven by higher Allegiant Air ground handling rates and the transition of certain station positions to outsourced operations. These increases were partially offset by decreases in Allegiant Air airport fees consistent with the 6.0 percent decrease in departures.
Depreciation and amortization expense. Depreciation and amortization expense decreased $3.2 million or 2.4 percent. Sun Country contributed an increase of $12.2 million during the stub period, and the sale of Sunseeker Resort resulted in a decrease of $7.2 million.
The remaining decrease of $8.2 million was driven primarily by lower Allegiant Air heavy maintenance amortization resulting from a low volume of recent engine overhauls and 12 capitalized overhauls which became fully amortized since the prior year period.
Maintenance and repairs expense. Maintenance and repairs expense increased $13.2 million or 18.6 percent, of which Sun Country contributed $9.9 million during the stub period.
35
The remaining increase of $3.3 million was driven by a higher volume of Allegiant Air engine check and repair costs and rotable part repairs compared to the prior year period.
Sales and marketing expense. Sales and marketing expense increased $11.5 million or 22.1 percent, of which $5.3 million was contributed by Sun Country during the stub period and a decrease of $3.4 million was attributable to the sale of Sunseeker Resort.
The remaining increase of $9.6 million was driven by higher Allegiant Air credit card processing fees consistent with the increase in passenger revenue and a non-recurring item related to our credit card agreement that offset expenses in the prior year period.
Aircraft rent. Aircraft rent decreased $2.5 million or 14.6 percent as a result of lease return costs accrued during the prior year period which are not present in current period results and as a result of seven leased aircraft which have been returned to the lessor from operating leases since June 30, 2025.
Other operating expense. Other operating expenses were impacted primarily by $11.5 million contributed by Sun Country during the stub period and a decrease of $25.2 million resulting from the sale of Sunseeker Resort.
Special charges. Special charges were $93.7 million for the six months ended June 30, 2026, of which $64.8 million relates to costs of the Sun Country acquisition and integration, $19.9 million relates to accelerated amortization of software identified for redevelopment, $7.0 million relates to a credit loss on a note receivable, and $2.7 million relates to accelerated depreciation of airframes identified for early retirement.
During the six months ended June 30, 2025, special charges included a $102.2 million write-down of Sunseeker Resort assets as a result of the agreement to sell the Resort, $12.1 million of organizational restructuring charges, and $3.9 million from accelerated depreciation of airframes identified for early retirement.
36
Comparative Operating Statistics
The following tables set forth our operating statistics for the three-month periods indicated:
| Three Months Ended June 30, | Percent Change (1) | ||||||||||||||||
| 2026 | 2025 | YoY | |||||||||||||||
| Airline operating statistics (unaudited): | |||||||||||||||||
| Total system statistics: | |||||||||||||||||
| Passengers | 5,753,539 | 5,127,025 | 12.2 | % | |||||||||||||
| Available seat miles (ASMs) (thousands) | 6,406,325 | 5,799,409 | 10.5 | ||||||||||||||
Airline operating expense per ASM (CASM) (cents) | 13.89 | ¢ | 10.79 | ¢ | 28.7 | ||||||||||||
Airline operating CASM, excluding fuel, special charges and cargo expenses (cents) | 8.19 | ¢ | 7.68 | ¢ | 6.6 | ||||||||||||
| Departures | 42,833 | 37,314 | 14.8 | ||||||||||||||
| Block hours | 104,652 | 88,749 | 17.9 | ||||||||||||||
| Average stage length (miles) | 905 | 886 | 2.1 | ||||||||||||||
| Average block hours per aircraft per day | 7.2 | 7.7 | (6.5) | ||||||||||||||
| Full-time equivalent employees at end of period | 8,484 | 5,980 | 41.9 | ||||||||||||||
| Fuel gallons consumed (thousands) | 74,292 | 68,452 | 8.5 | ||||||||||||||
| ASMs per gallon of fuel | 86.2 | 84.7 | 1.8 | ||||||||||||||
| Average fuel cost per gallon | $ | 4.14 | $ | 2.42 | 71.1 | ||||||||||||
| Scheduled service statistics: | |||||||||||||||||
| Passengers | 5,616,207 | 5,077,788 | 10.6 | ||||||||||||||
| Revenue passenger miles (RPMs) (thousands) | 5,226,070 | 4,610,321 | 13.4 | ||||||||||||||
| Available seat miles (ASMs) (thousands) | 6,097,107 | 5,629,040 | 8.3 | ||||||||||||||
| Load factor | 85.7 | % | 81.9 | % | 3.8 | ||||||||||||
| Departures | 37,502 | 36,056 | 4.0 | ||||||||||||||
| Block hours | 92,259 | 85,980 | 7.3 | ||||||||||||||
| Average seats per departure | 177.0 | 175.1 | 1.1 | ||||||||||||||
Yield (cents) (2) | 8.26 | ¢ | 5.75 | ¢ | 43.7 | ||||||||||||
Total passenger revenue per ASM (TRASM) (cents)(3) | 14.24 | ¢ | 11.57 | ¢ | 23.1 | ||||||||||||
Average fare - scheduled service(4) | $ | 76.90 | $ | 52.20 | 47.3 | ||||||||||||
Average fare - air-related charges(4) | $ | 69.55 | $ | 69.49 | 0.1 | ||||||||||||
| Average fare - third party products | $ | 8.15 | $ | 6.63 | 22.9 | ||||||||||||
| Average fare - total | $ | 154.60 | $ | 128.32 | 20.5 | ||||||||||||
| Average stage length (miles) | 914 | 891 | 2.6 | ||||||||||||||
| Fuel gallons consumed (thousands) | 70,655 | 66,419 | 6.4 | ||||||||||||||
| Average fuel cost per gallon | $ | 4.15 | $ | 2.43 | 70.8 | ||||||||||||
| Three Months Ended June 30, 2026 | |||||||||||
| Allegiant Air | Sun Country | ||||||||||
| AIRLINE OPERATING STATISTICS (BY SEGMENT) | |||||||||||
| Total system statistics: | |||||||||||
| Passengers | 5,073,414 | 680,125 | |||||||||
| Available seat miles (ASMs) (thousands) | 5,406,461 | 999,864 | |||||||||
| Departures | 34,733 | 8,100 | |||||||||
| Scheduled service statistics: | . | ||||||||||
| Revenue passenger miles (RPMs) (thousands) | 4,538,749 | 687,322 | |||||||||
| Available seat miles (ASMs) (thousands) | 5,281,688 | 815,419 | |||||||||
| Block hours | 80,881 | 11,378 | |||||||||
| Fuel cost per gallon, excluding indirect fuel credits | $4.19 | $3.87 | |||||||||
(1)Except load factor during period, which is presented as a percentage point change.
(2)Defined as scheduled service revenue divided by revenue passenger miles.
(3)Various components of this measure do not have a direct correlation to ASMs. This measure is provided on a per ASM basis so as to facilitate comparison with airlines reporting revenues on a per ASM basis.
(4)Reflects division of passenger revenue between scheduled service (base fare) and air-related charges in our booking path.
37
The following tables set forth our operating statistics for the six-month periods indicated:
| Six Months Ended June 30, | Percent Change (1) | ||||||||||||||||
| 2026 | 2025 | YoY | |||||||||||||||
| Airline operating statistics (unaudited): | |||||||||||||||||
| Total system statistics: | |||||||||||||||||
| Passengers | 10,182,002 | 9,578,331 | 6.3 | % | |||||||||||||
| Available seat miles (ASMs) (thousands) | 11,536,867 | 11,250,993 | 2.5 | ||||||||||||||
Airline operating expense per ASM (CASM) (cents) | 13.37 | ¢ | 10.96 | ¢ | 22.0 | ||||||||||||
Airline operating CASM, excluding fuel, special charges and cargo (cents) | 8.40 | ¢ | 7.87 | ¢ | 6.7 | ||||||||||||
| Departures | 74,403 | 70,549 | 5.5 | ||||||||||||||
| Block hours | 183,475 | 172,620 | 6.3 | ||||||||||||||
| Average stage length (miles) | 906 | 909 | (0.3) | ||||||||||||||
| Average block hours per aircraft per day | 7.2 | 7.6 | (5.3) | ||||||||||||||
| Full-time equivalent employees at end of period | 8,484 | 5,980 | 41.9 | ||||||||||||||
| Fuel gallons consumed (thousands) | 133,492 | 132,089 | 1.1 | ||||||||||||||
| ASMs per gallon of fuel | 86.4 | 85.2 | 1.4 | ||||||||||||||
| Average fuel cost per gallon | $ | 3.65 | $ | 2.51 | 45.4 | ||||||||||||
| Scheduled service statistics: | |||||||||||||||||
| Passengers | 10,014,314 | 9,498,599 | 5.4 | ||||||||||||||
| Revenue passenger miles (RPMs) (thousands) | 9,436,965 | 8,881,650 | 6.3 | ||||||||||||||
| Available seat miles (ASMs) (thousands) | 11,088,667 | 10,934,232 | 1.4 | ||||||||||||||
| Load factor | 85.1 | % | 81.2 | % | 3.9 | ||||||||||||
| Departures | 67,974 | 68,189 | (0.3) | ||||||||||||||
| Block hours | 168,756 | 167,394 | 0.8 | ||||||||||||||
| Average seats per departure | 176.6 | 175.0 | 0.9 | ||||||||||||||
Yield (cents) (2) | 8.38 | ¢ | 6.38 | ¢ | 31.3 | ||||||||||||
Total passenger revenue per ASM (TRASM) (cents)(3) | 14.27 | ¢ | 11.92 | ¢ | 19.7 | ||||||||||||
Average fare - scheduled service(4) | $ | 78.99 | $ | 59.64 | 32.4 | ||||||||||||
Average fare - air-related charges(4) | $ | 70.22 | $ | 70.34 | (0.2) | ||||||||||||
| Average fare - third party products | $ | 8.80 | $ | 7.25 | 21.4 | ||||||||||||
| Average fare - total | $ | 158.01 | $ | 137.23 | 15.1 | ||||||||||||
| Average stage length (miles) | 920 | 914 | 0.7 | ||||||||||||||
| Fuel gallons consumed (thousands) | 128,197 | 128,245 | — | ||||||||||||||
| Average fuel cost per gallon | $ | 3.65 | $ | 2.52 | 44.8 | ||||||||||||
| Six Months Ended June 30, 2026 | |||||||||||
| Allegiant Air | Sun Country | ||||||||||
| AIRLINE OPERATING STATISTICS (BY SEGMENT) | |||||||||||
| Total system statistics: | |||||||||||
| Passengers | 9,501,877 | 680,125 | |||||||||
| Available seat miles (ASMs) (thousands) | 10,537,003 | 999,864 | |||||||||
| Departures | 66,303 | 8,100 | |||||||||
| Scheduled service statistics: | . | ||||||||||
| Revenue passenger miles (RPMs) (thousands) | 8,749,644 | 687,322 | |||||||||
| Available seat miles (ASMs) (thousands) | 10,273,248 | 815,419 | |||||||||
| Block hours | 157,378 | 11,378 | |||||||||
| Fuel cost per gallon, excluding indirect fuel credits | $3.63 | $3.87 | |||||||||
(1)Except load factor during period, which is presented as a percentage point change.
(2)Defined as scheduled service revenue divided by revenue passenger miles.
(3)Various components of this measure do not have a direct correlation to ASMs. This measure is provided on a per ASM basis so as to facilitate comparison with airlines reporting revenues on a per ASM basis.
(4)Reflects division of passenger revenue between scheduled service (base fare) and air-related charges in our booking path.
38
LIQUIDITY AND CAPITAL RESOURCES
Current liquidity
Cash, cash equivalents and investment securities (short-term and long-term) increased to $1.1 billion as of June 30, 2026, from $0.8 billion at December 31, 2025. Investment securities represent highly liquid marketable securities which are available-for-sale.
As of June 30, 2026, we had $250.0 million of undrawn capacity under revolving credit facilities and $177.0 million under prearranged aircraft financing facilities.
Restricted cash represents escrowed funds under fixed fee contracts and cash collateral against letters of credit required by hotel properties for guaranteed room availability, airports and certain other parties. Under our fixed fee flying contracts, we require our customers to prepay for flights to be provided by us. The prepayments are escrowed until the flight is completed and are recorded as restricted cash with a corresponding amount reflected as air traffic liability.
Our operating cash flows and long-term debt borrowings have allowed us to invest in our fleet renewal. Future capital needs are primarily for the acquisition of additional aircraft, including our existing aircraft commitments, as well as investments related to the integration and ongoing operations of Sun Country following the acquisition.
Our share repurchase authority at June 30, 2026 is $64.7 million. We did not repurchase any shares on the open market during the first six months of 2026. We have indefinitely suspended our quarterly cash dividend in anticipation of upcoming capital needs related to our fleet investments.
We believe we have more than adequate liquidity resources through our cash, cash equivalent and short-term investment balances, existing aircraft financing facilities, our undrawn capacity under existing credit facilities, operating cash flows and anticipated access to liquidity, to meet our current contractual obligations and remain in compliance with the debt covenants in our existing financing agreements for the next 12 months. We will continue to consider raising funds through debt financing as needed to fund capital expenditures.
Debt
Our debt and finance lease obligations balance, before reduction for related issuance costs, was $2.8 billion as of June 30, 2026, compared to $1.8 billion as of December 31, 2025. Net debt (total debt less unrestricted cash, cash equivalents, and investments) totaled $1.7 billion as of June 30, 2026, representing an increase of $749.4 million from December 31, 2025. The increase in debt was attributable to the acquisition of Sun Country, which contributed $546.8 million of the increase in balance sheet debt, and to $895.2 million of new borrowings which were offset by principal repayments of $451.8 million and debt issuance costs. Sun Country's debt structure assumed in the acquisition consisted primarily of finance lease obligations, enhanced equipment trust certificates, and term loan borrowings.
During the six months ended June 30, 2026, we borrowed $895.2 million, including the issuance of $650.0 million aggregate principal amount of Senior Secured Notes due 2031. The borrowings during the period also included $245.2 million of debt which was secured by aircraft and aircraft related assets. A portion of the proceeds from the Senior Secured Notes due 2031 was used to refinance our Senior Secured Notes due 2027. During the period, we made principal payments of $475.4 million, including the repurchase of approximately $377.5 million aggregate principal amount of our Senior Secured Notes due 2027 in a tender offer and a $13.8 million prepayment under our PDP financing facility. In connection with the acquisition of Sun Country, we assumed approximately $570.3 million of debt and finance lease obligations.
As of June 30, 2026, approximately 66.9 percent of our debt and finance lease obligations are fixed-rate.
Sources and Uses of Cash
Operating Activities
During the six months ended June 30, 2026, and 2025, we generated cash flows from operations of $314.1 million and $283.6 million respectively.
Our operating cash flows are impacted by the following factors:
Advance Ticket Sales. Tickets for air travel are typically purchased in advance of the travel date. When we receive a cash payment at the time of booking, we record the cash received as deferred revenue in air traffic liability. When the flight is flown, we recognize the liability from air traffic liability into revenue. Due to the seasonal nature of our operations, our air traffic liability balances will fluctuate in line with our peak flying seasons.
39
Fuel. With the recent fuel price increases, fuel is our largest expense. The market price for jet fuel is volatile, which can impact the comparability of our periodic cash flows from operations. During the six months ended June 30, 2026, Allegiant Air decreased our year over year flying capacity by 6.3 percent, which led to a 7.2 percent decrease in fuel gallons consumed when compared to the same period in 2025. However, this decrease was offset by a 44.6 percent increase in average fuel cost per gallon for Allegiant Air over the same period in 2025, stemming from the Iranian conflict beginning on February 28, 2026. We expect to continue to see material increases in fuel costs while these circumstances persist.
Salaries and Benefits. Salaries and benefits expense represents our second largest expense and has increased considerably in recent years. Cash payments for our salaries and benefits expense are typically made in the period that they are incurred with the exception of our pilot retention bonus, which we expect will be paid to all pilots no later than fourth quarter 2026 as a new collective bargaining agreement was ratified in July 2026. For the quarters ended June 30, 2026 and 2025, we recognized, within the accrued liabilities line item in our balance sheet, approximately $17.0 million and $23.8 million, respectively, of expense related to the pilot retention bonus, including related payroll taxes.
Investing Activities
Investments. We hold various financial assets and will strategically purchase and sell these assets based on operational cash needs. During the six months ended June 30, 2026, we had $161.1 million of net investment maturities (net cash inflows) compared to $90.0 million of net investment purchases (net cash outflows) during the same period in 2025.
Capital Expenditures. Capital expenditures for the six months ended June 30, 2026 and 2025 were $386.0 million and $186.9 million, respectively. In December 2021, we committed to purchase 50 Boeing 737 MAX aircraft, of which we began to receive delivery in September 2024. During the six months ended June 30, 2026, we took delivery of four aircraft and made pre-delivery payments on certain of the remaining 30 aircraft under firm commitment.
Acquisition of Sun Country. We paid cash consideration of $167.1 million to acquire Sun Country, which is net of $139.9 million cash acquired.
Financing Activities
Long-Term Debt and Finance Leases. Cash provided by financing activities for the six months ended June 30, 2026 was $411.1 million, which was net of $22.8 million used by Sun Country during the stub period, compared to $116.2 million used for financing activities of legacy Allegiant only during the same period in 2025. During the six months ended June 30, 2026, we received proceeds of $895.2 million from our Senior Secured Notes due 2031 and other borrowings secured by aircraft and made principal payments of $474.4 million on our debt and finance lease obligations. During the six months ended June 30, 2025, we made $432.6 million of principal repayments on our debt and finance leases, largely related to prepayments of the Sunseeker construction loan and a PDP financing facility, and received proceeds from the issuance of aircraft financing debt totalling $323.8 million.
40
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
We have made forward-looking statements in this quarterly report on Form 10-Q, and in the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” that are based on our management’s beliefs and assumptions, and on information currently available to our management. Forward-looking statements include our statements regarding future airline operations, revenue, expenses and earnings, available seat mile growth, expected capital expenditures, the cost of fuel, the timing of aircraft acquisitions and retirements, the number of contracted aircraft to be placed in service in the future, our ability to consummate announced aircraft transactions, estimated tax rate, as well as other information concerning future results of operations, business strategies, financing plans, industry environment and potential growth opportunities. Forward-looking statements include all statements that are not historical facts and can be identified by the use of forward-looking terminology such as the words "believe," "expect," “guidance,” "anticipate," "intend," "plan," "estimate", “project”, “hope” or similar expressions.
Forward-looking statements involve risks, uncertainties and assumptions. Actual results may differ materially from those expressed in the forward-looking statements. Important risk factors that could cause our results to differ materially from those expressed in the forward-looking statements generally may be found in our periodic reports filed with the Securities and Exchange Commission at www.sec.gov. These risk factors include, without limitation, regulatory reviews of, and production limits on, Boeing impacting our aircraft delivery schedule, an accident involving, or problems with, our aircraft, public perception of our safety, our reliance on our automated systems, our reliance on Boeing to deliver aircraft under contract to us on a timely basis, risk of breach of security of personal data, volatility of fuel costs, labor issues and costs, the ability to obtain regulatory approvals as needed in connection with our fleet and network, the effect of economic conditions on leisure travel, debt covenants and balances, the impact of government regulations on the airline industry, the ability to finance aircraft to be acquired, the ability to obtain necessary government approvals to offer international service, terrorist attacks, risks inherent to airlines, our competitive environment, our reliance on third parties who provide facilities or services to us, the impact of the possible loss of key personnel, economic and other conditions in markets in which we operate, increases in maintenance costs and availability of outside maintenance contractors to perform needed work on our aircraft on a timely basis and at acceptable rates, cyclical and seasonal fluctuations in our operating results, the perceived acceptability of our environmental, social and governance efforts, the risk that the combined company after the Sun Country acquisition will not realize expected benefits, cost savings, accretion, synergies and/or growth from the Sun Country acquisition or that any of the foregoing may take longer to realize or be more costly to achieve than expected, the diversion of management's attention and time from ongoing business operations and opportunities to integration matters, the risk that the integration of Sun Country's operations will be materially delayed or will be more costly or difficult than expected or that Allegiant is otherwise unable to successfully integrate Sun Country's businesses into its businesses, and reputational risk and potential adverse reactions of Allegiant's or Sun Country's customers, suppliers, employees, labor unions or other business partners, including those resulting from the completion of the Sun Country acquisition and the integration of the companies.
Any forward-looking statements are based on information available to us today and we undertake no obligation to update publicly any forward-looking statements, whether as a result of future events, new information or otherwise.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Except as set forth below, there were no material changes to our critical accounting estimates during the six months ended June 30, 2026. For information regarding our critical accounting policies and estimates, see disclosures in the Consolidated Financial Statements and accompanying notes contained in our 2025 Form 10-K, and in Note 1 of Notes to Consolidated Financial Statements (unaudited) in this Form 10-Q.
Business Combination Accounting
To record the value of assets acquired and liabilities assumed as a result of our acquisition of Sun Country on May 13, 2026, we have performed a purchase price allocation utilizing the best information available to management. The purchase price allocation is provisional and is subject to further adjustments as additional information becomes available concerning the fair value of the assets acquired and liabilities assumed, with any adjustments to the purchase price allocation to be made as soon as practicable but no later than May 13, 2027. Business combination accounting requires management to make assumptions and apply judgment. The fair values of the assets and liabilities acquired were determined using a market basis, relief from royalty, or multi-period excess earnings approach. Key assumptions include, but are not limited to, selecting discount rates and valuation methodologies. These estimates and assumptions are subjective.
41
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are subject to certain market risks, including commodity prices (specifically aircraft fuel). The adverse effects of changes in these markets could pose potential losses as discussed below. The sensitivity analysis provided does not consider the effects that such adverse changes may have on overall economic activity, nor does it consider additional actions we may take to mitigate our exposure to such changes. Actual results may differ.
Aircraft Fuel
Our results of operations can be significantly impacted by changes in the price and availability of aircraft fuel. Aircraft fuel expense for the six months ended June 30, 2026 represented 31.0 percent of our total operating expenses. Increases in fuel prices, or a shortage of supply, could have a material impact on our operations and operating results. Based on our fuel consumption for the six months ended June 30, 2026, a hypothetical ten percent increase in the average price per gallon of fuel would have increased fuel expense by approximately $48.7 million. We do not hedge fuel price risk.
Interest Rates
As of June 30, 2026, we had $930.1 million of variable-rate debt, including current maturities, and without reduction for $11.3 million in related costs. A hypothetical 100 basis point change in interest rates would have affected interest expense on variable rate debt by approximately $2.2 million for the six months ended June 30, 2026.
Item 4. Controls and Procedures
As of June 30, 2026, under the supervision and with the participation of our management, including our chief executive officer ("CEO") and chief financial officer (“CFO”), we evaluated the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended, or the “Exchange Act”) as of the end of the period covered by this report. Based on that evaluation, management, including our CEO and CFO, has concluded that our disclosure controls and procedures are designed, and are effective, to give reasonable assurance that the information we are required to disclose is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and is accumulated and communicated to our management, including the CEO and the CFO, as appropriate to allow timely decisions regarding required disclosure.
Except as set forth below, there were no changes in our internal control over financial reporting that occurred during the quarter ending June 30, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
On May 13, 2026, the Company acquired Sun Country Airlines Holdings, Inc. (see Note 2 to the consolidated financial statements). As permitted by Securities and Exchange Commission Staff interpretive guidance for newly acquired businesses, management intends to exclude Sun Country from its annual evaluation of internal control over financial reporting as of December 31, 2026. We are implementing internal controls over significant processes specific to the acquisition that we believe are appropriate in consideration of related integration of operations, systems, control activities, and accounting for the merger and merger-related transactions. As of the date of this report, we are in the process of further integrating the acquired Sun Country operations into our overall internal controls over financial reporting.
42
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
We are subject to certain legal and administrative actions we consider routine to our business activities. We believe the ultimate outcome of any pending legal or administrative matters will not have a material adverse impact on our financial position, liquidity or results of operations.
Item 1A. Risk Factors
We have evaluated our risk factors and determined there are no changes to those set forth in Part I, Item 1A. of our Annual Report on Form 10-K for the year ended December 31, 2025, and filed with the Securities and Exchange Commission on February 26, 2026 other than the following additional risk factors resulting from our acquisition of Sun Country.
Our cargo business is concentrated with Amazon, and any decrease in volumes or increase in costs, or a termination of the ATSA, could have a material adverse effect on our business, results of operations and prospects.
Cargo revenue under the ATSA represented approximately 16.4 percent of Sun Country’s total operating revenues for the stub period, and this cargo revenue consisted entirely of air cargo transportation services provided to Amazon under the ATSA. The ATSA does not require a minimum amount of flying and Amazon is permitted to decrease flying volume at any time. Our cargo business would decline if Amazon’s use of our cargo services decreases for any reason, including due to general economic conditions or preferences of Amazon and its customers. A decline in our cargo business would materially adversely affect our business, results of operations, and prospects.
In addition, the profitability of the ATSA is dependent on our ability to manage and accurately predict costs. Our projections of operating costs, crew productivity and maintenance expenses contain key assumptions, including flight hours, aircraft reliability, crew member productivity, compensation and benefits and maintenance costs. If actual costs are higher than projected or aircraft reliability is less than expected, or aircraft become damaged and are out of revenue service for repair, the profitability of the ATSA and future operating results may be negatively impacted. We rely on flight crews that are unionized. If our costs are increased under collective bargaining agreements and we cannot recover such increases under the ATSA, our operating results would be negatively impacted, in which case, it may be necessary for us to commit fewer resources to the Sun Country scheduled or charter service, which could limit our expected growth in those areas.
Performance under the ATSA is subject to a number of challenges and uncertainties, such as: unforeseen maintenance and other costs; our ability to hire pilots, crew and other personnel necessary to support our cargo services, which can be impacted by industry-wide staffing shortages; interruptions in the operations under the ATSA as a result of unexpected or unforeseen events, whether as a result of factors within our control or outside of our control; and the level of operations and results of operations, including margins, under the ATSA being less than our current expectations and projections. The ATSA also contains monthly incentive payments for reaching specific on-time arrival performance thresholds and there are monetary penalties for on-time arrival performance below certain thresholds. As a result, our operating revenues may vary from period-to-period depending on the achievement of monthly incentives or the imposition of penalties. We do not currently meet the reliability standards to avoid penalties under the ATSA. Further, we could be found in default of the ATSA if we do not maintain certain minimum thresholds over a period of time. If we are placed in default due to the failure to maintain reliability thresholds, Amazon may elect to terminate all or part of the services we provide. Amazon may also terminate the ATSA for convenience, subject to certain notice requirements and payment of a termination fee. The ATSA is also subject to two, two-year extension options, which Amazon may choose not to exercise.
To the extent our volume of flying for Amazon decreases or costs associated with our cargo business increase, or if the ATSA is terminated for any reason, our business, results of operations and prospects could be materially and adversely affected.
The Sun Country business is significantly tied to and consolidated in its main hub in Minneapolis-St. Paul (MSP), and any decrease in traffic in this hub could have a material adverse effect on our business, results of operations and brand.
The Sun Country airline service is concentrated around our hub in MSP and our business is impacted by economic and geophysical factors of this region. We maintain a large presence in MSP as approximately 93% of Sun Country’s 2025 scheduled service capacity, as measured by ASMs, had MSP as either their origin or destination. Flight operations in Minneapolis can face extreme weather challenges in all seasons, but especially in the winter which at times has resulted in severe disruptions in our operation and the incurrence of material costs as a consequence of such disruptions. Our business could be further harmed by an increase in the amount of direct competition we face in the Minneapolis market or by continued or increased congestion, delays or cancellations. For instance, MSP is also a significant hub for Delta Air Lines. If we were to experience increased competition from LCCs or ULCCs, or increased competition on low-fare products from Delta Air Lines or another legacy network airline in the Minneapolis market, our business, results of operations and prospects could be materially adversely affected.
43
Our business would also be negatively impacted by any circumstances causing a reduction in demand for air transportation in the Minneapolis area, such as adverse changes in local economic conditions, local regulations and/or mandates, health concerns, adverse weather conditions, negative public perception of Minneapolis, riots, social unrest, terrorist attacks or significant price or tax increases linked to increases in airport access costs and fees imposed on passengers.
We currently operate out of Terminal 2 at MSP. Our access to use our existing gates and other facilities in Terminal 2 is not guaranteed. We cannot assure you that our continued use of our facilities at MSP will be on acceptable terms with respect to operations and cost of operations, or at all, or that our ongoing use of these facilities will not include increased fees.
Political and economic instability in the international markets Sun Country operates as well as income and other taxes could negatively affect our business and operating results due to our international operations.
Some of Sun Country’s existing and targeted growth international markets include countries with less developed economies, legal systems, financial markets and business and political environments that are vulnerable to economic and political disruptions, such as significant fluctuations in gross domestic product, interest and currency exchange rates, civil disturbances, government instability, nationalization and expropriation of private assets, trafficking and the imposition of charges by governments, as well as health and safety concerns. The occurrence of any of these events in markets served by us now or in the future and the resulting instability may have a material adverse effect on our business, results of operations and financial condition.
Due to operating in multiple jurisdictions we may also become subject to a wide range of income and other taxes. Further, any changes in tax laws in any of the jurisdictions in which we are subject to tax, such as increases in tax rates or limitations on our ability to deduct certain expenses from taxable income could materially affect our tax obligations.
Our ability to use Sun Country's net operating loss carryforwards to offset future taxable income for U.S. federal and state income tax purposes may be limited as a result of previous ownership changes, this acquisition or taxable income failing to reach sufficient levels.
As of the acquisition closing date, Sun Country recognized an estimated $77.8 million federal net operating loss carryforwards (“NOLs”) which may be carried forward indefinitely, and an estimated $4.0 million of state NOLs which begin to expire in 2033.
Our ability to realize the benefit of these federal and state net operating loss will be impacted by the limitation imposed by Section 382 of the Internal Revenue Code (the “Code”). As a result of our acquisition of Sun Country, Sun Country has experienced an “ownership change” as defined by Section 382 which imposes an annual limitation on the amount of the pre-ownership change NOLs we may utilize. The annual base limitation is determined based on the value of the corporation before the ownership change multiplied by the applicable long-term tax-exempt rate and may be increased or decreased by Sun Country’s built-in-gain or built-in-loss at the time of the ownership change. Any unused annual limitation may be carried over to subsequent taxable years with certain limitations.
A section 382 study is in progress but based on the initial assessment, we do not believe the Section 382 limitations will significantly impact our ability to utilize these NOLs in future periods.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Our Repurchases of Equity Securities
The following table reflects the repurchases of our common stock during second quarter 2026:
| Period | Total Number of Shares Purchased (1) | Average Price Paid per Share | Total Number of Shares Purchased as Part of our Publicly Announced Plan | Approximate Dollar Value of Shares that May yet be Purchased Under the Plans or Programs (in thousands) (2) | ||||||||||||||||||||||
| April | 9,235 | $ | 82.99 | None | ||||||||||||||||||||||
| May | 62,112 | $ | 75.24 | None | ||||||||||||||||||||||
| June | 23 | $ | 117.60 | None | ||||||||||||||||||||||
| Total | 71,370 | $ | 76.25 | — | $ | 64,694 | ||||||||||||||||||||
(1)Includes shares repurchased from employees who vested a portion of their restricted stock grants. These share repurchases were made at the election of each employee pursuant to an offer to repurchase by us. In each case, the shares repurchased constituted a portion of vested shares necessary to satisfy income tax withholding requirements.
(2)Represents the remaining dollar amount of open market purchases of our common stock which have been authorized by our board of directors under a share repurchase program.
44
Item 3. Defaults Upon Senior Securities
None
Item 4. Mine Safety Disclosures
Not applicable
Item 5. Other Information
Securities Trading Plans of Directors and Executive Officers
During the three months ended June 30, 2026, none of our directors or executive officers adopted or terminated any contract, instruction or written plan for the purchase or sale of the Company's securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement.”
45
Item 6. Exhibits
Certain of the following exhibits have been filed with the Securities and Exchange Commission and are incorporated by reference from the documents below. Certain others are filed with this Form 10-Q. The exhibits are numbered in accordance with Item 601 of Regulation S-K.
| Exhibit No. | Exhibit Description | Form | Date of First Filing | Exhibit No. | ||||||||||
| S-1/A | July 6, 2006 | 3.1 | ||||||||||||
| 8-K | May 13, 2026 | 3.1 | ||||||||||||
4.1(1) | S-1 | February 8, 2021 | 4.1 | |||||||||||
4.2(1) | S-1 | February 8, 2021 | 4.2 | |||||||||||
4.3(1) | S-1 | February 8, 2021 | 4.3 | |||||||||||
4.4(1) | S-1 | February 8, 2021 | 4.4 | |||||||||||
4.5(1) | S-1 | February 8, 2021 | 4.5 | |||||||||||
4.6(1) | 8-K | April 5, 2022 | 4.1 | |||||||||||
4.7(1) | 8-K | April 5, 2022 | 4.2 | |||||||||||
4.8(1) | 8-K | April 5, 2022 | 4.3 | |||||||||||
4.9(1) | 8-K | April 5, 2022 | 4.4 | |||||||||||
4.10(1) | 8-K | April 5, 2022 | 4.4 | |||||||||||
4.11(1) | 8-K | April 5, 2022 | 4.4 | |||||||||||
4.12(1) | 8-K | April 5, 2022 | 4.1 | |||||||||||
4.13(1) | 8-K | April 5, 2022 | 4.2 | |||||||||||
4.14(1)(2) | 10-K | February 12, 2025 | 4.15 | |||||||||||
4.15(1)(2) | 10-K | February 12, 2025 | 4.16 | |||||||||||
4.16(1)(2) | 10-K | February 12, 2025 | 4.17 | |||||||||||
| 8-K | June 29, 2026 | 4.1 | ||||||||||||
| 8-K | June 29, 2026 | 4.1 | ||||||||||||
46
| 8-K | June 29, 2026 | 4.3 | ||||||||||||
10.1(1) | S-1 | February 8, 2021 | 10.9 | |||||||||||
10.2(1) | S-1 | February 8, 2021 | 10.13 | |||||||||||
10.3(1) | S-1 | February 8, 2021 | 10.36 | |||||||||||
10.4(1) | S-1 | February 8, 2021 | 10.40 | |||||||||||
10.5(1) | S-8 | March 17, 2021 | 4.2 | |||||||||||
10.6(1) | S-1 | February 8, 2021 | 10.42 | |||||||||||
10.7(1) | 10-K | February 14, 2024 | 10.43 | |||||||||||
10.8(1) | 10-Q | May 7, 2024 | 10.1 | |||||||||||
10.9(1)(2) | 8-K | June 20, 2024 | 10.1 | |||||||||||
10.10(1) | 8-K | October 1, 2025 | 10.1 | |||||||||||
10.11(1) | 8-K | October 1, 2025 | 10.2 | |||||||||||
| 8-K | May 13, 2026 | 10.1 | ||||||||||||
| S-8 | May 13, 2026 | 4.3 | ||||||||||||
| 8-K | June 29, 2026 | 10.1 | ||||||||||||
31.1(3) | ||||||||||||||
31.2(3) | ||||||||||||||
32(3) | ||||||||||||||
| 101.SCH | XBRL Taxonomy Extension Schema Document | |||||||||||||
| 101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | |||||||||||||
| 101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | |||||||||||||
| 101.LAB | XBRL Taxonomy Extension Labels Linkbase Document | |||||||||||||
| 101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | |||||||||||||
(1) Filed by Sun Country Airlines Holdings, Inc., File Number 001-40217.
(2) Portions of this Exhibit are omitted pursuant to Item 601(b)(10)(iv) of Regulation S-K.
(3) Filed herewith.
47
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| ALLEGIANT TRAVEL COMPANY | |||||||||||
| Date: | August 10, 2026 | By: | /s/ Robert J. Neal | ||||||||
| Robert J. Neal, as duly authorized officer of the Company (President and Chief Financial Officer) and as Principal Financial Officer | |||||||||||
48