Allegiant Pilot Townhall Summary

Purpose: Provide factual updates on the proposed acquisition of Sun Country Airlines, explain the merger and seniority integration process, and answer pilot questions with input from experienced legal and economic advisors.

Presenters & Roles

Executive Board (elect): Ryan Joseph (President), Hansel Duran (VP), Fihmi Rossman (Recording Sec.), Greg Harris (Sec.-Treas.), Trustees: Brandon Wood, Genie Moy, Barron Howard.
Subject Matter Experts:
- Josh Shiffrin (Merger & Acquisition Counsel)
- Matt Barton (Contract Economist; Flight Path Economics)

1) Transaction Overview & Process (M&A Counsel)

Typical Merger Milestones (order can vary)

Announcement → sets the constructive notice date (post-announcement hires typically integrated by date of hire).
Transition & Process Agreement (TPA): Early, four-party agreement (both carriers + both pilot groups) defining process, info access, dispute resolution, timelines, potential equipment fences during transition, and whether/how to conduct JCBA talks and arbitration backstops.
Regulatory: DOJ antitrust review; DOT certification; then corporate closing.
JCBA Negotiations: Needed to run a combined operation under unified rules.
FAA SOC: Safety/training/manuals integration.
NMB Single Transportation System: HR/policies integration; representation determination (election or accretion).
Seniority List Integration (SLI): Negotiate or arbitrate under the fair and equitable standard; implement list and JCBA.

SLI Legal Guardrails: McCaskill–Bond

Requires “fair and equitable” seniority integration. If the parties can’t agree, it goes to arbitration.
Arbitrators aim to avoid windfalls and minimize disruption, preserving legitimate pre-merger career expectations while recognizing merged realities.

What Arbitrators Consider (Common Factors)

Longevity (date of hire adjusted for furlough/interruptions).
Status & Category (fleet types, fleet counts, Captain/FO positions).
Career Expectations (standalone growth prospects, contract strength, furlough history, financial risk).
Modern Practice: Often a hybrid method blending longevity with status/category in a defined ratio, validated by upgrade and QoL metrics.

Representation

The NMB decides: accretion (no vote) if a very large group absorbs a much smaller one; otherwise, election likely when both groups are sizable.

2) Economics & Strategic Rationale (Economist)

Industry Context

Pre-pandemic Allegiant margins were >15% for years.
While many ULCCs have struggled post-pandemic, Allegiant and Sun Country are exceptions—both profitable and growing, alongside a small group of large carriers.

Why This Merger Makes Sense

Strategic Fit Claims (Mgmt): Similar peaky/seasonal demand patterns; fleet optimization; market access (e.g., more international opportunities, MSP feed); cargo revenue and charter scale; airport utilization and cost synergies, including reduced overhead duplication.
Key Integration Risks to Manage:
- Concentration: Allegiant’s largest point of sale ≈ 6% vs. Sun Country’s ~44% concentrated in MSP.
- Competition Exposure: ~88% of Allegiant markets are non-competitive; Sun Country competes head-to-head on many Delta routes out of MSP.

Synergies & Profitability

Company has cited ~$140M annual net synergies (mostly revenue; includes labor dis-synergies).
2025 operating margins: Allegiant ~6%, Sun Country ~9%. Combined with synergies could exceed 10%, a meaningful uplift (but not yet back to pre-pandemic ~16%; some improvement must be organic).
Financial Accretion: Roughly $200M cash + stock to acquire ~$100M/year in operating profit (based on 2025 run-rate)—immediately accretive to operating profit per share and future cash flow.

3) Negotiations & Contract Topics

Current Status

Active focus: Section 15 (PBS LOA) / NavBlue—guardrails and parameters under negotiation.
Sessions: Feb 23, 26–27 (mediated).
The Board and NC report meaningful progress in the past 6 weeks.
Goal is a high-quality agreement as soon as practical; quality over speed.

Surveys / “Data-Driven” Commitment

Survey infrastructure is ready (vendors vetted: UNH, Qualtrics).
Temporarily paused to avoid disrupting Section 15 momentum; will re-evaluate after February sessions.
Movement toward company asks will only occur in exchange for value elsewhere.

PBS vs. CBI

Company has made clear CBI is not a sustainable solution for its needs.
NavBlue PBS brings company efficiency → the union’s approach is pays-for-plays.
Education on PBS and unstacking will be provided before surveying.

Retention Bonus

Company declined to accelerate payout; it remains tied to ratification (payable within 60 days of a new CBA or a JCBA).
No union dues withheld from the retention bonus.
Paid as W-2 income via normal payroll (not eligible for 401(k) contributions under current terms).

4) Representation, JCBA, and Timeline

Representation

NMB determines election vs. accretion after single transportation system finding. Given sizes, an election is likely.
If Teamsters prevail and no JCBA is yet in place: Allegiant’s CBA scope suggests Sun Country pilots would operate under the Allegiant CBA until amended.
If ALPA prevails before a new Allegiant CBA exists, both groups would likely remain under their existing CBAs until a JCBA is negotiated/ratified.

JCBA Process

Defined by the TPA.
Likely structure: A joint committee negotiates with the company; pilot side typically seeks “best of both” outcomes.

Fences & Protections

Transition fences are common in TPAs pre-integration.
No-bump/no-flush protection: nobody loses their current seat solely due to a new list.
Displacements from base or equipment changes are management decisions; negotiated protections may apply.
Companies avoid mass disruptions due to training cost and operational complexity.

Timelines

Company has floated an Aug–Sep target for regulatory approvals/closing.
Full end state commonly takes ~12–24 months.
Low competition overlap reduces antitrust friction, though timing variables remain.

5) Base/Staffing/Allentown & Operations Questions

Allentown (ABE): Risk assessed as very low that ABE pilots who want to remain cannot remain post-Phase 2.
Post-Merger Bases & Pairings: More operational information expected via March filings.
Hiring: Likely follows combined operational needs (growth focus: 737 side).

6) Trusteeship, War Chest & Admin

Trusteeship → Self-Governance: Complete training, demonstrate controls, hold GMM (Mar 11); target March–April release window.
Local Financials: Approx. $8.4M on hand.
War Chest Use: Active and expected to increase as needed.
SPC Actions: Temporarily paused; reassessment post-sessions.

7) Frequently Asked Clarifications

Will the DOT/FAA “force” a CBA? No. Labor falls under NMB.
Does “fair and equitable” equal pure date-of-hire? Not necessarily; hybrid approaches are common.
Will Sun Country pilots take Allegiant seats after SLI? Not by virtue of the list alone.
Retention bonus taxation/401(k): W-2 income; no 401(k); no dues withheld.
Attendance: ~320 pilots attended.

8) Closing Message from the Board

There is an established legal and procedural framework governing acquisitions and SLI.
The Board’s mandate is to protect the seniority list and long-term interests.
Communication will continue as developments occur.

What to Watch Next

Section 15 PBS LOA sessions and post-session update.
March public filings for operational detail.
Mar 11 GMM (trusteeship milestone).
Potential TPA coordination with Sun Country MEC.
Survey launch after Section 15 milestone.

View the recording here: Allegiant Pilot Townhall – February 2026