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Item 1A. Risk Factors

2026-02-26 compared with 2025-03-03 · 192 added, 75 removed, 247 unchanged (52% of the section changed)

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The trading price of our common stock could decline due to any of these risks, and investors may lose all or part of their investment.

Risks Related to our Proposed Acquisition of Sun Country Airlines Holdings, Inc.

The proposed acquisition of Sun Country will involve substantial costs and the pendency of the proposed acquisition of Sun Country may cause disruption in our business.

The Merger Agreement requires us to operate in the ordinary course of business and restricts us from taking specified actions without Sun Country’s consent until the proposed acquisition of Sun Country occurs or the Merger Agreement terminates.

Matters relating to the proposed acquisition of Sun Country are expected to occupy a significant amount of management’s time.

The diversion of management’s attention away from day-to-day business concerns and any difficulties encountered in the transition and integration process could adversely affect our business, results of operations and financial condition.

In addition, we have incurred and will continue to incur significant costs, expenses and fees in connection with the proposed acquisition of Sun Country.

The substantial majority of these costs will be non-recurring expenses relating to the proposed acquisition of Sun Country, some of which are payable regardless of whether or not the proposed acquisition of Sun Country is consummated.

Litigation may be filed in connection with the proposed acquisition of Sun Country and defending any such litigation could prove costly and time consuming.

Shareholder litigation could prevent or delay the consummation of the proposed acquisition of Sun Country or otherwise negatively impact our business, operating results and financial condition.

Securities class action lawsuits and derivative lawsuits are often brought against public companies that have entered into acquisition, merger, or other business combination agreements.

Even if such a lawsuit is without merit, defending against or settlement of these claims can result in substantial additional costs and diversion of management time and resources.

Any such future lawsuit or litigation may adversely affect our ability to complete the proposed acquisition of Sun Country.

We could incur significant costs in connection with any such litigation, including costs associated with an adverse judgment resulting in monetary damages and the indemnification of our directors and officers, which could have a negative impact on our liquidity and financial position.

Furthermore, one of the conditions to the consummation of the proposed acquisition of Sun Country is the absence of any governmental order or law preventing the consummation of the proposed acquisition of Sun Country or making the consummation of the proposed acquisition of Sun Country illegal.

Consequently, if a plaintiff were to secure injunctive or other relief prohibiting, delaying or otherwise adversely affecting our ability to complete the consummation of the proposed acquisition of Sun Country, then such injunctive or other relief may prevent the proposed acquisition of Sun Country from becoming effective within the expected time frame or at all.

Failure to complete the proposed acquisition of Sun Country in a timely manner or at all could negatively impact the market price of our common stock, as well as our future business and our results of operations and financial condition.

Consummation of the proposed acquisition of Sun Country is subject to various customary conditions set forth in the Merger Agreement beyond our control.

The failure to satisfy the required conditions could delay the completion of the proposed acquisition of Sun Country for a significant period of time or prevent it from occurring.

Further, there can be no assurance that the conditions to the closing of the proposed acquisition of Sun Country will be satisfied or waived or that the proposed acquisition of Sun Country will be completed.

We cannot predict whether and when the conditions to the proposed acquisition of Sun Country will be satisfied.

If one or more of these conditions are not satisfied, and as a result, we do not complete the proposed acquisition of Sun Country, we may remain liable for significant transaction costs, and the focus of our management would have been diverted from seeking other potential strategic opportunities, in each case without realizing any benefits of the proposed acquisition of Sun Country.

The Merger Agreement includes customary termination rights in favor of each party.

In certain circumstances, we may be required to pay Sun Country a termination fee of $52,230,000 or expense reimbursement of up to $11,000,000 in connection with the termination of the Merger Agreement.

Any requirement to pay a termination fee to Sun Country may have an adverse effect on our liquidity and results of operations.

Although Sun Country may be required to pay us a termination fee or expense reimbursement under certain circumstances, the receipt of any termination fee or expense reimbursement from Sun Country may not be sufficient to compensate us for all of the expenses incurred, and opportunities forgone as a result of our pursuit of the proposed acquisition of Sun Country.

In addition, our ongoing business may be adversely affected, including as follows:

• we may experience negative reactions from the financial markets, and our stock price could decline to the extent that the current market price reflects an assumption that the proposed acquisition of Sun Country will be completed;

• we may experience negative reactions from employees, passengers, suppliers, communities or other third parties;

• we may be subject to litigation, which could result in significant costs and expenses;

• management’s focus may be diverted from our day-to-day business operations and from pursuing other opportunities that could have been beneficial to us;

• our costs of pursuing the proposed acquisition of Sun Country may be higher than anticipated;

• we may have difficulties in attracting and/or retaining key employees;

• our access to capital markets may be limited and we may experience increased borrowing costs.

If the proposed acquisition of Sun Country is not consummated, there can be no assurance that these risks will not materialize and will not materially adversely affect our stock price, business, results of operations or financial condition.

In order to complete the proposed acquisition of Sun Country, we and Sun Country must obtain certain regulatory approvals, and if such approvals are not granted or are granted with conditions, completion of the proposed acquisition of Sun Country may be jeopardized or the anticipated benefits of the proposed acquisition of Sun Country could be reduced.

Although we and Sun Country have agreed to use reasonable best efforts, subject to certain limitations, to make certain governmental filings and obtain the required regulatory approvals, there can be no assurance that the relevant approvals will be obtained (including through the expiration of applicable waiting periods).

Governmental authorities may also commence litigation against us, or both us and Sun Country, to prevent the proposed acquisition of Sun Country from occurring.

Defending any such lawsuit will be time-consuming and expensive and there can be no assurance that we and Sun Country would ultimately be successful.

In addition, an actual or threatened U.S.

government shutdown resulting in government agency closures and employee furloughs may impact, could delay or disrupt the ability of us and Sun Country to obtain certain regulatory approvals which could result in delays to regulatory waiting periods or prevent regulatory clearances required for the consummation of the proposed acquisition of Sun Country.

The Merger Agreement contains provisions that restrict our ability to consider alternative transaction proposals.

The Merger Agreement contains non-solicitation provisions that, subject to limited exceptions which apply prior to obtaining the requisite stockholder approval of the issuance of shares of our common stock, restrict our ability to solicit, initiate, or knowingly encourage or facilitate competing third-party proposals (or engage in, continue to participate in, knowingly encourage or knowingly facilitate negotiations or discussions regarding such third-party proposals) certain acquisition proposals.

Under certain limited circumstances, our board of directors may (i) change, withhold, withdraw or modify its recommendation that our stockholders approve the issuance of shares of our common stock as set forth in the Merger Agreement and/or (ii) terminate the Merger Agreement to enter into a definitive agreement with respect to a third-party acquisition proposal.

However, before doing so, our board of directors must abide by certain procedures described in the Merger Agreement that give Sun Country an opportunity to negotiate to modify the terms of the Merger Agreement in a manner that any such third-party acquisition proposal would not constitute a superior proposal.

In some circumstances, upon termination of the Merger Agreement, we may be required to pay a termination fee of $52,230,000.

While the Merger Agreement remains in effect, these provisions might discourage a potential third-party acquiror or merger partner that might have an interest in acquiring all or a significant portion of our common stock or pursuing an alternative acquisition transaction from considering or proposing such a transaction, even if it were prepared to pay consideration with a higher per-share value than the per-share value proposed to be realized in the proposed acquisition of Sun Country.

If the Merger Agreement is terminated and we decide to seek another business combination, we may not be able to negotiate or consummate a transaction with another party on terms comparable to, or better than, the terms of the Merger Agreement.

All of the matters described above, alone or in combination, could materially and adversely affect our business, financial condition, results of operations and stock price.

The proposed acquisition of Sun Country may impair our ability to attract and retain qualified employees or retain and maintain relationships with our suppliers and other business partners.

Our employees and other key personnel may have uncertainties about the effect of the proposed acquisition of Sun Country, and these uncertainties may impact our ability to retain, recruit and hire key personnel while the proposed acquisition of Sun Country is pending or if it fails to close.

Furthermore, if key personnel depart because of such uncertainties, or because they do not wish to remain with us after the consummation of the proposed acquisition of Sun Country, our business and results of operations may be adversely affected.

In addition, we cannot predict how our suppliers and other business partners will view or react to the proposed acquisition of Sun Country upon consummation.

If we are unable to reassure our suppliers and other business partners to continue their business with us, our financial condition and results of operations may be adversely affected.

After completion of the proposed Sun Country acquisition, we may not be able to successfully integrate the businesses and realize the anticipated benefits of the proposed acquisition of Sun Country.

The success of the proposed Sun Country acquisition will depend, in part, on our ability to successfully combine Sun Country, which currently operates as an independent public company, with our business and realize the anticipated benefits, including synergies and operational efficiencies, from the acquisition of Sun Country.

If we are unable to achieve these objectives within

the anticipated time frame, or at all, the anticipated benefits may not be realized fully, or at all, or may take longer to realize than expected and the value of our common stock may be harmed.

The proposed 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.

Neither we nor Sun Country have previously completed a transaction comparable in size or scope to the proposed acquisition of Sun Country.

The integration of the two companies may result in material challenges, including, without limitation:

• the diversion of management’s attention from ongoing business concerns and performance shortfalls at one or both of the companies as a result of the devotion of management’s attention to the proposed acquisition of Sun Country;

• managing a larger company;

• creating, implementing, and executing a unified business strategy, and operational, financial, and managerial control with respect to the combined entity;

• the inherent risk of integrating complex systems and technologies, including customer reservations systems, operating procedures, regulatory compliance programs, aircraft fleets, networks and other assets in a manner that minimizes any adverse impact on customers, suppliers, employees and other constituencies;

• maintaining existing agreements with unions, employees, suppliers, third-party service providers and third-party distribution channels, and avoiding delays in entering into new agreements with prospective employees, suppliers, third-party service providers and third-party distribution channels;

• maintaining employee morale and attracting, motivating, and retaining management personnel and other key employees;

• the possibility of faulty assumptions underlying expectations regarding the integration process;

• retaining existing business with charter and cargo partners and operational relationships and attracting new business and operational relationships;

• issues in integrating information technology, operational, safety, communications and other systems;

• consolidating corporate and administrative infrastructures and eliminating duplicative operations and inconsistencies in standards, controls, procedures, and policies;

• coordinating geographically separate organizations;

• unanticipated changes in federal or state laws or regulations or international agreements, including additional regulatory scrutiny or additional regulatory requirements as a result of the transaction or the size, scope, and complexity of our business operations;

• unforeseen expenses or delays associated with the proposed acquisition of Sun Country.

Many of these factors will be outside of our control and any one of them could result in delays, increased costs, decreases in the amount of expected revenues, and diversion of management’s time and energy, which could materially affect our financial position, results of operations, and cash flows.

We and Sun Country have operated, and until the closing of the proposed acquisition of Sun Country will continue to operate, independently.

We and Sun Country are currently permitted to conduct only limited planning for the integration of the two companies following the proposed acquisition of Sun Country and have not yet determined the exact nature of how the businesses and operations of the two companies will be combined after the proposed acquisition of Sun Country.

The actual integration may result in additional and unforeseen expenses, and the anticipated benefits of the integration plan may not be realized.

After the closing, we plan to submit to the FAA a transition plan for merging the day-to-day operations of Allegiant and Sun Country under a single operating certificate.

The issuance of a single operating certificate will occur when the FAA agrees that we have achieved a level of integration that can be safely managed under one certificate as evidenced by there being one set of FAA-required management personnel in place with such managers having operational control of the merged air carrier operations.

The actual time required and cost incurred to receive this approval cannot be predicted.

Any delay in the grant of such approval or increase in costs beyond those presently expected could have a material adverse effect on the completion date of our integration plan and receipt of the benefits expected from that plan.

All of these factors could materially adversely affect our business, results of operations and financial condition.

Our future results may be adversely impacted if we do not effectively manage our expanded operations following completion of the proposed Sun Country acquisition.

Following the completion of the proposed Sun Country acquisition, the size of our business will be significantly larger than it is currently.

Our ability to successfully manage this expanded business will depend, in part, upon management’s ability to design and implement operational, managerial, financial, and strategic initiatives that address not only the integration of two independent stand-alone companies, but also the increased scale and scope of the combined business with its associated increased costs and complexity.

There can be no assurances that we will be successful or that we will realize the expected operating efficiencies, cost savings, and other benefits currently anticipated from the proposed Sun Country acquisition.

The market price of our common stock may be affected by factors different from those that are currently affecting or have historically affected the price of our common stock or Sun Country’s common stock.

Upon the completion of the proposed Sun Country acquisition, holders of our common stock and Sun Country common stock will be holders of our common stock.

As our business is different from Sun Country’s, the results of operations as well as the price of

our common stock may in the future be affected by factors different from those factors affecting us and Sun Country as independent stand-alone companies.

We will face additional risks and uncertainties that we or Sun Country may not currently be exposed to as independent companies.

The need to integrate Sun Country’s workforce with ours following the proposed acquisition of Sun Country presents the potential for delay in achieving expected synergies, increased labor costs or labor disputes that could adversely affect our operations.

The successful integration of Sun Country and achievement of the anticipated benefits of the proposed acquisition of Sun Country depend significantly on integrating Sun Country’s employee groups and on maintaining productive employee relations.

Failure to do so presents the potential for delays in achieving expected synergies of integration, increased labor costs and labor disputes that could adversely affect our operations.

We and Sun Country are both highly unionized companies.

The process for integrating labor groups in an airline merger is governed by a combination of the Railway Labor Act, which we refer to as the RLA, the McCaskill-Bond Act, and where applicable, the existing provisions of each company’s collective bargaining agreements and union policy.

Pending operational integration, it is generally necessary to keep the unionized employee groups at each airline separate and apply the terms of the existing collective bargaining agreements unless other terms have been negotiated.

Under the RLA, the National Mediation Board, which we refer to as the NMB, has exclusive authority to resolve representation disputes arising out of airline mergers.

The disputes that the NMB has authority to resolve include (i) whether the proposed acquisition of Sun Country has created a “single carrier” for representation purposes;

(ii) designation of the appropriate “craft or class”—the RLA term for “bargaining unit”—for bargaining on a system wide basis, an issue which typically arises from minor inconsistencies over which positions are included within a particular craft or class at the two companies;

and (iii) designation of the representative of each craft or class.

Under the McCaskill-Bond Act, seniority integration must be accomplished in a “fair and equitable” manner consistent with the process set forth in the Allegheny-Mohawk Labor Protective Provisions, which we refer to as the LPPs.

Such process consists first of direct negotiations between the companies and the incumbent unions and second, if integration cannot be achieved through agreement, submitting the seniority integration to binding arbitration by a neutral arbitrator.

Employee dissatisfaction with the results of the seniority integration can lead to litigation, which in some cases can delay implementation.

Where employees within a craft or class are represented by a union at one airline but not represented at the other, it is possible that the existing union, or another labor organization, may seek to organize the non-represented group or to represent the combined group.

This too presents the potential for increased labor costs and labor disputes.

In order to fully integrate the pre-merger represented employee groups, 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 NMB.

Prior to the closing, there is a risk of litigation or arbitration by unions or individual employees that could delay or halt the proposed acquisition of Sun Country or result in monetary damages on the basis that the proposed acquisition of Sun Country either violates a provision of an existing collective bargaining agreement or an obligation under the RLA or other applicable law.

The unions or individual employees might also pursue judicial or arbitral claims arising out of changes implemented as a result of the proposed acquisition of Sun Country.

There is also a possibility that employees or unions could engage in job actions such as slow-downs, work-to-rule campaigns, sick-outs or other actions designed to disrupt our or Sun Country’s normal operations, whether in opposition to the proposed acquisition of Sun Country or in an attempt to pressure the companies in collective bargaining negotiations.

Although the RLA makes such actions unlawful until the parties have been lawfully released to self-help and we can seek injunctive relief against premature self-help, such actions can cause significant harm even if ultimately enjoined.

The market price of our common stock may decline as a result of the proposed Sun Country acquisition.

The market price of our common stock may decline as a result of the proposed Sun Country acquisition, and holders of our common stock could lose value in their investment in our common stock, if, among other things, we are unable to achieve the expected growth in earnings, or if the anticipated benefits, including synergies, cost savings, and operational efficiencies, from the proposed acquisition of Sun Country are not realized, or if the transaction costs related to the proposed acquisition of Sun Country are greater than expected.

The market price also may decline if we do not achieve the perceived benefits of the proposed acquisition of Sun Country as rapidly or to the extent anticipated by financial or industry analysts or if the effect of the proposed Sun Country acquisition on our financial position, results of operations, or cash flows is not consistent with the expectations of financial or industry analysts.

The issuance of shares of our common stock would be dilutive and could have the effect of depressing the market price for our common stock.

In addition, many Sun Country stockholders may decide not to hold the shares of our common stock they receive as a result of the proposed Sun Country acquisition.

Other Sun Country stockholders, such as funds with limitations on their permitted holdings of stock in individual issuers, may be required to sell the shares of our common stock they receive.

Any such sales of our common stock could have the effect of depressing the market price for our common stock.

Moreover, general fluctuations in stock markets could have a material adverse effect on the market for, or liquidity of, our common stock, regardless of our actual operating performance.

We expect to incur substantial expenses related to the completion of the proposed Sun Country acquisition and the integration of Sun Country.

We expect to incur substantial expenses in connection with the completion of the proposed Sun Country acquisition.

There are a large number of processes, policies, procedures, operations, technologies, and systems that must be integrated, including purchasing, accounting and finance, sales, payroll, pricing, revenue management, marketing, and benefits.

In addition, our business will have a significant presence in Minneapolis, Minnesota where we are not currently located.

The substantial majority of these costs will be non-recurring expenses related to the proposed acquisition of Sun Country (including any financing of the proposed acquisition of Sun Country), facilities, and systems consolidation costs.

We may incur additional costs to retain employees and/or maintain employee morale and to attract, motivate, or retain management personnel and other key employees.

We will also incur transaction fees and costs related to formulating integration plans for our business, and the execution of these plans may lead to additional unanticipated costs.

These incremental transaction and merger-related costs may exceed the savings we expect to achieve from the elimination of duplicative costs and the realization of other efficiencies related to the integration of the businesses, particularly in the near term, and in the event there are material unanticipated costs.

Our indebtedness may limit our flexibility and increase borrowing costs.

As of December 31, 2025, we had approximately $1.8 billion of outstanding indebtedness, including finance leases, and Sun Country had approximately $574.4 million of outstanding indebtedness, including finance leases.

Our consolidated indebtedness may have the effect of, among other things, increasing borrowing costs.

In addition, the amount of cash required to service the indebtedness levels will be greater than the amount of cash flows required to service Sun Country’s or our indebtedness individually prior to completion of the proposed Sun Country acquisition.

The level of indebtedness could also impact our ability to make dividend payments, share repurchases, and other activities and may create competitive disadvantages relative to other companies with lower debt levels.

We may be required to raise additional financing for working capital, capital expenditures, acquisitions, or other general corporate purposes.

Our ability to arrange additional financing or refinancing will depend on, among other factors, our financial condition and performance, as well as prevailing market conditions and other factors beyond our control.

There can be no assurance that we will be able to obtain additional financing or arrange refinancing on terms acceptable to us or at all, and any such failure could materially adversely affect our operations and financial condition.

Risks Related to Allegiant

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We are relying on Boeing to deliver our new 737 MAX aircraft to support airline growth and to replace aircraft we have designated for retirement or whose leases are expiring.

The FAA is working with Boeing to address quality control procedures at Boeing and its suppliers in the aftermath of the 2024 emergency landing of an Alaska Airlines Boeing 737 MAX 9 aircraft and subsequent temporary grounding of all 737 MAX 9 aircraft pending inspections of the door plug which was the source of the issue.

As part of the focused attention on Boeing’s production, inspection and quality assurance processes, the FAA has indicated that aircraft production rates will be capped until they are fully satisfied with Boeing's quality practices.

Although deliveries under the contract have begun and we have accepted delivery of seven aircraft as of February 21, 2025, these factors could delay future deliveries to us.

As a result, our expectation of the number of deliveries in each year differs from the contractual provisions.

There continues to be regulatory focus on increasing quality control standards at Boeing and its suppliers with the aim of stabilizing aircraft production.

Although deliveries under the contract have begun and we have accepted delivery of 16 aircraft as of February 13, 2026, these factors could delay future deliveries to us.

Delays in delivery will likely delay our ability to capitalize on the expected profitability from the addition of these aircraft to our fleet, increase maintenance costs for aircraft that would have otherwise been retired and increase our interest costs for funds borrowed for pre-delivery deposits.

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Any subsequent FAA action or any future adverse 737 MAX events or safety concerns might disproportionately impact us as we rely on these new aircraft to augment our fleet as well as to replace aircraft to be retired.

As more than 1,100 737 MAX aircraft remain in service throughout the world and FAA oversight and Boeing process improvements should further assure the public regarding safety issues, we continue to believe that the addition of the 737 MAX aircraft will be safe, reliable and accretive to our profitability.

We continue to believe that the addition of the 737 MAX aircraft will be safe, reliable and accretive to our profitability.

However, negative publicity from these or future events could reflect poorly on our planned 737 service and our Company.

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Due to the effect of these events on the price and availability of aircraft fuel, our ability to control this cost is limited, and the price and future availability of fuel cannot be predicted with any degree of certainty.

Due to the high percentage of our operating costs represented by fuel, a relatively small increase in the price of fuel could have a significantly negative impact on our operating costs.

Due to the high percentage of our operating costs represented by fuel, a relatively small increase in the price of fuel could have a

significantly negative impact on our operating costs.

A fuel supply shortage or higher fuel prices could result in reduction of our service during the period affected.

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Pilot pay scales have increased significantly in the industry and we expect our next contract with this work group to reflect industry competitive rates which will be significantly higher than our current pilot rates.

In the meantime and in recognition of these higher prevailing pilot pay rates, in May 2023, we began to accrue a retention bonus which will become payable to our pilots who remain with us until a new collective bargaining agreement is ratified .

An agreement with the Transport Workers Union for the flight attendant group was approved in 2017 and became amendable in 2022.

A new agreement with this union was ratified in April 2024 under which the flight attendants received a ratification bonus and will receive pay increases during the term of the agreement.

This contract will become amendable in 2029.

We also have agreements with the International Brotherhood of Teamsters for our flight dispatchers and for our maintenance technicians.

In 2023, we entered into agreements with both groups to increase pay rates and extend all other terms of these agreements by two years, extending the CBA amendable dates until 2026 for our flight dispatchers and until 2028 for maintenance technicians.

In the meantime and in recognition of these higher prevailing pilot pay rates, in May 2023, we began to accrue a retention bonus which will become payable to our pilots who remain employed with us when a new collective bargaining agreement is ratified .

We also have collective bargaining agreements with the Transport Workers Union for our flight attendants and with the International Brotherhood of Teamsters for our flight dispatchers and for our maintenance technicians.

These agreements become amendable in 2029 (flight attendants), 2026 (flight dispatchers) and 2028 (maintenance technicians).

The CBA covering our flight dispatchers becomes amendable in May 2026 and we have commenced those negotiations.

Future union contracts with these, or other, work groups could put additional pressure on our labor costs.

If we are unable to reach agreement on the terms of collective bargaining agreements in the future, or if we experience wide-spread employee dissatisfaction, higher attrition in these work groups, difficulty in hiring sufficient personnel or work slow downs or stoppages could have an adverse effect on our operations and future results.

If we are unable to reach agreement on the terms of collective bargaining agreements in the future, or if we experience wide-spread employee dissatisfaction, higher attrition in these work groups, difficulty in hiring sufficient personnel or, subject to the labor group's compliance with law, work slowdowns or stoppages could have an adverse effect on our operations and future results.

The inability to attract and retain qualified flight crew and other airline personnel could limit our growth plans and adversely affect our business and results of operations.

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Due to COVID related early retirements, mandatory age-related retirements, and pent-up consumer demand for travel, the industry experienced a period of unprecedented growth and hiring from virtually every carrier, which also drove significant increases in compensation through collective bargaining.

This industry-wide growth slowed significantly in the second half of 2024, driven by aircraft availability (e.g., production delays), failed mergers, and the inability of certain carriers to execute on their plans to grow to profitability.

While at the current time, we are appropriately staffed and our attrition rate is stable, another unprecedented period of industry-wide growth and hiring could negatively impact our ability to attract new pilots or retain our current pilots.

The lack of a new collective bargaining agreement with our pilots (under negotiation since 2021) could exacerbate the challenge to maintain sufficient numbers of pilots to fly our published schedule and to grow our network.

Beyond pilot staffing, the entire airline industry, including our third party vendors, experienced the same challenges during that period of unprecedented growth, and may continue to experience challenges in hiring and retaining other labor positions, such as aircraft maintenance technicians, ground handling and customer service agents, and flight attendants should that trend resurface.

We and our third party vendors compete with the entire airline industry for aircraft maintenance technicians, ground handling and customer service agents, and flight attendants.

Our and our vendors' inability to attract and retain personnel for these positions could negatively impact our results of operations and growth plans.

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Additionally, our online operations rely on the secure transmission of customer data.

We use third party systems, integrated software, and advanced cyber security tools in order to protect the customer data we obtain through the course of our business.

We use third party systems, integrated software, and advanced cybersecurity tools in order to protect the customer data we obtain through the course of our business.

Although we use a variety of security techniques to protect customer information, a compromise of our physical or network security systems through a cyberattack would create the risk that customers’ personal information might be obtained by unauthorized persons.

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Consequences could include litigation, other legal actions against us, and/or the imposition of penalties, fines, fees or liabilities.

We currently are self-insured against these risks.

We maintain a combination of risk mitigation strategies, including self-insurance for certain cyber-related risks, which may not be sufficient to cover all potential losses.

Moreover, a security compromise or ransomware event could disrupt flight operations, e-commerce, in part or whole, and/or require us to devote significant management resources to address the problems created by the issue and to expend significant additional resources to further upgrade the security measures we employ to guard personal and confidential information against cyberattacks and other attempts to access or otherwise compromise such information and could result in a disruption of our operations, particularly our digital operations.

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Our website and reservation system must be able to accommodate a high volume of traffic and deliver necessary functionality to support our operations.

Our automated systems cannot be completely protected against events that are beyond our control, such as natural disasters, telecommunications failures, malware, ransom ware, security breaches or cyber-security attacks.

Although we have implemented security measures and have information systems disaster recovery plans in place, we cannot assure investors that these measures are adequate to prevent disruptions or losses.

Although we have implemented security measures and have information systems disaster recovery plans in place, we cannot assure

investors that these measures are adequate to prevent disruptions or losses.

Substantial or repeated website, reservations system, or telecommunication system failures could decrease the attractiveness of our services.

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economic conditions have historically driven changes in travel patterns and have resulted in reduced discretionary spending for leisure travel.

Unfavorable economic conditions could impact demand for airline travel in our under-served cities to our leisure destinations.

Unfavorable economic conditions could impact demand for airline travel in our underserved cities to our leisure destinations.

During difficult economic times, we may be unable to raise prices in response to fuel cost increases, labor, or other operating costs, which could adversely affect our results of operations and financial condition.

The successful operation of our Sunseeker Resort and ability to enter into a suitable arrangement with a capital partner are dependent on commercial and economic factors, some of which are beyond our control.

We opened Sunseeker Resort in Southwest Florida in December 2023 and incurred significant operating losses in 2024.

Although we are seeing improvement in recent months, we expect losses to continue in 2025.

The successful operation of the project will be subject to the usual risks of any new business, including risks of gaining sufficient interest from vacationers to stay in our hotel and suites, the desirability of the project’s location, competition, retention of the management team, unfavorable weather, the ability to attract, train and retain sufficient numbers of suitable line employees and the ability to profitably operate the hotel and related offerings at the rates offered.

We have announced that we are in the process of seeking a capital partner to purchase the Resort or an interest in the Resort.

We cannot assure investors whether or when we will be able to consummate such a transaction on acceptable terms or at all.

The success of our proposed alliance with VivaAerobus will depend on our ability to obtain necessary government approvals and other factors.

We will be able to implement the joint alliance with VivaAerobus as planned only if the DOT grants us antitrust immunity, and assuming the continued approval from Mexican authorities.

Although we believe we should qualify for these approvals, there can be no assurance when or if we will be able to obtain them.

DOT approval has now been held up indefinitely pending the outcome of diplomatic engagement on broader treaty issues.

We cannot assure investors that the change in Presidential administration will bring a resolution to this matter.

Many of the U.S.

airports from which we hope to offer this service do not currently qualify to offer international service.

The initiation of this service from these airports will depend on the airport satisfying the requirements for international service, for which we can provide no assurance.

Prior to offering international service on our website, we will need to implement the necessary systems to accommodate international travel and to meet the various requirements imposed by the U.S.

Although we have implemented many of these systems, there is no assurance that these requirements will be met in time for the expected launch of these services.

For Mexican routes to be operated by VivaAerobus, we will be relying on them to provide our customers with the quality flight experience our customers expect when traveling on our airline.

Otherwise, the success of the joint alliance and our reputation may suffer.

Increases in taxes could impact demand for our services.

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Our debt and finance lease obligations as of December 31, 2025 totaled $1.80 billion net of related costs.

In addition, we are party to a purchase agreement with The Boeing Company to purchase 50 Boeing 737 MAX aircraft, of which 46 are expected to deliver in 2025, 2026 and 2027.

This indebtedness, the Boeing purchase agreement and other commitments with debt service and fixed charge obligations could:

In addition, we are party to a purchase agreement with The Boeing Company to purchase 50 Boeing 737 MAX aircraft, of which 16 have been delivered as of December 31, 2025 and the remaining 34 are expected to be delivered through 2028.

Upon the closing of the proposed acquisition of Sun Country, we will be required to pay more than $200 million in cash as part of the purchase price and certain other commitments of Sun Country.

In addition, we will be required to pay a pilot retention bonus upon ratification of a collective bargaining agreement with our pilot group, for which we have accrued $235.9 million as of December 31, 2025.

This indebtedness, the Boeing purchase agreement, the proposed acquisition of Sun Country and related expenditures, the payment of the accrued pilot retention bonus, and other commitments with debt service and fixed charge obligations could:

• make it more difficult for us to satisfy our obligations with respect to our indebtedness, and any failure to comply with the obligations of any of our debt instruments, including financial and other restrictive covenants, could result in an event of default under agreements governing our indebtedness;

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In addition, one of our revolving credit facilities contains financial covenants, including requiring us, at the end of each calendar quarter in which the facility is drawn to a certain extent, to maintain a maximum total leverage ratio and to maintain a minimum aggregate amount of liquidity of $300.0 million.

We have pledged our assets to secure the Senior Secured Notes and revolving credit facility with the exceptions of aircraft and aircraft engines, Sunseeker Resort and certain other exceptions.

We have pledged our assets to secure the Senior Secured Notes and revolving credit facility with the exception of aircraft, aircraft engines, and certain other exceptions.

This will limit our ability to obtain debt secured by these pledged assets while these loans are outstanding.

These loan agreements contain various events of default (including failure to comply with the covenants under the loan agreements), and upon an event of default the lenders may, subject to various cure rights, require the immediate payment of all amounts outstanding under the these loans.

These loan agreements contain various events of default (including failure to comply with the covenants under these loan agreements), and upon an event of default the lenders may, subject to various cure rights, require the immediate payment of all amounts outstanding under the these loans.

As a result of these restrictive covenants, we may be limited in how we conduct business, and we may be unable to raise additional debt or equity financing to operate during difficult times or to take advantage of new business opportunities.

Any inability to obtain financing for aircraft under contract could harm our fleet growth plan.

We typically finance our aircraft through debt financing.

As of February 1, 2025, we have committed financing for our next four Boeing 737 MAX deliveries and we have secured revolving lines of credit for up to $275.0 million to offset the risk that financing may not be available on acceptable terms when needed.

While we believe debt financing will be available for the aircraft we will acquire, we cannot provide assurance that we will be able to secure such financing on terms attractive to us or at all.

When necessary, we finance our aircraft through debt financing.

As of February 1, 2026, we have secured revolving lines of credit for up to $250.0 million to offset the risk that financing may not be available on acceptable terms when needed.

While we believe debt financing will be available for the aircraft we intend to acquire, we cannot provide assurance that we will be able to secure such financing on terms attractive to us or at all.

To the extent we cannot secure such financing on acceptable terms or at all, we may be required to modify our aircraft acquisition plans, incur higher than anticipated financing costs, or use more of our cash balances for aircraft acquisitions than we currently expect.

Our maintenance costs may increase as our fleet ages.

While we have introduced new Boeing 737 MAX aircraft to our fleet in late 2024, the average age of our Airbus aircraft as of February 1, 2025, is 16.0 years, which is older than the fleets of many other carriers.

In general, the cost to maintain aircraft increases as they age, and exceeds the cost to maintain newer aircraft.

FAA regulations, including aging aircraft airworthiness directives, require additional and enhanced maintenance inspections for older aircraft.

These regulations can directly impact the frequency of inspections as an aircraft ages, and vary by aircraft or engine type, depending on the unique characteristics of each aircraft and/or engine.

In addition, we may be required to comply with any future law changes, regulations, or airworthiness directives.

We cannot assure investors our maintenance costs will not exceed our expectations.

Although we introduced new Boeing 737 MAX aircraft to our fleet in late 2024, the average age of the Airbus aircraft in our fleet as of February 1, 2026 was 17.2 years, which is older than the fleets of many other carriers.

In general, maintenance costs increase as aircraft age and may be higher than the costs associated with newer aircraft.

Older aircraft typically require more frequent and more extensive inspections, repairs and component overhauls, and may experience higher levels of unscheduled maintenance.

As our aircraft age, additional requirements may also arise to maintain airworthiness and support safe operations.

FAA regulations, including aging aircraft airworthiness directives, can require enhanced inspection programs and other maintenance actions that may increase both the scope and frequency of work performed, and these requirements may vary by aircraft and engine type.

In addition, we may need to incorporate modifications, service bulletins, software updates or other enhancements recommended by original equipment manufacturers (OEMs) or identified through operational experience, including issues discovered during routine inspections or in day-to-day operations.

These actions can increase maintenance expense, extend out-of-service time and reduce aircraft utilization.

Our fleet configuration may further increase maintenance complexity and cost.

Operating and maintaining multiple aircraft types and configurations can increase the complexity of maintenance planning and scheduling, engineering support, inventory management, and technician training, and may require specialized tooling and capabilities.

We may also be required to comply with future changes in laws, regulations or airworthiness directives.

We cannot assure investors that our maintenance costs will not increase or exceed our expectations.

As our aircraft age and maintenance events become more extensive, we expect to rely more heavily on third-party MRO (maintenance, repair and overhaul) facilities to perform certain work.

The MRO market has experienced capacity and resource constraints, and the providers we use may not have sufficient capacity to accommodate our maintenance needs on the timelines we require.

If third-party providers experience capacity limitations, labor or parts shortages, or other performance issues, our maintenance events may become more costly, maintenance may be delayed, and fewer aircraft may be available for scheduled service, which could disrupt our operations and adversely affect our business, results of operations and financial condition.

We rely on third parties to provide us with aircraft, facilities and services that are integral to our business.

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Our planned induction into service of aircraft under contract for delivery in the future could be adversely affected if Boeing or other third parties fail to perform as contractually obligated.

See also Risk Factors - Regulatory review of Boeing’s operations could delay its production schedule, which could impact us as any delivery delays may result in lower profitability than expected and delayed growth as well as bad publicity and other consequences.

What changed 10-K

Item 1A. Risk Factors