8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC20549

FORM 8-K

CURRENT REPORT PURSUANT

TO SECTION 13 OR 15(D) OF THE

SECURITIES EXCHANGE ACT OF 1934

April 23, 2009

(Date of earliest event reported)

ALASKA AIR GROUP, INC.

(Exact Name of Registrant as Specified in Its Charter)

Delaware

(State or Other Jurisdictionof Incorporation)

1-8957	91-1292054
(Commission File Number)	(IRS Employer Identification No.)

19300 International Boulevard, Seattle, Washington	98188
(Address of Principal Executive Offices)	(Zip Code)

(206) 392-5040

(Registrant’s Telephone Number, Including Area Code)

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o                 Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o                 Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o                 Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o                 Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 2.02  Results of Operations And Financial Condition

Alaska Air Group, Inc. today issued a press release reporting financial results for the first quarter of 2009. The press release is filed as Exhibit 99.1.

ITEM 7.01.Regulation FD Disclosure

Pursuant to 17 CFR Part 243 (“Regulation FD”), the Company is submitting information relating to its financial and operational outlook as attached in Exhibit 99.2.

In accordance with General Instruction B.2 of Form 8-K, the information under this item and Exhibit 99.2 shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing.  This report will not be deemed an admission as to the materiality of any information required to be disclosed solely to satisfy the requirements of Regulation FD.

ITEM 9.01  Financial Statements and Other Exhibits

Exhibit 99.1                         Press Release dated April 23, 2009

Exhibit 99.2                         Investor Update April 23, 2009

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.

ALASKA AIR GROUP, INC.                                                                           

Registrant

Date: April 23, 2009

/s/ Brandon S. Pedersen                                                                                                       

Brandon S. Pedersen

Vice President/Finance and Controller

/s/ Glenn S. Johnson                                                                                                                  

Glenn S. Johnson

Executive Vice President/Finance and Chief Financial Officer

EX-99.1

Exhibit 99.1

Media contacts:			Investor/analyst contact:
Bobbie Egan	-or-	Dan Russo	Shannon Alberts
Alaska Airlines		Horizon Air	Alaska Air Group
(206) 392-5101		(206) 392-0218	(206) 392-5218

FOR IMMEDIATE RELEASE                                                                                              ;     April 23, 2009

ALASKA AIR GROUP REPORTS FIRST QUARTER RESULTS

Alaska Airlines, Horizon Air announce new service charge for first checked bag with guarantee

First Quarter Financial Highlights:

· Net loss, excluding special items, of $25.4 million, or $0.70 per share, compared to a net loss of $37.7 million, or $1.02 per share, in the first quarter of 2008. This compares to a First Call mean estimate of a $0.49 per-share loss.

· A net loss under Generally Accepted Accounting Principles (GAAP) of $19.2 million, or $0.53 per share, compared to a net loss of $37.3 million, or $1.01 per share, in 2008.

· $1.04 billion in unrestricted cash and marketable securities as of March 31, 2009.

 SEATTLE – Alaska Air Group, Inc. (NYSE: ALK) today reported a first quarter 2009 net loss of $19.2 million compared to a net loss of $37.3 million in the first quarter of 2008. Excluding mark-to-market fuel hedge gains of $10 million ($6.2 million after tax, or $0.17 per share), the company reported a net loss of $25.4 million, or $0.70 per share, compared to a net loss of $37.7 million, or $1.02 per share, in first quarter 2008.

 The following table summarizes the company’s net loss and amounts per share during the first quarter of 2009 and 2008 excluding adjustments to reflect the timing of gain or loss recognition resulting from mark-to-market fuel-hedge accounting as reported in accordance with GAAP (in millions except per-share amounts):

	Three Months Ended March 31,
	2009						2008
	Dollars			Diluted EPS			Dollars			Diluted EPS
Net loss and diluted EPS, excluding mark-to-market hedging adjustments	$	(25.4	)	$	(0.70	)	$	(37.7	)	$	(1.02	)
Adjustments to reflect the timing of gain or loss recognition resulting from  mark-to-market fuel-hedge accounting, net of tax		6.2			0.17			0.4			0.01
Reported GAAP amounts	$	(19.2	)	$	(0.53	)	$	(37.3	)	$	(1.01	)

“While our first quarter financial results improved over last year due to a significant decline in fuel cost, we’re disappointed to report a loss for the quarter. To minimize the impact of the steep decline in air travel demand, we have reduced our schedules, reallocated capacity and taken fare actions,” said Bill Ayer, Alaska Air Group's chairman and chief executive officer. “We are responding to the continued economic uncertainty by maintaining a healthy level of liquidity, retiming some capital expenditures, controlling costs, reducing capacity and actively pursuing revenue opportunities.”

 Alaska Airlines' mainline passenger traffic in the first quarter declined 7.7 percent on a 9.3 percent capacity decrease compared to the first quarter of 2008. Load factor increased 1.3 percentage points to 75.7 percent. Alaska’s mainline passenger revenue per available seat mile (ASM) decreased 2.0 percent and its operating cost per ASM, excluding fuel and the mark-to-market fuel hedge gains, increased 11.3 percent. Alaska’s total pretax loss for the quarter was $18.3 million, compared to a pretax loss of $39.8 million in the first quarter of 2008. Excluding mark-to-market fuel hedge gains, Alaska’s pretax loss was $26.6 million for the quarter compared to a pretax loss of $39.6 million in the same period of 2008.

 Horizon Air’s passenger traffic in the first quarter declined 20.4 percent on a 16.5 percent capacity decrease compared to the first quarter of 2008. Load factor declined by 3.3 percentage points to 66.6 percent. Horizon’s passenger revenue per ASM decreased 0.7 percent and its operating cost per ASM, excluding fuel and mark-to-market fuel hedge gains, increased 5.8 percent. Horizon’s total pretax loss for the quarter was $10.5 million, compared to a pretax loss of $17.6 million in the first quarter of 2008. Excluding mark-to-market fuel hedge gains, Horizon’s pretax loss was $12.2 million for the quarter compared to a pretax loss of $18.5 million in the first quarter of 2008.

3

A summary of financial and statistical data for Alaska Airlines and Horizon Air, as well as a reconciliation of the reported non-GAAP financial measures, can be found in the accompanying tables. A glossary of financial terms can be found at the end of this release.

First checked bag service charge and guarantee

 Alaska Airlines and Horizon Air also announced they will join nearly all major domestic carriers in charging for a first checked bag. The $15 service charge — effective July 7 for tickets purchased beginning May 1 — includes a guarantee to compensate passengers if their luggage is not  at baggage claim 25 minutes after their flight parks at the gate.

 “We’re adapting to a marketplace in which customers increasingly want the lowest fare possible, with the option to pay extra to use other services,” Ayer said. “We want to continue matching the lowest fare in the market without being at a revenue disadvantage to our competitors. But we’re also going to provide customers more value for what we’re charging through the bag service guarantee, which no other airline offers.”

 Customers whose luggage is not at baggage claim within 25 minutes after their flight parks at the gate will receive 2,500 Alaska Airlines Mileage Plan miles or an e-certificate worth $25 off a future flight.

 First class, MVP and MVP Gold Mileage Plan members, unaccompanied minors, military personnel on active duty and passengers traveling to or from Mexico City and Guadalajara, Mexico, will not be charged for a first checked bag. Customers traveling solely within the state of Alaska also will continue to be allowed three free checked bags.

 In conjunction with the change, the service charge for a third bag will drop from $100 to $50, so passengers who check three bags will pay a total of $90 instead of $125. The second checked bag charge will remain at $25. Passengers checking two bags will pay a total of $40. The fees for overweight and oversized bags, currently $50 or $75 depending on weight and size, also will not change.

4

 A conference call regarding the first quarter 2009 results will be simulcast via the Internet at 8:30 a.m. Pacific Time on April 23, 2009. It can be accessed through the company’s Web site at alaskaair.com/investors. For those unable to listen to the live broadcast, a replay will be available after the conclusion of the call at alaskaair.com/investors.

 References in this news release to “Air Group,” “company,” “we,” “us” and “our” refer to Alaska Air Group, Inc. and its subsidiaries, unless otherwise specified. Alaska Airlines, Inc. and Horizon Air Industries, Inc. are referred to as “Alaska” and “Horizon,” respectively, and together as our “airlines.”

 This news release contains forward-looking statements subject to the safe harbor protection provided by Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. These statements relate to future events and involve known and unknown risks and uncertainties that may cause actual outcomes to be materially different from those indicated by any forward-looking statements. For a comprehensive discussion of potential risk factors, see Item 1A of the company’s Annual Report on Form 10-K for the year ended Dec. 31, 2008. Some of these risks include current economic conditions, increases in operating costs including fuel, competition, labor costs and relations, our significant indebtedness, inability to meet cost reduction goals, terrorist attacks, seasonal fluctuations in our financial results, an aircraft accident, laws and regulations, and government fees and taxes.  All of the forward-looking statements are qualified in their entirety by reference to the risk factors discussed therein. These risk factors may not be exhaustive. We operate in a continually changing business environment, and new risk factors emerge from time to time. Management cannot predict such new risk factors, nor can it assess the impact, if any, of such new risk factors on our business or events described in any forward-looking statements. We expressly disclaim any obligation to publicly update or revise any forward-looking statements after the date of this report to conform them to actual results. Over time, our actual results, performance or achievements will likely differ from the anticipated results, performance or achievements that are expressed or implied by our forward-looking statements, and such differences might be significant and materially adverse.

# # #

 Alaska Airlines and Horizon Air, subsidiaries of Alaska Air Group (NYSE: ALK), together serve more than 90 cities through an expansive network in Alaska, the Lower 48, Hawaii, Canada and Mexico. Alaska Airlines ranked “Highest in Customer Satisfaction among Traditional Network Carriers (tie)” in the J.D. Power and Associates 2008 North America Airline Satisfaction StudySM. For reservations, visit alaskaair.com. For more news and information, visit the Alaska Airlines/Horizon Air Newsroom at alaskaair.com/newsroom.

5

ALASKA AIR GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
(in millions, except per share amounts)
	Three Months Ended March 31,
	2009			2008
Operating Revenues:
Passenger	$	684.1		$	775.7
Freight and mail		19.4			22.2
Other - net		38.9			41.6
Total Operating Revenues		742.4			839.5
Operating Expenses:
Wages and benefits		246.0			244.7
Variable incentive pay		9.3			3.6
Aircraft fuel, including hedging gains and losses		157.7			282.0
Aircraft maintenance		59.7			58.0
Aircraft rent		38.0			43.6
Landing fees and other rentals		54.2			56.0
Contracted services		38.4			44.5
Selling expenses		25.0			34.5
Depreciation and amortization		52.8			49.3
Food and beverage service		11.6			12.3
Other		56.8			57.2
Fleet transition costs - Q200		4.8			5.8
Total Operating Expenses		754.3			891.5
Operating Loss		(11.9	)		(52.0	)
Nonoperating Income (Expense):
Interest income		8.3			10.3
Interest expense		(26.8	)		(23.4	)
Interest capitalized		2.8			6.5
Other - net		(2.0	)		0.2
		(17.7	)		(6.4	)
Loss before income tax		(29.6	)		(58.4	)
Income tax benefit		(10.4	)		(21.1	)
Net Loss	$	(19.2	)	$	(37.3	)
Basic and Diluted Loss Per Share:	$	(0.53	)	$	(1.01	)
Shares Used for Computation:
Basic and Diluted		36.326			37.024

6

ALASKA AIR GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
	March 31,		December 31,
(in millions)	2009		2008
Cash and marketable securities	$	1,043	$	1,077
Total current assets		1,466		1,509
Property and equipment-net		3,127		3,168
Other assets		186		159
Total assets	$	4,779	$	4,836
Current liabilities	$	1,286	$	1,361
Long-term debt		1,619		1,596
Other liabilities and credits		1,217		1,217
Shareholders' equity		657		662
Total liabilities and shareholders' equity	$	4,779	$	4,836
Debt to Capitalization, adjusted for operating leases	80%:20%		81%:19%
Number of common shares outstanding		36.386		36.275

7

Alaska Airlines Financial and Statistical Data
	Three Months Ended March 31,
Financial Data (in millions):	2009			2008 (c)			% Change
Operating Revenues:
Passenger	$	539.8		$	607.3			(11.1	)
Freight and mail		18.3			21.3			(14.1	)
Other - net		33.2			34.4			(3.5	)
Total mainline operating revenues		591.3			663.0			(10.8	)
Passenger - purchased capacity		61.8			70.4			(12.2	)
Total Operating Revenues		653.1			733.4			(10.9	)
Operating Expenses:
Wages and benefits		197.4			192.1			2.8
Variable incentive pay		7.1			2.6			173.1
Aircraft fuel, including hedging gains and losses		131.9			233.7			(43.6	)
Aircraft maintenance		46.3			42.1			10.0
Aircraft rent		26.5			28.2			(6.0	)
Landing fees and other rentals		40.8			41.9			(2.6	)
Contracted services		30.5			34.7			(12.1	)
Selling expenses		19.1			26.5			(27.9	)
Depreciation and amortization		43.3			38.8			11.6
Food and beverage service		11.0			11.7			(6.0	)
Other		42.8			41.8			2.4
Total mainline operating expenses		596.7			694.1			(14.0	)
Purchased capacity costs		62.7			76.7			(18.3	)
Total Operating Expenses		659.4			770.8			(14.5	)
Operating Loss		(6.3	)		(37.4	)
Interest income		10.1			13.1
Interest expense		(23.0	)		(21.8	)
Interest capitalized		2.5			5.9
Other - net		(1.6	)		0.4
		(12.0	)		(2.4	)
Loss Before Income Tax	$	(18.3	)	$	(39.8	)
Mainline Operating Statistics:
Revenue passengers (000)		3,573			4,080			(12.4	)
RPMs (000,000) "traffic"		4,179			4,526			(7.7	)
ASMs (000,000) "capacity"		5,520			6,084			(9.3	)
Passenger load factor		75.7	%		74.4	%	1.3 pts
Yield per passenger mile		12.92	¢		13.42	¢		(3.7	)
Operating revenue per ASM		10.71	¢		10.90	¢		(1.7	)
Passenger revenue per ASM		9.78	¢		9.98	¢		(2.0	)
Operating expense per ASM		10.81	¢		11.41	¢		(5.3	)
Operating expense per ASM excluding fuel (a)		8.42	¢		7.57	¢		11.3
GAAP fuel cost per gallon	$	1.80		$	2.72			(33.9	)
Economic fuel cost per gallon (b)	$	1.91		$	2.72			(29.8	)
Fuel gallons (000,000)		73.3			85.9			(14.7	)
Average number of full-time equivalent employees		9,021			9,881			(8.7	)
Aircraft utilization (blk hrs/day)		9.9			10.8			(8.3	)
Average aircraft stage length (miles)		1,016			969			4.9
Operating fleet at period-end		112			115			(3) a/c
Purchased Capacity Operating Statistics:
RPMs (000,000)		215			267			(19.5	)
ASMs (000,000)		316			363			(12.9	)
Passenger load factor		68.0	%		73.6	%	(5.6) pts
Yield per passenger mile		28.74	¢		26.37	¢		9.0
Operating revenue per ASM		19.56	¢		19.39	¢		0.8
Operating expenses per ASM		19.84	¢		21.13	¢		(6.1	)

(a) See page 9 for a reconciliation of these non-GAAP measures and a discussion about why these measures may be important to investors.

(b) See page 11 for a reconciliation of economic fuel cost.

(c) The first quarter of 2008 has been adjusted to reflect the correction of an error in the calculation of stock-based compensation.  The error resulted in an understatement of wages and benefits of $1.9 million in the first three months of 2008.  In accordance with SAB 108, the error has been corrected in this statement.

8

Horizon Air Financial and Statistical Data
	Three Months Ended March 31,
Financial Data (in millions):	2009			2008 (d)			% Change
Operating Revenues:
Passenger - brand flying	$	86.6		$	102.7			(15.7	)
Passenger - capacity purchase arrangements		57.8			71.4			(19.0	)
Total passenger revenue		144.4			174.1			(17.1	)
Freight and mail		0.7			0.6			16.7
Other - net		1.7			2.5			(32.0	)
Total Operating Revenues		146.8			177.2			(17.2	)
Operating Expenses:
Wages and benefits		46.4			50.7			(8.5	)
Variable incentive pay		2.2			1.0			120.0
Aircraft fuel, including hedging gains and losses		25.8			48.3			(46.6	)
Aircraft maintenance		13.4			15.9			(15.7	)
Aircraft rent		11.5			15.4			(25.3	)
Landing fees and other rentals		13.7			14.4			(4.9	)
Contracted services		7.5			8.0			(6.3	)
Selling expenses		5.9			8.0			(26.3	)
Depreciation and amortization		9.2			10.2			(9.8	)
Food and beverage service		0.6			0.6			-
Other		11.0			12.8			(14.1	)
Fleet transition costs		4.8			5.8		NM
Total Operating Expenses		152.0			191.1			(20.5	)
Operating Loss		(5.2	)		(13.9	)
Interest income		0.4			1.4
Interest expense		(5.9	)		(5.7	)
Interest capitalized		0.3			0.6
Other - net		(0.1	)		-
		(5.3	)		(3.7	)
Loss Before Income Tax	$	(10.5	)	$	(17.6	)
Combined Operating Statistics: (a)
Revenue passengers (000)		1,546			1,852			(16.5	)
RPMs (000,000) "traffic"		524			658			(20.4	)
ASMs (000,000) "capacity"		787			942			(16.5	)
Passenger load factor		66.6	%		69.9	%	(3.3)pts
Yield per passenger mile		27.56	¢		26.46	¢		4.2
Operating revenue per ASM		18.65	¢		18.81	¢		(0.8	)
Passenger revenue per ASM		18.35	¢		18.48	¢		(0.7	)
Operating expenses per ASM		19.31	¢		20.29	¢		(4.8	)
Operating expense per ASM excluding fuel (b)		16.04	¢		15.16	¢		5.8
GAAP fuel cost per gallon	$	1.78		$	2.73			(34.8	)
Economic fuel cost per gallon (c)	$	1.90		$	2.78			(31.7	)
Fuel gallons (000,000)		14.5			17.7			(18.1	)
Average number of full-time equivalent employees		3,382			3,851			(12.2	)
Aircraft utilization (blk hrs/day)		8.3			8.3			0.0
Average aircraft stage length (miles)		315			345			(8.7	)
Operating fleet at period-end		55			66			(11 a/c	)
NM = Not Meaningful
(a) Represents combined information for all Horizon flights, including those operated under a Capacity Purchase Agreement (CPA) with Alaska. See page 10 for additional line of business information.
(b) See pages 10 for a reconciliation of these non-GAAP measures and a discussion about why these measures may be important to investors.
(c) See page 11 for a reconciliation of economic fuel cost.
(d) The first quarter of 2008 has been adjusted to reflect the correction of an error in the calculation of stock-based compensation. The error resulted in an understatement of wages and benefits of $0.4 million in the first three months of 2008. In accordance with SAB 108, the error has been corrected in this statement.

9

Note A: Pursuant to Regulation G, we are providing disclosure of the reconciliation of reported non-GAAP financial measures to their most directly comparable financial measures reported on a GAAP basis. We believe that consideration of this measure of unit costs excluding fuel, purchased capacity costs, and other noted items may be important to investors for the following reasons:
·By eliminating fuel expense and certain special items from our unit cost metrics, we believe that we have better visibility into the results of our non-fuel cost-reduction initiatives. Our industry is highly competitive and is characterized by high fixed costs, so even a small reduction in non-fuel operating costs can result in a significant improvement in operating results. In addition, we believe that all domestic carriers are similarly impacted by changes in jet fuel costs over the long run, so it is important for management (and thus investors) to understand the impact of (and trends in) company-specific cost drivers such as labor rates and productivity, airport costs, maintenance costs, etc., which are more controllable by management.
·Cost per ASM excluding fuel and certain special items is one of the most important measures used by managements of both Alaska and Horizon and by the Air Group Board of Directors in assessing quarterly and annual cost performance. For Alaska Airlines, these decision-makers evaluate operating results of the “mainline” operation, which includes the operation of the B737 fleet branded in Alaska Airlines livery. The revenues and expenses associated with purchased capacity are evaluated separately.
·Cost per ASM excluding fuel (and other items as specified in our plan documents) is an important metric for the employee incentive plan that covers company management and certain other employee groups.
·Cost per ASM excluding fuel and certain special items is a measure commonly used by industry analysts, and we believe it is the basis by which they compare our airlines to others in the industry. The measure is also the subject of frequent questions from investors.
·Disclosure of the individual impact of certain noted items provides investors the ability to measure and monitor performance both with and without these special items. We believe that disclosing the impact of certain items, such as fleet transition costs and restructuring charges, is important because it provides information on significant items that are not necessarily indicative of future performance. Industry analysts and investors consistently measure our performance without these items for better comparability between periods and among other airlines.
·Although we disclose our “mainline” passenger unit revenues for Alaska, we do not (nor are we able to) evaluate mainline unit revenues excluding the impact that changes in fuel costs have had on ticket prices. Fuel expense represents a large percentage of our total mainline operating expenses. Fluctuations in fuel prices often drive changes in unit revenues in the mid-to-long term. Although we believe it is useful to evaluate non-fuel unit costs for the reasons noted above, we would caution readers of these financial statements not to place undue reliance on unit costs excluding fuel as a measure or predictor of future profitability because of the significant impact of fuel costs on our business.
The following tables reconcile our non-GAAP financial measures to the most directly comparable GAAP financial measures for both Alaska Airlines, Inc. and Horizon Air Industries, Inc.:
Alaska Airlines, Inc.
(in millions, except for per ASM unit information)
	Three Months Ended March 31,
Mainline unit cost reconciliations:	2009			2008
Mainline operating expenses	$	596.7		$	694.1
Mainline ASMs		5,520			6,084
Mainline operating expenses per ASM		10.81	¢		11.41	¢
Mainline operating expenses	$	596.7		$	694.1
Less: aircraft fuel		(131.9	)		(233.7	)
Mainline operating expenses excluding fuel	$	464.8		$	460.4
Mainline ASMs		5,520			6,084
Mainline operating expenses per ASM excluding fuel		8.42	¢		7.57	¢
	Three Months Ended March 31,
Reconciliation to GAAP loss before taxes:	2009			2008
Loss before taxes, excluding mark-to-market hedging gains (losses)	$	(26.6	)	$	(39.6	)
Adjustments to reflect timing of gain or loss recognition resulting from
mark-to-market accounting on fuel hedges		8.3			(0.2	)
GAAP loss before taxes as reported	$	(18.3	)	$	(39.8	)

10

Horizon Air Industries, Inc.
(in millions, except for per ASM unit information)
		Three Months Ended March 31,
Unit cost reconciliations:		2009		2008
Operating expenses	$	152.0	$	191.1
ASMs		787		942
Operating expenses per ASM		19.31¢		20.29¢
Operating expenses	$	152.0	$	191.1
Less: aircraft fuel		(25.8)		(48.3)
Operating expenses excluding fuel	$	126.2	$	142.8
ASMs		787		942
Operating expenses per ASM excluding fuel		16.04¢		15.16¢
Unit cost reconciliations-excluding Q200 fleet transition costs:
Operating expenses	$	152.0	$	191.1
Less:  aircraft fuel		(25.8)		(48.3)
Less:  fleet transition costs - Q200		(4.8)		(5.8)
Operating expenses excluding fuel and Q200 fleet transition costs	$	121.4	$	137.0
ASMs		787		942
Operating expenses per ASM excluding fuel and Q200 fleet transition costs		15.43¢		14.54¢
Reconciliation to GAAP loss before taxes:
Loss before taxes, excluding mark-to-market fuel hedging gains	$	(12.2)	$	(18.5)
Adjustments to reflect timing of gain or loss recognition resulting from
mark-to-market accounting on fuel hedges		1.7		0.9
GAAP loss before taxes as reported	$	(10.5)	$	(17.6)

Line of Business Information:
Horizon brand flying includes those routes in the Horizon system not covered by the Alaska Capacity Purchase Agreement (CPA). Horizon bears the revenue risk in those markets and, as a result, traffic, yield and load factor impact revenue recorded by Horizon. In the CPA arrangement, Horizon is insulated from market revenue factors and is guaranteed contractual revenue amounts based on operational capacity. As a result, yield and load factor information is not presented.
	Three Months Ended March 31, 2009
	Capacity and Mix													Load Factor						Yield						RASM
	Q1 2009 Actual (000,000)		Q1 2008 Actual (000,000)		Change Y-O-Y			Current % Total			Point Change Y-O-Y			Actual			Point Change Y-O-Y			Actual			Change Y-O-Y			Actual			Change Y-O-Y
Brand Flying		488		598		(18.4	%)		62	%		(1	)		65.5	%		(1.7	)		27.09	¢		6.0	%		18.24	¢		3.0	%
Alaska CPA		299		344		(13.1	%)		38	%		1		NM			NM			NM			NM			NM			NM
System Total		787		942		(16.5	%)		100	%		-			66.6	%		(3.3	)		27.56	¢		4.2	%		18.65	¢		(0.8	%)
NM= Not Meaningful

11

Alaska Airlines Fuel Reconciliation
(in millions, except for per gallon amounts)
	Three Months Ended March 31,
	2009						2008
	Dollars			Cost/Gal			Dollars			Cost/Gal
Raw or "into-plane" fuel cost	$	118.8		$	1.62		$	257.7		$	3.00
Minus gains, or plus the losses, during the period on settled hedges		21.4			0.29			(24.2	)		(0.28	)
Economic fuel expense	$	140.2		$	1.91		$	233.5		$	2.72
Adjustments to reflect timing of gain or loss recognition resulting from   mark-to-market accounting*		(8.3	)		(0.11	)		0.2			0.00
GAAP fuel expense	$	131.9		$	1.80		$	233.7		$	2.72
Fuel gallons		73.3						85.9
Horizon Air Fuel Reconciliation
(in millions, except for per gallon amounts)
	Three Months Ended March 31,
	2009						2008
	Dollars			Cost/Gal			Dollars			Cost/Gal
Raw or "into-plane" fuel cost	$	23.1		$	1.59		$	54.2		$	3.06
Minus gains, or plus the losses, during the period on settled hedges		4.4			0.31			(5.0	)		(0.28	)
Economic fuel expense	$	27.5		$	1.90		$	49.2		$	2.78
Adjustments to reflect timing of gain or loss recognition resulting from   mark-to-market accounting*		(1.7	)		(0.12	)		(0.9	)		(0.05	)
GAAP fuel expense	$	25.8		$	1.78		$	48.3		$	2.73
Fuel gallons		14.5						17.7
* Includes gains or losses recognized during the current period for contracts settling in future periods and the reversal of cumulative gains or losses recognized in prior periods for contracts that settled in the current period.

12

EX-99.2

Exhibit 99.2

Investor Update – April 23, 2009

References in this update to “Air Group,” “Company,” “we,” “us,” and “our” refer to Alaska Air Group, Inc. and its subsidiaries, unless otherwise specified.

This update includes forecasted operational and financial information for our subsidiaries Alaska Airlines, Inc. (Alaska) and Horizon Air Industries, Inc. (Horizon).  Our disclosure of operating cost per available seat mile, excluding fuel and other items, provides us (and may provide investors) with the ability to measure and monitor our performance without these items.  The most directly comparable GAAP measure is total operating expense per available seat mile.  However, due to the large fluctuations in fuel prices, we are unable to predict total operating expense for any future period with any degree of certainty.  In addition, we believe the disclosure of fuel expense on an economic basis is useful to investors in evaluating our ongoing operational performance.  Please see the cautionary statement under “Forward-Looking Information.”

Please see our press release dated today for actual financial and statistical information for the first quarter of 2009.

Forward-Looking Information

This update contains forward-looking statements subject to the safe harbor protection provided by Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. These statements relate to future events and involve known and unknown risks and uncertainties that may cause actual outcomes to be materially different from those indicated by any forward-looking statements.  For a comprehensive discussion of potential risk factors, see Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2008.   Some of these risks include current economic conditions, increases in operating costs including fuel, competition, labor costs and relations, our significant indebtedness, inability to meet cost reduction goals, terrorist attacks, seasonal fluctuations in our financial results, an aircraft accident, laws and regulations, and government fees and taxes.  All of the forward-looking statements are qualified in their entirety by reference to the risk factors discussed therein. These risk factors may not be exhaustive. We operate in a continually changing business environment, and new risk factors emerge from time to time. Management cannot predict such new risk factors, nor can it assess the impact, if any, of such new risk factors on our business or events described in any forward-looking statements. We expressly disclaim any obligation to publicly update or revise any forward-looking statements after the date of this report to conform them to actual results. Over time, our actual results, performance or achievements will likely differ from the anticipated results, performance or achievements that are expressed or implied by our forward-looking statements, and such differences might be significant and materially adverse.

ALASKA AIRLINES – MAINLINE

Forecast Information

	Forecast Q2 2009	Change Y-O-Y	Forecast Full Year 2009	Change Y-O-Y
Capacity (ASMs in millions)	5,800	(7)%	22,700	(6)%
Cost per ASM excluding fuel (cents)*	8.2	9%	8.1	8%
Fuel Gallons (000,000)	79	(9)%	310	(7)%
Economic fuel cost per gallon**	$1.78	(45)%	**	**

* For Alaska, our forecasts of mainline cost per ASM excluding fuel is based on forward-looking estimates, which may differ from actual results.

** Because of the volatility of fuel prices, actual amounts may differ significantly from our estimates. Because of the unpredictable nature of oil prices, our full-year 2009 forecast is not meaningful at this time.

Changes in Advance Booked Load Factors (percentage of available seat miles that are sold)

	April	May	June
Point Change Y-O-Y	+1.5 pts*	-0.5 pts	-4.5 pts

* The Easter holiday is in April this year, but was in March 2008.

Labor Updates

Alaska recently reached a tentative agreement with the Air Line Pilots Association (ALPA) on a new four-year contract representing Alaska’s pilots.  Details of the agreement will not be disclosed until the vote has been completed.

First Bag Fee

Alaska and Horizon will begin charging a $15 fee for a first checked bag effective July 7, 2009 for tickets purchased beginning May 1, 2009.  The fee includes a guarantee to compensate passengers if their luggage is not in baggage claim within 25 minutes after their flight arrives at the gate.  The first bag fee will not apply to certain passengers.  We believe that this fee will likely result in increased ancillary revenues for Air Group of approximately $70 million or more annually.

ALASKA – PURCHASED CAPACITY

Alaska has Capacity Purchase Agreements (CPA) with Horizon for certain routes and with a third party for service between Anchorage and Dutch Harbor, AK.

Forecast Information (Horizon CPA)

	Forecast Q2 2009	Change Y-O-Y	Forecast Full Year 2009	Change Y-O-Y
Capacity (ASMs in millions)	340	(9)%	1,300	(7)%
Cost per ASM (cents)*	19.5	(9)%	19.8	(7)%

* Costs associated with the Horizon CPA agreement represent the amount paid by Alaska to Horizon for operating costs plus a specified profit margin and are eliminated in consolidation.

Changes in Advance Booked Load Factors (percentage of available seat miles that are sold)

	April	May	June
Point Change Y-O-Y	-3.5 pts*	-6.0 pts	-6.5 pts

* The Easter holiday is in April this year, but was in March 2008.

2

HORIZON AIR

Forecast Information

	Forecast Q2 2009	Change Y-O-Y	Forecast Full Year 2009	Change Y-O-Y
Capacity (ASMs in millions)	835	(12)%	3,300	(9)%
Cost per ASM excluding fuel and CRJ-700 fleet transition    charges (cents)*	14.9 -- 15.1	4% -- 5%	15.3 -- 15.4	5% -- 6%
Cost per ASM excluding fuel and all fleet     transition charges (cents)*	14.9 -- 15.1	6% -- 7%	15.2 -- 15.3	7% -- 8%
Fuel gallons (in millions)	16	(8)%	62	(7)%
Economic fuel cost per gallon**	$1.85	(45)%	**	**

* For Horizon, our forecast of cost per ASM excluding fuel is based on forward-looking estimates, which may differ significantly from actual results.

** Because of the volatility of fuel prices, actual amounts may differ significantly from our estimates. Because of the unpredictable nature of oil prices, our full-year 2009 forecast is not meaningful at this time.

Changes in Advance Booked Load Factors – Brand Flying Only (percentage of available seat miles that are sold)

	April	May	June
Point Change Y-O-Y	+1.0 pt*	-2.0 pts	-4.5 pts

* The Easter holiday is in April this year, but was in March 2008

First Bag Fee

As noted above, Alaska and Horizon will begin charging a $15 fee for a first checked bag effective July 7, 2009 for tickets purchased beginning May 1, 2009.  We believe that this fee will likely result in increased ancillary revenues for Air Group of approximately $70 million or more annually.

3

AIR GROUP

Future Fuel Hedge Positions*

	Approximate % of Expected Fuel Requirements	Approximate Crude Oil Price per Barrel
Second Quarter 2009	50%	$71
Third Quarter 2009	50%	$76
Fourth Quarter 2009	50%	$76
Full Year 2009	50%	$76
First Quarter 2010	47%	$68
Second Quarter 2010	43%	$67
Third Quarter 2010	29%	$67
Fourth Quarter 2010	24%	$78
Full Year 2010	36%	$69
First Quarter 2011	17%	$91
Second Quarter 2011	15%	$73
Third Quarter 2011	11%	$74
Fourth Quarter 2011	5%	$67
Full Year 2011	12%	$78

*All of our 2010 and 2011 positions and the majority of our 2009 positions are call options which are designed to effectively cap our cost of the crude oil component of our jet fuel purchases.  With call options, we benefit from a decline in crude oil prices, as there is no cash outlay other than the premiums we pay to enter into the contracts.

Cash and Share Count

(in millions)	March 31, 2009	December 31, 2008
Cash and marketable securities	$1,043	$1,077
Common shares outstanding	36.386	36.275

Capital Expenditures

Total expected capital expenditures for 2009 are as follows (in millions):

	Total 2009 Estimate
	Aircraft-related	Non-aircraft	Total
Alaska	$312	$73	$385
Horizon	73	6	79
Air Group	$385	$79	$464

As noted below, Alaska is deferring delivery on a number of B737-800 aircraft, resulting in fewer aircraft-related capital expenditures in 2009.  

The increase from prior guidance in expected non-aircraft capital expenditures at Alaska is primarily due to projected costs associated with our likely move to a different terminal at Los AngelesInternationalAirport in early 2010.  We have estimated $20 million for 2009, although total project costs through 2010 will likely be higher.  Details of the funding mechanism and cost-sharing arrangements have not yet been worked out with the airport authority.  As a result, this estimate is subject to change.

4

AIR GROUP – (continued)

Firm Aircraft Commitments

In April 2009, Alaska entered into an agreement with Boeing to defer the delivery on a number of B737-800 aircraft and exercised options for an additional four aircraft to be delivered in 2014 and 2015.  With this new agreement, we do not plan to take any B737-800 aircraft deliveries in 2011.

Horizon is currently in discussions with Bombardier to defer all remaining 2009, 2010 and 2011 Q400 deliveries to later periods.  A final agreement has not yet been reached, so the delivery schedule below is based on the current commitment.  We expect to reach an agreement later in the second quarter of this year.

	April – Dec. 2009	2010	2011	2012	2013	Beyond 2013	Total
Alaska (B737-800)	4	7	-	2	2	4	19
Horizon (Q400)	3	7	1	-	-	-	11
Totals	7	14	1	2	2	4	30

In addition to the firm orders noted above, Alaska has options to acquire 40 additional B737-800s and Horizon has options to acquire 10 Q400s.

Projected Fleet Count

		Actual Fleet Count			Expected Fleet Activity
					Changes by Quarter
Alaska	Seats	Dec. 31, 2007	Dec. 31, 2008	Mar. 31, 2009	Q2	Q3	Q4	Dec. 31, 2009 2	2010 Changes	Dec. 31, 2010 2
737-400F 1	---	1	1	1	---	---	---	1	---	1
737-400C 1	72	5	5	5	---	---	---	5	---	5
737-400	144	34	31	28	---	---	---	28	(5)	23
737-700	124	20	20	19	---	---	(4)	15	(2)	13
737-800	157	29	41	47	4	---	---	51	7	58
737-900	172	12	12	12	---	---	---	12	---	12
MD-80	140	14	---	---	---	---	---	---	---	---
Totals		115	110	112	4	---	(4)	112	---	112
		Actual Fleet Count			Expected Fleet Activity
					Changes by Quarter
Horizon	Seats	Dec. 31, 2007	Dec. 31, 2008	Mar. 31, 2009	Q2	Q3	Q4	Dec. 31, 2009	2010 Changes	Dec. 31, 2010
Q200	37	16	6	---	---	---	---	---	---	---
Q4003	74-76	33	35	37	---	---	3	40	7	47
CRJ-700 3	70	21	18	18	---	(1)	(4)	13	(8)	5
Totals		70	59	55	---	(1)	(1)	53	(1)	52

1 F=Freighter; C=Combination freighter/passenger

2 The expected fleet counts at December 31, 2009 and 2010 for Alaska are subject to change as we continue to refine the capacity reduction and aircraft utilization plan, and attempt to market four of our B737-700 aircraft.

3 The planned CRJ and Q400 fleets at December 31, 2009 and 2010 are subject to change as we finalize the fleet transition plan and is dependent on our ability to remarket the CRJ aircraft.

5