ex992.htm

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.

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.

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.

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 Angeles International Airport 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.

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	---	---	---	---	---	---	---
Q400 3	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.