Investor Update: DOJ Clearance
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Cautionary Statement Regarding Forward-Looking Statements
This communication contains forward-looking statements within the meaning of Section 27A of the Securities Act of
1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, about Alaska Airlines and
the proposed transaction with Virgin America. Forward-looking statements are statements that are not historical facts.
These statements can be identified by the use of forward-looking terminology such as "believe," "expect," "may,"
"likely," "should," "project," "could," "plan," "goal," "potential," "pro forma," "seek," "estimate," "intend" or "anticipate" or
the negative thereof, and may include discussions of strategy, financial projections, guidance and estimates (including
their underlying assumptions), statements regarding plans, objectives, expectations or consequences of announced
transactions and statements about the future performance, operations, products and services of Alaska Airlines and/or
Virgin America. Alaska Airlines cautions readers not to place undue reliance on these statements. These forward-
looking statements are subject to a variety of risks and uncertainties. Consequently, actual results and experience
may differ materially from those contained in any forward-looking statements.
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Cautionary Statement Regarding Forward-Looking Statements
Such risks and uncertainties include: the possibility that the closing conditions to the proposed transaction may not be
satisfied or waived; delay in closing the transaction or the possibility of non-consummation of the transaction; the
occurrence of any event that could give rise to termination of the merger agreement; the risk that stockholder litigation
in connection with the contemplated transaction may affect the timing or occurrence of the contemplated transaction or
result in significant costs of defense, indemnification and liability; risks inherent in the achievement of anticipated
synergies and the timing thereof; risks related to the disruption of the transaction to Virgin America and its
management; the effect of announcement of the transaction on Virgin America's ability to retain and hire key
personnel and maintain relationships with suppliers and other third parties; labor costs and relations, general
economic conditions, increases in operating costs including fuel, inability to meet cost reduction goals, an aircraft
accident, and changes in laws and regulations. These risks and others are described in greater detail in Alaska Air
Group’s SEC filings, including its Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2015, as well as in
other documents filed by Alaska Air Group with the SEC after the date thereof. Alaska Air Group makes no
commitment to revise or update any forward-looking statements in order to reflect events or circumstances occurring
or existing after the date any forward-looking statement is made.
Highlights
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Department of Justice clears Alaska Air Group to acquire Virgin America
There are 45 markets where Alaska loses existing codeshare revenue, and the net
financial impact is between $15-$20 million.
No impact on interline.
No asset divestitures required
DOJ clearance includes limited reduction of codeshare with American Airlines
We have agreed to seek DOJ approval before selling, leasing, or trading the slots and
gates at Dallas Love Field, New York LaGuardia or Washington Reagan that Virgin
American obtained from the American Airlines-US Airways settlement.
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Total
Codeshare
$320M (6%)
International Interline
$50M (1%)
Domestic Interline
$115M (2%)
American $190
Delta $65
Others $65
Total
Codeshare
$486M (9%)
International Interline
$53M (1%)
Domestic Interline
$113M (2%)
American $225
Delta $190
Others $71
2014
9% of Revenue is from Codeshare
2016
6% of Revenue is from Codeshare
Codeshare today is a smaller portion of Alaska’s revenue,
but it remains important strategically
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33 markets
Non-stop overlap routes flown by
both AA and AS/VX
AS and AA are not allowed to
market each other’s flights on
non-stop overlap markets
9 markets
Flights operated by AS/VX from
AA’s hubs, and vice versa
(non-overlap)
AA can’t sell AS flights from
AA hubs and vice versa
3 markets
Flights operated by AA between LAX
& AA’s other hubs (non-overlap)
AS can’t sell AA flights from LAX
to AA’s other hubs
Notwithstanding the above concessions, both carriers can
continue to sell itineraries “beyond” each others’ hubs
Only 45 markets under the American agreement
(representing ~$60M revenue) are financially impacted by
concessions
Examples of where codesharing is no longer permitted:
Example: An AA customer wants to
fly from Seattle to Los Angeles.
Before: The AA customer could book
an AA flight or an AS flight through
AA’s website, depending on their
preferred flight times. AS earned
codeshare revenue if the AA customer
booked the AS flight.
After: Since AS and AA both fly this
route, AS & AA can no longer market
each others’ flights. Only the AA flight
will appear to AA’s customers so AS
will not earn codeshare revenue, and
vice versa.
33 Markets
Non-stop overlap routes flown by
both AA and AS/VX
Example: An AA customer wants to
fly from Norfolk, VA to Seattle.
Before: An AA customer could fly AA
from ORF to DCA, and then connect
onto an AS flight from DCA-SEA. AS
earned codeshare revenue on the
DCA-SEA flight.
After: The customer will not be able
to buy this itinerary from AA, so AS
would potentially lose this codeshare
revenue.
However, the customer can still book
the same itinerary through AS, in
which case AS could still earn
passenger revenue on DCA-SEA
portion.
Example: An AS customer wants to
fly from Santa Rosa to Charlotte.
Before: The AS customer could fly an
AS flight from STS-LAX, and then
connect onto an AA flight from LAX-
CLT. AS earned passenger revenue
on the STS-LAX segment.
After: The customer will not be able
to buy this itinerary from AS, so AS
would potentially lose this revenue.
However, the customer can still book
the same itinerary through AA, in
which case AS could still earn
codeshare revenue on STS-LAX.
9 Markets
Flights operated by AS/VX from
AA’s hubs, and vice versa
(non-overlap )
3 Markets
Flights operated by AA between
LAX and AA’s other hubs
(non-overlap)
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Customer demand in a market does not
disappear when codeshare ends
The amount of total customer demand (and
revenue) that we can recapture depends
on:
1. Whether we already serve the market
2. Current AS load factors
3. Current volume of customers on AS flights
provided by AA codeshare
4. Alternative connections or additional local traffic
within the existing Alaska network
5. Other feed from international partners
We believe we can recapture ~70% ($40-$45M) of lost
codeshare revenue by replacing it with our own passengers
C
ur
re
nt
A
S
Lo
ad
F
ac
to
r
Lo
w
H
ig
h
Current AA Contribution to
AS Load Factor
Low High
High recapture
Moderate recapture
5
Markets
1
Markets
Sample Recapture Analysis for Top 8
Markets (half of impacted revenue)
Limited recapture
Moderate recapture
2
Markets
0
Markets
Ultimately, we believe the net impact of the codeshare
changes on our existing Alaska flights is $15-$20M
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Impact of codeshare
concessions
Est. impact after
Recapture
Net codeshare
impact after
recapture is
between
$15-$20M
(~$60M)
Recapture
$40-$45M
($15-$20M)
Even with codeshare changes, we remain confident in our
ability to achieve synergy targets…
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Average Annual Run
Rate Estimates
Revenue Synergies $175M
Net Cost Synergies $50M
Total Synergies $225M
…and are focused on realizing deal benefits for investors,
employees, and consumers
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Powerful West Coast Network
Access to Constrained Airports Opportunity to Grow & Improve Loyalty
Enhanced International Partnerships
California Customer Base
3x
PacNW
Population