This presentation may include forward-looking statements regarding the performance of Alaska Air Group or its subsidiaries. Actual results may differ materially from these projections. Please see our most recent Annual Report on Form 10-K for additional information concerning factors that could cause results to differ.

January 8, 2009C F O ROUNDTABLE

Surviving Tough Times

TimelinesMajor “Shocks” We’ve Experienced as an Airline and an

Industry

2000Flight

261

20019/11

Attacks

2003 - 20052010

RestructuringPlan

2007 - 2008Oil priceRun up

2008 - ???Global

Recession

$0

$25

$50

$75

$100

$125

$150

Source: Kiodex as of 1/2/09

Identify controllable vs uncontrollable items and focus energy on what you can

control

Cru

de o

il $

per

barr

el

Example

Fuel hedges have helped control costs

-$5

$0

$5

$10

$15

$20

$25

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

$123 million net economic hedge benefit in 2008

(mill

ions

)

Challenge Your Paradigms

High capital investmentin aircraft

Old, legacy thinking

Fuel priceincreases

PlummetingDemand

Aircraft aremoveable

assets

Nimble andlearn from our

past

Reduce Capacity,Create and collect

ancillary fees(2nd bag, itinerary

change fees, reservationservice fee, IFE, Buy on Board)

Reduce capacity,move aircraftto alternate

markets

AAG Cash position

$0

$200

$400

$600

$800

$1,000

$1,200

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

(mill

ions)

11%

12%

14%

15%

17%

19%

19%

23%

29%

32%

0% 10% 20% 30% 40% 50%

US A irways Group

A irTran

United

Delta

J et B lue

C ontinental

American

Northwest

A laska A ir Group

Southwest

Strong cash position andmultiple sources of liquidity

Cash as a % of Revenues Q3 ‘08

Note: All airlines calculated using unrestricted cash and short-term investments at September 30, 2008 divided by revenue for the 12 months ended September 30, 2008. As of December 22, 2008, Southwest had $1.3 billion in cash net of posting $230 million in hedge collateral and not including inflow of $575 million in sale/leasebacks and private placements. Including the inflow, their cash as a % of revenue is approximately 17%. As of November 30 2008, AAG had $1.027 billion in cash and approximately 30% cash to revenue.

Source: All company earnings releases and 10Qs as of Q3 2008. AAG 8K as of December 19, 2008. Southwest 8K as of December 23, 2008.

Fuel hedging cash collateral

Possible sources of liquidity

• Additional capacity available on line of credit

• Additional capacity available on pre-delivery payment facility

• Unencumbered aircraft

• Forward sale of miles

Tools Acquired or Sharpened During these Challenging Times

• LEAN principles (eliminate waste, just in time, etc.)

• Project Management– Clear identification of the problem and solution– Measurable outcomes with dates– Frequent reviews of project progress at senior levels– Absolute accountability (things are green or red; if they are

red - how can we help move them to green?)

• Focus on inputs rather than outputs

• Change management (the human and more difficult part of change)

• Don’t buy things you can’t afford• Don’t borrow money you can’t pay back• Don’t agree to things you don’t understand• If it doesn’t seem right, it probably isn’t

Things your (grand) parents probably taught

you that still have a place in today’s business world: