SEATTLE, Jul 19, 2001 (BUSINESS WIRE) --

Alaska Air Group, Inc.
(NYSE:ALK) today reported second quarter net income of $4.7 million,
or $0.18 per share diluted, compared with net income excluding a
special charge of $23.6 million, or $0.89 per share, for last year's
second quarter.
	   Last year's results included a special charge of $24.0 million
($14.8 million after tax or $0.56 per share) for increases in
estimated costs to acquire award travel for Mileage Plan members on
other airlines.
	   Operating revenues for the quarter were $579.3 million, a 4.8
percent increase, while operating expenses were $568.0 million, up 5.2
percent. The operating income for the quarter was $11.3 million,
compared with an operating income excluding special charges of $37.1
million a year earlier.
	   "It appears we'll be fortunate enough to be one of the few major
airlines reporting a profit this quarter," said John F. Kelly,
chairman, president and chief executive officer of Alaska Air Group.
"At Alaska, we've been successful in attracting a greater number of
leisure travelers, which has helped offset some of the decline in
business travel. We've also made substantial gains operationally with
schedule reliability and on-time performance. At Horizon we're making
good progress on the introduction of our two new aircraft types -- the
Bombardier Q400 and the CRJ-700 -- and we expect to begin seeing the
full benefits of these airplanes later this year and in 2002."
	   Alaska Airlines' passenger traffic increased 8.0 percent on a
capacity increase of 11.2 percent. Its load factor fell 2.1 points to
70.3 percent. The airline's operating revenue per available seat mile
(ASM) decreased 4.6 percent, while its operating cost per ASM
excluding special charges increased 0.4 percent. Alaska's pretax
income was $8.3 million compared to a pretax income excluding special
charges of $33.9 million a year earlier.
	   Horizon Air's passenger traffic increased 1.4 percent on a 0.2
percent capacity decrease. Its load factor increased 1.0 points to
62.2 percent. The airline's operating revenue per ASM increased 1.3
percent due to manufacturer support received as compensation for
delays in delivery of CRJ700 aircraft. Operating cost per ASM
increased 5.8 percent largely due to higher labor and depreciation
costs. Horizon's pretax income was $0.8 million, compared to $5.6
million a year earlier.

	   This report may contain forward-looking statements that are based
on the best information currently available to management. These
forward-looking statements are intended to be subject to the safe
harbor protection provided by Section 27A of the Securities Act of
1933 and Section 21E of the Securities Exchange Act of 1934.
Forward-looking statements are indicated by phrases such as "will,"
"should," "the Company believes," "we expect" or any other language
indicating a prediction of future events. There can be no assurance
that actual developments will be those anticipated by the Company.
Actual results could differ materially from those projected as a
result of a number of factors, some of which the Company cannot
predict or control. For a discussion of these factors, please see Item
1 of the Company's Annual Report on Form 10-K for the year ended
December 31, 2000.

	   Alaska Air Group is the parent company of Alaska Airlines, Inc.
and Horizon Air Industries, Inc.

                        ALASKA AIR GROUP, INC.

CONSOLIDATED STATEMENT OF INCOME (In millions, except per share amounts)

Quarter Six Months

Ended June 30 Ended June 30

------------------ ------------------

2000 2001 2000 2001

---- ---- ---- ---- Operating Revenues:

Passenger $ 515.0 $ 534.3 $ 970.1 $ 1,014.1 Freight and mail 23.2 24.1 43.5 44.7 Other -- net 14.6 20.9 28.9 36.5

-------- -------- -------- -------- Total Operating

 Revenues                  552.8      579.3        1,042.5    1,095.3
                        --------   --------       --------   --------

Operating Expenses:

Wages and benefits 175.8 194.1 346.8 386.1 Contracted

services 17.9 20.9 35.6 41.8 Aircraft fuel 83.1 89.8 173.2 179.5 Aircraft

maintenance 45.4 45.2 85.6 95.3 Aircraft rent 46.7 46.3 93.1 92.5 Food and beverage

service 13.2 15.4 26.1 29.4 Commissions 17.2 16.4 33.7 31.8 Other selling

expenses 29.0 32.8 55.2 64.6 Depreciation and

amortization 24.4 31.6 47.4 61.5 Loss (gain) on

sale of assets (0.4) 0.4 (0.5) 1.2 Landing fees and

other rentals 23.9 30.7 46.3 59.0 Other 39.5 44.4 79.5 90.8 Special charge --

Mileage Plan 24.0 -- 24.0 --

-------- -------- -------- -------- Total Operating

 Expenses                  539.7      568.0        1,046.0    1,133.5
                        --------   --------       --------   --------

Operating Income
 (Loss)                     13.1       11.3           (3.5)     (38.2)
                        --------   --------       --------   --------

Interest income 5.2 5.7 10.4 13.8 Interest expense (7.9) (10.6) (15.8) (22.7) Interest

capitalized 3.8 2.3 7.2 5.9 Other -- net 0.6 (0.5) 1.1 (1.9)

-------- -------- -------- --------

1.7 (3.1) 2.9 (4.9)

-------- -------- -------- -------- Income (Loss)

Before Income

Tax and

Accounting

Change 14.8 8.2 (0.6) (43.1) Income tax expense

(credit) 6.0 3.5 (0.2) (14.7)

-------- -------- -------- -------- Income (Loss)

Before Acct'g

Change 8.8 4.7 (0.4) (28.4) Cumulative effect

of Accounting

Change Net of

Income Tax -- -- (56.9) --

-------- -------- -------- -------- Net Income (Loss) $ 8.8 $ 4.7 $ (57.3) $ (28.4)

                        ========   ========       ========   ========

Basic Earnings

(Loss) Per Share: Income before

accounting change $ 0.33 $ 0.18 $ (0.02) (1.07) Cumulative effect

of acct'g change -- -- (2.15) --

-------- -------- -------- -------- Net Income (Loss) $ 0.33 $ 0.18 $ (2.17) $ (1.07)

                        ========   ========       ========   ========

Diluted Earnings

(Loss) Per Share: Income before

accounting change $ 0.33 $ 0.18 $ (0.02) $ (1.07) Cumulative effect

of acct'g change -- -- (2.15) --

-------- -------- -------- -------- Net Income (Loss) $ 0.33 $ 0.18 $ (2.17) $ (1.07)

                        ========   ========       ========   ========

Shares used for

computation: Basic 26.442 26.481 26.432 26.476 Diluted 26.498 26.526 26.432 26.476

                        ALASKA AIR GROUP, INC.

CONSOLIDATED BALANCE SHEET December 31 June 30 -------------------------- 2000 2001 (In millions) ----------- -----------

Cash and marketable

securities $ 462 $ 371

======== ======== Total current

assets 806 749 Property and

equipment -- net 1,730 1,868 Other assets 94 90

-------- -------- Total assets $ 2,630 $ 2,707

======== ======== Current liabilities $ 711 $ 768 Long-term debt

and capital lease

obligations 609 656 Other liabilities

and credits 448 448 Shareholders'

equity 862 835

-------- -------- Total liabilities

 and equity                        $  2,630             $  2,707
                                   ========             ========


            Alaska Airlines Financial and Statistical Data

Quarter Ended June 30

--------------------- Financial Data %

(in millions): 2000 2001 Change

---- ---- ------ Operating Revenues:

Passenger $ 410.0 $ 434.7 6.0 Freight and mail 20.1 21.4 6.5 Other -- net 14.1 15.2 7.8

-------- -------- -------- Total Operating

 Revenues                444.2           471.3               6.1      
                      --------        --------          --------      

Operating Expenses: Wages and benefits 142.3 157.5 10.7 Contracted

services 14.9 18.2 22.1 Aircraft fuel 67.7 74.1 9.5 Aircraft

maintenance 30.1 32.1 6.6 Aircraft rent 36.1 35.0 (3.0) Food and beverage

service 12.4 14.7 18.5 Commissions 16.7 18.2 9.0 Other selling

expenses 23.4 26.6 13.7 Depreciation and

amortization 19.4 24.6 26.8 Loss on sale of

assets 0.4 0.3 NM Landing fees and

other rentals 17.5 23.3 33.1 Other 31.1 35.6 14.5 Special charge --

Mileage Plan 24.0 -- NM

-------- -------- Total Operating

Expenses 436.0 460.2 5.6

-------- -------- Operating Income

(Loss) 8.2 11.1

-------- -------- Interest income 6.3 6.8 Interest expense (7.9) (10.6) Interest

capitalized 3.0 1.2 Other -- net 0.3 (0.2)

-------- --------

1.7 2.8

-------- -------- Income (Loss)

 Before Income Tax
 and Accounting 
 Change               $    9.9        $    8.3              
                      --------        --------         

Operating Statistics:

Revenue

passengers (000) 3,432 3,698 7.7 RPMs (000,000) 3,047 3,290 8.0 ASMs (000,000) 4,210 4,683 11.2 Passenger load

factor 72.4% 70.3% (2.1) pts Breakeven load

factor 66.9% 69.9% 3.0 pts Yield per passenger

mile 13.45(cent) 13.21(cent) (1.8) Operating revenue

per ASM 10.55(cent) 10.06(cent) (4.6) Operating expenses

per ASM(1) 9.79(cent) 9.82(cent) 0.4 Expense per ASM

excluding fuel(1) 8.18(cent) 8.24(cent) 0.8 Fuel cost per

gallon 91.2(cent) 92.3(cent) 1.1 Fuel gallons

(000,000) 74.2 80.3 8.2 Average number of

employees 9,439 10,201 8.1 Aircraft

utilization

(block hours) 10.5 11.1 5.7 Operating fleet

 at period-end              91             100               9.9      

Six Months Ended June 30

------------------------- Financial Data %

(in millions): 2000 2001 Change

---- ---- ------ Operating Revenues:

Passenger $ 770.1 $ 819.8 6.5 Freight and mail 37.9 39.7 4.7 Other -- net 27.7 29.9 7.9

-------- -------- Total Operating

Revenues 835.7 889.4 6.4

-------- --------

Operating Expenses: Wages and benefits 280.9 312.8 11.4 Contracted

services 30.1 36.1 19.9 Aircraft fuel 141.5 148.1 4.7 Aircraft

maintenance 58.5 63.2 8.0 Aircraft rent 71.9 70.3 (2.2) Food and beverage

service 24.5 27.9 13.9 Commissions 32.3 34.1 5.6 Other selling

expenses 43.8 52.6 20.1 Depreciation and

amortization 38.0 47.7 25.5 Loss on sale of

assets 0.4 1.2 NM Landing fees and

other rentals 34.5 44.8 29.9 Other 62.1 72.0 15.9 Special charge --

Mileage Plan 24.0 -- NM

-------- -------- Total Operating

Expenses 842.5 910.8 8.1

-------- -------- Operating Income

(Loss) (6.8) (21.4)

-------- -------- Interest income 12.4 16.3 Interest expense (15.8) (22.7) Interest

capitalized 5.6 3.8 Other -- net 0.8 (1.4)

-------- -------- Income (Loss)

 Before Income Tax                                
 and Accounting                                   
 Change               $    3.8        $  (25.4)   
                      ========        ========

Operating Statistics:                                       

Revenue

passengers (000) 6,600 6,896 4.5 RPMs (000,000) 5,861 6,185 5.5 ASMs (000,000) 8,441 9,111 7.9 Passenger load

factor 69.4% 67.9% (1.5) pts Breakeven load

factor 68.6% 71.6% 3.0 pts Yield per passenger

mile 13.14(cent) 13.25(cent) 0.9 Operating revenue

per ASM 9.90(cent) 9.76(cent) (1.4) Operating expenses

per ASM(1) 9.70(cent) 10.00(cent) 3.1 Expense per ASM

excluding fuel(1) 8.02(cent) 8.37(cent) 4.4 Fuel cost per

gallon 95.2(cent) 94.6(cent) (0.6) Fuel gallons

(000,000) 148.6 156.5 5.3 Average number of

employees 9,359 10,202 9.0 Aircraft

utilization

(block hours) 10.7 11.0 2.8 Operating fleet

at period-end 91 100 9.9

(1) Excludes the impact of a special charge in June 2000.

Horizon Air Financial and Statistical Data

Quarter Ended June 30

--------------------- Financial Data %

(in millions): 2000 2001 Change

---- ---- ------ Operating

 Revenues:            

Passenger $ 108.0 $ 104.4 (3.3) Freight and mail 3.1 2.6 (16.1) Other -- net 1.5 6.9 360.0

-------- -------- -------- Total Operating

Revenues 112.6 113.9 1.2

-------- -------- -------- Operating

Expenses: Wages and

benefits 33.5 36.6 9.3 Contracted

services 3.7 3.4 (8.1) Aircraft fuel 15.4 15.7 1.9 Aircraft

maintenance 15.3 13.1 (14.4) Aircraft rent 10.7 11.3 5.6 Food and beverage

service 0.8 0.7 (12.5) Commissions 3.6 3.1 (13.9) Other selling

expenses 5.6 6.3 12.5 Depreciation and

amortization 4.7 6.7 42.6 Loss (gain) on

sale of assets (0.8) 0.1 NM Landing fees and

other rentals 6.2 7.3 17.7 Other 8.3 8.7 4.8

-------- -------- Total Operating

Expenses 107.0 113.0 5.6

-------- -------- Operating Income

 (Loss)                    5.6             0.9                        
                      --------        --------                        

Interest expense (0.9) (1.0) Interest

capitalized 0.9 1.0 Other -- net 0.0 (0.1)

-------- --------

0.0 (0.1)

-------- -------- Income (Loss)

Before Income

Tax $ 5.6 $ 0.8

======== ======== Operating

 Statistics:

Revenue passengers

(000) 1,267 1,250 (1.3) RPMs (000,000) 353 358 1.4 ASMs (000,000) 576 575 (0.2) Passenger load

factor 61.2% 62.2% 1.0 pts Breakeven load

factor 58.3% 61.7% 3.4 pts Yield per

passenger mile 30.61(cent) 29.19(cent) (4.6) Operating revenue

per ASM 19.53(cent) 19.79(cent) 1.3 Operating

expenses per ASM 18.56(cent) 19.64(cent) 5.8 Expense per ASM

excluding fuel 15.89(cent) 16.91(cent) 6.4 Fuel cost per

gallon 93.7(cent) 98.4(cent) 5.0 Fuel gallons

(000,000) 16.5 16.0 (3.0) Average number

of employees 3,633 3,786 4.2 Aircraft utilization

(block hours) 8.3 8.1 (2.4) Operating fleet

 at period-end              62              63               1.6      

Six Months Ended June 30

------------------------- Financial Data %

(in millions): 2000 2001 Change

---- ---- ------ Operating

Revenues: Passenger $ 205.5 $ 202.6 (1.4) Freight and mail 5.6 4.9 (12.5) Other -- net 3.0 8.4 180.0

-------- -------- Total Operating

Revenues 214.1 215.9 0.8

-------- -------- Operating

Expenses: Wages and

benefits 65.9 73.3 11.2 Contracted

services 6.8 7.1 4.4 Aircraft fuel 31.7 31.4 (0.9) Aircraft

maintenance 27.1 32.1 18.5 Aircraft rent 21.3 22.3 4.7 Food and beverage

service 1.6 1.5 (6.3) Commissions 7.0 6.0 (14.3) Other selling

expenses 11.4 12.1 6.1 Depreciation and

amortization 9.0 13.1 45.6 Loss (gain) on

sale of assets (0.9) 0.0 NM Landing fees and

other rentals 11.9 14.2 19.3 Other 17.2 18.6 8.1

-------- -------- Total Operating

Expenses 210.0 231.7 10.3

-------- -------- Operating Income

(Loss) 4.1 (15.8)

-------- --------

Interest expense (1.7) (2.1) Interest

capitalized 1.7 2.1 Other -- net 0.1 (0.5)

-------- --------

0.1 (0.5)

-------- -------- Income (Loss)

 Before Income                                                       
 Tax                  $    4.2        $  (16.3)                       
                      ========        ========                      

Operating                                                            
 Statistics:                                                         

Revenue passengers

(000) 2,458 2,427 (1.2) RPMs (000,000) 682 693 1.7 ASMs (000,000) 1,128 1,119 (0.8) Passenger load

factor 60.5% 62.0% 1.5 pts Breakeven load

factor 59.4% 67.3% 7.9 pts Yield per

passenger mile 30.13(cent) 29.21(cent) (3.1) Operating revenue

per ASM 18.98(cent) 19.30(cent) 1.7 Operating

expenses per ASM 18.62(cent) 20.71(cent) 11.2 Expense per ASM

excluding fuel 15.81(cent) 17.91(cent) 13.3 Fuel cost per

gallon 97.6(cent) 99.2(cent) 1.6 Fuel gallons

(000,000) 32.5 31.6 (2.8) Average number

of employees 3,625 3,855 6.3 Aircraft utilization

(block hours) 8.2 8.1 (1.2) Operating fleet

at period-end 62 63 1.6

CONTACT:          Alaska Air Group, Inc.                   
                  Brad Tilden, 206/433-3362                
                  or                                    
                  Lou Cancelmi, 206/433-3170