UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC  20549
FORM 10-Q

(Mark One)
(X)     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES 
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996.
OR
(  )    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES 
EXCHANGE ACT OF 1934
For the transition period from  . . . . . .  to  . . . . . .

Commission file number  1-8957

ALASKA AIR GROUP, INC.
(Exact name of registrant as specified in its charter)

Delaware     91-1292054
(State or other jurisdiction of (I.R.S. Employer 
incorporation or organization)  Identification No.)

19300 Pacific Highway South, Seattle, Washington 98188
(Address of principal executive offices)

Registrant's telephone number, including area code: (206) 431-7040

Indicate by check mark whether the registrant (1) has filed all reports 
required to be filed by Section 13 or 15(d) of the Securities Exchange Act 
of 1934 during the preceding 12 months (or for such shorter period that the 
registrant was required to file such reports), and (2) has been subject to 
such filing requirements for the past 90 days. Yes  X  No ___

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents 
and reports required to be filed by Sections 12, 13 or 15(d) of the 
Securities Exchange Act of 1934 subsequent to the distribution of 
securities under a plan confirmed by a court.  Yes. No.

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer's 
classes of common stock, as of the latest practicable date.

The registrant has 14,466,550 common shares, par value $1.00, 
outstanding at September 30, 1996.

PART I.  FINANCIAL INFORMATION
ITEM 1.  Financial Statements
Attached are the following Alaska Air Group, Inc. (the Company or Air 
Group) unaudited financial statements: (i) consolidated balance sheets as 
of September 30, 1996 and December 31, 1995; (ii) consolidated statements 
of income for the quarters and nine months ended September 30, 1996 and 
1995; (iii) consolidated statement of shareholders' equity for the nine 
months ended September 30, 1996; and, (iv) consolidated statements of cash 
flows for the nine months ended September 30, 1996 and 1995.  Also attached 
are the accompanying notes to the Company's consolidated financial 
statements that have changed significantly during the nine months ended 
September 30, 1996.  These statements, which should be read in conjunction 
with the financial statements in the Company's annual report on Form 10-K 
for the year ended December 31, 1995, include all adjustments that are, in 
the opinion of management, necessary for a fair presentation of the results 
for the interim periods.  The adjustments made were of a normal recurring 
nature.

Air Group is a holding company incorporated in Delaware in 1985.  Its 
principal subsidiaries are Alaska Airlines, Inc. (Alaska) and Horizon Air 
Industries, Inc. (Horizon).

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND 
FINANCIAL CONDITION

RESULTS OF OPERATIONS
Third Quarter 1996 Compared with Third Quarter 1995
The consolidated net income for the third quarter of 1996 was $32.8 
million, or $2.25 per share ($1.53 per share fully diluted), compared with 
net income of $27.4 million, or $2.01 per share ($1.30 per share fully 
diluted), in 1995.  Operating income for the third quarter of 1996 was 
$63.0 million compared to $61.9 million for 1995.  The 1996 quarter 
included $8.3 million for estimated employee profit sharing expense 
(compared to zero for 1995) and a $3.6 million gain on sale of assets 
(compared to a $0.7 million loss in 1995).  Excluding these items, 
operating income increased $5.1 million reflecting higher passenger load 
factors at Alaska Airlines.  Airline financial and statistical data is 
shown following the Air Group financial statements.  A discussion of this 
data follows.

Alaska Airlines  Operating revenues increased 11.7% to $382.8 million.  
Passenger revenues, which accounted for 90% of total operating revenues, 
increased 13.5% on a 14.5% rise in passenger traffic.  Capacity increased 
7.0%, primarily due to more flying in the Alaska, Mexico and Nevada 
markets.  Essentially all markets experienced increases in load factors, 
while the system load factor increased 4.6 points from 66.0% in 1995 to 
70.6% in 1996.  System passenger yields were down 0.8% reflecting lower 
fares in the Alaska and Mexico markets, offset by higher fares in the 
California markets.

Freight and mail revenues decreased 3.0%, reflecting increased competition 
in the Alaska markets.  Other-net revenues decreased 1.2% due to lower 
revenues from providing services to other airlines.

The table below shows the major operating expense elements on a cost per 
available seat mile (ASM) basis for Alaska for the third quarters of 1996 
and 1995.

Alaska Airlines Operating Expenses Per ASM (In Cents)
1996            1995    Change    %     Change
Wages and benefits              2.44        2.41        .03             1
Employee profit sharing                 .19                     -       .19             NM
Aircraft fuel                     1.38          1.08          .30               28
Aircraft maintenance                    .32             .31             .01             3
Aircraft rent                      .88          .91             (.03)           (3)
Commissions                             .63             .56             .07             13
Depreciation & amortization          .35        .38             (.03)           (8)
Loss (gain) on sale of assets     (.09)         .02             (.11)           NM
Landing fees and other rentals    .32        .32                -           -
Other                             1.53      1.52        .01             1
Alaska Airlines Total             7.95          7.51            .44              6
NM = Not Meaningful
Alaska's higher unit costs were primarily due to employee profit sharing 
and higher fuel prices.  Significant unit cost changes are discussed below.

Estimated profit sharing expense increased the cost per ASM by .19 cents.  
Actual profit sharing is based on full year results.  Hence, this expense 
item for full year 1996 could change depending on fourth quarter results.  
For purposes of estimating profit sharing, the income for the fourth 
quarter of 1996 was assumed to be comparable to the fourth quarter of 1995.  
This is an assumption, not a forecast, and using this assumption, Alaska is 
fully accrued for estimated 1996 profit sharing expense as of September 30, 
1996.

Fuel expense per ASM increased 28%, due to a 27% increase in the price of 
fuel.  Approximately one fourth of the fuel price increase was due to a 4.3 
cent Federal excise tax on domestic fuel consumption that began October 1, 
1995.

Commission expense per ASM increased 13% because passenger revenues, upon 
which commissions are paid, increased more than ASM growth.  Commission 
expense as a percentage of passenger revenue was 7.4% in 1996 compared to 
7.1% in 1995.

Depreciation and amortization expense per ASM decreased 8% due to the sale 
(and leaseback) of two aircraft at the end of the first quarter and a 4% 
increase in aircraft utilization.

The gain on sale of assets in 1996 is primarily due to the sale of a jet 
aircraft.  A new accounting standard requires that gains or losses on long-
lived assets be included in operating income.

Horizon Air  Operating revenues increased 7.8% to $83.9 million.  Passenger 
revenues, which accounted for 96% of total operating revenues, increased 
8.9% on a 0.3 percent rise in passenger traffic.  Capacity increased 
slightly, primarily due to new flying in the Seattle-Edmonton and Boise-San 
Jose markets, offset by less flying in the lower-yield Seattle-Spokane and 
Portland-Spokane markets.  These actions helped boost passenger yields 8.5% 
to 33.7 cents in 1996.  The 61.7% system load factor remained the same as 
in 1995.

The table below shows the major operating expense elements on a cost per 
ASM basis for Horizon for the third quarters of 1996 and 1995.

Horizon Air     Operating Expenses Per ASM (In Cents)

1996             1995       Change         % Change
Wages and benefits              6.12            5.69            .43             8
Employee profit sharing          .18            -               .18             NM
Aircraft fuel                     2.29          1.88            .41             22
Aircraft maintenance               2.75         2.30            .45             20
Aircraft rent                   2.36            2.27            .09             4
Commissions                         1.34        1.32           .02              2
Depreciation & amortization             .68           .59               .09             15
Loss (gain) on sale of assets      .04          .01            .03              NM
Landing fees and other rentals          .88           .87              .01                1
Other                             3.51       3.51               -           -
Horizon Air Total               20.15           18.44           1.71             9
NM = Not Meaningful
Horizon's unit costs increased 9% primarily due to: (a) employee profit 
sharing and higher wage rates; (b) 23% higher fuel prices; (c) increased 
maintenance expense on Dash 8 aircraft, which now average 8 years in age; 
and (d) more depreciation expense on aircraft improvements.

Consolidated Other Income (Expense)  Non-operating expense decreased from 
$11.6 million to $6.4 million primarily due to lower interest rates on 
variable debt and smaller average debt balances.  The 1995 period included 
a $2.2 million write-off of capitalized debt issuance costs for the 7-1/4% 
zero coupon notes that were redeemed in August 1995.

Nine Months 1996 Compared with Nine Months 1995
The consolidated net income for the nine months ended September 30, 1996 
was $43.6 million, or $3.06 per share ($2.22 per share fully diluted), 
compared with net income of $18.0 million, or $1.34 per share ($1.22 per 
share fully diluted), in 1995.  Operating income for the first nine months 
of 1996 was $97.4 million compared to $67.4 million for 1995.  A discussion 
of operating revenues and expenses for the two airlines follows.

Alaska Airlines  Operating revenues increased 15.7% to $1.005 billion, 
primarily due to a 16.4% rise in passenger traffic.  Capacity increased 
8.5%, primarily due to increases in the Alaska, Nevada and Mexico markets.  
The load factor increased 4.4 points from 61.5% in 1995 to 65.9% in 1996.  
Passenger yields rose 1.2% to 11.86 cents in 1996, reflecting an improved 
balance between supply and demand for air travel on the West Coast.

Operating expenses increased 13.6% to $913.8 million on a capacity increase 
of 8.5%.  Unit costs increased 4.7%, generally for the same reasons as 
noted above in the third quarter comparison.

Horizon Air  Operating revenues increased 10.5% to $233.0 million, due to a 
3.9% rise in passenger traffic combined with a 7.1% increase in passenger 
yield.  Capacity increased 2.5%, while load factor rose 0.8 points from 
59.0% in 1995 to 59.8% in 1996.

Operating expenses increased 9.2% to $225.8 million on a capacity increase 
of 2.5%.  Unit costs increased 6.6%, generally for the same reasons as 
noted above in the third quarter comparison.

Consolidated Other Income (Expense)  Non-operating expense decreased from 
$34.2 million to $21.4 million generally for the same reasons as noted 
above in the third quarter comparison.

Income Tax Expense  Accounting standards require the Company to provide for 
income taxes each quarter based on its estimate of the effective tax rate 
for the full year.  The volatility of air fares and the seasonality of the 
Company's business make it very difficult to estimate full-year pretax 
results.  In addition, a relatively small change in pretax results can 
cause a significant change in the effective tax rate due to the magnitude 
of nondeductible expenses, such as goodwill amortization and employee per 
diem costs.  In estimating the 42.6% tax rate for the first nine months of 
1996, the Company considered a variety of factors, including the U.S. 
federal rate of 35%, estimates of nondeductible expenses and state income 
taxes, and the 49.1% tax rate used for full year 1995.  This rate is 
evaluated each quarter and adjustments are made if necessary.

LIQUIDITY AND CAPITAL RESOURCES
The table below presents the major indicators of financial condition and 
liquidity.
Sep 30, 1996      Dec 31, 1995        Change
(In millions, except debt-to-equity and per share amounts)

Cash and marketable securities  $       131.3          $        135.1         $ (3.8)
Working capital (deficit)               (114.0)         (106.4)                 (7.6)
Long-term debt and                                              
capital lease obligations             452.9            522.4                  (69.5)
Shareholders' equity                 277.7                      212.5                   65.2

Book value per common share             $       19.20           $       15.67           $       3.53

Debt-to-equity                          62%:38%         71%:29%           NA

The Company's cash and marketable securities portfolio decreased by $4 
million during the first nine months of 1996.  Operating activities 
provided $222 million of cash during this period.  Additional cash was 
provided by the sale and leaseback of three B737-400 aircraft ($86 
million), the sale of one MD-80 aircraft ($17 million) and proceeds 
received from the issuance of common stock ($21 million).  Cash was used 
for the purchase of two new MD-83 aircraft, one used B737-400 aircraft, one 
previously leased B737-200C, airframe and engine overhauls and other 
capital expenditures ($161 million), and aircraft purchase deposits ($51 
million).  Cash was also used to repay $66 million of short-term borrowings 
and $81 million of debt (including $52 million repaid early).

Shareholders' equity increased by $65 million due to the net income of $44 
million and the issuance of $21 million of common stock under stock plans.  
Equity increased to 38% of capital, an improvement of 9 percentage points, 
due to the increased equity and the early repayment of debt.

Commitments  During the first nine months of 1996, Alaska's lease 
commitments increased approximately $141 million due to the sale and 
leaseback of three B737-400 aircraft.  In addition, Alaska ordered 12 
Boeing 737-400 aircraft along with an option to acquire 12 more.  The value 
of the order, based on the manufacturer's list price, is about $540 
million.  The new B737-400s will be phased in over the next three years, 
with the first plane scheduled to enter the fleet in June 1997.  The new 
planes will replace 12 older McDonnell Douglas MD-80s.  Horizon ordered 25 
de Havilland Dash 8-200 aircraft along with an option to acquire 45 more.  
The value of the order, based on the manufacturer's list price, is about 
$270 million.  Alaska and Horizon expect to finance the new planes with 
either leases, long-term debt or internally generated cash.

Alaska has commitments, during the fourth quarter of 1996, to replace its 
$75 million credit facility with a $125 million credit facility with 
substantially the same terms and conditions.
PART II.  OTHER INFORMATION
ITEM 5.  Other Information
The U.S. 10% passenger ticket tax, the 6.25% cargo waybill tax and the $6 
per passenger international departure tax expired on December 31, 1995. It 
was reinstated effective August 27, 1996 for travel through December 31, 
1996.

ITEM 6.  Exhibits and Reports on Form 8-K
(a)     Exhibit #10.1 - Agreement dated September 18, 1996 between Alaska 
Airlines, Inc. and Boeing       for the purchase of 12 Boeing 737-400 aircraft.
Exhibit #10.2 - Agreement dated August 28, 1996 between Horizon Air 
Industries, Inc. and    Bombardier for the      purchase of 25 de Havilland Dash 8-
200 aircraft.
Exhibit 11 - Statement regarding computation of per-share earnings.
Exhibit 27 - Financial data schedule.
# Confidential treatment has been requested as to a portion of this 
document.

(b)  The following reports on Form 8-K were filed during the third quarter of 
1996:
(1) Amended and Restated Right Agreement filed on August 8, 1996
(2) Agreement to acquire 12 Boeing 737-400 aircraft and 25 de Havilland 
Dash 8-200 aircraft filed       on September 24, 1996

Signatures
Pursuant to the requirements of the Securities 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:  November 4, 1996 

/s/ John F. Kelly       
John F. Kelly
Chairman, President and Chief Executive Officer

/s/ Harry G. Lehr       
Harry G. Lehr
Senior Vice President/Finance
(Principal Financial Officer)

CONSOLIDATED BALANCE SHEET
Alaska Air Group, Inc.

ASSETS
Sep 30,     Dec 31,
(In Millions)                                               1996        1995
Current Assets
Cash and cash equivalents                                  $51.9       $25.8
Marketable securities                                       79.4       109.3
Receivables - net                                           77.8        88.5
Inventories and supplies                                    46.3        44.8
Prepaid expenses and other assets                           69.6        70.0
Total Current Assets                                       325.0       338.4

Property and Equipment
Flight equipment                                           863.8       845.9
Other property and equipment                               231.8       219.1
Deposits for future flight equipment                        74.8        40.7
1,170.4     1,105.7
Less accumulated depreciation and amortization             333.1       312.8
837.3       792.9
Capital leases
Flight and other equipment                                  44.4        44.4
Less accumulated amortization                               24.9        23.3
19.5        21.1
Total Property and Equipment - Net                         856.8       814.0

Intangible Assets - Subsidiaries                            62.1        63.6

Other Assets                                                88.0        97.4

Total Assets                                            $1,331.9    $1,313.4

See accompanying notes to consolidated financial statements.

CONSOLIDATED BALANCE SHEET
Alaska Air Group, Inc.

LIABILITIES AND SHAREHOLDERS' EQUITY
Sep 30,     Dec 31,
(In Millions)                                               1996        1995
Current Liabilities
Accounts payable                                           $68.3       $69.2
Accrued aircraft rent                                       51.6        44.1
Accrued wages, vacation and payroll taxes                   57.5        45.8
Other accrued liabilities                                   64.9        55.7
Short-term borrowings                                        -          65.9
(Interest rate: 1995 - 6.2%)
Air traffic liability                                      167.9       124.4
Current portion of long-term debt and
capital lease obligations                                 28.8        39.7
Total Current Liabilities                                  439.0       444.8

Long-Term Debt and Capital Lease Obligations               452.9       522.4
Other Liabilities and Credits
Deferred income taxes                                       64.4        41.0
Deferred income                                             18.5        20.0
Other liabilities                                           79.4        72.7
162.3       133.7
Shareholders' Equity
Common stock, $1 par value
Authorized:      50,000,000 shares
Issued: 1996 -  17,215,100 shares
1995 -  16,718,684 shares                         17.2        16.7
Capital in excess of par value                           166.7       155.4
Treasury stock, at cost:
1996-2,748,550; 1995-3,153,608 shares                    (62.6)      (71.8)
Deferred compensation                                       (3.0)       (3.6)
Retained earnings                                          159.4       115.8
277.7       212.5
Total Liabilities and Shareholders' Equity              $1,331.9    $1,313.4

See accompanying notes to consolidated financial statements.

CONSOLIDATED STATEMENT OF INCOME
Alaska Air Group, Inc.

Three Months Ended September 30
(In Millions except Per share Amounts)                     1996        1995
Operating Revenues
Passenger                                                 $423.0      $377.3
Freight and mail                                            25.4        26.3
Other - net                                                 16.5        16.0
Total Operating Revenues                                   464.9       419.6
Operating Expenses
Wages and benefits                                         132.4       114.2
Aircraft fuel                                               65.5        48.5
Aircraft maintenance                                        23.6        20.8
Aircraft rent                                               45.3        43.8
Commissions                                                 29.0        26.5
Depreciation and amortization                               17.0        16.9
Loss (gain) on sale of assets                               (3.6)        0.7
Landing fees and other rentals                              16.1        15.5
Other                                                       76.6        70.8
Total Operating Expenses                                   401.9       357.7
Operating Income                                            63.0        61.9
Other Income (Expense)
Interest income                                              2.6         3.4
Interest expense                                            (9.3)      (13.3)
Interest capitalized                                         0.2         0.0
Other - net                                                  0.1        (1.7)
(6.4)      (11.6)
Income before income tax                                    56.6        50.3
Income tax expense                                          23.8        22.9
Net Income                                                 $32.8       $27.4

Primary Earnings Per Share                                 $2.25       $2.01
Fully Diluted Earnings Per Share                           $1.53       $1.30
Shares used for computation:
Primary                                                   14.6        13.6
Fully diluted                                             22.7        23.0

See accompanying notes to consolidated financial statements.

CONSOLIDATED STATEMENT OF INCOME
Alaska Air Group, Inc.

Nine Months Ended September 30
(In Millions except Per share Amounts)                     1996        1995
Operating Revenues
Passenger                                               $1,109.8      $957.5
Freight and mail                                            71.7        71.8
Other - net                                                 51.5        47.1
Total Operating Revenues                                 1,233.0     1,076.4
Operating Expenses
Wages and benefits                                         364.2       322.5
Aircraft fuel                                              173.3       131.6
Aircraft maintenance                                        71.7        61.1
Aircraft rent                                              134.7       128.5
Commissions                                                 78.9        71.8
Depreciation and amortization                               51.0        50.9
Loss (gain) on sale of assets                               (2.8)        1.4
Landing fees and other rentals                              46.8        44.5
Other                                                      217.8       196.7
Total Operating Expenses                                 1,135.6     1,009.0
Operating Income                                            97.4        67.4
Other Income (Expense)
Interest income                                              8.1         6.7
Interest expense                                           (30.2)      (39.7)
Interest capitalized                                         0.2         0.0
Other - net                                                  0.5        (1.2)
(21.4)      (34.2)
Income before income tax                                    76.0        33.2
Income tax expense                                          32.4        15.2
Net Income                                                 $43.6       $18.0

Primary Earnings Per Share                                 $3.06       $1.34
Fully Diluted Earnings Per Share                           $2.22       $1.22
Shares used for computation:
Primary                                                   14.3        13.5
Fully diluted                                             22.4        20.4

See accompanying notes to consolidated financial statements.

CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
Alaska Air Group, Inc.

Common Stock
Capital in    Treasury     Deferred
$1 Par   Excess of       Stock      Compen-    Retained
(In Millions)                                             Value   Par Value     at Cost       sation    Earnings     Total

Balances at December 31, 1995                              $16.7      $155.4      $(71.8)       $(3.6)     $115.8    $212.5
Net income for the nine months
ended September 30, 1996                                                                                   43.6      43.6
Stock issued under stock plans                               0.5         9.6                                           10.1
Treasury stock purchase
(4,466 shares)                                                                    (0.1)                              (0.1)
Treasury stock sold
(409,524 shares)                                                       1.7         9.3                               11.0
Employee Stock Ownership Plan
shares allocated                                                                                0.6                   0.6
Balances at September 30, 1996                             $17.2      $166.7      $(62.6)       $(3.0)     $159.4    $277.7

See accompanying notes to consolidated financial statements.

CONSOLIDATED STATEMENT OF CASH FLOWS
Alaska Air Group, Inc.

Nine Months Ended September 30  (In Millions)              1996        1995
Cash and cash equivalents at beginning of period           $25.8       $11.6
Cash flows from operating activities:
Net income                                                  43.6        18.0
Adjustments to reconcile net income to cash:
Depreciation and amortization                            51.0        50.9
Amortization of airframe and engine overhauls            24.9        18.7
Loss (gain) on disposal of assets and debt retired       (2.8)        3.2
Increase in deferred income taxes                        23.4        17.2
Decrease (increase) in accounts receivable               10.7       (35.5)
Increase in other current assets                         (1.0)       (6.8)
Increase in air traffic liability                        43.5        16.6
Increase in other current liabilities                    27.6        33.3
Other-net                                                 1.0        18.6

Net cash provided by operating activities                  221.9       134.2
Cash flows from investing activities:
Proceeds from disposition of assets                         23.6         2.2
Purchases of marketable securities                         (45.6)      (62.3)
Sales and maturities of marketable securities               75.4        70.2
Flight equipment deposits returned                           1.1         8.9
Additions to flight equipment deposits                     (50.9)         -
Additions to property and equipment                       (160.8)      (47.0)
Restricted deposits and other                                1.2         4.6

Net cash used in investing activities                     (156.0)      (23.4)
Cash flows from financing activities:
Proceeds from short-term borrowings                           -          4.0
Repayment of short-term borrowings                         (65.9)      (29.0)
Proceeds from sale and leaseback transactions               85.6          -
Proceeds from issuance of long-term debt                      -        128.8
Long-term debt and capital lease payments                  (80.5)     (168.9)
Proceeds from issuance of common stock                      10.1         2.6
Proceeds from sale of treasury stock                        10.9          -
Gain (loss) on debt retirement                                -         (1.8)

Net cash used in financing activities                      (39.8)      (64.3)
Net increase in cash and cash equivalents                   26.1        46.5
Cash and cash equivalents at end of period                 $51.9       $58.1
Supplemental disclosure of cash paid (received) during the period for:
Interest (net of amount capitalized)                     $33.1       $34.7
Income taxes (refunds)                                     6.6        (1.9)
Noncash investing and financing activities                 None        None

See accompanying notes to consolidated financial statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS THAT HAVE CHANGED 
SIGNIFICANTLY DURING THE NINE MONTHS ENDED SEPTEMBER 30, 1996
Alaska Air Group, Inc.

Note 1. Commitments (See Note 5 to Consolidated Financial Statements at 
December 31, 1995)
During the first quarter of 1996, Alaska's lease commitments increased 
approximately $96 million due to the sale and leaseback of two B737-400 
aircraft under 18-1/2-year operating leases.  During the third quarter 
of 1996, Alaska's lease commitments increased approximately $45 million 
due to the sale and leaseback of one B737-400 aircraft under an 18-year 
operating lease.

During the third quarter of 1996, Horizon ordered 25 de Havilland Dash 
8-200 aircraft along with an option to acquire 45 more.  The value of 
the order, based on the manufacturer's list price, is about $270 
million.  During the third quarter of 1996, Alaska ordered 12 Boeing 
737-400 aircraft along with an option to acquire 12 more.  The value of 
the order, based on the manufacturer's list price, is about $540 
million.

Alaska  Airlines Financial and Statistical Data

Quarter Ended Sep 30     Nine Months Ended Sep 30
%                           %
1996    1995   Change       1996    1995   Change
Financial Data (in millions):
Operating Revenues:
Passenger                   $344.3   $303.4    13.5     $892.1   $757.4    17.8
Freight and mail              22.6     23.3    (3.0)      63.4     63.6    (0.3)
Other - net                   15.9     16.1    (1.2)      49.3     47.4     4.0

Total Operating Revenues     382.8    342.8    11.7    1,004.8    868.4    15.7

Operating Expenses:
Wages and benefits           100.4     92.3     8.8      286.7    258.2    11.0
Employee profit sharing        7.6      0.0     NM         7.6      0.0     NM
Aircraft fuel                 56.7     41.2    37.6      148.9    111.6    33.4
Aircraft maintenance          12.9     11.9     8.4       40.8     35.2    15.9
Aircraft rent                 36.2     35.0     3.4      108.4    102.7     5.6
Commissions                   25.6     21.4    19.6       69.0     57.2    20.6
Depreciation and amort.       14.3     14.6    (2.1)      42.4     43.9    (3.4)
Loss (gain) on asset sales    (3.8)     0.7     NM        (3.6)     1.4     NM
Landing fees and other rent   13.0     12.4     4.8       37.5     35.1     6.8
Other                         62.9     58.1     8.3      176.1    159.3    10.5

Total Operating Expenses     325.8    287.6    13.3      913.8    804.6    13.6

Operating Income              57.0     55.2     3.3       91.0     63.8    42.6

Interest income                2.7      3.5                8.4      7.1
Interest expense              (7.1)   (10.0)             (23.6)   (30.7)
Interest capitalized           0.1      0.0                0.1      0.0
Other - net                    0.2      0.4                0.7      1.2
(4.1)    (6.1)             (14.4)   (22.4)

Income Before Income Tax     $52.9    $49.1              $76.6    $41.4

Operating Statistics:
Revenue passengers (000)      3,420    2,954   15.8       9,001    7,548   19.2
RPM's (000,000)               2,893    2,528   14.5       7,524    6,464   16.4
ASM's (000,000)               4,100    3,831    7.0      11,409   10,512    8.5
Passenger load factor         70.6%    66.0% 4.6 pts      65.9%    61.5% 4.4 pts
Breakeven load factor         59.7%    54.4% 5.3 pts      60.4%    58.1% 2.3 pts
Yield per passenger mile     11.90c   12.00c   (0.8)     11.86c   11.72c    1.2
Operating revenue per ASM     9.34c    8.95c    4.4       8.81c    8.26c    6.6
Operating expenses per ASM    7.95c    7.51c    5.8       8.01c    7.65c    4.7
Fuel cost per gallon          77.6c    61.0c   27.1       73.5c    60.7c   21.1
Average number of employees   7,877    7,243    8.8       7,562    6,944    8.9
Acft utilization (block hr)    11.9     11.4    4.3        11.4     10.9    4.9
Operating fleet at period-end    75       74    1.4          75       74    1.4
NM = Not Meaningful
c= cents

Horizon Air Financial and Statistical Data

Quarter Ended Sep 30        Nine Months Ended Sep 30
%                           %
1996    1995   Change       1996    1995   Change
Financial Data (in millions):
Operating Revenues:
Passenger                    $80.5    $73.9     8.9     $222.5   $200.1    11.2
Freight and mail               2.8      2.9    (3.4)       8.4      8.1     3.7
Other - net                    0.6      1.0   (40.0)       2.1      2.7   (22.2)

Total Operating Revenues      83.9     77.8     7.8      233.0    210.9    10.5

Operating Expenses:
Wages and benefits            23.7     21.9     8.2       69.2     64.3     7.6
Employee profit sharing        0.7      0.0     NM         0.7      0.0     NM
Aircraft fuel                  8.9      7.2    23.6       24.4     20.0    22.0
Aircraft maintenance          10.7      8.9    20.2       30.9     25.9    19.3
Aircraft rent                  9.1      8.8     3.4       26.3     25.8     1.9
Commissions                    5.2      5.1     2.0       14.8     14.6     1.4
Depreciation and amort.        2.6      2.3    13.0        8.5      6.8    25.0
Loss (gain) on sale of assets  0.2      0.0     NM         0.8      0.0     NM
Landing fees and other rent    3.4      3.4     0.0        9.7      9.7     0.0
Other                         13.5     13.5    (0.0)      40.5     39.6     2.3

Total Operating Expenses      78.0     71.1     9.7      225.8    206.7     9.2

Operating Income               5.9      6.7   (11.9)       7.2      4.2    71.4

Interest income                0.0      0.0                0.1      0.0
Interest expense              (0.2)    (0.2)              (0.6)    (0.6)
Interest capitalized           0.1      0.0                0.1      0.0
Other - net                    0.3     (0.0)               0.2     (0.0)
0.2     (0.2)              (0.2)    (0.6)

Income Before Income Tax      $6.1     $6.5               $7.0     $3.6

Operating Statistics:
Revenue passengers (000)      1,022    1,057   (3.4)      2,849    2,869   (0.7)
RPM's (000,000)                 239      238    0.3         656      631    3.9
ASM's (000,000)                 387      386    0.3       1,097    1,070    2.5
Passenger load factor         61.7%    61.7% 0.0 pts      59.8%    59.0% 0.8 pts
Breakeven load factor         56.5%    55.7% 0.8 pts      57.5%    57.8%(0.3)pts
Yield per passenger mile     33.69c   31.04c    8.5      33.92c   31.68c    7.1
Operating revenue per ASM    21.68c   20.17c    7.5      21.25c   19.71c    7.8
Operating expenses per ASM   20.15c   18.44c    9.3      20.59c   19.31c    6.6
Fuel cost per gallon          79.6c    64.5c   23.5       77.0c    64.3c   19.8
Average number of employees   2,947    2,948   (0.0)      2,873    2,885   (0.4)
Acft utilization (block hr)     8.0      8.1   (1.8)        7.8      8.1   (4.0)
Operating fleet at period-end    62       68   (8.8)         62       68   (8.8)
NM = Not Meaningful
c= cents

Exhibit 10.1

PURCHASE AGREEMENT

between

THE BOEING COMPANY

and

ALASKA AIRLINES, INC.

Relating to Boeing Model 737 Aircraft

Purchase Agreement Number 1954

TABLE OF CONTENTS

Page    SA
Number  Number

ARTICLES

1.      Subject Matter of Sale  1-1

2.      Delivery, Title and Risk
of Loss 2-1

3.      Price of Aircraft       3-1

4.      Taxes   4-1

5.      Payment 5-1

6.      Excusable Delay 6-1

7.      Changes to the Detail
Specification   7-1

8.      Federal Aviation Requirements and
Certificates and Export License 8-1

9.      Representatives, Inspection,
Flights and Test Data   9-1

10.     Assignment, Resale or Lease     10-1

11.     Termination for Certain Events  11-1

12.     Product Assurance; Disclaimer and
Release; Exclusion of Liabilities;
Customer Support; Indemnification
and Insurance   12-1

13.     Buyer Furnished Equipment and
Spare Parts     13-1

14.     Contractual Notices and Requests        14-1

15.     Miscellaneous   15-1

TABLES

1.      Aircraft Deliveries and
Descriptions    S-1

TABLE OF CONTENTS

SA
Number

EXHIBITS

A       Aircraft Configuration          

B       Product Assurance Document              

C       Customer Support Document               

D       Price Adjustments Due to
Economic Fluctuations -
Airframe and Engines            

E       Buyer Furnished Equipment
Provisions Document             

F       Defined Terms Document          

LETTER AGREEMENTS

1954-1  Promotion Support               

1954-2  Seller Purchased Equipment              

1954-3  Option Aircraft.......................  

1954-4  Spares Initial Provisioning...........  

1954-5  Escalation Sharing....................  

1954-6  Waiver of Aircraft Demonstration                
Flights...........      

1954-7  Additional Purchase Agreement ......... 
Provisions.............................

TABLE OF CONTENTS

SA
Number

RESTRICTED LETTER AGREEMENTS

6-1162-DSF-003  [Confidential Treatment Requested]

6-1162-DSF-004  [Confidential Treatment Requested]

6-1162-DSF-005  [Confidential Treatment Requested]

6-1162-DSF-006  [Confidential Treatment Requested]

6-1162-DSF-008  [Confidential Treatment Requested]

6-1162-DSF-009  [Confidential Treatment Requested]

6-1162-DSF-012  [Confidential Treatment Requested]

6-1162-DSF-016  Special Purchase Agreement Provisions   
[Confidential Treatment Requested]

PURCHASE AGREEMENT NO. 1954

Relating to

BOEING MODEL 737-490 AIRCRAFT

This Agreement is entered into as of September 18, 1996 by and 
between The Boeing Company, a Delaware corporation, with its principal 
office in Seattle, Washington (Boeing), and Alaska Airlines, Inc., an 
Alaska corporation, with its principal office in the City of Seattle, State 
of Washington (Buyer).

Accordingly, Boeing and Buyer agree as follows:

ARTICLE 1.      Subject Matter of Sale.

1.1     The Aircraft.  Boeing will manufacture and deliver to Buyer 
and Buyer will purchase and accept delivery from Boeing of twelve (12) 
Boeing Model 737-490             aircraft (the Aircraft) manufactured in 
accordance with Boeing detail specification D6-38900-4-1C dated August 29, 
1996, as described in Exhibit A, as modified from time to time in 
accordance with this Agreement (Detail Specification).

1.2     Additional Goods and Services.  In connection with the sale 
of the Aircraft, Boeing will also provide to Buyer certain other things 
under this Agreement, including data, documents, training and services, all 
as described in this Agreement.

1.3     Performance Guarantees.  Any performance guarantees 
applicable to the Aircraft will be expressly included in this Agreement.  
Where performance guarantees are included in this Agreement other than 
within the Detail Specification, such guarantees will be treated as being 
incorporated in the Detail Specification by this reference.  

1.4     Defined Terms.  For ease of use, certain terms are treated as 
defined terms in this Agreement.  Such terms are identified with a capital 
letter and set forth and/or defined in Exhibit F.

ARTICLE 2.      Delivery, Title and Risk of Loss.

2.1     Time of Delivery.  The Aircraft will be delivered to Buyer by 
Boeing, and Buyer will accept delivery of the Aircraft, in accordance with 
the schedule set forth in Table 1.

2.2     Notice of Target Delivery Date.  Boeing will give Buyer 
notice of the Target Delivery Date of the Aircraft approximately 30 days 
prior to the scheduled month of delivery.

2.3     Notice of Delivery Date.  Boeing will give Buyer at least 7 
days notice of the delivery date of the Aircraft.  If an Aircraft delivery 
is delayed beyond such delivery date due to the responsibility of Buyer, 
Buyer will reimburse Boeing for all costs incurred by Boeing as a result of 
such delay, including amounts for storage, insurance, Taxes, preservation 
or protection of the Aircraft and interest on payments due.

2.4     Place of Delivery.  The Aircraft will be delivered at a 
facility selected by Boeing in the State of Washington, unless mutually 
agreed otherwise.

2.5     Title and Risk of Loss.  Title to and risk of loss of an 
Aircraft will pass from Boeing to Buyer upon delivery of such Aircraft, but 
not prior thereto.

2.6     Bill of Sale.  Upon delivery of an Aircraft Boeing will 
deliver to Buyer a bill of sale conveying good title to such Aircraft, free 
of any encumbrances.

ARTICLE 3.      Price of Aircraft.

3.1     Definitions.

3.1.1   Special Features are the features incorporated in 
Exhibit A which have been selected by Buyer.

3.1.2   Base Airframe Price is the Aircraft Basic Price 
excluding the price of Special Features and Engines.

3.1.3   Engine Price is the price established by the Engine 
manufacturer for the Engines installed on the Aircraft including all 
accessories, equipment and parts set forth in Exhibit D.

3.1.4   Aircraft Basic Price is comprised of the Base Airframe 
Price, the Engine Price and the price of the Special Features.

3.1.5   Economic Price Adjustment is the adjustment to the 
Aircraft Basic Price (Base Airframe, Engine and Special Features) as 
calculated pursuant to Exhibit D.

3.1.6   Aircraft Price is the total amount Buyer is to pay for 
the Aircraft at the time of delivery.

3.2     Aircraft Basic Price.

The Aircraft Basic Price, expressed in July 1995 dollars, is 
set forth below:

Base Airframe Price:    [Confidential Treatment Requested]
Special Features        [Confidential Treatment Requested]
Engine Price    [Confidential Treatment Requested]
Aircraft Basic Price    [Confidential Treatment Requested]

3.3     Aircraft Price.  The Aircraft Price will be established at 
the time of delivery of such Aircraft to Buyer and will be the sum of:

3.3.1   the Aircraft Basic Price, which is [Confidential 
Treatment Requested]

3.3.2   the Economic Price Adjustments for the Aircraft Basic 
Price, as calculated pursuant to the formulas set forth in Exhibit D (Price 
Adjustments Due to Economic Fluctuations - Airframe and Engine); plus

3.3.3   other price adjustments made pursuant to this 
Agreement or other written agreements executed by Boeing and Buyer.

3.4     Advance Payment Base Price.

3.4.1   Advance Payment Base Price.  For advance payment 
purposes, the following estimated delivery prices of the Aircraft have been 
established, using currently available forecasts of the escalation factors 
used by Boeing as of the date of signing this Agreement.  The Advance 
Payment Base Price of each Aircraft is set forth in Table 1.

ARTICLE 4.      Taxes.

4.1     Taxes.  Buyer will pay all Taxes imposed by any domestic or 
foreign taxing authority arising out of or in connection with this 
Agreement or performance pursuant to it.  In this Agreement, "Taxes" are 
defined as all taxes, fees, charges or duties and any interest, penalties, 
fines, or other additions to tax, including, but not limited to, sales, 
use, value added, gross receipts, stamp, excise, transfer and similar 
taxes, except U.S. federal income taxes and Washington State business and 
occupation tax imposed on Boeing.

4.2     Taxes Relating to Buyer Furnished Equipment.  Buyer is 
responsible for the proper filing of all tax returns, reports and 
declarations and payment of all taxes related to or imposed on Buyer 
Furnished Equipment.

4.3     Reimbursement of Boeing.  Buyer will promptly reimburse 
Boeing on demand, net of additional taxes thereon, for any Taxes that are 
imposed on and paid by Boeing or for which Boeing is responsible for 
collecting.

ARTICLE 5.      Payment.

5.1     Advance Payment Schedule.  Advance payment for each Aircraft 
will be made to Boeing by Buyer as follows:

Due Date of Payment     Amount Due /per Aircraft/
(Percentage times
Advance Payment Base Price)

Upon signing the Agreement      1% (less the
Deposit)

24 months prior to the first    4%
day of the scheduled delivery
month of the Aircraft

21 months prior to the first    5%
day of the scheduled delivery
month of the Aircraft

18 months prior to the first    5%
day of the scheduled delivery
month of the Aircraft

12 months prior to the first    5%
day of the scheduled delivery
month of the Aircraft

9 months prior to the first     5%
day of the scheduled delivery
month of the Aircraft

6 months prior to the first     5%
day of the scheduled delivery
month of the Aircraft/     

Total           30%

5.2     Payment at Delivery.  The Aircraft Price, less Advance 
Payments received by Boeing, is due on delivery of such Aircraft to Buyer.

5.3     Form of Payments.  All payments due hereunder will be made by 
Buyer to Boeing by unconditional deposit in a bank account in the United 
States designated by Boeing or in other immediately available funds.  All 
prices and payments set forth in this Agreement are in United States 
Dollars.

5.4     Monetary and Government Regulations.  Buyer will be 
responsible for complying with all monetary control regulations and for 
obtaining necessary governmental authorizations related to payments 
hereunder.

ARTICLE 6.      Excusable Delay.

6.1     General.  Boeing will not be liable for or be deemed to be in 
default under this Agreement on account of any delay in delivery of any 
Aircraft or other performance hereunder arising out of causes such as:  
acts of God; war, armed hostilities, riots, fires, floods, earthquakes or 
serious accidents; governmental acts or failures to act affecting 
materials, facilities or Aircraft; strikes or labor troubles causing 
cessation, slowdown or interruption of work; damage to an Aircraft; failure 
of or delay in transportation; or inability, after due and timely 
diligence, to procure materials, systems, accessories, equipment or parts; 
or arising out of any other cause to the extent it is beyond Boeing's 
control or not occasioned by Boeing's fault or negligence.  A delay 
resulting from such causes is referred to as an "Excusable Delay".

6.2     Excusable Delay of 12 Months.

6.2.1   Anticipated Delay.  If Boeing concludes, based on its 
appraisal of the facts and normal scheduling procedures, that due to an 
Excusable Delay, delivery of an Aircraft will be delayed more than 12 
months beyond the month in which delivery is scheduled, Boeing will 
promptly so notify Buyer in writing and either party may then terminate 
this Agreement with respect to such Aircraft by giving written notice to 
the other within 15 days after receipt by Buyer of Boeing's notice.  
Failure of a party to terminate the purchase of an Aircraft for an 
Excusable Delay pursuant to this paragraph results in a waiver of that 
party's right to terminate the purchase of such Aircraft for any delay in 
delivery caused by such Excusable Delay.

6.2.2   Actual Delay.  If, due to an Excusable Delay, delivery 
of an Aircraft is delayed for more than 12 months beyond the month in which 
delivery is scheduled, and such right to terminate has not been waived 
under paragraph 6.2.1, either party may terminate this Agreement with 
respect to such Aircraft by giving written notice to the other within 15 
days after the expiration of such 12-month period.

6.3     Aircraft Damaged Beyond Repair.  If, prior to delivery, an 
Aircraft is destroyed or damaged beyond economic repair due to any cause, 
Boeing will promptly notify Buyer in writing and either party may then 
terminate this Agreement with respect to such Aircraft.  If Boeing does not 
so terminate this Agreement with respect to such Aircraft, such notice will 
specify the earliest date reasonably possible, consistent with Boeing's 
other contractual commitments and production capabilities, by which Boeing 
will deliver a replacement for such Aircraft.  This Agreement will 
thereupon terminate as to such Aircraft, unless Buyer gives Boeing written 
notice, within 30 days after receipt of Boeing's notice, that Buyer desires 
the proposed replacement for such Aircraft.

6.4     Agreement Revision.  If an Aircraft is delayed, or destroyed 
or damaged beyond economic repair, and this Agreement is not terminated 
pursuant to this Article, this Agreement will be appropriately revised.

6.5     Agreement Termination.

6.5.1   Termination under this Article will discharge all 
obligations and liabilities of Boeing and Buyer hereunder with respect to 
terminated Aircraft and all related undelivered items and services, except 
that Boeing will return to Buyer, without interest, all advance payments 
related to such Aircraft,

6.5.2   If either party terminates this Agreement as to any 
Aircraft pursuant to this Article, Boeing may, upon written notice to Buyer 
within 30 days after such termination, purchase from Buyer any Buyer 
Furnished Equipment related to such Aircraft, at the invoice prices paid, 
or contracted to be paid, by Buyer.

6.6     Exclusive Rights.  The termination rights set forth in this 
Article are in substitution for any and all other rights of termination or 
contract lapse or any other claim arising by operation of law by virtue of 
delays in performance covered by this Article.

ARTICLE 7.      Changes to the Detail Specification.

7.1     Development Changes.  Boeing may, at its own expense and 
without Buyer's consent, incorporate Development Changes in the Detail 
Specification and the Aircraft prior to delivery to Buyer.  Development 
Changes are defined as changes to the basic specification for 
Model 737           aircraft that do not affect the Aircraft Purchase Price 
or adversely affect Aircraft delivery, guaranteed weight, guaranteed 
performance or compliance with the interchangeability or replaceability 
requirements set forth in the Detail Specification.  If Boeing makes 
changes pursuant to this paragraph, Boeing will promptly notify Buyer of 
such changes.

7.2     Change Orders.  The Detail Specification and associated 
provisions of this Agreement may be amended by Change Order or other 
written agreement, which will state the particular changes to be made and 
any effect on design, performance, weight, balance, time of delivery, 
Aircraft Basic Price and Advance Payment Base Price.

ARTICLE 8.      Federal Aviation Requirements and Certificates.

8.1     FAA Certificates.

8.1.1   Boeing will obtain from the Federal Aviation 
Administration (FAA):

8.1.1.1  a Type Certificate (transport category) 
issued pursuant to Part 21 of the Federal Aviation Regulations for the type 
of aircraft covered by this Agreement, and

8.1.1.2  a Standard Airworthiness Certificate for each 
Aircraft issued pursuant to Part 21 of the Federal Aviation Regulations, 
which will be provided to Buyer with delivery of the Aircraft.

8.1.2   Boeing will not be obligated to obtain any other 
certificates or approvals for the Aircraft.

8.1.3   If the use of either FAA certificate is discontinued 
prior to delivery of an Aircraft, references in this Agreement to such 
discontinued certificate will be deemed references to its superseding FAA 
certificate.  If the FAA does not issue a superseding certificate, Boeing's 
only obligation under this paragraph will be to comply with the Detail 
Specification.

8.2     FAA Manufacturer Changes.

8.2.1   If the FAA, or any other governmental agency having 
jurisdiction, requires any change to the Aircraft, data relating to the 
Aircraft, or testing of the Aircraft in order to obtain the Standard 
Airworthiness Certificate (Manufacturer Change), such Manufacturer Change 
will be made prior to delivery of such Aircraft.

8.2.2   If prior to Aircraft delivery a Manufacturer Change is 
required to be incorporated in an Aircraft, it will be incorporated at no 
charge to Buyer, unless the requirement is promulgated subsequent to the 
date of this Agreement, in which case Buyer will pay Boeing's 

charge only for Aircraft scheduled for delivery to Buyer 18 months or more 
after the date of this Agreement.

8.3     FAA Operator Changes.

8.3.1   Boeing will deliver each Aircraft with the changes in 
equipment incorporated (or, at Boeing's sole discretion, with suitable 
provisions for the incorporation of such equipment) that is required by 
Federal Aviation Regulations which (i) are generally applicable with 
respect to transport category aircraft to be used in United States 
certified air carriage and (ii) have to be complied with on or before the 
date of delivery of such Aircraft (Operator Changes).

8.3.2   If Operator Changes are incorporated in an Aircraft, 
Buyer will pay Boeing's charge applicable to such Aircraft.

8.4     Delays; Changes to this Agreement.  If delivery of an 
Aircraft is delayed due to the incorporation of a Manufacturer Change or an 
Operator Change, the delivery of the Aircraft will be appropriately revised 
to reflect such delay.  This Agreement will also be revised to reflect 
appropriate changes in the Aircraft Price, design, performance, weight and 
balance due to the incorporation of a Manufacturer Change or an Operator 
Change.

ARTICLE 9.      Representatives, Inspection,
Flights and Test Data.

9.1     Office Space at Boeing.  From a date 12 months prior to 
delivery of the first Aircraft, and until the delivery of the last 
Aircraft, Boeing will furnish, without additional charge, suitable office 
space and equipment in or conveniently located near its plant in Seattle 
for the accommodation of up to three (3) personnel of Buyer.

9.2     Inspection by Buyer.  Designated representatives of Buyer may 
inspect the manufacturing of the Aircraft at all reasonable times.  
However, if access to any part of Boeing's plant is restricted by the 
United States Government, Boeing will be allowed a reasonable time to 
arrange for inspection elsewhere.  All inspections by Buyer's 
representatives will be performed so as not to hinder manufacture or 
performance by Boeing.

9.3     Aircraft Flight.  Prior to delivery, each Aircraft will be 
flown by Boeing for such periods as may be required to demonstrate to Buyer 
the function of the Aircraft and its equipment in accordance with Boeing's 
production flight test procedures.  The aggregate duration of such flights 
will be not less than 1-1/2 hours or more than 4 hours.  Five persons 
designated by Buyer may participate in such flights as observers.

9.4     Test Data.  Boeing will furnish to Buyer, as soon as 
practicable, flight test data obtained on an aircraft of the type purchased 
hereunder, certified as correct by Boeing, to evidence compliance with any 
performance guarantees set forth in this Agreement.  Any Performance 
Guarantee will be deemed to be met if reasonable engineering 
interpretations and calculations based on such flight test data establish 
that the Aircraft would, if actually flown, comply with such guarantee.

9.5     Special Aircraft Test Requirements.  Boeing may use the 
Aircraft for flight and ground tests prior to delivery to Buyer, without 
reduction in the Aircraft Purchase Price, if such tests are deemed 
necessary by Boeing to:

9.5.1  obtain or maintain the Type Certificate or Standard 
Airworthiness Certificate for the Aircraft; or

9.5.2  evaluate aircraft improvement changes that may be 
offered for production or retrofit incorporation in any aircraft.

9.6     Indemnity.  Boeing will indemnify and hold harmless Buyer and 
Buyer's observers from and against all claims and liabilities, including 
costs and expenses (including attorneys' fees) incident thereto, for injury 
to or death of any person or persons, including employees of Boeing but 
excluding employees, officers or agents of Buyer, or for loss of or damage 
to any property, arising out of or in connection with the operation of the 
Aircraft during all demonstration and test flights conducted under the 
provisions of this Article, whether or not arising in tort or occasioned in 
whole or in part by the negligence of Buyer or any of Buyer's observers, 
whether active, passive or imputed.

ARTICLE 10.     Assignment, Resale or Lease.

10.1    Assignment.  This Agreement will inure to the benefit of and 
be binding upon each of the parties hereto and their respective successors 
and assigns.  Neither the rights nor the duties of either party under this 
Agreement may be assigned or delegated, or contracted to be assigned or 
delegated, in whole or part, without the prior written consent of the other 
party, except that:

10.1.1  Either party may assign its interest to a corporation 
that (i) results from any merger or reorganization of such party or (ii) 
acquires substantially all the assets of such party;

10.1.2  Boeing may assign its rights to receive money; and

10.1.3  Boeing may assign all or any part of its rights and 
obligations under this Agreement to any wholly owned subsidiary of Boeing, 
provided that Boeing will remain fully and solely responsible to Buyer for 
all obligations and liabilities as the seller of the Aircraft, and Buyer 
will continue to deal exclusively with Boeing.

10.2    Transfer by Buyer at Delivery.  Buyer may, and at Buyer's 
request Boeing will, take any action reasonably required for the purpose of 
causing an Aircraft, at time of delivery, to be subjected to an equipment 
trust, conditional sale, lien or other arrangement for the financing by 
Buyer of such Aircraft.  No action taken by either party pursuant to this 
paragraph, however, will require Boeing to divest itself of title to or 
possession of such Aircraft until delivery and payment therefor pursuant to 
this Agreement.

10.3    Sale by Buyer After Delivery.  If, following delivery of any 
Aircraft, Buyer sells such Aircraft (including any sale for financing 
purposes), then all of Buyer's rights with respect to such Aircraft under 
this Agreement will inure to the benefit of the purchaser of such Aircraft, 
effective upon Boeing's receipt of such purchaser's express written 
agreement, in form satisfactory to Boeing, to be bound by and to comply 
with all applicable terms, conditions and limitations of this Agreement.

10.4    Lease by Buyer After Delivery.  If, following delivery of any 
Aircraft, Buyer leases such Aircraft, Buyer will not assign to the lessee 
of such Aircraft any rights under this Agreement without Boeing's prior 
written consent, which consent will not be unreasonably withheld.

10.5    No Increase in Boeing Liability.  No action taken by Buyer or 
Boeing relating to the assignment, resale or lease of any Aircraft or this 
Agreement will subject Boeing to any liability beyond that in this 
Agreement or modify in any way Boeing's obligations under this Agreement.

10.6    Exculpatory or Indemnity Clause in Post-Delivery Sale or 
Lease.  If, following delivery of an Aircraft, Buyer sells or leases such 
Aircraft and obtains from the transferee an exculpatory or indemnity clause 
protecting Buyer, Buyer will include the same protection for Boeing.

ARTICLE 11.     Termination for Certain Events.

11.1    Termination.  This Agreement may be terminated at any time 
with regard to undelivered Aircraft and items and unperformed services by 
notice in writing by either party hereto if the other party:

11.1.1  Ceases doing business as a going concern, suspends all 
or substantially all its business operations, makes an assignment for the 
benefit of creditors, is insolvent, or generally does not pay its debts, or 
admits in writing its inability to pay its debts; or

11.1.2  Petitions for or acquiesces in the appointment of any 
receiver, trustee or similar officer to liquidate or conserve its business 
or any substantial part of its assets; commences any legal proceeding such 
as insolvency, bankruptcy, reorganization, readjustment of debt, 
dissolution or liquidation available for the relief of financially 
distressed debtors; or becomes the object of any such proceeding, unless 
such proceeding is dismissed or stayed within a reasonable period, not to 
exceed 60 days.

11.2    Repayment of Advance Payments.  If this Agreement is 
terminated with regard to any Aircraft by Buyer under this Article, Boeing 
will repay to Buyer, without interest, any advance payments received by 
Boeing from Buyer with respect to such Aircraft.

ARTICLE 12.     Product Assurance; Disclaimer and Release; Exclusion of 
Liabilities; Customer Support; Indemnification and Insurance.

12.1    Product Assurance.  Boeing and Buyer are bound by the 
provisions of Exhibit B hereto (Product Assurance Document).

12.2    DISCLAIMER AND RELEASE.  THE WARRANTIES, OBLIGATIONS AND 
LIABILITIES OF BOEING AND THE REMEDIES OF BUYER SET FORTH IN THE PRODUCT 
ASSURANCE DOCUMENT ARE EXCLUSIVE AND IN SUBSTITUTION FOR, AND BUYER HEREBY 
WAIVES, RELEASES AND RENOUNCES, ALL OTHER WARRANTIES, OBLIGATIONS AND 
LIABILITIES OF BOEING AND ALL OTHER RIGHTS, CLAIMS AND REMEDIES OF BUYER 
AGAINST BOEING, EXPRESS OR IMPLIED, ARISING BY LAW OR OTHERWISE, WITH 
RESPECT TO ANY NONCONFORMANCE OR DEFECT IN ANY AIRCRAFT OR OTHER THING 
PROVIDED UNDER THIS AGREEMENT, INCLUDING, BUT NOT LIMITED TO:

(A)     ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS;

(B)     ANY IMPLIED WARRANTY ARISING FROM COURSE OF 
PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE;

(C)     ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY IN 
TORT, WHETHER OR NOT ARISING FROM THE NEGLIGENCE OF 
BOEING (WHETHER ACTIVE, PASSIVE OR IMPUTED); AND

(D)     ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY FOR 
LOSS OF OR DAMAGE TO ANY AIRCRAFT.

12.3    EXCLUSION OF CONSEQUENTIAL AND OTHER DAMAGES.  BOEING WILL 
HAVE NO OBLIGATION OR LIABILITY, WHETHER ARISING IN CONTRACT (INCLUDING 
WARRANTY), TORT (INCLUDING ACTIVE, PASSIVE OR IMPUTED NEGLIGENCE) OR 
OTHERWISE, FOR LOSS OF USE, REVENUE OR PROFIT, OR FOR ANY OTHER INCIDENTAL 
OR CONSEQUENTIAL DAMAGES WITH RESPECT TO ANY NONCONFORMANCE OR DEFECT IN 
ANY AIRCRAFT OR OTHER THING PROVIDED UNDER THIS AGREEMENT.

12.4    Definitions.  For the purposes of this Article, the term 
"BOEING" means The Boeing Company, its divisions, subsidiaries and 
affiliates, the assignees of each, and their directors, officers, employees 
and agents.

12.5    Customer Support and Indemnification; Insurance.  Boeing and 
Buyer are bound by the provisions of Exhibit C hereto (Customer Support 
Document), which includes indemnification and insurance requirements 
related to the use of Customer Support Services.

ARTICLE 13.     Buyer Furnished Equipment and Spare Parts.

13.1    Buyer Furnished Equipment.  Boeing and Buyer are bound by the 
provisions of Exhibit E (Buyer Furnished Equipment Document), which 
includes indemnification requirements related to Buyer Furnished Equipment.

13.2    Purchase of Boeing Spare Parts.  Boeing will sell to Buyer 
and Buyer will purchase from Boeing materials, spare parts, assemblies, 
tools and items of equipment relating to the Aircraft pursuant to Customer 
Services General Terms Agreement No. 90.

ARTICLE 14.     Contractual Notices and Requests.

All notices and requests relating to this Agreement will be in 
English, and may be transmitted by any customary means of written 
communication addressed as follows:

Buyer:          Alaska Airlines
19300 Pacific Highway South

Attention:  Senior Vice President                       
Finance

Copy to:    Associate General Counsel

Facsimile No.  (206) 433-3379

Boeing: Boeing Commercial Airplane Group
P.O. Box 3707
Seattle, Washington 98124-2207
U.S.A.

Attention:      Vice President - Contracts
Mail Stop 75-38

Facsimile No.  (206) 237-1706

or to such other address as specified elsewhere herein or as otherwise 
directed in writing by either party.  The effective date of any such notice 
or request will be the date on which it is received by the addressee.

ARTICLE 15.     Miscellaneous.

15.1    Government Approval.  Boeing and Buyer will use their best 
reasonable efforts to assist each other in obtaining any United States 
Governmental agency consents or approvals necessary or appropriate to 
effect certification and sale of the Aircraft under this Agreement.

15.2    Headings.  Article and paragraph headings used in this 
Agreement are for convenient reference only and are not intended to affect 
the interpretation of this Agreement.

15.3    Entire Agreement; Amendments.  This Agreement contains the 
entire agreement between the parties concerning the subject matter hereof 
and supersedes all previous proposals, understandings, commitments or 
representations whatsoever, oral or written.  This Agreement may be changed 
only in writing signed by authorized representatives of Boeing and Buyer, 
except in the case of certain changes permitted or required by this 
Agreement.

15.4    GOVERNING LAW.  THIS AGREEMENT WILL BE GOVERNED BY THE LAW OF 
THE STATE OF WASHINGTON, U.S.A., EXCLUSIVE OF WASHINGTON'S CONFLICTS OF 
LAWS RULES.

15.5    Negotiated Agreement.  This Agreement, including the 
provisions of Article 12 relating to DISCLAIMER AND RELEASE, the Exclusion 
of Consequential and Other Damages, and the provisions relating to 
indemnification and insurance set forth in this Agreement, has been the 
subject of discussion and negotiation and is fully understood by the 
parties; the Aircraft Purchase Price and other agreements of the parties 
set forth in this Agreement were arrived at in consideration of such 
provisions.

*************************

ALASKA AIRLINES
THE BOEING COMPANY

By /s/ Harry G. Lehr            By /s/ Dawn S. Foster 

Its Senior Vice President Finance       Its  Attorney-In-Fact      

Table 1 to

Purchase Agreement 1954

Aircraft Deliveries and Descriptions

Model 737-490 Aircraft

Detail Specification No. and Date - D6-38900-4-1C  8-29-96
Exhibit Number - A

Month/Year              Quantity of 
of Delivery             Aircraft                Price

June 1997               One (1) [Confidential Treatment Requested]
July 1997               Two (2)         [Confidential Treatment Requested]
January 1998            One (1)         [Confidential Treatment Requested]
February 1998           One (1)         [Confidential Treatment Requested]
March 1998              One (1)         [Confidential Treatment Requested]
April 1998              One (1)         [Confidential Treatment Requested]
May 1998                One (1)         [Confidential Treatment Requested]
August 1998             One (1)         [Confidential Treatment Requested]
September 1998  One (1)         [Confidential Treatment Requested]
March 1999              One (1)         [Confidential Treatment Requested]
May 1999                One (1)         [Confidential Treatment Requested]

AIRCRAFT CONFIGURATION

between

THE BOEING COMPANY

and

ALASKA AIRLINES, INC.

Exhibit A to Purchase Agreement Number 1954

AIRCRAFT CONFIGURATION

Dated September 18, 1996

relating to

BOEING MODEL 737-490 AIRCRAFT

The Detail Specification is Detail Specification D6-38900-4-1C  
dated as of August 29, 1996.  Such Detail Specification will be comprised 
of Detail Specification D6-38900-4-1 Revision T dated February 3, 1995 as 
amended to incorporate the applicable specification language to reflect the 
effect of the changes set forth in the Change Requests listed below 
(configuration of leased ILFC Model 737-4Q8 Aircraft PW251), including the 
effects of such changes on Manufacturer's Empty Weight (MEW) and Operating 
Empty Weight (OEW).  Such Change Requests are set forth in Boeing Document 
D6-77136.  As soon as practicable, Boeing will furnish to Buyer copies of 
the Detail Specification, which copies will reflect the effect of such 
changes.  The Aircraft Basic Price reflects and includes all effects of 
such changes of price, except such Aircraft Basic Price does not include 
the price effects of Change Requests changing Buyer Furnished Equipment to 
Seller Purchased Equipment.

Price   
Per Aircraft
Change No./Title                        (1995$ STE) 
1110MP3354                      [CTR]*

EXTERIOR DECORATIVE FINISH - COURTAULDS DESOTHANE
HS HIGH SOLIDS TOPCOAT IN LIEU OF EXISTING TOPCOAT

2520CH3688                      [CTR]*
INTERIOR ARRANGEMENT REVISION - (8) BFE FIRST 
CLASS SEATS AND (132) BFE TOURIST CLASS SETAS

2524MP3498                      [CTR]*

BFE CLOSET AND BFE CLASS DIVIDER - REVISION

2527MP3125                      [CTR]*

PASSENGER COMPARTMENT FLOOR COVERING - 
INSTALLATION OF NEW BFE CARPETING

3435CH3033                      [CTR]*
FLIGHT DYNAMICS CAPTAIN ONLY HEAD UP 
GUIDANCE SYSTEM - COMPLETE BFE INSTALLATION - 
ILFC/ALASKA AIRLINES EFIS EQUIPED AIRPLANES

3446MP3147                      [CTR]*

GROUND PROXIMITY WARNING SYSTEM - BANK ANGLE
CALLOUT REVISION

3458CH3040                      [CTR]*
INSTALL PARTIAL PROVISIONS FOR GLOBAL 
POSITIONING SYSTEM

3458MP3114                      [CTR]*

GLOBAL POSITIONING SYSTEM (GPS) - INSTALLATION -       
HONEYWELL, INC.

3461CH3199                      [CTR]*
FMC - REVISION - INSTALLATION OF A SECOND
4 MCU, UPDATE 7 FMC INTO EXISTING PARTIAL
PROVISIONS

TOTAL           $[CTR]*

[CTR]* - Confidential Treatment Requested

PRODUCT ASSURANCE DOCUMENT

between

THE BOEING COMPANY

and

ALASKA AIRLINES

Exhibit B to Purchase Agreement Number 1954

PRODUCT ASSURANCE DOCUMENT NO. 1954

Dated                      

Relating to

BOEING MODEL 737-490 AIRCRAFT

This Product Assurance Document is Exhibit B to and forms a part of 
Purchase Agreement No. 1954 between The Boeing Company (Boeing) and Alaska 
Airlines (Buyer) relating to the purchase of Boeing Model 737-490 aircraft.  
This Product Assurance Document consists of the following parts:

PART A  Boeing Warranty

PART B  Warranty Repairs and Modifications by Buyer

PART C  Boeing Service Life Policy

PART D  Boeing Indemnity Against Patent Infringement

PART D-1        Boeing Indemnity Against Copyright Infringement

PART E  Supplier Warranties and Patent Indemnities

PART F  Engine Manufacturer Warranties

PART G  Boeing Interface Commitment

PART H  General

PART A

BOEING WARRANTY

1.      Warranties.

Subject to the exceptions set forth herein, Boeing warrants that, at 
the time of delivery, each Aircraft, including all installed systems, 
accessories, equipment and parts, will:

1.1     conform to the Detail Specification, as it may be changed 
pursuant to this Agreement, except such portions  stated to be estimates, 
approximations, design objectives, or design criteria, or described as not 
guaranteed;

1.2     be free from defects in material and workmanship, including 
process of manufacture; and

1.3     be free from defects in design, including selection of (i) 
materials and (ii) process of manufacture, in view of the state of the art 
at the time of design.

For purposes of this Boeing Warranty, nonconformance with the Detail 
Specification, defects in material or workmanship and defects in design may 
hereinafter be called "defects" or a "defect", and the term "system", 
"accessory", "equipment" or "part" may hereinafter be called "item" or 
"items."

2.      Exceptions.

The warranties above will not apply to BFE.  The warranty above 
covering material and workmanship and the warranty above covering design 
will not apply to Engines or to any other item purchased by Boeing but not 
manufactured to Boeing's detailed design.  However, any defect in the 
Boeing workmanship installing such BFE, Engines or other items in an 
Aircraft will constitute a defect in workmanship.

3.      Survival of Warranties.

Neither the warranty of conformance to the Detail Specification 
applicable to Engines and other items purchased by Boeing but not 
manufactured to Boeing's detailed design, nor any Performance Guarantees, 
will

survive delivery of the Aircraft.  The remaining warranties set forth 
herein will survive delivery of the Aircraft, subject to the limitations 
and conditions set forth herein.

4.      Warranty Periods and Claims.

4.1     The warranty periods are:

4.1.1   As to a defect in conformance to the Detail 
Specification, 36 months after delivery of each Aircraft, and

4.1.2   As to a defect in material, workmanship or design in 
any item, 36 months after delivery of each Aircraft in which such item was 
initially installed.

4.2     Boeing's Product Assurance Regional Manager at Renton, 
Washington must receive the warranty claim in writing at the earliest 
practicable time after the defect becomes apparent but in no event later 
than 90 days after expiration of the applicable warranty period.

4.3     Such warranty claim must include the data set forth below 
and, if requested by Boeing, reasonable evidence that the claimed defect 
did not result from any act or omission of Buyer.

4.3.1   Identity of the item or Aircraft involved, including 
Boeing part number, serial number if applicable, nomenclature and the 
quantity claimed to be defective;

4.3.2   Identity of the Aircraft on which the claimed item was 
installed as original equipment;

4.3.3   Date the claimed defect became apparent which will be 
the date such defect was discovered by Buyer or the warranty date set forth 
in a Boeing service bulletin or service letter, whichever date occurs 
first; and

4.3.4   Description of the claimed defect and circumstances, 
including Boeing service bulletin or Boeing service letter number if claim 
involves a service bulletin or letter.

4.4     Upon completion of Boeing's warranty claim investigation, 
including examination of any item or Aircraft returned to Boeing, Boeing 
will provide a written disposition of its warranty claim findings to Buyer.  
In the event Boeing rejects Buyer's warranty claim, Boeing will provide 
reasonable substantiation of such rejection in its disposition.

5.      Remedies.

Buyer's remedies under this Boeing Warranty are as follows:

5.1     As to a defect in conformance to the Detail Specification, 
the correction at Boeing's expense of such defect; provided, however, that 
Boeing will not be obligated to correct any defect that has no material 
adverse effect on the maintenance, use or operation of the Aircraft.  The 
warranty period for the corrected item will be the unexpired warranty 
period for the defective item.

5.2     As to a defect in material or workmanship, (i) the repair at 
Boeing's expense of such defect or, (ii) at Boeing's option, the 
replacement of such item with a similar item free from defect or the 
issuance of a credit memorandum to reimburse Buyer for a spare part 
previously purchased from Boeing as the replacement for such defective 
item.  The warranty period for either correction will be the unexpired 
warranty period for the defective item.

5.3     As to a defect in design, the correction at Boeing's expense 
of such defect.  The warranty period for such correction is 18 months from 
receipt by Buyer of corrective material or the end of the original design 
warranty period for the defective item, whichever is later.

5.4     Boeing will issue a credit memorandum to reimburse Buyer at 
the Warranty Labor Rate for the direct labor hours required for removal 
from the Aircraft of a defective item and the reinstallation in the 
Aircraft of the corrected item.

6.      Returned Items.

Unless otherwise provided in this Agreement, the Aircraft or item 
claimed to be defective must be returned to Boeing as soon as practicable.  
Buyer may also provide specific technical repair or correction instructions 
with such return.  The absence of such instructions will evidence Buyer's 
authorization for Boeing to proceed using Boeing information and data.  The 
following criteria will apply with respect to return of Aircraft or items 
to Boeing:

6.1     As to Aircraft:

6.1.1   An Aircraft may be returned only if

6.1.1.1  substantially all the work to be performed by 
Boeing is covered by this Boeing Warranty, and

6.1.1.2  Buyer does not have the capability to 
perform, nor is it practical for Boeing personnel to perform, the warranty 
work away from Boeing's facilities.

6.1.2   All warranty work will be performed at Boeing's 
expense, with reasonable efforts to minimize Aircraft out-of-service time.  
In addition, Boeing will reimburse Buyer by issuing a credit memorandum for 
the cost of fuel, oil and landing fees incurred in ferrying the Aircraft to 
Boeing's facilities and in ferrying the Aircraft back to Buyer's 
facilities.  Buyer will minimize the length of both ferry flights.

6.1.3   Any nonwarranty work performed by Boeing will be paid 
for by Buyer at Boeing's then-standard rates.

6.1.4   A separate agreement based on Boeing's then-standard 
form will be entered into to cover the return of and work on such Aircraft.

6.2     As to any system, accessory, equipment or part:

6.2.1   All warranty work will be performed at Boeing's 
expense, with reasonable efforts to minimize item out-of-service time for 
items returned.

6.2.2   Boeing's turnaround-time objectives for repair or 
replacement are: 10 working days for avionic and electronic items and 30 
working days for other items when corrected at Boeing's facilities, or 40 
working days when corrected at the facilities of a Boeing subcontractor.  
Turnaround time starts the date Boeing receives the returned item, together 
with Buyer's warranty claim describing the work, and ends the date of 
shipment by Boeing of such item.  If a turnaround-time objective is not 
achieved and a resultant critical parts shortage is experienced by Buyer, 
and Buyer has procured spare parts for such item in accordance with the 
Boeing Recommended Spare Parts List, Boeing will, upon request from Buyer, 
either:

6.2.2.1  expedite repair or replacement of the item or

6.2.2.2  provide a similar item on a no-charge loan or 
no-charge lease basis until the repaired or replaced item is provided to 
Buyer.

6.2.3   The freight charge for shipment to Boeing of any item 
will be paid by Buyer; however, Boeing will reimburse Buyer by issuing a 
credit memorandum for such charge for any item determined to be defective 
under this Boeing Warranty.  The freight charge for the return shipment to 
Buyer of any such defective item which has been repaired, replaced or 
corrected pursuant to this Boeing Warranty will be paid by Boeing.

6.3     Title to and risk of loss of any Aircraft or item returned to 
Boeing will at all times remain with Buyer and/or any other owner of such 
Aircraft or item, except that at the time Boeing ships a replacement item 
to Buyer, title to and risk of loss (i) for the returned item will pass to 
Boeing and (ii) for the replacement item will pass to Buyer.  While Boeing 
has care, custody and control of an Aircraft or item, Boeing will have only 
such liabilities as a bailee for mutual benefit would have, but will not be 
liable for loss of use.

7.      Nonrepairable Items.

Buyer may scrap any defective nonrepairable item having a 
then-current Boeing spare part selling price of $2,000 or less and make a 
claim for a replacement item.  For a defective nonrepairable item having a 
then-current Boeing spare part selling price greater than $2,000, an 
authorized Boeing representative must confirm the nonrepairability of any 
such item.  Buyer's claim for an item with a spare part selling price 
exceeding $2,000 must include such confirmation.

8.      Reimbursement for Certain Inspection Labor Costs.

8.1     In addition to the remedies set forth in this Boeing 
Warranty, Boeing will reimburse Buyer by issuing a credit memorandum at the 
Warranty Labor Rate for the direct labor hours expended by Buyer in 
performing inspections of the Aircraft to determine whether or not a 
covered defect exists in any system, accessory, equipment or part 
manufactured to Boeing's detailed design, provided that:

8.1.1   such inspections are recommended by a Boeing service 
bulletin or service letter issued by Boeing within 36 months after delivery 
of such Aircraft, and

8.1.2   such reimbursement will not apply to any inspections 
performed as an alternative to accomplishing corrective action when such 
corrective action is available to Buyer at the time such inspections are 
performed.

8.2     If a covered defect is determined to exist as a result of the 
foregoing inspections, the remedies under this Boeing warranty will apply 
to Aircraft in warranty as of the warranty date set forth in the applicable 
Boeing service bulletin or service letter or the date the defect was 
discovered by Buyer, whichever date occurs first.

9.      Wear and Tear.

Normal wear and tear and the need for regular maintenance and 
overhaul will not constitute a defect.

10.     Disclaimer and Release; Exclusion of Liabilities.

This Part A and the rights and remedies of Buyer and obligations of 
Boeing herein are subject to the Disclaimer and Release and Exclusion of 
Consequential and Other Damages provisions of Article 12 of this Agreement.

11.     Buyer's Indemnification of Boeing.

The provisions of Part E, "Buyer's Indemnification of Boeing and 
Insurance" of Exhibit C, will apply to all warranty work performed by 
Boeing hereunder in accordance with Buyer's specific technical repair or 
correction instructions, to the extent any legal liability of Boeing is 
based upon the content of such instructions.

PART B

WARRANTY REPAIRS AND MODIFICATIONS BY BUYER

1.      General.

To expedite the return to service of any defective Aircraft or 
systems, accessories, equipment and parts (items) that Boeing is obligated 
to correct under the Boeing Warranty, repairs and modifications may, at 
Buyer's option, be performed by Buyer (work) and charged to Boeing, subject 
to the following:

2.      Scope.

This option applies only to items manufactured to Boeing's detailed 
design.  The warranty and notice periods and all other conditions and 
limitations applicable to the Boeing Warranty apply to this option.

3.      Repairs and Modifications.

All work will be performed in accordance with Boeing's written 
instructions, using parts and materials as may be furnished by Boeing 
and/or Boeing approved parts and materials as may be furnished by Buyer.

4.      Claims for Reimbursement.

Buyer's claim for reimbursement must be submitted in writing to 
Boeing promptly after completion of the work.  Such claim must include the 
data set forth in paragraph 4.3 of Part A of this Exhibit B and the 
following:

4.1     Description of the work performed by Buyer;

4.2     Date work was completed by Buyer;

4.3     Itemized account of the direct labor hours expended in 
performing the work; and

4.4     Itemized account of the direct materials incorporated in the 
work.

5.      Reimbursement.

Upon approval of Buyer's claim for reimbursement, Boeing will 
reimburse Buyer by issuing a credit memorandum as follows:

5.1     Direct Labor.

At the Warranty Labor Rate specified herein for labor hours 
expended by Buyer's direct labor employees in performing the work, 
including removal, disassembly, inspection, bench testing, reassembly, 
final inspection,  and reinstallation, but not to exceed Boeing's estimate 
of required labor hours, and excluding time for overhaul.

5.2     Direct Materials.

At the invoice cost to Buyer for all direct materials 
incorporated in the work, excluding (i) materials used for overhaul, (ii) 
materials furnished by Boeing at no charge, (iii) materials which exceed 
Boeing's estimate of required materials, and (iv) allowances for handling, 
overhead, taxes, customs duties and the like.

5.3     Warranty Labor Rate.

The Warranty Labor Rate is $41.25 per hour or 150% of Buyer's 
average direct hourly labor rate, whichever is greater.  For this purpose, 
"average direct hourly labor rate" is defined as the average hourly rate 
(excluding all fringe benefits, premium-time allowances, social charges, 
business taxes and the like) paid by Buyer to Buyer's employees whose jobs 
are directly related to the performance of the work.  Prior to or 
concurrently with submittal of Buyer's first claim for labor reimbursement, 
Buyer will notify Boeing of Buyer's then-current average direct hourly 
labor rate, and thereafter notify Boeing of any material change in such 
rate.  Boeing may require data from Buyer to substantiate such rates.

5.4     Limitation.

The total reimbursement with respect to the direct labor and 
direct materials incorporated in the work, will not exceed 65% of Boeing's 
then-current sales price for the item unless a greater percentage is 
established for a particular item by written agreement between Boeing and 
Buyer.

All claims for reimbursement will be subject to audit by Boeing.  Boeing 
will promptly notify Buyer of Boeing's disposition of each claim submitted 
hereunder.

6.      Replaced Parts.

If component parts of any assembly are replaced by Buyer, the 
replaced parts will be tagged with the assembly part number, the serial 
number and the warranty claim number and retained for a period of 60 days 
following the date of submittal of Buyer's claim, so as to be made 
available for Boeing's inspection.  Such parts may be scrapped after such 
60-day period.

PART C

BOEING SERVICE LIFE POLICY

1.      Definitions.

1.1     "Airframe Component" means any of the primary structural 
elements of the wing, fuselage, or vertical or horizontal stabilizer set 
forth in Attachment A hereto and installed in an Aircraft at the time of 
delivery.

1.2     "Landing Gear Component" means any of the primary structural 
elements of the landing gear set forth in Attachment A and installed in an 
Aircraft at the time of delivery.

1.3     "Spare Component" means any component set forth in 
Attachment A that was furnished to Buyer pursuant to this Policy or 
purchased by Buyer from Boeing as a spare part.

1.4     "Covered Component" means an Airframe Component, a Landing 
Gear Component or a Spare Component.

1.5     "Failure" means any breakage or defect in a Covered 
Component.

1.6     "Failed Component" means a Covered Component in which a 
Failure has occurred.

2.      Service Life Policy.

If a Failure occurs in any Covered Component within the following 
periods, Boeing will promptly, at a price calculated pursuant to this 
Policy, either (i) design and furnish to Buyer materials required to 
correct the Failed Component (excluding industry standard parts) or (ii) 
furnish to Buyer a replacement Covered Component:

2.1     As to any Airframe Component or Landing Gear Component, 
within 12 years after delivery of the Aircraft in which such component was 
initially installed; or

2.2     As to any Spare Component, within 12 years after delivery of 
such Spare Component, or within 12 years after delivery by Boeing of the 
last new Model 737 aircraft to Buyer, whichever first expires.

3.      Price.

The price that Buyer will pay for the correction or replacement of a 
Failed Component will be calculated pursuant to the following formula:

P =     CT 
144

where:

P =     price to Buyer

C =     Boeing spare parts sales price at time of correction or 
replacement

T =     total age in months of the Failed Component from the date of 
delivery to Buyer to the date of Failure.

4.      Conditions and Limitations.

Boeing's obligations under this Policy are conditioned upon the 
following:

4.1     Buyer must notify Boeing of the Failure within three months 
after it becomes apparent to Buyer.

4.2     Buyer must provide reasonable evidence that the claimed 
Failure is covered by this Policy and if requested by Boeing, that such 
Failure was not the result of (i) the breakage of or a defect in a 
component not covered by this Policy, (ii) an extrinsic force, (iii) an act 
or omission of Buyer, or (iv) operation or maintenance contrary to 
applicable regulations or Boeing's instructions.

4.3     If return of a Failed Component is practicable and requested 
by Boeing, Buyer will return such Failed Component to Boeing at Boeing's 
expense.

4.4     Buyer's rights and remedies under this Policy are limited to 
the receipt of corrective materials or replacement components at prices 
calculated in accordance with this Policy.

5.      Disclaimer and Release; Exclusion of Liabilities.

This Part C and the rights and remedies of Buyer and the obligations 
of Boeing herein are subject to the Disclaimer and Release and Exclusion of 
Consequential and Other Damages provisions of Article 12 of this Agreement.

COVERED AIRFRAME AND LANDING GEAR COMPONENTS

1.      Wing.

(a)     Upper and lower skins and stiffeners between the forward and 
rear wing spars.

(b)     Wing spar webs, chords and stiffeners.

(c)     Inspar wing ribs.

(d)     Inspar splice plates and fittings.

(e)     Main landing gear support structure.

(f)     Wing center section floor beams, lower beams and spanwise 
beams, but not the seat tracks attached to floor beams.

(g)     Engine strut support fittings attached directly to wing 
primary structure.

(h)     Wing-to-body structural attachments.

(i)     Support structure in the wing for spoilers and spoiler 
actuators; for aileron hinges and reaction links; and for 
leading edge devices and trailing edge flaps.

(j)     Trailing edge flap tracks and carriages.

(k)     Aileron, leading edge device and trailing edge flap internal, 
fixed attachment and actuator support structure.

2.      Body.

(a)     External surface skins and doublers, longitudinal stiffeners, 
longerons and circumferential rings and frames between the 
forward pressure bulkhead and the vertical stabilizer rear 
spar bulkhead and structural support and enclosure for the 
APU but excluding all system components and related 
installation and connecting devices, insulation, lining, and 
decorative panels and related installation and connecting 
devices.

(b)     Window and windshield structure but excluding the windows and 
windshields.

(c)     Fixed attachment structure of the passenger doors, cargo 
doors and emergency exits, excluding door mechanisms and 
movable hinge components.  Sills and frames around the body 
openings for the passenger doors, cargo doors and emergency 
exits, excluding scuff plates and pressure seals.

(d)     Nose wheel well structure, including the wheel well walls, 
pressure deck, bulkheads, and gear support structure.

(e)     Main gear wheel well structure including pressure deck and 
landing gear beam support structure.

(f)     Floor beams and support posts in the control cab and 
passenger cabin area, but excluding seat tracks.

(g)     Forward and aft pressure bulkheads.

(h)     Keel structure between the wing front spar bulkhead and the 
main gear wheel well aft bulkhead including splices.

(i)     Wing front and rear spar support bulkheads, and vertical and 
horizontal stabilizer front and rear spar support bulkheads 
including terminal fittings but excluding all system 
components and related installation and connecting devices, 
insulation, lining, decorative panels and related 
installation and connecting devices.

(j)     Support structure in the body for the stabilizer pivot and 
stabilizer screw.

3.      Vertical Stabilizer.

(a)     External skins between front and rear spars.

(b)     Front, rear and auxiliary spar chords, webs and stiffeners 
and attachment fittings.

(c)     Inspar ribs.

(d)     Rudder hinges and supporting ribs, excluding bearings.

(e)     Support structure in the vertical stabilizer for rudder 
hinges, reaction links and actuators.

(f)     Rudder internal, fixed attachment and actuator support 
structure.

4.      Horizontal Stabilizer.

(a)     External skins between front and rear spars.

(b)     Front and rear spar chords, webs and stiffeners.

(c)     Inspar ribs.

(d)     Stabilizer center section including hinge and screw support 
structure.

(e)     Support structure in the horizontal stabilizer for the 
elevator hinges, reaction links and actuators.

(f)     Elevator internal, fixed attachment and actuator support 
structure.

5.      Engine Strut.

(a)     Strut external surface skin and doublers and stiffeners.

(b)     Internal strut chords, frames and bulkheads.

(c)     Strut to wing fittings and diagonal brace.

(d)     Engine mount support fittings attached directly to strut 
structure and including the engine-mounted support fittings.

6.      Main Landing Gear.

(a)     Outer cylinder.

(b)     Inner cylinder, including axles.

(c)     Upper and lower side struts, including spindles, universals 
and reaction links.

(d)     Drag strut.

(e)     Bell crank.

(f)     Orifice support tube.

(g)     Trunnion link.

(h)     Downlock links including spindles and universals.

(i)     Torsion links.

(j)     Actuator beam, support link and beam arm.

7.      Nose Landing Gear.

(a)     Outer cylinder.

(b)     Inner cylinder, including axles.

(c)     Orifice support tube.

(d)     Upper and lower drag strut, including lock links.

(e)     Steering plates and steering collars.

(f)     Torsion links.

NOTE:   The Service Life Policy does not cover any bearings, bolts, 
bushings, clamps, brackets, actuating mechanisms or latching 
mechanisms used in or on the Covered Components.

PART D

BOEING INDEMNITY AGAINST PATENT INFRINGEMENT

1.      Indemnity.

Subject to the provisions of this Part D, Boeing will indemnify and 
hold harmless Buyer from and against all claims, suits, actions, 
liabilities, damages and costs arising out of actual or alleged 
infringement, by any Aircraft or any system, accessory, equipment or part 
(item) installed thereon at the time of Aircraft delivery, of any patent 
issued under the laws of any country in which Buyer lawfully operates the 
Aircraft (Country).

2.      Exceptions.

2.1     This indemnity will not apply unless, from the time of design 
of the allegedly infringing Aircraft or item until the resolution of the 
infringement claim, the Country and flag country of the Aircraft:  (i) are 
fully bound by the Chicago Convention on International Civil Aviation of 
December 7, 1944, and are fully entitled to all benefits of Article 27 
thereof, or (ii) have been parties to the International Convention for the 
Protection of Industrial Property (Paris Convention).

2.2     This indemnity will not apply to Buyer Furnished Equipment, 
Engines, any system, accessory, equipment or part that was not manufactured 
to Boeing's detailed design, or to any system, accessory, equipment or part 
manufactured to Boeing's detailed design without Boeing's authorization.

3.      Conditions and Limitations.

Buyer's remedy and Boeing's obligations hereunder are subject to the 
following:

3.1     Buyer must give Boeing written notice within 10 days after 
Buyer receives notice of a suit or action against Buyer alleging 
infringement or within 20 days after Buyer receives a written claim of 
infringement.

3.2     Following receipt of such notice Boeing may conduct 
negotiations with any party claiming infringement and may intervene in any 
suit or action.  Whether or not Boeing intervenes, Boeing will be entitled 
at any stage of the proceedings to assume or control the defense.

3.3     Buyer will (i) promptly furnish to Boeing all data, records 
and assistance within Buyer's control which are material to any such claim, 
suit or action and (ii) (except as to amounts mandated by a judgment) 
obtain Boeing's prior approval to pay or assume any liabilities, damages, 
royalties or costs.

3.4     Boeing's obligations and Buyer's remedies herein exclude 
Buyer's incidental or consequential damages and liabilities, costs, loss of 
revenue or loss of profit resulting from loss of use, but include, at 
Boeing's option, replacing the infringing item or otherwise curing any 
infringement on account of which use of the Aircraft by Buyer is prevented.

3.5     Boeing's obligations and Buyer's remedies herein are 
exclusive and in substitution for, and Buyer hereby waives, releases and 
renounces, all other indemnities, obligations and liabilities of Boeing and 
any assignee of Boeing, and all other rights, remedies and claims, 
including claims for damages, direct, incidental or consequential, of Buyer 
against Boeing or any assignee of Boeing, express or implied, arising by 
law or otherwise, with respect to any actual or alleged patent infringement 
or the like by any Aircraft or any item installed therein.

PART D-1

BOEING INDEMNITY AGAINST COPYRIGHT INFRINGEMENT

1.      Indemnity.

Subject to the following, Boeing will indemnify Buyer with respect 
to claims, suits, damages and costs arising out of copyright infringement 
by any computer software included with the Aircraft when the Aircraft is 
first delivered by Boeing (Aircraft Software).

2.      Exceptions, Limitations and Conditions.

2.1     Boeing will have no obligation to indemnify Buyer relative to 
Buyer Furnished Equipment, engines, software not manufactured to Boeing's 
detailed design, or software manufactured to Boeing's detailed design 
without Boeing's written authorization.

2.2     Boeing's obligation to indemnify Buyer is limited to 
infringements (a) in countries where Buyer lawfully operates the Aircraft 
(Countries) and (b) where, from the time of creation of the allegedly 
infringing software until the resolution of the infringement claim, the 
Countries and flag country of the Aircraft are members of The Berne Union 
and recognize computer software as a "work" under The Berne Convention.

2.3     Boeing will have no obligation or liability for loss of use, 
revenue or profit, or for any other incidental or consequential damages.

2.4     Boeing may, at its option, replace any infringing or 
allegedly infringing Aircraft Software (or item containing Aircraft 
Software) with a noninfringing equivalent.

2.5     Buyer must inform Boeing in writing (a) within 10 days after 
Buyer receives notice of a suit or other formal action against Buyer 
alleging copyright infringement involving Aircraft Software and (b) within 
30 days after Buyer receives any allegation or claim in the nature of 
copyright infringement involving Aircraft Software.

2.6     Boeing may negotiate with any party claiming infringement and 
may intervene or assume control of the defense at any stage in any 
infringement suit or action.

2.7     Buyer will promptly furnish to Boeing all data, records and 
assistance within Buyer's possession or control which may be material to 
any copyright infringement claim, suit or action relating to Aircraft 
Software.

2.8     Other than as required by a final judgment entered by a court 
of competent jurisdiction, Buyer will not make any payment or commitment to 
pay, assume any obligation, or make any material concession relative to any 
copyright infringement for which Boeing may otherwise be obligated.

2.9     The obligations of Boeing and remedies of Buyer set forth in 
this Part are exclusive and in substitution for, and Buyer hereby waives, 
releases and renounces, all other indemnities, obligations, and liabilities 
of Boeing and all other rights, claims and remedies of Buyer against 
Boeing, express or implied, arising by law or otherwise, with respect to 
any actual or alleged copyright infringement or the like by any Aircraft or 
any item included in any Aircraft.

PART E

SUPPLIER WARRANTIES AND PATENT INDEMNITIES

1.      Supplier Warranties and Supplier Patent Indemnities.

Boeing will use diligent efforts to obtain adequate warranties and 
indemnities against patent infringement enforceable by Buyer from 
manufacturers (Suppliers) of systems, accessories, equipment or parts 
installed on the Aircraft at the time of delivery that were selected and 
purchased by Boeing, but not manufactured to Boeing's detailed design.  
Boeing will furnish copies of such warranties and patent indemnities to 
Buyer prior to delivery of the first Aircraft.

2.      Boeing Assistance in Administration of Supplier Warranties.

Buyer will be responsible for submitting warranty claims directly to 
Suppliers; however, if Buyer experiences problems enforcing any Supplier 
warranty obtained by Boeing for Buyer, Boeing will conduct an investigation 
of such problems and assist Buyer in the resolution of such claims.

3.      Boeing Support in Event of Supplier Default.

3.1     If any Supplier defaults in the performance of a material 
obligation under a design, material or workmanship warranty obtained by 
Boeing for Buyer, and Buyer provides evidence to Boeing that such default 
has occurred, then the equivalent warranty and related provisions set forth 
in this Product Assurance Document will apply to the claimed defect.

3.2     At Boeing's request, Buyer will assign to Boeing, and Boeing 
will be subrogated to, Buyer's rights against the manufacturer providing 
such Supplier warranty.

PART F

ENGINE MANUFACTURER'S WARRANTY
AND PRODUCT SUPPORT PLAN

Boeing has obtained from CFM International, Inc. (CFM) the right to extend 
to Buyer the provisions of CFM's New Engine Warranty set forth in CFM's 
"CFM56 Product Support Plan"; subject, however, to Buyer's acceptance of 
the conditions set forth herein and in such product support plan.  
Accordingly, Boeing hereby extends to Buyer, and Buyer hereby accepts, the 
provisions of such CFM warranty and such provisions shall apply to CFM56 
turbo-fan engines installed in the Aircraft at the time of delivery to 
Buyer except that, if Buyer and CFM have executed a General Terms 
Agreement, then the terms of that Agreement shall be substituted for and 
supersede the below-stated provisions and such provisions shall be of no 
force or effect and neither Boeing nor CFM shall have any obligation 
arising therefrom.  In consideration for such extension, Buyer hereby 
releases and discharges Boeing from any and all claims, obligations and 
liabilities whatsoever arising out of the purchase or use of said installed 
CFM56 engines and releases and discharges CFM from any and all claims, 
obligations and liabilities whatsoever arising out of the purchase or use 
of said installed CFM56 engines except as expressly assumed by CFM in such 
Product Support Plan or in such General Terms Agreement between Buyer and 
CFM.

CFM INTERNATIONAL, INC. WARRANTY

1.      Title.

CFM International (CFM) warrants that at the date of delivery, CFM 
has legal title to and good and lawful right to sell its CFM56 turbo-fan 
engines (Engines, including all Modules and Parts thereof) and related 
engine products, and furthermore warrants that such title is free and clear 
of all claims, liens and encumbrances of any nature whatsoever.

2.      Patents.

A.      CFM shall handle all claims and defend any suit or proceeding 
brought against Buyer insofar as based on a claim that any product or part 
furnished under this Agreement constitutes an infringement of any patent of 
the United States, and shall pay all damages and costs awarded therein 
against Buyer.  This paragraph shall not apply to any product or any part 
manufactured to Buyer's design or to the aircraft manufacturer's design.  
As to such product or part, CFM assumes no liability for patent 
infringement.

B.      CFM's liability hereunder is conditioned upon Buyer promptly 
notifying CFM in writing and giving CFM authority, information and 
assistance (at CFM's expense) for the defense of any suit.  In case said 
equipment or part is held in such suit to constitute infringement and the 
use of said equipment or part is enjoined, CFM shall expeditiously, at its 
own expense and at its option, either (1) procure for Buyer the rights to 
continue using said product or part; (2) replace the same with satisfactory 
and noninfringing product or part; (3) modify the same so it becomes 
satisfactory and noninfringing.  CFM shall not be responsible to Buyer for 
consequential damages including costs, expenses, liabilities, and/or loss 
resulting from loss of use of an allegedly infringing product or part 
hereunder.  The foregoing shall constitute the sole remedy of Buyer and the 
sole liability of CFM for patent infringement.

C.      The above provisions also apply to products which are the 
same as those covered by this Agreement and are delivered to Buyer as part 
of the installed equipment on CFM56 powered Aircraft.

3.      Initial Warranty.

CFM warrants that CFM56 turbo-fan engines and related engine 
products will conform to CFM's applicable specifications and will be free 
from defects in material and workmanship prior to Buyer's initial use of 
such products.  The provisions of CFM's "CFM56 Product Support Plan" will 
apply.

4.      Product Support Plan.

CFM has agreed to offer to Buyer, for application to each CFM56-3 
engine delivered on an Aircraft, the CFM "CFM56 Product Support Plan" which 
is in effect on the date of delivery of such engine to Buyer.

5.      LIMITATIONS.

THE PROVISIONS SET FORTH HEREIN ARE EXCLUSIVE AND ARE IN LIEU OF ALL 
OTHER WARRANTIES WHETHER WRITTEN, ORAL OR IMPLIED.  THERE ARE NO IMPLIED 
WARRANTIES OF FITNESS OR MERCHANTABILITY.  SAID PROVISIONS SET FORTH THE 
MAXIMUM LIABILITY OF CFM WITH RESPECT TO CLAIMS OF ANY KIND, INCLUDING 
NEGLIGENCE, ARISING OUT OF MANUFACTURE, SALE, POSSESSION, USE OR HANDLING 
OF THE PRODUCTS OR PARTS THEREOF OR THEREFOR, AND IN NO EVENT SHALL CFM'S 
LIABILITY TO BUYER EXCEED THE PURCHASE PRICE OF THE PRODUCT GIVING RISE TO 
BUYER'S CLAIM OR INCLUDE INCIDENTAL OR CONSEQUENTIAL DAMAGES.  AS USED 
HEREIN, THE TERM "CFM" SHALL INCLUDE CFM INTERNATIONAL, INC. AND CFM 
INTERNATIONAL, S.A.  THE LIMITS OF LIABILITY SET FORTH ABOVE SHALL APPLY TO 
ANY AND ALL CLAIMS, AS ABOVE DEFINED, AGAINST CFM INTERNATIONAL, INC., CFM 
INTERNATIONAL, S.A., GENERAL ELECTRIC COMPANY (GE), AND SOCIETE NATIONALE 
D'ETUDE ET DE CONSTRUCTION DE MOTEURS D'AVIATION (SNECMA) AND IN NO EVENT 
SHALL SUCH CLAIMS EXCEED IN THE AGGREGATE THE PRICE OF THE PRODUCT GIVING 
RISE TO THE CLAIM.

PART G

BOEING INTERFACE COMMITMENT

1.      Interface Problems.

If Buyer experiences technical problems in the operation of an 
Aircraft or its systems, the cause of which is not readily identifiable by 
Buyer but which Buyer believes to be attributable to the design 
characteristics of the Aircraft or its systems (Interface Problem), Boeing 
will, without additional charge to Buyer, promptly conduct an investigation 
and analysis to determine the cause or causes of the Interface Problem and 
to recommend such corrective action as may be feasible.  Buyer will furnish 
to Boeing all data and information in Buyer's possession relevant to the 
Interface Problem, and will cooperate with Boeing in the conduct of 
investigations and tests.  Boeing will promptly advise Buyer at the 
conclusion of its investigation of Boeing's opinion as to the causes of the 
Interface Problem and Boeing's recommendation as to corrective action.

2.      Boeing Responsibility.

If Boeing determines that the Interface Problem is primarily 
attributable to the design of any item manufactured to Boeing's detailed 
design, Boeing will correct the design of such item to the extent of any 
then-existing obligations of Boeing under the provisions of the applicable 
Boeing Warranty or Boeing Service Life Policy.

3.      Manufacturer Responsibility.

If Boeing determines that the Interface Problem is primarily 
attributable to the design of an item not manufactured to Boeing's detailed 
design, Boeing will assist Buyer in processing a warranty claim against the 
manufacturer of such item.

4.      Joint Responsibility.

If Boeing determines that the Interface Problem is partially 
attributable to the design of an item manufactured to Boeing's detailed 
design and partially to the design of an item not manufactured to Boeing's 
detailed design, Boeing will seek a solution to the Interface Problem 
through the cooperative efforts of Boeing and the manufacturer of the other 
item and will promptly advise Buyer of resulting corrective actions and 
recommendations.

5.      General.

Buyer will, if requested by Boeing, assign to Boeing any of Buyer's 
rights against any manufacturer as Boeing may require to fulfill its 
obligations hereunder.

6.      Disclaimer and Release; Exclusion of Liabilities.

This Part G and the rights and remedies of Buyer and the obligations 
of Boeing herein are subject to the Disclaimer And Release and Exclusion of 
Consequential and Other Damages provisions of Article 12 of this Agreement.

PART H

GENERAL

1.      Duplicate Product Assurance Remedies.

Boeing will not provide or be requested to provide multiple remedies 
for any claim made pursuant to the provisions of this Product Assurance 
Document.

2.      Notices.

References to "Boeing" in connection with notices or communications 
throughout this Product Assurance Document mean Boeing's Product Assurance 
Regional Manager at Renton, Washington.

CUSTOMER SUPPORT DOCUMENT

between

THE BOEING COMPANY

and

ALASKA AIRLINES, INC.

Exhibit C to Purchase Agreement Number 1954

CUSTOMER SUPPORT DOCUMENT NO. 1954

Dated                        

Relating to

BOEING MODEL 737-490 AIRCRAFT

This Customer Support Document is Exhibit C to and forms a part of 
Purchase Agreement No. 1954 between The Boeing Company (Boeing) and Alaska 
Airlines, Inc. (Buyer) relating to the purchase of Boeing Model 737-
490 aircraft.  This Customer Support Document consists of the following 
parts:

PART A  Boeing Maintenance Training Program

PART B  Boeing Customer Support Services

PART C  Boeing Flight Training Program

PART D  Technical Data and Documents

PART E  Buyer's Indemnification of Boeing and Insurance

PART F  Alleviation or Cessation of Performance

PART A

BOEING MAINTENANCE TRAINING PROGRAM

1.      General.

This Part describes the maintenance training to be provided by 
Boeing (Maintenance Training) at Boeing's training facility at or near 
Seattle.  The Maintenance Training will be provided at no additional charge 
to Buyer, except as otherwise provided herein.

All instruction, examinations and materials shall be prepared and presented 
in the English language and in the units of measure used by Boeing.  

Buyer will be responsible for the living expenses of Buyer's personnel 
during Maintenance Training.  For Maintenance Training provided at or near 
Seattle, Boeing will transport Buyer's personnel between their local 
lodging and the training facility.

2.      Maintenance Training Program.

In conjunction with earlier sales to Buyer of the same model type 
aircraft as the Aircraft, Boeing has provided to Buyer comprehensive 
maintenance training and/or materials for such aircraft.  If requested by 
Buyer at least 12 months prior to delivery of the first Aircraft, Boeing 
agrees to provide 1 Maintenance Training course consisting of classroom 
training to acquaint up to 15 of Buyer's personnel with any operational, 
structural or systems differences between the first Aircraft scheduled for 
delivery pursuant to this Agreement and the last aircraft of the same model 
type for which maintenance training and/or materials were delivered by 
Boeing to Buyer that are significant to the maintenance of the Aircraft.  
Such course will be scheduled by mutual agreement of Boeing's and Buyer's 
maintenance training organizations. 

3.      Training Materials.

Boeing will provide Buyer with a narrative description defining the 
expected time to teach the various differences between the first Aircraft 
scheduled for delivery pursuant to this agreement and the last aircraft of 
the same model type for which maintenance training and/or materials were 
delivered by Boeing to Buyer.

If Buyer chooses to have Boeing provide a differences Maintenance Training 
course, Boeing will provide at the beginning of the course, 1 copy of a 
training manual for the differences training course to each student 
attending such course.  Boeing will also provide to the Buyer 1 set of 
visual aid projection transparencies and 1 set of black and white 
reproducible masters of the training manual graphics and text utilized in 
the Maintenance Training class.  No revision service will be provided for 
such training manuals and materials.

If Buyer chooses not to have Boeing provide a differences Maintenance 
Training course, Boeing will provide to Buyer at Buyer's direction, 1 set 
of visual aid projection transparencies and 1 set of black and white 
reproducible masters of the training manual graphics and text that would 
have been utilized in a differences Maintenance Training class.  Delivery 
of requested materials will satisfy difference training entitlements as 
defined herein.  No revision service will be provided for such training 
manuals and materials.

4.      Training at a Facility Other Than Boeing's.

If seasonably requested, Boeing will conduct the classroom training 
described above at a mutually acceptable alternate training site, subject 
to the following conditions:

4.1     Buyer will be responsible for providing acceptable classroom 
space and training equipment required to present the Boeing courseware.

4.2     Buyer will pay Boeing's then-current per diem charge for each 
Boeing instructor for each day, or fraction thereof, such instructor is 
away from Seattle, including travel time.

4.3     Buyer will reimburse Boeing for round-trip transportation for 
Boeing's instructors and training materials between Seattle and such 
alternate training site.

4.4     Buyer will pay, or reimburse Boeing for, all taxes, fees, 
duties, licenses, permits and similar expenses incurred by Boeing and its 
employees as a result of Boeing's providing the training at such alternate 
site.

4.5     Those portions of training that require the use of Boeing's 
training devices, if any, will be conducted at Boeing-designated 
facilities.

PART B

BOEING CUSTOMER SUPPORT SERVICES

1.      General.

This Part describes the support services to be provided by Boeing at 
no additional charge to Buyer, unless otherwise specified herein.  Except 
with respect to Field Services, the services described in this Part will be 
provided by Boeing during a period commencing with delivery of the first 
Aircraft and continuing so long as one Aircraft is regularly operated by 
Buyer in commercial air transport service.

2.      Field Service Engineering.

Boeing will furnish field service representation to advise Buyer on 
maintenance and operation of the Aircraft (Field Services) as follows:

2.1     Field Services will be available to Buyer at or near Buyer's 
main maintenance or engineering facility  beginning prior to delivery of 
each Aircraft and terminating 12 months after delivery of each such 
Aircraft (Field Service Period(s)).  If such Field Service Periods overlap, 
the Field Services will be provided concurrently. 

2.2     Buyer will furnish at no charge to Boeing suitable office 
space and equipment that will include desks, chairs, file cabinets and an 
electrical power source in, or convenient to, Buyer's facility where 
each/any Boeing representative is providing Field Services.  As required, 
Buyer will assist each representative providing Field Services with visas, 
work permits, customs, mail handling, identification passes, and local 
airport authorities.

2.3     In addition to the Field Services referred to above, the 
services of any Boeing field service representative will also be available 
to Buyer anywhere Buyer may land the Aircraft.

2.4     Boeing may, from time to time, provide additional support 
services in the form of Boeing personnel visiting Buyer's facilities to 
work with Buyer's personnel in an advisory capacity.

3.      Additional Engineering Support Services.

Boeing will, if requested by Buyer in writing, provide technical 
advisory assistance with respect to the Aircraft and accessories, equipment 
and parts manufactured to Boeing's detailed design and installed in the 
Aircraft at the time of delivery.  Such technical advisory assistance, 
which will be provided from Seattle, will include:

3.1     analysis of and comment on any Aircraft service or 
operational problem experienced by Buyer in order to determine the nature 
of the problem and its cause and to suggest possible solutions;

3.2     analysis of and comment on Buyer's engineering releases 
relating to structural repairs of the Aircraft not covered by Boeing's 
Structural Repair Manual; and

3.3     analysis of and comment on Buyer's engineering proposals for 
changes in, or replacement of, parts, accessories or equipment manufactured 
to Boeing's detailed design (excluding computer software embedded or 
included therein); provided that Boeing will not analyze or comment on any 
such change or replacement which constitutes a major structural change, nor 
on any engineering release related thereto, unless Buyer's request for such 
analysis and comment is accompanied by complete detailed drawings, 
substantiating data (including data, if any, required by applicable 
government agencies), all stress or other appropriate analysis, and a 
specific statement from Buyer of the kind of review and response desired by 
Buyer.

4.      Special Services.

4.1     Facilities, Ground Equipment and Maintenance Planning 
Assistance.

Boeing will, at Buyer's request, send qualified Boeing 
engineering representatives to Buyer's main base to evaluate Buyer's 
technical facilities, tools and equipment for servicing and maintaining the 
Aircraft, to recommend changes where necessary and to assist in the 
formulation of Buyer's overall maintenance plan.

4.2     Additional Services.

Boeing may, at Buyer's request, provide additional special 
services with respect to the Aircraft after delivery, which may include 
such items as Master Changes (Kits and/or Data), training and maintenance 
and repair of the Aircraft.  Providing such additional services will be 
subject to (i) mutually acceptable price, schedule and scope of work and 
(ii) Boeing's then-current standard contract therefor including disclaimer 
and release, exclusion of consequential and other damages and 
indemnification and insurance requirements.

4.3     Post-Delivery Aircraft Services.

If Boeing performs unanticipated work on an Aircraft after 
delivery of such Aircraft, but prior to its initial departure flight, or 
upon its return to Boeing's facilities prior to completion of such flight, 
the following provisions will apply:

4.3.1   Title to and risk of loss of any such Aircraft will at 
all times remain with Buyer.

4.3.2   The provisions of the Boeing Warranty set forth in 
Exhibit B of this Agreement will apply to such work.

4.3.3   Buyer will reimburse Boeing for such work to the 
extent not covered by the Boeing Warranty applicable to the Aircraft.

4.3.4   The Disclaimer and Release and Exclusion of 
Consequential and Other Damages provisions set forth in Article 12 of this 
Agreement and the indemnification and insurance provisions set forth in 
this Exhibit C will apply to such Boeing work.

4.3.5   In performing such work, Boeing may rely upon the 
commitment authority of Buyer's personnel requesting such work.

5.      Additional Informational Services.

Boeing may, from time to time, provide Buyer with additional 
services in the form of information about the Aircraft or other aircraft of 
the same type, including information concerning design, manufacture, 
operation, maintenance, modification, repair and in-service experience.

PART C

BOEING FLIGHT TRAINING PROGRAM

1.      General.

This Part describes the flight training to be provided by Boeing 
(Flight Training) at or near Seattle, or at some other location to be 
determined pursuant to this Part.  The Flight Training will be provided at 
no additional charge to Buyer, except as otherwise provided herein.

All instruction, examinations and materials will be prepared and presented 
in the English language and in the units of measure used by Boeing.  

Buyer will be responsible for the living expenses of Buyer's personnel 
during the Flight Training Program.  For Flight Training provided at or 
near Seattle, Boeing will transport Buyer's personnel between their local 
lodging and the training facility.

2.      Flight Training Program.

In conjunction with earlier sales to Buyer of aircraft of the same 
model type as the Aircraft, Boeing has provided to Buyer comprehensive 
flight training for such aircraft.  If requested by Buyer at least 12 
months prior to delivery of the first Aircraft, Boeing agrees to provide, 
if required, 1 classroom training class to acquaint up to 15 of Buyer's 
personnel with any operational, systems and performance differences 
significant to the operation of the Aircraft, between the first Aircraft 
scheduled for delivery pursuant to this Agreement and the last aircraft of 
the same model type as the aircraft previously delivered by Boeing to 
Buyer.  Such course will be scheduled by mutual agreement of Boeing's and 
Buyer's flight training organizations.

3.      Training Materials.
Any training materials, if required, that are used in Flight 
Training shall be provided to Buyer at the conclusion of such class.  No 
revision service shall be provided for such training materials.

4.      Training at a Facility Other Than Boeing's.

If seasonably requested, Boeing will conduct the Flight Training at 
a mutually acceptable alternate training site, subject to the following 
conditions:

4.1     Buyer will be responsible for providing classroom space 
acceptable to Boeing, a flight simulator and training equipment required to 
present the Boeing courseware.

4.2     Buyer will pay Boeing's then-current per diem charge for each 
Boeing instructor for each day, or fraction thereof, such instructor is 
away from Seattle, including travel time.

4.3     Buyer will reimburse Boeing for round-trip transportation for 
Boeing's flight training instructors and materials between Seattle and such 
alternate site.

4.4     Buyer will pay, or reimburse Boeing for, all taxes, fees, 
duties, licenses, permits and similar expenses incurred by Boeing and its 
employees as a result of Boeing's providing the training at such alternate 
site.

4.5     Those portions of the training that require the use of 
Boeing's training devices, if any, will be conducted at Boeing-designated 
facilities.

PART D

TECHNICAL DATA AND DOCUMENTS

1.      General.

Boeing will furnish to Buyer the data and documents set forth herein 
at no additional charge to Buyer, unless otherwise specified herein.  Such 
data and documents will, where applicable, be prepared essentially in 
accordance with the provisions of Revision 29 excluding FRM/FIM/ to Air 
Transport Association of America Specification No. 100, dated June 1, 1956, 
entitled "Specification for Manufacturers' Technical Data," with the 
following specific exceptions:  The Illustrated Parts Catalog, will be 
prepared essentially in accordance with the provisions of Revision 28.  The 
Overhaul and Component Maintenance Manuals will be written to the ATA 
Revision level established for the airplane model the component was 
originally used on.  Such data and documents are only intended to provide 
Buyer with pertinent information on components, equipment and installations 
designed by Boeing for aircraft of the same model type as the Aircraft.  
Such data and documents will be in English and in the units of measure used 
by Boeing, except as otherwise specified herein or as may be required to 
reflect Aircraft instrumentation.

Digitally-produced data and documents will, where applicable, be prepared 
essentially in accordance with the provisions of Revision 0 of Air 
Transport Association of America (ATA) Specification 2100, dated 
January 1994, entitled "Digital Data Standards for Aircraft Support."

2.      Treatment of Data and Documents.

2.1     The data and documents provided by Boeing under this 
Agreement ("Documents") are licensed to Buyer.  They contain confidential, 
proprietary and/or trade secret information belonging to Boeing; and Buyer 
will treat them in confidence and use and disclose them only for Buyer's 
own internal purposes as specifically authorized herein.  If Buyer makes 
copies of any Documents, the copies will also belong to Boeing and be 
treated as Documents under this Agreement.  Buyer will preserve all 
restrictive legends and proprietary notices on all Documents and copies.

2.2     All Documents will only be used:  (a) for the purpose of 
maintenance, repair, or modification of an Aircraft or spare part as 
permitted in the Spare Parts GTA or Customer Services GTA between Buyer and 
Boeing, and then only in connection with an Aircraft or spare part for 
which the Document in question is tabulated or identified by Boeing serial 
number, and (b) for the purpose of Buyer's own development and manufacture 
of training devices for use by Buyer, in connection with the Aircraft.

2.3     Any Document may be provided to Buyer's contractors for 
maintenance, repair, or modification of the Aircraft; and Airplane Flight 
Manuals, Operations Manuals, Aircraft Maintenance Manuals, Wiring Diagram 
Manuals, System Schematics Manuals, Component Maintenance/Overhaul Manuals 
and assembly and installation drawings may be provided to Buyer's 
contractors for development and manufacture of training devices for use by 
Buyer, but in both cases, only if Buyer's contractor is, at the time of 
transfer of Documents, bound by a Boeing Customer Services GTA, or other 
appropriate proprietary information protection agreement with Boeing, 
applicable to the Documents.

3.      Document Formats and Quantities.

The Attachment is provided to record the quantities and formats of 
Documents provided to Buyer which are applicable to aircraft previously 
delivered by Boeing of the same model type as the Aircraft.  Revisions to 
such Documents will be provided as necessary to reflect the configuration, 
at time of delivery, of the Aircraft to which this Part applies.  Space is 
provided in the Attachment for Buyer and Boeing to indicate changes, 
mutually agreed upon concurrently with signing this Agreement, in the 
quantities and formats of such Documents to be hereinafter provided.

In the event Boeing determines that revisions would not be appropriate for 
any of the Documents described in the Attachment, Boeing reserves the right 
to furnish to Buyer, in lieu of such revisions, a separate publication of 
such Document for the Aircraft in the same format and quantity as indicated 
in the Attachment.  Revision service for such publication shall be the same 
as for the Document it replaces.

4.      Revision Service.

Further revisions to any such Documents will be provided as set 
forth in the purchase agreement, purchase agreement supplement, or as may 
have been amended by the parties, for such aircraft.

5.      Supplier Technical Data.

Boeing will continue to maintain the supplier data program referred 
to in the purchase agreement or purchase agreement supplement under which 
data and documents for Buyer's aircraft of the same model type as the 
Aircraft were originally provided to Buyer.  As indicated in such prior 
purchase agreement or supplement, the provisions of such supplier data 
program are not applicable to items of Buyer Furnished Equipment.

6.      Additional Data and Documents.

If Boeing provides data or documents other than Documents which are 
not covered by a Boeing Customer Services GTA or other proprietary 
information protection agreement between Boeing and Buyer, all such data 
and documents will be considered things delivered under this Agreement and 
treated as Documents.

7.      Buyer's Shipping Address.

Boeing will ship the Documents furnished hereunder to Buyer's 
shipping address for data and documents previously provided to Boeing.  
Buyer shall promptly notify Boeing of any change to such address.

A.      FLIGHT OPERATIONS:

1.     Airplane Flight Manual     22              51           Printed 1 Side

NOTE:   An additional copy is
placed aboard each
airplane at delivery
as required by FAR's.

2.     Operations Manual and Quick         5                           Printed 2 Sides
Reference Handbook          1                           Diskette

3.     Weight and Balance Control
and Loading Manual          2                           Reproduced

4.     Dispatch Deviation          6                           Printed 2 Sides
Procedures Guide

5.     Flight Crew Training Manual        12                           Printed 2 Sides

6.     Performance Engineer's Manual       2                   
Printed 2 Sides

7.     Jet Transport Performance           0                           Printed 2 Sides
Methods
(total quantity - all models)

8.     FMC Supplemental Data Document      0                   
Printed 2 Sides

9.     Operational Performance
Software (OPS)

a.      Inflight and Report Software        0                   
Digital Magnetic
Tape
0                           Diskette, IBM
Compatible
3.5 Inch (720KB 
or
1.44MB)
0                           Diskette, 
Macintosh
3.5 Inch (800KB 
or
1.4MB)

b.      Airplane Performance        0                           Digital Magnetic
Monitoring (APM/HISTRY)                 Tape
Software                        Diskette, IBM
Compatible:
0                           3.5 Inch (720KB 
or
1.44MB)
0                           5.25 Inch (360KB 
or
1.2MB)  

(737,747,757,767)
0                           Diskette, 
Macintosh
3.5 Inch (800KB 
or
1.4MB)

c.      Takeoff Analysis Software            0                          Digital Magnetic
Tape
Diskette, IBM
Compatible:
0                          3.5 Inch (720KB 
or
1.44MB)
0                          5.25 Inch (360KB 
or
1.2MB)  

(737,747,757,767)
0                          Diskette, 
Macintosh
3.5 Inch (800KB 
or
1.4MB)
d.      Landing Analysis Software            0                          Digital Magnetic
Tape
Diskette, IBM
Compatible:
0                          3.5 Inch (720KB 
or
1.44MB)
0                          5.25 Inch (360KB 
or
1.2MB)  

(737,747,757,767)
0                          Diskette, 
Macintosh
3.5 Inch (800KB 
or
1.4MB)

10.     ETOPS Guide Vol. III         2                          Printed 2 Sides
(Operational Guidelines
and Methods)/

B.      MAINTENANCE

1.     Aircraft Maintenance Manual          1                          Printed 2 Sides

0                          Printed 1 Side

40                          Microfilm, 16mm 
Duplicate

0                          Microfilm, 16mm 
Master

0                          Digital Format 

2.      Wiring Diagram Manual        1                          35mm Aperture 
Cards of all 
Wiring Diagrams 
and Charts

0                         Standard Printed
Copies of Entire
Manual

12                         Standard Printed
Copies of all
sections except 
EDP portion

0                         EDP portion in 
Microfilm, 16mm, 
Duplicate

0                         EDP portion in 
Microfilm, 16mm, 
Master

14                         Entire Manual, 
Microfilm, 16mm, 
Duplicate

0                         Entire Manual, 
Microfilm, 16mm, 
Master

0                         Digital Format

3.     System Schematics Manual             20                         Printed 2 Sides

0                         35mm Aperture 
Cards

10                         Microfilm, 16mm, 
Duplicate

0                         Microfilm, 16mm, 
Master 
(737,747,757,767
)

0                         Digital Format

4.     Connector Part Number         2                         Printed 2 Sides
Options Document

5.     Structural Repair Manual              5             30          Printed 2 Sides

0                         Printed 1 Side

12                         Microfilm, 16mm, 
Duplicate

0                         Microfilm, 16mm, 
Master

0                         Magnetic Tape
Text (Print File 
Format)
Illustrations 
(CGM Format) 
6.     Component Maintenance/       4                          Printed 2 Sides
Overhaul Manuals
6                          Microfilm, 16mm, 
Duplicate

0                          Microfilm, 16mm, 
Master

0                          Magnetic Tape
Text (Print File 
Format)
Illustrations 
(CGM Format)

7.     Chapter 20 Standard          0                          Printed 2 Sides
Overhaul Practices Manual
(total quantity - all models)        0                  
Printed 1 Side

12                          Microfilm, 16mm, 
Duplicate

0                          Microfilm, 16mm, 
Master
8.     Chapter 20 Standard Wiring           5                          Printed 2 Sides
Practices Manual
(total quantity - all models)       25                  
Microfilm, 
16mm, Duplicate

0                          Microfilm, 16mm, 
Master

9.     Nondestructive Test          0                          Printed 2 Sides
Manual
0                          Printed 1 Side

2                          Microfilm, 16mm, 
Duplicate

0                          Microfilm, 16mm, 
Master

0                          Magnetic Tape
Text (Print File 
Format)
Illustrations 
(CGM Format) 

10.     Service Bulletins            2                          Printed 2 Sides

11.     Service Bulletins Index      1                          Printed 2 Sides

12.     Corrosion Prevention Manual          5                          Printed 2 Sides

0                          Printed 1 Side

0                          Microfilm, 16mm, 
Duplicate

0                          Microfilm, 16mm, 
Master

0                          Magnetic Tape
Text (Print File 
Format)
Illustrations 
(CGM Format) 

13.     Fuel Measuring Stick       3/ A/C                       Printed 1 Side
Calibration Document
Check One:
U. S. Gallons     X
Imperial Gallons           
Pounds     
Kilograms          
Liters     

14.     Power Plant Buildup Manual          10                          Printed 2 Sides

0                          Printed 1 Side

0                          Microfilm (16mm) 
Duplicate

0                          Microfilm (16mm) 
Master

15.     FMS BITE Manual      25                         Printed 2 Sides

0                         Microfilm, 16mm, 
Duplicate

0                         Microfilm, 16mm, 
Master/

16.     In-Service Activity Report           2                          Printed 2 sides

17.     All Operator Letter          2                          Printed 1 or
2 sides

18.     Service Letters      3                          Printed 1 or
2 sides

19.     Structural Item Interim      2                          Printed 1 or
Advisory                        2 sides

20.     Maintenance Tips             2                          Printed 1 or
2 sides

21.     Combined Index       1                          Printed 2 sides

1                          Digital Format

C.      MAINTENANCE PLANNING

1.     Maintenance Planning         3                          Printed 2 sides
Data Documents
0                          Microfilm (16mm) 
Duplicate

0                          Microfilm (16mm) 
Master

0                          Digital Format

2.     Maintenance Task Cards       1                          Printed 1 Side

0                          Microfilm (16mm) 
Duplicate

0                          Microfilm (16mm) 
Master

1                          Digital Format

3.     Maintenance Task Card Index          1                          Printed 2 sides

0                          Digital Format  
(777)

4.     Maintenance Inspection       2                          Printed 2 sides
Intervals Report
(total quantity - all models)

D.      SPARES

1.     Illustrated Parts Catalog            0                          Printed 2 Sides
(select one format only)
0                          Printed 1 Side

35                          Microfilm (16mm) 
Duplicate

0                          Microfilm (16mm) 
Master
2.     Standards Books

a.      Index        0                          Printed 2 Sides

2                          Microfilm (16mm) 
Duplicate

b.      Parts Standards      0                          Printed 2 Sides

2                          Microfilm (16mm) 
Duplicate

c.      Parts Specifications         0                          Printed 2 Sides

2                          Microfilm (16mm) 
Duplicate

d.      Standards for Repair         0                          Printed 2 Sides

1                          Microfilm (16mm) 
Duplicate

e.      Obsolete Standards           0                          Printed 2 Sides

1                          Microfilm (16mm) 
Duplicate

f.      Commercial Markers           0                          Printed 2 Sides

1                          Microfilm (16mm) 
Duplicate

g.      Commercial Markers 737       0                          Printed 2 Sides

1                          Microfilm (16mm) 
Duplicate

h.      Passenger Cabin Symbology            0                          Printed 2 Sides
(Commercial Placards)
1                          Microfilm (16mm) 
Duplicate

i.      Process Standards            0                          Printed 2 Sides

4                          Microfilm (16mm) 
Duplicate
j.      Material Standards           0                          Printed 2 Sides

1                          Microfilm (16mm) 
Duplicate

k.      Drafting Standards Practices         0                  
Printed 2 Sides

1                          Microfilm (16mm) 
Duplicate

l.      Specification Support        0                          Printed 2 Sides
Standards
0                          Microfilm (16mm) 
Duplicate

E.      FACILITIES AND EQUIPMENT PLANNING

1.     Facilities and Equipment             4                          Printed 2 Sides
Planning Document
0                          Microfilm (16mm) 
Master (777)

2.     Special Tool and Ground      1                          Microfilm, 
(35mm)
Handling Equipment Drawings                     Duplicate in 
Aperture Card 
Format

3.     Special Tool and Ground      2                          Printed 2 Sides
Handling Equipment Drawings
Index

4.     Supplementary Tooling        1                          Printed 2 Sides
Documentation
(total quantity - all models)

5.     System Test Equipment        2                          Printed 1 Side
Document

6.     Illustrated Tool and         2                          Printed 2 Sides
Equipment List/Manual
0                          Printed 1 Side

1                          Microfilm, 16mm, 
Duplicate

0                          Microfilm, 16mm, 
Master

7.     Aircraft Recovery Document           6                          Printed 2 Sides

8.     Airplane Characteristics for         2                          Printed 2 sides
Airport Planning

9.     Airplane Rescue and Fire             2                          Printed 2 Sides
Fighting Document (total
quantity - all models)

10.     Engine Handling Document             2                          Printed 2 Sides

F.      Configuration, Maintenance           2                          Printed 2 Sides
and Procedures for Extended
Range Operations Document/

G.      ETOPS Guide Vol. I           2                          Printed 2 Sides
(Configuration, Maintenance
and Procedures Supplement)/

H.      ETOPS Guide Vol. II          2                          Printed 2 Sides
(Maintenance Programs Guidelines)
(total quantity - all models)/

I.      Computer Software Index      2                          Printed 2 Sides
(total quantity - all models)

J.      Supplier Technical Data

1.      Service Bulletins            2                          Printed

2.      Ground Support Equipment             4                          Printed
Data

3.      Provisioning Information             2                          Printed

4.      Component Maintenance/       3                          Printed
Overhaul Manuals

5.      Component Maintenance/       5                          Printed
Overhaul Manuals Index
(total quantity - all models)

6.      Publications Index           3                          Printed

7.      Product Support Supplier             1                          Printed
Directory (total quantity - 
all models)

PART E

BUYER'S INDEMNIFICATION OF BOEING AND INSURANCE

1.      Buyer's Indemnification Of Boeing.

Buyer hereby indemnifies and holds harmless Boeing from and against 
all claims and liabilities, including costs and expenses (including 
attorneys' fees) incident thereto or incident to successfully establishing 
the right to indemnification, for injury to or death of any person or 
persons, including employees of Buyer but not employees of Boeing, or for 
loss of or damage to any property, including Aircraft, arising out of or in 
any way related to the performance by Boeing of training, services or other 
obligations pursuant to this Exhibit C, whether or not arising in tort or 
occasioned in whole or in part by the negligence of Boeing, whether active, 
passive or imputed.

1.1     With regard to training, services and obligations other than 
Revenue Service Training, the foregoing indemnification will not apply to 
the legal liability to persons or parties other than Buyer or Buyer's 
assignees arising out of an accident caused solely by a product defect in 
an Aircraft.

1.2     With regard to Revenue Service Training, the foregoing 
indemnification will apply to the legal liability to persons or parties 
other than Buyer or Buyer's assignees, even if arising out of an accident 
caused solely by a product defect in an Aircraft.

2.      Buyer's Insurance.

Evidence of insurance will be required 30 days prior to the 
scheduled delivery of the first Aircraft.  Accordingly, Buyer will provide 
certificates of insurance specifically referencing the Agreement and 
paragraph 1 of this Part E.  In addition to showing policy number, limits 
of liability, and effective dates of coverage, such certificates will 
contain but not be limited to the following provisions:

2.1     Hull All Risk; Hull War & Allied Perils Insurance.

Insurers and/or reinsurers will hold harmless and waive all 
rights of subrogation against Boeing for any damages or claims arising out 
of these Exhibit C services.

2.2     Aircraft Liability Insurance.

(a)     To name Boeing as an additional insured in connection 
with the performance by Boeing of training, services, or other obligations 
provided under this Exhibit C.

(b)     To provide that the insurance arranged herein will be 
primary and without right of contribution with respect to any other 
insurance which may be available for the protection of Boeing.

(c)     To provide that all provisions of the insurance, 
except the limits of liability, will operate to give each insured or 
additional insured the same protection as if there were a separate policy 
issued covering each insured or additional insured.

(d)     To provide that no act, omission, breach of any 
warranty or condition, or misrepresentation on the part of the Insured or 
any other person or party (other than by Boeing) will void, exclude, 
minimize, or adversely change this coverage as it applies to Boeing.

2.3     For Coverages Specified in 2.1 and 2.2.

(a)     Acknowledgment that the insurers and/or reinsurers are 
aware of and have seen a copy of the Agreement and accept and insure the 
risks and indemnity herein to the extent of the coverage and endorsements 
as described in this certificate.

(b)     To give 30 day written notice of cancellation, 
termination or adverse material alteration of the policies (7 day written 
notice in the event of War Risk or such lesser period as may be in effect 
with prior notice).
(c)     That Boeing will not be responsible for payment, set 
off, or assessment of any kind of any premiums in connection with the 
policies, endorsements or coverages described herein.

(d)     For the purpose of this Part E, "Boeing" is defined as 
The Boeing Company, its divisions, subsidiaries, affiliates, the assignees 
of each and their respective directors, officers, employees and agents.

If more than one Aircraft is to be delivered under the Purchase Agreement, 
the insurance certificates must reference all Aircraft when delivered or 
separate certificates must be supplied for each Aircraft.  The certificates 
of insurance will be kept current and valid.

PART F

Alleviation or Cessation of Performance

Boeing will not be required to provide any services, training, data or 
goods at a facility while:

1.      a labor stoppage or dispute in progress involving Buyer 
exists;

2.      wars or warlike operations, riots or insurrections in the 
country where such facility is located exist;

3.      conditions at such facility which, in the opinion of Boeing, 
are detrimental to the general health, welfare or safety of its personnel 
and/or their families exist;

4.      the United States Government refuses permission to any Boeing 
personnel or their families to enter the country where such facility is 
located, or recommends that any Boeing personnel or their families leave 
such country; or

5.      the United States Government refuses Boeing permission to 
deliver goods or services to the country where such facility is located.

Boeing further reserves the right, upon the occurrence of any of such 
events, subsequent to the location of Boeing personnel at Buyer's facility, 
to immediately and without prior notice relocate its personnel and their 
families to a place of Boeing's choosing.  Any delay resulting therefrom 
will be deemed a delay by mutual agreement.

AIRFRAME AND ENGINE PRICE ADJUSTMENT

between

THE BOEING COMPANY

and

ALASKA AIRLINES, INC.

Exhibit D to Purchase Agreement Number 1954

PRICE ADJUSTMENT DUE TO
ECONOMIC FLUCTUATIONS
AIRFRAME PRICE ADJUSTMENT
(1995 Base Price)

1.      Formula.

The Airframe Price Adjustment will be determined at the time of 
Aircraft delivery in accordance with the following formula:

Pa = (P)(L + M - 1)

Where:

Pa = Airframe Price Adjustment.

L =     .65 x  ECI 
130.1

M =     .35 x  ICI 
123.6

P =     Aircraft Basic Price (as set forth in Article 3.2 of this 
Agreement) less the base price of Engines (as defined in this 
Exhibit D) in the amount of $[Confidential Treatment 
Requested].

ECI =      A value using the "Employment Cost Index for workers in 
aerospace manufacturing" (aircraft manufacturing, standard 
industrial classification code 3721, compensation, base month 
and year June 1989 = 100), as released by the Bureau of Labor 
Statistics, U.S. Department of Labor on a quarterly basis for 
the months of March, June, September and December, calculated 
as follows: A three-month arithmetic average value (expressed 
as a decimal and rounded to the nearest tenth) will be 
determined using the months set forth in the table below for 
the applicable Aircraft, with the released Employment Cost 
Index value described above for the month of March also being 
used for the months of January and February; the value for June 
also used for April and May; the value for September also used 
for July and August; and the value for December also used for 
October and November.

ICI =      The three-month arithmetic average of the released monthly 
values for the Industrial Commodities Index as set forth in the 
"Producer Prices and Price Index" (Base Year 1982 = 100) as 
released by the Bureau of Labor Statistics, U.S. Department of 
Labor values (expressed as a decimal and rounded to the nearest 
tenth) for the months set forth in the table below for the 
applicable Aircraft.

In determining the value of L, the ratio of ECI divided by 130.1 
will be expressed as a decimal rounded to the nearest ten-thousandth and 
then multiplied by .65 with the resulting value also expressed as a decimal 
and rounded to the nearest ten-thousandth.

In determining the value of M, the ratio of ICI divided by 123.6 
will be expressed as a decimal rounded to the nearest ten-thousandth and 
then multiplied by .35 with the resulting value also expressed as a decimal 
and rounded to the nearest ten-thousandth.

Months to be Utilized
Month of Scheduled              in Determining the
Aircraft Delivery               Value of ECI and ICI     

January                         June  B, July  B, Aug.  B
February                        July  B, Aug.  B, Sept. B
March                           Aug.  B, Sept. B, Oct.  B
April                           Sept. B, Oct.  B, Nov.  B
May                             Oct.  B, Nov.  B, Dec.  B
June                            Nov.  B, Dec.  B, Jan.  D
July                            Dec.  B, Jan.  D, Feb.  D
August                          Jan.  D, Feb.  D, Mar.  D
September                       Feb.  D, Mar.  D, Apr.  D
October                         Mar.  D, Apr.  D, May   D
November                        Apr.  D, May   D, June  D
December                        May   D, June  D, July  D

The following definitions of B and D will apply:

B       =       The calendar year before the year in which the scheduled month 
of delivery as set forth in Article 2.1 occurs.

D       =       The calendar year during which the scheduled month of delivery 
as set forth in Article 2.1 occurs.

2.      If at the time of delivery of an Aircraft Boeing is unable to 
determine the Airframe Price Adjustment because the applicable values to be 
used to determine the ECI and ICI have not been released by the Bureau of 
Labor Statistics, then:

2.1     The Airframe Price Adjustment, to be used at the time of 
delivery of each of the Aircraft, will be determined by utilizing the 
escalation provisions set forth above.  The values released by the Bureau 
of Labor Statistics and available to Boeing 30 days prior to scheduled 
Aircraft delivery will be used to determine the ECI and ICI values for the 
applicable months (including those noted as preliminary by the Bureau of 
Labor Statistics) to calculate the Airframe Price Adjustment.  If no values 
have been released for an applicable month, the provisions set forth in 
Paragraph 2.2 below will apply.  If prior to delivery of an Aircraft the 
U.S. Department of Labor changes the base year for determination of the ECI 
or ICI values as defined above, such rebased values will be incorporated in 
the Airframe Price Adjustment calculation.  The payment by Buyer to Boeing 
of the amount of the Purchase Price for such Aircraft, as determined at the 
time of Aircraft delivery, will be deemed to be the payment for such 
Aircraft required at the delivery thereof.

2.2     If prior to delivery of an Aircraft the U.S. Department of 
Labor substantially revises the methodology used for the determination of 
the values to be used to determine the ECI and ICI values (in contrast to 
benchmark adjustments or other corrections of previously released values), 
or for any reason has not released values needed to determine the 
applicable Aircraft Airframe Price Adjustment, the parties will, prior to 
delivery of any such Aircraft, select a substitute for such values from 
data published by the Bureau of Labor Statistics or other similar data 
reported by non-governmental United States organizations, such substitute 
to lead in application to the same adjustment result, insofar as possible, 
as would have been achieved by continuing the use of the original values as 
they may have fluctuated during the applicable time period.  Appropriate 
revision of the formula will be made as required to reflect any substitute 
values.  However, if within 24 months from delivery of the Aircraft the 
Bureau of Labor Statistics should resume releasing values for the months 
needed to determine the Airframe Price Adjustment, such values will be used 
to determine any increase or decrease in the Airframe Price Adjustment for 
the Aircraft from that determined at the time of delivery of such Aircraft.

2.3     In the event escalation provisions are made non-enforceable 
or otherwise rendered null and void by any agency of the United States 
Government, the parties agree, to the extent they may lawfully do so, to 
equitably adjust the Purchase Price of any affected Aircraft to reflect an 
allowance for increases or decreases in labor compensation and material 
costs occurring since February, 1995, which is consistent with the 
applicable provisions of paragraph 1 of this Exhibit D.

3.      For the calculations herein, the values released by the Bureau of 
Labor Statistics and available to Boeing 30 days prior to scheduled 
Aircraft delivery will be used to determine the ECI and ICI values for the 
applicable months (including those noted as preliminary by the Bureau of 
Labor Statistics) to calculate the Airframe Price Adjustment.

Note:   Any rounding of a number, as required under this Exhibit D with 
respect to escalation of the airframe price, will be accomplished as 
follows:  if the first digit of the portion to be dropped from the 
number to be rounded is five or greater, the preceding digit will be 
raised to the next higher number.

ENGINE PRICE ADJUSTMENT - CFM INTERNATIONAL, INC.
(1995 BASE PRICE)

(a)     The Aircraft Basic Price of each Aircraft set forth in 
Article 3.1 of this Agreement includes an aggregate price for CFM56-3C-1 
engines and all accessories, equipment and parts therefor provided by the 
engine manufacturer (collectively in this Exhibit D called "Engines") of 
[Confidential Treatment Requested].  The adjustment in Engine price 
applicable to each Aircraft ("Engine Price Adjustment" herein) will be 
determined at the time of Aircraft delivery in accordance with the 
following formula:

D1  =   (Pb x  CPI  ) - Pb
138.27

(b)  The following definitions will apply herein:

D1  =   Engine Price Adjustment

Pb  =   Aggregate Engine Base Price as set forth in Paragraph (a) 
above.

CPI =   The Composite Price Index as determined in accordance with 
the formula set forth below.  The Index values referred to 
below, to be used in determining the CPI, will be for the 
ninth month prior to the month of scheduled Aircraft 
delivery.  Such Index values will be those prepared by the 
Bureau of Labor Statistics, U.S. Department of Labor.

CPI =   L + M1 + M2 + M3

L   =   The Labor Index for such month will be the quotient, 
expressed as a decimal and rounded to the nearest 
thousandth, of the "Hourly Earnings of Aircraft 
Engines and Engine Parts Production Workers" SIC 3724, 
for such month divided by Eleven Dollars and Sixteen 
Cents ($11.16).  Such quotient will be multiplied by 
100 and then by fifty-five percent (55%) with the 
value resulting from the latter multiplication 
expressed as a decimal and rounded to the nearest 
hundredth.

M1  =   The Industrial Commodities Index for such month will 
be equal to ten percent (10%) of the Producer Price 
Index for "all commodities other than Farm and Foods," 
Code 3-15, (Base Year 1982 = 100) for such month, 
expressed as a decimal and rounded to the nearest 
hundredth.

M2  =   The Metals and Metal Products Index for such month 
will be equal to twenty-five percent (25%) of the 
Producer Price Index for "Metals and Metal Products," 
Code 10, (Base Year 1982 = 100) for such month 
expressed as a decimal and rounded to the nearest 
hundredth.

M3  =   The Fuel Index for such month will be equal to ten 
percent (10%) of the Producer Price Index for "Fuel 
and Related Products and Power," Code 5, (Base Year 
1982 = 100) for such month expressed as a decimal and 
rounded to the nearest hundredth.

138.27  =       Composite Price Index for October, 1994.

The factor (CPI divided by 138.27) by which the Aggregate Engine Base Price 
is to be multiplied will be expressed as a decimal and rounded to the 
nearest thousandth.

The Engine Price Adjustment will not be made if it would result in a 
decrease in the aggregate Engine base price.

(c)     The values of the Average Hourly Earnings and Producer Price Indices 
used in determining the Engine Price Adjustment will be those published by 
the Bureau of Labor Statistics, U.S. Department of Labor as of a date 30 
days prior to the scheduled Aircraft delivery to Buyer.  Such values will 
be considered final and no Engine Price Adjustment will be made after 
Aircraft delivery for any subsequent changes in published Index values.

(d)     If the U.S. Department of Labor, Bureau of Labor Statistics (i) 
substantially revises the methodology (in contrast to benchmark adjustments 
or other corrections of previously published data) or (ii) discontinues 
publication of any of the data referred to above, CFMI agrees to meet 
jointly with Boeing and Buyer to jointly select a substitute for the 
revised or discontinued data; such substitute data to lead in application 
to the same adjustment result, insofar as possible, as would have been 
achieved by continuing the use of the original data as it may have 
fluctuated had it not been revised or discontinued.

Appropriate revision of the Engine Price Adjustment provisions set forth 
above will be made to accomplish this result for the affected Engines.

In the event the Engine price escalation provisions are made 
non-enforceable or otherwise rendered null and void by any agency of the 
United States Government, CFMI agrees to meet with Boeing and Buyer to 
jointly agree, to the extent such parties may lawfully do so, to adjust 
equitably the purchase price of any affected Engine(s) to reflect an 
allowance for increases in labor, material and fuel costs that have 
occurred from the period represented by the CPI to the ninth month 
preceding the month of scheduled delivery of the applicable aircraft.

NOTE:   Any rounding of a number, as required under this Exhibit D with 
respect to escalation of the Engine price, will be accomplished as 
follows:  if the first digit of the portion to be dropped from the 
number to be rounded is five or greater, the preceding digit will be 
raised to the next higher number.

BUYER FURNISHED EQUIPMENT PROVISIONS DOCUMENT

between

THE BOEING COMPANY

and

ALASKA AIRLINES

Exhibit E to Purchase Agreement Number 1954

BUYER FURNISHED EQUIPMENT PROVISIONS DOCUMENT

Dated                           

Relating to

BOEING MODEL 737 AIRCRAFT

This Buyer Furnished Equipment Provisions Document is Exhibit E to 
and forms a part of Purchase Agreement No. 1954, between The Boeing Company 
(Boeing) and Alaska Airlines (Buyer) relating to the purchase of Boeing 
Model 737-490 aircraft.

BUYER FURNISHED EQUIPMENT PROVISIONS DOCUMENT

1.      General.

Certain equipment to be installed in the Aircraft is furnished to 
Boeing by Buyer at Buyer's expense.  This equipment is designated "Buyer 
Furnished Equipment" (BFE) and is listed in the Detail Specification.  On 
or before October 1, 1996, Boeing will provide to Buyer a BFE Requirements 
On-Dock/Inventory Document (BFE Document) or an electronically transmitted 
BFE Report which may be periodically revised, setting forth the items, 
quantities, on-dock dates and shipping instructions relating to the in 
sequence installation of BFE.  For planning purposes, a preliminary BFE on-
dock schedule is set forth in the attachment to this Exhibit.

2.      Supplier Selection.

Buyer will:

2.1     Select and notify Boeing of the suppliers of the following 
BFE items by the following dates:

Galley System            September 30,1996      

Seats (passenger)        September 30, 1996     

2.2     Meet with Boeing and such selected BFE suppliers promptly 
after such selection to:

2.2.1   complete BFE configuration design requirements for 
such BFE; and

2.2.2   confirm technical data submittal dates for BFE 
certification.

3.      Buyer's Obligations.

Buyer will:

3.1     comply with and cause the supplier to comply with the 
provisions of the BFE Document or BFE Report;

3.1.1   deliver technical data (in English) to Boeing as 
required to support installation and FAA certification in accordance with 
the schedule provided by Boeing or as mutually agreed upon during the BFE 
meeting referred to above;

3.1.2   deliver BFE including production and/or flight 
training spares to Boeing in accordance with the quantities and schedule 
provided therein; and

3.1.3   deliver appropriate quality assurance documentation to 
Boeing as required with each BFE part (D6-56586, "BFE Product Acceptance 
Requirements");

3.2     authorize Boeing to discuss all details of the BFE directly 
with the BFE suppliers;

3.3     authorize Boeing to conduct or delegate to the supplier 
quality source inspection and supplier hardware acceptance of BFE at the 
supplier location;

3.3.1   require supplier's contractual compliance to Boeing 
defined source inspection and supplier delegation programs, including 
availability of adequate facilities for Boeing resident personnel; and

3.3.2   assure that Boeing identified supplier's quality 
systems be approved to Boeing document D1-9000;

3.4     provide necessary field service representation at Boeing's 
facilities to support Boeing on all issues related to the installation and 
certification of BFE;

3.5     deal directly with all BFE suppliers to obtain overhaul data, 
provisioning data, related product support documentation and any warranty 
provisions applicable to the BFE;

3.6     work closely with Boeing and the BFE suppliers to resolve any 
difficulties, including defective equipment, that arise;

3.7     be responsible for modifying, adjusting and/or calibrating 
BFE as required for FAA approval and for all related expenses;

3.8     warrant that the BFE will meet the requirements of the Detail 
Specification; and

3.9     be responsible for providing equipment which is FAA 
certifiable at time of Aircraft delivery, or for obtaining waivers from the 
applicable regulatory agency for non-FAA certifiable equipment.

4.      Boeing's Obligations.

Other than as set forth below, Boeing will provide for the 
installation of and install the BFE and obtain certification of the 
Aircraft with the BFE installed.

5.      Nonperformance by Buyer.

If Buyer's nonperformance of obligations in this Exhibit or in the 
BFE Document causes a delay in the delivery of the Aircraft or causes 
Boeing to perform out-of-sequence or additional work, Buyer will reimburse 
Boeing for all resulting expenses and be deemed to have agreed to any such 
delay in Aircraft delivery.  In addition Boeing will have the right to:

5.1     provide and install specified equipment or suitable alternate 
equipment and increase the price of the Aircraft accordingly; and/or

5.2     deliver the Aircraft to Buyer without the BFE installed.

6.      Return of Equipment.

BFE not installed in the Aircraft will be returned to Buyer in 
accordance with Buyer's instructions and at Buyer's expense.

7.      Title and Risk of Loss.

Title to and risk of loss of BFE will at all times remain with Buyer 
or other owner.  Boeing will have only such liability for BFE as a bailee 
for mutual benefit would have, but will not be liable for loss of use.

8.      Indemnification of Boeing.

Buyer hereby indemnifies and holds harmless Boeing from and against 
all claims and liabilities, including costs and expenses (including 
attorneys' fees) incident thereto or incident to successfully establishing 
the right to indemnification, for injury to or death of any person or 
persons, including employees of Buyer but not employees of Boeing, or for 
loss of or damage to any property, including any Aircraft, arising out of 
or in any way connected with any nonconformance or defect in any BFE and 
whether or not arising in tort or occasioned in whole or in part by the 
active, passive or imputed negligence of Boeing.  This indemnity will not 
apply with respect to any nonconformance or defect caused solely by 
Boeing's installation of the BFE.

9.      Patent Indemnity.

Buyer hereby indemnifies and holds harmless Boeing from and against 
all claims, suits, actions, liabilities, damages and costs arising out of 
any actual or alleged infringement of any patent or other intellectual 
property rights by BFE or arising out of the installation, sale or use of 
BFE by Boeing.

10.     Definitions.

For the purposes of the above indemnities, the term "Boeing" 
includes The Boeing Company, its divisions, subsidiaries and affiliates, 
the assignees of each, and their directors, officers, employees and agents.

BOEING MODEL 737-400 AIRCRAFT

Item    Preliminary On-Dock Dates

June, 1997      July, 1997
Aircraft        Aircraft

Seats   4/11/97 5/13/97

Galleys 4/8/97  5/8/97

Electronics     4/2/97  5/2/97

Furnishings     4/4/97  5/6/97

July, 1997      January, 1998
Aircraft        Aircraft

Seats   5/15/97 11/3/97

Galleys 5/12/97 10/29/97

Electronics     5/6/97  10/24/97

Furnishings     5/8/97  10/23/97

February, 1998  March, 1998
Aircraft        Aircraft

Seats   12/5/97 1/15/98

Galleys 12/2/97 1/12/98

Electronics     11/25/97        1/7/98

Furnishings     12/2/97 1/12/98

BOEING MODEL 737-400 AIRCRAFT

Item    Preliminary On-Dock Dates

April, 1998     May, 1998
Aircraft        Aircraft

Seats   2/12/98 3/16/98

Galleys 2/9/98  3/11/98

Electronics     2/4/98  3/5/98

Furnishings     2/9/98  3/10/98

August, 1998    September, 1998
Aircraft        Aircraft

Seats   6/5/98  7/10/98

Galleys 6/2/98  7/7/98

Electronics     5/28/98 6/30/98

Furnishings     6/3/98  7/6/98

March, 1999     May 1999
Aircraft        Aircraft

Seats   1/8/99  3/5/99

Galleys 1/5/99  3/2/99

Electronics     12/21/98        2/24/99

Furnishings     1/4/99  3/1/99

DEFINED TERMS DOCUMENT

between

THE BOEING COMPANY

and

ALASKA AIRLINES

Exhibit F to Purchase Agreement Number 1954

DEFINED TERMS DOCUMENT

Dated                      

Relating to

BOEING MODEL 737-490 AIRCRAFT

This Document is Exhibit F to and forms a part of Purchase Agreement 
No. 1954 (Agreement) between The Boeing Company (Boeing) and Alaska 
Airlines (Buyer) relating to the purchase of Boeing Model 737-490 aircraft.

The following is a list of those terms and their definitions as used 
and not otherwise defined in this Agreement.  Such terms are identified in 
the Agreement by the use of an initial capital letter.

Advance Payment Base 
Price
Boeing's estimate of the 
Aircraft Price is set 
forth in Article 3.
Article 3, Paragraph 
3,4
Agreement
Purchase Agreement 
No. 1954, including all 
Exhibits, the Detail 
Specification, 
attachments, letter 
agreements and other 
written modifications and 
amendments thereto.
Opening paragraph 
of the Agreement
Aircraft (includes 
"the", "all", 
"first", "last" 
"such", etc.)
The aircraft described in 
Article 1, Para. 1.1.
Article 1, Para. 1.1
Aircraft Basic Price
The amount set forth in 
Article 3, Para. 3.1.4.
Article 3, Para. 
3.1.4
Aircraft Price
The total amount Buyer is 
to pay for an Aircraft 
which is described in 
Article 3,  Para. 3.1.6. 
Article 3, Para. 
3.1.6
Aircraft Software
The computer software 
included with the Aircraft 
when the Aircraft is 
delivered by Boeing, 
described in Exhibit B, 
Part D-1, Para. 1.
Exhibit B, Part D-1, 
Para 1
Airframe Component
A component described in 
Exhibit B, Part C, Para. 
1.1
Exhibit B Part C 
Para. 1.1
Article
An Article of the 
Agreement.
Article 6, Para. 6.4
Base Airframe Price
The airframe price 
described in Article 3, 
Para. 3.1.2.
Article 3,
Para. 3.1.2
Boeing
The Seller of the Aircraft 
identified in the opening 
paragraph of the 
Agreement.
Opening paragraph of 
the Agreement
Boeing Warranty
Part A of Exhibit B to the 
Agreement.
Exhibit B, Part A, 
Para. 1
Buyer
The purchaser of the 
Aircraft identified in the 
opening paragraph of the 
Agreement.
Opening paragraph of 
the Agreement
Buyer Furnished 
Equipment or BFE
Equipment provided by 
Buyer pursuant to Exhibit 
E for installation by 
Boeing on the Aircraft.
Article 4.2
Buyer Furnished 
Equipment Document
Document provided by 
Boeing to Buyer defining 
requirements for BFE.  
Exhibit E, Para. 1.
Article 13, Para. 
13.1 
Certificate of 
Airworthiness
The certificate issued by 
the FAA pursuant to Part 
21 of the Federal Aviation 
Regulations for each of 
the Aircraft purchased 
under this Agreement as 
described in Article 8.  
Article 8, Para. 
8.1.1.2 (referred to 
therein as Standard 
Airworthiness 
Certificate)
Change Order
A change to the Detail 
Specification, as 
described in Article 7, 
Para. 7.2.
Article 7, Para. 7.2
Covered Component
An Airframe Component as 
described in Exhibit B, 
Part C, Para. 1.4.
Exhibit B Part C 
Para. 1.4
Customer Support 
Document
Exhibit C to the 
Agreement.
Article 12, Para. 
12.5
Customer Support 
Services
The Boeing services, 
training and other 
obligations described in 
Exhibit C to the 
Agreement.
Article 12, Para. 
12.5
Deposit
The money paid by Buyer to 
Boeing as part of the 
acceptance of the Aircraft 
proposal.
Article 5, Para. 5.1
Detail Specification
The Boeing document that 
describes the 
specifications of the 
Aircraft modified from 
time to time to include 
developmental and Buyer 
requested changes.
Article 1, Para. 1.1
Development 
Change(s)
Changes to the basic 
specification that do not 
affect price, delivery, 
guaranteed weight, 
performance or 
interchangeability as 
described in Article 7, 
Para. 7.1.
Article 7, Para. 7.1
Disclaimer and 
Release
The Disclaimer and Release 
set forth in Article 12, 
Para. 12.2.
Article 12, 
Para. 12.2
Documents
The data and documents 
provided by Boeing under 
the Agreement.
Exhibit C, Part D 
Para. 2
Economic Price 
Adjustment
Article 3, Para.  3.1.5. 
Article 3,
Para. 3.1.5
Engine(s)
The engines installed on 
the Aircraft as described 
in the Detail 
Specification.
Article 3, 
Para. 3.1.2
Engine Price
The price of the Engines 
installed on the Aircraft 
set forth in Exhibit D, 
including all accessories, 
equipment and parts 
therefor provided by the 
Engine manufacturer.
Article 3, Para. 
3.1.3
Engine Price 
Adjustment
The adjustment to the 
Engine Price as required 
by Article 3, Para. 3.1.2, 
and as calculated pursuant 
to Exhibit D.
Exhibit D
Excusable Delay
A delay resulting from any 
of the causes described in 
Article 6, Para. 6.1.
Article 6, Para. 6.1

FAA
The Federal Aviation 
Administration of the 
Department of 
Transportation of the 
United States, including 
the Administrator of the 
Federal Aviation 
Administration, the 
National Transportation 
Safety Board and any other 
authority or agency of the 
Federal Government of the 
United States having like 
jurisdiction.
Article 8, Para. 
8.1.1
Failed Component
A component as described 
in Exhibit B, Part C, 
Para. 1.6.
Exhibit B Part C 
Para. 1.6
Failure
Any breakage or defect as 
described in Exhibit B, 
Part C, Para. 5.
Exhibit B Part C 
Para. 1.5
Federal Aviation 
Regulations
The United States Federal 
Aviation Regulations and, 
if they are redesignated 
or discontinued, any 
comparable regulations or 
parts thereof issued by 
the FAA.
Article 8, Para. 
8.1.1.1
Field Service(s)
Boeing-provided services 
as described in Exhibit C, 
Part B, Para. 2.
Exhibit C, Part B, 
Para. 2
Field Service Period
The length of time Boeing 
provides Field Service to 
Buyer as described in 
Exhibit C, Part B, Para. 
2.1.
Exhibit C, Part B, 
Para. 2.1

Flight Training 
Program
The program of flight 
training described in 
Exhibit C, Part C, Para. 
3.
Exhibit C, Part C, 
Para. 2
Interface Problem
A technical problem 
attributed to the design 
characteristics of the 
Aircraft or its systems, 
as described in Exhibit B, 
Part G, Para. 1.
Exhibit B, Part G, 
Para. 1
Landing Gear 
Component
A component as described 
in Exhibit B, Part C, 
Para. 1.2.
Exhibit B Part C 
Para. 1.2

Maintenance Training 
Program
The program of training 
described in Exhibit C, 
Part A, Para. 3.
Exhibit C, Part A, 
Para. 2

Manufacturer 
Change(s)
A change to the Aircraft 
or performance required of 
Boeing as described in 
Article 8, Para. 8.2.1.
Article 8, Para. 
8.2.1
Operator Change(s)
A change to the Aircraft 
described in Article 8, 
Para. 8.3.1.
Article 8, Para. 
8.3.1
Performance 
Guarantees
The written guarantees 
regarding the operational 
performance of the 
Aircraft set forth in the 
Agreement or the Detail 
Specification.
Article 1, Para. 1.3 
Policy (Boeing 
Service Life Policy)
Exhibit B, Part C, Para. 
2.
Exhibit B, Part C, 
Para. 2

Product Assurance 
Document
Exhibit B of the 
Agreement.
Article 12, Para. 
12.1
Revenue Service 
Training
Flight Training conducted 
on the Aircraft during 
revenue service with cargo 
and/or passengers on 
board.

Exhibit C, Part E, 
Para. 1.1

Spare Component
A component as described 
in Exhibit B, Part C, 
Para. 1.3.
Exhibit B Part C 
Para. 1.3
Special Features
Article 3, Para. 3.1.1.
Article 3,
Para. 3.1.1
Standard 
Airworthiness 
Certificate
A certificate issued by 
the FAA, pursuant to Part 
21 of the Federal Aviation 
Regulations as described 
in Article 8, 
Para. 8.1.1.2.
Article 8, Para.
8.1.1.2
Target Delivery Date
A non binding estimated 
delivery date provided for 
Buyer's planning purposes, 
described in Article 2.
Article 2, Para. 2.2
Taxes
The term "Taxes" defined 
in Article 4, Para. 4.1.
Article 2, Para. 2.3
Type Certificate
A certificate issued by 
the FAA pursuant to Part 
21 of the Federal Aviation 
Regulations described in 
Article 8, Para. 8.1.1.1.
Article 8, 
Para. 8.1.1.1
Warranty Labor Rate
The hourly labor rate 
defined in Exhibit B, Part 
B, Para. 5.3.
Exhibit B, Part B, 
Para. 5.3

1954-1

Alaska Airlines, Inc.
19300 Pacific Highway South
Seattle, Washington 98188

Subject:        Letter Agreement No. 1954-1 to
Purchase Agreement No. 1954 - 
Promotion Support

This Letter Agreement amends Purchase Agreement No. 1954 dated as of even 
date herewith (the Agreement) between The Boeing Company (Boeing) and 
Alaska Airlines, Inc. (Buyer) relating to  Model 737-400 aircraft (the 
Aircraft).

All terms used herein and in the Agreement, and not defined herein, will 
have the same meaning as in the Agreement.

1.      Planning Meeting.

Boeing will assist Buyer in the introduction of the Aircraft by 
providing to Buyer certain promotion support.  Promptly after execution of 
the Agreement and before any funds are disbursed, a Boeing Airline 
Promotion representative will meet with Buyer's designated representatives 
to discuss the extent, selection, scheduling, and dispursement process for 
the promotion support to be provided.

2.      Support Level.

Boeing will make available to Buyer up to [Confidential Treatment 
Requested] for Buyer's marketing communications programs.  Programs include 
marketing research; tourism development; corporate identity; direct 
marketing; video tape, film or still photography requirements; planning, 
design and production of collateral materials; management of promotion 
programs; and advertising campaigns.  The intent of this funding program is 
to encourage the use of the Aircraft benefits in support of Buyer's 
marketing communications programs, as Boeing and Buyer mutually agree.  
Prior to any funds being disbursed, Boeing and Buyer will meet to mutually 
agree on the marketing communications programs related to Buyer's 
introduction and operation of the Aircraft.

Boeing's obligation to provide the support will commence at the time the 
purchase of the Aircraft becomes firm (not subject to cancellation by 
either party) and will terminate 2 years from the date the first Aircraft 
is delivered to Buyer.  There will be no cash payments or other support in 
lieu thereof.

3.      Additional Support.

Additional promotional support may be provided by Boeing subject to 
the parties reaching mutual agreement as to the type of services, timing 
and price.

Very truly yours,

THE BOEING COMPANY

By  /s/ Dawn S. Foster 

Its    Attorney-In-Fact    

ACCEPTED AND AGREED TO this

Date: September 18, 1996

ALASKA AIRLINES

By  /s/ Harry G. Lehr 

Its  Senior Vice President Finance

1954-2

Alaska Airlines, Inc.
19300 Pacific Highway South
Seattle, Washington 98188

Subject:        Letter Agreement No. 1954-2 to
Purchase Agreement No. 1954 - 
Seller Purchased Equipment

This Letter Agreement amends Letter Agreement 1954-2 of Purchase Agreement 
No. 1954 dated as of even date herewith (the Agreement) between The Boeing 
Company (Boeing) and Alaska Airlines, Inc. (Buyer) relating to  Model 737-
400 aircraft (the Aircraft).

For purposes of this Letter Agreement the following definitions apply:

Seller Purchased Equipment (SPE) is Buyer Furnished Equipment (BFE) that 
Boeing purchases for Buyer.

Developmental Buyer Furnished Equipment (DBFE) is all BFE not previously 
certified for installation on the same model aircraft.

Developmental Seller Purchased Equipment (DSPE) is DBFE which is converted 
to SPE.  

This Letter Agreement does not include developmental avionics.  
Developmental avionics are avionics that have not been previously certified 
for installation on the same model aircraft.

Boeing and Buyer acknowldege that there are no items of DBFE or DSPE in 
Buyer's detail specification D6-38900-1C dated August 29, 1996.

All other terms used herein and in the Agreement, and not defined above, 
will have the same meaning as in the Agreement.

Buyer has requested that Boeing purchase as SPE the BFE which has been 
changed to SPE as reflected in the Detail Specification.  Accordingly, 
Boeing and Buyer agree as follows:

1.      Price.

Advance Payments.  An estimated SPE price will be included in the 
Aircraft Advance Payment Base Price for the purpose of establishing the 
advance payments for each Aircraft.  The estimated price of the SPE for 
each Aircraft as identified in the Detail Specification as of the date 
hereof, is [Confidential Treatment Requested] expressed in 1995 STE 
dollars.

Aircraft Price.  The Aircraft Price will be adjusted to reflect (i) 
the actual costs charged Boeing by the SPE suppliers, (ii) a handling fee 
of [Confidential Treatment Requested]% of such costs and (iii) 
transportation charges.  If at some future date, Buyer's configuration is 
revised to include any DBFE and all DBFE, except for developmental 
avionics, is converted to SPE, Boeing will waive the handling fee for all 
SPE.

2.      Responsibilities.

2.1     If Buyer elects to convert additional BFE               to 
SPE, Buyer is responsible for:

(i)     selecting the supplier on or before:

Not Applicable  for galleys
Not Applicable  for seats;

(ii)    selecting a FAA certifiable part; and

(iii)   providing to Boeing the SPE part specification/Buyer 
requirements.

2.2.    Boeing is responsible for:

(i)     placing and managing the purchase order with the 
supplier;

(ii)    coordinating with the suppliers on technical issues;

(iii)   ensuring that the delivered SPE complies with the part 
specification;

(iv)    obtaining certification of the Aircraft with the SPE 
installed; and

(v)     obtaining for Buyer the supplier's standard warranty 
for the SPE.  SPE is deemed to be BFE for purposes of Exhibit B, the 
Product Assurance Document, of the Agreement.

3.      Changes.

After this Letter Agreement is signed, changes to SPE may only be 
made by and between Boeing and the suppliers.  Buyer's contacts with SPE 
suppliers relating to design (including selection of materials and colors), 
weights, prices or schedules are for informational purposes only.  If Buyer 
wants changes made to any of the above, requests must be made directly to 
Boeing for negotiating with the supplier.

5.      Proprietary Rights.

Boeing's obligation to purchase SPE will not impose upon Boeing any 
obligation to compensate Buyer or any supplier for any proprietary rights 
Buyer may have in the design of the SPE.

6.      Remedies.

If Buyer does not comply with the obligations above, Boeing may:

(i)     delay delivery of the Aircraft;

(ii)    deliver the Aircraft without installing the SPE;

(iii)   substitute a comparable part and invoice Buyer for the cost;

(iv)    increase the Aircraft Price by the amount of Boeing's 
additional costs attributable to such noncompliance.

7.      Buyer's Indemnification of Boeing.

Buyer will indemnify and hold harmless Boeing from and against all 
claims and liabilities, including costs and expenses (including attorneys' 
fees) incident thereto or incident to successfully establishing the right 
to indemnification, for injury to or death of any person or persons, 
including employees of Buyer but not employees of Boeing, or for loss of or 
damage to any property, including Aircraft, arising out of or in any way 
connected with any nonconformance or defect in any SPE and whether or not 
arising in tort or occasioned in whole or in part by the negligence of 
Boeing, whether active, passive or imputed.  This indemnity will not apply 
with respect to any nonconformance or defect caused solely by Boeing's 
installation of the SPE.

Very truly yours,

THE BOEING COMPANY

By  /s/ Dawn S. Foster 

Its    Attorney-In-Fact    

ACCEPTED AND AGREED TO this

Date: September 18, 1996

ALASKA AIRLINES

By  /s/ Harry G. Lehr 

Its  Senior Vice President Finance

1954-3

Alaska Airlines, Inc.
19300 Pacific Highway South
Seattle, Washington  98188

Subject:        Letter Agreement No. 1954-3 to Purchase Agreement No. 1954 - 
Option Aircraft

This Letter Agreement amends Purchase Agreement No. 1954 dated as of even 
date herewith (the Agreement) between The Boeing Company (Boeing) and 
Alaska Airlines, Inc. (Buyer) relating to Model 737-400 aircraft 
(Aircraft).

All terms not defined herein will have the same meaning as in the 
Agreement.

In consideration of Buyer's purchase of the Aircraft, Boeing agrees to 
manufacture and sell to Buyer up to twelve (12) additional Model 737-400 
Aircraft (Option Aircraft) [Confidential Treatment Requested] as described 
in paragraph 1 of Attachment A hereto, and subject to the terms and 
conditions set forth below.

1.      Delivery.

1.1 The Option Aircraft will be delivered to Buyer during or before 
the months set forth in the following schedule:

Month and Year  Number of
of Delivery     Option Aircraft

July 1999               One (1)
August 1999             One (1)
October 1999            One (1)
November 1999           One (1)
December 1999           One (1)

January 2000            One (1)
February 2000           One (1)
April 2000              Two (2)
December 2000           One (1)
January 2001            One (1)
February 2001           One (1)

2.      Price.

The estimated delivery prices (Advance Payment Base Price) of the 
Option Aircraft set forth in Attachment A include an allowance of 
$[Confidential Treatment Requested](1995$ STE) for the special features 
listed in paragraph 1 of Attachment A and an estimate for Seller Purchased 
Equipment in the amount of $[Confidential Treatment Requested] (1995$ STE).  
The Advance Payment Base Price excludes any amount for items of BFE.  The 
Option Aircraft pricing elements and associated pricing terms and 
conditions are in Attachment A.

3.      Option Aircraft Deposit.

In consideration of Boeing's grant to Buyer of options to purchase 
the Option Aircraft as set forth herein, and concurrent with the execution 
of the Purchase Agreement for the Aircraft, Buyer will pay a deposit to 
Boeing of $[Confidential Treatment Requested] for each Option Aircraft (the 
Option Deposit).  In the event Buyer exercises an option herein for an 
Option Aircraft, the amount of the Option Deposit for such Option Aircraft 
will be credited against the first advance payment due for such Option 
Aircraft pursuant to the advance payment schedule set forth in Article 5 of 
the Purchase Agreement.  

In the event that Buyer does not exercise its option to purchase a 
particular Option Aircraft pursuant to the terms and conditions set forth 
herein, Boeing shall be entitled to retain the Option Deposit for such 
Option Aircraft.

4.      Option Exercise.

To exercise its option to purchase the Option Aircraft, Buyer shall 
give written notice thereof to Boeing on or before the first business day 
of the month in each Option Exercise Date shown below:

Option Aircraft
Delivery Date   Option Exercise Date

July 1999       On or before February 1, 1998
August 1999     On or before February 1, 1998
October 1999    On or before May 1, 1998
November 1999   On or before May 1, 1998
December 1999   On or before May 1, 1998

January 2000    On or before August 1, 1998
February 2000   On or before August 1, 1998

April 2000      On or before October 1, 1998

December 2000   On or before May 1, 1999
January 2001    On or before May 1, 1999
February 2001   On or before May 1, 1999

5.      Contract Terms.

Within thirty (30) days after Buyer exercises an option to purchase 
Option Aircraft pursuant to paragraph 4 above, Boeing and Buyer will use 
their best reasonable efforts to enter into a supplemental agreement 
amending the Purchase Agreement to add the applicable Option Aircraft to 
the Purchase Agreement as a firm Aircraft as provided in Paragraph 7, below 
(the Option Aircraft Supplemental Agreement).

6.      [Confidential Treatment Requested]

7.      Applicability.

Except as otherwise specifically provided in this Letter Agreement, 
all the applicable terms, conditions and provisions of the Purchase 
Agreement shall apply to  all Option Aircraft [Confidential Treatment 
Requested]that are added to the Purchase Agreement by an Option Aircraft 
Supplemental Agreement as firm Aircraft.

If the foregoing accurately reflects your understanding of the matters 
treated herein, please so indicate by signature below.

Very truly yours,

THE BOEING COMPANY

By  /s/ Dawn S. Foster 

Its    Attorney-In-Fact    

ACCEPTED AND AGREED TO this

Date: September 18, 1996

ALASKA AIRLINES

By  /s/ Harry G. Lehr 

Its  Senior Vice President Finance

Attachments

Model 737-400 Aircraft

1.      Option and [Confidential Treatment Requested] Aircraft Description 
and Changes.

1.1     Aircraft Description.  The Option Aircraft and [Confidential 
Treatment Requested] Aircraft are described by Detail Specification D6-
38900-4-1C dated August 29, 1996, as revised to include:

(1)     CFM56-3C-1 Engine Installation 

(2)     The following special features:

As described in Exhibit A to the                        
Agreement

1.2     Changes.  The Detail Specification  will be revised to 
include:

(1)     Changes applicable to the basic Model 737-400 aircraft 
which are developed by Boeing between the date of the Detail Specification 
and the signing of a definitive agreement to purchase the Option Aircraft.

(2)     Changes mutually agreed upon.

(3)     Changes required to obtain a Standard Certificate of 
Airworthiness.

2.      Price Description - Model 737-400

2.1     Price Elements Per Aircraft

[Confidential Treatment Requested]

2.2     Price Adjustments.

2.2.1   Special Features.  The price for Special Features 
selected for the Option Aircraft will be adjusted to Boeing's then-current 
prices as of the date of execution of the definitive agreement for the 
Option Aircraft.  

2.2.2   Escalation Adjustments.  For Option Aircraft 
delivering before January, 2002, the Base Airframe Price and the price of 
Special Features will be escalated according to the provisions of Exhibit D 
to the Agreement.

The engine manufacturer's current escalation provisions, shown in Exhibit D 
to the Agreement, were used to calculate the advance payment base prices 
shown herein.  Such engine escalation provisions will be revised if they 
are changed by the engine manufacturer prior to the signing of a definitive 
agreement for the Option Aircraft and the then-current engine escalation 
provisions will be incorporated into such agreement.

2.2.3   Base Price Adjustments.  The Base Airframe Price and 
the Engine Price of the Option Aircraft will be adjusted to Boeing's and 
the engine manufacturer's then-current prices as of the date of execution 
of the definitive agreement for the Option Aircraft.  

3.      Advance Payment Schedules, Prices and   Adjustments.

3.1     Buyer will pay to Boeing advance payments for the Option 
Aircraft pursuant to the following schedule.

Amount Due per Option Aircraft
(Percentage times
Due Date of Payment     Advance Payment Base Price)

Upon signing of the definitive  1% (less the
agreement               Deposit)

24 months prior to the first    4%
day of the scheduled delivery
month of the Option Aircraft/

21 months prior to the first    5%
day of the scheduled delivery
month of the Option Aircraft

18 months prior to the first    5%
day of the scheduled delivery
month of the Option Aircraft

12 months prior to the first    5%
day of the scheduled delivery
month of the Option Aircraft

9 months prior to the first     5%
day of the scheduled delivery
month of the Option Aircraft

6 months prior to the first     5%
day of the scheduled delivery
month of the Option Aircraft       

Total           30%

Any advance payments past due as of the date of signing the definitive 
purchase agreement for the Option Aircraft are due and payable on the date 
of such signing.

3.2     Option Aircraft advance payment base prices will be increased 
or decreased, as appropriate, at the time of signing of the definitive 
purchase agreement for the Option Aircraft, using the then-current 
forecasted airframe and engine escalation factors used by Boeing, to 
determine the amount of the advance payments to be made by Buyer for the 
Option Aircraft.

1954-4

Alaska Airlines, Inc.
19300 Pacific Highway South
Seattle, Washington 98188

Subject:        Letter Agreement No. 1954-4 to
Purchase Agreement No. 1954 - 
Spares Initial Provisioning

This Letter Agreement amends Purchase Agreement No. 1954 dated as of even 
date herewith (the Agreement) between The Boeing Company (Boeing) and 
Alaska Airlines, Inc. (Buyer) relating to  Model 737-400 aircraft (the 
Aircraft).

All terms used herein and in the Purchase Agreement, and not defined 
herein, will have the same meaning as in the Agreement.

1.      Applicability.

This letter will apply to initial provisioning for the Model 737-400 
Aircraft covered by the Agreement.

2.      Initial Provisioning Meeting.

Boeing will conduct an initial provisioning meeting (Initial 
Provisioning Meeting) with Buyer to establish mutually agreeable procedures 
to accomplish Buyer's initial provisioning of spare parts for the Aircraft.  
The parties will agree, during the Initial Provisioning Meeting on the 
operational data to be provided by Buyer for Boeing's use in preparing its 
quantity recommendations for initial provisioning of spare parts for the 
Aircraft, exclusive of special tools, ground support equipment, engines and 
engine parts (Provisioning Items).  Such operational data to be provided by 
Buyer will be the data described in Section E of Boeing Manual D6-49090, 
entitled "Initial Provisioning Implementation Manual, Boeing Model 757, 
767, 777, 747-400 and 737-300, -400 and -500" (Boeing Initial Provisioning 
Implementation Manual) which will be furnished to Buyer prior to the 
Initial Provisioning Meeting.  The parties will also agree on the 
provisioning documentation to be provided by Boeing.  Such data will be 
essentially in accordance with the provisions of Chapter 1 of ATA 
International Specification 2000, Revision 1, dated April 20, 1989, as 
described in Boeing Initial Provisioning Implementation Manual D6-49090 
(such data will be hereinafter referred to collectively as the 
"Provisioning Data").  Boeing will provide instruction in the use of the 
initial provisioning documentation.  This instruction will be provided in 
conjunction with the Initial Provisioning Meeting.  In addition, the 
parties will discuss spares ordering procedures and other matters related 
to the provisioning for the Aircraft.  The time and location for such 
Initial Provisioning Meeting will be mutually agreed upon between the 
parties; however, Boeing and Buyer will use their best efforts to convene 
such meeting within 30 days after execution of the Agreement.

3.      Initial Provisioning Documentation.

3.1     Provisioning Data.  Boeing will furnish Provisioning Data to 
Buyer on or about September 20, 1996.  The Provisioning Data will be as 
complete as possible and will cover Provisioning Items selected by Boeing 
for review by Buyer for initial provisioning for the Aircraft.  The 
Provisioning Data will set forth the prices for Provisioning Items which 
are Boeing Spare Parts and such prices will be firm and remain in effect 
until the date or dates set forth in Paragraph 4.1, Boeing Spare Parts, by 
which orders must be placed with Boeing.  Boeing will, from time to time, 
until a date approximately 90 days following delivery of the last Aircraft 
or until the delivery configuration of each of the Aircraft is reflected in 
the Provisioning Data, whichever is later, furnish to Buyer revisions to 
the Provisioning Data.

3.2     Provisioning IPC.  Boeing will, on or about September 20, 
1996, furnish to Buyer a Boeing Illustrated Parts Catalog (IPC), 
hereinafter referred to as the "Provisioning IPC."  The Provisioning IPC 
will be as complete as possible and will cover Provisioning Items selected 
by Boeing for review by Buyer for initial provisioning for the Aircraft.  
Boeing will, from time to time, until a date approximately 90 days 
following delivery of the last Aircraft, or until the delivery 
configuration of each of the Aircraft is reflected in the Provisioning IPC, 
whichever is later, furnish to Buyer revisions to the Provisioning IPC.

3.3     Buyer Furnished Equipment (BFE) Provisioning Data.

3.3.1   Boeing's Responsibility.  Boeing will include BFE end 
items in the Provisioning Data and Provisioning IPC for BFE installed on 
Buyer's Aircraft provided such equipment has been installed on other 
Aircraft by Boeing and Boeing has data on the BFE.

3.3.2   Buyer's Responsibility.  Buyer will be responsible for 
ensuring BFE data is provided to Boeing by the BFE supplier in a format 
acceptable to Boeing for BFE not covered by 3.3.1 above.  If the data is 
not provided to Boeing in a timely manner and in a format acceptable to 
Boeing, such BFE equipment will not be included in Boeing's Provisioning 
Data or IPC.

3.4     Other Data.  Boeing will submit to Buyer listings of Raw 
Materials, Standard Parts and Bulk Materials to be used by Buyer in the 
maintenance and repair of the Aircraft.

4.      Purchase from Boeing of Spare Parts as Initial Provisioning for the 
Aircraft.

4.1     Boeing Spare Parts.  Buyer will place orders for Provisioning 
Items by October 20, 1996; provided, however, that in those instances where 
Boeing submits any revision to the Provisioning Data, Buyer will place 
orders for Boeing Spare Parts covered by such revision within 60 days 
following the date of such submittal.  At Buyer's request, Boeing will 
process "controlled shipments" by shipping full or partial quantities of an 
order on a schedule specified by Buyer, provided the final shipment is made 
no later than 24 months after receipt of the order.

4.2     Vendor Provisioning Items.  Buyer may place orders with 
Boeing for Provisioning Items which are manufactured by vendors or to their 
detailed design and are covered by the Provisioning Data as initial 
provisioning for the Aircraft.  The price to Buyer for any such vendor 
Provisioning Item will be [Confidential Treatment Requested]% of the 
vendor's quoted price to Boeing therefor.  If Buyer elects to purchase such 
vendor Provisioning Items from Boeing, Buyer will place its orders therefor 
in accordance with the provisions of Paragraph 4.1, Boeing Spare Parts.

4.3     Ground Support Equipment and Special Tools.  Buyer may place 
orders with Boeing for ground support equipment (GSE) and special tools 
manufactured by vendors which Buyer determines it will initially require 
for maintenance, overhaul and servicing of the Aircraft and/or engines.  
The price to Buyer for such GSE or special tools will be [Confidential 
Treatment Requested]% of the vendor's quoted price to Boeing therefor.  If 
Buyer elects to purchase such GSE and special tools from Boeing, Buyer will 
place its orders therefor by the date set forth in Paragraph 4.1, Boeing 
Spare Parts or such later date as the parties may mutually agree.

4.4     Spare Engines and Engine Spare Parts.  Buyer may place orders 
with Boeing for spare engines and/or engine spare parts which Buyer 
determines it will initially require for support of the Aircraft or for 
maintenance and overhaul of the engines.  The price to Buyer for such spare 
engines or such engine spare parts, will be [Confidential Treatment 
Requested]% of the engine manufacturer's quoted price to Boeing for the 
engine, and [Confidential Treatment Requested]% of the engine 
manufacturer's quoted price to Boeing for the engine spare parts.  If Buyer 
elects to purchase such spare engines or engine spare parts through Boeing, 
Buyer will place its orders on a date to be mutually agreed upon during the 
Initial Provisioning Meeting.

4.5     QEC Kits.  Boeing will, on or about September 20, 1996, 
furnish to Buyer a listing of all components which could be included in the 
Quick Engine Change (QEC) kits which may be purchased by Buyer from Boeing.  
Buyer agrees to review such listing and indicate by marking on one copy of 
such listing those components that Buyer desires included in its QEC kits.  
Buyer will return such marked copy to Boeing within 30 days after Buyer's 
receipt of such listing.  Within 30 days after Boeing's receipt of such 
marked copy, Boeing will republish such listing to reflect only those 
components selected by Buyer and will provide copies of such republished 
listing to Buyer.  Boeing will from time to time furnish revisions to such 
republished listing until a date approximately 90 days after delivery of 
the last QEC kit ordered by Buyer for the Aircraft.  Boeing will furnish to 
Buyer as soon as practicable a statement setting forth a firm price for the 
QEC kit configuration selected by Buyer.  Buyer agrees to place orders with 
Boeing for the QEC kits for the Aircraft by October 20, 1996.

4.6     Payment for Provisioning Items.  The payment provisions of 
the General Terms Agreement between Boeing and Buyer will be applicable to 
Provisioning Items ordered by Buyer from Boeing for the Aircraft.

5.      Delivery.

Boeing will, insofar as reasonably possible, deliver to Buyer the 
Spare Parts ordered by Buyer in accordance with the provisions of this 
letter on dates reasonably calculated to conform to Buyer's anticipated 
needs in view of the scheduled deliveries of the Aircraft.  Buyer and 
Boeing will agree upon the date to begin delivery of the Provisioning Spare 
Parts ordered in accordance with this letter.  Where appropriate, Boeing 
will arrange for shipment of such Spare Parts, which are manufactured by 
vendors, directly to Buyer from the applicable vendor's facility.  The 
routing and method of shipment for initial deliveries and all subsequent 
deliveries of such Spare Parts will be as mutually agreed between Boeing 
and Buyer.

6.      Substitution for Obsolete Spare Parts.

6.1     Obligation to Substitute.  In the event that, prior to 
delivery of the first Aircraft pursuant to the Agreement, any Spare Part 
purchased by Buyer from Boeing in accordance with this letter is rendered 
obsolete or unusable due to the redesign of the Aircraft or of any 
accessory, equipment or part therefor, (other than a redesign at Buyer's 
request), Boeing will deliver to Buyer new and usable Spare Parts in 
substitution for such obsolete or unusable Spare Parts and Buyer will 
return the obsolete or unusable Spare Parts to Boeing.  Boeing will credit 
Buyer's account with Boeing with the price paid by Buyer for any such 
obsolete or unusable Spare Part and will invoice Buyer for the purchase 
price of any such substitute Spare Part delivered to Buyer.

6.2     Delivery of Obsolete Spare Parts and Substitutes Therefor.  
Obsolete or unusable Spare Parts returned by Buyer pursuant to this 
Item will be delivered to Boeing at its Seattle Distribution Center, or 
such other destination as Boeing may reasonably designate.  Spare Parts 
substituted for such returned

obsolete or unusable Spare Parts will be delivered to Buyer at Boeing's 
Seattle Distribution Center, or such other Boeing shipping point as Boeing 
may reasonably designate.  Boeing will pay the freight charges for the 
shipment from Buyer to Boeing of any such obsolete or unusable Spare Part 
and for the shipment from Boeing to Buyer of any such substitute Spare 
Part.

7.      Repurchase of Provisioning Items.

7.1     Obligation to Repurchase Peculiar Provisioning Items.  During 
a period commencing 1 year after delivery of the first Aircraft under the 
Agreement, and ending 5 years after such delivery, Boeing will, upon 
receipt of Buyer's written request and subject to the exceptions in 
Paragraph 7.2, Exceptions, repurchase unused and undamaged Provisioning 
Items which were peculiar to the Aircraft as compared to the delivery 
configuration of Model 737-400 Aircraft previously purchased by Buyer from 
Boeing, and (i) were recommended by Boeing in the Provisioning Data as 
initial provisioning for the Aircraft, (ii) were purchased by Buyer from 
Boeing, and (iii) are surplus to Buyer's needs.

7.2     Exceptions.  Boeing will not be obligated under 
Paragraph 7.1, Obligation to Repurchase, to repurchase any of the 
following:  (i) quantities of Provisioning Items in excess of those 
quantities recommended by Boeing in the Provisioning Data for the Aircraft, 
(ii) QEC Kits, Bulk Material Kits, Raw Material Kits, Service Bulletin 
Kits, Standards Kits and components thereof (except those components listed 
separately in the Provisioning Data), (iii) Provisioning Items for which an 
Order was received by Boeing more than 5 months after delivery of the last 
Aircraft, (iv) Provisioning Items which have become obsolete or have been 
replaced by other Provisioning Items as a result of (a) Buyer's 
modification of the Aircraft or (b) design improvements by Boeing or the 
vendor (other than Provisioning Items which have become obsolete because of 
a defect in design if such defect has not been remedied by an offer by 
Boeing or the vendor to provide no charge retrofit kits or replacement 
parts which correct such defect), and (v) Provisioning Items which become 
excess as a result of a change in Buyer's operating parameters, provided to 
Boeing pursuant to the Initial Provisioning meeting in Paragraph 2, which 
were the basis of Boeing's initial provisioning recommendations for the 
Aircraft.

7.3     Notification and Format.  Buyer will notify Boeing, in 
writing, when Buyer desires to return Provisioning Items which Buyer's 
review indicates are eligible for repurchase by Boeing under the provisions 
of this Repurchase of Provisioning Items paragraph.  Buyer's notification 
will include a detailed summary, in part number sequence, of the 
Provisioning Items Buyer desires to return.  Such summary will be in the 
form of listings, tapes, diskettes or other media as may be mutually agreed 
between Boeing and Buyer, and will include part number, nomenclature, 
purchase order number, purchase order date and quantity to be returned.  
Within 5 business days after receipt of Buyer's notification, Boeing will 
advise Buyer, in writing, when Boeing's review of such summary will be 
completed.

7.4     Review and Acceptance by Boeing.  Upon completion of Boeing's 
review of any detailed summary submitted by Buyer pursuant to 
Paragraph 7.3, Boeing will issue to Buyer a Material Return Authorization 
(MRA) for those Provisioning Items Boeing agrees are eligible for 
repurchase in accordance with this Repurchase of Provisioning Items 
paragraph.  Boeing will advise Buyer of the reason that any spare part 
included in Buyer's detailed summary is not eligible for return.  Boeing's 
MRA will state the date by which Provisioning Items listed in the MRA must 
be redelivered to Boeing and Buyer will arrange for shipment of such 
Provisioning Items accordingly.

7.5     Price and Payment.  The price of each Provisioning Item 
repurchased by Boeing pursuant to this Repurchase of Provisioning Items 
paragraph will be an amount equal to 100% of the original invoice price 
thereof.  In the case of Provisioning Items manufactured by a vendor which 
were purchased pursuant to Paragraph 4, Purchase from Boeing of Spare Parts 
as Initial Provisioning for the Aircraft, hereof the repurchase price will 
not include Boeing's [Confidential Treatment Requested]% handling charge.  
Boeing will pay the repurchase price by issuing a credit memorandum in 
favor of Buyer which may be applied against amounts due Boeing for the 
purchase of aircraft, Spare Parts, services or data.

7.6     Delivery of Provisioning Items. Provisioning Items 
repurchased by Boeing pursuant to this Repurchase of Provisioning Items 
paragraph will be delivered to Boeing F.O.B. at its Seattle Distribution 
Center, or such other destination as Boeing may reasonably designate.  
Buyer will pay the freight charges for the shipment from Buyer to Boeing of 
any such Provisioning Items.

8.      Obsolete Spare Parts and Surplus Provisioning Items - Title and Risk 
of Loss.

Title to and risk of loss of any obsolete or unusable Spare Parts 
returned to Boeing pursuant to Paragraph 6, Substitution for Obsolete Spare 
Parts, will pass to Boeing upon delivery thereof to Boeing.  Title to and 
risk of loss of any Spare Part substituted for an obsolete or unusable 
Spare Part pursuant to Paragraph 6, Substitution for Obsolete Spare Parts, 
will pass to Buyer upon delivery thereof to Buyer.  Title to and risk of 
loss of any Provisioning Item repurchased by Boeing pursuant to 
Paragraph 7, Repurchase of Provisioning Items,  will pass to Boeing upon 
delivery thereof to Boeing.  With respect to the obsolete or unusable Spare 
Parts which may be returned to Boeing and the Spare Parts substituted 
therefor, pursuant to Paragraph 6, and the Provisioning Items which may be 
repurchased by Boeing, pursuant to Paragraph 7, the party which has risk of 
loss of any such Spare Part or Provisioning Item will have the 
responsibility of providing any insurance coverage for it desired by such 
party.

9.      Supplier Support.

Boeing has entered, or anticipates entering, into product support 
agreements with suppliers (Boeing Suppliers) of major system components 
manufactured by such Suppliers to be installed on the Aircraft (Supplier 
Components).  Such product support agreements commit, or are expected to 
commit, the Boeing Suppliers to provide to Boeing's Buyers and/or the 
Buyer's designees support services with respect to the Supplier Components 
which can be reasonably expected to be required during the course of normal 
operation.  This support includes but is not limited to shelf-stock of 
certain spare parts, emergency spare parts, timely delivery of spare parts, 
and technical data related to the Supplier Components.  Copies of such 
product support agreements will be provided to Buyer on or about September 
20, 1996 in Boeing Document D6-56115, Volumes 1 and 2.  In the event Buyer 
has used due diligence in attempting to resolve any difficulty arising in 
normal business transactions between Buyer and a Boeing Supplier with 
respect to product support for a Supplier Component manufactured by such 
Supplier and if such difficulty remains unresolved, Boeing will, if 
requested by Buyer, assist Buyer in resolving such difficulty.  Assistance 
will be provided by the Spares Supplier Support and Data Management 
Organization within the Boeing Buyer Services Division.

10.     Termination of Agreement for Excusable Delay.

In the event of termination of the Agreement with respect to any 
Aircraft

(i)     pursuant to Article 6.2 of the Agreement, or

(ii)    pursuant to Article 6.3 of the Agreement

such termination will, if Buyer so requests by written notice received by 
Boeing within 15 days after such termination, also discharge and terminate 
all obligations and liabilities of the parties as to any Spare Parts which 
Buyer had ordered pursuant to the Provisions of this letter as initial 
provisioning for such Aircraft and which are undelivered on the date Boeing 
receives such written notice.

Very truly yours,

THE BOEING COMPANY

By  /s/ Dawn S. Foster 

Its    Attorney-In-Fact    

ACCEPTED AND AGREED TO this

Date: September 18, 1996

ALASKA AIRLINES

By  /s/ Harry G. Lehr 

Its  Senior Vice President Finance

1954-5

Alaska Airlines, Inc.
19300 Pacific Highway South
Seattle, Washington 98188

Subject:        Letter Agreement No. 1954-5 to
Purchase Agreement No. 1954 - 
Escalation Sharing

This Letter Agreement amends Purchase Agreement No. 1954 dated as of even 
date herewith (the Agreement) between The Boeing Company (Boeing) and 
Alaska Airlines, Inc. (Buyer) relating to  Model 737-400 aircraft (the 
Aircraft).

All terms used herein and in the Agreement, and not defined herein, will 
have the same meaning as in the Agreement.

1.      Commitment.

Boeing agrees to share one-half of the escalation up to a maximum of 
3 percent per year in each of the years 1997 and 1998, as more fully 
described in paragraph 2 below, for any of Buyer's aircraft which are 
scheduled to deliver after December 31, 1996 (to include the twelve Firm, 
twelve Option and 24 Conditional Option Aircraft that are the subject of 
the Agreement).  For the purpose of this Letter Agreement such aircraft are 
referred to as "Eligible Aircraft."

All escalation calculations under this Letter Agreement will be made in 
accordance with Exhibit D to the Agreement entitled "Price Adjustment Due 
to Economic Fluctuations - Airframe Price Adjustment" (hereinafter referred 
to as "Exhibit D"), using actual escalation indices published for the 
applicable period.

2.      Escalation Credit Memo.

2.1     Calculation - Eligible Aircraft Delivering in 1997.

At the time of delivery of each Eligible Aircraft delivering 
in 1997, Boeing will issue to Buyer a credit memorandum (the 1997 Credit 
Memorandum) which shall be applied to the Purchase Price of such Aircraft.  
The 1997 Credit Memorandum shall be calculated as follows:

One-half of the difference between the airframe and special features 
escalation calculated for a December 1996 aircraft delivery 
position, and the escalation calculated for the month of delivery of 
the 1997 Eligible Aircraft;

provided however,

The maximum amount of the 1997 Credit Memorandum shall not exceed 3 
percent pursuant to the following calculation:

At the time of the delivery of the 1997 Eligible Aircraft, the 
Base Airframe Price and Special Features prices will be 
escalated to a December 1996 delivery month.  The December 1996 
escalated price will be referred to in the following formula as 
the "December 1996 Index Amount".  The 1997 Credit Memorandum 
for the 1997 Eligible Aircraft will not exceed an amount equal 
to:

the December 1996 Index Amount times 0.03

2.2     Calculation - Eligible Aircraft Delivering in 1998.

At the time of delivery of each Eligible Aircraft delivering 
in 1998, Boeing will issue to Buyer a credit memorandum (the 1998 Credit 
Memorandum) which shall be applied to the Purchase Price of such Aircraft.  
The 1998 Credit Memorandum shall be calculated as follows:

(i)     One-half of the difference between the  airframe and special 
features escalation calculated for a December 1997 aircraft delivery 
position, and the escalation calculated for the month of delivery of 
the 1998 Eligible Aircraft;

provided however,

The maximum amount of the 1998 Credit Memorandum shall not exceed 3 
percent pursuant to the following calculation:

At the time of the delivery of the 1998 Eligible Aircraft, the 
Base Airframe Price and Special Features prices will be 
escalated to a December 1997 delivery month.  The December 1997 
escalated price will be referred to in the following formula as 
the "December 1997 Index Amount."  The 1998 Credit Memorandum 
for the 1998 Eligible Aircraft will not exceed an amount equal 
to:

the December 1997 Index Amount times 0.03;

and,

(ii)   The amount calculated above in paragraph 2.1 for the 1997 
Credit Memorandum calculated through December, 1997.

2.3     Eligible Aircraft Delivering after 1998.

For Eligible Aircraft delivering after the calendar year 
1998, the amount of the Credit Memorandum will be the amount calculated 
pursuant to paragraph 2.2 above through December 1998.  This credit 
memorandum amount will be escalated pursuant to the Airframe Adjustment 
Formula contained in Exhibit D of the Agreement, from December 1998 to the 
month of delivery.

3.      Advance Payment Base Price.

It is agreed that the Advance Payment Base Prices for the Eligible 
Aircraft set forth in Article 3.4 of the Agreement includes an estimate for 
the escalation sharing Credit Memorandum pursuant to this Letter Agreement.

4.      Escalating Credits (STE).

It is agreed that the credit memoranda amount specified in Letter 
Agreement No.6-1162-DSF-008 which is expressed [Confidential Treatment 
Requested] will be calculated upon the Aircraft Price at delivery.

Very truly yours,

THE BOEING COMPANY

By  /s/ Dawn S. Foster 

Its    Attorney-In-Fact    

ACCEPTED AND AGREED TO this

Date: September 18, 1996

ALASKA AIRLINES

By  /s/ Harry G. Lehr 

Its  Senior Vice President Finance

1954-6

Alaska Airlines, Inc.
19300 Pacific Highway South
Seattle, Washington  98188

Subject:        Letter Agreement No. 1954-6
Purchase Agreement No. 1954 -
Waiver of Aircraft Demonstration Flights

This Letter Agreement amends Purchase Agreement No. 1954 dated as of even 
date herewith (the Agreement) between The Boeing Company (Boeing) and 
Alaska Airlines, Inc. (Buyer) relating to Model 737-400 aircraft (the 
Aircraft).

All terms not defined herein have the same meaning as in the Agreement.

1.      Fuel Entitlement at Delivery.

At the time of delivery of the Aircraft, Boeing will provide to 
Buyer, at no charge, 1000 gallons of jet fuel.

2.      Waiver of Demonstration Flight.

Notwithstanding the provisions of the Agreement requiring the 
Aircraft to be test flown prior to delivery for the purpose of 
demonstrating to Buyer the functioning of such Aircraft and its equipment, 
upon written notice to Boeing 90 days prior to the scheduled date of the 
Aircraft delivery, or as agreed between the parties in writing, Buyer may 
waive such flight.  With respect to each waived demonstration flight, the 
following provisions will apply:

3.      Additional Fuel.

Promptly after delivery of the Aircraft, Boeing will load on the 
Aircraft an amount of jet fuel which together with the 1,000 gallons 
provided at delivery, equals a full tank.

4.      Reimbursement for Correction of Flight Discrepancies.

4.1     Ferry Flight.

Except for Aircraft to be used promptly after delivery for 
Boeing flight crew training provided to Buyer at or near Seattle, 
Washington, Boeing will reimburse Buyer for Buyer's direct labor costs (as 
defined below) and the cost of any material (Correction Costs) required to 
correct any flight discrepancy detected by Buyer while the Aircraft is 
being ferried from Seattle, Washington, to Buyer's main base, to the extent 
such Correction Costs and labor costs are not covered under a warranty 
provided by Boeing or by any of its suppliers.  Within 90 days after the 
date of such ferry flight Buyer will submit to Boeing's Director, Product 
Assurance Contracts, at Renton, Washington, a written itemized statement 
describing any such flight discrepancy and indicating the Correction Costs 
incurred by Buyer for the correction of such flight discrepancy.

4.2     Definitions.

For purposes of reimbursement under this paragraph; (i) 
Buyer's direct labor costs will be determined using the Warranty Labor Rate 
in effect between the parties as of the date such labor is expended, and 
(ii) flight discrepancies mean any failure or malfunction of such Aircraft, 
or the accessories, equipment, systems and parts installed therein which 
results from a defect in such Aircraft, accessories, equipment, systems and 
parts or a nonconformance to the Detail Specification for such Aircraft 
which was present at the time of delivery of the Aircraft to Buyer and 
which, if detected during a Boeing predelivery demonstration flight, would 
have been reported in the pilot's flight discrepancy report and would have 
been corrected by Boeing prior to the delivery of such Aircraft to Buyer.

5.      Return of Aircraft.

If any flight discrepancy as defined above is detected by Buyer 
during the ferry flight of any Aircraft, which requires the return of such 
Aircraft to Boeing's facilities at Seattle, Washington, for correction by 
Boeing, title to and risk of loss of such Aircraft will at all times remain 
with Buyer and Boeing will have such responsibility for such Aircraft while 
it is on the ground at Boeing's Seattle, Washington, facilities as is 
chargeable by law to a bailee for mutual benefit, but Boeing will not be 
chargeable for loss of use.

Very truly yours,

THE BOEING COMPANY

By  /s/ Dawn S. Foster 

Its    Attorney-In-Fact    

ACCEPTED AND AGREED TO this

Date: September 18, 1996

ALASKA AIRLINES

By  /s/ Harry G. Lehr 

Its  Senior Vice President Finance

1954-7

Alaska Airlines, Inc.
19300 Pacific Highway South
Seattle, Washington  98188

Subject:        Letter Agreement No. 1954-7
Purchase Agreement No. 1954 -
Additional Purchase Agreement Provisions

Gentlemen:

This Letter Agreement amends Purchase Agreement No. 1954 dated as of even 
date herewith (the Agreement) between The Boeing Company (Boeing) and 
Alaska Airlines, Inc. (Buyer) relating to Model 737-400 aircraft (the 
Aircraft).

All terms not defined herein have the same meaning as in the Agreement.

1.      Boeing and Buyer agree that the following provisions shall apply in 
lieu of the provisions currently contained in the subject Agreement:

1.1     Article 2.3 - Notice of Delivery Date, is revised to read: 
"Boeing will give Buyer at least 10 days notice of the delivery date of the 
Aircraft....".

1.2     Article 2.6 - Bill of Sale, is revised in its entirety to 
read:  "Upon delivery of an Aircraft Boeing will deliver to Buyer a bill of 
sale conveying good title to such Aircraft, free of any and all 
encumbrances, and such other documents of title as Buyer may reasonably 
request."

1.3     Article 7.1 - Developmental Changes.  The last line of the 
article is revised to read: "If Boeing makes changes pursuant to this 
paragraph, Boeing will promptly notify Buyer of such changes and provide 
documentation of associated detail specification updates."

1.4     Article 7.2 - Change Orders, is revised to add: "Change 
Orders will include only changes previously accepted by Buyer in writing."
1.5     Notwithstanding Article 8.1.2, Boeing will provide a 
Certificate of Sanitary Construction at the time of delivery of each 
Aircraft.

1.6     Article 8.1.3 is revised to read "...If the FAA (or any 
successor U.S. governmental agency) does not issue a superseding 
certificate, Boeing's only....".

1.7     Article 9.3 - Aircraft Flight.  The paragraph shall be 
revised to add "Boeing will continue its practice of permitting Buyer's 
licensed and qualified pilot observer to participate in flying the Aircraft 
provided that the flights shall always be under the command of Boeing's 
pilot."

1.8     Exhibit B, Part A, Paragraph 4.2 is revised to add: "Boeing 
may release service bulletins or service letters advising Buyer of the 
availability of certain warranty remedies.  When such advice is provided, 
Buyer will be deemed to have fulfilled the requirements for discovery of 
the defect and submittal of notice in this Exhibit C as of the date 
specified in the service bulletin or service letter."

1.9     Pursuant to Exhibit B, Part A, Paragraph 6.2.2, for purposes 
of this agreement, "Boeing Recommended Spare Parts List" shall be defined 
as that negotiated spare parts list developed jointly by Buyer and Boeing 
Spares Organization using operating parameters supplies by Buyer.

1.10    Exhibit B, Part B, Paragraph 5.2 - Direct Materials, is 
revised to read: "...(iii) materials which exceed Boeing's reasonable 
estimate of required materials, and...".

1.11    Exhibit B, Part B, Paragraph 5.4 - Limitation, is revised to 
read: "The total reimbursement with respect to the direct labor and direct 
materials incorporated in an item, will not exceed...".

1.12    Exhibit B, Part B, Paragraph 6 - Replaced Parts, is revised 
to read: "...the warranty claim number and, if the part has a then-current 
Boeing spare part selling price of more than $2,000, retained for a period 
of 60 days....".

1.13    Exhibit B, Part G, Paragraph 3 - Manufacturer Responsibility, 
is revised to add: "Boeing shall also take such actions as are reasonable 
in an effort to obtain a correction of the Interface Problem."

1.14    Exhibit B, Part H, Paragraph 1 - Duplicate Product Assurance 
Remedies,  is revised to add: "In other words, Buyer may at its option, 
make a claim under the Warranty, if applicable, or the Service Life Policy, 
if applicable, but not both."

1.15    Exhibit C, Part A, Paragraph 2 - Maintenance Training 
Program, is revised to read: "...If requested by Buyer by December 1, 1996, 
Boeing agrees to provide....".

1.16    Exhibit C, Part C, Paragraph 2, - Flight Training Program, is 
revised to read: "...If requested by Buyer by December 1, 1996, Boeing 
agrees to provide....".

1.17    Exhibit C, Part A and Part C, Paragraph 4.3 are revised to 
read: "...materials between Seattle and such alternate training site away 
from Seattle."

1.18    Exhibit C, Part A and Part C, Paragraph 4.4 are revised to 
read: "...providing the training at such alternate site away from Seattle."

If the foregoing accurately reflects your understanding of the matters 
treated herein, please so indicate by signature below.

Very truly yours,

THE BOEING COMPANY

By  /s/ Dawn S. Foster 

Its    Attorney-In-Fact    

ACCEPTED AND AGREED TO this

Date: September 18, 1996

ALASKA AIRLINES

By  /s/ Harry G. Lehr 

Its  Senior Vice President Finance

6-1162-DSF-003

Alaska Airlines, Inc.
19300 Pacific Highway South
Seattle, Washington  98188

Subject:        Letter Agreement No. 6-1162-DSF-003 to
Purchase Agreement No. 1954 -
Model 737-400 Aircraft [Confidential Treatment Requested]

This Letter Agreement amends Purchase Agreement No. 1954 (the Agreement) 
between The Boeing Company (Boeing) and Alaska Airlines, Inc. (Buyer) 
relating to the Model 737-400 aircraft (the Aircraft).

All terms used herein and in the Agreement, and not defined herein will 
have the same meaning as in the Agreement.

1.      [Confidential Treatment Requested]

2.      Confidential Treatment.  Buyer understands that certain commercial 
and financial information contained in this Letter Agreement including any 
attachments hereto is considered by Boeing as confidential.  Buyer agrees 
that it will treat this Letter Agreement and the information contained 
herein as confidential and will not, without the prior written consent of 
Boeing, disclose this Letter Agreement or any information contained herein 
to any other person or entity except as provided in Letter Agreement 6-
1162-DSF-005.

Very truly yours,

THE BOEING COMPANY

By  /s/ Dawn S. Foster 

Its    Attorney-In-Fact    

ACCEPTED AND AGREED TO this

Date: September 18, 1996

ALASKA AIRLINES

By  /s/ Harry G. Lehr 

Its  Senior Vice President Finance

Attachment

Attachment to Letter Agreement No. 6-1162-DSF-003

[Confidential Treatment Requested]

6-1162-DSF-004

Alaska Airlines, Inc.
19300 Pacific Highway South
Seattle, Washington  98188

Subject:        Letter Agreement No. 6-1162-DSF-004 to
Purchase Agreement No. 1954 -
Model 737-800 [Confidential Treatment Requested]

This Letter Agreement amends Purchase Agreement No. 1954 (the Agreement) 
between The Boeing Company (Boeing) and Alaska Airlines, Inc. (Buyer) 
relating to the Model 737-800 aircraft (the Aircraft).

All terms used herein and in the Agreement, and not defined herein will 
have the same meaning as in the Agreement.

1.      [Confidential Treatment Requested]

2.      Confidential Treatment.  Buyer understands that certain commercial 
and financial information contained in this Letter Agreement including the 
attachment hereto is considered by Boeing as confidential.  Buyer agrees 
that it will treat this Letter Agreement and the information contained 
herein as confidential and will not, without the prior written consent of 
Boeing, disclose this Letter Agreement or any information contained herein 
to any other person or entity except as provided in Letter Agreement 6-
1162-DSF-005.

Very truly yours,

THE BOEING COMPANY

By  /s/ Dawn S. Foster 

Its    Attorney-In-Fact    

ACCEPTED AND AGREED TO this

Date: September 18, 1996

ALASKA AIRLINES

By  /s/ Harry G. Lehr 

Its  Senior Vice President Finance

Attachment

Attachment to Letter Agreement No. 6-1162-DSF-004

[Confidential Treatment Requested]

6-1162-DSF-005

Alaska Airlines, Inc.
19300 Pacific Highway South
Seattle, Washington 98188

Subject:        Letter Agreement No. 6-1162-DSF-005 to
Purchase Agreement No. 1954 - 
Disclosure of Confidential Information

This Letter Agreement amends Purchase Agreement No. 1954 dated as of even 
date herewith (the Agreement) between The Boeing Company (Boeing) and 
Alaska Airlines, Inc. (Buyer) relating to Model 737-400 aircraft (the 
Aircraft).

All terms used herein and in the Agreement, and not defined herein, will 
have the same meaning as in the Agreement.

1.      Buyer understands that certain commercial and financial information 
contained in the documents listed below (Confidential Documents) is 
considered by Boeing as confidential.

2.      Buyer agrees that it will treat the Confidential Documents and the 
information contained therein as confidential and will not, without the 
prior written consent of Boeing, disclose such Confidential Documents or 
any information contained therein to any other person or entity except as 
may be required by (i) applicable law or governmental regulations, or (ii) 
for financing the Aircraft in accordance with the provisions of Article 10 
of the Agreement.

3.      In connection with any such disclosure or filing of the Confidential 
Documents, or the information contained therein pursuant to any such 
applicable law or governmental regulation, Buyer will request and use its 
best reasonable efforts to obtain confidential treatment of such 
Confidential Documents and the information contained therein.  Boeing 
agrees to cooperate with Buyer in making and supporting its request for 
confidential treatment.

Schedule of Confidential Documents

[Confidential Treatment Requested]

Very truly yours,

THE BOEING COMPANY

By  /s/ Dawn S. Foster 

Its    Attorney-In-Fact    

ACCEPTED AND AGREED TO this

Date: September 18, 1996

ALASKA AIRLINES

By  /s/ Harry G. Lehr 

Its  Senior Vice President Finance

6-1162-DSF-006

Alaska Airlines, Inc.
19300 Pacific Highway South
Seattle, Washington  98188

Subject:                Letter Agreement No. 6-1162-DSF-006  
Purchase Agreement No. 2954
[Confidential Treatment Requested]
Objective for Model 737-800 Aircraft

Reference is made to Purchase Agreement No. 1954 dated as of even date 
herewith (the Agreement) between The Boeing Company (Boeing) and Alaska 
Airlines, Inc. (Buyer) relating to the sale by Boeing and the purchase by 
Buyer of up to twelve (12) Model 737-400 Option Aircraft [Confidential 
Treatment Requested].  Such Option Aircraft and [Confidential Treatment 
Requested] may be substituted to Model 737-800 Aircraft, pursuant to the 
conditions in Letter Agreement No. 6-1162-DSF-008.

This letter, when accepted by Buyer contemporaneously with the execution 
of the Agreement, will become part of the Agreement and will evidence our 
further agreement with respect to the matters set forth below.

All terms used herein and in the Agreement, and not defined herein, shall 
have the same meaning as the Agreement.

[Confidential Treatment Requested]

[Confidential Treatment Requested]

[Confidential Treatment Requested]

1.      [Confidential Treatment Requested]

2.      [Confidential Treatment Requested]

3.      [Confidential Treatment Requested]

4.      Confidential Treatment.

Buyer understands that certain commercial and financial information 
contained in this Letter Agreement, and any attachments hereto, is 
considered by Boeing as confidential.  Buyer agrees that it will treat 
this Letter Agreement and the information contained herein as confidential 
and will not, without the prior written consent of Boeing, disclose this 
Letter Agreement or any information contained herein to any other person 
or entity except as provided in Letter Agreement No. 6-1162-DSF-005.

If the foregoing correctly sets forth your understanding of our agreement 
with respect to the matters treated above, please indicate your acceptance 
and approval below.

Very truly yours,

THE BOEING COMPANY

By  /s/ Dawn S. Foster 

Its    Attorney-In-Fact    

ACCEPTED AND AGREED TO this

Date: September 18, 1996

ALASKA AIRLINES

By  /s/ Harry G. Lehr 

Its  Senior Vice President Finance

[Confidential Treatment Requested]

6-1162-DSF-008

Alaska Airlines
19300 Pacific Highway South
Seattle, Washington 98188

Subject:        Letter Agreement No. 6-1162-DSF-008 to
Purchase Agreement No. 1954 -
Special Matters

Gentlemen:

This Letter Agreement amends Purchase Agreement No. 1954 dated as of even 
date herewith (the Agreement) between The Boeing Company (Boeing) and 
Alaska Airlines, Inc. (Buyer) relating to Model 737-400 aircraft (the 
Aircraft).

All terms used herein and in the Agreement, and not defined herein, will 
have the same meaning as in the Agreement.

1.      Basic Credit Memorandum.

In consideration of Buyer's purchase of twelve (12) firm Model 737-
400 aircraft (Firm Aircraft) and twelve (12) option Model 737-400 aircraft 
(Option Aircraft), Boeing shall issue a credit memorandum at time of 
delivery of each Firm and Option Aircraft to Buyer in an amount equal to 
[Confidential Treatment Requested] of Base Airframe plus Engine Price for 
Model 737-400/500/300 aircraft (Current Generation Aircraft) or Base 
Aircraft price for Model 737-800/700/600 aircraft (New Generation 
Aircraft), [Confidential Treatment Requested].  

BASIC CREDIT MEMORANDA [Confidential Treatment Requested]

MODEL           FIRM AND OPTION
TYPE            AIRCRAFT 

737-400 [Confidential Treatment Requested]
737-800 [Confidential Treatment Requested]
737-700 [Confidential Treatment Requested]
737-300 [Confidential Treatment Requested]
737-600 [Confidential Treatment Requested]
737-500 [Confidential Treatment Requested]

1.1     Model Substitution.   Should Buyer elect to change an option 
Aircraft model type pursuant to paragraph 4 herein and substitute from a 
Model 737-400 to a Current Generation or New Generation Aircraft, the 
applicable basic credit memorandum and amount as designated above would 
apply against [Confidential Treatment Requested].

1.2     [Confidential Treatment Requested]

1.3     Application Of Credit Memoranda.
All Credit Memoranda will be issued to Buyer at time of the delivery 
of each Aircraft to which they relate unless otherwise stated herein.  Once 
issued, the Basic Credit Memoranda may be used by Buyer for the purchase 
from Boeing of Boeing goods and services, or may be used (in whole or in 
part) by Buyer for the payment of the balance of the Aircraft Price due at 
the time of delivery of the related Aircraft.  The Basic Credit Memoranda 
may not, however, be used for the payment of Advance Payments.

2.      [Confidential Treatment Requested]

3.      [Confidential Treatment Requested]

4.      Option Aircraft.   

4.1     Model Substitution.   [Confidential Treatment Requested].

4.2     Performance Matters.  [Confidential Treatment Requested].

5.      [Confidential Treatment Requested]

6.      [Confidential Treatment Requested]

7.      [Confidential Treatment Requested]

8.      737-800 Introductory Support Credit Memoranda.   

In consideration of Buyer's requirements for spares and training 
support for New Generation Model 737 Aircraft should Buyer elect to take 
delivery of a New Generation Model 737 aircraft, Boeing agrees to provide a 
credit memorandum in the amount of [Confidential Treatment Requested] per 
New Generation Model 737 Aircraft.  Such credit memorandum will be made 
available to Buyer six (6) months prior to delivery of each New Generation 
Model 737 Aircraft and may be used for Boeing spares and /or training 
support (in excess of training entitlements for Model 737-400 operators 
introducing Model 737-600/-700/-800 Aircraft similar to the entitlement 
described in Attachment B. to which Buyer will be entitled upon exercise of 
a firm Model 737-600/-700/-800 Option Aircraft) as required by Buyer for 
introduction of the Model 737-600/-700 or -800 aircraft into Buyer's fleet.

9.      Assignment of Credits.

[Confidential Treatment Requested].

10.     Confidential Treatment.  Buyer understands that certain commercial 
and financial information contained in this Letter Agreement including any 
attachments hereto is considered by Boeing as confidential.  Buyer agrees 
that it will treat this Letter Agreement and the information contained 
herein as confidential and will not, without the prior written consent of 
Boeing, disclose this Letter Agreement or any information contained herein 
to any other person or entity except as provided in Letter Agreement 6-
1162-DSF-005.

If the foregoing accurately reflects your understanding of the matters 
treated herein, please so indicate by signature below.

Very truly yours,

THE BOEING COMPANY

By  /s/ Dawn S. Foster 

Its    Attorney-In-Fact    

ACCEPTED AND AGREED TO this

Date: September 18, 1996

ALASKA AIRLINES

By  /s/ Harry G. Lehr 

Its  Senior Vice President Finance

Attachment A [Confidential Treatment Requested]

Attachment B to 6-1162-DSF-008
(8 pages)

PART A

BOEING MAINTENANCE TRAINING PROGRAM

1.      General.

This Part describes the maintenance training to be provided by 
Boeing (Maintenance Training) at Boeing's training facility at or near 
Seattle.  The Maintenance Training will be provided at no additional charge 
to Buyer, except as otherwise provided herein.  If any part of the 
Maintenance Training is not used by Buyer prior to delivery of the first 
Aircraft, Boeing will not be obligated to provide such Maintenance Training 
at a later date, unless the parties have otherwise agreed in writing.

All instruction, examinations and materials shall be prepared and presented 
in the English language and in the units of measure used by Boeing.  

Buyer will be responsible for the living expenses of Buyer's personnel 
during Maintenance Training.  For Maintenance Training provided at or near 
Seattle, Boeing will transport Buyer's personnel between their local 
lodging and the training facility.

2.      Maintenance Training Planning Conference.

No later than 12 months prior to delivery of Buyer's first Aircraft, 
Boeing and Buyer will conduct a planning conference in order to schedule 
and discuss the Maintenance Training.

3.      Maintenance Training Program.

The Maintenance Training Program will (i) consist of classroom 
presentations supported by training materials and aids and (ii) if 
practicable, include an escorted tour of aircraft production areas and/or 
flight lines.  The Maintenance Training will include the following courses:

3.1     Mechanical/Power Plant Systems Course.

This course provides mechanical instruction on the 
maintenance of the Aircraft and its systems, including engine systems.  
Electrical instruction, where necessary, will be provided in order to 
clarify mechanical system operation.

One class; up to 15 students.

3.2     Electrical Systems Course.

This course provides electrical instruction on the 
maintenance of the Aircraft and its systems, including engine systems.  
Mechanical instruction, where necessary, will be provided in order to 
clarify electrical system operation.

One class; up to 15 students.

3.3     Avionics Systems Course.

This course provides instruction on the maintenance of the 
Aircraft automatic flight control systems, communications and navigation 
systems.  It is oriented to those personnel who specialize in trouble 
analysis and line maintenance on avionics systems.

One class; up to 15 students.

3.4     Aircraft Rigging Course.

This course provides instruction on aircraft rigging so as to 
provide Buyer's specialist personnel with the necessary information to rig 
all flight control surfaces, landing gear components, aircraft doors and 
engines.  The conditions set forth in paragraph 4 below will be applicable 
with respect to Boeing's providing such course.

One class; up to 6 students at a mutually acceptable alternate facility.

3.5     Advanced Composite Repair Course.

This course provides instruction for Buyer's structural 
repair personnel and promotes understanding of the design philosophy, 
inspection and repair of advanced composite components.

One class; up to 8 students.

4.      Training at a Facility Other Than Boeing's.

If requested prior to the conclusion of the Maintenance Training 
Planning Conference, Boeing will conduct the classroom training described 
above (except for the Advanced Composite Repair Course) at a mutually 
acceptable alternate training site, subject to the following conditions:

4.1     Buyer will be responsible for providing acceptable classroom 
space and training equipment required to present the Boeing courseware.

4.2     Buyer will pay Boeing's then-current per diem charge for each 
Boeing instructor for each day, or fraction thereof, such instructor is 
away from Seattle, including travel time.

4.3     Buyer will reimburse Boeing for round-trip transportation for 
Boeing's instructors and training materials between Seattle and such 
alternate training site.

4.4     Buyer will pay, or reimburse Boeing for, all taxes, fees, 
duties, licenses, permits and similar expenses incurred by Boeing and its 
employees as a result of Boeing's providing the training at such alternate 
site.

4.5     Those portions of training that require the use of Boeing's 
training devices shall be conducted at Boeing-designated facilities.

5.      Supplier Training.

The Maintenance Training includes sufficient information on the 
location, operation and servicing of Aircraft equipment, accessories and 
parts provided by suppliers to support line maintenance functions.

If Buyer requires additional maintenance training with respect to any 
supplier-provided equipment, accessories or parts, Buyer will schedule such 
training directly with the supplier.  If Buyer experiences difficulty in 
scheduling such training, Boeing will, if requested, assist Buyer in 
coordinating and scheduling such training.

6.      Student Training Material.

No revision service will be provided for the material provided 
hereunder.

6.1     Manuals.

Boeing will provide at the beginning of each Maintenance 
Training course 1 copy of a training manual or equivalent for each student 
attending such course.

6.2     Panel Description/Component Locator Guide/
Field Trip Checklist Manual.

Boeing will provide 1 copy of a Panel Description/Component 
Locator Guide/Field Trip Checklist Manual for each student in each 
applicable Maintenance Training course.

7.      Other Training Material.

At the conclusion of the Maintenance Training Program, Boeing will 
provide to Buyer 1 set of the following training materials, as used in the 
full Aircraft systems courses.  Revision service will not be provided for 
these materials.

7.1     Visual Aids.

7.1.1   Blackline 8-1/2 x 11-inch projection transparencies.

7.1.2   Full-scale instrument panel wall charts in the form of 
black and white copies and mylar reproducible copies.

7.1.3   Training slides.

7.2     Reproducible Masters.

8-1/2 x 11-inch prints suitable for black and white 
reproduction of all graphics and applicable text.

7.3     Video Programs.

Video programs on 3/4-inch U-matic or 1/2-inch VHS cassette 
formats in NTSC, PAL or SECAM standards, as selected by Buyer.

7.4     Computer-Based Training (CBT) Courseware.

CBT courseware, and instructions for courseware installation 
and operation.

7.5     Shipment of Materials.

The training materials described above will be shipped to 
Buyer 30 days after completion of the first class of each applicable 
Maintenance Training course.

7.6     Training Material - Aircraft Configuration.

The visual aids and reproducible masters (except training 
slides and CBT) described above will, at the conclusion of the shipments 
thereof, reflect the configuration of the first Aircraft as delivered to 
Buyer.  CBT Courseware will reflect the major configuration of the first 
Aircraft delivered to Buyer.

8.      Course Completion Records.

At the completion of the Maintenance Training, Boeing will provide 
Buyer with course completion records consisting of the following:

8.1     Master copies of all examinations given.

8.2     Attendance and examination records for each student.

8.3     Certificate of completion for each course each student 
successfully completes.

PART C

BOEING FLIGHT TRAINING PROGRAM

1.      General.

This Part describes the flight training to be provided by Boeing 
(Flight Training) at or near Seattle, or at some other location to be 
determined pursuant to this Part.  The Flight Training will be provided at 
no additional charge to Buyer, except as otherwise provided herein.

All instruction, examinations and materials will be prepared and presented 
in the English language and in the units of measure used by Boeing. 

Buyer will be responsible for the living expenses of Buyer's personnel 
during the Flight Training Program.  For Flight Training provided at or 
near Seattle, Boeing will transport Buyer's personnel between their local 
lodging and the training facility.

2.      Flight Training Differences Program.

In conjunction with earlier sales to Buyer of aircraft of the same 
model type as the Aircraft, Boeing has provided to Buyer comprehensive 
flight training for such aircraft.  If requested by Buyer at least 12 
months prior to delivery of the first Aircraft, Boeing agrees to provide, 
if required, 1 classroom training class to acquaint up to 4 cockpit crews 
of Buyer's personnel with any operational, systems and performance 
differences significant to the operation of the Aircraft, between the first 
Aircraft scheduled for delivery pursuant to this Agreement and the last 
aircraft of the same model type as the aircraft previously delivered by 
Boeing to Buyer.  Such course will be scheduled by mutual agreement of 
Boeing's and Buyer's flight training organizations.

3.      Student Training Material.

Student training material, in Boeing's then-standard format, will be 
provided to Buyer's personnel (1 set per student) as listed below.  No 
revision service will be provided for the material provided hereunder.

Operations Manual
Quick Reference Handbook

4.      Other Training Material.

At the conclusion of the Differences Flight Training, Boeing will 
provide 1 set of the following materials, as used in the Flight Training 
Program.  Revision service will not be provided for these materials.

4.1     Computer Based Training (CBT).

Boeing will provide a copy of Boeing developed CBT materials 
used in the Flight Training Program.  The CBT Courseware will reflect the 
major configuration of Buyer's first Aircraft.  Buyer will require certain 
equipment and materials in order to use the CBT Program.  Equipment and 
materials required to run the CBT Program will be procured by Buyer at 
Buyer's expense.  The CBT materials provided include the following:

4.1.1   1 copy of lesson files supplied on CD-ROM disc.

4.1.2   1 paper copy of loading and operation instructions for 
installing the lessons on an MS-DOS compatible Personal Computer or File 
Server.

4.1.3   1 copy of the runtime software required to run the CBT 
lessons.

4.2     Full-Scale Color Instrument Panel Wall Charts.

5.      Training at a Facility Other Than Boeing's.

If seasonably requested, Boeing will conduct the Flight Training at 
a mutually acceptable alternate training site, subject to the following 
conditions:

5.1     Buyer will be responsible for providing classroom space 
acceptable to Boeing, a flight simulator and training equipment required to 
present the Boeing courseware.

5.2     Buyer will pay Boeing's then-current per diem charge for each 
Boeing instructor for each day, or fraction thereof, such instructor is 
away from Seattle, including travel time.

5.3     Buyer will reimburse Boeing for round-trip transportation for 
Boeing's flight training instructors and materials between Seattle and such 
alternate site.

5.4     Buyer will pay, or reimburse Boeing for, all taxes, fees, 
duties, licenses, permits and similar expenses incurred by Boeing and its 
employees as a result of Boeing's providing the training at such alternate 
site.

5.5     Those portions of the training that require the use of 
Boeing's training devices, if any, will be conducted at Boeing-designated 
facilities.

Buyer has rights of substitution for the Option [Confidential Treatment 
Requested] from Model 737-400 to Model 737-600/-700/-800 Aircraft, 
described as follows:

Model 737-600/-700/-800

1.      Description and Changes.

1.1     Aircraft Description.

1.1.1  The Model 737-600 is described by Configuration 
Specification D6-38808-E dated September 15, 1995, as revised to include:

(1) CFM56-7B18 Engine Installation.
(2) Increase MTOW to 129,500 Pounds.

1.1.2   The Model 737-700 is described by Configuration 
Specification D6-38808-E dated September 15, 1995 as revised to include:

(1) CFM56-7B20 Engine Installation.
(2) Increase MTOW to 138,000 Pounds.

1.1.3   The Model 737-800 is described by Configuration 
Specification D6-38808-E dated September 15 1995 as revised to include:

(1) CFM56-7B24 Engine Installation.
(2) Increase MTOW to 160,000 Pounds.

1.2     Changes.  The Configuration Specification will be revised to 
include:

(1) Changes applicable to the basic Model 737-600/-700/-800 
aircraft which are developed by Boeing between the date of the 
Configuration Specification and the signing of a definitive agreement to 
purchase the Option Aircraft.

(2) Changes mutually agreed upon.

(3) Changes required to obtain a Standard Certificate of 
Airworthiness.

2.      Price Description.

Aircraft      Special
Price         Features
(95$)         Price (95$)

Model 737-600     [Confidential Treatment Requested]

Model 737-700     [Confidential Treatment Requested]

Model 737-800     [Confidential Treatment Requested]

6-1162-DSF-009

Alaska Airlines
19300 Pacific Highway South
Seattle, Washington 98188

Subject:        Letter Agreement No. 6-1162-DSF-009 to
Purchase Agreement No. 1954 -
Special Purchase Agreement Provisions

This Letter Agreement amends Purchase Agreement No. 1954 dated as of even 
date herewith (the Agreement) between The Boeing Company (Boeing) and 
Alaska Airlines, Inc. (Buyer) relating to Model 737-400 aircraft (the 
Aircraft).

All terms used herein and in the Agreement, and not defined herein, will 
have the same meaning as in the Agreement.

1.      Boeing and Buyer agree that the following provisions shall apply in 
lieu of the provisions currently contained in the subject Agreement:

1.1  Article 4.1 Taxes, [Confidential Treatment Requested].

1.2  Article 5.3 - Form of Payments.  [Confidential Treatment 
Requested].

1.3  Article 6 - Excusable Delay.  [Confidential Treatment 
Requested].

1.4  Article 6.5.2, [Confidential Treatment Requested].

1.5  Pursuant to Article 8.2.2 and Article 8.3.2, [Confidential 
Treatment Requested].

1.6  Article 9.5.2 [Confidential Treatment Requested].

1.7.  Article 10.6 - Exculpatory or Indemnity Clause in 
Post-delivery Sale or Lease, [Confidential Treatment Requested].

1.8     Exhibit B, Part A, Paragraph 2 - Exceptions.  [Confidential 
Treatment Requested].

1.9     Exhibit B, Part A, Paragraph 5.1 and Paragraph 5.2, 
[Confidential Treatment Requested].

1.10    Exhibit B, Part A, Paragraph 11 - Buyers' Indemnification of 
Boeing, [Confidential Treatment Requested].

1.11    Exhibit B, Part B, Paragraph 4 - Joint Responsibility, 
[Confidential Treatment Requested].

1.12    Exhibit C, Part D, Paragraphs 2.3 [Confidential Treatment 
Requested].

1.13    Exhibit C, Part D, Technical Data and Documents [Confidential 
Treatment Requested].

1.14    Exhibit C, Part E, Paragraph 1.1 [Confidential Treatment 
Requested].

1.15    Exhibit C, Part E, Paragraph 1.2 [Confidential Treatment 
Requested].

1.16    Exhibit C, Part E, Paragraph 2.2 (a) [Confidential Treatment 
Requested].

1.17    Exhibit C, Part E, Paragraph 2.3 (a) [Confidential Treatment 
Requested].

1.18    Exhibit C, Part E, Paragraph 2.3 (b) [Confidential Treatment 
Requested].

1.19  Exhibit E, Paragraph 5.1 - [Confidential Treatment Requested].

1.20    Paragraph 8 of Exhibit E - Buyer Furnished Equipment 
Provisions Document of the Agreement, and Paragraph 7 of Letter Agreement 
1954-2 - Seller Purchased Equipment [Confidential Treatment Requested].

1.21    Attachment A to Letter Agreement 1954-3, Paragraph 2.2.1 - 
Special Features [Confidential Treatment Requested].

1.22    Attachment A to Letter Agreement 1954-3, Paragraph 2.2.3 - 
Base Price Adjustments [Confidential Treatment Requested].

1.23    Attachment A to Letter Agreement 1954-3, Paragraph 2.2.2 - 
Escalation Adjustments [Confidential Treatment Requested].

2.      Confidential Treatment.  Buyer understands that certain commercial 
and financial information contained in this Letter Agreement including any 
attachments hereto is considered by Boeing as confidential.  Buyer agrees 
that it will treat this Letter Agreement and the information contained 
herein as confidential and will not, without the prior written consent of 
Boeing, disclose this Letter Agreement or any information contained herein 
to any other person or entity except as provided in Letter Agreement 6-
1162-DSF-005.

If the foregoing accurately reflects your understanding of the matters 
treated herein, please so indicate by signature below.

Very truly yours,

THE BOEING COMPANY

By  /s/ Dawn S. Foster 

Its    Attorney-In-Fact    

ACCEPTED AND AGREED TO this

Date: September 18, 1996

ALASKA AIRLINES

By  /s/ Harry G. Lehr 

Its  Senior Vice President Finance

6-1162-DSF-012

Alaska Airlines
19300 Pacific Highway South
Seattle, Washington 98188

Subject:        Letter Agreement No. 6-1162-DSF-012 to
Purchase Agreement No. 1954 -
[Confidential Treatment Requested]-             
Letter of Intent

This Letter Agreement amends Purchase Agreement No. 1954 dated as of even 
date herewith (the Agreement) between The Boeing Company (Boeing) and 
Alaska Airlines, Inc. (Buyer) relating to Model 737-400 aircraft (the 
Aircraft).

All terms used herein and in the Agreement, and not defined herein, will 
have the same meaning as in the Agreement.

Boeing and Buyer do hereby agree to enter into negotiation to come to 
agreement on [Confidential Treatment Requested] at such time that Buyer 
firms up a Model 737-800 Option Aircraft subject to the following terms:

1) Intent - [Confidential Treatment Requested].  

2) Program Term - The length of the Program [Confidential Treatment 
Requested].

3) Methodology - [Confidential Treatment Requested].

4. Remedy - [Confidential Treatment Requested].  

5. [Confidential Treatment Requested]. 

6. Conditions and Limitations - [Confidential Treatment Requested]. 

Attached to this Letter of Intent is a draft Program which will form the 
basis of the agreement to be entered into after Buyer firms up delivery of 
a Model 737-800 Option Aircraft.

If the foregoing accurately reflects your understanding of the matters 
treated herein, please so indicate by signature below.

Very truly yours,

THE BOEING COMPANY

By  /s/ Dawn S. Foster 

Its    Attorney-In-Fact    

ACCEPTED AND AGREED TO this

Date: September 18, 1996

ALASKA AIRLINES

By  /s/ Harry G. Lehr 

Its  Senior Vice President Finance

Attachment A [Confidential Treatment Requested]

Attachment B [Confidential Treatment Requested]

6-1162-DSF-016

Alaska Airlines
19300 Pacific Highway South
Seattle, Washington 98188

Subject:        Letter Agreement No. 6-1162-DSF-016 to
Purchase Agreement No. 1954 -
Special Purchase Agreement Provisions           
Related [Confidential Treatment                         Requested]

This Letter Agreement amends Purchase Agreement No. 1954 dated as of even 
date herewith (the Agreement) between The Boeing Company (Boeing) and 
Alaska Airlines, Inc.

All terms used herein and in the Agreement, and not defined herein, will 
have the same meaning as in the Agreement.

In consideration for Buyer's participation and cooperation in development 
and certification of [Confidential Treatment Requested] to the Model 737-
400 Aircraft, Boeing and Buyer agree to the following:

1.      [Confidential Treatment Requested]

2.      Boeing agrees to make best reasonable effort to ensure production 
incorporation on Buyer's Aircraft assuming a decision to offer such feature 
is made by Boeing.  [Confidential Treatment Requested].

3.      Buyer agrees to pay [Confidential Treatment Requested].

2.      Confidential Treatment.  Buyer understands that certain commercial 
and financial information contained in this Letter Agreement including any 
attachments hereto is considered by Boeing as confidential.  Buyer agrees 
that it will treat this Letter Agreement and the information contained 
herein as confidential and will not, without the prior written consent of 
Boeing, disclose this Letter Agreement or any information contained herein 
to any other person or entity except as provided in Letter Agreement 6-
1162-DSF-005.

If the foregoing accurately reflects your understanding of the matters 
treated herein, please so indicate by signature below.

Very truly yours,

THE BOEING COMPANY

By  /s/ Dawn S. Foster 

Its    Attorney-In-Fact    

ACCEPTED AND AGREED TO this

Date: September 18, 1996

ALASKA AIRLINES

By  /s/ Harry G. Lehr 

Its  Senior Vice President Finance

Attachment to 
6-1162-DSF-016
Page 1

[Confidential Treatment Requested]

Exhibit 10.2

BOMBARDIER REGIONAL AIRCRAFT DIVISION

PURCHASE AGREEMENT

BETWEEN

BOMBARDIER INC.

AND

HORIZON AIR INDUSTRIES, INC.
__________________________________________________________________

Forty (40) de Havilland DHC-8 aircraft 

Including related Customer Support Services

_________________________________________________________________

TABLE OF CONTENTS

ARTICLE
1       INTERPRETATION
2       SUBJECT MATTER OF SALE
3       CUSTOMER SUPPORT SERVICES AND WARRANTY
4       PRICE
5       PAYMENT
6       DELIVERY PROGRAM
7       BUYER INFORMATION
8       CERTIFICATION FOR EXPORT
9       ACCEPTANCE PROCEDURE
10      TITLE AND RISK
11      CHANGES
12      BUYER'S REPRESENTATIVES AT MANUFACTURE SITE
13      EXCUSABLE DELAY
14      NON-EXCUSABLE DELAY
15      LOSS OR DAMAGE
16      TERMINATION
17      NOTICES
18      INDEMNITY AGAINST PATENT INFRINGEMENT
19      LIMITATION OF LIABILITY
20      ASSIGNMENT
21      SUCCESSORS
22      APPLICABLE LAWS
23      CONFIDENTIAL NATURE OF AGREEMENT
24      AGREEMENT

APPENDIX        
I               ECONOMIC ADJUSTMENT FORMULA
II              DELIVERY SCHEDULE
III     SPECIFICATION
IV      BUYER SELECTED OPTIONAL FEATURES 

EXHIBIT
I               CERTIFICATE OF ACCEPTANCE
II              BILL OF SALE
III     CERTIFICATE OF RECEIPT OF AIRCRAFT
IV      CHANGE ORDER

ANNEX A                 CUSTOMER SUPPORT SERVICES
ANNEX B                 WARRANTY AND SERVICE LIFE POLICY

HORIZON AIR INDUSTRIES, INC.

LETTER AGREEMENTS - PA 80345

LA #80345-1A    [CONFIDENTIAL TREATMENT REQUESTED]
LA #80345-01    [CONFIDENTIAL TREATMENT REQUESTED]
LA #80345-02    [CONFIDENTIAL TREATMENT REQUESTED]
LA #80345-03    [CONFIDENTIAL TREATMENT REQUESTED]
LA #80345-04    Option Aircraft
LA #80345-05    [CONFIDENTIAL TREATMENT REQUESTED]
LA #80345-06    [CONFIDENTIAL TREATMENT REQUESTED]
LA #80345-07    [CONFIDENTIAL TREATMENT REQUESTED]
LA #80345-08    [CONFIDENTIAL TREATMENT REQUESTED]
LA #80345-09    [CONFIDENTIAL TREATMENT REQUESTED]
LA #80345-10    [CONFIDENTIAL TREATMENT REQUESTED]
LA #80345-11    [CONFIDENTIAL TREATMENT REQUESTED]
LA #80345-12    [CONFIDENTIAL TREATMENT REQUESTED]
LA #80345-13    Customer Services
LA #80345-14    [CONFIDENTIAL TREATMENT REQUESTED]
LA #80345-15    [CONFIDENTIAL TREATMENT REQUESTED]
LA #80345-16    [CONFIDENTIAL TREATMENT REQUESTED]
LA #80345-17    [CONFIDENTIAL TREATMENT REQUESTED]
LA #80345-18    [CONFIDENTIAL TREATMENT REQUESTED]
LA #80345-19    [CONFIDENTIAL TREATMENT REQUESTED]
LA #80345-20    [CONFIDENTIAL TREATMENT REQUESTED]
LA #80345-21    [CONFIDENTIAL TREATMENT REQUESTED]
LA #80345-22    Spare Parts Support Program - Flex Parts
LA #80345-23    Intentionally Deleted
LA #80345-24    Intentionally Deleted
LA #80345-25    [CONFIDENTIAL TREATMENT REQUESTED]
LA #80345-26    [CONFIDENTIAL TREATMENT REQUESTED]
LA #80345-27    [CONFIDENTIAL TREATMENT REQUESTED]
LA #80345-28    Optional Features
LA #80345-29    [CONFIDENTIAL TREATMENT REQUESTED]
LA #80345-30    [CONFIDENTIAL TREATMENT REQUESTED]

This Agreement is made on the        day of               1996.

BY AND BETWEEN: BOMBARDIER INC., a Canadian Corporation represented by 
its BOMBARDIER REGIONAL AIRCRAFT DIVISION ("BRAD") having 
an office at 123 Garratt Boulevard, Downsview, Ontario, 
Canada.

AND:    HORIZON AIR INDUSTRIES, INC., a Washington Corporation 
having its head office at 19521 Pacific Highway South, 
Seattle, Washington, USA, 98188.

("Buyer")

WHEREAS de Havilland Inc., an affiliate of BRAD, is engaged in 
the manufacture of the DHC-8 ("Dash 8") aircraft 
products; and

BRAD has been created for the purpose of providing 
marketing, sales and customer support services for the de 
Havilland Dash 8 aircraft and related products; and

BRAD is entering into this agreement acting as agent for 
de Havilland Inc.

WHEREAS Buyer desires to purchase forty (40) Aircraft (as later 
defined) and related data, documents, and services under 
this Agreement (as later defined), and BRAD desires to 
arrange the sale of such Aircraft, data, documents and 
services to Buyer,

NOW THEREFORE, in consideration of the mutual covenants herein contained, 
Buyer and BRAD agree as follows:

ARTICLE 1.      INTERPRETATION

1.1     The recitals above have been inserted for convenience only and do not 
form part of the agreement.

1.2     The headings in this agreement are included for convenience only and 
shall not be used in the construction and interpretation of this 
agreement.

1.3     In this agreement, unless otherwise expressly provided, the singular 
includes the plural and vice-versa.

1.4     In this agreement the following expressions shall, unless otherwise 
expressly provided, mean:

(a)     "Acceptance Period" shall have the meaning attributed to it in 
Article 9.3;

(b)     "Acceptance Date" shall have the meaning attributed to it in 
Article 9.7.(a);

(c)     "Agreement" means this Agreement, including its Exhibits, 
Annexes, Appendices and Letter Agreements, if any, attached 
hereto (each of which is incorporated in the Agreement by this 
reference), as they may be amended pursuant to the provisions of 
the Agreement;

(d)     "Aircraft" shall have the meaning attributed to it in Article 
2.1;

(e)     "Aircraft Purchase Price" shall have the meaning attributed to it 
in Article 4.2;

(f)     "Base Price" shall have the meaning attributed to it in Article 
4.1;

(g)     "Bill of Sale" shall have the meaning attributed to it in Article 
9.7 (c);

(h)     "BFE" shall have the meaning attributed to it in Article 11.1;

(i)     "Buyer Selected Optional Features" shall have the meaning 
attributed to it in Article 2.1;

(j)     "Delivery Date" shall have the meaning attributed to it in 
Article 9.7.(c);

(k)     "Economic Adjustment Formula" shall have the meaning attributed 
to it in Article 4.2;

(l)     "Excusable Delay" shall have the meaning attributed to it in 
Article 13.1;

(m)     "FAA" shall have the meaning attributed to it in Article 8.1;

(n)     "Non-Excusable Delay" shall have the meaning attributed to it in 
Article 14.1;

(o)     "Notice" shall have the meaning attributed to it in Article 17.1;

(p)     "Other Patents" shall have the meaning attributed to it in 
Article 18.1;

(q)     "Permitted Change" shall have the meaning attributed to it in 
Article 11.2;

(r)     "Readiness Date" shall have the meaning attributed to it in 
Article 9.1;

(s)     "Regulatory Change" shall have the meaning attributed to it in 
Article 8.4;

(t)     "Scheduled Delivery Dates" shall have the meaning attributed to 
it in Article 6;

(u)     "Specification" shall have the meaning attributed to it in 
Article 2.1; and

(v)     "Taxes" shall have the meaning attributed to it in Article 4.3.

(w)     "TC" shall have the meaning attributed to it in Article 8.1;

1.5     All dollar amounts in this Agreement are in United States Dollars.

ARTICLE 2 - SUBJECT MATTER OF SALE

2.1     Subject to the provisions of this Agreement, BRAD will sell and Buyer 
will purchase forty (40) de Havilland Dash 8 series 200 model 202 
aircraft manufactured pursuant to detail specification no. DS8-200 
Issue 3 dated May 1996, attached hereto as Appendix III, as that 
specification may be modified from time to time in accordance with 
this Agreement (the "Specification"), as supplemented to reflect the 
incorporation of the Buyer selected optional features ("Buyer Selected 
Optional Features") set forth in Appendix IV hereto (individually or 
collectively the "Aircraft").

ARTICLE 3 - CUSTOMER SUPPORT SERVICES AND WARRANTY

3.1     BRAD shall provide to Buyer the customer support services pursuant to 
the provisions of Annex A attached hereto.

3.2     BRAD shall provide to Buyer the warranty and the service life policy 
described in Annex B attached hereto which shall be the exclusive 
warranty applicable to the Aircraft.

3.3     Unless expressly stated otherwise, the services referred to in 3.1 and 
3.2 above are incidental to the sale of the Aircraft and are included 
in the Aircraft Purchase Price.

ARTICLE 4  -  PRICE

4.1     (a)     The base price for each of the Aircraft (excluding the Buyer 
Selected Optional Features) Ex Works (Incoterms 1990) BRAD's 
facilities in Downsview, Ontario, is [CONFIDENTIAL TREATMENT 
REQUESTED]

(b)     The base price of the Buyer Selected Optional Features 
(Appendix IV) is [CONFIDENTIAL TREATMENT REQUESTED

The Aircraft base price shall be the base price for the Aircraft 
as stated in paragraph (a), plus the base price of the Buyer 
Selected Optional Features as stated in paragraph (b) ( the "Base 
Price").

4.2     The price of the Aircraft shall be the Base Price adjusted for changes 
made pursuant to Article 11 and any Regulatory Changes pursuant to 
Article 8.4, and further adjusted to the Delivery Date to reflect 
economic fluctuations during the period from July 1, 1995 to the 
Delivery Date of each Aircraft  ("Aircraft Purchase Price").  Such 
adjustments shall be based on the economic adjustment formula attached 
as Appendix I ("Economic Adjustment Formula").

4.3     The Aircraft Purchase Price does not include any taxes, fees or duties 
including, but not limited to, sales, use, value added (including the 
Canadian Goods and Services Tax), personal property, gross receipts, 
franchise, excise taxes, assessments or duties ("Taxes") which are or 
may be imposed by law upon BRAD, any affiliate of BRAD, Buyer or the 
Aircraft whether or not there is an obligation for BRAD to collect 
same from Buyer, by any taxing authority or jurisdiction occasioned 
by, relating to or as a result of the execution of this Agreement or 
the sale, lease, delivery, storage, use or other consumption of any 
Aircraft, BFE or any other matter, good or service provided under or 
in connection with this Agreement.  According to current legislation, 
Canadian taxes, duties and Goods and Services Tax are not applicable 
to aircraft sold and immediately exported from Canada.

4.4     If any Taxes (other than Canadian income taxes charged on the income 
of BRAD) are imposed upon Buyer or become due or are to be collected 
from BRAD by any taxing authority, BRAD shall notify Buyer in a timely 
manner  and Buyer shall promptly, but no later than ten (10) working 
days after receiving such notice, pay such Taxes directly to the 
taxing authority, or reimburse BRAD for such Taxes, as the case may 
be, including interest and penalties except for interest and penalties 
resulting from BRAD's fault or negligence.  The parties hereto agree, 
subject to applicable laws, to work together to minimize the 
imposition of Taxes.

4.5.1   Upon BRAD's reasonable request, Buyer shall execute and deliver 
to BRAD any documents that BRAD deems necessary or desirable in 
connection with any exemption from or reduction of or the contestation 
of or the defense against any imposition of Taxes.

4.5.2   Upon Buyer's reasonable request, BRAD shall execute and deliver 
to Buyer any existing documents that Buyer deems necessary or 
desirable in connection with any exemption from or reduction of or the 
contestation of or the defense against any imposition of Taxes, except 
that BRAD shall not supply or disclose any documentation relating to 
other customers of BRAD, costing or pricing of Aircraft or services or 
any other documents deemed confidential by BRAD.

ARTICLE 5  -  PAYMENT

5.1     BRAD and Buyer acknowledges not having previously provided a deposit 
per Aircraft.

5.2     Buyer shall make payment or cause payment to be made for each Aircraft 
as follows:

(a)     7.5% of the estimated Aircraft Purchase Price upon execution of 
the Agreement;

(b)     5 % of the estimated Aircraft Purchase Price fifteen (15) months 
prior to its Scheduled Delivery Date;

(c)     5 % of the estimated Aircraft Purchase Price twelve (12) months 
prior to its Scheduled Delivery Date;

(d)     5 % of the estimated Aircraft Purchase Price nine (9) months 
prior to its Scheduled Delivery Date;

(e)     7.5% of the estimated Aircraft Purchase Price six (6) months 
prior to its Scheduled Delivery Date; and

(f)     the balance of the Aircraft Purchase Price, less the amounts 
previously received referred to in Article 5.1, on or before 
the Delivery Date of such Aircraft to Buyer.

All payments referred to in paragraphs b. to e. above are to be made 
on the first day of the applicable month.

5.3     Intentionally deleted.

5.4     Buyer shall pay BRAD daily interest on late payments, if the late 
payments are not made within a five (5) day grace period, from the 
date that any payment becomes due up to and including the day prior to 
receipt of payment, at a rate of two per cent (2 %) per annum over the 
prime rate on U.S. funds charged by the National Bank of Canada from 
time to time, calculated and compounded monthly. BRAD's right to 
receive such interest is in addition to any other right or remedy BRAD 
has at law as a result of Buyer's failure to make payments when due.

5.5     Buyer shall make all payments due under this Agreement in immediately 
available United States Dollars by deposit on or before the due date 
to the account of de Havilland Inc. at:

Morgan Guarantee Trust Co.
New York, New York, United States of America
ABA # 021000238

To pay:
Canadian Imperial Bank of Commerce
Head Office
Toronto, Ontario, Canada
Account # 64101470

For the credit of the beneficiary bank:
Canadian Imperial Bank of Commerce
Main Branch Transit # 00002
Toronto, Ontario, Canada
Account # 64101470

For the further credit of the beneficiary:
de Havilland Inc.
Account # 03-51717

5.6     All other amounts due with respect to each Aircraft shall be paid on 
or prior to the Delivery Date of the respective Aircraft.

5.7     All payments provided for under this Agreement shall be made so as to 
be received in immediately available funds on or before the dates 
stipulated herein.

5.8     de Havilland Inc. shall remain the exclusive owner of the Aircraft, 
free and clear of all rights, liens, charges or encumbrances created 
by or through Buyer, until such time as all payments referred to in 
this Article 5 have been made.

ARTICLE 6  -  DELIVERY PROGRAM

6.1     The Aircraft shall be offered for inspection and acceptance to Buyer 
at BRAD's facility in Downsview, Ontario during the months set forth 
in Appendix II attached hereto (the "Scheduled Delivery Dates").

ARTICLE 7  -  BUYER INFORMATION

7.1     During the manufacture of the Aircraft, Buyer shall provide to BRAD on 
or before the date required by BRAD, all information as BRAD may 
reasonably request to manufacture the Aircraft including, without 
limitation, the selection of furnishings, internal and external colour 
schemes.

Within thirty (30) days of execution of the Agreement:

(a)     provide BRAD with an external paint scheme agreed on by the 
parties; and

(b)     select interior colours (from BRAD's standard colours).

Failure of Buyer to comply with these requirements may result in an 
increase in price, a delay in delivery of the Aircraft, or both.

7.2     On or before execution of this Agreement Buyer shall notify BRAD in 
writing of the BFE (if any) that Buyer wishes to have incorporated 
into each Aircraft.  Buyer shall also provide details of:

a.      weights and dimensions of the BFE;

b.      test equipment or special tools required to incorporate the BFE; 
and

c.      any other information BRAD may reasonably require.

Within ninety (90) calendar days thereafter, BRAD shall advise Buyer 
of its acceptance or rejection of the BFE, acceptance of which is not 
to be unreasonably refused, and of the dates by which each item of BFE 
is required by BRAD.  If required the parties hereto shall execute a 
Change Order in accordance with Article 11.1 to cover those BFE 
accepted by BRAD.

7.3     The BFE accepted by BRAD pursuant to this Article shall be 
incorporated in the manufacturing process of the Aircraft subject to 
the following conditions:

a.      Title to the BFE shall remain at all times with Buyer and risk of 
loss of the BFE shall remain at all times with Buyer except for 
damages caused by BRAD's gross negligence.

b.      The BFE must be received Carriage Paid To (Incoterms 1990) BRAD's 
plant or such other place as BRAD may designate, no later than 
the date notified pursuant to Article 7.2, free and clear of any 
taxes, duties, licenses, charges, liens or other similar claims;

c.      The BFE shall meet:

1)      the standards of quality of BRAD, and 

2)      the requirements of the applicable airworthiness 
certification agency;

d.      The BFE shall be delivered to BRAD in good condition and ready 
for immediate incorporation into the Aircraft.  BRAD shall, upon 
receipt, inspect the BFE as to quantity and apparent defects and 
inform Buyer of any discrepancies and the required corrective 
actions to be taken;

e.      BRAD shall only be responsible for the fitment and testing of the 
BFE in the Aircraft using reasonable care and good manufacturing 
practices, in accordance with Buyer's written detailed 
description of the dimensions and weight of such BFE.  Buyer 
shall also furnish information necessary for its proper storage, 
fitment, servicing, maintenance and operation and availability of 
test equipment or special tools;

f.      BRAD SHALL HAVE NO LIABILITY OR OTHER OBLIGATIONS AND IS HEREBY 
RELIEVED OF ANY LIABILITY, WARRANTY OR OTHER OBLIGATION WITH 
RESPECT TO THE BFE AND BUYER HEREBY WAIVES ALL EXPRESS OR IMPLIED 
WARRANTIES OR CONDITIONS INCLUDING THOSE OF MERCHANTABILITY OR 
FITNESS OR OTHERWISE AND ALL OTHER LIABILITY (STRICT OR 
OTHERWISE) ON THE PART OF BRAD, BE IT IN FACT, IN LAW, IN 
CONTRACT, OR IN TORT (INCLUDING WITHOUT LIMITATION THE ACTIVE, 
PASSIVE OR IMPUTED NEGLIGENCE OR STRICT PRODUCTS LIABILITY OF 
BRAD OR ITS AFFILIATES), OR OTHERWISE, IN CONNECTION WITH THE BFE 
OR ITS DESIGN, SUITABILITY, USE OR OPERATION.

7.4     If at any time between receipt of the BFE by BRAD and the Delivery 
Date, it is reasonably determined by BRAD that an item of BFE supplied 
does not meet the standards and requirements described above or its 
fitment, integration and testing in the Aircraft or Aircraft systems 
create delays in the manufacturing or certification process, then such 
BFE may be removed and replaced by other BFE or by BRAD's equipment.  
Any costs associated with the removal, refitment, replacement, 
testing, certification and/or delays in the Delivery Date of the 
Aircraft shall be borne by Buyer unless a specific change made by BRAD 
results in previously acceptable BFE being refused.

7.5     In the event that the delivery of an Aircraft is delayed due to any 
delay caused by Buyer's failure to:

a.      deliver or have BFE delivered by the date required;

b.      ensure satisfactory design, suitability, use or operation of the 
BFE;

c.      furnish or obtain applicable BFE data;

d.      perform any adjusting, calibrating, retesting or updating of BFE;

e.      furnish or obtain any approvals in compliance with the provisions 
of this Article; or

f.      comply with the conditions of this Article;

then BRAD agrees to discuss with Buyer the steps to be taken to 
minimize, cure, eliminate or work around the delay, but any delay 
incurred shall be the responsibility of Buyer and Buyer shall pay to 
BRAD any costs and expenses reasonably incurred by BRAD due to such 
delay.

7.6     Should there be a delay in delivery caused either by a failure of 
Buyer described in Article 7.5, or by an event to which reference is 
made in Article 13.0 in connection with the BFE, and if such delay 
cannot reasonably be minimized, cured, eliminated or worked around by 
agreement of the parties, Buyer agrees that BRAD may deliver the 
Aircraft without installing the unapproved, delayed or nonconforming 
BFE, and Buyer agrees to take delivery of and pay for the Aircraft.

7.7     If this Agreement is terminated in whole or in part in accordance with 
the provisions hereof BRAD may elect to, by written notice to Buyer, 
either:

a.      if concurrence is received from Buyer, purchase the BFE ordered 
by Buyer and/or received by BRAD at the invoice price paid by 
Buyer; or
b.      return the BFE to Buyer Free Carrier (Incoterms 1990) BRAD's 
plant, or such other place that BRAD may designate.

ARTICLE 8  -  CERTIFICATION FOR EXPORT

8.1     BRAD has obtained from Transport Canada ("TC"), a TC Type Approval 
(Transport Category) and from the Federal Aviation Administration of 
the United States ("FAA") an FAA Type Certificate for the type of 
aircraft purchased under this Agreement.

8.2     BRAD shall provide to Buyer a TC Certificate of Airworthiness 
(Transport Category) for export, on or before the Delivery Date.  This 
Certificate shall bear a statement of compliance enabling Buyer to 
obtain an FAA Certificate of Airworthiness.

8.3     BRAD shall not be obligated to obtain any other certificates or 
approvals as part of this Agreement.  The obtaining of any import 
license or authority required to import or operate the Aircraft into 
any country outside of Canada shall be the responsibility of Buyer. 
BRAD shall, to the extent permitted by law, and with Buyer's 
assistance, seek the issuance of a Canadian export license to enable 
Buyer to export the Aircraft from Canada subject to prevailing export 
control regulations in effect on the Delivery Date.

8.4     If any addition or change to, or modification or testing of the 
Aircraft is required by any law or governmental regulation or 
requirement or interpretation thereof by any governmental agency 
having jurisdiction in order to meet the requirements of Article 8.2 
(a "Regulatory Change"), such Regulatory Change shall be made to the 
Aircraft prior to Delivery Date, or at such other time after the 
Delivery Date as the parties may agree upon.

8.5     The Regulatory Change shall be made without additional charge to Buyer 
unless such Regulatory Change is:

(a)     necessary to comply with any requirement of the United States of 
America, the country of import, which varies from or is in 
addition to its regulation, requirement or interpretation in 
effect on the date hereof for the issuance of a Certificate of 
Airworthiness in said country of import, in which case Buyer shall 
pay BRAD's reasonable charges for such Regulatory Change, or

(b)     required by any governmental law or regulations or interpretation 
thereof promulgated by TC or the FAA which is effective subsequent 
to the date of this Agreement but before the Delivery Date and 
which is applicable to all aircraft in general or to all aircraft 
of the same category as the Aircraft, in which case Buyer shall 
pay BRAD's reasonable charges for such Regulatory Change 
incorporated in any such Aircraft.

8.6     If delivery of the Aircraft is delayed by the incorporation of any 
Regulatory Change, such delay shall be an Excusable Delay within the 
meaning of Article 13.

8.7     BRAD shall issue a Change Order, reflecting any Regulatory Change 
required to be made under this Article 8, which shall set forth in 
detail the particular changes to be made and the effect, if any, of 
such changes on design, performance, weight, balance, time of 
delivery, Base Price and Aircraft Purchase Price.  Any Change Orders 
issued pursuant to this Article shall be effective and binding upon 
the date of BRAD's transmittal of such Change Order.

8.8     If the use of any of the certificates identified in this Article 8 are 
discontinued during the performance of this Agreement, reference to 
such discontinued certificate shall be deemed a reference to any other 
certificate or instrument which corresponds to such certificate.

8.9     Reference to a regulatory authority shall include any succeeding 
department or agency then responsible for the duties of said 
regulatory authority.

8.10    [CONFIDENTIAL TREATMENT REQUESTED

ARTICLE 9  -  ACCEPTANCE PROCEDURE

9.1     BRAD shall give Buyer at least thirty (30) days advance notice, by 
facsimile or telegraphic communication or other expeditious means, of 
the projected date of readiness of each Aircraft for inspection and 
delivery.

BRAD shall give Buyer at least ten (10) working days advance notice, 
by facsimile or telegraphic communication or other expeditious means, 
of the date on which an Aircraft will be ready for Buyer's inspection, 
flight test and acceptance (the "Readiness Date").

9.2     Within two (2) working days following receipt by Buyer of the notice 
of Readiness Date Buyer shall:

(a)     provide notice to BRAD as to the source and method of payment of 
the balance of the Aircraft Purchase Price;

(b)     identify to BRAD the names of Buyer's representatives who will 
participate in the inspection, flight test and acceptance; and 

(c)     provide evidence of the authority of the designated persons to 
execute the Certificate of Acceptance and other delivery 
documents on behalf of Buyer.

9.3     Buyer shall have three (3) consecutive working days commencing on the 
Readiness Date in which to complete the inspection and flight test 
(such three (3) working day period being the "Acceptance Period").

9.4     Up to four (4) representatives of Buyer may participate in Buyer's 
ground inspection of the Aircraft and two (2) representatives of Buyer 
may participate in the flight test.  BRAD shall, if requested by 
Buyer, perform an acceptance flight of not less than one (1) and not 
more than three (3) hours duration.  Ground inspection and flight test 
shall be conducted in accordance with BRAD's acceptance procedures (a 
copy of which shall be provided to Buyer at least 30 days prior to the 
Scheduled Delivery Date of the First Aircraft hereunder) and at BRAD's 
expense. At all times during ground inspection and flight test, BRAD 
shall retain control over the Aircraft.

9.5     If no Aircraft defect or discrepancy is revealed during the ground 
inspection or flight test, Buyer shall accept the Aircraft on or 
before the last day of the Acceptance Period in accordance with the 
provisions of Article 9.7.

9.6.1   If any material defect or discrepancy in the Aircraft is 
revealed by Buyer's ground inspection or flight test, the defect 
or discrepancy will promptly be corrected by BRAD, at no cost to 
Buyer, which correction may occur during or after the Acceptance 
Period depending on the nature of the defect or discrepancy and 
of the time required for correction.  Should the inspection 
reveal a defect or discrepancy which from Buyer's standpoint is 
not a material defect the cost correction of which would be 
disproportionate to the impact of such defect or discrepancy or 
Buyer's operation the parties agree to discuss to resolve the 
issue in a manner satisfactory to both parties.  To the extent 
necessary to demonstrate to Buyer such correction, BRAD shall 
perform one (1) or more further acceptance flights.

9.6.2   If any material defect or discrepancy in the Aircraft is 
revealed by Buyer's ground inspection or flight test, and BRAD is 
not able to promptly correct such defect or 
discrepancydiscrepenacy then BRAD and Buyer will cooperate to 
effect acceptance and delivery of such Aircraft following 
correction of such defect in a timely manner satisfactory to both 
parties.

9.7     Upon completion of the ground inspection and acceptance flight of the 
Aircraft and correction of any material defects or discrepancies:

(a)     Buyer will sign a Certificate of Acceptance (in the form of 
Exhibit I hereto) for the Aircraft. Execution of the Certificate 
of Acceptance by or on behalf of Buyer shall be evidence of Buyer 
having examined the Aircraft and found it in accordance with the 
provisions of this Agreement.  The date of signature of the 
Certificate of Acceptance shall be the "Acceptance Date";

(b)     BRAD will supply a TC Certificate of Airworthiness for Export; 
and

(c)     Buyer shall pay BRAD the balance of the Aircraft Purchase Price 
and any other amounts due, at which time BRAD shall cause de 
Havilland Inc., the manufacturer, to issue an FAA form Bill of 
Sale and a bill of sale (in the form of Exhibit II hereto) 
passing to Buyer good title to the Aircraft free and clear of all 
liens, claims, charges and encumbrances except for those liens, 
charges or encumbrances created by or claimed through Buyer 
(collectively the "Bill of Sale").  The date on which BRAD 
delivers the Bill of Sale and Buyer takes delivery of the 
Aircraft shall be the "Delivery Date".

Delivery of the Aircraft shall be evidenced by the execution and 
delivery of the Bill of Sale and of the Certificate of Receipt of 
Aircraft (in the form of Exhibit III hereto).

9.8     Provided that BRAD has met all of its obligations under this Article 
9, should Buyer not accept, pay for and take delivery of any of the 
Aircraft within ten (10) calendar days after the end of the Acceptance 
Period of such Aircraft, Buyer shall be deemed to be in default of the 
terms of this Agreement.

9.9     Provided that BRAD has met all material obligations under this Article 
9, Buyer shall promptly, upon demand, reimburse BRAD for all costs and 
expenses reasonably incurred by BRAD as a result of Buyer's failure to 
accept or take delivery of the Aircraft, including but not limited to 
reasonable amounts for storage, insurance, taxes, preservation or 
protection of the Aircraft.  Provided that BRAD has met all of its 
obligations under this Article 9, should Buyer not accept, pay for 
and/or take delivery of any one of the Aircraft by the end of the 
Acceptance Period, the present Agreement can be terminated pursuant to 
Article 16.2 herein.

ARTICLE 10  -  TITLE AND RISK

10.1    Title to the Aircraft and risk of loss of or damage to the Aircraft 
passes to Buyer when BRAD presents the Bill of Sale to Buyer on the 
Delivery Date. 

10.2    If, after transfer of title on the Delivery Date, the Aircraft remains 
in or is returned to the care, custody or control of BRAD, Buyer shall 
retain risk of loss of, or damage to the Aircraft and for itself and 
on behalf of its insurer(s) hereby waives and renounces to, and 
releases BRAD and any of BRAD's affiliates from any claim, whether 
direct, indirect or by way of subrogation, for damages to or loss of 
the Aircraft arising out of, or related to, or by reason of such care, 
custody or control.

ARTICLE 11  -  CHANGES

11.1    Other than a Permitted Change as described in Article 11.2, or a 
Regulatory Change as described in Article 8.4, any change to this 
Agreement (including without limitation the Specification) or any 
features or Buyer Furnished Equipment ("BFE"), if any, changing the 
Aircraft from that described in the Specification attached hereto, 
requested by Buyer, and as may be mutually agreed upon by the parties 
hereto, shall be made using a change order ("Change Order") 
substantially in the format of Exhibit IV hereto.  Should Buyer 
request a change, BRAD shall advise Buyer,  to the extent reasonably 
practical, of the effect, if any, of such change request on:

(a)     the Scheduled Delivery Date;

(b)     the price and payment terms applicable to the Change Order; and

(c)     any other material provisions of this Agreement which will be 
affected by the Change Order.

Such Change Order shall become effective and binding on the parties 
hereto when signed by a duly authorized representative of each party.

11.2    BRAD, prior to the Delivery Date and without a Change Order or Buyer's 
consent, may:

(a)     substitute the kind, type or source of any material, part, 
accessory or    equipment with any other material, part, accessory 
or equipment of like,   equivalent or better kind or type; or

(b)     make such change or modification to the Specification as it deems 
appropriate to:

1)      improve the Aircraft, its maintainability or appearance, or
2)      to prevent delays in manufacture or delivery, or
3)      to meet the requirements of Articles 2 and 8, other than for a 
Regulatory Change to which the provisions of Articles 8.4 and 8.5 
shall apply,

provided that all such substitutions, changes or modifications shall 
not affect the Aircraft Purchase Price or diminish the underlying 
value of the Aircraft or materially affect (i) the Scheduled Delivery 
Date, (ii) interchangeability or replaceability of spare parts or 
maintainability of the Aircraft, or (iii) performance characteristics 
including but not limited to passenger and freight capacity of the 
Aircraft, or (iv) not significantly increase the cost of maintenance 
of the Aircraft.  Any change made in accordance with the provisions of 
this Article 11.2 shall be deemed to be a "Permitted Change" and the 
cost thereof shall be borne by BRAD.

ARTICLE 12  -  BUYER'S REPRESENTATIVES AT MANUFACTURE SITE

12.1    From time to time, commencing with the date of this Agreement and 
ending with the Delivery Date of the last Aircraft purchased 
hereunder, BRAD shall furnish, without charge, office space at BRAD's 
facility for one (1) representative of Buyer.  Buyer shall be 
responsible for all expenses of its representative and shall notify 
BRAD at least thirty (30) calendar days prior to the first scheduled 
visit of such representative and three (3) days for each subsequent 
visit.

12.2    BRAD's and BRAD's affiliates facilities shall be accessible to Buyer's 
representative during normal working hours.  Buyer's representative 
shall have the right to periodically observe the work at BRAD's or 
BRAD's affiliates' facilities where the work is being carried out 
provided there shall be no disruption in the performance of the work.

12.3    BRAD shall advise Buyer's representative of BRAD's or BRAD's 
affiliates' rules and regulations applicable at the facilities being 
visited and Buyer's representative shall conform to such rules and 
regulations.

12.4    At any time prior to delivery of the Aircraft, Buyer's representative 
may request, in writing, correction of parts or materials which they 
reasonably believe are not in accordance with the Specification.  BRAD 
shall provide a written response to any such request. Communication 
between Buyer's representative and BRAD shall be solely through BRAD's 
Contract Department or its designate.

12.5    BUYER HEREBY RELEASES AND AGREES TO DEFEND, INDEMNIFY AND HOLD 
HARMLESS BRAD, ITS ASSIGNEES AND AFFILIATES AND THEIR OFFICERS, 
DIRECTORS, AGENTS, EMPLOYEES AND CONTRACTORS FROM AND AGAINST ALL 
LIABILITIES, DAMAGES, LOSSES, COSTS AND EXPENSES RESULTING FROM 
INJURIES TO OR DEATH OF OR LOSS OF OR DAMAGE TO PROPERTY OF BUYER 
((OTHER THAN THE AIRCRAFT OR SPARE PARTS)) OR BUYER'S REPRESENTATIVES 
WHILE AT BRAD'S OR BRAD'S AFFILIATES OR SUBCONTRACTOR'S FACILITIES 
AND/OR DURING INSPECTION, FLIGHT TEST OR ACCEPTANCE OF THE AIRCRAFT, 
WHETHER OR NOT CAUSED BY THE ACTIVE, PASSIVE OR IMPUTED NEGLIGENCE OR 
STRICT PRODUCTS LIABILITY OF BRAD, ITS ASSIGNEES, AFFILIATES OR THEIR 
OFFICERS, DIRECTORS, AGENTS, EMPLOYEES OR CONTRACTORS.

ARTICLE 13  -  EXCUSABLE DELAY

13.1    In the event of a delay on the part of BRAD in the performance of its 
obligations or responsibilities under the provisions of this Agreement 
due directly or indirectly to a cause which is beyond the reasonable 
control or without the fault or negligence of BRAD (an "Excusable 
Delay"), BRAD shall not be liable for, nor be deemed to be in default 
under this Agreement on account of such delay in delivery of the 
Aircraft or other performance hereunder and the time fixed or required 
for the performance of any obligation or responsibility in this 
Agreement shall be extended for a period equal to the period during 
which any such cause or the effect thereof persist.  Excusable Delay 
shall be deemed to include, without limitation, delays occasioned by 
the following causes:

(a)     force majeure or acts of God;
(b)     war, warlike operations, act of the enemy, armed aggression, 
civil commotion, insurrection, riot or embargo;
(c)     fire, explosion, earthquake, lightning, flood, draught, windstorm 
or other action of the elements or other catastrophic or serious 
accidents;
(d)     epidemic or quarantine restrictions;
(e)     any legislation, act, order, directive or regulation of any 
governmental or other duly constituted authority;
(f)     strikes, lock-out, walk-out, and/or other labour troubles causing 
cessation, slow-down or interruption of work;
(g)     lack or shortage or delay in delivery of supplies, materials, 
accessories, equipment, tools or parts, provided another 
reasonable and practicable alternative source or measure to avoid 
such were not available to BRAD;
(h)     delay or failure of carriers, subcontractors or suppliers to 
deliver parts, products, data or services for any reason 
whatsoever, provided same are ordered in a timely manner; and
(i)     delay in obtaining any airworthiness approval or certificate, or 
any equivalent approval or certification, by reason of any law or 
governmental order, directive or regulation or any change 
thereto, or interpretation thereof, by a governmental agency, the 
effective date of which is subsequent to the date of this 
Agreement, or by reason of any change or addition made by BRAD or 
its affiliates or requested by a governmental agency to the 
compliance program of BRAD or of its affiliate, or any part 
thereof, as same may have been approved by TC, or change to the 
interpretation thereof to obtain any such airworthiness approval 
or certificate.

13.2    (a)     If BRAD concludes, based on its appraisal of the facts and normal 
scheduling procedures, that due to Excusable Delay delivery of 
the Aircraft will be delayed for more than twelve (12) months 
after the originally Scheduled Delivery Date or any revised date 
agreed to in writing by the parties, BRAD shall promptly notify 
Buyer in writing and either party may then terminate this 
Agreement with respect to the Aircraft by giving written notice 
to the other within fifteen (15) days after receipt by Buyer of 
BRAD's notice.

(b)     If, due to Excusable Delay, delivery of any Aircraft is delayed 
for more than twelve (12) months after the Scheduled Delivery 
Date, either party may terminate this Agreement with respect to  
such Aircraft by giving written notice to the other within 
fifteen (15) days after the expiration of such twelve (12) month 
period.

13.3    Termination under Article 13.2 shall discharge all obligations and 
liabilities of Buyer and BRAD hereunder with respect to such delayed 
Aircraft and all related undelivered items and services, except that 
BRAD shall promptly repay to Buyer, and BRAD's sole liability and 
responsibility shall be limited to the repayment to Buyer, of all 
advance payments for such Aircraft received by BRAD less any amount 
due by Buyer to BRAD.

13.4    The termination rights set forth in Article 13.2 are in substitution 
for any and all other rights of termination or contract lapse arising 
by operation of law in connection with Excusable Delays.

13.5    [CONFIDENTIAL TREATMENT REQUESTED].

ARTICLE 14  -  NON-EXCUSABLE DELAY

14.1    If delivery of the Aircraft is delayed by causes not excused under 
Article 13.1 (a "Non-Excusable Delay"), BRAD shall pay Buyer, 
[CONFIDENTIAL TREATMENT REQUESTED for any such delayed Aircraft.

14.2    THE LIQUIDATED DAMAGES PAYABLE IN ACCORDANCE WITH ARTICLE 14.1 AND 
BUYER'S RIGHT OF TERMINATION UNDER ARTICLE 14.3 CONSTITUTE BUYER'S 
EXCLUSIVE REMEDY AND RIGHT FOR NON-EXCUSABLE DELAY, INCLUDING A 
COMPLETE FAILURE TO DELIVER, FOR ANY REASON WHATSOEVER OTHER THAN 
BRAD'S WILLFUL MISCONDUCT.  BUYER WAIVES, RELEASES AND RENOUNCES ALL 
OTHER CLAIMS, RIGHTS AND REMEDIES, AT LAW OR IN EQUITY, WHETHER BASED 
ON CONTRACT (INCLUDING WITHOUT LIMITATION WARRANTY), TORT (WHETHER OR 
NOT ARISING FROM THE ACTIVE, PASSIVE OR IMPUTED NEGLIGENCE OF BRAD OR 
DE HAVILLAND INC.) OR THE STRICT PRODUCTS LIABILITY OF BRAD OR DE 
HAVILLAND INC. OR OTHERWISE, FOR (a) ANY COSTS INCURRED BY BUYER IN 
SECURING TEMPORARY OR PERMANENT REPLACEMENT AIRCRAFT, (b) ANY 
FINANCING, TAX, PERSONNEL, FACILITY OR OTHER COSTS OR DAMAGES INCURRED 
BY BUYER RELATING TO DELIVERY OR NON-DELIVERY OF THE AIRCRAFT, 
INCLUDING BUT NOT LIMITED TO EXPENSES FOR PILOT AND GROUND CREW 
TRAINING, MAINTENANCE FACILITIES, SCHEDULING AND PILOT TIME, OR (c) 
ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES, INCLUDING WITHOUT LIMITATION 
LOSS OF USE, LOSS OF REVENUE OR LOSS OF PROFIT.

14.3    Any right Buyer might otherwise have to refuse to accept delivery of 
an Aircraft when offered by BRAD for inspection and acceptance 
following a Non-Excusable Delay is included within the rights and 
remedies for which the liquidated damages provided pursuant to Article 
14.1 are the exclusive right and remedy.  Buyer will not have the 
right to refuse to take delivery of  any Aircraft because of a 
Non-Excusable Delay unless and until the aggregate duration of the 
Non-Excusable Delay for such Aircraft exceeds sixty (60) days.  If 
BRAD has not offered an Aircraft for inspection and acceptance before 
the end of that sixty (60) day period, Buyer may terminate the 
Agreement as to such Aircraft by giving notice to BRAD.  Buyer shall, 
effective upon such termination, be entitled to recover from BRAD, as 
liquidated damages and not as a penalty, the aggregate amount of 
liquidated damages calculated under Article 14.1 to the date of 
termination.  In addition BRAD shall promptly repay to Buyer all 
advance payments for such Aircraft plus daily simple interest thereon 
from the date of receipt to the date of repayment at the prime rate 
charged by the National Bank of Canada from time to time, calculated 
and compounded monthly.

ARTICLE 15  -  LOSS OR DAMAGE

15.1    In the event that prior to the Delivery Date of any Aircraft, the 
Aircraft is lost, destroyed or damaged beyond repair due to any cause, 
BRAD shall promptly notify Buyer in writing.  Such notice shall 
specify the earliest date reasonably possible, consistent with BRAD's 
other contractual commitments and production schedule, by which BRAD 
estimates it would be able to deliver a replacement for the lost, 
destroyed or damaged Aircraft.  This Agreement shall automatically 
terminate as to such Aircraft unless Buyer gives BRAD written notice, 
within thirty (30) days of BRAD's notice, that Buyer desires a 
replacement for such Aircraft.  If Buyer gives such notice to BRAD, 
the parties shall execute an amendment to this Agreement which shall 
set forth the Delivery Date for such replacement aircraft and 
corresponding new replacement Aircraft Purchase Price; provided, 
however, that nothing herein shall obligate BRAD to manufacture and 
deliver such replacement aircraft if it would require the reactivation 
or acceleration of its production line for the model of aircraft 
purchased hereunder.  The terms and conditions of this Agreement 
applicable to the replaced Aircraft shall apply to the replacement 
aircraft.

ARTICLE 16  -  TERMINATION 

16.1    This Agreement may be terminated, in whole or in part, with respect to 
any or all of the Aircraft before the Delivery Date by BRAD or Buyer 
by notice of termination to the other party upon the occurrence of any 
of the following events:

(a)     a party makes an assignment for the benefit of creditors or 
admits in writing its inability to pay its debts or generally 
does not pay its debts as they become due; or

(b)     a receiver or trustee is appointed for a party or for 
substantially all of such party's assets and, if appointed 
without such party's consent, such appointment is not discharged 
or stayed within thirty (30) calendar days thereafter; or

(c)     proceedings or action under any law relating to bankruptcy, 
insolvency or the reorganization or relief of debtors are 
instituted by or against a party, and, if contested by such 
party, are not dismissed or stayed within thirty (30) calendar 
days thereafter; or

(d)     any writ of attachment or execution or any similar process is 
issued or levied against a party or any significant part of its 
property and is not released, stayed, bonded or vacated within 
thirty (30) calendar days after its issue or levy.

16.2    In addition, this Agreement may be terminated, in whole or in part, 
before the Delivery Date with respect to any or all undelivered 
Aircraft

(a)     as otherwise provided in this Agreement; or

(b)     by BRAD, if Buyer is in default or breach of any material term or 
condition of this Agreement and Buyer does not cure such default 
or breach within forty-five (45) calendar days after receipt of 
notice from BRAD specifying such default or breach.

(c)     by Buyer, if BRAD is in default or breach of any material term or 
condition of this Agreement and such breach remains uncured for a 
period of forty-five (45) calendar days following receipt of a 
notice from Buyer specifying the nature of default or breach.

16.3    In case of termination of this Agreement under Article 9.9, or by BRAD 
pursuant to Articles 16.1 or 16.2:

(a)     all rights (including property rights), if any, which Buyer or 
its assignee may have or may have had in or to this Agreement or 
any or all of the undelivered Aircraft shall become null and void 
with immediate effect;

(b)     BRAD may sell, lease or otherwise diespose of such Aircraft to 
another party free of any claim by Buyer; and

(c)     all amounts paid by Buyer with respect to the applicable 
undelivered Aircraft shall be retained by BRAD and shall be 
applied against the costs, expenses, losses and damages incurred 
by BRAD as a result of Buyer's default and/or the termination of 
this Agreement.  Buyer hereby acknowledges and recognizes that 
BRAD shall have all rights permitted by law to recover from Buyer 
such costs, expenses, losses and damages and, in any event, such 
costs, expenses, losses and damages will aggregate not less than 
the amount retained by BRAD pursuant to this Article 16.4 (c).

16.4    Subject to Article 14.1, in the event of termination of this Agreement 
by Buyer, Buyer's sole rights, remedies and recourses against BRAD and 
BRAD's obligations to Buyer shall be limited to only the return by 
BRAD of those amounts paid by Buyer to BRAD hereunder on account of 
the undelivered Aircraft.

ARTICLE 17  -  NOTICES

17.1    Any notice, request, approval, permission, consent or other 
communication ("Notice"), to be given or required under this Agreement 
shall be provided in writing, by registered mail, facsimile, courier, 
telegraphic or other electronic communication providing reasonable 
proof of transmission, except that no notice shall be sent by mail if 
disruption of postal service exists or is threatened either in the 
country of origin or of destination, by the party giving the Notice 
and shall be addressed as follows:

(a)     Notice to BRAD shall be addressed to:

Bombardier Inc.
Bombardier Regional Aircraft Division
123 Garratt Boulevard
Downsview, Ontario
Canada
M3K 1Y5
Attention:  Director of Contracts

Telex:  06-22128
Facsimile:      (416) 375-4533

(b)     Notice to Buyer shall be addressed to:

Horizon Air Industries, Inc.
19521 Pacific Highway South
Seattle, Washington
U.S.A. 98188

Attention:      President
Facsimile:      (206) 431-4610

17.2    Notice given in accordance with Article 17.1 shall be deemed 
sufficiently given to and received by the addressees:

(a)     if delivered by hand, on the day when the same shall have been so 
delivered; or

(b)     if mailed or sent by courier on the day indicated on the 
corresponding acknowledgment of receipt; or

(c)     if sent by telex or facsimile on the day indicated by the 
acknowledgment or the answer back of the receiver in provable 
form.

ARTICLE 18  -  INDEMNITY AGAINST PATENT INFRINGEMENT

18.1    In the case of any actual or alleged infringement of any Canadian or 
United States patent or, subject to the conditions and exceptions set 
forth below, any patent issued under the laws of any other country in 
which Buyer from time to time may lawfully operate the Aircraft 
("Other Patents"), by the Aircraft, or by any system, accessory, 
equipment or part installed in such Aircraft at the time title to such 
Aircraft passes to Buyer, BRAD shall indemnify, protect and hold 
harmless Buyer from and against all claims, suits, actions, 
liabilities, damages and costs resulting from the infringement, 
excluding any incidental or consequential damages (which include 
without limitation loss of revenue or loss of profit) and BRAD shall, 
at its option and expense:

(a)     procure for Buyer the right under such patent to use such system, 
accessory, equipment or part; or

(b)     replace such system, accessory, equipment or part with one of the 
similar nature and quality that is non-infringing; or 

(c)     modify such system, accessory, equipment or part to make same 
non-infringing in a manner such as to keep it otherwise in 
compliance with the requirements of this Agreement.

BRAD's obligation hereunder shall extend to Other Patents only if from 
the time of design of the Aircraft, system, accessory, equipment or 
part until the alleged infringement claims are resolved:

(a)     such other country and the country in which the Aircraft is 
permanently registered have ratified and adhered to and are at 
the time of the actual or alleged infringement contracting 
parties to the Chicago Convention on International Civil Aviation 
of December 7, 1944 and are fully entitled to all benefits of 
Article 27 thereof; and 

(b)     such other country and the country of registration shall each 
have been a party to the International Convention for the 
Protection of Industrial Property (Paris Convention) or have 
enacted patent laws which recognize and give adequate protection 
to inventions made by the nationals of other countries which have 
ratified, adhered to and are contracting parties to either of the 
forgoing conventions.

18.2    The foregoing indemnity does not apply to BFE, or to avionics, engines 
or any system, accessory, equipment or part that was not manufactured 
to BRAD's detailed design or to any system, accessory, equipment or 
part manufactured by a third party to BRAD's detailed design without 
BRAD's authorization.

18.3    Buyer's remedy and BRAD's obligation and liability under this Article 
are conditional upon (i) Buyer giving BRAD written notice within ten 
(10) days after Buyer receives notice of a suit or action against 
Buyer alleging infringement or within twenty (20) days after Buyer 
receives any other written claim of infringement (ii) Buyer uses 
reasonable efforts in full cooperation with BRAD to reduce or mitigate 
any such expenses, damages, costs or royalties involved, and (iii) 
Buyer furnishes promptly to BRAD all data, papers and records in its 
possession or control necessary or useful to resist and defend against 
such claim or suit.  BRAD may at its option conduct negotiations with 
any party claiming infringement and may intervene in any suit or 
action.  Whether or not BRAD intervenes, BRAD shall be entitled at any 
stage of the proceedings to assume or control the defense.  Buyer's 
remedy and BRAD's obligation and liability are further conditional 
upon BRAD's prior approval of Buyer's payment or assumption of any 
liabilities, expenses, damages, royalties or costs for which BRAD may 
be held liable or responsible.

18.4    THE INDEMNITY, OBLIGATIONS AND LIABILITIES OF BRAD AND REMEDIES OF 
BUYER SET OUT IN THIS ARTICLE ARE EXCLUSIVE AND ACCEPTED BY BUYER TO 
BE IN LIEU OF AND IN SUBSTITUTION FOR, AND BUYER HEREBY WAIVES, 
RELEASES AND RENOUNCES, ALL OTHER INDEMNITIES, OBLIGATIONS AND 
LIABILITIES OF BRAD AND OF ITS AFFILIATES AND ALL OTHER RIGHTS, 
REMEDIES AND CLAIMS, INCLUDING CLAIMS FOR DAMAGES, DIRECT, INCIDENTAL 
OR CONSEQUENTIAL, OF BUYER AGAINST BRAD AND ITS AFFILIATES EXPRESS OR 
IMPLIED, ARISING BY LAW OR OTHERWISE, WITH RESPECT TO ANY ACTUAL OR 
ALLEGED PATENT INFRINGEMENT BY THE AIRCRAFT OR ANY INSTALLED SYSTEM, 
ACCESSORY, EQUIPMENT OR PART.

ARTICLE 19  -  LIMITATION OF LIABILITY AND INDEMNIFICATION

19.1    BRAD SHALL HAVE NO OBLIGATION OR LIABILITY (AT LAW OR IN EQUITY), 
WHETHER ARISING IN CONTRACT (INCLUDING WITHOUT LIMITATION, WARRANTY), 
IN TORT (INCLUDING THE ACTIVE, PASSIVE OR IMPUTED NEGLIGENCE OR STRICT 
PRODUCTS LIABILITY OF BRAD OR ITS AFFILIATES), OR OTHERWISE, FOR LOSS 
OF USE, REVENUE OR PROFIT OR FOR ANY OTHER INDIRECT, INCIDENTAL, 
CONSEQUENTIAL OR PUNITIVE DAMAGES OF ANY KIND OR NATURE, FOR ANY 
LOSSES OR DAMAGES FOR OR ARISING OUT OF ANY LACK OR LOSS OF USE OF ANY 
AIRCRAFT, EQUIPMENT, BRAD PARTS, VENDOR PARTS, SPARE PART, GROUND 
SUPPORT EQUIPMENT, TECHNICAL PUBLICATION OR DATA OR ANY SERVICES TO BE 
PROVIDED HEREUNDER, OR FOR ANY FAILURE BY BRAD TO PERFORM ANY 
OBLIGATION HEREUNDER.

19.2    ANNEX B HERETO EXCLUSIVELY SETS FORTH BRAD'S OBLIGATIONS WITH RESPECT 
TO ANY NON-CONFORMANCE OF THE AIRCRAFT WITH THE SPECIFICATION OR ANY 
DEFECT IN THE AIRCRAFT.

EXCEPT AS SET FORTH IN ANNEX B THERE ARE NO UNDERSTANDINGS, 
REPRESENTATIONS, CONDITIONS OR WARRANTIES, EXPRESS OR IMPLIED, BETWEEN 
THE PARTIES WITH RESPECT TO ANY NON-CONFORMANCE OF THE AIRCRAFT WITH 
THE SPECIFICATION OR ANY DEFECT IN THE AIRCRAFT OR ANY OTHER THING 
DELIVERED UNDER THIS AGREEMENT.

19.3    THE WARRANTY AND SERVICE LIFE POLICY PROVIDED IN ANNEX B TO THIS 
AGREEMENT AND THE OBLIGATIONS AND LIABILITIES OF BRAD UNDER THE 
AFORESAID WARRANTY AND SERVICE LIFE POLICY ARE ACCEPTED BY BUYER TO BE 
EXCLUSIVE AND IN LIEU OF, AND BUYER HEREBY WAIVES, RELEASES AND 
RENOUNCES ALL OTHER REMEDIES, WARRANTIES, GUARANTEES, OBLIGATIONS, 
REPRESENTATIONS OR LIABILITIES, EXPRESS OR IMPLIED, OF BRAD AND ITS 
AFFILIATES WITH RESPECT TO DEFECTS IN EACH AIRCRAFT OR PART THEREOF, 
PRODUCT, DOCUMENT OR SERVICE DELIVERED OR PROVIDED UNDER THIS 
AGREEMENT, ARISING IN FACT, IN LAW, IN CONTRACT, IN TORT, OR 
OTHERWISE, INCLUDING, WITHOUT LIMITATION, 

A.      ANY IMPLIED WARRANTY OR CONDITION OF MERCHANTABILITY OR FITNESS;

B.      ANY IMPLIED WARRANTY OR CONDITION ARISING FROM COURSE OF 
PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE;

C.      ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY IN TORT, 
WHETHER OR NOT ARISING FROM THE ACTIVE, PASSIVE OR IMPUTED 
NEGLIGENCE OR STRICT PRODUCTS LIABILITY OF BRAD OR ITS 
AFFILIATES, BY REASON OF THE DESIGN, MANUFACTURE, SALE, REPAIR, 
LEASE OR USE OF THE AIRCRAFT OR PRODUCT AND SERVICES DELIVERED 
HEREUNDER; AND

D.      ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY FOR LOSS OF OR 
DAMAGE TO ANY AIRCRAFT OR PART THEREOF, ANY BRAD PARTS, ANY POWER 
PLANT PARTS, ANY VENDOR PARTS, ANY SPARE PARTS OR ANY TECHNICAL 
DATA.

BUYER AND BRAD AGREE THAT THIS AGREEMENT HAS BEEN THE SUBJECT OF 
DISCUSSION AND NEGOTIATION AND IS FULLY UNDERSTOOD BY THE PARTIES 
HERETO AND THAT THE MUTUAL AGREEMENTS OF THE PARTIES SET FORTH HEREIN 
WERE ARRIVED AT IN CONSIDERATION OF THE PROVISIONS CONTAINED IN THIS 
ARTICLE 19.

THE LIMITATIONS OF LIABILITY CONTAINED IN THIS ARTICLE 19 DOES NOT 
APPLY TO ANY LOSSES, DAMAGES OR CLAIMS ARISING OUT OF THE GROSS 
NEGLIGENCE OR WILLFUL MISCONDUCT OF BRAD OR OF ANY PERSON FOR WHOM 
BRAD IS IN LAW RESPONSIBLE AND NOTHING HEREIN CONTAINED SHALL 
CONSTITUTE OR BE DEEMED TO CONSTITUTE A WAIVER, RELEASE OR 
RENUNCIATION OF ANY SUCH LOSSES, DAMAGES OR CLAIMS BY BUYER.  CLAIMS 
BY BUYER AGAINST BRAD FOR CONTRIBUTION TOWARD THIRD-PARTY BODILY 
INJURY OR PROPERTY DAMAGE CLAIMS, TO THE EXTENT OF BRAD'S RELATIVE 
PERCENTAGE  OF THE TOTAL FAULT OR OTHER LEGAL RESPONSIBILITY OF ALL 
PERSONS CAUSING SUCH BODILY INJURIES OR PROPERTY DAMAGE ARE ALSO 
EXCEPTED FROM THE TERMS OF THIS ARTICLE 19.

19.4            INTENTIONALLY DELETED 

ARTICLE 20  -  ASSIGNMENT

20.1    Either party may assign, sell, transfer or dispose of (in whole or in 
part) any of its rights and obligations hereunder to an affiliate or a 
wholly owned subsidiary provided that there is no increase to the 
liability and/or responsibility of the non-assigning party and that 
the assigning party remains jointly and severally liable with any 
assignee for the performance of its obligation under this Agreement.  
In addition, either party may assign its interest to a corporation 
(ii) that results from any merger, consolidation, or a reorganization 
of such party;; or (ii) into which such party may be merged or with 
which it may be consolidated.

20.2    Except as provided in Article 20.1, Buyer shall not assign, sell, 
transfer or dispose of (in whole or in part) any of its rights or 
obligations hereunder without BRAD's prior written consent, such 
consent not to be unreasonably withheld.  In the event of such 
assignment, sale, transfer or disposition Buyer shall remain jointly 
and severally liable with any assignee for the performance of all and 
any of Buyer's obligations under this Agreement and BRAD reserves the 
right as a condition of its consent to amend one or more of the terms 
and conditions of this Agreement.

20.3    Notwithstanding Article 20.2 above, Buyer may assign, after transfer 
of title of the Aircraft, its rights under the Agreement to a third 
party purchaser of any one of the Aircraft, upon obtaining from said 
third party an acknowledgement in writing to be bound by the 
applicable terms and conditions of this Agreement, including but not 
limited to the provisions and limitations as detailed Annex A, 
Customer Support Services, Annex B, Warranty and Service Life Policy 
and of the provisions and limitations in Limitation of Liability as 
defined in Article 19 hereof and Indemnity Against Patent Infringement 
as defined in Article 18 hereof and any other on-going obligations of 
Buyer, which shall apply to it to the same extent as if said third 
party was Buyer hereunder and provided that there is no increase to 
the liability and/or responsibility of BRAD.

20.4    BRAD may assign any of its rights to receive money hereunder without 
the prior consent of Buyer.

20.5    Notwithstanding the other provisions of this Article 20, BRAD shall, 
at Buyer's cost and expense, if so requested in writing by Buyer, take 
any action reasonably required for the purpose of causing any of the 
Aircraft to be subjected (i) to, on or after the Delivery Date, an 
equipment trust, conditional sale or lien, or (ii) to another 
arrangement for the financing of the Aircraft by Buyer, providing, 
however, there shall be no increase to the liability and/or 
responsibility of BRAD arising through such financing, and no transfer 
of title of an Aircraft shall occur until payment therefore as 
provided in this Agreement.

ARTICLE 21  -  SUCCESSORS

This Agreement shall inure to the benefit of and be binding upon each 
of BRAD and Buyer and their respective successors and permitted 
assignees.

ARTICLE 22  -  APPLICABLE LAWS

22.1    THIS AGREEMENT SHALL BE SUBJECT TO AND CONSTRUED IN ACCORDANCE WITH 
AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY THE DOMESTIC LAWS 
OF THE PROVINCE OF ONTARIO, CANADA, EXCLUDING THE CHOICE OF LAW RULES, 
AND THE PARTIES HAVE AGREED THAT THE APPLICATION OF THE UNITED NATIONS 
CONVENTION ON CONTRACTS FOR THE INTERNATIONAL SALE OF GOODS IS HEREBY 
EXCLUDED.

22.2    BRAD's obligations under this Agreement shall be subject to and apply 
only to the extent permitted by applicable laws, regulations, 
directives and/or orders regarding export controls.

ARTICLE 23  -  CONFIDENTIAL NATURE OF AGREEMENT

23.1    Except as required by law, this Agreement is confidential between the 
parties and shall not, without the prior written consent of the other 
party, be disclosed by either party in whole or in part to any other 
person or body except as may be necessary for either party to carry 
out its obligations under this Agreement.  Nevertheless the parties 
agree to cooperate to keep this Agreement confidential.

23.2    Except as may be reasonably required for the normal operation, 
maintenance, overhaul and repair of the Aircraft or in the normal 
course of supporting the Aircraft, each party shall hold confidential 
all technical data and information supplied by or on behalf of the 
other party.  Buyer shall not reproduce any technical data or 
information or divulge the same to any third party without obtaining a 
confidentiality agreement in favor of and acceptable to BRAD.

23.3    Either party may announce the signing of this Agreement by means of a 
notice to the press provided that the content and date of the notice 
has been agreed to by the other party.

ARTICLE 24  -  AGREEMENT

24.1    This Agreement and the matters referred to herein constitute the 
entire Agreement between BRAD and Buyer and supersede and cancel all 
prior representations, brochures, alleged warranties, statements, 
negotiations, undertakings, letters, memoranda of agreement, 
acceptances, agreements, understandings, contracts and 
communications, whether oral or written, between BRAD and Buyer or 
their respective agents, with respect to or in connection with the 
subject matter of this Agreement and no agreement or understanding 
varying the terms and conditions hereof shall be binding on either 
BRAD or Buyer hereto unless an amendment to this Agreement is issued 
and duly signed by their respective authorized representatives 
pursuant to the provisions of this Article hereof.  In the event of 
any inconsistencies between this Agreement and any of the 
Appendices, Exhibits and Annexes or other documents referred to 
herein, the provisions of this Agreement shall prevail.

24.2    If any of the provisions of this Agreement are for any reason 
declared by judgment of a court of competent jurisdiction to be 
unenforceable or ineffective, those provisions shall be deemed 
severable from the other provisions of this Agreement and the 
remainder of this Agreement shall remain in full force and effect.

24.3    THE BENEFIT OF THE WAIVER, RELEASE, RENUNCIATION AND EXCLUSION OF 
LIABILITY IN EACH OF ARTICLES 7.3 (f), 12.5, 18.4, 19, ANNEX A 
ARTICLE 2.9.4.5 AND ANNEX B ARTICLE 5.1 EXTENDS ALSO TO THE OTHER 
DIVISIONS, OTHER SUBSIDIARIES, AND OTHER AFFILIATES OF BOMBARDIER 
INC., INCLUDING DE HAVILLAND INC. (COLLECTIVELY THE "BOMBARDIER 
GROUP") AND TO THE OFFICERS, DIRECTORS, EMPLOYEES AND 
REPRESENTATIVES OF THE BOMBARDIER GROUP, ON WHOSE BEHALF AND FOR 
WHOSE BENEFIT BRAD IS, FOR PURPOSES OF THIS ARTICLE 24.3, ACTING AS 
AGENT AND TRUSTEE.

24.4    BRAD and Buyer confirm to each other they have each obtained the 
required authorizations and fulfilled any conditions applicable to 
enable each of them to enter into this Agreement.

24.5    Buyer and BRAD agree that this Agreement has been the subject of 
discussion and negotiation and is fully understood by the parties 
hereto and that the price of the Aircraft and the other mutual 
agreements of the parties set forth herein were arrived at in 
consideration of the provisions contained in this Agreement, taken 
as a whole, including Article 19.

In witness whereof this Agreement was signed on the date written hereof:

For and on behalf of    For and on behalf of

Horizon Air Industries, Inc.:   Bombardier Inc.
Bombardier Regional Aircraft Division:

___________________________     _______________________________
Glenn Johnson           Pierre Lortie
V.P. Finance and C.F.O. President

_______________________________
Michel Bourgeois
Vice President, Contracts

APPENDIX I

ECONOMIC ADJUSTMENT FORMULA

1.      Economic Adjustment will be calculated using the following Economic 
Adjustment Formula:

PA  =  P1 -  P0

Where   P1  =  P0  [0.65  (L1/L0)  +  0.35  (M1/M0) ]  

2.0     In the Economic Adjustment Formula:

a.      PA      =       Aircraft Price Adjustment;

b.      P0      =       Base Price;

c.      P1      =       Base Price adjusted to the time of delivery to Buyer using 
the formula set forth above;

d.      L1      =       the delivery year index for labour obtained by calculating 
the arithmetic average of the labour indexes published by 
Statistics Canada in Labour Earnings and Hours, Table 3.1, 
for the fourth, fifth and sixth months prior to the month of 
delivery of the Aircraft;

e.      L0      =       19.19, being the index for labour obtained by calculating 
the arithmetic average of the labour indexes published by 
Statistics Canada in Labour (Canada), Aircraft and Aircraft 
Parts, Code 321, Earnings and Hours, Table 3.1 for January, 
February and March, 1995;

f.      M1      =       the delivery year index for material obtained by calculating 
as the arithmetic average of the material indexes published 
by the U.S. Department of Labor in Material (U.S.) 
Industrial Commodities, Producer Price Index, Table 6, for 
the fourth, fifth and sixth months prior to the month of 
delivery of the Aircraft.;

g.      M0      =       124.3, being the index for material obtained by calculating 
the arithmetic average of the material indexes published by 
the U.S. Department of Labor in Material (U.S.) Industrial 
Commodities, Producer Price Index, Table 6 January, February 
and March, 1995.

3.      In the calculation of the Aircraft Price Adjustment:

a.      All indices used in the calculations made to determine the factor 
to apply to P0, and the calculations themselves, will be to four 
significant digits; and

b.      The Aircraft Price Adjustment will be corrected to the nearest 
dollar.

4.      In the event that at the time of Aircraft delivery BRAD is unable to 
determine the Aircraft Price Adjustment due to the unavailability of   
L1  or  M1,  then: 

a.      An interim Aircraft Price Adjustment amount will be calculated in 
accordance with the Economic Adjustment Formula utilizing the 
latest available delivery indexes and such amount shall be paid 
to BRAD in lieu of the Aircraft Price Adjustment of delivery; and 

b.      subsequent to delivery of the Aircraft and as soon as both  L1  
or  M1  are available, BRAD will calculate the Aircraft Price 
Adjustment and will submit to Buyer a supplemental invoice for 
the amount due to BRAD or refund to Buyer the amount due Buyer, 
as appropriate.

5.      In the event that any index referred to is discontinued, or if the 
methodology employed by the relevant authority in determining the 
index is substantially revised, then a mutually agreed to index will 
be substituted prior to delivery of the Aircraft.

APPENDIX II
DELIVERY SCHEDULE

First Aircraft:
[CTR]
Second Aircraft:
[CTR]
Third Aircraft:
[CTR]
Fourth Aircraft:
[CTR]
Fifth Aircraft:
[CTR]
Sixth Aircraft:
[CTR]
Seventh Aircraft:
[CTR]
Eighth Aircraft:
[CTR]
Ninth Aircraft:
[CTR]
Tenth Aircraft:
[CTR]
Eleventh Aircraft:
[CTR]
Twelfth Aircraft:
[CTR]
Thirteenth Aircraft:
[CTR]
Fourteenth Aircraft:
[CTR]
Fifteenth Aircraft:
[CTR]
Sixteenth Aircraft:
[CTR]
Seventeenth Aircraft:
[CTR]
Eighteenth Aircraft:
[CTR]
Nineteenth Aircraft:
[CTR]
Twentieth Aircraft;
[CTR]
Twenty-First 
Aircraft:
[CTR]
Twenty-Second 
Aircraft:
[CTR]
Twenty-Third 
Aircraft:
[CTR]
Twenty-Fourth 
Aircraft:
[CTR]
Twenty-Fifth 
Aircraft:
[CTR]
Twenty-Sixth Aircraft
[CTR]
Twenty-Seventh 
Aircraft
[CTR]
Twenty-Eighth 
Aircraft
[CTR]
Twenty-Ninth Aircraft
[CTR]
Thirtieth Aircraft
[CTR]
Thirty-First Aircraft
[CTR]
Thirty-Second 
Aircraft
[CTR]
Thirty-Third Aircraft
[CTR]
Thirty-Fourth 
Aircraft
[CTR]
Thirty-Fifth Aircraft
[CTR]
Thirty-Sixth Aircraft
[CTR]
Thirty-Seventh 
Aircraft
[CTR]
Thirty-Eighth 
Aircraft
[CTR]
Thirty-Ninth Aircraft
[CTR]
Fortieth Aircraft
[CTR]
CTR = [CONFIDENTIAL TREATMENT REQUESTED].

APPENDIX III

SPECIFICATION

DETAIL SPECIFICATION

Number DS8-200 Issue 3

May 1996

APPENDIX IV

BUYER SELECTED OPTIONAL FEATURES

CONFIDENTIAL TREATMENT REQUESTED for all prices of these features
listed below

803SO00073      Dash 8 Series 200 Model 202
804CH00048      Performance Guarantee for Horizon Air S200      
811CH00435      Installation of Airframe and Engine Mortgage Nameplates
identifying the Owner and Lessor        
811CH00439      Exterior Paint Scheme - Horizon Air     
821CH00075      Passenger Exterior Air Intake Fan for Ground Operation - S200   
824CH82066      Batteries on line with Ground Power     
825CH01077      ELT (Pointer C-4000-11) 
825CH02003      Weather Proof Airstair Door Acoustic Curtain with Label 
to Indicate that curtain is to be Open during Take-Off and 
Landing Hunting Interior        
825CH02013      In-Arm Folding Meal Trays Row 1 only-S200-PTC Model 935 
825CH02112      First Aid Kit and Splint-Horizon Air Location-BFE-Series 200
2,642
825CH02160      Interior configuration-Horizon Air-Leather Pax and FA 
Seat Dress Covers, Dado, Carpet & Aisle Curtain 
825CH02216      Modified Standard Series 200 Hunting Galley to provide three 
(3)
Prong DC Power Hot Jugs in lieu of the Standard two (2) prong 
DC
Powered Hot Jugs - Qty two (2), Three Prong Hot Jugs Provided 
with Galley     
831CH00055      Engine Trend Monitoring System Using the Flight Data 
Acquisition
Unit (Plessey DFDAU)    
832CH00022      Nose Gear Lock Indicator on the Flight Deck-S200        
834CH00098-1    Audible Altitude Alert  
834CH00384      VHF Nav. Dual, Collins (VIR33), Installation of 
Receivers with Level I Software Compatible with an 
Heads-Up Guidance System        
834CH00432      Structural, Wiring and Space Provisions for "Combiner"
for Flight Dynamics (FDI) Heads-Up Guidance System-
Model 2800 with Litton LTN-101 IRS      
834CH82218      Single Cue Command on EADI      
835CH00041      Deletion of Portable Oxygen Bottle from Flight Compartment      
835CH00075      Increased Capacity Crew Member Fixed Oxygen
Cylinder-Complete with on Board Recharging 
Capability-Nose Compartment     
[CTR] = [CONFIDENTIAL TREATMENT REQUESTED] FOR ALL PRICES

APPENDIX IV

BUYER SELECTED OPTIONAL FEATURES
Cond't

879CH82380      Mobil Oil in lieu of Standard Exxon     [CTR]
823SO02000      Passenger Briefing and Music System-Hunting Interior    
823SO08041      VHF Comm. Dual-Collins Proline II (VHF22)       
823SO08050-5    Sundstrand Solid State Cockpit Voice Recorder-SSCVR     6,698
824SO00054      D.C. Generation System-Removal of Phoenix Parts and 
Introduction of Lapec Parts-Converts Post Mod 8/1956
Aircraft to pre mod Configuration-without APU   
831SO08049-1    Sundstrand Flight Data Recorder in lieu of Standard     
834SO08010-1    Electronic Flight Instrument System (Sperry EDZ800)     
834SO08014-1    Second Radio Altimeter (Sperry AA-300)  
834SO08043-1    ADF-Single, Collins Proline II (ADF60)  
834SO08045      DME No. 1, Collins Proline II (DME42)   
834SO08048-1    DME No. 2, Collins Proline II (DME42)   
835SO02008-5    Oxygen-Essex PBE-BFE-S300/Post Hunting Interior 8,462
834SO08044-4    ATC #1 Collins Collins Proline II - Mode C Transponder
Supplied BFE (New or Used Unit) 
854CH0002       Installation of the Series 300 Forward Upper Nacelle
Structure and Lower Engine Mount Tubes and Busings
in the Series 100       

Total Optional Features

EXHIBIT I

CERTIFICATE OF ACCEPTANCE

The undersigned hereby acknowledges on behalf of Buyer acceptance of 
the Aircraft bearing manufacturer's serial number ____________________ 
fitted with two (2) Pratt & Whitney of Canada, Ltd. PWC-123C engines 
bearing serial numbers _____________________ and __________________ 
and two (2) Hamilton Standard 14SF-7/15/23/ propellors as being in 
accordance with the terms and conditions of this Agreement signed on 
the       day of       , 1996 between Bombardier Regional Aircraft 
Division and Buyer.

Place:                  Date:           

Signed for and on behalf of 

[Buyer]

Per:            

Title:          

EXHIBIT II
BILL OF SALE

1.      FOR VALUABLE CONSIDERATION, de HAVILLAND INC., OWNER OF THE FULL LEGAL 
AND BENEFICIAL TITLE OF THE AIRCRAFT DESCRIBED AS FOLLOWS:

ONE DE HAVILLAND DHC-8-200/300 AIRCRAFT BEARING:

MANUFACTURER'S SERIAL NO.:              , WITH:

PWC-123 ENGINES SERIAL NOS.:            

, AND

AUXILIARY POWER UNIT NO.:                       

DOES THIS           DAY OF               19      HEREBY SELL, GRANT, 
TRANSFER AND DELIVER ALL RIGHT, TITLE AND INTEREST IN AND TO SUCH 
AIRCRAFT UNTO:  [BUYER'S NAME].

BY VIRTUE OF THE EXECUTION OF THIS BILL OF SALE, DE HAVILLAND INC. 
HEREBY DIVESTS ITSELF OF ALL ITS RIGHT, TITLE AND INTEREST OF ANY KIND 
IN THE AIRCRAFT, IN FAVOUR OF BUYER AND WARRANTS THAT BUYER WILL HAVE 
GOOD TITLE TO THE AIRCRAFT, FREE OF LIENS AND ENCUMBRANCES.

BUYER:

PLACE:          TIME:   

For and on behalf of    

DE HAVILLAND INC.:

Per:                                    

Title:                                  

EXHIBIT III

CERTIFICATE OF RECEIPT OF AIRCRAFT

THE UNDERSIGNED HEREBY ACKNOWLEDGES TO HAVE RECEIVED FROM BOMBARDIER 
REGIONAL AIRCRAFT DIVISION, AT THE DOWNSVIEW AIRPORT, ADJACENT TO BRAD'S 
PLANT IN DOWNSVIEW, PROVINCE OF ONTARIO, CANADA, ON THE _____________ DAY 
OF ______________ , AT THE HOUR OF _____________ O'CLOCK, ONE (1) de 
HAVILLAND DHC-8-200/300/ AIRCRAFT, BEARING SERIAL NUMBER ______________, 
INCLUDING WITH THE AIRCRAFT TWO (2) PWC-123 ENGINES BEARING MANUFACTURER'S 
SERIAL NUMBERS _____________ & __________________ AND TWO (2) HAMILTON 
STANDARD 14SF-7/15/23/ PROPELLORS AND OTHER MAJOR REPLACEABLE ACCESSORIES 
ATTACHED TO THE AIRCRAFT AND ENGINES.

Signed for and on behalf of
[Buyer's name]:

Per:            

Title:          

EXHIBIT IV

CHANGE ORDER
(PRO FORMA)

CONTRACT CHANGE ORDER

PURCHASER:      

PURCHASE AGREEMENT NO.:         AIRCRAFT TYPE:

C.C.O. NO.:             DATED:

PAGE __ of __

REASON FOR CHANGE:      

___________________________________________________________________________
___

DESCRIPTION OF CHANGE:

ALL OTHER TERMS AND CONDITIONS OF THE AGREEMENT WILL REMAIN UNCHANGED

For administrative purposes only, a consolidation of the amendments 
contained in this CCO is attached.  In the event of inconsistencies between 
the consolidation and this CCO, this CCO shall prevail.
_________________________________________________________________________

FOR AND ON BEHALF OF:   FOR AND ON BEHALF OF:

Bombardier Regional Aircraft Division   __________________________

Signed:_______________________  Signed: __________________________

Date:_________________________  Date:   __________________________

CUSTOMER SUPPORT SERVICES

ANNEX A -       TECHNICAL SUPPORT, SPARE PARTS, TRAINING AND 
TECHNICAL DATA

The following Customer Support Services are those services to which 
reference is made in Article 3 of the Agreement. 

ARTICLE 1 - TECHNICAL SUPPORT

1.1     Factory Service

BRAD agrees to maintain or cause to be maintained the capability to 
respond to Buyer's technical inquiries, to conduct investigations 
concerning repetitive  maintenance problems and to issue findings and 
recommend action thereon.  This service shall be provided for as long 
as ten (10) DHC-8-200/300 aircraft remain in commercial air transport 
service.

1.2     Field Service Representative

1.2.1   Services

BRAD shall [CONFIDENTIAL TREATMENT REQUESTED] Area Field 
Service Representative ("FSR") to Buyer's main base of operation or other 
location as may be mutually agreed.

1.2.2   Term

Such assignment shall be for at least, [CONFIDENTIAL TREATMENT 
REQUESTED] and shall commence approximately one (1) month prior 
to the Delivery Date of the first Aircraft.  The FSR assignment 
may be extended on terms and conditions to be mutually agreed.

1.2.3   Responsibility

The FSR's responsibility shall be to provide technical advice to 
Buyer for the line maintenance and operation of the Aircraft 
systems and troubleshooting during scheduled and unscheduled 
maintenance by Buyer's designated personnel ("FSR Services").

1.2.4   Travel

If requested by Buyer, the FSR may, at Buyer's expense, travel to 
another location to provide technical advice to Buyer.

1.2.5   Office Facilities

Buyer shall furnish the FSR, at no charge to BRAD, suitable and 
private office facilities and related equipment including desk, 
file cabinet, access to two telephone lines, facsimile and 
photocopy equipment conveniently located at Buyer's main base of 
operation or other location as may be mutually agreed.

1.2.6   Additional Expenses

Buyer shall reimburse BRAD (net of any additional taxes on such 
reimbursement) the amount of any and all taxes (except Canadian 
taxes on the income of the FSR) and fees of whatever nature, 
including any customs duties, withholding taxes or fees together 
with any penalties or interest thereon except for penalties or 
interest resulting from BRAD's fault or negligence, paid or 
incurred by BRAD or the FSR or other BRAD employee as a result of 
or in connection with the rendering of the services.

1.2.7   Right to Stop Work

BRAD shall not be required to commence or continue the FSR 
Services when:

a.)     there is a labour dispute or work stoppage in progress at Buyer's 
main maintenance facilities;

b.)     there exist war, risk of war or warlike operations, riots or 
insurrections which is likely to affect Buyer's facility;

c.)     there exist conditions that are dangerous to the safety or health 
of the FSR or other BRAD employee; or

d.)     the Government of the country where Buyer's facilities are 
located or where Buyer desires the FSR to travel refuses the BRAD 
employees permission to enter said country or Buyer's base of 
operations.

1.2.8   Work Permits and Clearances

BRAD and Buyer shall cooperate to arrange for all necessary work 
permits and airport security clearances required for the FSR or 
other BRAD employee to permit timely accomplishment of the FSR 
services.

1.3     Maintenance Planning Support

1.3.1   Scheduled Maintenance Task Cards

As described in Annex A Attachment A, BRAD shall provide Buyer 
BRAD's standard format scheduled maintenance task cards that 
shall conform to the Aircraft at the Delivery Date.  At Buyer's 
request BRAD shall provide a proposal for task cards produced to 
Buyer's format.

1.3.2   In-Service Maintenance Data

Buyer agrees to provide to BRAD in-service maintenance data in 
order to provide updates to BRAD's recommended maintenance 
program.  Buyer and BRAD shall agree on standards and frequency 
for communication of such data.

1.4     Additional Services

At Buyer's request BRAD shall provide a proposal to provide such 
additional support services as the parties may agree upon, which may 
include special investigations, maintenance and repair of the 
Aircraft.

ARTICLE 2 - SPARE PARTS, GSE, TOOLS AND TEST EQUIPMENT

2.1.1   Definitions

a.      "BRAD Parts":

any spare parts, ground support equipment, tools and test 
equipment which bear an inhouse Cage Code number in the BRAD 
Provisioning Files (as that expression is defined in ATA 
Specification 2000).

b.      "Power Plant Parts":

any power plant or power plant part or assembly carrying the 
power plant manufacturer's part number or any part furnished by 
the power plant manufacturer for incorporation on the Aircraft.

c.      "Vendor Parts":

any spare parts, ground support equipment, tools and test 
equipment for the Aircraft which are not BRAD Parts or Power 
Plant Parts.

d.      "Spare Parts":

all materials, spare parts, assemblies, special tools and items 
of equipment, including ground support equipment, ordered for the 
Aircraft by Buyer from BRAD.  The term Spare Parts includes BRAD 
Parts, Power Plant Part and Vendor Parts.

e.      "Order":

any order for Spare Parts issued by Buyer to BRAD; and

f.      "Technical Data":

shall have the meaning attributed to it in Annex A Article 4.1.

2.1     Term and Applicability

The term of this Annex A Article 2 shall become effective on the date 
hereof and shall remain in full force and effect with respect to the 
purchase and sale of Spare Parts for each Aircraft so long as at least 
ten (10) of the DHC-8-200/300 aircraft remain  in commercial air 
transport service.  The provisions of Annex A Articles 2.2, 2.6.5, 
2.24 and Annex B Article 5.0 shall survive expiration or termination 
of this Agreement.

2.2     Order Terms

Terms and conditions hereof shall apply to all Orders placed by Buyer 
with BRAD in lieu of any terms and conditions in Buyer's purchase 
orders.

2.3     Purchase and Sale of Spare Parts

2.3.1   Agreement to Manufacture and Sell

BRAD shall manufacture, or procure, and make available for sale 
to Buyer suitable Spare Parts in quantities sufficient to meet 
the reasonably anticipated needs of Buyer for normal maintenance 
and normal spares inventory replacement for each Aircraft.  
During the term specified in Annex A Article 2.1 above, BRAD 
shall also maintain a shelf stock of certain BRAD Parts selected 
by BRAD to ensure reasonable re-order lead times and emergency 
support.  BRAD shall maintain a reasonable quantity of BRAD 
insurance parts.  Insurance parts as used herein shall include, 
but not be limited to, dispatch-essential parts such as major 
flight control surfaces.

2.4     Agreement to Purchase BRAD Parts

2.4.1   Purchase of BRAD Parts

In consideration of BRAD's obligation under Annex A Article 
2.3.1, during the term stated in Annex A Article 2.1., Buyer 
agrees to purchase BRAD Parts only from BRAD or from airlines 
operating the same type aircraft purchased herein.  Buyer may 
however purchase BRAD Parts from any source whatsoever, redesign 
BRAD Parts, or have them redesigned, manufacture BRAD Parts, or 
have them manufactured, under the following conditions:

a)      When less than ten (10) aircraft of the type purchased 
hereunder are operated in scheduled commercial air transport 
service; 

b)      Any time BRAD Parts are needed to effect emergency repairs on 
the Aircraft, provided that such purchase, redesign or 
manufacture by or from sources other than BRAD allows Buyer to 
obtain BRAD Parts in less time than BRAD requires to furnish 
them; or

c)      If Buyer has notified BRAD in writing that any BRAD Parts are 
defective or unsatisfactory in use and if within a reasonable 
period thereafter BRAD has not provided a satisfactory 
resolution or made redesigned BRAD Parts available.

d)      The BRAD Part or Parts listed in the Spare Parts Price Catalog 
with a unit price of $100.00 or less can be made by Buyer for 
a cost of less then $100.00 as provided in this paragraph.  
BRAD grants Buyer the right to fabricate certain BRAD Parts as 
follows: (i) parts for which BRAD or one of its affiliates 
provides written authorization to Buyer to make, or (ii) 
normally simple cut-to-size parts fabricated with simple hand 
tools.  Such fabrication is authorized for Buyer's use only 
and any parts manufactured under authorization are not for 
resale.

2.4.2   Purchase of BRAD Parts from Other Approved Sources

Buyer may obtain BRAD Parts from any source provided that such 
source is approved by BRAD and provided that such BRAD Parts are 
for Buyer's use only.

2.4.3   Buyer's Right to Purchase, Redesign or Manufacture

Buyer's right to purchase, redesign or to have redesigned or 
manufacture or to have manufactured BRAD Parts under the 
preceding Article shall not be construed as a granting of a 
license by BRAD and shall not obligate BRAD to disclose to anyone 
Technical Data or other information nor to the payment of any 
license fee or royalty or create any obligation whatsoever to 
BRAD and BRAD shall be relieved of any obligation or liability 
with respect to patent infringement in connection with any such 
redesigned part.  Buyer shall be responsible for obtaining all 
regulatory authority approvals required by Buyer to repair the 
Aircraft using redesigned or manufactured BRAD Parts as described 
in the preceding Article.  Any such redesigned part shall be 
identified with Buyer's part number only.

2.4.4   Notice to BRAD of Redesigned Parts

If Buyer redesigns or has had any BRAD Parts redesigned, Buyer 
shall immediately thereafter advise BRAD and make available to 
BRAD and its affiliates any such redesigned part or manufacturing 
process therefor or drawings thereof.  If BRAD requests, Buyer 
shall negotiate with BRAD, within sixty (60) calendar days after 
such redesigned part or manufacturing process therefor or 
drawings thereof are made available to BRAD, for the granting to 
BRAD of exclusive (except for Buyer) manufacturing rights of the 
redesigned part.

2.5     Purchase of Vendor Parts & Power Plant Parts

BRAD shall not be obligated to maintain a stock of Vendor Parts or 
Power Plant Parts.  BRAD may elect to maintain a spares stock of 
selected Vendor Parts at its own discretion to support provisioning 
and replenishment sales.  BRAD agrees to use reasonable efforts to 
require its vendors to comply with the terms and conditions of this 
Annex A Article 2 as they apply to Vendor Parts.  Vendor Parts shall 
be delivered in accordance with the vendor's quoted lead time plus 
BRAD's internal processing time.

2.6     Spare Parts Pricing

2.6.1   Spare Parts Price Catalogue

Prices for commonly used BRAD Parts stocked by BRAD shall be 
published in the spare parts price catalogue ("Spare Parts Price 
Catalogue").  BRAD shall hold the published prices firm for 
catalogue stock class items for a period of twelve (12) months 
and shall provide at least ninety (90) calendar days notice prior 
to changing the published price.

2.6.2   BRAD prices for Vendor Parts

If Buyer orders Vendor Parts from BRAD, the price shall be as 
published in the Spare Parts Catalogue.

2.6.3   Quotations

Price and delivery quotations for items not included in the Spare 
Parts Price Catalogue shall be provided at Buyer's request by 
BRAD.  Price quotations will be held firm for a period of ninety 
(90) calendar days or as otherwise specified by BRAD.  Responses 
to quotation requests will be provided within ten (10) calendar 
days.

2.6.4   Price Applicability

The purchase price of BRAD Parts shall be the applicable price 
set forth in the Spare Parts Price Catalogue at time of receipt 
by BRAD of Buyer's Order or as quoted by BRAD to Buyer upon 
request.  If Buyer requests accelerated delivery or special 
handling for BRAD Parts not included in the Spare Parts Price 
Catalogue, BRAD may increase the price from the original 
quotation to cover any additional costs to BRAD.

2.6.5   Currency and Taxes

All Spare Parts Price Catalogue and quotation prices shall be in 
U.S. dollars and exclusive of transportation, taxes, duties and 
licenses.

Buyer shall pay to BRAD upon demand the amount of any sales, use, 
value-added, excise or similar taxes imposed by any federal, 
provincial or local taxing authority within Canada, and the 
amount of all taxes imposed by any taxing authority outside 
Canada, required to be paid by BRAD as a result of any sale, use, 
delivery, storage or transfer of any Spare Parts.  If BRAD has 
reason to believe that any such tax is applicable, BRAD shall 
separately state the amount of such tax in its invoice.  If a 
claim is made against BRAD for any such tax, BRAD shall promptly 
notify Buyer.

The parties hereto agree, subject to applicable laws, to work 
together to minimize the imposition of taxes and fees herein.  In 
addition, Buyer shall pay to BRAD on demand the amount of any 
customs duties required to be paid by BRAD with respect to the 
importation by Buyer of any Spare Parts.

2.6.6   Vendor Pricing

BRAD shall use reasonable efforts to require its major vendors to 
maintain any published price for their parts for a period of at 
least twelve (12) months with a ninety (90) calendar day notice 
period prior to changing a published price.

2.7     Provisioning

2.7.1   Pre-provisioning/Provisioning Conference

Pre-provisioning and provisioning conferences shall be convened 
on dates to be mutually agreed between Buyer and BRAD in order 
to:

(i)     discuss the operational parameters to be provided by Buyer 
to BRAD which BRAD considers necessary for preparing its 
quantity recommendations for initial provisioning of Spare 
Parts to be purchased from BRAD or vendors ("Provisioning 
Items");

(ii)    review Buyer's ground support equipment and special tool 
requirements for the Aircraft;

(iii)   discuss the format of the provisioning documentation to 
be provided to Buyer from BRAD for the selection of 
Provisioning Items; and

(iv)    arrive at a schedule of events for the initial provisioning 
process, including the establishment of a date for the 
initial provisioning conference ("Initial Provisioning 
Conference") which shall be scheduled where possible at 
least twelve (12) months prior to delivery of the first 
Aircraft.

The time and location of the pre-provisioning conference shall be 
mutually agreed upon between the parties; however, BRAD and Buyer 
shall use their best efforts to convene such meeting within 
thirty (30) days after execution of the Agreement.

2.8     Initial Provisioning Documentation

Initial provisioning documentation for BRAD Parts and Vendor Parts 
shall be provided by BRAD as follows:

a)      BRAD shall provide, as applicable to Buyer, no later than 
eighteen (18) months prior to the Scheduled Delivery Date of the 
first Aircraft, or as may be mutually agreed, the initial issue 
of provisioning files as required by ATA Specification 2000, 
Chapter 1 (as may be amended by BRAD);

Revisions to this provisioning data shall be issued by BRAD every 
ninety (90) calendar days until ninety (90) calendar days 
following the Delivery Date of the last Aircraft or as may be 
mutually agreed;

b)      BRAD shall provide, as required by Buyer, all data files defined 
in Chapter 1 of ATA Specification 2000; and

c)      the Illustrated Parts Catalogue designed to support provisioning 
shall be issued concurrently with provisioning data files and 
revised at ninety (90) calendar day intervals.

2.8.1   Obligation to Substitute Obsolete Spare Parts

In the event that, prior to delivery of the first Aircraft, any 
Spare Part purchased by Buyer from BRAD is rendered obsolete or 
unusable due to the redesign of the Aircraft or of any accessory, 
equipment or part thereto (other than a redesign at Buyer's 
request), BRAD shall deliver to Buyer new and usable Spare Parts 
in substitution for such obsolete or unusable Spare Parts upon 
return of such Spare Parts to BRAD by Buyer.  BRAD shall credit 
Buyer's account with BRAD with the price paid by Buyer for any 
such obsolete or unusable Spare Part and shall invoice Buyer for 
the purchase price of any such substitute Spare Part delivered to 
Buyer.

2.8.2   Delivery of Obsolete Spare Parts and Substitutes 

Obsolete or unusable Spare Parts returned by Buyer pursuant to 
Annex A Article 2.8.1. shall be delivered to BRAD at its plant in 
Ontario or Quebec, or such other destination as BRAD may 
reasonably designate.  Spare Parts substituted for such returned 
obsolete or unusable Spare Parts shall be delivered to Buyer from 
BRAD's plant in  Ontario or Quebec, or such other BRAD shipping 
point as BRAD may reasonably designate.  BRAD shall pay the 
freight charges for the shipment from Buyer to BRAD of any such 
obsolete or unusable Spare Part and for the shipment from BRAD to 
Buyer of any such substitute Spare Part.

2.8.3   Obligation to Repurchase Surplus Provisioning Items

During a period commencing one (1) year after the Delivery Date 
of the first Aircraft, and ending five (5) years after such 
Delivery Date, BRAD shall, upon receipt of Buyer's written 
request and subject to the exceptions in Annex A Article 2.8.4, 
repurchase unused and undamaged Provisioning Items which: (i) 
were recommended by BRAD as initial provisioning for the 
Aircraft, (ii) were purchased by Buyer from BRAD, and (iii) are 
surplus to Buyer's needs.

2.8.4   Exceptions

BRAD shall not be obligated under Annex A Article 2.8.3 to 
repurchase any of the following:  (i) quantities of Provisioning 
Items in excess of those quantities recommended by BRAD in its 
Recommended Spare Parts List ("RSPL")  for the Aircraft, (ii) 
Power Plant Parts, QEC Kits, standard hardware, bulk and raw 
materials, ground support equipment and special tools, (iii) 
Provisioning Items which have become obsolete or have been 
replaced by other Provisioning Items as a result of (a) Buyer's 
modification of the Aircraft or (b) design improvement by the 
Aircraft manufacturer or the vendor (other than Provisioning 
Items which have become obsolete because of a defect in design if 
such defect has not been remedied by an offer by BRAD or the 
vendor to provide no charge retrofit kits or replacement parts 
which correct such defect), and (iv) Provisioning Items which 
become surplus as a result of a change in Buyer's operating 
parameters provided to BRAD pursuant to Annex A Article 2.7, 
which were the basis of BRAD's initial provisioning 
recommendations for the Aircraft.

2.8.5   Notification and Format

Buyer shall notify BRAD, in writing, when Buyer desires to return 
Provisioning Items which Buyer's review indicates are eligible 
for repurchase by BRAD under the provisions of  Annex A Article 
2.8.3.  Buyer's notification shall include a detailed summary, in 
part number sequence, of the Provisioning Items Buyer desires to 
return.  Such summary shall be in the form of listings as may be 
mutually agreed between BRAD and Buyer, and shall include part 
number, nomenclature, purchase order number, purchase order date 
and quantity to be returned.

Within five (5) business days after receipt of Buyer's 
notification BRAD shall advise Buyer, in writing, when BRAD's 
review of such summary from Buyer will be completed.

2.8.6   Review and Acceptance by BRAD

Upon completion of BRAD's review of any detailed summary 
submitted by Buyer pursuant to Annex A Article 2.8.5., BRAD shall 
issue to Buyer a Material Return Authorization notice ("MRA") for 
those Provisioning Items BRAD agrees are eligible for repurchase 
in accordance with Annex A Article 2.8.3.  BRAD will advise Buyer 
of the reason specified in Article 2.8.4 that any Provisioning 
Item included in Buyer's detailed summary is not eligible for 
return.  The MRA notice shall state the date by which 
Provisioning Items listed in the MRA notice must be redelivered 
to BRAD and Buyer shall arrange for shipment of such Provisioning 
Items accordingly.

2.8.7   Price and Payment

The price of each Provisioning Item repurchased by BRAD pursuant 
to Annex A Article 2.8.6[CONFIDENTIAL TREATMENT REQUESTED]   BRAD 
shall pay the repurchase price [CONFIDENTIAL TREATMENT REQUESTED] 

2.8.8   Return of Surplus Provisioning Items

Provisioning Items repurchased by BRAD pursuant to Annex A 
Article 2.8.6 shall be delivered to BRAD Free Carrier 
(Incoterms), at its plant in Ontario or Quebec, or other such 
destination as BRAD may reasonably designate.

2.8.9   Obsolete Spare Parts and Surplus Provisioning Items - Title 
and Risk of Loss

Title to and risk of loss of any obsolete or unusable Spare Parts 
returned to BRAD pursuant to Annex A Article 2.8.8 shall pass to 
BRAD upon delivery thereof to BRAD.  Title to and risk of loss of 
any Spare Parts substituted for an obsolete or unusable Spare 
Part pursuant to Annex A Article 2.8.1 shall pass to Buyer upon 
delivery thereof to Buyer.  Title to and risk of loss of any 
Provisioning Items repurchased by BRAD pursuant to Annex A 
Article 2.8.3 shall pass to BRAD upon delivery thereof to BRAD.

With respect to the obsolete or unusable Spare Parts which may be 
returned to BRAD and the Spare Parts substituted therefor, 
pursuant to Annex A Article 2.8.1, and the Provisioning Items 
which may be repurchased by BRAD, pursuant to Annex A Article 
2.8.3, the party which has the risk of loss of any such Spare 
Part or Provisioning Item shall have the responsibility of 
providing any insurance coverage thereon desired by such party.

2.9     Procedure for Ordering Spare Parts

Orders for Spare Parts may be placed by Buyer to BRAD by any method of 
order placement (including but not limited to SITA, ARINC, telecopier, 
letter, telex, facsimile, telephone or hard copy purchase order).

2.9.1   Requirements

Orders shall include at a minimum order number, part number, 
nomenclature, quantity, delivery schedule requested, shipping 
instructions and BRAD's price, if available.  Buyer agrees that 
orders placed with BRAD shall conform to the requirements and 
procedures contained in ATA Specification 2000, as applicable to 
Buyer.

2.9.2   Processing of Orders

Upon acceptance of any Order, unless otherwise directed by Buyer, 
BRAD shall, if the Spare Parts are in stock, proceed immediately 
to prepare the Spare Parts for shipment to Buyer.  If BRAD does 
not have the Spare Parts in stock, BRAD shall proceed immediately 
to acquire or manufacture the Spare Parts.  Purchase order status 
and actions related to the shipment of Spare Parts shall be 
generally consistent with the provisions of the World Airline 
Suppliers Guide and the applicable portions of ATA Specification 
2000, as applicable to Buyer.

2.9.3   Changes

BRAD reserves the right, without Buyer's consent, to make any 
necessary corrections or changes in the design, part number and 
nomenclature of Spare Parts covered by an Order, to substitute 
Spare Parts and to adjust prices accordingly, provided that 
interchangeability is not affected and [CONFIDENTIAL TREATMENT 
REQUESTED] BRAD shall promptly give Buyer written notice of 
corrections, changes, substitutions and consequent price 
adjustments.  Corrections, changes, substitutions and price 
adjustments which affect interchangeability or exceed the price 
limitations set forth above may be made only with Buyer's 
consent, which consent shall conclusively be deemed to have been 
given unless Buyer gives BRAD written notice of objection within 
fifteen (15) business days after receipt of BRAD's notice.  In 
case of any objection, the affected Spare Part will be deemed to 
be deleted from Buyer's Order.

2.9.4   Electronic Data Interchange

2.9.4.1 Use of Electronic Data Interchange (EDI)

The SPEC 2000 Protocol shall be used for any EDI 
transaction.  Buyer and BRAD shall implement security 
procedures to ensure proper use of this communication.  A 
message will be considered received only at the point 
where it is in a format which can be accepted by the 
receiving computer according to ATA SPEC 2000 rules on 
transmissions.  If garbled transmissions are received, the 
receiver shall promptly notify the sender through use of 
the S1REJECT command.

2.9.4.2 Acceptance of EDI Transactions

The SIBOOKED transaction creates an obligation on the part 
of Buyer to purchase the material and quantities as 
specified in the transmission.  BRAD is obliged to sell 
the material and quantities as specified except as may be 
identified in a subsequent SIORDEXC message.  With respect 
to a S1QUOTES transaction, Buyer and BRAD are bound to 
respect the prices quoted in the transmission in any 
resultant S1BOOKED order transaction based upon that 
S1QUOTES message within the validity period of the 
S1QUOTES message. An S1NVOICE message will be considered 
as the official commercial invoice for the goods shipped. 
An S1STOCKS, S1SHIPPD, S1POSTAT or S1PNSTAT message 
creates no obligations on either the Buyer or BRAD.  If an 
S1BOOKED acknowledgment is not sent within 24 hours by 
BRAD then Buyer shall resend the original message.

Any document which has been properly received shall not 
give rise to any obligation unless and until the party 
receiving such document has properly transmitted in return 
an acknowledgment document according to SPEC 2000 
Protocol.

2.9.4.3 Systems Operations

Buyer and BRAD, at their own expense, shall provide and 
maintain the equipment, software, services and testing 
necessary to effectively and reliably transmit and receive 
documents.

2.9.4.4 Validity of Documents

Annex A Article 2.9.4 has been agreed to by Buyer and BRAD 
to evidence their mutual intent to create binding purchase 
and sale obligations pursuant to the electronic 
transmission and receipt of documents as described herein.

Such documents properly transmitted pursuant to this Annex 
A Article 2.9.4 shall be considered, in connection with 
any transaction or any other agreement, to be a "writing" 
or "in writing" and shall be deemed for all purposes (a) 
to have been "signed" and (b) to constitute an "original" 
when printed from electronic files or records established 
and maintained in the normal course of business.

Buyer and BRAD agree not to contest the validity or 
enforceability of signed documents under the provisions of 
any applicable law relating to whether certain agreements 
are to be in writing or signed by either party to be bound 
thereby.  Signed documents, if introduced as evidence on 
paper in any judicial, arbitration, mediation or 
administrative proceedings, will be admissible as between 
Buyer and BRAD to the same extent and under the same 
conditions as other business records originated and 
maintained in documentary form.  Neither Buyer nor BRAD 
shall contest the admissibility of copies of signed 
documents under either the business records exception to 
the hearsay rule or the best evidence rule on the basis 
that the signed documents were not originated or 
maintained in documentary form.

2.9.4.5 Limitation of Liability

NEITHER BUYER NOR BRAD SHALL BE LIABLE TO THE OTHER FOR 
ANY INDIRECT, SPECIAL, INCIDENTAL, EXEMPLARY, PUNITIVE OR 
CONSEQUENTIAL DAMAGES ARISING FROM OR AS A RESULT OF ANY 
DELAY, OMISSION OR ERROR IN THE ELECTRONIC TRANSMISSION OR 
RECEIPT OF ANY DOCUMENTS PURSUANT TO THIS ANNEX A ARTICLE 
2.9.4, EVEN IF EITHER PARTY HAS BEEN ADVISED OF THE 
POSSIBILITY OF SUCH DAMAGES.  

2.10    Packing

All Spare Parts ordered shall receive standard commercial packing 
suitable for export shipment via air freight.  Such standard packing 
will generally be to ATA 300 standards as amended from time to time.  
All AOG orders will be handled, processed, packed and shipped 
separately.

2.11    Packing List

BRAD shall insert in each shipment a packing list/release note 
itemized to show:

(i)     the contents of the shipment,
(ii)    the approved signature of BRAD's TC authority attesting to the 
airworthiness of the Spare Parts.
(iii)   value of the shipment for customs clearance if required. 

2.12    Container Marks

Upon Buyer's request each container shall be marked with shipping 
marks as specified on the Order.  In addition BRAD shall, upon 
request, include in the markings:  gross weight and cubic 
measurements.

2.13    Delivery, Title and Risk of Loss

2.13.1  Delivery Point

Spare Parts shall be delivered to Buyer in one of the following 
manners at BRAD's sole option:

(i)     Free Carrier (Incoterms 1990) BRAD's plant in either  
Ontario or Quebec, Canada; or
(ii)    Free Carrier (Incoterms 1990) other BRAD depots or 
shipping points; or
(iii)   Free Carrier (Incoterms 1990) vendor's or subcontractor's 
plant.

2.13.2 Delivery Time

BRAD shall use reasonable efforts so that shipment of BRAD Parts 
to Buyer be as follows:

a)      AOG Orders

Ship AOG Orders within four (4) hours of receipt of Order.  
Buyer's affected Aircraft factory production number shall be 
required on AOG Orders;

b)      Critical Orders (A1)

Ship critical Orders within twenty-four (24) hours of order 
receipt;

c)      Expedite Orders (A2)

Ship expedite Orders within seven (7) calendar days of order 
receipt;

d)      Initial Provisioning Orders

Prior to the Delivery Date of the first Aircraft or as may 
be mutually agreed; and

e)      Other Orders

Shipment of stock items shall be approximately thirty (30) 
calendar days after BRAD's receipt of Buyer's Order.   
Shipment of non-stock items shall be in accordance with 
quoted lead times or lead times published in the current 
Spare Parts Price Catalogue, procurement data, or 
provisioning data.

2.14    Collect Shipments

Where collect shipments are not deemed practicable by BRAD, charges 
for shipment, insurance, prepaid freight charges and all other costs 
paid by BRAD shall be paid by Buyer promptly upon presentation to 
Buyer of invoices covering the same.

2.15    Freight Forwarder

If Buyer elects to use the services of a freight forwarder for the 
onward movement of Spare Parts, Buyer agrees to release BRAD from and 
indemnify it for any liability for any fines or seizures of Spare 
Parts imposed under any governmental Goods in Transit regulations.  
Any such fines levied against BRAD will be invoiced to Buyer and any 
Spare Parts seized under such regulations will be deemed to be 
received, inspected, and accepted by Buyer at the time of seizure.

2.16    Reimbursement of Expenses

If BRAD gives Buyer written notice that an Order is ready for shipment 
and shipment is delayed more than thirty (30) days at Buyer's request 
or without BRAD's fault or responsibility, Buyer shall promptly 
reimburse BRAD upon demand for all costs and expenses, including but 
not limited to reasonable amounts for storage, handling, insurance and 
taxes, incurred by BRAD as a result of such delay.

2.17    Title and Risk of Loss

Property and title to the Spare Parts will pass to Buyer upon payment 
for the Spare Parts in full.  Until payment in full for Spare Parts, 
(a) title to them will not pass to Buyer, and (b) BRAD maintains a 
purchase money security interest in them.  Risk of loss of the Spare 
Parts will pass to the Buyer upon delivery by BRAD.  With respect to 
Spare Parts rejected by Buyer pursuant to Annex A Article 2.19, risk 
of loss shall remain with Buyer until such Spare Parts are re-
delivered to BRAD .

BRAD agrees to notify Buyer when material is shipped and shall provide 
carrier's reference information (i.e., waybill number).

2.18    Inspection and Acceptance

All Spare Parts shall be subject to  inspection by Buyer at 
destination. Use of Spare Parts or failure of Buyer to give notice of 
rejection within thirty (30) days after receipt shall constitute 
acceptance.  Acceptance shall be final and Buyer waives the right to 
revoke acceptance for any reason, whether or not known to Buyer at the 
time of acceptance.  Buyer's remedies for defects discovered before 
acceptance are exclusively provided for in Annex A Article 2.19 
herein.

2.19    Rejection

Any notice of rejection referred to in Annex A Article 2.18 shall 
specify the reasons for rejection.  If BRAD concurs with a rejection, 
BRAD shall, at its option, correct, repair or replace the rejected 
Spare Parts.  Buyer shall, upon receipt of BRAD's written instructions 
and Material Return Authorication ("MRA") number, return the rejected 
Spare Parts to BRAD at its specified plant, or other destination as 
may be mutually agreeable.  The return of the rejected Spare Parts to 
BRAD and the return or delivery of a corrected or repaired rejected 
Spare Part or any replacement for any such Spare Part to Buyer shall 
be at BRAD's expense.  Any corrected, repaired or replacement Spare 
Parts shall be subject to the provisions of this Agreement.

2.20    Payment

Except as provided in Annex A Article 2.22 below, payment terms shall 
be [CONFIDENTIAL TREATMENT REQUESTED] calendar days of invoice date 
for established open accounts.  Any overdue amount shall bear interest 
from the due date until actual payment is received by BRAD at an 
annual rate of interest equal to the U.S. prime interest rate as 
established from time to time by the National Bank of Canada, plus two 
percent (2%) calculated and compounded monthly.

2.21    Payment for Provisioning Items

Payment for Provisioning Items shall be made by Buyer as follows:

a)      a deposit of [CONFIDENTIAL TREATMENT REQUESTED] of the total 
price of the Provisioning Items as selected by Buyer, upon 
signature of the spares provisioning document; and

b)      the balance of the total price of Provisioning Items upon their 
delivery.

2.22    Modified Terms of Payment

BRAD reserves the right to alter the terms of payment:

(i)     at any time by giving Buyer thirty (30) days' prior written 
notice of the new terms, and

(ii)    without prior notice if Buyer fails to pay when due an amount 
Buyer owes under any agreement with BRAD.

2.23    Regulations

Buyer shall comply with all applicable monetary and exchange control 
regulations and shall obtain any necessary authority from the 
governmental agencies administering such regulations to enable Buyer 
to make payments at the time and place and in the manner specified 
herein.

2.24    Warranty

ANNEX B HERETO EXCLUSIVELY SETS FORTH BRAD'S WARRANTY OBLIGATIONS WITH 
RESPECT TO SPARE PARTS.  EXCEPT AS EXPRESSLY SET OUT IN ANNEX B, THERE 
ARE NO UNDERSTANDINGS, REPRESENTATIONS, CONDITIONS OR WARRANTIES, 
EXPRESS OR IMPLIED, BETWEEN THE PARTIES WITH RESPECT TO ANY DEFECT IN 
THE SPARE PARTS OR ANY OTHER THING DELIVERED UNDER THIS AGREEMENT.

2.25    Cancellation of Orders

Except as otherwise may apply to initial provisioning, if Buyer 
cancels an Order, BRAD, at its option, shall be entitled to recover 
its costs as specified below:

a)      if work accomplished on the Order has been limited to BRAD Spares 
Department, or the part has been identified as "shelf stock" in 
the Spare Parts Price Catalogue, no cancellation charges shall be 
made;

b)      if production planning has been completed on the Order and shop 
orders have been written, but no shop time or material charges 
have been made against the Order, the cancellation charge shall 
be 10% of the price but not to exceed $100 per unit;

c)      if shop time or material charges have been made against the 
Order, the cancellation charge shall be based on the cost of such 
time and materials, plus overhead; and

d)      if the Spare Parts covered by the Order can be absorbed into 
BRAD's inventory without increasing  BRAD's normal maximum stock 
level, no cancellation charges shall be made.

2.26    Lease

BRAD shall select and make available certain parts for lease, subject 
to availability.  Buyer has the option to negotiate a lease agreement 
with BRAD separate from this Agreement.

2.27    Additional Terms and Conditions

BRAD's conditions of sale are deemed to incorporate the terms and 
conditions stated herein.  Additional terms and conditions applicable 
at time of receipt of each order from Buyer may be added providing 
such terms and conditions do not conflict with the terms and 
conditions provided herein.  Such additional terms and conditions 
shall be provided to Buyer at least ninety (90) calendar days prior to 
their effective date.

ARTICLE 3 - TRAINING

3.1     General Terms

3.1.1   The objective of the training programs (the "Programs"), as 
described herein, shall be to familiarize and assist Buyer's 
personnel in the introduction, operation, and maintenance of the 
Aircraft.

BRAD shall offer to the Buyer the Programs in the English 
language at a BRAD designated facility; the Programs shall be 
completed prior to the Delivery Date of the last Aircraft 
purchased herein.

3.1.2   Buyer shall be responsible for all travel and living 
expenses, including local transportation, of Buyer's personnel 
incurred in connection with the Programs.

3.1.3   The Programs shall be designed to reflect the model and/or 
configuration of the Aircraft and may include differences 
training to identify such configuration or model.  Manuals which 
are provided during the Programs exclude revision service.

3.1.4   A training conference shall be held where possible no later 
than twelve (12) months prior to the Scheduled Delivery Date of 
the first Aircraft to the Buyer, or as may be otherwise agreed, 
to establish the Programs' content and schedule.

3.2     Flight Crew Training

Intentionally deleted.

3.3     Maintenance Training

Intentionally deleted.

3.4     Insurance

Intentionally deleted.

ARTICLE 4 - TECHNICAL DATA

4.1     Technical Data Provided

BRAD shall furnish to Buyer the Technical Data described in Attachment 
A hereto (the "Technical Data").  The Technical Data shall be in the 
English language and shall provide information on items manufactured 
according to BRAD's detailed design and in those units of measures 
used in the Specification or as may otherwise be required to reflect 
Aircraft instrumentation as may be mutually agreed.

4.2     Shipment

All Technical Data provided hereunder shall be delivered to Buyer Free 
Carrier (Incoterms) BRAD's designated facilities and at the time 
indicated in Attachment A.

4.3     Proprietary Technical Data

It is understood and Buyer acknowledges that the Technical Data 
provided herein is proprietary to BRAD and all rights to copyright 
belong to BRAD and the Technical Data shall be kept confidential by 
Buyer.  Buyer agrees to use the Technical Data solely to maintain, 
operate, overhaul or repair the Aircraft or to make installation or 
alteration thereto allowed by BRAD. In addition, Buyer may transfer 
the Technical Data to any party in connection with the sale or lease 
of an Aircraft from Buyer provided Buyer obtains a confidentiality 
agreement with such purchaser or lessee in favor of and acceptable to 
BRAD.

Technical Data shall not be disclosed to third parties or used by 
Buyer or furnished by Buyer for the design or manufacture of any 
aircraft or Spare Parts  including BRAD Parts or items of equipment, 
except when manufacture or redesign is permitted under the provisions 
of Annex A Article 2.4 hereof and then only to the extent and for the 
purposes expressly permitted therein, and provided further the 
recipient shall provide a non-disclosure undertaking acceptable to 
BRAD.

ARTICLE 5 - HOLD HARMLESS

5.1     BUYER SHALL INDEMNIFY AND HOLD HARMLESS BRAD, ITS SUBSIDIARIES, 
AFFILIATES, SUBCONTRACTORS AND THE EMPLOYEES, DIRECTORS, OFFICERS 
AND AGENTS OF EACH OF THEM (COLLECTIVELY "BRAD") FROM AND AGAINST 
ALL LIABILITIES, CLAIMS, DAMAGES, LOSSES, COSTS AND EXPENSES FOR 
ALL DAMAGES TO OR LOSS OF PROPERTY INCLUDING ANY AIRCRAFT, AND 
LOSS OF USE THEREOF OR INJURIES TO OR DEATH OF ANY AND ALL 
PERSONS (INCLUDING CUSTOMER'S DIRECTORS, OFFICERS, AGENTS AND 
EMPLOYEES BUT EXCLUDING BRAD's DIRECTORS, OFFICERS, AGENTS AND 
EMPLOYEES) ARISING DIRECTLY OR INDIRECTLY OUT OF OR IN CONNECTION 
WITH ANY SERVICE PROVIDED UNDER ANNEX A WHETHER OR NOT CAUSED BY 
THE NEGLIGENCE OF BRAD.

5.2     THE FOREGOING INDEMNITY AND HOLD HARMLESS SHALL NOT BE APPLICABLE 
IN THE EVENT OF LOSSES, DAMAGES OR CLAIMS RESULTING FROM THE 
WILLFUL MISCONDUCT OR GROSS NEGLIGENCE OF BRAD OR OF THOSE FOR 
WHOM IT IS IN LAW RESPONSIBLE, OR IN THE EVENT OF LOSSES, DAMAGES 
OR CLAIMS ARISING OUT OF AN ACCIDENT CAUSED BY A DEFECT IN THE 
DESIGN, MANUFACTURING, REPAIR OR MAINTENANCE ACTIVITIES OF BRAD 
(OR ITS AFFILIATES) AND THE RELATED LIABILITY (PRODUCT OR 
OTHERWISE) ARISING THEREFROM.

ATTACHMENT A
TECHNICAL DATA

1.      With the delivery of the Aircraft, BRAD will provide to Buyer at no 
additional charge [CONFIDENTIAL TREATMENT REQUESTED] of the following 
technical manuals and documents, prepared generally in accordance with 
Specification ATA 100 Revision 26, as applicable, and [CONFIDENTIAL 
TREATMENT REQUESTED] of the documents referred to in line items (e) 
and (f) below.  With each additional Aircraft BRAD will also provide 
at no additional charge [CONFIDENTIAL TREATMENT REQUESTED] of the 
documents referred to in line items (a), (b), (c) and (d) below.

1.1     (a)     Airplane Flight Manual
(b)     Quick Reference Handbook
(c)     Supplementary Operating Data
(d)     Weight and Balance Manual
(e)     Maintenance Program
(f)     Maintenance Task Cards
(g)     Maintenance Planning Manual
(h)     Maintenance Manual
(i)     Maintenance Manual-Customized Chapters (S300 only)
(j)     Engine Rigging Manual (S300 only)
(k)     Ramp Servicing Manual
(l)     Tools and Equipment Manual
(m)     Wiring Diagrams Manual
(n)     Wiring Manual-Customized Chapters (S300 only)
(o)     Structural Repair Manual
(p)     Illustrated Parts Manual
(q)     Component Maintenance Manual
(r)     Non-Destructive Testing Manual
(s)     Cargo Loading Manual
(t)     Power Plant Build-up Manual
(u)     Dash 8 Modifications Manual
(v)     Crash-Fire-Rescue Information
(w)     Master Minimum Equipment List and Minimum Equipment
List and Procedures Manual
(x)     Corrosion Prevention and Control Manual
(y)     Service Bulletins
(z)     Service Letters

1.2.    BRAD will provide Buyer with revision service for [CONFIDENTIAL 
TREATMENT REQUESTED] following the the Delivery Date of Buyer's last 
Aircraft.  Subsequent revision service shall be provided dependent 
upon incorporation of BRAD issued Service Bulletins.  

Revisions to the Technical Data to reflect the Aircraft at Delivery 
Date shall be provided to Buyer within [CONFIDENTIAL TREATMENT 
REQUESTED] following the Delivery Date of each of the Aircraft, 
respectively.  

Provided the revision service is being supplied under the terms of 
this Agreement or by subsequent purchase order, BRAD shall incorporate 
in the applicable documents all applicable BRAD originated Service 
Bulletins in a regular revision following formal notification by Buyer 
that such Service Bulletins shall be accomplished on the Buyer's 
Aircraft.  The manuals shall then contain both original and revised 
configuration until Buyer advises BRAD in writing that one 
configuration is no longer required.

2.      BRAD will provide to Buyer at no additional charge, [CONFIDENTIAL 
TREATMENT REQUESTED] of the following vendor manuals:

(a)     Engine Maintenance Manual
(b)     Engine Illustrated Parts Catalog
(c)     Propeller Maintenance Manual (with Maintenance level Illustrated 
Parts Breakdown)

These all will be shipped by the vendors directly to Buyer.

3.      All manuals, revisions or amendments will be in the English language.

ANNEX B - WARRANTY AND SERVICE LIFE POLICY

ARTICLE 1 - WARRANTY

The following warranty is that to which reference is made in Article 3 of 
the Agreement.

1.1     Warranty

1.1.1   Subject to Annex B Articles 1.9, 1.10, and 2.0, BRAD 
warrants that, at the date of delivery of the Aircraft or BRAD 
Part, as applicable :

a)      the Aircraft shall conform to the Specification, except that 
any matter stated in the Specification as type 
characteristics, estimates or approximations is excluded 
from this Warranty;

b)      the Aircraft shall be free from defects caused by the 
failure of BRAD to install a Vendor Part or Powerplant Part 
in accordance with reasonable instructions of the vendor;

c)      the BRAD Parts shall be free from defects in material or 
workmanship; and

d.)     the BRAD Parts shall be free from defects in design, having 
regard to the state of the art as of the date of such 
design.

1.1.2   The Warranty set forth in Annex B Article 1.1.1 (c) and (d) 
above shall also be applicable to BRAD Parts purchased as Spare 
Parts.

1.1.3   BRAD further warrants that, at the time of delivery, the 
Technical Data shall be free from error.

1.2     Warranty Period

1.2.1   The Warranty set forth in Annex B Article 1.1 shall remain 
in effect for any defect covered by the Warranty (a "Defect") 
becoming apparent during the following periods (individually, the 
"Warranty Period"):

a)      for failure to conform to the Specification and in the 
installation referred to in Annex B Article 1.1.1 (a) and 
1.1.1 (b), thirty-six (36) months from the Delivery Date;

b)      for those Defects in material or workmanship in BRAD Parts 
referred to in Annex B Article 1.1.1 (c) and 1.1.2, thirty-
six (36) months from the date of delivery of such parts;

c)      for those Defects in design referred to in Annex B Article 
1.1.1 (d), thirty-six (36) months from the date of delivery 
of such parts; and

d)      for errors in the Technical Data referred to in Annex B 
Article 1.1.3, twelve (12) months from the date of delivery 
of the applicable Technical Data.

1.3     Repair, Replacement or Rework

As to each matter covered by this Warranty BRAD's sole obligation and 
liability under this Warranty is expressly limited to, at BRAD's 
election, correction by the repair, replacement or rework of the 
defective part or item of Technical Data.  The repaired, replaced or 
reworked part or item of Technical Data which is the subject of the 
Warranty claim shall then be warranted under the same terms and 
conditions for the then unexpired portion of the Warranty Period.

In the case of a Defect relating to non-conformance with the 
Specification, BRAD shall correct that Defect in the equipment item or 
part in which the Defect appears, except that BRAD will not be 
obligated to correct any Defect which has no material adverse effect 
on the maintenance, use or operation of the Aircraft.

1.4     Claims Information

BRAD's obligations hereunder are subject to a Warranty claim to be 
submitted in writing to BRAD's warranty administrator, which claim 
shall include but not be limited to the following information:

a)      the identity of the part or item involved, including the  Part 
number, serial number if applicable nomenclature and the quantity 
claimed to be defective;

b)      the manufacturer's serial number of the Aircraft from which the 
part was removed;

c)      the date the claimed Defect became apparent to Buyer;

d)      the total flight hours (and cycles if applicable) accrued on the 
part at the time the claimed Defect became apparent to Buyer; and

e)      a description of the claimed Defect and the circumstances 
pertaining thereto.

1.5     BRAD's Approval

Within ten (10) working days following receipt of Buyer's Warranty 
claim for a Defect accompanied by Buyer's request for permission as 
applicable to correct a Defect, BRAD shall notify Buyer of its 
decision on the request.  Approval under this Article shall not 
constitute a determination as to the existence of a Defect as 
described in Annex B Article 1.1 above.

1.6     Timely Corrections

1.6.1   BRAD shall make the repair, replacement or rework, following 
receipt of the defective part or item, with reasonable care and 
dispatch.

1.6.2   In the event, BRAD does not respond or confirm receipt of a 
warranty claim from Buyer within ninety (90) days, said claim 
will be resolved in Buyer's favor subject to Buyer and BRAD 
agreeing on a non-receipt of a confirmation from BRAD within 
sixty (60) days from date of submittal of claim.

1.7     Labour Reimbursement

For correction of Defects BRAD shall establish a reasonable estimate 
for the labour hours required for the repair, replacement or rework of 
the defective BRAD Part and, if the repair, replacement or rework is 
performed by Buyer, BRAD shall reimburse Buyer for BRAD estimated 
hours or for Buyer's actual labour hours, whichever is less, for the 
repair, replacement or rework of the defective BRAD Part excluding any 
work necessary to gain access to said BRAD Part.  Such reimbursement 
shall be based upon Buyer's direct labour rate per manhour plus burden 
rate of fifty percent (50%), subject to annual review and adjustment 
of such labour rate as mutually agreed; provided, however, that this 
amount shall not exceed fifty percent (50%) of the BRAD published 
selling labour rate.

1.8     Approval, Audit, Transportation and Waiver

All Warranty claims shall be subject to audit and approval by BRAD.  
BRAD will use reasonable efforts to advise in writing the disposition 
of Buyer's Warranty claim within thirty (30) days following the 
receipt of the claim and (if requested) return of the defective BRAD 
Part to BRAD's designated facility.  BRAD shall notify Buyer of BRAD's 
disposition of each claim.  

Buyer shall pay all costs of transportation of the defective part from 
Buyer to BRAD and shall pay all costs of transportation of the 
repaired, corrected or replacement parts back to Buyer.

1.9     Limitations

1.9.1   BRAD shall be relieved of and shall have no obligation or 
liability under this Warranty if:

a)      the Aircraft was operated with any products or parts not 
specifically approved by BRAD, unless Buyer furnishes 
reasonable evidence that such products or parts were not a 
cause of the Defect; or

b)      the Aircraft was not operated or maintained in accordance 
with the Technical Data listed in Attachment A of Annex A 
and the manufacturer's documentation furnished to Buyer 
(including Service Bulletins and airworthiness directives) 
unless Buyer furnishes reasonable evidence that such 
operation or maintenance was not a cause of the Defect; or

c)      the Aircraft was not operated under normal airline use, 
unless Buyer furnishes reasonable evidence that such 
operation was not a cause of the Defect; or

d)      Buyer does not

1)      report the Defect in writing to BRAD's Warranty 
administrator within thirty (30) calendar days 
following such Defect becoming apparent, and

2)      retain the BRAD Part claimed to be defective until 
advised by BRAD to return such BRAD Part to BRAD's 
designated facility in order for BRAD to finalize its 
evaluation of the Warranty claim or to otherwise 
dispose of such BRAD Part; or

e)      Buyer does not submit reasonable proof to BRAD within thirty 
(30) calendar days after the Defect becomes apparent that 
the Defect is due to a matter covered within this Warranty; 
or

f)      Buyer does not allow BRAD reasonable opportunity to be 
present during the disassembly and inspection of the BRAD 
Part claimed to be defective.  It is acknowledged that Buyer 
will not delay returning an AOG Aircraft to service to await 
a BRAD representative.

1.9.2   The above warranties do not apply to Buyer Furnished 
Equipment.

1.10    Normal Usage

Normal wear and tear that does not render the part unserviceable and 
the need for regular maintenance and overhaul shall not constitute a 
Defect or failure under this Warranty.

1.11    Overhaul of Warranty Parts

BRAD's liability for a BRAD Part which has a Defect and is overhauled 
by Buyer within the Warranty Period shall be limited only to that 
portion of the labour and material replacement related to the Defect.

1.12    No Fault Found

In the event that a BRAD Part returned under a Warranty claim is 
subsequently established to be serviceable then BRAD shall be entitled 
to charge and recover from Buyer any reasonable costs incurred by BRAD 
in connection with such Warranty claim.  Providing, however, in the 
event that repetitive in-service failure occurs on the particular BRAD 
Part which is subsequently identified by BRAD on a repeated basis to 
be "no fault found," then BRAD and Buyer shall discuss and mutually 
agree a course of further action to help identify the problem.  In the 
event the fault is ultimately confirmed to be a legitimate Warranty 
claim then the above mentioned costs incurred by BRAD and charged to 
Buyer shall be waived.

ARTICLE 2 - VENDOR WARRANTIES

2.1     Warranties from Vendors

The Warranty provisions of this Annex B apply to BRAD Parts only.  
However, BRAD has made or shall make reasonable efforts to obtain 
favourable warranties from vendors, with respect to Vendor Parts and 
Power Plant Parts.  Except as specifically provided under this Annex B 
Article 2, BRAD shall have no liability or responsibility for any such 
Vendor Parts and Power Plant Parts and the warranties for those Vendor 
Parts and Power Plant Parts shall be the responsibility of the vendor 
and a matter as between Buyer and vendor.

2.2     Vendor Warranty Backstop

For those Vendor Parts installed on the Aircraft at the Delivery Date 
or subsequently purchased through BRAD, excluding the Powerplant or 
the Power Plant Parts, in the event the parties agree that a vendor is 
in default in the performance of any material obligation under any 
applicable warranty obtained by BRAD from such vendor pursuant to 
Annex B Article 2.1 above, the warranties and all other terms and 
conditions of Annex B Article 1 shall become applicable as if the 
Vendor Parts had been a BRAD Part, except that the warranty period 
shall be the Warranty Period as set forth herein or by the vendor's 
warranty, whichever is shorter and all transportation costs associated 
with the Vendor Parts shall be borne by Buyer.

2.3     BRAD's Interface Commitment

In the event of a dispute in the application of a Vendor Part 
warranty, at Buyer's request addressed to BRAD's warranty 
administrator, BRAD shall, without charge, conduct an investigation 
and analysis of any such dispute resulting from a technical interface 
problem to determine, if possible, the cause of the interface problem 
and then recommend feasible corrective action.  Buyer shall furnish to 
BRAD all data and information in Buyer's possession relevant to the 
interface problem and shall cooperate with BRAD in the conduct of its 
investigation and such tests as may be required.  BRAD, at the 
conclusion of its investigation, shall advise Buyer in writing of 
BRAD's opinion as to the cause of the problem and BRAD's recommended 
corrective action.

ARTICLE 3 - SERVICE LIFE POLICY

3.1     Applicability

The Service Life Policy ("SLP") described in this Annex B Article 3 
shall apply if repetitive failures occur in any Covered Component 
which is defined in Annex B Article 3.7 below.

3.2     Term

3.2.1   Should such failures occur in any Covered Component within 
one hundred and forty-four (144) months following delivery of the 
Aircraft containing such Covered Component, BRAD shall, as 
promptly as practicable and at its option;

a)      design and/or furnish a correction for such failed Covered 
Component; or

b)      furnish a replacement Covered Component (exclusive of 
standard parts such as bearings, bushings, nuts, bolts, 
consumables and similar low value items).

3.3     Price

Any Covered Component which BRAD is required to furnish under this SLP 
shall be provided for at a price calculated in accordance with the 
following formula:

P       =       C x T
144

Where:

P       =       Price of Covered Component to Buyer;
C       =       BRAD's then current price for the Covered Component;
T       =       The total time to the nearest month since the Aircraft containing 
the Covered Component was delivered by BRAD

3.4     Conditions and Limitations

3.4.1   The following general conditions and limitations shall apply 
to the SLP:

a)      the transportation cost for the return to BRAD's designated 
facility, if practicable, of any failed Covered Component 
necessary for failure investigation or redesigning studies 
shall be borne by Buyer;

b)      BRAD's obligations under this SLP are conditional upon the 
submission of reasonable proof acceptable to BRAD that the 
failure is covered hereby;

c)      Buyer shall report any failure of a Covered Component in 
writing to BRAD`s Warranty administrator within two (2) 
months after such failure becomes evident.  Failure to give 
this required notice shall excuse BRAD from all obligations 
with respect to such failure;

d)      the provisions of Annex B Article 1.9 of the Warranty 
(except for subparagraphs (d) and (e) thereof) are 
incorporated by this reference and shall condition BRAD's 
obligations under this SLP with respect to any Covered 
Component;

e)      BRAD's obligations under this SLP shall not apply to any 
Aircraft which has not been correctly modified in accordance 
with the specifications or instructions contained in the 
relevant Service Bulletins which are furnished to Buyer 
prior to receipt by BRAD from Buyer of any notice of an 
occurrence which constitutes a failure in a Covered 
Component.  The provisions of this subparagraph shall not 
apply in the event that Buyer furnishes reasonable evidence 
reasonably acceptable to BRAD that such failure was not 
caused by Buyer's failure to so modify the Aircraft;

f)      this SLP shall not apply to a failure of a Covered Component 
if BRAD determines that such failure may not reasonably be 
expected to occur on a repetitive basis; and

g)      this SLP shall not apply to a Covered Component where the 
failure results from an accident, abuse, misuse, 
degradation,  negligence or wrongful act or omission, 
unauthorized repair or modification adversely affecting a 
Covered Component, impact or foreign object damage, to any 
Covered Component.

3.5     Coverage

This SLP is neither a warranty, performance guarantee nor an agreement 
to modify the Aircraft to conform to new developments in design and 
manufacturing art.  BRAD's obligation is only to provide correction 
instructions to correct a Covered Component or furnish replacement at 
a reduced price as provided in this SLP.

3.6     Assignment

Buyer's rights under this SLP shall not be assigned, sold, leased, 
transferred or otherwise alienated by contract, operation of law or 
otherwise, without BRAD's prior written consent.  Any unauthorized 
assignment, sale, lease, transfer, or other alienation of Buyer's 
rights under the SLP shall immediately void all of BRAD's obligations 
under the SLP.

3.7     Covered Component

Only those items or part thereof listed in Attachment A to this Annex 
B shall be deemed to be a Covered Component, and subject to the 
provisions of this SLP.

ARTICLE 4 - GENERAL

4.1     It is agreed that BRAD shall not be obligated to provide to Buyer any 
remedy  which is a duplicate of any other remedy which has been 
provided to Buyer under         any other part of this Annex B.

ARTICLE 5 - DISCLAIMER

5.1     BRAD SHALL HAVE NO OBLIGATION OR LIABILITY (AT LAW OR IN EQUITY) 
IN CONTRACT (INCLUDING, WITHOUT LIMITATION, WARRANTY), IN TORT 
(WHETHER OR NOT ARISING FROM THE ACTIVE, PASSIVE OR IMPUTED NEGLIGENCE 
OR STRICT PRODUCTS LIABILITY OF BRAD OR ITS AFFILIATES) OR OTHERWISE, 
FOR ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES, INCLUDING WITHOUT 
LIMITATION LOSS OF USE, LOSS OF REVENUE OR LOSS OF PROFIT, WITH 
RESPECT TO:

1)      ANY DEFECT IN THE SPARE PARTS OR ANY OTHER THING DELIVERED UNDER 
THIS AGREEMENT,

2)      ANY DELAY IN DELIVERY OR COMPLETE FAILURE TO DELIVER FOR ANY 
REASON WHATSOEVER, OR

3)      ANY FAILURE TO PERFORM ANY OF ITS OTHER OBLIGATIONS UNDER THIS 
AGREEMENT.

NOTHING IN THIS ARTICLE SHALL BE CONSTRUED TO ALTER OBLIGATIONS 
EXPRESSLY ASSUMED BY BRAD IN OTHER PROVISIONS OF THIS AGREEMENT, 
INCLUDING WITHOUT LIMITATION THE PROVISIONS OF ANNEX "B".

Annex B - Attachment A
COVERED COMPONENTS
WING
(a)     Upper and lower wing skins and stringers between front to rear 
spars.
(b)     Wing spar caps, webs and uprights.
(c)     Main box (front spar to rear spar) wing ribs.
(d)     Main box splice plates, fittings.
(e)     Wing to nacelle structural attachments.
(f)     Wing to fuselage structural attachments.
(g)     Support structure in the wing to spoilers, spoiler actuators and 
ailerons.
(h)     Main gear support structure.
(i)     Engine support fittings.

FUSELAGE
(a)     External surface skins and doublers, stringers, circumferential 
frames between forward pressure bulkhead and aft pressure dome, 
excluding all systems, insulation, lining and decorative clips 
and brackets.
(b)     Window and windshield structure but excluding the windows and 
windshields.
(c)     Primary structure frames around body openings for passenger 
doors, cargo/baggage doors and emergency exits.
(d)     Nose gear support structure.
(e)     Floor beams and supporting structure in the flight compartment 
and cabin including the lavatory, excluding seat tracks in both 
areas.
(f)     Forward pressure bulkhead and aft pressure dome.
(g)     Floor beams and supporting structure in the baggage compartment 
providing same is not damaged through abusive handling of baggage 
or cargo.

Annex B - Attachment A
COVERED COMPONENTS
Con't

VERTICAL TAIL (including fuselage aft of aft pressure dome)

(a)     Fuselage external surface skins, stringers and frames between aft 
pressure dome and rear fin spar frame.
(b)     Fin skins and stiffeners between front and rear spars.
(c)     Fin front, centre and rear spar caps, webs and uprights.
(d)     Main box (front spar to rear spar) fin ribs.
(e)     Fin hinge and actuator support structure for rudder and elevator.
(f)     Fore rudder structure and hinge and actuator brackets.
(g)     Aft rudder forward cell structure and hinge and radius rod 
brackets.

HORIZONTAL TAIL

(a)     Tailplane skins and stringers.
(b)     Tailplane spar caps, webs and uprights.
(c)     Tailplane main box (front spar to rear spar) ribs.
(d)     Tailplane hinge support structure for elevator.
(e)     Elevator forward cell structure and hinge and actuator 
brackets.
(f)     Horizontal tail structure attachments.

August 27, 1996
Our Ref:  B96-ERS-80345-01

Mr. George Bagley
President and C.E.O.
Mr. Glenn Johnson
V.P. Finance and C.F.O.
Horizon Air Industries, Inc.
19521 Pacific Highway South
Seattle, Washington
98188

Gentlemen,

Re:  Letter Agreement No. B96-ERS-80345-01

Reference is made to Purchase Agreement No. PA 8-0345 (the "Agreement") 
between Bombardier Inc., represented by its Bombardier Regional Aircraft 
Division ("BRAD"), and Horizon Air Industries, Inc. ("Buyer") for the sale 
of forty (40) DHC-8 aircraft (the "Aircraft").

This letter, when accepted and agreed to by Buyer contemporaneously with 
execution of the Agreement, will become part of the Agreement and will 
evidence our further agreement with respect to the matters set forth below.

All terms herein and in the Agreement and not defined herein shall have the 
same meanings as in the Agreement.

[CONFIDENTIAL TREATMENT REQUESTED] 

2.0     In the event of the termination of the Agreement, this Letter 
Agreement shall become automatically null and void. 

3.0     The provisions of this Letter Agreement are personal to Buyer and 
shall not be assigned or otherwise disposed of by Buyer without the 
prior written consent of BRAD. 

4.0     This Letter Agreement constitutes an integral part of the Agreement 
and subject to the terms and conditions contained therein. 

If the foregoing correctly sets forth your understanding of our agreement 
with respect to the above matters, please indicate your acceptance and 
agreement below.

Yours truly,
BOMBARDIER INC.

_____________________________
Michel Bourgeois
Vice President, Contracts
Bombardier Regional Aircraft Division

ACCEPTED AND AGREED TO:

this       day of August 1996

HORIZON AIR INDUSTRIES, INC.

_____________________________
Glenn Johnson
V.P. Finance and C.F.O.

August 27, 1996
Our Ref:  B96-ERS-80345-01A

Mr. George Bagley
President and C.E.O.
Mr. Glenn Johnson
V.P. Finance and C.F.O.
Horizon Air Industries, Inc.
19521 Pacific Highway South
Seattle, Washington
98188

Gentlemen,

Re:  Letter Agreement No. B996-ERS-80345-01A

Reference is made to Purchase Agreement No. PA 8-0345 (the "Agreement") 
between Bombardier Inc., represented by its Bombardier Regional Aircraft 
Division ("BRAD"), and Horizon Air Industries, Inc. ("Buyer") for the sale 
of forty (40) DHC-8 aircraft (the "Aircraft").

This letter, when accepted and agreed to by Buyer contemporaneously with 
execution of the Agreement, will become part of the Agreement and will 
evidence our further agreement with respect to the matters set forth below.

All terms herein and in the Agreement and not defined herein shall have the 
same meanings as in the Agreement.

[CONFIDENTIAL TREATMENT REQUESTED] 

3.0     In the event of the termination of the Agreement, this Letter 
Agreement shall become automatically null and void.

4.0     The provisions of this Letter Agreement are personal to Buyer and 
shall not be assigned or otherwise disposed of by Buyer without the 
prior written consent of BRAD.

5.0     This Letter Agreement constitutes an integral part of the Agreement 
and subject to the terms and conditions contained therein.

If the foregoing correctly sets forth your understanding of our agreement 
with respect to the above matters, please indicate your acceptance and 
agreement below.

Yours truly,
BOMBARDIER INC.

_____________________________
Michel Bourgeois
Vice President, Contracts
Bombardier Regional Aircraft Division

ACCEPTED AND AGREED TO:

this       day of August 1996

HORIZON AIR INDUSTRIES, INC.

_____________________________
Glenn Johnson
V.P. Finance and C.F.O.

August 27, 1996
Our Ref:  B96-ERS-80345-02

Mr. George Bagley
President and C.E.O.
Mr. Glenn Johnson
V.P. Finance and C.F.O.
Horizon Air Industries, Inc.
19521 Pacific Highway South
Seattle, Washington
98188

Gentlemen,

Re:  Letter Agreement No. B96-ERS-80345-02

Reference is made to Purchase Agreement No. PA 8-0345 (the "Agreement") 
between Bombardier Inc., represented by its Bombardier Regional Aircraft 
Division ("BRAD"), and Horizon Air Industries, Inc. ("Buyer") for the sale 
of forty (40) DHC-8 aircraft (the "Aircraft").

This letter, when accepted and agreed to by Buyer contemporaneously with 
execution of the Agreement, will become part of the Agreement and will 
evidence our further agreement with respect to the matters set forth below.

All terms herein and in the Agreement and not defined herein shall have the 
same meanings as in the Agreement.
[CONFIDENTIAL TREATMENT REQUESTED] 

3.0     In the event of the termination of the Agreement, this Letter 
Agreement shall become automatically null and void. 

4.0     The provisions of this Letter Agreement are personal to Buyer and 
shall not be assigned or otherwise disposed of by Buyer without the 
prior written consent of BRAD. 

5.0     This Letter Agreement constitutes an integral part of the Agreement 
and subject to the terms and conditions contained therein. 

If the foregoing correctly sets forth your understanding of our agreement 
with respect to the above matters, please indicate your acceptance and 
agreement below.

Yours truly,
BOMBARDIER INC.

_____________________________
Michel Bourgeois
Vice President, Contracts
Bombardier Regional Aircraft Division

ACCEPTED AND AGREED TO:

this       day of August 1996

HORIZON AIR INDUSTRIES, INC.

_____________________________
Glenn Johnson
V.P. Finance and C.F.O.

August 27, 1996
Our Ref:  B96-ERS-80345-03

Mr. George Bagley
President and C.E.O.
Mr. Glenn Johnson
V.P. Finance and C.F.O.
Horizon Air Industries, Inc.
19521 Pacific Highway South
Seattle, Washington
98188

Dear Gentlemen,

Re:  Letter Agreement No. B96-ERS-80345-03

Reference is made to Purchase Agreement No. PA 8-0345 (the "Agreement") 
between Bombardier Inc., represented by its Bombardier Regional Aircraft 
Division ("BRAD"), and Horizon Air Industries, Inc. ("Buyer") for the sale 
of forty (40) DHC-8 aircraft (the "Aircraft").

This letter, when accepted and agreed to by Buyer contemporaneously with 
execution of the Agreement, will become part of the Agreement and will 
evidence our further agreement with respect to the matters set forth below.

All terms herein and in the Agreement and not defined herein shall have the 
same meanings as in the Agreement.

[CONFIDENTIAL TREATMENT REQUESTED] 

2.0     For more certainty, the parties agree that Buyer shall not have the 
right to terminate the first (1st) through twenty-fifth (25th) 
Aircraft.

3.0     In the event of the termination of the Agreement, this Letter 
Agreement shall become automatically null and void. 

4.0     The provisions of this Letter Agreement are personal to Buyer and 
shall not be assigned or otherwise disposed of by Buyer without the 
prior written consent of BRAD. 

5.0     This Letter Agreement constitutes an integral part of the Agreement 
and subject to the terms and conditions contained therein. 

If the foregoing correctly sets forth your understanding of our agreement 
with respect to the above matters, please indicate your acceptance and 
agreement below.

Yours truly,
BOMBARDIER INC.

_____________________________
Michel Bourgeois
Vice President, Contracts
Bombardier Regional Aircraft Division

ACCEPTED AND AGREED TO:

this       day of August 1996

HORIZON AIR INDUSTRIES, INC.

_____________________________
Glenn Johnson
V.P. Finance and C.F.O.

August 27, 1996
Our Ref:  B96-ERS-80345-04

Mr. George Bagley
President and C.E.O.
Mr. Glenn Johnson
V.P. Finance and C.F.O.
Horizon Air Industries, Inc.
19521 Pacific Highway South
Seattle, Washington
98188

Gentlemen,

Re:  Letter Agreement No. B96-ERS-80345-04

Reference is made to Purchase Agreement No. PA 8-0345 (the "Agreement") 
between Bombardier Inc., represented by its Bombardier Regional Aircraft 
Division ("BRAD"), and Horizon Air Industries, Inc. ("Buyer") for the sale 
of forty (40) DHC-8 aircraft (the "Aircraft").

This letter, when accepted and agreed to by Buyer contemporaneously with 
execution of the Agreement, will become part of the Agreement and will 
evidence our further agreement with respect to the matters set forth below.

All terms herein and in the Agreement and not defined herein shall have the 
same meanings as in the Agreement.

OPTION AIRCRAFT

In consideration of Buyer's agreement to purchase the Aircraft, BRAD is 
pleased to offer to Buyer the option to purchase up to twenty-five (25) 
DHC-8 Series 200 aircraft (the "Option Aircraft") on the following terms 
and conditions.

1.1     The Option Aircraft will be as described in Article 2 of the 
Agreement.

1.2     The base price for each of the Option Aircraft excluding the Buyer 
Selected Optional Features, Ex Works (Incoterms 1990) BRAD's 
facilities in Downsview, Ontario, shall be [CONFIDENTIAL TREATMENT 
REQUESTED] The base price of the Buyer Selected Special Optional 
Features shall be [CONFIDENTIAL TREATMENT REQUESTED] The purchase 
price of each Option Aircraft shall be the aggregate of the Option 
Aircraft Base Price and the Buyer Selected Option Base Price for each 
Option Aircraft being [CONFIDENTIAL TREATMENT REQUESTED] subject to 
escalation in accordance with the Economic Adjustment Formula attached 
as Appendix I of the Agreement for the [CONFIDENTIAL TREATMENT 
REQUESTED] of each Option Aircraft ( the "Option Aircraft Purchase 
Price").  The Option Aircraft Purchase Price, or any part thereof, 
does not include any taxes, fees or duties.

1.3     [CONFIDENTIAL TREATMENT REQUESTED]  

1.4     [CONFIDENTIAL TREATMENT REQUESTED]  

1.5     Buyer shall make payment or cause payment to be made for each Option 
Aircraft as follows: 

[CONFIDENTIAL TREATMENT REQUESTED]

1.6     [CONFIDENTIAL TREATMENT REQUESTED]  

2.0     Upon exercise of Buyer's right to purchase the Option Aircraft, the 
parties shall consider all definitions, terms and conditions of the 
Agreement as applicable to the purchase thereof, unless otherwise 
described herein, or shall enter into another definitive purchase 
agreement for the purchase of Option Aircraft in accordance with the 
terms and conditions hereof. 

3.0     In the event of the termination of the Agreement, this Letter 
Agreement shall become automatically null and void. 

4.0     The provisions of this Letter Agreement are personal to Buyer and 
shall not be assigned or otherwise disposed of by Buyer without the 
prior written consent of BRAD. 

5.0     This Letter Agreement constitutes an integral part of the Agreement 
and is subject to the terms and conditions contained therein. 

If the foregoing correctly sets forth your understanding of our agreement 
with respect to the above matters, please indicate your acceptance and 
agreement below.

Yours truly,
BOMBARDIER INC.

_____________________________
Michel Bourgeois
Vice President, Contracts
Bombardier Regional Aircraft Division

ACCEPTED AND AGREED TO:

this       day of August 1996

HORIZON AIR INDUSTRIES, INC.

_____________________________
Glenn Johnson
V.P. Finance and C.F.O.

ATTACHMENT I

SCHEDULED DELIVERY DATES

OPTION AIRCRAFT

Block No. 1     Scheduled Delivery Date
CONFIDENTIAL TREATMENT REQUESTED as to all delivery dates

First Option Aircraft   
Second Option Aircraft
Third Option Aircraft   
Fourth Option Aircraft
Fifth Option Aircraft   

Block No. 2     Scheduled Delivery Date
Sixth Option Aircraft   
Seventh Option Aircraft         
Eight Option Aircraft   
Ninth Option Aircraft   
Tenth Option Aircraft   
Eleventh Option Aircraft        
Twelfth Option Aircraft         
Thirteenth Option Aircraft      
Fourteenth Option Aircraft      
Fifteenth Option Aircraft       
Sixteen Option Aircraft 
Seventeenth Option Aircraft     
Eighteenth Option Aircraft      
Nineteenth Option Aircraft      
Twentieth Option Aircraft       
Twenty-first Option Aircraft    
Twenty-second Option Aircraft
Twenty-third Option Aircraft    
Twenty-fourth Option Aircraft   
Twenty-fifth Option Aircraft    

August 27, 1996
Our Ref:  B96-ERS-80345-05

Mr. George Bagley
President and C.E.O.
Mr. Glenn Johnson
V.P. Finance and C.F.O.
Horizon Air Industries, Inc.
19521 Pacific Highway South
Seattle, Washington
98188

Gentlemen,

Re:  Letter Agreement No. B96-ERS-80345-05

Reference is made to Purchase Agreement No. PA 8-0345 (the "Agreement") 
between Bombardier Inc., represented by its Bombardier Regional Aircraft 
Division ("BRAD"), and Horizon Air Industries, Inc. ("Buyer") for the sale 
of forty (40) DHC-8 aircraft (the "Aircraft").

This letter, when accepted and agreed to by Buyer contemporaneously with 
execution of the Agreement, will become part of the Agreement and will 
evidence our further agreement with respect to the matters set forth below.

All terms herein and in the Agreement and not defined herein shall have the 
same meanings as in the Agreement.

[CONFIDENTIAL TREATMENT REQUESTED]

1.1     The Special Option Aircraft will be as described in Article 2 of the 
Agreement. 

1.2     The base price for each of the Special Option Aircraft excluding the 
Buyer Selected Optional Features, Ex Works (Incoterms 1990) BRAD's 
facilities in Downsview, Ontario, shall be [CONFIDENTIAL TREATMENT 
REQUESTED]  The base price of the Buyer Selected Special Optional 
Features as shown in Appendix IV of the Agreement shall be 
[CONFIDENTIAL TREATMENT REQUESTED]  The purchase price of each Special 
Option Aircraft shall be the aggregate of the Special Option Aircraft 
Base Price and the Buyer Selected Special Option Base Price for each 
Special Option Aircraft being [CONFIDENTIAL TREATMENT REQUESTED]  
subject to escalation in accordance with the Economic Adjustment 
Formula attached as Appendix I of the Agreement for [CONFIDENTIAL 
TREATMENT REQUESTED]  of each Special Option Aircraft (the "Special 
Option Aircraft Purchase Price").  The Special Option Aircraft 
Purchase Price, or any part thereof does not include any taxes, fees 
or duties.

1.3     [CONFIDENTIAL TREATMENT REQUESTED]   

1.4      [CONFIDENTIAL TREATMENT REQUESTED]   

1.5      [CONFIDENTIAL TREATMENT REQUESTED]   

1.6      [CONFIDENTIAL TREATMENT REQUESTED]   

2.0     In the event that Buyer fails to exercise its rights to purchase a 
Special Option Aircraft on or before its respective Exercise Date, any 
and all rights of Buyer to such Special Option Aircraft shall 
immediately terminate. 

3.0     Upon exercise of Buyer's right to purchase the Special Option 
Aircraft, the parties shall consider all definitions, terms and 
conditions of the Agreement as applicable, unless otherwise described 
herein,, and execute a Contract Change Order, or shall enter into 
another definitive purchase agreement for the purchase of Special 
Option Aircraft in accordance with the terms and conditions hereof. 

4.0     In the event of the termination of the Agreement, this Letter 
Agreement shall become automatically null and void. 

5.0     The provisions of this Letter Agreement are personal to Buyer and 
shall not be assigned or otherwise disposed of by Buyer without the 
prior written consent of BRAD. 

6.0     This Letter Agreement constitutes an integral part of the Agreement 
and subject to the terms and conditions contained therein. 

If the foregoing correctly sets forth your understanding of our agreement 
with respect to the above matters, please indicate your acceptance and 
agreement below.

Yours truly,
BOMBARDIER INC.

_____________________________
Michel Bourgeois
Vice President, Contracts
Bombardier Regional Aircraft Division

ACCEPTED AND AGREED TO:

this       day of August 1996

HORIZON AIR INDUSTRIES, INC.

_____________________________
Glenn Johnson
V.P. Finance and C.F.O.

August 27, 1996
Our Ref:  B96-ERS-80345-06

Mr. George Bagley
President and C.E.O.
Mr. Glenn Johnson
V.P. Finance and C.F.O.
Horizon Air Industries, Inc.
19521 Pacific Highway South
Seattle, Washington
98188

Gentlemen,

Re:  Letter Agreement No. B96-ERS-80345-06

Reference is made to Purchase Agreement No. PA 8-0345 (the "Agreement") 
between Bombardier Inc., represented by its Bombardier Regional Aircraft 
Division ("BRAD"), and Horizon Air Industries, Inc. ("Buyer") for the sale 
of forty (40) DHC-8 aircraft (the "Aircraft").

This letter, when accepted and agreed to by Buyer contemporaneously with 
execution of the Agreement, will become part of the Agreement and will 
evidence our further agreement with respect to the matters set forth below.

All terms herein and in the Agreement and not defined herein shall have the 
same meanings as in the Agreement.

[CONFIDENTIAL TREATMENT REQUESTED]

1.0     [CONFIDENTIAL TREATMENT REQUESTED]

2.0     [CONFIDENTIAL TREATMENT REQUESTED]

3.0     In the event of the termination of the Agreement, this Letter 
Agreement shall become automatically null and void. 

4.0     The provisions of this Letter Agreement are personal to Buyer and 
shall not be assigned or otherwise disposed of by Buyer without the 
prior written consent of BRAD. 

5.0     This Letter Agreement constitutes an integral part of the Agreement 
and subject to the terms and conditions contained therein. 

If the foregoing correctly sets forth your understanding of our agreement 
with respect to the above matters, please indicate your acceptance and 
agreement below.

Yours truly,
BOMBARDIER INC.

_____________________________
Michel Bourgeois
Vice President, Contracts
Bombardier Regional Aircraft Division

ACCEPTED AND AGREED TO:

this       day of August 1996

HORIZON AIR INDUSTRIES, INC.

_____________________________
Glenn Johnson
V.P. Finance and C.F.O.

August 27, 1996
Our Ref:  B96-ERS-80345-07

Mr. George Bagley
President and C.E.O.
Mr. Glenn Johnson
V.P. Finance and C.F.O.
Horizon Air Industries, Inc.
19521 Pacific Highway South
Seattle, Washington
98188

Gentlemen,

Re:  Letter Agreement No. B96-ERS-80345-07

Reference is made to Purchase Agreement No. PA 8-0345 (the "Agreement") 
between Bombardier Inc., represented by its Bombardier Regional Aircraft 
Division ("BRAD"), and Horizon Air Industries, Inc. ("Buyer") for the sale 
of forty (40) DHC-8 aircraft (the "Aircraft").

This letter, when accepted and agreed to by Buyer contemporaneously with 
execution of the Agreement, will become part of the Agreement and will 
evidence our further agreement with respect to the matters set forth below.

All terms herein and in the Agreement and not defined herein shall have the 
same meanings as in the Agreement.

[CONFIDENTIAL TREATMENT REQUESTED]

1.0     [CONFIDENTIAL TREATMENT REQUESTED]

2.0     In the event of the termination of the Agreement, this Letter 
Agreement shall become automatically null and void. 

3.0     The provisions of this Letter Agreement are personal to Buyer and 
shall not be assigned or otherwise disposed of by Buyer without the 
prior written consent of BRAD. 

4.0     [CONFIDENTIAL TREATMENT REQUESTED] 

5.0     This Letter Agreement constitutes an integral part of the Agreement 
and subject to the terms and conditions contained therein. 

If the foregoing correctly sets forth your understanding of our agreement 
with respect to the above matters, please indicate your acceptance and 
agreement below.

Yours truly,
BOMBARDIER INC.

_____________________________
Michel Bourgeois
Vice President, Contracts
Bombardier Regional Aircraft Division

ACCEPTED AND AGREED TO:

this       day of August 1996

HORIZON AIR INDUSTRIES, INC.

_____________________________
Glenn Johnson
V.P. Finance and C.F.O.

August 27, 1996
Our Ref:  B96-ERS-80345-08

Mr. George Bagley
President and C.E.O.
Mr. Glenn Johnson
V.P. Finance and C.F.O.
Horizon Air Industries, Inc.
19521 Pacific Highway South
Seattle, Washington
98188

Gentlemen,

Re:  Letter Agreement No. B96-ERS-80345-08

Reference is made to Purchase Agreement No. PA 8-0345 (the "Agreement") 
between Bombardier Inc., represented by its Bombardier Regional Aircraft 
Division ("BRAD"), and Horizon Air Industries, Inc. ("Buyer") for the sale 
of forty (40) DHC-8 aircraft (the "Aircraft").

This letter, when accepted and agreed to by Buyer contemporaneously with 
execution of the Agreement, will become part of the Agreement and will 
evidence our further agreement with respect to the matters set forth below.

All terms herein and in the Agreement and not defined herein shall have the 
same meanings as in the Agreement.

[CONFIDENTIAL TREATMENT REQUESTED] 

1.0     [CONFIDENTIAL TREATMENT REQUESTED]

2.0     [CONFIDENTIAL TREATMENT REQUESTED]

3.0     [CONFIDENTIAL TREATMENT REQUESTED] 

4.0     In the event of the termination of the Agreement, this Letter 
Agreement shall become automatically null and void.

5.0     The provisions of this Letter Agreement are personal to Buyer and 
shall not be assigned or otherwise disposed of by Buyer without the 
prior written consent of BRAD.

6.0     This Letter Agreement constitutes an integral part of the Agreement 
and subject to the terms and conditions contained therein.

If the foregoing correctly sets forth your understanding of our agreement 
with respect to the above matters, please indicate your acceptance and 
agreement below. 

Yours truly,
BOMBARDIER INC.

_____________________________
Michel Bourgeois
Vice President, Contracts
Bombardier Regional Aircraft Division

ACCEPTED AND AGREED TO:

this       day of August 1996

HORIZON AIR INDUSTRIES, INC.

_____________________________
Glenn Johnson
V.P. Finance and C.F.O.

ATTACHMENT I

[CONFIDENTIAL TREATMENT REQUESTED] 

ATTACHMENT II

[CONFIDENTIAL TREATMENT REQUESTED] 1,010,204

August 27, 1996
Our Ref:  B96-ERS-80345-09

Mr. George Bagley
President and C.E.O.
Mr. Glenn Johnson
V.P. Finance and C.F.O.
Horizon Air Industries, Inc.
19521 Pacific Highway South
Seattle, Washington
98188

Gentlemen,

Re:  Letter Agreement No. B96-ERS-80345-09

Reference is made to Purchase Agreement No. PA 8-0345 (the "Agreement") 
between Bombardier Inc., represented by its Bombardier Regional Aircraft 
Division ("BRAD"), and Horizon Air Industries, Inc. ("Buyer") for the sale 
of forty (40) DHC-8 aircraft (the "Aircraft").

This letter, when accepted and agreed to by Buyer contemporaneously with 
execution of the Agreement, will become part of the Agreement and will 
evidence our further agreement with respect to the matters set forth below.

All terms herein and in the Agreement and not defined herein shall have the 
same meanings as in the Agreement.

[CONFIDENTIAL TREATMENT REQUESTED] 1,010,204

1.0     [CONFIDENTIAL TREATMENT REQUESTED] 1,010,204

2.0     [CONFIDENTIAL TREATMENT REQUESTED] 1,010,204

3.0     [CONFIDENTIAL TREATMENT REQUESTED] 1,010,204

4.0     [CONFIDENTIAL TREATMENT REQUESTED] 1,010,204

5.0     [CONFIDENTIAL TREATMENT REQUESTED] 1,010,204

6.0     [CONFIDENTIAL TREATMENT REQUESTED] 1,010,204

7.0     In the event of the termination of the Agreement, this Letter 
Agreement shall become automatically null and void. 

8.0     The provisions of this Letter Agreement are personal to Buyer and 
shall not be assigned or otherwise disposed of by Buyer without the 
prior written consent of BRAD. 

9.0     This Letter Agreement constitutes an integral part of the Agreement 
and subject to the terms and conditions contained therein. 

If the foregoing correctly sets forth your understanding of our agreement 
with respect to the above matters, please indicate your acceptance and 
agreement below.

Yours truly,
BOMBARDIER INC.

_____________________________
Michel Bourgeois
Vice President, Contracts
Bombardier Regional Aircraft Division

ACCEPTED AND AGREED TO:

this       day of August 1996

HORIZON AIR INDUSTRIES, INC.

_____________________________
Glenn Johnson
V.P. Finance and C.F.O.

ATTACHMENT I
[CONFIDENTIAL TREATMENT REQUESTED] 1,010,204

August 27, 1996
Our Ref:  B96-ERS-80345-10

Mr. George Bagley
President and C.E.O.
Mr. Glenn Johnson
V.P. Finance and C.F.O.
Horizon Air Industries, Inc.
19521 Pacific Highway South
Seattle, Washington
98188

Gentlemen,

Re:  Letter Agreement No. B96-ERS-80345-10

Reference is made to Purchase Agreement No. PA 8-0345 (the "Agreement") 
between Bombardier Inc., represented by its Bombardier Regional Aircraft 
Division, ("BRAD") and Horizon Air Industries, Inc. ("Buyer") for the sale 
of forty (40) DHC-8 aircraft (the "Aircraft").

This letter, when accepted and agreed to by Buyer contemporaneously with 
execution of the Agreement, will become part of the Agreement and will 
evidence our further agreement with respect to the matters set forth below.

All terms herein and in the Agreement and not defined herein shall have the 
same meanings as in the Agreement.

[CONFIDENTIAL TREATMENT REQUESTED] 1,010,204

2.0     In the event of the termination of the Agreement, this Letter 
Agreement shall become automatically null and void. 

3.0     The provisions of this Letter Agreement are personal to Buyer and 
shall not be assigned or otherwise disposed of by Buyer without the 
prior written consent of BRAD. 

4.0     This Letter Agreement constitutes an integral part of the Agreement 
and subject to the terms and conditions contained therein. 

If the foregoing correctly sets forth your understanding of our agreement 
with respect to the above matters, please indicate your acceptance and 
agreement below.

Yours truly,
BOMBARDIER INC.

_____________________________
Michel Bourgeois
Vice President, Contracts
Bombardier Regional Aircraft Division

ACCEPTED AND AGREED TO:

this ...... day of August 1996

HORIZON AIR INDUSTRIES, INC.

_____________________________
Glenn Johnson
V.P. Finance and C.F.O.

ATTACHMENT I

[CONFIDENTIAL TREATMENT REQUESTED] 1,010,204

August 27, 1996
Our Ref:  B96-ERS-80345-11

Mr. George Bagley
President and C.E.O.
Mr. Glenn Johnson
V.P. Finance and C.F.O.
Horizon Air Industries, Inc.
19521 Pacific Highway South
Seattle, Washington
98188

Gentlemen,

Re:  Letter Agreement No. B96-ERS-80345-11

Reference is made to Purchase Agreement No. PA 8-0345 (the "Agreement") 
between Bombardier Inc., represented by its Bombardier Regional Aircraft 
Division ("BRAD"), and Horizon Air Industries, Inc. ("Buyer") for the sale 
of forty (40) DHC-8 aircraft (the "Aircraft").

This letter, when accepted and agreed to by Buyer contemporaneously with 
execution of the Agreement, will become part of the Agreement and will 
evidence our further agreement with respect to the matters set forth below.

All terms herein and in the Agreement and not defined herein shall have the 
same meanings as in the Agreement.

[CONFIDENTIAL TREATMENT REQUESTED] 1,010,204

2.0     [CONFIDENTIAL TREATMENT REQUESTED] 1,010,204

3.0     [CONFIDENTIAL TREATMENT REQUESTED] 1,010,204

4.0     [CONFIDENTIAL TREATMENT REQUESTED] 1,010,204

5.0     [CONFIDENTIAL TREATMENT REQUESTED] 1,010,204

6.0     [CONFIDENTIAL TREATMENT REQUESTED] 1,010,204

7.0     [CONFIDENTIAL TREATMENT REQUESTED] 1,010,204

8.0     [CONFIDENTIAL TREATMENT REQUESTED] 1,010,204

9.0     In the event of the termination of the Agreement, this Letter 
Agreement shall become automatically null and void. 

10.0    The provisions of this Letter Agreement are personal to Buyer and 
shall not be assigned or otherwise disposed of by Buyer without the 
prior written consent of BRAD. 

11.0    This Letter Agreement constitutes an integral part of the Agreement 
and subject to the terms and conditions contained therein. 

If the foregoing correctly sets forth your understanding of our agreement 
with respect to the above matters, please indicate your acceptance and 
agreement below.

Yours truly,
BOMBARDIER INC.

_____________________________
Michel Bourgeois
Vice President, Contracts
Bombardier Regional Aircraft Division

ACCEPTED AND AGREED TO:

this ...... day of August 1996

HORIZON AIR INDUSTRIES, INC.

_____________________________
Glenn Johnson
V.P. Finance and C.F.O.

August 27, 1996
Our Ref:  B96-ERS-80345-12

Mr. George Bagley
President and C.E.O.
Mr. Glenn Johnson
V.P. Finance and C.F.O.
Horizon Air Industries, Inc.
19521 Pacific Highway South
Seattle, Washington
98188

Gentlemen,

Re:  Letter Agreement No. B96-ERS-80345-12

Reference is made to Purchase Agreement No. PA 8-0345 (the "Agreement") 
between Bombardier Inc., represented by its Bombardier Regional Aircraft 
Division ("BRAD", and Horizon Air Industries, Inc. ("Buyer") for the sale 
of forty (40) DHC-8 aircraft (the "Aircraft").

This letter, when accepted and agreed to by Buyer contemporaneously with 
execution of the Agreement, will become part of the Agreement and will 
evidence our further agreement with respect to the matters set forth below.

All terms herein and in the Agreement and not defined herein shall have the 
same meanings as in the Agreement.

[CONFIDENTIAL TREATMENT REQUESTED] 

2.0     In the event of the termination of the Agreement, this Letter 
Agreement shall become automatically null and void. 

3.0     The provisions of this Letter Agreement are personal to Buyer and 
shall not be assigned or otherwise disposed of by Buyer without the 
prior written consent of BRAD. 

4.0     This Letter Agreement constitutes an integral part of the Agreement 
and subject to the terms and conditions contained therein. 

If the foregoing correctly sets forth your understanding of our agreement 
with respect to the above matters, please indicate your acceptance and 
agreement below.

Yours truly,
BOMBARDIER INC.

_____________________________
Michel Bourgeois
Vice President, Contracts
Bombardier Regional Aircraft Division

ACCEPTED AND AGREED TO:

this ...... day of August 1996

HORIZON AIR INDUSTRIES, INC.

_____________________________
Glenn Johnson
V.P. Finance and C.F.O.

August 27, 1996
Our Ref:  B96-ERS-80345-13

Mr. George Bagley
President and C.E.O.
Mr. Glenn Johnson
V.P. Finance and C.F.O.
Horizon Air Industries, Inc.
19521 Pacific Highway South
Seattle, Washington
98188

Gentlemen,

Re:  Letter Agreement No. B96-ERS-80345-13

Reference is made to Purchase Agreement No. PA 8-0345 (the "Agreement") 
between Bombardier Inc., represented by its Bombardier Regional Aircraft 
Division ("BRAD"), and Horizon Air Industries, Inc. ("Buyer") for the sale 
of forty (40) DHC-8 aircraft (the "Aircraft").

This letter, when accepted and agreed to by Buyer contemporaneously with 
execution of the Agreement, will become part of the Agreement and will 
evidence our further agreement with respect to the matters set forth below.

All terms herein and in the Agreement and not defined herein shall have the 
same meanings as in the Agreement.

CUSTOMER SERVICES

1.0     Differences Training

1.1     Series 200 Pilot Differences Training

BRAD will provide DHC-8 Series 200 differences training for up to 
[CONFIDENTIAL TREATMENT REQUESTED] of Buyer's instructor pilots or 
DHC-8 endorsed pilots at Buyer's facilities in Portland, Oregon or 
Seattle, Washington.  Such differences training comprises a 
[CONFIDENTIAL TREATMENT REQUESTED] ground school.

1.2     Series 200 Maintenance Difference Training

BRAD will provide DHC-8 Series 200 differences training for up to 
[CONFIDENTIAL TREATMENT REQUESTED] of Buyer's maintenance instructors 
or DHC-8 endorsed mechanics at Buyer's facilities in Portland, Oregon 
or Seattle, Washington.  Such differences training comprises 
[CONFIDENTIAL TREATMENT REQUESTED] 
ground school and shall be delivered over up to [CONFIDENTIAL 
TREATMENT REQUESTED] sessions.  BRAD shall endeavor to have 
FlightSafety provide [CONFIDENTIAL TREATMENT REQUESTED]  set of 
reproducible maintenance differences training materials to Buyer for 
Buyer's subsequent training requirements.

2.0     Simulator Rental

BRAD will provide Buyer, with each Aircraft delivered to a maximum 
aggregate of [CONFIDENTIAL TREATMENT REQUESTED] aircraft, 
[CONFIDENTIAL TREATMENT REQUESTED] hours simulator rental (excluding 
instructor) at a facility of FlightSafety.

3.0     In the event of the termination of the Agreement, this Letter 
Agreement shall become automatically null and void. 

4.0     The provisions of this Letter Agreement are personal to Buyer and 
shall not be assigned or otherwise disposed of by Buyer without the 
prior written consent of BRAD. 

5.0     This Letter Agreement constitutes an integral part of the Agreement 
and subject to the terms and conditions contained therein. 

If the foregoing correctly sets forth your understanding of our agreement 
with respect to the above matters, please indicate your acceptance and 
agreement below.

Yours truly,
BOMBARDIER INC.

_____________________________
Michel Bourgeois
Vice President, Contracts
Bombardier Regional Aircraft Division

ACCEPTED AND AGREED TO:

this       day of August 1996

HORIZON AIR INDUSTRIES, INC.

_____________________________
Glenn Johnson
V.P. Finance and C.F.O.

August 27, 1996
Our Ref:  B96-ERS-80345-14

Mr. George Bagley
President and C.E.O.
Mr. Glenn Johnson
V.P. Finance and C.F.O.
Horizon Air Industries, Inc.
19521 Pacific Highway South
Seattle, Washington
98188

Gentlemen,

Re:  Letter Agreement No. B96-ERS-80345-14

Reference is made to Purchase Agreement No. PA 8-0345 (the "Agreement") 
between Bombardier Inc., represented by its Bombardier Regional Aircraft 
Division ("BRAD"), and Horizon Air Industries, Inc. ("Buyer") for the sale 
of forty (40) DHC-8 aircraft (the "Aircraft").

This letter, when accepted and agreed to by Buyer contemporaneously with 
execution of the Agreement, will become part of the Agreement and will 
evidence our further agreement with respect to the matters set forth below.

All terms herein and in the Agreement and not defined herein shall have the 
same meanings as in the Agreement.
[CONFIDENTIAL TREATMENT REQUESTED]

2.0     [CONFIDENTIAL TREATMENT REQUESTED]

3.0     [CONFIDENTIAL TREATMENT REQUESTED]

4.0     [CONFIDENTIAL TREATMENT REQUESTED] 

5.0     In the event of the termination of the Agreement, this Letter 
Agreement shall become automatically null and void. 

6.0     The provisions of this Letter Agreement are personal to Buyer and 
shall not be assigned or otherwise disposed of by Buyer without the 
prior written consent of BRAD. 

7.0     This Letter Agreement constitutes an integral part of the Agreement 
and subject to the terms and conditions contained therein.

If the foregoing correctly sets forth your understanding of our agreement 
with respect to the above matters, please indicate your acceptance and 
agreement below.

Yours truly,
BOMBARDIER INC.

_____________________________
Michel Bourgeois
Vice President, Contracts
Bombardier Regional Aircraft Division

ACCEPTED AND AGREED TO:

this ...... day of August 1996

HORIZON AIR INDUSTRIES, INC.

_____________________________
Glenn Johnson
V.P. Finance and C.F.O.

August 27, 1996
Our Ref:  B96-ERS-80345-15

Mr. George Bagley
President and C.E.O.
Mr. Glenn Johnson
V.P. Finance and C.F.O.
Horizon Air Industries, Inc.
19521 Pacific Highway South
Seattle, Washington
98188

Gentlemen,

Re:  Letter Agreement No. B96-ERS-80345-15

Reference is made to Purchase Agreement No. PA 8-0345 (the "Agreement") 
between Bombardier Inc., represented by its Bombardier Regional Aircraft 
Division ("BRAD"), and Horizon Air Industries, Inc. ("Buyer") for the sale 
of forty (40) DHC-8 aircraft (the "Aircraft").

This letter, when accepted and agreed to by Buyer contemporaneously with 
execution of the Agreement, will become part of the Agreement and will 
evidence our further agreement with respect to the matters set forth below.

All terms herein and in the Agreement and not defined herein shall have the 
same meanings as in the Agreement.
[CONFIDENTIAL TREATMENT REQUESTED]

2.0     [CONFIDENTIAL TREATMENT REQUESTED]

3.0     [CONFIDENTIAL TREATMENT REQUESTED]

4.0     [CONFIDENTIAL TREATMENT REQUESTED]

5.0     BUYER AND BRAD AGREE THAT THIS LETTER AGREEMENT, INCLUDING BUT NOT 
LIMITED TO ARTICLE 3.0 ABOVE, HAS BEEN THE SUBJECT OF DISCUSSION AND 
NEGOTIATION AND IS FULLY UNDERSTOOD BY THE PARTIES HERETO AND THAT 
THE MUTUAL AGREEMENTS OF THE PARTIES SET FORTH IN THIS LETTER 
AGREEMENT WERE ARRIVED AT IN CONSIDERATION OF PROVISIONS CONTAINED 
IN THIS ARTICLE 8.AND THE OTHER PROVISIONS OF THIS LETTER AGREEMENT.

6.0     In the event of the termination of the Agreement, this Letter 
Agreement shall become automatically null and void.

7.0     The provisions of this Letter Agreement are personal to Buyer and 
shall not be assigned or otherwise disposed of by Buyer without the 
prior written consent of BRAD. 

8.0     This Letter Agreement constitutes an integral part of the Agreement 
and subject to the terms and conditions contained therein. 

If the foregoing correctly sets forth your understanding of our agreement 
with respect to the above matters, please indicate your acceptance and 
agreement below.

Yours truly,
BOMBARDIER INC.

_____________________________
Michel Bourgeois
Vice President, Contracts
Bombardier Regional Aircraft Division

ACCEPTED AND AGREED TO:

this ...... day of August 1996

HORIZON AIR INDUSTRIES, INC.

_____________________________
Glenn Johnson
V.P. Finance and C.F.O.

August 27, 1996
Our Ref:  B96-ERS-80345-16

Mr. George Bagley
President and C.E.O.
Mr. Glenn Johnson
V.P. Finance and C.F.O.
Horizon Air Industries, Inc.
19521 Pacific Highway South
Seattle, Washington
98188

Gentlemen,

Re:  Letter Agreement No. B96-ERS-80345-16

Reference is made to Purchase Agreement No. PA 8-0345 (the "Agreement") 
between Bombardier Inc., represented by its Bombardier Regional Aircraft 
Division ("BRAD"), and Horizon Air Industries, Inc. ("Buyer") for the sale 
of forty (40) DHC-8 aircraft (the "Aircraft").

This letter, when accepted and agreed to by Buyer contemporaneously with 
execution of the Agreement, will become part of the Agreement and will 
evidence our further agreement with respect to the matters set forth below.

All terms herein and in the Agreement and not defined herein shall have the 
same meanings as in the Agreement.
[CONFIDENTIAL TREATMENT REQUESTED]

If the foregoing correctly sets forth your understanding of our agreement 
with respect to the above matters, please indicate your acceptance and 
agreement below.

Yours truly,
BOMBARDIER INC.

_____________________________
Michel Bourgeois
Vice President, Contracts
Bombardier Regional Aircraft Division

ACCEPTED AND AGREED TO:

this ...... day of August 1996

HORIZON AIR INDUSTRIES, INC.

_____________________________
Glenn Johnson
V.P. Finance and C.F.O.

Attachment A
[CONFIDENTIAL TREATMENT REQUESTED]

August 27, 1996
Our Ref:  B96-ERS-80345-17

Mr. George Bagley
President and C.E.O.
Mr. Glenn Johnson
V.P. Finance and C.F.O.
Horizon Air Industries, Inc.
19521 Pacific Highway South
Seattle, Washington
98188

Gentlemen,

Re:  Letter Agreement No. B96-ERS-80345-17

Reference is made to Purchase Agreement No. PA 8-0345 (the "Agreement") 
between Bombardier Inc., represented by its Bombardier Regional Aircraft 
Division ("BRAD"), and Horizon Air Industries, Inc. ("Buyer") for the sale 
of forty (40) DHC-8 aircraft (the "Aircraft").

This letter, when accepted and agreed to by Buyer contemporaneously with 
execution of the Agreement, will become part of the Agreement and will 
evidence our further agreement with respect to the matters set forth below.

All terms herein and in the Agreement and not defined herein shall have the 
same meanings as in the Agreement.
[CONFIDENTIAL TREATMENT REQUESTED]

3.0     In the event of the termination of the Agreement, this Letter 
Agreement shall become automatically null and void.

4.0     The provisions of this Letter Agreement are personal to Buyer and 
shall not be assigned or otherwise disposed of by Buyer without the 
prior written consent of BRAD.

5.0     This Letter Agreement constitutes an integral part of the Agreement 
and subject to the terms and conditions contained therein.

If the foregoing correctly sets forth your understanding of our agreement 
with respect to the above matters, please indicate your acceptance and 
agreement below.

Yours truly,
BOMBARDIER INC.

_____________________________
Michel Bourgeois
Vice President, Contracts
Bombardier Regional Aircraft Division

ACCEPTED AND AGREED TO:

this       day of August 1996

HORIZON AIR INDUSTRIES, INC.

_____________________________
Glenn Johnson
V.P. Finance and C.F.O.

August 27, 1996
Our Ref:  B96-ERS-80345-18

Mr. George Bagley
President and C.E.O. 
Mr. Glenn Johnson
V.P. Finance and C.F.O.
Horizon Air Industries, Inc.
19521 Pacific Highway South
Seattle, Washington
98188

Dear Gentlemen,

Re:  Letter Agreement No. B96-ERS-80345-18

Reference is made to Purchase Agreement No. PA 8-0345 (the "Agreement") 
between Bombardier Inc., represented by its Bombardier Regional Aircraft 
Division ("BRAD"), and Horizon Air Industries, Inc. ("Buyer") for the sale 
of DHC-8 aircraft.

This letter, when accepted and agreed to by Buyer contemporaneously with 
execution of the Agreement, will become part of the Agreement and will 
evidence our further agreement with respect to the matters set forth below.

All terms herein and in the Agreement and not defined herein shall have the 
same meanings as in the Agreement.  In this Letter Agreement No. B96-ERS-
80345-18 the term Aircraft shall apply only to the twenty-five (25) firm 
DHC-8 aircraft.

[CONFIDENTIAL TREATMENT REQUESTED]

122.0   In the event of the termination of the Agreement, this Letter 
Agreement shall become automatically null and void.

133.0   The provisions of this Letter Agreement are personal to Buyer and 
shall not be assigned or otherwise disposed of by Buyer without the 
prior written consent of BRAD.

144.0   This Letter Agreement constitutes an integral part of the 
Agreement and subject to the terms and conditions contained therein.

If the foregoing correctly sets forth your understanding of our agreement 
with respect to the above matters, please indicate your acceptance and 
agreement below.

Yours truly,
BOMBARDIER INC.

_____________________________
Michel Bourgeois
Vice President, Contracts
Bombardier Regional Aircraft Division

ACCEPTED AND AGREED TO:

this ...... day of August 1996

HORIZON AIR INDUSTRIES, INC.

_____________________________
Glenn Johnson
V.P. Finance and C.F.O.

August 27, 1996
Our Ref:  B96-ERS-80345-19

Mr. George Bagley
President and C.E.O.
Mr. Glenn Johnson
V.P. Finance and C.F.O.
Horizon Air Industries, Inc.
19521 Pacific Highway South
Seattle, Washington
98188

Gentlemen,

Re:  Letter Agreement No. B96-ERS-80345-19

Reference is made to Purchase Agreement No. PA 8-0345 (the "Agreement") 
between Bombardier Inc., represented by its Bombardier Regional Aircraft 
Division, ("BRAD"), and Horizon Air Industries, Inc. ("Buyer") for the sale 
of forty (40) DHC-8 aircraft (the "Aircraft").

This letter, when accepted and agreed to by Buyer contemporaneously with 
execution of the Agreement, will become part of the Agreement and will 
evidence our further agreement with respect to the matters set forth below.

All terms herein and in the Agreement and not defined herein shall have the 
same meanings as in the Agreement.
[CONFIDENTIAL TREATMENT REQUESTED]

5.0     In the event of the termination of the Agreement, this Letter 
Agreement shall become automatically null and void. 

6.0     The provisions of this Letter Agreement are personal to Buyer and 
shall not be assigned or otherwise disposed of by Buyer without the 
prior written consent of BRAD. 

7.0     This Letter Agreement constitutes an integral part of the Agreement 
and subject to the terms and conditions contained therein. 

If the foregoing correctly sets forth your understanding of our agreement 
with respect to the above matters, please indicate your acceptance and 
agreement below.

Yours truly,
BOMBARDIER INC.

_____________________________
Michel Bourgeois
Vice President, Contracts
Bombardier Regional Aircraft Division

ACCEPTED AND AGREED TO:

this       day of August 1996

HORIZON AIR INDUSTRIES, INC.

_____________________________
Glenn Johnson
V.P. Finance and C.F.O.

August 27, 1996
Our Ref:  B96-ERS-80345-20

Mr. George Bagley
President and C.E.O.
Mr. Glenn Johnson
V.P. Finance and C.F.O.
Horizon Air Industries, Inc.
19521 Pacific Highway South
Seattle, Washington
98188

Gentlemen,

Re:  Letter Agreement No. B96-ERS-80345-20

Reference is made to Purchase Agreement No. PA 8-0345 (the "Agreement") 
between Bombardier Inc., represented by its Bombardier Regional Aircraft 
Division, ("BRAD"), and Horizon Air Industries, Inc. ("Buyer") for the sale 
of forty (40) DHC-8 aircraft (the "Aircraft").

This letter, when accepted and agreed to by Buyer contemporaneously with 
execution of the Agreement, will become part of the Agreement and will 
evidence our further agreement with respect to the matters set forth below.

All terms herein and in the Agreement and not defined herein shall have the 
same meanings as in the Agreement.

[CONFIDENTIAL TREATMENT REQUESTED]

2.0     In the event of the termination of the Agreement, this Letter 
Agreement shall become automatically null and void.

3.0     The provisions of this Letter Agreement are personal to Buyer and 
shall not be assigned or otherwise disposed of by Buyer without 
the prior written consent of BRAD.

4.0     This Letter Agreement constitutes an integral part of the 
Agreement and subject to the terms and conditions contained 
therein.

If the foregoing correctly sets forth your understanding of our agreement 
with respect to the above matters, please indicate your acceptance and 
agreement below.

Yours truly,
BOMBARDIER INC.

_____________________________
Michel Bourgeois
Vice President, Contracts
Bombardier Regional Aircraft Division

ACCEPTED AND AGREED TO:

this ...... day of August 1996

HORIZON AIR INDUSTRIES, INC.

_____________________________
Glenn Johnson
V.P. Finance and C.F.O.

August 27, 1996
Our Ref:  B96-ERS-80345-21

Mr. George Bagley
President and C.E.O.
Mr. Glenn Johnson
V.P. Finance and C.F.O.
Horizon Air Industries, Inc.
19521 Pacific Highway South
Seattle, Washington
98188

Gentlemen,

Re:  Letter Agreement No. B96-ERS-80345-21

Reference is made to Purchase Agreement No. PA 8-0345 (the "Agreement") 
between Bombardier Inc., represented by its Bombardier Regional Aircraft 
Division, ("BRAD") and Horizon Air Industries, Inc. ("Buyer") for the sale 
of forty (40) DHC-8 aircraft (the "Aircraft").

This letter, when accepted and agreed to by Buyer contemporaneously with 
execution of the Agreement, will become part of the Agreement and will 
evidence our further agreement with respect to the matters set forth below.

All terms herein and in the Agreement and not defined herein shall have the 
same meanings as in the Agreement.

[CONFIDENTIAL TREATMENT REQUESTED]

9.0     In the event of the termination of the Agreement, this Letter 
Agreement shall become automatically null and void.

10.0    The provisions of this Letter Agreement are personal to Buyer and 
shall not be assigned or otherwise disposed of by Buyer without the 
prior written consent of BRAD.

11.0    This Letter Agreement constitutes an integral part of the Agreement 
and subject to the terms and conditions contained therein.

If the foregoing correctly sets forth your understanding of our agreement 
with respect to the above matters, please indicate your acceptance and 
agreement below.

Yours truly,
BOMBARDIER INC.

_____________________________
Michel Bourgeois
Vice President, Contracts
Bombardier Regional Aircraft Division

ACCEPTED AND AGREED TO:

this ...... day of August 1996

HORIZON AIR INDUSTRIES, INC.

_____________________________
Glenn Johnson
V.P. Finance and C.F.O.

APPENDIX A

[CONFIDENTIAL TREATMENT REQUESTED]

August 27, 1996
Our Ref:  B96-ERS-80345-22

Mr. George Bagley
President and C.E.O.
Mr. Glenn Johnson
V.P. Finance and C.F.O.
Horizon Air Industries, Inc.
19521 Pacific Highway South
Seattle, Washington
98188

Gentlemen,

Re:  Letter Agreement No. B996-ERS-80345-22

Reference is made to Purchase Agreement No. PA 8-0345 (the "Agreement") 
between Bombardier Inc., represented by its Bombardier Regional Aircraft 
Division, ("BRAD"), and Horizon Air Industries, Inc. ("Buyer") for the sale 
of forty (40) DHC-8 aircraft (the "Aircraft").

This letter, when accepted and agreed to by Buyer contemporaneously with 
execution of the Agreement, will become part of the Agreement and will 
evidence our further agreement with respect to the matters set forth below.

All terms herein and in the Agreement and not defined herein shall have the 
same meanings as in the Agreement.

SPARE PARTS SUPPORT PROGRAM -FLEX PARTS

1.0     In the event a Spare Parts Support Program - Flex Parts become 
generally offerable by BRAD, BRAD will provide a quotation to Buyer 
and Buyer shall be given the opportunity to purchase Flex Parts 
subject to terms and conditions to be agreed upon.

2.0     In the event of the termination of the Agreement, this Letter 
Agreement shall become automatically null and void.

3.0     The provisions of this Letter Agreement are personal to Buyer and 
shall not be assigned or otherwise disposed of by Buyer without the 
prior written consent of BRAD.

4.0     This Letter Agreement constitutes an integral part of the Agreement 
and subject to the terms and conditions contained therein.

If the foregoing correctly sets forth your understanding of our agreement 
with respect to the above matters, please indicate your acceptance and 
agreement below.

Yours truly,
BOMBARDIER INC.

_____________________________
Michel Bourgeois
Vice President, Contracts
Bombardier Regional Aircraft Division

ACCEPTED AND AGREED TO:

this ...... day of August 1996

HORIZON AIR INDUSTRIES, INC.

_____________________________
Glenn Johnson
V.P. Finance and C.F.O.

August 27, 1996
Our Ref:  B96-ERS-80345-23

Mr. George Bagley
President and C.E.O.
Mr. Glenn Johnson
V.P. Finance and C.F.O.
Horizon Air Industries, Inc.
19521 Pacific Highway South
Seattle, Washington
98188

Gentlemen,

Re:  Letter Agreement No. B96-ERS-80345-23

1.0     Intentionally Deleted.

August 27, 1996
Our Ref:  B96-ERS-80345-240

Mr. George Bagley
President and C.E.O.
Mr. Glenn Johnson
V.P. Finance and C.F.O.
Horizon Air Industries, Inc.
19521 Pacific Highway South
Seattle, Washington
98188

Gentlemen,

Re:  Letter Agreement No. B96-ERS-80345-240

1.0     Intentionally Deleted.

August 27, 1996
Our Ref:  B96-ERS-80345-25

Mr. George Bagley
President and C.E.O.
Mr. Glenn Johnson
V.P. Finance and C.F.O.
Horizon Air Industries, Inc.
19521 Pacific Highway South
Seattle, Washington
98188

Gentlemen,

Re:  Letter Agreement No. B96-ERS-80345-25

Reference is made to Purchase Agreement No. PA 8-0345 (the "Agreement") 
between Bombardier Inc., represented by its Bombardier Regional Aircraft 
Division, ("BRAD"), and Horizon Air Industries, Inc. ("Buyer") for the sale 
of forty (40) DHC-8 aircraft (the "Aircraft").

This letter, when accepted and agreed to by Buyer contemporaneously with 
execution of the Agreement, will become part of the Agreement and will 
evidence our further agreement with respect to the matters set forth below.

All terms herein and in the Agreement and not defined herein shall have the 
same meanings as in the Agreement.

[CONFIDENTIAL TREATMENT REQUESTED]

2.0     In the event of the termination of the Agreement, this Letter 
Agreement shall become automatically null and void.

3.0     The provisions of this Letter Agreement are personal to Buyer and 
shall not be assigned or otherwise disposed of by Buyer without the 
prior written consent of BRAD.

4.0     This Letter Agreement constitutes an integral part of the Agreement 
and subject to the terms and conditions contained therein.

If the foregoing correctly sets forth your understanding of our agreement 
with respect to the above matters, please indicate your acceptance and 
agreement below.

Yours truly,
BOMBARDIER INC.

_____________________________
Michel Bourgeois
Vice President, Contracts
Bombardier Regional Aircraft Division

ACCEPTED AND AGREED TO:

this ...... day of August 1996

HORIZON AIR INDUSTRIES, INC.

_____________________________
Glenn Johnson
V.P. Finance and C.F.O.

ATTACHMENT 1

[CONFIDENTIAL TREATMENT REQUESTED]

August 27, 1996
Our Ref:  B96-ERS-80345-26

Mr. George Bagley
President and C.E.O.
Mr. Glenn Johnson
V.P. Finance and C.F.O.
Horizon Air Industries, Inc.
19521 Pacific Highway South
Seattle, Washington
98188

Gentlemen,

Re:  Letter Agreement No. B96-ERS-80345-26

Reference is made to Purchase Agreement No. PA 8-0345 (the "Agreement") 
between Bombardier Inc., represented by its Bombardier Regional Aircraft 
Division, ("BRAD"), and Horizon Air Industries, Inc. ("Buyer") for the sale 
of forty (40) DHC-8 aircraft (the "Aircraft").

This letter, when accepted and agreed to by Buyer contemporaneously with 
execution of the Agreement, will become part of the Agreement and will 
evidence our further agreement with respect to the matters set forth below.

All terms herein and in the Agreement and not defined herein shall have the 
same meanings as in the Agreement.

[CONFIDENTIAL TREATMENT REQUESTED]

7.0     In the event of the termination of the Agreement, this Letter 
Agreement shall become automatically null and void.

8.0     The provisions of this Letter Agreement are personal to Buyer and 
shall not be assigned or otherwise disposed of by Buyer without the 
prior written consent of BRAD.

9.0     This Letter Agreement constitutes an integral part of the Agreement 
and subject to the terms and conditions contained therein.

If the foregoing correctly sets forth your understanding of our agreement 
with respect to the above matters, please indicate your acceptance and 
agreement below.

Yours truly,
BOMBARDIER INC.

_____________________________
Michel Bourgeois
Vice President, Contracts
Bombardier Regional Aircraft Division

ACCEPTED AND AGREED TO:

this ...... day of August 1996

HORIZON AIR INDUSTRIES, INC.

_____________________________
Glenn Johnson
V.P. Finance and C.F.O.

ATTACHMENT 1

[CONFIDENTIAL TREATMENT REQUESTED]

August 27, 1996
Our Ref:  B96-ERS-80345-27

Mr. George Bagley
President and C.E.O.
Mr. Glenn Johnson
V.P. Finance and C.F.O.
Horizon Air Industries, Inc.
19521 Pacific Highway South
Seattle, Washington
98188

Gentlemen,

Re:  Letter Agreement No. B96-ERS-80345-27

Reference is made to Purchase Agreement No. PA 8-0345 (the "Agreement") 
between Bombardier Inc., represented by its Bombardier Regional Aircraft 
Division, ("BRAD"), and Horizon Air Industries, Inc. ("Buyer") for the sale 
of forty (40) DHC-8 aircraft (the "Aircraft").

This letter, when accepted and agreed to by Buyer contemporaneously with 
execution of the Agreement, will become part of the Agreement and will 
evidence our further agreement with respect to the matters set forth below.

All terms herein and in the Agreement and not defined herein shall have the 
same meanings as in the Agreement.

[CONFIDENTIAL TREATMENT REQUESTED]

3.0     In the event of the termination of the Agreement, this Letter 
Agreement shall become automatically null and void.

4.0     The provisions of this Letter Agreement are personal to Buyer and 
shall not be assigned or otherwise disposed of by Buyer without the 
prior written consent of BRAD.

5.0     This Letter Agreement constitutes an integral part of the Agreement 
and subject to the terms and conditions contained therein.

If the foregoing correctly sets forth your understanding of our agreement 
with respect to the above matters, please indicate your acceptance and 
agreement below.

Yours truly,
BOMBARDIER INC.

_____________________________
Michel Bourgeois
Vice President, Contracts
Bombardier Regional Aircraft Division

ACCEPTED AND AGREED TO:

this ...... day of August 1996

HORIZON AIR INDUSTRIES, INC.

_____________________________
Glenn Johnson
V.P. Finance and C.F.O.

August 27, 1996
Our Ref:  B96-ERS-80345-28

Mr. George Bagley
President and C.E.O.
Mr. Glenn Johnson
V.P. Finance and C.F.O.
Horizon Air Industries, Inc.
19521 Pacific Highway South
Seattle, Washington
98188

Gentlemen,

Re:  Letter Agreement No. B96-ERS-80345-28

Reference is made to Purchase Agreement No. PA 8-0345 (the "Agreement") 
between Bombardier Inc., represented by its Bombardier Regional Aircraft 
Division, ("BRAD"), and Horizon Air Industries, Inc. ("Buyer") for the sale 
of forty (40) DHC-8 aircraft (the "Aircraft").

This letter, when accepted and agreed to by Buyer contemporaneously with 
execution of the Agreement, will become part of the Agreement and will 
evidence our further agreement with respect to the matters set forth below.

All terms herein and in the Agreement and not defined herein shall have the 
same meanings as in the Agreement.

OPTIONAL FEATURES

1.0     In the event that Buyer wishes to add or delete a standard optional 
feature from the Aircraft, Buyer will provide written notification to 
BRAD at least thirty (30) weeks prior to the scheduled delivery date 
of such Aircraft.  Any item deleted from or re-instated to the Buyer 
Selected Optional Features as set forth in Appendix IV to the 
Agreement shall be credited or charged at the price as specified in 
Appendix IV.

2.0     In the event of the termination of the Agreement, this Letter 
Agreement shall become automatically null and void.

3.0     The provisions of this Letter Agreement are personal to Buyer and 
shall not be assigned or otherwise disposed of by Buyer without the 
prior written consent of BRAD.

4.0     This Letter Agreement constitutes an integral part of the Agreement 
and subject to the terms and conditions contained therein.

If the foregoing correctly sets forth your understanding of our agreement 
with respect to the above matters, please indicate your acceptance and 
agreement below.

Yours truly,
BOMBARDIER INC.

_____________________________
Michel Bourgeois
Vice President, Contracts
Bombardier Regional Aircraft Division

ACCEPTED AND AGREED TO:

this ...... day of August 1996

HORIZON AIR INDUSTRIES, INC.

_____________________________
Glenn Johnson
V.P. Finance and C.F.O.

August 27, 1996
Our Ref:  B96-ERS-80345-29

Mr. George Bagley
President and C.E.O.
Mr. Glenn Johnson
V.P. Finance and C.F.O.
Horizon Air Industries, Inc.
19521 Pacific Highway South
Seattle, Washington
98188

Dear Gentlemen,

Re:  Letter Agreement No. B96-ERS-80345-29

Reference is made to Purchase Agreement No. PA 8-0345 (the "Agreement") 
between Bombardier Inc., represented by its Bombardier Regional Aircraft 
Division ("BRAD"), and Horizon Air Industries, Inc. ("Buyer") for the sale 
of forty (40) DHC-8 aircraft (the "Aircraft").

This letter, when accepted and agreed to by Buyer contemporaneously with 
execution of the Agreement, will become part of the Agreement and will 
evidence our further agreement with respect to the matters set forth below.

All terms herein and in the Agreement and not defined herein shall have the 
same meanings as in the Agreement.

[CONFIDENTIAL TREATMENT REQUESTED]

2.0     In the event of the termination of the Agreement, this Letter 
Agreement shall become automatically null and void.

3.0     The provisions of this Letter Agreement are personal to Buyer and 
shall not be assigned or otherwise disposed of by Buyer without the 
prior written consent of BRAD. 

4.0     This Letter Agreement constitutes an integral part of the Agreement 
and subject to the terms and conditions contained therein. 

If the foregoing correctly sets forth your understanding of our agreement 
with respect to the above matters, please indicate your acceptance and 
agreement below.

Yours truly,
BOMBARDIER INC.

_____________________________
Michel Bourgeois
Vice President, Contracts
Bombardier Regional Aircraft Division

ACCEPTED AND AGREED TO:

this ...... day of August 1996

HORIZON AIR INDUSTRIES, INC.

_____________________________
Glenn Johnson
V.P. Finance and C.F.O.

August 27, 1996
Our Ref:  B96-ERS-80345-30

Mr. George Bagley
President and C.E.O.
Mr. Glenn Johnson
V.P. Finance and C.F.O.
Horizon Air Industries, Inc.
19521 Pacific Highway South
Seattle, Washington
98188

Dear Gentlemen,

Re:  Letter Agreement No. B96-ERS-80345-30

Reference is made to Purchase Agreement No. PA 8-0345 (the "Agreement") 
between Bombardier Inc., represented by its Bombardier Regional Aircraft 
Division ("BRAD"), and Horizon Air Industries, Inc. ("Buyer") for the sale 
of forty (40) DHC-8 aircraft (the "Aircraft").

This letter, when accepted and agreed to by Buyer contemporaneously with 
execution of the Agreement, will become part of the Agreement and will 
evidence our further agreement with respect to the matters set forth below.

All terms herein and in the Agreement and not defined herein shall have the 
same meanings as in the Agreement.

[CONFIDENTIAL TREATMENT REQUESTED]

2.0     In the event of the termination of the Agreement, this Letter 
Agreement shall become automatically null and void.

3.0     The provisions of this Letter Agreement are personal to Buyer and 
shall not be assigned or otherwise disposed of by Buyer without the 
prior written consent of BRAD. 

4.0     This Letter Agreement constitutes an integral part of the Agreement 
and subject to the terms and conditions contained therein. 

If the foregoing correctly sets forth your understanding of our agreement 
with respect to the above matters, please indicate your acceptance and 
agreement below.

Yours truly,
BOMBARDIER INC.

_____________________________
Michel Bourgeois
Vice President, Contracts
Bombardier Regional Aircraft Division

ACCEPTED AND AGREED TO:

this ...... day of August 1996

HORIZON AIR INDUSTRIES, INC.

_____________________________
Glenn Johnson
V.P. Finance and C.F.O.

Alaska Air Group, Inc.                                                                    EXHIBIT 11
Computation of Earnings Per Common Share
(In thousands, except per share)

Three Months Ended           Nine Months Ended
September 30,               September 30,

1996          1995          1996          1995

PRIMARY -
Net income                                        $32,816       $27,352       $43,611       $18,033

Average number of shares outstanding                14,467        13,509        14,165        13,440
Assumed exercise of stock options reduced
by the number of shares purchased with
the proceeds from exercise of such options            121            66          110            10

Average shares as adjusted                         14,588        13,575        14,275        13,450

Primary earnings per common share                   $2.25         $2.01         $3.06         $1.34

FULLY DILUTED -
Net income                                        $32,816       $27,352       $43,611       $18,033
After tax interest on convertible debt              2,038         2,580         6,070         6,868

Income applicable to common shares                $34,854       $29,932       $49,681       $24,901

Average number of shares outstanding               14,467        13,509        14,165        13,440
Assumed exercise of stock options                     121            66           110            10
Assumed conversion of 6.5% debentures               6,151         6,151         6,151         2,141
Assumed conversion of 7.75% debentures                381           446           381           487
Assumed conversion of 6.875% debentures             1,608         1,608         1,608         1,608
Assumed conversion of 7.25% notes                       0         1,254             0         2,745

Average shares as adjusted                         22,728        23,034        22,415        20,431

Fully diluted earnings per common share             $1.53         $1.30         $2.22         $1.22

<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ALASKA AIR
GROUP INC. THIRD QUARTER 1996 FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000

<PERIOD-TYPE>                   9-MOS
<FISCAL-YEAR-END>                          DEC-31-1996
<PERIOD-END>                               SEP-30-1996
<CASH>                                           51900
<SECURITIES>                                     79400
<RECEIVABLES>                                    77800
<ALLOWANCES>                                         0
<INVENTORY>                                      46300
<CURRENT-ASSETS>                                325000
<PP                                         1214800
<DEPRECIATION>                                  358000
<TOTAL-ASSETS>                                 1331900
<CURRENT-LIABILITIES>                           439000
<BONDS>                                         452900
<PREFERRED-MANDATORY>                                0
<PREFERRED>                                          0
<COMMON>                                         17200
<OTHER-SE>                                      260500
<TOTAL-LIABILITY-AND-EQUITY>                   1331900
<SALES>                                        1233000
<TOTAL-REVENUES>                               1233000
<CGS>                                          1135600
<TOTAL-COSTS>                                  1135600
<OTHER-EXPENSES>                                     0
<LOSS-PROVISION>                                     0
<INTEREST-EXPENSE>                               30200
<INCOME-PRETAX>                                  76000
<INCOME-TAX>                                     32400
<INCOME-CONTINUING>                              43600
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                     43600
<EPS-PRIMARY>                                     3.06
<EPS-DILUTED>                                     2.22