ALK 2013 Annual Report-2014 Proxy Statement

Annual Report

2013

Annual Report

To our ShareholderS:2013 was another excellent year for Alaska Air Group. It was a record year in many respects, adding to a growing trend of great performance and execution both financially and operationally. Id like to share some of our accomplishments with you, along with some of our thoughts about the future. But before I do, I want to give you some background on how far weve come.

Alaskas history dates back 82 years and over those years weve seen a tremendous amount of change that has reshaped the industry and our company. Weve experienced government regulation and de-regulation, economic peaks and valleys, including the Great Recession, a fuel crisis, the terrorist attacks of September 11,

and several rounds of consolidation. Through it all, airlines have come and gone many disappearing altogether and many more restructuring through bankruptcy. Today, the industry looks nothing like it did 20 years ago, or even 10 years ago. Service has improved, airlines are more stable, and theyre performing better financially (though the industrys combined result since the Wright Brothers took off at Kitty Hawk is still a net loss!). A few airlines, led by Alaska Air Group, are returning capital to shareholders in meaningful ways a very positive sign of real change. Well have to see if the industrys improved performance persists, but the last few years look good and many experts expect further improvement in the next few.

So, a question I sometimes ask is: Through all of this change, why is Alaska Air Group still here? Were a relatively small player in the U.S.airline industry with around 3.5% of the flown capacity and were competing against carriers that are as much as eight times our size. Yet, we are still here and we are still Alaska Airlines. My answer and this is based on what customers frequently tell us is that its because of our people and, in particular, because of the friendly and personal service they provide. Sure, there are other factors a safe and industry-leading operation, low fares, a focus on low costs, and dedication to doing the right thing. But, at the end of the day, all of these things are due to our people.

So that leads us to 2013. Here is a short list of the things our people accomplished:

First, we continue to be safe. Both Alaska and Horizon have strong safety records, and we are working to get better every day. Safety is our top priority and the foundation for everything else we do.

Second, we received our sixth consecutive J.D. Power Award for Highest in Customer Satisfaction Among Traditional Network Carriers in North America. This is one of the most respected measures of service in our industry, and we are very proud to have received this recognition from our customers.

Third, our operational performance continued to lead the industry, with 87% of our mainline flights completed on time. Flightstats.com ranked Alaska the No. 1 major airline in North America for the fourth consecutive year and The Wall Street Journal rated us the best major airline in the nation in two of the last three years.

Fourth, we finalized new five-year agreements with Alaskas pilots and Horizons flight attendants, and we recently reached a tentative five-year agreement with Alaskas clerical, office, and passenger service personnel. We are optimistic well reach agreement with Alaskas flight attendants on a new contract soon. We are at our best when our people are onboard and fully engaged, and were pleased to have long-term contracts in place for most of our employee groups.

Fifth, we met or exceeded nearly all of our operational and financial goals, which resulted in record incentive pay for our employees. Each employee at Alaska and Horizon received a bonus that represents at least 4 weeks of pay. As the company performs well, our employees are rewarded, and we strongly believe this alignment benefits all of our stakeholders.

Sixth, significant company contributions over the last decade and favorable market conditions have resulted in fully funded defined-benefit pension plans. Weve restructured many of our legacy airline benefits, including shifting to defined-contribution plans, which allows us to compete on a more equal footing with low-cost airlines.

And last, but certainly not least, we are leading the industry in creating value for our shareholders. For 2013, we reported $383 million of adjusted net income, a 12.4% pre-tax margin, a 13.6% return on invested capital, and $415 million of free cash flow. These are all records. Strong profits over the last several years and the balanced use of free cash flow have produced one of the best balance sheets in the industry. Debt and operating leases are now just 35% of our capital structure and we have no net debt.

And we are returning capital to shareholders. During 2013, we declared a dividend for the first time in 21 years, and in early 2014 we increased it by 25%. We bought back 2.5 million shares of our stock in 2013, and we have now repurchased 21 million shares over the last seven years. We are committed to providing strong, sustainable returns for our owners.

We take pride in seeing our company grow and perform well. And were excited about raising the bar as we move forward.

As we look ahead, there are some big challenges coming our way, not the least of which is the addition of significant new competition in our core West Coast markets. In response, we have undertaken a number of initiatives designed to make the service we provide to our customers and our communities even better. Its because of our people that we can face the future with confidence, and all 13,000 of us know that if we want to continue as a strong and independent airline, it is imperative that we perform well for our customers, our communities, our employees and most importantly, our owners. Were looking forward to doing just that.

Im incredibly honored to lead the best group of people in the industry, and we appreciate your support of and your investment in Alaska Air Group.

Sincerely,

Brad Tilden

Chairman and Chief Executive Officer

2014PROXY STATEMENT

ALASKA AIR GROUP, INC.NOTICE OF ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT

TABLE OF CONTENTSGENERAL INFORMATIONAnnual Meeting Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1Questions and Answers about the Annual Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

PROPOSALS TO BE VOTED ONProposal 1: Election of Directors to One-Year Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11Proposal 2: Ratification of the Appointment of the Companys Independent Accountants . . . . . . . . . 16Proposal 3: Advisory Vote Regarding the Compensation of the Companys Named Executive Officers . . 16Proposal 4: Adoption and Approval of Amendment to the Certificate of Incorporation to AuthorizeAdditional Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Proposal 5: Adoption and Approval of Amendment to the Certificate of Incorporation to Reduce ParValue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

Proposal 6: Stockholder Proposal Regarding an Independent Chair Policy . . . . . . . . . . . . . . . . . . . . . 22

CORPORATE GOVERNANCEStructure of the Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27Director Independence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31Director Nomination Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32Board Leadership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36Executive Sessions and Lead Director . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37Risk Oversight . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37Code of Conduct and Ethics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38Certain Relationships and Related Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38Stockholder Communication Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

AUDIT COMMITTEE MATTERSIndependent Registered Public Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41Audit Committee Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

DIRECTOR COMPENSATION2013 Director Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44Director Stock Ownership Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

EXECUTIVE COMPENSATIONCompensation Discussion and Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46Compensation and Leadership Development Committee Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62Compensation and Leadership Development Committee Interlocks and Insider Participation . . . . . . 622013 Summary Compensation Table . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 632013 Grants of Plan-Based Awards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 662013 Outstanding Equity at Fiscal Year End . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 672013 Options Exercised and Stock Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68Pension and Other Retirement Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 692013 Nonqualified Deferred Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71Potential Payments Upon Change in Control and Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72

SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENTSecurity Ownership of Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75Beneficial Owners of 5% or More . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76Section 16(a) Beneficial Ownership Reporting Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

P.O. Box 68947Seattle, Washington 98168

To our Stockholders:

The Annual Meeting of Stockholders ofAlaska Air Group, Inc. (the Annual Meeting)will be held in the Auditorium at theAnchorage Museum, 625 C Street,Anchorage, Alaska at 4 p.m. on Thursday,May 8, 2014, for the following purposes:

1. to elect to the Board of Directors theten nominees named in this ProxyStatement, each for a one-year term;

2. to ratify the appointment of KPMG LLP asthe Companys independent registeredpublic accountants (the independentaccountants) for fiscal year 2014;

3. to seek an advisory vote to approve thecompensation of the Companys NamedExecutive Officers;

4. to seek adoption and approval of anamendment to the Companyscertificate of incorporation to increasethe authorized common stock;

5. to seek adoption and approval of anamendment to the Companyscertificate of incorporation to reduce thepar value of the Companys stock;

6. to consider a stockholder proposalregarding an independent boardchairman policy; and

7. to transact such other business as mayproperly come before the meeting or anypostponement or adjournment thereof.

The Board of Directors set March 18, 2014as the record date for the Annual Meeting.

This means that owners of Alaska Air Groupcommon stock as of the close of businesson that date are entitled to receive thisnotice, attend the meeting in person withproper proof of ownership or by proxy (seeCan I attend the Annual Meeting, and whatdo I need for admission? in the followingQuestions and Answers About the AnnualMeeting section of this Proxy Statement);and vote at the meeting and anyadjournments or postponements.Whether or not you attend the meeting inperson, we encourage you to vote byInternet or phone or to complete, sign andreturn your proxy prior to the meeting.Because the majority of our stockholders willnot be able to attend in person, we invite youto submit any questions you may have thatwould be of general stockholder interest tothe Corporate Secretary via email [email protected]. We willinclude as many of your questions aspossible during the Q&A session of themeeting and will send you a copy of theresponse. Every stockholder vote isimportant. To ensure your vote is counted atthe Annual Meeting, please vote as promptlyas possible.By Order of the Board of Directors,

Shannon K. AlbertsCorporate Secretary

March 28, 2014

IMPORTANT NOTICE REGARDING THE INTERNET AVAILABILITY OF PROXYMATERIALS FOR THE STOCKHOLDERS MEETING TO BE HELD ON MAY 8, 2014.

Stockholders may access, view and download the 2014 Proxy Statement and 2013 Annual Report atwww.edocumentview.com/alk.

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GENERAL INFORMATION

ANNUAL MEETING INFORMATION

The Board of Directors of Alaska Air Group,Inc. (Air Group or the Company) is solicitingproxies for the 2014 Annual Meeting ofStockholders. This Proxy Statement containsimportant information for you to considerwhen deciding how to vote on the mattersbrought before the meeting. Please read itcarefully.

The Board set March 18, 2014, as therecord date for the meeting. Stockholderswho owned Air Group common stock on thatdate are entitled to vote at the meeting, witheach share entitled to one vote. There were68,825,259 shares of Air Group commonstock outstanding on the record date.

Internet Availability of Annual MeetingMaterials

On or about March 28, 2014, stockholdersof record, beneficial owners and employeeparticipants in the Companys 401(k) Planswere mailed a Notice of Internet Availabilityof Proxy Materials (the Notice) directingthem to a website where they can accessour 2014 Proxy Statement and 2013 AnnualReport (the Annual Meeting Materials). The

Companys Form 10-K for the year endedDecember 31, 2013 is included in the 2013Annual Report. It was filed with theSecurities and Exchange Commission (SEC)on February 13, 2014.

If you would prefer to receive a paper copyof the proxy materials, please follow theinstructions printed on the Notice and thematerial will be mailed to you.

All stockholders may access, view anddownload the Annual Meeting Materials atwww.edocumentview.com/alk. Otherinformation on the website does notconstitute part of this Proxy Statement.

Admission to the Annual Meeting

If you would like to attend the meeting inperson, you must present proof of stockownership as of the record date along withvalid, government-issued photoidentification. For further details, see Can Iattend the Annual Meeting, and what do Ineed for admission? in the followingQuestions and Answers About the AnnualMeeting section of this Proxy Statement.

QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING

Why am I receiving the Annual MeetingMaterial?

You are receiving the Annual MeetingMaterial from us because you owned AirGroup common stock as of the record datefor the Annual Meeting. This ProxyStatement describes issues on which youmay vote and provides you with otherimportant information so that you can makeinformed decisions.

You may own shares of Air Group commonstock in several different ways. If your stockis represented by one or more stockcertificates registered in your name or if youhave a Direct Registration Service (DRS)advice evidencing shares held in book entryform, then you have a stockholder accountwith our transfer agent, ComputershareTrust Company, N.A. (Computershare), andyou are a stockholder of record. If you holdyour shares in a brokerage, trust, or similaraccount, then you are the beneficial owner

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but not the stockholder of record of thoseshares. Employees of the Companyssubsidiaries who hold shares of stock in oneor more of the Companys 401(k) retirementplans are beneficial owners.

What am I voting on?

You are being asked to vote on the electionof the ten director nominees named in thisProxy Statement, to ratify the appointmentof KPMG LLP as the Companys independentaccountants, to provide an advisory vote inregard to the compensation of theCompanys Named Executive Officers, tovote on two proposals to amend thecertificate of incorporation to (1) increasethe authorized common stock and(2) decrease the par value of the Companysstock, and to vote on a stockholder proposalregarding an independent chairman policy.When you sign and mail the proxy card orsubmit your proxy by phone or the Internet,you appoint each of Bradley D. Tilden andKeith Loveless, or their respectivesubstitutes or nominees, as yourrepresentatives at the meeting. (When werefer to the named proxies, we arereferring to Messrs. Tilden and Loveless.)This way, your shares will be voted even ifyou cannot attend the meeting.

How does the Board of Directorsrecommend I vote on each of theproposals?

FOR the election of each of the Boardsten director nominees named in thisProxy Statement;

FOR the ratification of the appointment ofKPMG LLP as the Companysindependent accountants for fiscal 2014;

FOR the ratification of the compensationof the Companys Named ExecutiveOfficers;

FOR the proposal to amend thecertificate of incorporation to increasethe authorized common stock;

FOR the proposal to amend thecertificate of incorporation to decreasethe par value; and

AGAINST the stockholder proposalregarding an independent chairmanpolicy.

How do I vote my shares?

Stockholders of record can vote by using theproxy card or by phone or the Internet.

Beneficial owners whose stock is held:

in a brokerage account can vote by usingthe voting instruction form provided bythe broker or by phone or the Internet;

by a bank, and who have the power tovote or to direct the voting of the shares,can vote using the proxy or the votinginformation form provided by the bank or,if made available by the bank, by phoneor the Internet;

in trust under an arrangement thatprovides the beneficial owner with thepower to vote or to direct the voting of theshares can vote in accordance with theprovisions of such arrangement; and/or

in trust in one of the Companys 401(k)retirement plans can vote by telephone orinternet, or by mailing the votinginstruction form provided by the trustee.

Beneficial owners other those whobeneficially own stock held in trust in one ofthe Companys 401(k) retirement plans canvote at the meeting provided that he or sheobtains a legal proxy from the person orentity holding the stock for him or her(typically a broker, bank, or trustee). Abeneficial owner can obtain a legal proxy by

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making a request to the broker, bank, ortrustee. Under a legal proxy, the bank,broker, or trustee confers all of its rights asa record holder to grant proxies or to vote atthe meeting.

Listed below are the various means Internet, phone and mail you can use tovote your shares without attending theAnnual Meeting.

You can vote on the Internet.

Stockholders of record and beneficialowners of the Companys common stockcan vote via the Internet regardless ofwhether they receive their annual meetingmaterials through the mail or via theInternet. Instructions for voting are providedalong with your notice, proxy card or votinginstruction form. If you vote on the Internet,please do not mail your proxy card if youreceived one (unless you intend for it torevoke your prior Internet vote). Your Internetvote will authorize the named proxies to voteyour shares in the same manner as if youmarked, signed and returned your proxycard.

You can vote by phone.

Stockholders of record and beneficial ownersof the Companys common stock can vote byphone. Instructions are provided along withyour proxy card or voting instruction form. Ifyou vote by phone, do not mail your proxycard if you received one (unless you intendfor it to revoke your prior vote submitted byphone). Your vote by phone will authorize thenamed proxies to vote your shares in thesame manner as if you marked, signed andreturned your proxy card.

You can vote by mail.

If you received this Proxy Statement by mail,simply sign and date the enclosed proxycard or voting instruction form and mail it inthe enclosed prepaid and addressedenvelope. If you mark your choices on thecard or voting instruction form, your shareswill be voted as you instruct.

The availability of phone and Internet voting.

Internet and telephone voting facilities forstockholders of record and beneficial ownerswill be available 24 hours a day and willclose at 11:59 p.m. Eastern Time onWednesday, May 7, 2014. To allowsufficient time for voting by the trustee,voting instructions for the Companys 401(k)plan shares must be received no later than11:59 p.m. Eastern Time on Monday,May 5, 2014.

Voting by the Internet or phone is fast andconvenient and your vote is immediatelyconfirmed and tabulated. By using theInternet or phone to vote, you help AlaskaAir Group conserve natural resources andreduce postage and proxy tabulation costs.

How will my shares be voted if I return ablank proxy or voting instruction form?

If you sign and return a proxy card withoutgiving specific voting instructions, yourshares will be voted in accordance with therecommendations of the Board of Directorsshown above and as the named proxies maydetermine in their discretion with respect toany other matters properly presented for avote during the meeting or any postponementor adjournment of the meeting.

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If my shares are held in a brokerageaccount, how will my shares be voted if Ido not return voting instructions to mybroker?

If you hold your shares in street namethrough a brokerage account and you do notsubmit voting instructions to your broker,your broker may generally vote your sharesin its discretion on matters designated asroutine under the rules of the New YorkStock Exchange (NYSE). However, a brokercannot vote shares held in street name onmatters designated as non-routine by theNYSE, unless the broker receives votinginstructions from the street name(beneficial) owner.

The proposal to ratify the appointment of theCompanys independent accountants forfiscal year 2014 and the proposals toamend the certificate of incorporation areconsidered routine under NYSE rules. Eachof the other items to be submitted for a voteis considered non-routine under applicableNYSE rules. Accordingly, if you hold yourshares in street name through a brokerageaccount and you do not submit votinginstructions to your broker, your broker mayexercise its discretion to vote your shareson the proposals to ratify the appointment ofthe Companys independent accountantsand the proposals to amend the certificateof incorporation but will not be permitted tovote your shares on any of the other items.If your broker exercises this discretion, yourshares will be counted as present for thepurpose of determining a quorum at theAnnual Meeting and will be voted on theproposal to ratify the Companysindependent accountants and the proposalsto amend the certificate of incorporation inthe manner instructed by your broker, butyour shares will constitute broker non-votes on each of the other items at theAnnual Meeting.

For a description of the effect of broker non-votes on the proposals, see How manyvotes must the nominees have to beelected? and Not including the election ofdirectors, how many votes must theproposals receive in order to pass?

What other business may be properlybrought before the meeting, and whatdiscretionary authority is granted?

Under the Companys Bylaws, as amendedApril 30, 2010, a stockholder may bringbusiness before the meeting or forpublication in the Companys 2014 ProxyStatement only if the stockholder gavewritten notice to the Company on or beforeDecember 5, 2013 and complied with theother requirements included in Article II ofthe Companys Bylaws.

The Company has not received valid noticethat any business other than that describedor referenced in this Proxy Statement will bebrought before the meeting.

As to any other matters that may properlycome before the meeting and are not on theproxy card, the proxy grants toMessrs. Tilden and Loveless the authority tovote in their discretion the shares for whichthey hold proxies.

What does it mean if I receive more thanone proxy card, voting instruction form oremail notification from the Company?

It means that you hold Alaska Air Groupstock in more than one account. Pleasecomplete and submit all proxies to ensurethat all your shares are voted or vote byInternet or phone using each of theidentification numbers.

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What if I change my mind after I submit myproxy?

Stockholders, except for persons whobeneficially own shares held in trust in oneof the Companys 401(k) retirement plans,may revoke a proxy and change a vote bydelivering a later-dated proxy or by voting atthe meeting. The later-dated proxy may bedelivered by phone, Internet or mail andneed not be delivered by the same meansused in delivering the prior proxysubmission.

Except for persons beneficially owningshares in one of the Companys 401(k)retirement plans, stockholders may do thisat a later date or time by:

voting by phone or the Internet before11:59 p.m. Eastern Time on Wednesday,May 7, 2014 (your latest phone orInternet proxy will be counted);

signing and delivering a proxy card with alater date; or

voting at the meeting. (If you hold yourshares beneficially through a broker, youmust bring a legal proxy from the brokerin order to vote at the meeting. Pleasealso note that attendance at the meeting,in and of itself, without voting in personat the meeting, will not cause yourpreviously granted proxy to be revoked.)

Persons beneficially owning shares in one ofthe Companys 401(k) retirement planscannot vote in person at the meeting andmust vote in accordance with instructionsfrom the trustees. Subject to thesequalifications, such holders have the samerights as other record and beneficial ownersto change their votes by phone or theInternet, however, in all cases your votemust be submitted by 11:59 p.m. EasternTime on Monday, May 5, 2014.

Stockholders of record can obtain a newproxy card by contacting the CompanysCorporate Secretary, Alaska Air Group, Inc.,P.O. Box 68947, Seattle, WA 98168,telephone (206) 392-5719.

Stockholders with shares held by a broker,trustee or bank can obtain a new votinginstruction form by contacting your broker,trustee or bank.

Stockholders whose shares are held in oneof the Companys 401(k) retirement planscan obtain a new voting instruction form bycontacting the trustee of such plan. You canobtain information about how to contact thetrustee from the Companys CorporateSecretary. Please refer to the section belowtitled How are shares voted that are held ina Company 401(k) plan? for moreinformation.

If you sign and date the proxy card or votinginstruction form and submit it in accordancewith the accompanying instructions and in atimely manner, any earlier proxy card orvoting instruction form will be revoked andyour new choices will be voted.

How are shares voted that are held in theCompanys 401(k) plan?

On the record date, 2,160,457 shares wereheld in trust for Alaska Air Group 401(k) planparticipants. The trustees, VanguardFiduciary Trust Company (Vanguard) andFidelity Management Trust Company(Fidelity), provided Notice of Proxy andAccess instructions to each participant whoheld shares through the Companys 401(k)plans on the record date. The trustees willvote only those shares for which instructionsare received from participants. If aparticipant does not indicate a preferenceas to a matter, including the election ofdirectors, then the trustees will not vote theparticipants shares on such matters.

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To allow sufficient time for voting by thetrustee, please provide voting instructionsno later than 11:59 p.m. Eastern Time onMonday, May 5, 2014. Because the sharesmust be voted by the trustee, those whohold shares through the 401(k) plans maynot vote these shares at the meeting.

Can I attend the Annual Meeting, and whatdo I need for admission?

Admission to the Annual Meeting is limitedto Air Group stockholders as of March 18,2014 and persons holding valid proxies fromstockholders of record. To be admitted tothe Annual Meeting, you must present proofof your stock ownership as of the recorddate and valid, government-issued photoidentification. Acceptable proof of stockownership includes:

the admission ticket attached to the topof your proxy card (or made available byComputershare if you submit your proxyonline);

a copy of the Notice of Proxy and AccessInstructions you received by mail;

a photocopy of your voting instructionform;

a letter from your bank or brokerconfirming your ownership as of therecord date;

a brokerage statement evidencingownership of shares of Alaska Air Groupstock as of the record date; or

a valid proxy form.

If you do not provide photo identification orcomply with the other procedures outlinedabove upon request, you will not beadmitted to the Annual Meeting. Guests ofstockholders will not be admitted unlessthey provide their own proof of ownershipaccording to the criteria outlined above.

Each stockholder of record or beneficialstockholder, including institutional holders,may designate one person to represent theirshares at the meeting. If multiplerepresentatives request admission on behalfof the same stockholder, the first person toregister at the door with appropriate proof ofownership and proper delegation of votingauthority will be allowed to attend themeeting.

Security measures may include bag search,metal detector and hand-wand search. Theuse of cameras (including cell phones withphotographic capabilities), recordingdevices, smart phones and other electronicdevices is strictly prohibited.

May I vote in person at the meeting?

We will provide a ballot to any record holderof our stock who requests one at themeeting. If you hold your shares through abroker, you must bring a legal proxy fromyour broker in order to vote by ballot at themeeting. You may request a legal proxy fromyour broker to attend and vote your sharesat the meeting by marking your votinginstruction form or the Internet voting site towhich your voting materials direct you.Please allow sufficient time to receive alegal proxy through the mail after your brokerreceives your request. Because shares heldby participants in the Companys 401(k)plans must be voted by the trustee, theseshares may not be voted at the meeting.

How can I reduce the number of annualmeeting materials I receive?

If you are a stockholder of record receivingmultiple copies of the annual meetingmaterials either because you have multipleregistered stockholder accounts or becauseyou share an address with other registeredstockholders, and you would like to

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discontinue receiving multiple copies, youcan contact our transfer agent,Computershare, by telephone at 877-282-1168 or by writing to them c/oComputershare, PO Box 30170, CollegeStation, TX 77842-3170.

If you are a beneficial stockholder, but not aregistered stockholder, and you share anaddress with other beneficial stockholders,the number of annual meeting materials youreceive is already being reduced becauseyour broker, bank or other institution ispermitted to deliver a single copy of thismaterial for all stockholders at your addressunless a stockholder has requestedseparate copies. If you would like to receiveseparate copies, please contact your broker,bank or institution and update yourpreference for future meetings.

Can I receive future materials via theInternet?

If you vote on the Internet, simply follow theprompts for enrolling in electronic proxydelivery service. This will reduce theCompanys printing and postage costs, aswell as the number of paper documents youwill receive.

Stockholders of record may enroll in thatservice at the time they vote their proxiesvia the Internet or at any time after theAnnual Meeting and can read additionalinformation about this option and requestelectronic delivery by going towww.computershare.com/investor. If youhold shares beneficially, please contact yourbroker to enroll for electronic proxy delivery.

At this time, employee participants in aCompany 401(k) plan may not elect toreceive notice and proxy materials viaelectronic delivery.

If you already receive your proxy materialsvia the Internet, you will continue to receivethem that way until you instruct otherwisethrough the methods referenced above.

How many shares must be present to holdthe meeting?

A majority of the Companys outstandingshares entitled to vote as of the recorddate, or 34,412,631 shares, must bepresent or represented at the meeting andentitled to vote in order to hold the meetingand conduct business (i.e., to constitute aquorum). Shares are counted as present orrepresented at the meeting if thestockholder of record attends the meeting; ifthe beneficial owner attends with a legalproxy from the record holder; or if therecord holder or beneficial owner hassubmitted a proxy or voting instructions,whether by returning a proxy card or votinginstructions or by phone or Internet, withoutregard to whether the proxy or votinginstructions actually casts a vote orwithholds or abstains from voting.

How many votes must the nominees haveto be elected?

The Companys Bylaws (as amendedApril 30, 2010) require that each director beelected annually by a majority of votes castwith respect to that director. This meansthat the number of votes for a directormust exceed the number of votes againstthat director. In the event that a nominee fordirector receives more against votes forhis or her election than for votes, theBoard must consider such directorsresignation following a recommendation bythe Boards Governance and NominatingCommittee. The majority voting standarddoes not apply, however, in the event thatthe number of nominees for directorexceeds the number of directors to be

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GENERAL INFORMATION

elected. In such circumstances, directors willinstead be elected by a plurality of the votescast, meaning that the persons receiving thehighest number of for votes, up to the totalnumber of directors to be elected at theAnnual Meeting, will be elected.

With regard to the election of directors, theBoard intends to nominate the ten personsidentified as its nominees in this ProxyStatement. Because the Company has notreceived notice from any stockholder of anintent to nominate directors at the AnnualMeeting, each of the directors must beelected by a majority of votes cast.

Abstain votes and broker non-votes arenot treated as votes cast with respect to adirector and therefore will not be counted indetermining the outcome of the election ofdirectors.

What happens if a director candidatenominated by the Board of Directors isunable to stand for election?

The Board of Directors may reduce thenumber of seats on the Board or it maydesignate a substitute nominee. If the Boarddesignates a substitute, shares representedby proxies held by the named proxies will bevoted for the substitute nominee.

Not including the election of directors, howmany votes must the proposals receive inorder to pass?

Ratification of the appointment of KPMG LLPas the Companys independent accountants

A majority of the shares present in person orby proxy at the meeting and entitled to voteon the proposal must be voted for theproposal in order for it to pass. Abstainvotes are deemed present and entitled tovote and are included for purposes ofdetermining the number of shares

constituting a majority of shares present andentitled to vote. Accordingly, an abstention,because it is not a vote for will have theeffect of a negative vote.

Advisory vote regarding the compensation ofthe Companys Named Executive Officers

A majority of the shares present in person orby proxy at the meeting and entitled to vote onthe proposal must be voted for the proposalin order for it to pass. Abstain votes aredeemed present and entitled to vote and areincluded for purposes of determining thenumber of shares constituting a majority ofshares present and entitled to vote.Accordingly, an abstention, because it is not avote for will have the effect of a negativevote. In addition, broker non-votes are notconsidered entitled to vote for purposes ofdetermining whether the proposal has beenapproved by stockholders and therefore willnot be counted in determining the outcome ofthe vote on the proposal.

Approval to amend the Companys certificateof incorporation to increase authorizedcommon shares

A majority of the shares outstanding andentitled to vote on the proposal must bevoted for the proposal in order for it topass. Abstain votes are deemed presentand entitled to vote and are included forpurposes of determining the number ofshares constituting a majority of sharespresent and entitled to vote. Accordingly, anabstention, because it is not a vote for willhave the effect of a negative vote.

Approval to amend the Companys certificateof incorporation to decrease par value

A majority of the shares outstanding andentitled to vote on the proposal must bevoted for the proposal in order for it to

8

GENERAL INFORMATION

pass. Abstain votes are deemed presentand entitled to vote and are included forpurposes of determining the number ofshares constituting a majority of sharespresent and entitled to vote. Accordingly, anabstention, because it is not a vote for willhave the effect of a negative vote.

Stockholder proposal regarding anindependent chairman policy

A majority of the shares present in person orby proxy at the meeting and entitled to voteon the proposals must be voted for theproposal in order for it to pass. Abstainvotes are deemed present and entitled tovote and are included for purposes ofdetermining the number of sharesconstituting a majority of shares present andentitled to vote. Accordingly, an abstention,because it is not a vote for will have theeffect of a negative vote. In addition, brokernon-votes are not considered entitled to votefor purposes of determining whether theproposal has been approved by stockholdersand, therefore, will not be counted indetermining the outcome of the vote on theproposal.

How are votes counted?

Voting results will be tabulated byComputershare. Computershare will alsoserve as the independent inspector ofelection.

Is my vote confidential?

The Company has a confidential votingpolicy as a part of its governance guidelines,which are published on the Companyswebsite.

Who pays the costs of proxy solicitation?

The Company pays for distributing andsoliciting proxies and reimburses brokers,

nominees, fiduciaries and other custodianstheir reasonable fees and expenses inforwarding proxy materials to beneficialowners. The Company has engagedGeorgeson Inc. (Georgeson) to assist in thesolicitation of proxies for the meeting. It isintended that proxies will be solicited by thefollowing means: additional mailings,personal interview, mail, phone andelectronic means. Although no preciseestimate can be made at this time, weanticipate that the aggregate amount we willspend in connection with the solicitation ofproxies will be approximately $33,000. Todate, $29,000 has been incurred. Thisamount includes fees payable to Georgeson,but excludes salaries and expenses of ourofficers, directors and employees.

Is a list of stockholders entitled to vote atthe Annual Meeting available?

A list of stockholders of record entitled tovote at the 2014 Annual Meeting will beavailable at the meeting. It will also beavailable Monday through Friday fromMarch 31, 2014 through May 6, 2014between the hours of 9 a.m. and 4 p.m.,Pacific time, at the offices of the CorporateSecretary, 19300 International Blvd.,Seattle, WA 98188. A stockholder of recordmay examine the list for any legally validpurpose related to the Annual Meeting.

Where can I find the voting results of theAnnual Meeting?

We will publish the voting results on Form 8-K on or about May 14, 2014. You can reador print a copy of that report by going toInvestor Information-SEC Filings atwww.alaskaair.com or by going directly tothe SEC EDGAR files at www.sec.gov. Youcan also request a copy by calling us at(206) 392-5719 or by calling the SEC at(800) SEC-0330 for the location of a publicreference room.

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GENERAL INFORMATION

How can I submit a proposal for next yearsannual meeting?

The Company expects to hold its nextannual meeting on or about May 7, 2015. Ifyou wish to submit a proposal for inclusionin the proxy materials for that meeting, youmust send the proposal to the CorporateSecretary at the address below. Theproposal must be received at the Companyscorporate offices no later thanNovember 28, 2014 to be considered forinclusion. Among other requirements setforth in the SECs proxy rules and theCompanys Bylaws, you must havecontinuously held a minimum of either$2,000 in market value or 1% of theCompanys outstanding stock for at leastone year by the date of submitting the

proposal, and you must continue to ownsuch stock through the date of the meeting.

If you intend to nominate candidates forelection as directors or present a proposalat the meeting without including it in theCompanys proxy materials, you mustprovide notice of such proposal to theCompany no later than February 6, 2015.The Companys Bylaws outline proceduresfor giving the required notice. If you wouldlike a copy of the procedures contained inour Bylaws, please contact:

Corporate SecretaryAlaska Air Group, Inc.P.O. Box 68947Seattle, WA 98168

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PROPOSALS TO BE VOTED ON

PROPOSAL 1:ELECTION OF DIRECTORS TO ONE-YEAR TERMS

The Company currently has eleven directors.Because he has reached mandatoryretirement age as outlined in the CompanysGovernance Guidelines, the Board did notnominate Mr. Marc Langland to stand forelection, and his term will expire with theupcoming Annual Meeting of Stockholders.The Board of Directors wishes to thank Mr.Langland for his dedication and service tothe Board over the past 23 years.

The Companys Certificate of Incorporationprovides that the Board of Directors shall becomposed of no less than nine and no morethan 15 directors. On February 12, 2014 theBoard passed a resolution providing that theCompany shall have ten directors effectivewith the Annual Meeting on May 8, 2014.

The Companys Bylaws provide that directorsshall serve a one-year term. Directors areelected to hold office until their successorsare elected and qualified, or until resignationor removal in the manner provided in ourBylaws. Ten directors are nominees forelection this year and each has consentedto serve a one-year term ending in 2015.

Patricia M. BedientDirector since 2004Age 60

Ms. Bedient chairs theBoards Audit Committee.She is executive vicepresident and CFO for TheWeyerhaeuser Company,one of the worlds largestintegrated forest products

companies. A certified public accountant(CPA) since 1978, she served as managingpartner of the Seattle office of ArthurAndersen LLP prior to joining Weyerhaeuser.

Ms. Bedient also worked at AndersensPortland and Boise offices as a partner andas a CPA during her 27-year career with thefirm. She serves on the boards of AlaskaAirlines and Horizon Air (subsidiaries ofAlaska Air Group), the Overlake HospitalMedical Center Board, the Oregon StateUniversity Board of Trustees and theUniversity of Washington Foster School ofBusiness Advisory Board. She has alsoserved on the boards of a variety of civicorganizations, including the Oregon StateUniversity Foundation Board of Trustees, theWorld Forestry Center, City Club of Portland,St. Marys Academy of Portland, and theChamber of Commerce in Boise, Idaho. Sheis a member of the American Institute ofCPAs and the Washington Society of CPAs.Ms. Bedient received her bachelors degreein business administration, withconcentrations in finance and accounting,from Oregon State University in 1975. Ms.Bedients extensive experience in publicaccounting and financial expertise speciallyqualify her to serve on the Board and to actas an audit committee financial expert, asdefined by the SEC.

Marion C. BlakeyDirector since 2010Age 65

Ms. Blakey is chair of theBoards Safety Committee.Ms. Blakey is presidentand CEO of AerospaceIndustries Association(AIA), the nations largestaerospace and defense

trade association. Prior to her currentposition, she served as the Administrator ofthe Federal Aviation Administration (the FAA)from 2002 to 2007 and chair of the

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National Transportation Safety Board (theNTSB) from 2001 to 2002. Ms. Blakey alsoserves on the boards of Alaska Airlines andHorizon Air (subsidiaries of Alaska AirGroup), Noblis, the NASA Advisory Council,and the Presidents Export CouncilSubcommittee on Export Administration(PECSEA), as well as a number ofphilanthropic and community organizations,including the Washington Area Airports TaskForce Advisory Board and the InternationalAviation Womens Association. Ms. Blakeysexperience with AIA, the FAA and the NTSBspecially qualify her for service on theCompanys Board and, because of herexperience with the FAA and NTSB, shebrings a very relevant and importantperspective to the deliberations of theSafety Committee.

Phyllis J. CampbellDirector since 2002Age 62

Ms. Campbell is leaddirector and chair of theBoards Governance andNominating Committee.She has been chairman ofthe Pacific Northwest, forJPMorgan Chase & Co.

since April 2009. She is the firms seniorexecutive in Washington, Oregon, and Idahoacross businesses, representing JPMorganChase at the most senior level. From 2003to 2009, Ms. Campbell served as presidentand CEO of The Seattle Foundation, one ofthe nations largest community philanthropicfoundations. She was president of U.S.Bank of Washington from 1993 until 2001and served as chair of the banksCommunity Board. Ms. Campbell hasreceived several awards for her corporateand community involvement. These awardsinclude Women Who Make A Difference andDirector of the Year from the Northwest

Chapter of the National Association ofCorporate Directors. Since August 2007,Ms. Campbell has served on ToyotasDiversity Advisory Board. She also serves onthe boards of Alaska Airlines and Horizon Air(subsidiaries of Alaska Air Group) andNordstrom, where she chaired the auditcommittee until November 2013. UntilFebruary 2009, she served on the boards ofPuget Energy and its subsidiary, PugetSound Energy. Ms. Campbells business andcommunity leadership background and herextensive governance experience eminentlyqualify her for her role as lead director of theBoard.

Jessie J. Knight, Jr.Director since 2002Age 63

Mr. Knight serves on theBoards Safety Committeeand its Governance andNominating Committee.Mr. Knight is executive vicepresident of externalaffairs for Sempra Energy,

as well as chairman of San Diego Gas andElectric Company and chairman of SouthernCalifornia Gas Company, both subsidiariesof Sempra Energy. From 2010 to 2014, hewas chairman and CEO of San Diego Gas &Electric. From 2006 to 2010, he wasexecutive vice president of external affairs atSempra Energy. From 1999 to 2006,Mr. Knight served as president and CEO ofthe San Diego Regional Chamber ofCommerce, and from 1993 to 1998, he wasa commissioner of the California PublicUtilities Commission. Prior to this,Mr. Knight was vice president of marketingand strategic planning for the San FranciscoChronicle and San Francisco Examinernewspapers. While there, he won fiveNational Clio Awards for television, radio andprinted advertising and a Cannes Film

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Festival Golden Lion Award for businessmarketing. Prior to his media career,Mr. Knight spent ten years in finance andmarketing with the Dole Foods Company inits banana and pineapple businesses.Mr. Knight serves on the boards of AlaskaAirlines and Horizon Air (subsidiaries ofAlaska Air Group), the Timken Museum ofArt in San Diego, the Southern CaliforniaLeadership Council, and the University ofCalifornia San Diego Foundation. He is a lifemember of the Council on Foreign Relationsand a corporate member of the HooverInstitution at Stanford University. Hepreviously served ten years on the board ofthe San Diego Padres Baseball Club.Mr. Knights expertise in brand marketing,energy markets and economic development,as well as his broad business experienceuniquely qualify him for service on theAlaska Air Group Board.

Dennis F. MadsenDirector since 2003Age 65

Mr. Madsen serves on theBoards Compensation andLeadership DevelopmentCommittee and its AuditCommittee. From 2000 to2005, Mr. Madsen waspresident and CEO of

Recreational Equipment, Inc. (REI), a retailerand online merchant for outdoor gear andclothing. He served as REIs executive vicepresident and COO from 1987 to 2000, andprior to that held numerous other positionsat REI. In 2010, Mr. Madsen was appointeda director of West Marine Inc., a publiclytraded retail company in the recreationalboating sector. He also chairs WestMarines compensation and leadershipdevelopment committee and serves on itsnominations and governance committee.Other boards on which Mr. Madsen serves

include Alaska Airlines and Horizon Air(subsidiaries of Alaska Air Group), theWestern Washington University Foundation,Western Washington University, Islandwood,and the Youth Outdoors Legacy Fund.Because of his varied business backgroundand his experience in leading a large people-oriented and customer-service-drivenorganization, Mr. Madsen is highly qualifiedto serve on the Alaska Air Group Board andits Compensation and LeadershipDevelopment Committee.

Byron I. MallottDirector since 1982Age 70

Mr. Mallott serves on theBoards Safety and itsGovernance andNominating Committees.Currently he is a seniorfellow of the First AlaskansInstitute, a nonprofit

organization dedicated to the developmentof Alaska Native peoples and theircommunities, a position he has held since2000. Mr. Mallott is currenly a candidate forgovernor of the state of Alaska. Prior tonominating him to serve another term, theBoard reviewed Mr. Mallotts ability todevote needed attention to his Boardactivities and was satisfied that thecampaign would not detract from his abilityto serve on the Board. The election will bedecided in November 2014. Mr. Mallottserved on the Board of Trustees of theSmithsonian Institutions National Museumof the American Indian for two three-yearterms ending in 2013. He has served thestate of Alaska in various advisory andexecutive capacities, including as mayor ofYakutat and of Juneau. From 1995 to 1999,he was executive director (chief executiveofficer) of the Alaska Permanent FundCorporation, a trust managing proceeds from

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the state of Alaskas oil reserves. He was adirector of Sealaska Corporation (Juneau,Alaska) from 1972 to 1988, chair from1976 to 1983, and CEO from 1982 to1992. He owns Mallott Enterprises(personal investments) and is a director ofAlaska Airlines and Horizon Air (subsidiariesof Alaska Air Group), a director and memberof the audit committee of SealaskaCorporation, and a director and member ofthe audit committee of Yak-Tat Kwaan, Inc.Mr. Mallotts leadership and extensiveknowledge of the Native Alaskan people andtheir culture and his experience withgovernmental affairs uniquely qualify him forhis role on the Alaska Air Group Board.

Helvi K. SandvikDirector since 2013Age 56

Ms. Sandvik was appointedto the Alaska Air GroupBoard in November 2013and was appointed to theBoards Safety Committeein February 2014. Since1995, Ms. Sandvik has

been president of NANA DevelopmentCorporation, a diversified business engagedin government contracting, oilfield and miningsupport, professional management services,and engineering and construction. She alsoserves on the not-for-profit board of the NativeAmerican Contractors Association and astrustee for the Robert Aqqaluk Newlin Trust.She was director of the Federal Reserve Bankof San Francisco, Seattle Branch from 2004to 2009 and served as its chair from 2008 to2009. Ms. Sandvik also serves as a directorof Alaska Airlines and Horizon Air(subsidiaries of Alaska Air Group). Ms.Sandviks business leadership experienceand her intimate knowledge of the Nativeculture in the state of Alaska specially qualifyher to serve on the Alaska Air Group Board.

J. Kenneth ThompsonDirector since 1999Age 62

Mr. Thompson is chair ofthe Boards Compensationand LeadershipDevelopment Committeeand also serves on theSafety Committee. Since2000, Mr. Thompson has

been president and CEO of Pacific Star EnergyLLC, a private energy investment company inAlaska with partial ownership in the oilexploration firm Alaska Venture Capital Group(AVCG LLC). From 1998 to 2000,Mr. Thompson served as executive vicepresident of ARCOs Asia Pacific oil and gasoperating companies in Alaska, California,Indonesia, China and Singapore. Prior to that,he was president of ARCO Alaska, Inc., theparent companys oil and gas producingdivision based in Anchorage, Alaska. Hecurrently serves on the boards of AlaskaAirlines and Horizon Air (subsidiaries ofAlaska Air Group), Pioneer Natural ResourcesCompany, Tetra Tech, Inc., and Coeur MiningCorporation, as well as on the non-profitboard of Provision Ministry Group.Mr. Thompson chairs the environmental,health, safety and social responsibilitycommittee and serves on the governance andnominating and the audit committees ofCoeur Mining Corporation. At Tetra Tech,Mr. Thompson serves on the audit, thegovernance and nominating, and the strategyplanning committees and chairs thecompensation committee. At Pioneer NaturalResources, he serves on the governance andnominating, compensation and hydrocarbonreserves committees and chairs the health,safety and environmental committee.Mr. Thompsons business leadership and hisbreadth of experience in planning, operations,engineering, and safety/regulatory issueseminently qualify him for service on theAlaska Air Group Board.

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Bradley D. TildenDirector since 2010Age 53

Mr. Tilden was electedchairman of Alaska AirGroup and of AlaskaAirlines and Horizon Air(subsidiaries of Alaska AirGroup) effective January 1,2014. He has served as

president of Alaska Airlines since December2008. In May 2012, Mr. Tilden was namedpresident and CEO of Alaska Air Group andCEO of Alaska Airlines and Horizon Air. Heserved as executive vice president offinance and planning from 2002 to 2008and as CFO from 2000 to 2008 for AlaskaAirlines and Alaska Air Group. Prior to 2000,Mr. Tilden was vice president of finance atAlaska Airlines and Alaska Air Group. Mr.Tilden worked for the accounting firmPricewaterhouseCoopers prior to joiningAlaska Airlines. He served on the board ofFlow International and chaired its auditcommittee until the company was acquiredin February 2014. He serves on the boardsof Alaska Airlines and Horizon Air(subsidiaries of Alaska Air Group), Airlines 4America, Pacific Lutheran University, andChief Seattle Council of the Boy Scouts ofAmerica. Mr. Tildens role as CEO of AlaskaAir Group and its operating subsidiaries, hisdeep airline experience, strategic planningskills and financial expertise uniquely qualifyhim to serve on the Air Group Board.

Eric K. YeamanDirector since 2012Age 46

Mr. Yeaman serves on theBoards Audit Committee.He is president and CEO ofHawaiian Telcom (atelecommunicationscompany serving the stateof Hawaii). Prior to joining

Hawaiian Telcom in June 2008, he wassenior executive vice president and COO ofHawaiian Electric Company, Inc. (HECO). Mr.Yeaman joined Hawaiian Electric Industries,Inc., HECOs parent company, in 2003 asfinancial vice president, treasurer and CFO.Prior to joining HECO, Mr. Yeaman held thepositions of chief operating and financialofficer for Kamehameha Schools from 2000to 2003. He began his career at ArthurAndersen LLP in 1989. Mr. Yeaman serveson the not-for-profit boards of QueensHealth Systems, Hawaii CommunityFoundation, Hawaii Business Roundtable,The Nature Conservancy of Hawaii,Kamehameha Schools Audit Committee,Aloha United Way, and the Harold K.L.Castle Foundation. He is also a director ofAlaska Airlines and Horizon Air (subsidiariesof Alaska Air Group), Alexander & Baldwin,the United States Telcom Association, andis a member of the Hawaii Asia PacificAssociation. Mr. Yeamans extensivebusiness background, his experience asCEO of a public company, and his intimateknowledge of the culture of Hawaii (a regionthat accounts for a significant portion ofAlaskas business) uniquely qualify him toserve as a member of the Air Group Board.

THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THEELECTION OF THE TEN DIRECTOR NOMINEES NAMED ABOVE.

UNLESS OTHERWISE INDICATED ON YOUR PROXY, THE SHARES WILL BEVOTED FOR THE ELECTION OF THESE TEN NOMINEES AS DIRECTORS.

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PROPOSAL 2:RATIFICATION OF THE APPOINTMENT OF THE COMPANYS

INDEPENDENT ACCOUNTANTS

The Audit Committee has selected KPMGLLP (KPMG) as the Companysindependent accountants for fiscal year2014, and the Board is asking stockholdersto ratify that selection. Although current law,rules, and regulations, as well as the charterof the Audit Committee, require the AuditCommittee to engage, retain, and supervisethe independent accountants, the Boardconsiders the selection of the independentaccountants to be an important matter of

stockholder concern and is submitting theselection of KPMG for ratification bystockholders as a matter of good corporatepractice.

The affirmative vote of holders of a majorityof the shares of common stock representedat the meeting and entitled to vote on theproposal is required to ratify the selection ofKPMG as the Companys independentaccountant for the current fiscal year.

THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THERATIFICATION OF THE COMPANYS INDEPENDENT ACCOUNTANTS.

PROPOSAL 3:ADVISORY VOTE REGARDING THE COMPENSATIONOF THE COMPANYS NAMED EXECUTIVE OFFICERS

The Company is providing its stockholderswith the opportunity to cast a non-binding,advisory vote on the compensation of theCompanys Named Executive Officers asdisclosed pursuant to the SECs executivecompensation disclosure rules and set forthin this Proxy Statement (including thecompensation tables and the narrativediscussion accompanying those tables aswell as in the Compensation Discussion andAnalysis).

As described more fully in the CompensationDiscussion and Analysis section of thisProxy Statement, the structure of theCompanys executive compensation programis designed to compensate executivesappropriately and competitively and to drivesuperior performance. For the NamedExecutive Officers, a high percentage of totaldirect compensation is variable and tied to

the success of the Company because theyare the senior leaders primarily responsiblefor the overall execution of the Companysstrategy. The Companys strategic goals arereflected in its incentive-based executivecompensation programs so that theinterests of executives are aligned withstockholder interests. Executivecompensation is designed to be internallyequitable, to reward executives forresponding successfully to businesschallenges facing the Company, and to takeinto consideration the Companys sizerelative to the rest of the industry.

The Compensation Discussion and Analysissection of this Proxy Statement describes inmore detail the Companys executivecompensation programs and the decisionsmade by the Compensation and LeadershipDevelopment Committee during 2013.

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Highlights of these executive compensationprograms include the following:

Base SalaryIn general, for the Named ExecutiveOfficers, the Committee targets basesalary levels at the 25th percentilerelative to the Companys peer group withthe opportunity to earn market-level orabove compensation through short- andlong-term incentive plans that pay whenperformance objectives are met.

Annual Incentive PayThe Companys Named Executive Officersare eligible to earn annual incentive payunder the broad-based Performance-Based Pay Plan, which is intended tomotivate the executives to achievespecific Company goals. Annual targetperformance measures reflect near-termfinancial and operational goals that areconsistent with the strategic plan.

Long-term Incentive PayEquity-based incentive awards that linkexecutive pay to stockholder value are animportant element of the Companysexecutive compensation program. Long-term equity incentives that vest overthree- or four-year periods are awardedannually, resulting in overlapping vestingperiods that are designed to discourageshort-term risk taking and to align NamedExecutive Officers long-term interestswith those of stockholders while helpingthe Company attract and retain top-performing executives who fit a team-oriented and performance-driven culture.

In accordance with the requirements ofSection 14A of the Exchange Act (which was

added by the Dodd-Frank Wall Street Reformand Consumer Protection Act) and therelated rules of the SEC, our Board ofDirectors will request your advisory vote onthe following resolution at the 2014 AnnualMeeting:

RESOLVED, that the compensation paidto the Named Executive Officers, asdisclosed in this Proxy Statementpursuant to the SECs executivecompensation disclosure rules (whichdisclosure includes the CompensationDiscussion and Analysis, thecompensation tables and the narrativediscussion that accompanies thecompensation tables), is herebyapproved.

This proposal regarding the compensationpaid to our Named Executive Officers isadvisory only and will not be binding on theCompany or our Board and will not beconstrued as overruling a decision by theCompany or our Board or as creating orimplying any additional fiduciary duty for theCompany or our Board. However, theCompensation and Leadership DevelopmentCommittee, which is responsible fordesigning and administering the Companysexecutive compensation program, values theopinions expressed by stockholders in theirvote on this proposal and will consider theoutcome of the vote when making futurecompensation decisions for our NamedExecutive Officers. Stockholders will begiven an opportunity to cast an advisory voteon this topic annually, with the nextopportunity occurring in connection with theCompanys annual meeting in 2015.

THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE APPROVALOF THE COMPENSATION OF THE NAMED EXECUTIVE OFFICERS, AS DISCLOSED INTHIS PROXY STATEMENT PURSUANT TO THE SECS EXECUTIVE COMPENSATION

DISCLOSURE RULES.

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OVERVIEW OF PROPOSALS 4 AND 5:AMENDMENTS TO THE CERTIFICATE OF INCORPORATION

Proposals 4 and 5 request amendments tothe Companys Certificate of Incorporation to(i) increase the number of authorized sharesof Company common stock from100,000,000 to 200,000,000 (Proposal 4)and (ii) reduce the par value for theCompanys common and preferred stockfrom $1.00 to $0.01 (Proposal 5).

Each amendment contemplated byProposals 4 and 5 is not conditioned uponthe approval of the other proposal. If one orboth of the proposals is approved by thestockholders, the Company intends to file aCertificate of Amendment with the Secretaryof State of the State of Delaware. Theamendment will become effective upon thefiling of the Certificate of Amendment withthe Secretary of State of the State ofDelaware.

The amendments contemplated by Proposal4 and Proposal 5 are each described inmore detail below. These descriptions arequalified in their entirety by reference to,and should be read in conjunction with, thefull text of the Certificate of Amendment,which is attached to this Proxy Statement asAppendix A and assumes that Proposals 4and 5 are both approved. If either ofProposal 4 or 5 is not approved by therequisite vote of the Companysstockholders, the Certificate of Amendmentto be filed with the Secretary of State of theState of Delaware will be appropriatelymodified. The Companys Certificate ofIncorporation will remain the same in allother respects.

PROPOSAL 4:ADOPTION AND APPROVAL OF AMENDMENT OF THE CERTIFICATE OF

INCORPORATION TO INCREASE AUTHORIZED SHARES OF COMMON STOCK

General

The Companys current Certificate ofIncorporation authorizes the issuance of105,000,000 shares of the Companyscapital stock, of which 5,000,000 sharesare designated as preferred stock and100,000,000 shares are designated ascommon stock. On February 12, 2014, theCompanys Board of Directors unanimouslyadopted and approved an amendment to theCompanys Certificate of Incorporation toincrease the number of authorized shares ofCompany common stock from 100,000,000to 200,000,000 (the Share Amendment),subject to stockholder approval. The Boardhas declared the proposed Share

Amendment to be advisable and in the bestinterests of the Company and itsstockholders and has directed that adoptionand approval of the Share Amendment besubmitted to the Companys stockholdersfor their consideration at this AnnualMeeting.

The Companys Board of Directorsrecommends that stockholders adopt andapprove the proposed Share Amendment tothe Companys Certificate of Incorporation.The text of the proposed Share Amendmentis attached as Appendix A and incorporatedin this Proxy Statement by reference. Asdescribed above, Appendix A also includesthe text of the proposed amendmentdescribed in Proposal 5.

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Purpose and Background of the ProposedShare Amendment

As of March 18, 2014, there wereapproximately 68,825,259 shares ofCompany common stock issued andoutstanding. This number does not includeapproximately 1,124,766 shares ofCompany common stock that are subject tooutstanding equity awards under our 2008Performance Incentive Plan and 2004Performance Incentive Plan and anadditional 8,556,996 shares of Companycommon stock that are reserved for futureissuance under our 2008 PerformanceIncentive Plan and our Employee StockPurchase Plan as of March 18, 2014. Basedupon our issued and reserved shares ofcommon stock, there are approximately22,617,745 million shares of commonstock available for issuance in the future forother corporate purposes.

The purpose of the proposed ShareAmendment is to allow the Company to havea sufficient number of shares of authorizedand unissued common stock for issuance inconnection with such corporate purposes asmay, from time to time, be consideredadvisable by the Companys Board ofDirectors. Having such shares available forissuance in the future will give the Companygreater flexibility and will allow the shares tobe issued from time to time as determinedby the Companys Board and, unlessotherwise required by NYSE listing rules orother applicable rules and regulations,without the expense and delay of a specialstockholders meeting to approve theadditional authorized capital stock. Thecorporate purposes for which the Companymay issue common stock could include,without limitation, issuances in connectionwith stock splits or stock dividends,issuances in connection with future

acquisitions, issuances pursuant to equityawards granted under current or futureequity compensation plans and issuances inconnection with equity financings. There arecurrently no commitments or understandingswith respect to the issuance of any of theadditional shares of Company commonstock that would be authorized by theproposed Share Amendment.

Rights of Additional Authorized Shares

Any authorized shares of Company commonstock, if and when issued, would be part ofour existing class of common stock andwould have the same rights and privilegesas the shares of common stock currentlyoutstanding. The holders of Companycommon stock have no preemptive rights tosubscribe for or purchase any additionalshares of Company common stock that maybe issued in the future.

Effect of Proposed Share Amendment

The increase in the Companys authorizedcommon stock will not have any immediateeffect on the rights of existing stockholders.However, the Companys Board of Directorswill have the authority to issue commonstock without requiring future stockholderapproval of such issuances, except as maybe required by the Companys Certificate ofIncorporation, NYSE listing rules or otherapplicable rules and regulations. To theextent that the additional authorized sharesare issued in the future, they could decreasethe Companys existing stockholderspercentage equity ownership and, dependingupon the price at which they are issued ascompared to the price paid by existingstockholders for their shares, could bedilutive to the Companys existingstockholders.

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The increase in the authorized number ofshares of Company common stock and thesubsequent issuance of such shares couldhave the effect of delaying or preventing achange in control of the Company withoutfurther action by the stockholders. Shares ofauthorized and unissued common stockcould (within the limits imposed byapplicable law) be issued in one or moretransactions that would make a change incontrol of the Company more difficult, andtherefore less likely. Any such issuance ofadditional stock could have the effect ofdiluting the earnings per share and bookvalue per share of the Companysoutstanding shares of common stock, andsuch additional shares could be used todilute the stock ownership or voting rights ofa person seeking to obtain control of theCompany. The Companys Board of Directorsis not aware of any attempt to take controlof the Company and has not presented thisproposal with the intention that the increasein our authorized shares of common stockbe used as a type of anti-takeover device.

Implementing the Proposed ShareAmendment

If approved by the Companys stockholdersat the Annual Meeting, the proposed ShareAmendment to the Companys Certificate ofIncorporation will become effective upon the

filing of a Certificate of Amendment with theSecretary of State of the State of Delaware.Although the Companys Board of Directorsintends to file the Certificate of Amendmentas soon as practicable after the AnnualMeeting, if, in the judgment of theCompanys Board of Directors, anycircumstances exist that would makeconsummation of the proposed ShareAmendment inadvisable, then, inaccordance with Delaware law andnotwithstanding approval of the proposedShare Amendment to the Certificate ofIncorporation by the Companysstockholders, the Companys Board ofDirectors may abandon the proposed ShareAmendment, either before or after approvaland authorization by the Companysstockholders, at any time prior to theeffectiveness of the filing of the Certificateof Amendment.

Vote Required and Recommendation of theBoard of Directors

The affirmative vote of the holders of atleast a majority of the outstanding shares ofcommon stock, whether or not present orrepresented by proxy at the Annual Meeting,is required to approve the ShareAmendment to the Companys Certificate ofIncorporation.

THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FORADOPTION AND APPROVAL OF THE SHARE AMENDMENT TO THE

CERTIFICATE OF INCORPORATION.

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PROPOSAL 5:ADOPTION AND APPROVAL OF AMENDMENT TO THE CERTIFICATE OF

INCORPORATION TO REDUCE PAR VALUE

General

On March 5, 2014, the Companys Board ofDirectors unanimously adopted andapproved a further amendment to theCompanys Certificate of Incorporation todecrease the par value of the Companyscommon and preferred stock from $1.00 to$0.01 (the Par Value Amendment), subjectto stockholder approval. The Board hasdeclared the proposed Par ValueAmendment to be advisable and in the bestinterests of the Company and itsstockholders and has directed that adoptionand approval of the Par Value Amendmentbe submitted to the Companysstockholders for their consideration at thisAnnual Meeting.

The Companys Board of Directorsrecommends that stockholders adopt andapprove the proposed Par Value Amendmentto the Companys Certificate ofIncorporation. The text of the proposed ParValue Amendment is attached as Appendix Aand incorporated in this Proxy Statement byreference. As described above, Appendix Aalso includes the text of the proposedamendment described in Proposal 4 above.

Purpose and Background of the ProposedPar Value Amendment

The reduction in par value is intended tobring the par value of our common andpreferred stock in line with the par value ofthe capital stock of many other publiccompanies in Delaware. Historically, theconcept of par value served to protectcreditors and senior security holders byensuring that a company received at leastthe par value as consideration for issuance

of stock. Over time, the concept of par valuehas lost its significance as lenders,creditors and other persons doing businesswith a corporation tend to rely on the totalfinancial strength of the corporation asshown by its financial statements andearnings prospects and, especially in thecase of financial institutions that lendmoney to a corporation, on contractualrestrictions that establish financialrequirements that the corporation mustsatisfy. Many companies that incorporatetoday use a nominal par value or have nopar value.

Effect of the Proposed Par ValueAmendment

The proposed Par Value Amendment will notchange the number of authorized shares ofcommon stock or preferred stock or affectthe total number of shares of common stockcurrently outstanding, although the Companyis separately asking stockholders to adoptand approve the Share Amendmentdescribed in Proposal 4. No shares ofpreferred stock are currently outstanding.The reduction in par value will have no effecton the rights of the holders of common orpreferred stock, except for reducing theminimum amount per share the Companymust receive upon the issuance of anyshares of common or preferred stock.

Following the effectiveness of the proposedPar Value Amendment, the Companyscapital under the Delaware GeneralCorporation Law will be adjusted to reflectthe par value reduction. This will increasethe Companys surplus under theDelaware General Corporation Law available

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for the payment of dividends and therepurchase of common stock.

Certificates representing shares of theCompanys common stock, par value $1.00per share, issued and outstanding prior tothe effective date of filing of the Par ValueAmendment to the Certificate ofIncorporation will be deemed to representthe same number of shares of our commonstock, $0.01 par value per share, as theydid prior to such effective date. Existingcertificates will not be exchanged for newcertificates in connection with the Par ValueAmendment.

Implementing the Proposed Par ValueAmendment

If approved by the Companys stockholdersat the Annual Meeting, the proposedamendment to the Companys Certificate ofIncorporation will become effective upon thefiling of a Certificate of Amendment with theSecretary of State of the State of Delaware.Although the Companys Board of Directorsintends to file the Certificate of Amendment

as soon as practicable after the AnnualMeeting, if, in the judgment of theCompanys Board of Directors, anycircumstances exist that would makeconsummation of the proposed Par ValueAmendment inadvisable, then, inaccordance with Delaware law andnotwithstanding approval of the proposedPar Value Amendment, the CompanysBoard of Directors may abandon theproposed Par Value Amendment, eitherbefore or after approval and authorization bythe Companys stockholders, at any timeprior to the effectiveness of the filing of theCertificate of Amendment.

Vote Required and Recommendation of theBoard of Directors

The affirmative vote of the holders of atleast a majority of the outstanding shares ofcommon stock, whether or not present orrepresented by proxy at the Annual Meeting,is required to approve the Par ValueAmendment to the Companys Certificate ofIncorporation.

THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FORADOPTION AND APPROVAL OF THE PAR VALUE AMENDMENT TO THE

CERTIFICATE OF INCORPORATION.

PROPOSAL 6:STOCKHOLDER PROPOSAL INDEPENDENT BOARD CHAIRMAN

Mr. John Chevedden has given notice of hisintention to present a proposal at the 2014Annual Meeting. Mr. Cheveddens addressis 2215 Nelson Avenue, No. 205, RedondoBeach, California 90278, andMr. Chevedden represents that he hascontinuously owned no less than 100shares of the Companys common stocksince September 1, 2012. Mr. Cheveddens

proposal and supporting statement, assubmitted to the Company, appear below.

The Board of Directors opposes adoption ofMr. Cheveddens proposal and asksstockholders to review the Boardsresponse, which follows Mr. Cheveddensproposal and supporting statement below.

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The affirmative vote of the holders of amajority of the shares of common stockpresent, in person or represented by proxy

at the meeting and entitled to vote on theproposal is required to approve thisproposal.

Proposal 6 Independent Board Chairman

RESOLVED: Shareholders request that our Board of Directors to adopt a policy, and amendother governing documents as necessary to reflect this policy, to require the Chair of ourBoard of Directors to be an independent member of our Board. This independencerequirement shall apply prospectively so as not to violate any contractual obligation at thetime this resolution is adopted. Compliance with this policy is waived if no independentdirector is available and willing to serve as Chair. The policy should also specify how to selecta new independent chairman if a current chairman ceases to be independent between annualshareholder meetings.

Many companies already have an independent Chairman. In contrast, William Ayer, ourChairman was our former CEO and had 14-year tenure which further detracts from hisindependence. An independent Chairman is the prevailing practice in the United Kingdom andmany international markets. This proposal topic won 50%-plus support at 5 major U.S.companies in 2013 including 73%-support at Netflix.

This proposal should also be more favorably evaluated due to our Companys clearlyimprovable environmental, social and corporate governance performance as reported in 2013:

GMI Ratings, an independent investment research firm, rated Alaska Air D for executive pay our CEO can get long-term incentive pay for below-medium performance. There was thepotential for excessive golden parachutes and unvested equity pay would not lapse upon CEOtermination. A CEO was on our executive pay committee. There were 3 CEOs on our board:Eric Yeaman, Marion Blakey and Marc Langland. Mr. Langland had 22-years long-tenure whichdetracts from director independence. And Byron Mallott had 31-years long-tenure. JamesThompson was over-committed by serving on the boards of 4 companies. GMI rated Alaska AirD for accounting. Our Company had a history of significant restatements, special charges orwrite-offs.

Returning to the core topic of this proposal from the context of our clearly improvablecorporate governance, please vote to protect shareholder value: Independent Board Chair Proposal 6.

THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE AGAINSTPROPOSAL 6 FOR THE FOLLOWING REASONS:

The current leadership structure of theBoard of Directors is designed to ensureindependent decision-making and oversightwhile, at the same time, giving the Boardflexibility to determine the structure that is

in the best interests of the Company and itsstockholders whether it be to combine orto separate the roles of chairman and CEO.Stockholders are best served if the Boardretains flexibility to decide what leadership

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structure works best for the Board and theCompany based on the existing facts andcircumstances.

The Companys board leadership generallyincludes a combined chairman/CEO role anda strong, independent lead director.However, in 2012-2013, the Boardseparated the roles of chairman and CEO inconnection with the transition to a new CEO.As of January 1, 2014, Alaska Air GroupCEO Brad Tilden holds both positions.

The Board considers many factors indetermining optimal leadership structure

In choosing to combine the roles ofchairman and CEO, the Board takes intoconsideration the highly technical nature ofthe airline industry and the complexity anddynamic nature of the Companys businessand operating environment. In addition, theBoard considers, among other things, theexperience and capacity of the sitting CEO,the rigor of independent director oversight offinancial, operational and safety regulatoryissues, the current climate of opennessbetween management and the Board, andthe existence of other checks and balancesthat help ensure independent thinking anddecision-making by directors. The directorsbelieve that Mr. Tilden is best qualified toprovide effective leadership to the Board,including facilitating the flow of informationbetween management and the Board bykeeping the Board informed about theCompanys business and the airline industryand consulting with Board members in atimely manner about important issues facingthe Company. The Board also believes thatthe current leadership structure providesfocused leadership for the Company, helpsensure accountability for the Companysperformance and promotes a clear, unified,strategic vision for Alaska Air Group byassuring that the strategies adopted by the

Board will be best positioned for executionby management.

Our governance structure promotes Boardindependence

The Board believes the Companys corporategovernance structure, which has a strongemphasis on board independence, makesan independent chairman requirementunnecessary. The Boards lead director iselected by and from the independent boardmembers and has specific authority thatensures objective, independent oversight ofmanagements strategic decisions, riskmanagement, succession planning, andexecutive performance and compensation.The authority and responsibilities of the leaddirector are outlined in the CompanysGovernance Guidelines, which are availableat www.alaskaair.com. The lead director:

serves as liaison between the chairmanand the independent directors;

is authorized to call a meeting of theindependent directors at any time;

is authorized to call a meeting of the fullboard at any time;

presides at meetings where the boardchairman is not present or where he/shecould be perceived as having a conflict ofinterest;

presides over quarterly executivesessions of the independence directors;

approves board meeting agendas andmeeting schedules to ensure thatappropriate time is allotted to topics ofimportance;

approves information sent to boardmembers;

leads the independent directors annualevaluation of the CEOs performance;

conducts interviews of independentdirectors annually prior to nomination forelection;

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discusses proposed changes tocommittee assignments with eachdirector; and

makes himself/herself available forconsultation and direct communicationwith major shareholders.

In addition, the Companys governancestructure incorporates the provisionsdescribed below.

The Companys Governance Guidelinesrequire that at least 75% of directors beindependent as defined by SECregulations and NYSE listing standards.At present, the Board has determinedthat 10 out of 11 directors (or 91%) areindependent according to thesestandards.

Each of the Audit, the Compensation andLeadership Development, and theGovernance and Nominating Committeesis required to be composed solely ofindependent directors. This means thatthe oversight of key matters, such as theintegrity of financial statements,executive compensation, the nominationof directors and evaluation of the Boardand its committees, is entrustedexclusively to independent directors.

The Board and its committees meetregularly in executive session withoutmanagement, and they have access tomanagement and the authority to retainindependent advisors, as they deemappropriate.

Restricting Board discretion would bedetrimental to the interests ofstockholders

The stockholder proposal seeks to mandateone leadership structure regardless ofcircumstances. Because of the presence ofthe independence safeguards noted above,the Board believes it is not only unnecessary,

but that it would be detrimental to restrict theBoards leadership structure to one form. Themembers of the Board have experience withand knowledge of the challenges andopportunities the Company faces at any giventime, and therefore they are in the bestposition to choose the leadership structurethat is most appropriate for the situation. TheBoards commitment to select a leadershipstructure that is most appropriate for theCompany and its stockholders is bestevidenced by the Boards recent decision toseparate the chairman and CEO positions in2012-2013 in connection with the transitionto a new CEO.

Alaska Air Group governance practicesranked among the best by ISS

As of February 18, 2014, Alaska Air Groupreceived a governance rating of 1 fromInstitutional Shareholder Services (ISS),which places Alaska Air Groups governancestructure in the top decile.

Other Information

In considering how to vote on the shareholderproposal, it is important to note that theproponent has made several assertions thatare false or misleading. The assertions arenot directly related the proposal to require anindependent chairman, and they areaddressed here in the interest of providinginvestors full information.

The proponent asserts that Ourcompany had a history of significantrestatements, special charges orwrite-offs.

In the past five years Alaska Air Group hasnot amended any of its annual reports onForm 10-K. During that period, weamended two quarterly reports on Form10-Q (for the periods ended March 31,2010 and 2011) in order to re-file exhibitsrelated to a purchase agreement and acredit agreement.

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Neither amendment included arestatement of financial information due toan error in accounting or misapplication ofaccounting principles.

As is common in the airline industry, theCompany excludes certain special chargesand write-offs from U.S. GenerallyAccepted Accounting Principles (GAAP)earnings. The Company excludes not onlyspecial charges but also special benefitsfrom its GAAP earnings to provideinvestors with a better sense of our futurecash flow opportunities so that they canbetter value our Company and makeinvestment decisions. We disclose in theManagements Discussion and Analysis ofFinancial Condition and Results ofOperations section of the Form 10-K thereasons for the adjustments and areconciliation of our adjusted (non-GAAP)earnings to GAAP earnings.

The proponent correctly cites the fact thatthat some of our board members are CEOsof other

Documents

ALK 2013 Annual Report-2014 Proxy Statement