Investor Presentation

Investor Presentation

Safe harbor This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are based on, and include statements about, the Company s estimates, expectations, beliefs, intentions, and strategies for the future, and are not guarantees of future performance. Forward-looking statements involve risks, uncertainties, assumptions, and other factors that are difficult to predict and that could cause actual results to vary materially from those expressed in or indicated by them. Please refer to the risk factors described in Company's filings with the Securities and Exchange Commission, including the detailed factors discussed under "Risk Factors" in the Company s Annual Report on Form 10-K for the fiscal year ended December 31, 2015. 2

Our strategy is simple and balanced Safety & Compliance People Focus Hassle Free (Easiest airline to fly) Energetic & Compelling Brand Low Fares, Low Costs & Network Growth 3

Good execution against that strategy has helped us grow our network for our customers 14 New Markets 6 New Markets 20 New Markets in 14 New Markets in 8 New Markets* in Includes new markets announced for 2017 as of 11/8/16 4

outpace the industry revenues $5.4B $5.6B $5.8B* $4.3B $4.7B $5.0B $3.8B $3.4B 2009 2010 2011 2012 2013 2014 2015 2016 * 2016 estimate using consensus (not endorsed by Alaska Air Group) Estimates are for Alaska Air Group 2016 standalone, without effect of Virgin America adjustment 5

And provide returns for our owners Adjusted Net Income and EPS * 2009 2010 2011 2012 2013 2014 2015 2016 * 2016 estimate using consensus (not endorsed by Alaska Air Group) Estimates are for Alaska Air Group 2016 standalone, without effect of Virgin America adjustment 6

2016 is shaping up to be another strong year financially Industry and Sector Leading Pre-Tax Margin (LTM 9/30/16) 19.7% 24.8% 11.5% 13.4% 14.4% S&P 500 Industrials Legacies LCC's Alaska 7

And the underlying business is operating well Safe Great Operation Employee Engagement Award Winning Service 8

We have a long history of successful growth Alaska Mainline ASM Growth by Year, 1995 2016 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 U.S. Domestic Industry Data from A4A 9

This growth has helped us diversify our revenue and cash flows PacNW/ Canada 12% Transcon 11% Midcon 2% Alaska 20% 55 % PacNW/ Canada 5% Mountain 11% Mexico 8% California 36% Mountain 9% Mexico 5% * 2016 revenue estimate using consensus (not endorsed by Alaska Air Group) 10

The Virgin America acquisition will position us as the 5 th largest airline in the U.S. with an unparalleled ability to serve West Coast travelers 11

It provides a platform for growth of our low-fare, premium product Powerful West Coast Network Enhanced International Partnerships Access to Constrained Airports California Customer Base Opportunity to Grow & Improve Loyalty 12

The market size is significant North America Revenue Low Fare Premium Product Carriers Network Carriers 66% 12% 19% Low Cost Carriers 3% Ultra Low Cost Carriers 13

California is our single largest opportunity Population 11.9 Million Daily Passengers North America 71,700 AK 0.7M WA 7.2M Population 39.1 Million Daily Passengers North America 185,700 CA 39.1M 2.5x PacNW Daily Passengers 3x PacNW Population OR 4.0M 14

with very attractive characteristics Characteristic Metric US Rank Population 39.1M #1 Gross State Product $2.3T #1 North America Pax/Day 185,700 #1 Intl Passengers/Day 11,750 #3 Gross State Product Growth 4% #4 Sources: Bureau of Economic Analysis 15

Our combined network provides tremendous options for customers living on the West Coast + 16

AS WN UA DL AA HA B6 NK From day one, the combined carrier will offer more seats from the West Coast, so that we can serve customers better 22% 21% 16% 12% 12% 7% 2% 1% Share of West Coast Seats North America Seat Share from Alaska, Oregon, Washington, and California YE3Q16; total is less than 100% because smaller other category is excluded 17

and offer a significant presence at all major metropolitan areas Anchorage 46 Flights 9 Gates Seattle 291 Flights 32 Gates Portland 123 Flights 20 Gates San Francisco 73 Flights 10 Gates LAX 79 Flights 12 Gates Bay Area 115 Flights LA Basin 102 Flights Average scheduled daily flights for Alaska and Virgin America YE3Q16 18

We will serve all 10 of the top markets from SFO SFO Customer Utility Service in Top 10 Markets from SFO 6% Alaska - Today 58% Alaska - Post Merger Rank Market 1 JFK 2 LAX 3 Las Vegas 4 Chicago 5 Boston 6 SEATTLE Seattle 7 Newark 8 San Diego 9 Denver 10 Dulles Utility percentage represents share of domestic revenue for the year ended Q32015. 19

And our utility in LAX increases substantially LAX Customer Utility 58% 10% Current Future Service in Top 10 Markets from LAX Rank Market 1 JFK 2 San Francisco 3 Chicago 4 Seattle 5 Las Vegas 6 Denver 7 Newark 8 Honolulu 9 Boston 10 Atlanta Utility percentage represents share of domestic revenue for the year ended Q32015. 20

With Virgin America, we obtain valuable gates and landing slots on the East and West Coast SFO 8 Gates LGA 12 Slots DCA 10 Slots JFK 23 Slots EWR 15 Slots LAX 6 Gates DAL 2 Gates 21

Both Alaska and Virgin America have lower costs than legacy carriers Limited Service Carriers Premium Value Carriers Legacy Carriers 11.63 6.67 7.14 7.29 7.46 8.27 9.14 9.38 4.85 5.00 Spirit Allegiant Southwest Hawaiian Alaska Jetblue Virgin Delta American United Source: Alaska Mainline and Competitors, 12 Months Ending September 30, 2016 Stage-length adjusted CASM formula: other airline CASM x (other airline stage length / Alaska mainline stage length) ^ 0.5. 22

Our customers benefit from our lower fares Our fares are ~25% lower than legacy carriers $205 $210 $215 $169 $170 Source: U.S. Department of Transportation, 12 months ended Q3 2015 North American Origin and Departures (stage-length adjusted to industry average fare of 1,165) 23

Industry leading operational reliability Alaska Alaska Alaska Alaska Virgin Amer. Alaska Virgin Amer. Virgin Amer. Virgin Amer. Alaska Virgin Amer. Virgin Amer. Virgin Amer. Alaska Virgin Amer. Alaska Sources: On-time and canceled flights data for full year 2014 from masflight. Includes regional affiliate flights. extreme delays, which are 45 minutes or longer, compiled by FlightStats Inc. Two-hour tarmac delays, mishandled baggage, and consumer complaints from Department of Transportation based on 12 months ended in November. DOT involuntary-bumping data 12 months through September. 24

Award-winning customer service #1 Traditional Carrier 9 straight years Best Domestic Airline 9 straight years 25

on one of the youngest Fleet Age in Years 22 17 5 7 9 9 10 10 12 14 Source: Airfleets.net. Mainline only. 26

and most fuel efficient fleets in the country 83 Fuel Efficiency ASM s/gallon 82 76 75 74 70 70 68 66 65 Source: 2015 10-K reports. Mainline only. 27

Planned fleet growth comes from both mainline aircraft and E-175 regional aircraft Projected Fleet Count 12/31/16 12/31/17 12/31/18 Total Mainline Fleet 155 152 160 Q400s* 52 52 37 E175s* 15 33 43 Total Regional Fleet* 67 85 80 Alaska Air Group 222 237 240 Virgin America 63 68 73 * Indicates aircraft are operated under capacity purchase agreements with Horizon or other regional airlines The expected fleet counts at December 31, 2016 and beyond are subject to change. Virgin America s fleet plan is as reported. 28

Addition of E-175 s in our fleet creates a superior onboard experience for our customers and opens up new markets Air Group s Fleet Range E-175 737- NG Cabin Height 6 7 7 3 Regional Jets 76 Seats Aisle Width 19.75 16.7 Seat Width 18.25 17.5 1,700 mi. 29

Starting in 2017, Alaska will introduced dedicated Premium Class product on 737s and E175s Premium Economy Seats +30 Main Cabin Seats -30 Net Seats -4 Premium Economy Seats +24 Main Cabin Seats -27 Net Seats -3 30

Our partner portfolio gives our customers expansive global reach 31

90% of revenue is Alaska generated and partner traffic remains robust, while composition has shifted 2014 9% of Revenue is from Codeshare 2016 6% of Revenue is from Codeshare International Interline $53M (1%) Domestic Interline $113M (2%) International Interline $50M (1%) Domestic Interline $115M (2%) Delta $190 Others $71 American $225 Total Codeshare $486M (9%) Delta $65 Others $65 American $190 Total Codeshare $320M (6%) 32

Our credit card offers the best value proposition amongst comparable airlines Annual Fee $75 $95 $95 $95 $99 Miles for on Airline Spend 3X 2X 2X 2X 2X Companion Certificate $99 Top Rated Loyalty Program* Free Bag Foreign Transaction Fees 0% 0% 0% 0% 0% Bonus Miles 30K 30K 30K 30K 25K 33

Our enhanced network and service offerings should help us grow our loyalty further Mileage Plan Members Affinity Card Membership 2010 2011 2012 2013 2014 2015 2016* 2010 2011 2012 2013 2014 2015 2016* All 2016 data is year ending Q3 2016 34

And we are committed to taking care of employees Combined Incentive Pay 2012 2013 2014 2015 35

This combination creates significant value for our owners Average Annual Run Rate Estimates Revenue Synergies $175M Net Cost Synergies $50M Total Synergies $225M 36

These synergies are in line with recent deals in the sector $680M 6.5% $2.0B 6.3% Net Synergies $1.0B - $1.2B 3.9% $225M 3.1% Average: 4.4% of Annual Returns > $400M > $1.0B 2.8% 2.7% Source: SEC filings by other airlines Notes: Delta / Northwest announced merger with $1.1b in synergies and revised upward to $2.0b after closing. Average reflects actuals only 37

We expect synergies to ramp up quickly 90% 100% 65% 30% Year 1 Year 2 Year 3 Year 4 38

Post merger our leverage is comparable to other airlines Debt-to-Cap 88% 59% ~ 61% 64% 66% 78% 38% 39% 43% LUV JBLU DAL ALGT ALK SAVE UAL HA AAL Source: OALs come from 9/30/16 company filings. ALK is a pro forma modeled on the combined carrier. 39

and in line with S&P 500 industrials Debt-to-Cap ~55% by end of 2017 ~ 61% Half of S&P 500 Industrials have leverage between 40-60% ~45% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100+% Post Close 2020 We are committed to re-de-leveraging the balance sheet 40

We have a track record of balanced cash flow allocation Cash Flow from Operations Pension Contributions Capex (Aircraft/Other) Cash Returned to Shareholders Debt Payments Net of Borrowing 2010 to 2015 cash generation and deployment. Capex includes both aircraft and other capex 41

And we have consistently returned capital since 2007 and grown the dividend since inception Shareholder returns since 2010 Increased dividend each year since inception $102 27.5 $68 $347 $505 ~$130 10.0 $45 $79 $28 $59 $159 ~$200 2010 2011 2012 2013 2014 2015 2016 2013 2016 Share Repurchase Dividend * Dividend spend subject to Board approval. + Share repurchase based on current expected case subject to change 42