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1 ALASKA AIR GROUP OPERATIONAL PERFORMANCE REWARDS PLAN DESCRIPTION Adopted
January 3, 2005; Amended January 17, 2018 The Board of Directors of Alaska Air
Group, Inc. (the “Company”) has adopted the Operational Performance Rewards Plan
(the “Plan”) to reward employees of Alaska Airlines, Inc. (“Alaska”), Horizon
Air Industries, Inc. (“Horizon”) and Virgin America Inc. (“Virgin”) (each a
“Subsidiary”) for achieving certain operational performance targets. This
description is provided to explain the key elements of how the Plan will
operate. This Plan is effective beginning with the 2018 Plan year and each year
thereafter until amended or terminated as provided herein. 1. ELIGIBILITY All
regular employees and temporary variabletime employees of Alaska, Horizon and
Virgin (including employees outside of the United States, if permitted by
applicable law and labor contracts) are eligible to participate in the Plan
(“Eligible Employees”), and will receive one or more payments under the Plan if
they meet the criteria in this paragraph. Payments under the Plan (“Awards”) are
earned monthly and paid quarterly. Eligible Employees on active status or on an
approved leave of absence as of the close of business on the last day of the
quarter during which (a) any of the monthly operational targets applicable to
such employee's applicable Subsidiary are met and (b) employee had eligible
earnings as defined in the Company's Performance Based Pay Plan during the
quarter will be eligible for a payout for each month of the quarter in which the
employee's applicable Subsidiary's operational targets are met. For persons with
Voluntary Severance Incentive or equivalent severance packages (whether
voluntary or not), the last day of eligible employment will not include any of
the period during which the employee has ceased working but is still otherwise
treated as on payroll. Unless otherwise provided in a separate agreement, an
individual whose employment with Alaska, Horizon or Virgin ends prior to the
last day of the quarter for any reason not set forth above, for example,
resignation or termination (with or without cause), forfeits any Award under
this Plan. In addition, employees terminated for cause, as determined by Alaska
or Horizon, shall forfeit any Award under this Plan, regardless of their
employment status on the last day of the quarter. Notwithstanding the foregoing,
contract employees or independent contractors as classified by Alaska, Horizon
or Virgin shall be excluded from participation hereunder, regardless of whether
an agency or court subsequently re-classifies such individuals as employees of
Alaska, Horizon or Virgin. An Eligible Employee who meets all the requirements
for an Award is a “Plan Participant." Participation in the Plan does not
guarantee that any Award will be paid if applicable operational targets are not
achieved.

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2 2. ACCRUAL OF AWARDS An Award will accrue for each Participant as of the close
of business of the last day of any quarter in which the applicable Subsidiary
has achieved one or more of the performance goals set forth in Exhibit A. Each
Subsidiary does not need to achieve all of the performance goals in a given
quarter to accrue an Award; each goal reached in a given Target Period (as
defined in Exhibit A) will apply separately towards the Award to that
Subsidiary’s Participants for that quarter. 3. PAYMENT OF AWARDS Accrued Awards
will be paid quarterly. The Company will use reasonable efforts to pay accrued
Awards to Participants within sixty (60) days of the end of each calendar
quarter. The Company may pay Awards through regular payroll or by separate check
in the Company’s discretion, and in either case the Company may withhold
applicable taxes and garnishments from such payments. The Company will pay a
deceased Participant's Award to the beneficiary designated by the Participant
for purposes of the Company's group term life insurance plan covering the
deceased Participant, and in the absence of any designation, will be paid to the
Participant’s estate. 4. ESTABLISHMENT OF PERFORMANCE GOALS The Compensation and
Leadership Development Committee of the Board (the “Compensation Committee”)
will establish the periodic performance goals for each Plan year during the life
of this Plan, and will provide an exhibit to this Plan that outlines goals and
the payout amounts for each goal. Each such attachment will be labeled “Exhibit
A: Operational Performance Rewards Plan Goals and Award Levels for [year]” and
communicated to eligible employees. 5. AMENDMENT; TERMINATION; INTERPETATION The
Board, acting through the Compensation Committee, retains the right at any time
to modify the Plan in any manner that it deems appropriate or to terminate the
Plan, provided that no amendment or termination shall be effective sooner than
the first day of the month following the Compensation Committee’s action on such
amendment or termination. No termination of the Plan shall affect Awards accrued
before the effective date of termination. Management may interpret or amend this
Plan Description with respect to administrative issues that do not affect
benefit amounts and are not otherwise material to the overall benefits provided
by the Plan. The Compensation Committee shall have discretion to interpret and
resolve any material issue or dispute under the Plan, and its decision
concerning any aspect of the operation of the Plan will be final and conclusive.
The Compensation Committee will review the Plan annually and may make changes to
the Plan and/or Exhibit A for the next Plan year.

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3 6. MISCELLANEOUS This description, including its attachments, constitutes the
entire understanding relating to the Plan, and supersedes all prior oral or
written agreements, representations or commitments relating to the Plan or any
Award. This Plan is not a commitment of the Company, Alaska, Horizon or Virgin,
to any officer or employee of such company to continue that individual in its
employ for any reason. Any employee who files suit against his or her employer
for wrongful termination shall automatically cease to be a Participant. This
description and the rights and obligations provided for herein shall be
construed and interpreted in accordance with the law of the state of Washington,
excluding its conflicts of law rules.

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