<PAGE>
                                                                  Exhibit 10.2

                                                               FOIA CONFIDENTIAL
                                                             TREATMENT REQUESTED


                         PURCHASE AGREEMENT NUMBER 2497

                                    between

                               THE BOEING COMPANY

                                      and

                             ALASKA AIRLINES, INC.

                   Relating to Boeing Model 737-890 Aircraft

                               BOEING PROPRIETARY

P.A. No. 2497

<PAGE>

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                    SA
ARTICLES                                                          NUMBER
--------                                                          ------
<S>                                                               <C>
   1.   Quantity, Model and Description

   2.   Delivery Schedule

   3.   Price

   4.   Payment

   5.   Miscellaneous

TABLE

   1.   Aircraft Information Table

EXHIBIT

   A.   Aircraft Configuration

   B.   Aircraft Delivery Requirements and Responsibilities

SUPPLEMENTAL EXHIBITS

   AE1. Escalation Adjustment/Airframe and Optional Features

   BFE1. BFE Variables

   CS1. Customer Support Variables

   EE1. Engine Escalation/Engine Warranty and Patent Indemnity

   SLP1. Service Life Policy Components
</TABLE>

                               BOEING PROPRIETARY

P.A. No. 2497                          i

<PAGE>

<TABLE>
<CAPTION>
                                                      SA
LETTER AGREEMENT                                    NUMBER
----------------                                    ------
<S>                                                 <C>
2497-1   Option Aircraft........................

2497-2   Aircraft Model Substitution............

2497-3   Seller Purchased Equipment.............

2497-4   Demonstration Flight Waiver............

2497-5   Customer Software......................

2497-6   Promotion Support......................
</TABLE>

                               BOEING PROPRIETARY

P.A. No. 2497                         ii

<PAGE>

<TABLE>
<CAPTION>
                                                                    SA
RESTRICTED LETTER AGREEMENT                                       NUMBER
---------------------------                                       ------
<S>                                                               <C>
6-1162-MSA-588   Aircraft Performance Guarantees -............
                   Model 737-800 Aircraft.....................

6-1162-MSA-589   [***] .......................................

6-1162-MSA-590   Purchase Right Aircraft......................

6-1162-MSA-592   Special Purchase Agreement Provisions........

6-1162-MSA-597   Special Matters..............................
</TABLE>

*   Indicates that certain information contained herein has been omitted and
    filed separately with the Securities and Exchange Commission. Confidential
    treatment has been requested with respect to the omitted portions.


                               BOEING PROPRIETARY

P.A. No. 2497                         iii

<PAGE>

                           Purchase Agreement No. 2497

                                     between

                               The Boeing Company

                                       and

                              Alaska Airlines, Inc.

            This Purchase Agreement No. 2497 dated as of June 15, 2005 between
The Boeing Company (BOEING) and Alaska Airlines, Inc. (CUSTOMER) relating to the
purchase and sale of Model 737-890 aircraft together with all tables, exhibits,
supplemental exhibits, letter agreements and other attachments thereto, if any,
(PURCHASE AGREEMENT) incorporates the terms and conditions of the Aircraft
General Terms Agreement dated as of June 15, 2005 between the parties,
identified as AGTA-ASA (AGTA).

Article 1.  Quantity, Model and Description.

            The aircraft to be delivered to Customer will be designated as Model
737-890 aircraft (the AIRCRAFT). Boeing will manufacture and sell to Customer
Aircraft conforming to the configuration described in Exhibit A in the
quantities listed in Table 1 to the Purchase Agreement.

Article 2.  Delivery Schedule.

            The scheduled months of delivery of the Aircraft are listed in the
attached Table 1. Exhibit B describes certain responsibilities for both Customer
and Boeing in order to accomplish the delivery of the Aircraft.

Article 3.  Price.

            3.1 Aircraft Basic Price. The Aircraft Basic Price is listed in
Table 1 in subject to escalation dollars.

            3.2 Advance Payment Base Prices. The Advance Payment Base Prices
listed in Table 1 were calculated utilizing the latest escalation factors
available to Boeing on the date of this Purchase Agreement projected to the
month of scheduled delivery.

                               BOEING PROPRIETARY

P.A. No. 2497                          1

<PAGE>

Article 4.  Payment.

            4.1 Boeing acknowledges receipt of a deposit in the amount shown in
Table 1 for each Aircraft (DEPOSIT).

            4.2 The standard advance payment schedule for the Model 737-890
aircraft requires Customer to make certain advance payments, expressed in a
percentage of the Advance Payment Base Price of each Aircraft beginning with a
payment of 1%, less the Deposit, on the effective date of the Purchase Agreement
for the Aircraft. Additional advance payments for each Aircraft are due as
specified in and on the first business day of the months listed in the attached
Table 1.

            4.3 For any Aircraft whose scheduled month of delivery is less than
24 months from the date of this Purchase Agreement, the total amount of advance
payments due for payment upon signing of this Purchase Agreement will include
all advance payments which are past due in accordance with the standard advance
payment schedule set forth in paragraph 4.2 above.

            4.4 Customer will pay the balance of the Aircraft Price of each
Aircraft at delivery.

Article 5.  Additional Terms.

            5.1 Aircraft Information Table. Table 1 consolidates information
contained in Articles 1, 2, 3 and 4 with respect to (i) quantity of Aircraft,
(ii) applicable Detail Specification, (iii) month and year of scheduled
deliveries, (iv) Aircraft Basic Price, (v) applicable escalation factors and
(vi) Advance Payment Base Prices and advance payments and their schedules.

            5.2 Escalation Adjustment/Airframe and Optional Features.
Supplemental Exhibit AE1 contains the applicable airframe and optional features
escalation formula.

            5.3 Buyer Furnished Equipment Variables. Supplemental Exhibit BFE1
contains vendor selection dates and other variables applicable to the Aircraft.

            5.4 Customer Support Variables. Information, training, services and
other things furnished by Boeing in support of introduction of the Aircraft into
Customer's fleet are described in Supplemental Exhibit CS1. As Customer has
taken delivery of 737-800 type aircraft, the level of support to be provided
under Supplemental Exhibit CS1 (the Entitlements) is as applicable for an
operator already operating such aircraft.

                               BOEING PROPRIETARY

P.A. No. 2497                          2

<PAGE>

            5.5 Engine Variables. Supplemental Exhibit EE1 contains the engine
warranty and the engine patent indemnity for the Aircraft.

            5.6 Service Life Policy Component Variables. Supplemental Exhibit
SLP1 lists the airframe and landing gear components covered by the Service Life
Policy for the Aircraft (COVERED COMPONENTS).

            5.7 Public Announcement. Boeing reserves the right to make a public
announcement regarding Customer's purchase of the Aircraft upon approval of
Boeing's press release by Customer's public relations department or other
authorized representative.

            5.8 Negotiated Agreement; Entire Agreement. This Purchase Agreement,
including the provisions of Article 8.2 of the AGTA relating to insurance, and
Article 11 of Part 2 of Exhibit C of the AGTA relating to DISCLAIMER AND RELEASE
and EXCLUSION OF CONSEQUENTIAL AND OTHER DAMAGES, has been the subject of
discussion and negotiation and is understood by the parties; the Aircraft Price
and other agreements of the parties stated in this Purchase Agreement were
arrived at in consideration of such provisions. This Purchase Agreement,
including the AGTA, contains the entire agreement between the parties and
supersedes all previous proposals, understandings, commitments or
representations whatsoever, oral or written, and may be changed only in writing
signed by authorized representatives of the parties.

                               BOEING PROPRIETARY

P.A. No. 2497                          3

<PAGE>

DATED June 15, 2005

Alaska Airlines, Inc.                         THE BOEING COMPANY

By____________________________________        By___________________________

Its Vice President Finance & Treasurer        Its Attorney-In-Fact

                               BOEING PROPRIETARY

P.A. No. 2497                          4

<PAGE>

                       Table 1 to Purchase Agreement 2497
       737-800 Aircraft Delivery, Description, Price and Advance Payments
                              ECI-MFG/CPI Formula

                                     [***]

*  Indicates that certain information contained herein has been omitted and
   filed separately with the Securities and Exchange Commission. Confidential
   treatment has been requested with respect to the omitted portions.

<PAGE>

                             AIRCRAFT CONFIGURATION

                                    between

                               THE BOEING COMPANY

                                      and

                             ALASKA AIRLINES, INC.

                  Exhibit A to Purchase Agreement Number 2497

                               BOEING PROPRIETARY

P.A. No. 2497                          A

<PAGE>

Exhibit A to
Purchase Agreement No. 2497
Page 1

                             AIRCRAFT CONFIGURATION

                            Dated: January 31, 2005

                                  relating to

                         BOEING MODEL 737-890 AIRCRAFT

            The Detail Specification is Detail Specification D019A001ASA38P-1
dated as of January 31, 2005. The Aircraft Basic Price reflects and includes all
effects of such Options, except such Aircraft Basic Price does not include the
price effects of Buyer Furnished Equipment or Seller Purchased Equipment.

                               BOEING PROPRIETARY

P.A. No. 2497                          A

<PAGE>

Exhibit A to
Purchase Agreement No. 2497
Page A-2

[***]

* Indicates that certain information contained herein has been omitted and filed
  separately with the Securities and Exchange Commission. Confidential treatment
  has been requested with respect to the omitted portions.

<PAGE>

              AIRCRAFT DELIVERY REQUIREMENTS AND RESPONSIBILITIES

                                    between

                               THE BOEING COMPANY

                                      and

                             ALASKA AIRLINES, INC.

                  Exhibit B to Purchase Agreement Number 2497

                               BOEING PROPRIETARY

P.A. No. 2497                          B

<PAGE>

Exhibit B to
Purchase Agreement No. 2497
Page 1

              AIRCRAFT DELIVERY REQUIREMENTS AND RESPONSIBILITIES

                                  relating to

                         BOEING MODEL 737-890 AIRCRAFT

Both Boeing and Customer have certain documentation and approval
responsibilities at various times during the construction cycle of Customer's
Aircraft that are critical to making the delivery of each Aircraft a positive
experience for both parties. This Exhibit B documents those responsibilities and
indicates recommended completion deadlines for the actions to be accomplished.

          1.    GOVERNMENT DOCUMENTATION REQUIREMENTS.

Certain actions are required to be taken by Customer in advance of the scheduled
delivery month of each Aircraft with respect to obtaining certain government
issued documentation.

                1.1     Airworthiness and Registration Documents.

                        Not later than 6 MONTHS PRIOR TO DELIVERY of each
Aircraft, Customer will notify Boeing of the registration number to be painted
on the side of the Aircraft. In addition, and not later than 3 MONTHS PRIOR TO
DELIVERY of each Aircraft, Customer will, by letter to the regulatory authority
having jurisdiction, authorize the temporary use of such registration numbers by
Boeing during the pre-delivery testing of the Aircraft.

Customer is responsible for furnishing any Temporary or Permanent Registration
Certificates required by any governmental authority having jurisdiction to be
displayed aboard the Aircraft after delivery.

                1.2     Certificate of Sanitary Construction.

                        1.2.1 U.S. Registered Aircraft. Boeing will obtain from
the United States Public Health Service, a United States Certificate of Sanitary
Construction to be displayed aboard each Aircraft after delivery to Customer.

                        1.2.2 Non-U.S. Registered Aircraft. If Customer requires
a United States Certificate of Sanitary Construction at the time of delivery of
the Aircraft, Customer will give written notice thereof to Boeing at least 3
MONTHS PRIOR TO DELIVERY. Boeing will then use its reasonable best efforts to
obtain the Certificate from

                               BOEING PROPRIETARY

P.A. No. 2497                         B-1

<PAGE>

Exhibit B to
Purchase Agreement No. 2497
Page 2

the United States Public Health Service and present it to Customer at the time
of Aircraft delivery.

                1.3     Customs Documentation.

                        1.3.1 Import Documentation. If the Aircraft is intended
to be exported from the United States, Customer must notify Boeing not later
than 3 MONTHS PRIOR TO DELIVERY of each Aircraft of any documentation required
by the customs authorities or by any other agency of the country of import.

                        1.3.2 General Declaration - U.S. If the Aircraft is
intended to be exported from the United States, Boeing will prepare Customs Form
7507, General Declaration, for execution by U.S. Customs immediately prior to
the ferry flight of the Aircraft. For this purpose, Customer will furnish to
Boeing not later than 20 DAYS PRIOR TO DELIVERY all information required by U.S.
Customs or U.S. Immigration and Naturalization Service, including without
limitation (i) a complete crew and passenger list identifying the names, birth
dates, passport numbers and passport expiration dates of all crew and passengers
and (ii) a complete ferry flight itinerary, including point of exit from the
United States for the Aircraft.

If Customer intends, during the ferry flight of an Aircraft, to land at a U.S.
airport after clearing Customs at delivery, Customer must notify Boeing not
later than 20 DAYS PRIOR TO DELIVERY of such intention. If Boeing receives such
notification, Boeing will provide to Customer the documents constituting a
Customs permit to proceed, allowing such Aircraft to depart after any such
landing. Sufficient copies of completed Form 7507, along with passenger
manifest, will be furnished to Customer to cover U.S. stops scheduled for the
ferry flight.

                        1.3.3 Export Declaration - U.S. If the Aircraft is
intended to be exported from the United States, Boeing will prepare Form 7525V
and, IMMEDIATELY PRIOR TO THE FERRY FLIGHT, will submit such Form to U.S.
Customs in Seattle in order to obtain clearance for the departure of the
Aircraft, including any cargo, from the United States. U.S. Customs will deliver
the Export Declaration to the U.S. Department of Commerce after export.

                2.      INSURANCE CERTIFICATES.

                        Unless provided earlier, Customer will provide to Boeing
not later than 30 DAYS PRIOR TO DELIVERY of the first Aircraft, a copy of the
requisite annual insurance certificate in accordance with the requirements of
Article 8 of the AGTA.

                               BOEING PROPRIETARY

P.A. No. 2497                         B-2

<PAGE>

Exhibit B to
Purchase Agreement No. 2497
Page 3

                3.      NOTICE OF FLYAWAY CONFIGURATION.

                        Not later than 20 DAYS PRIOR TO DELIVERY of the
Aircraft, Customer will provide to Boeing a configuration letter stating the
requested "flyaway configuration" of the Aircraft for its ferry flight. This
configuration letter should include:

                         (i) the name of the company which is to furnish fuel
                for the ferry flight and any scheduled post-delivery flight
                training, the method of payment for such fuel, and fuel load for
                the ferry flight;

                         (ii) the cargo to be loaded and where it is to be
                stowed on board the Aircraft, the address where cargo is to be
                shipped after flyaway and notification of any hazardous
                materials requiring special handling;

                         (iii) any BFE equipment to be removed prior to flyaway
                and returned to Boeing BFE stores for installation on Customer's
                subsequent Aircraft;

                         (iv) a complete list of names and citizenship of each
                crew member and non-revenue passenger who will be aboard the
                ferry flight; and

                         (v) a complete ferry flight itinerary.

                4.       DELIVERY ACTIONS BY BOEING.

                         4.1 Schedule of Inspections. All FAA, Boeing, Customer
and, if required, U.S. Customs Bureau inspections will be scheduled by Boeing
for completion prior to delivery or departure of the Aircraft. Customer will be
informed of such schedules.

                         4.2 Schedule of Demonstration Flights. All FAA and
Customer demonstration flights will be scheduled by Boeing for completion prior
to delivery of the Aircraft.

                         4.3 Schedule for Customer's Flight Crew. Boeing will
inform Customer of the date that a flight crew is required for acceptance
routines associated with delivery of the Aircraft.

                               BOEING PROPRIETARY

P.A. No. 2497                         B-3

<PAGE>

Exhibit B to
Purchase Agreement No. 2497
Page 4

                         4.4 Fuel Provided by Boeing. Boeing will provide to
Customer, without charge, the amount of fuel shown in U.S. gallons in the table
below for the model of Aircraft being delivered and full capacity of engine oil
at the time of delivery or prior to the ferry flight of the Aircraft.

<TABLE>
<CAPTION>
Aircraft Model      Fuel Provided
--------------      -------------
<S>                 <C>
     737                 1,000
</TABLE>

                         4.5 Flight Crew and Passenger Consumables. Boeing will
provide reasonable quantities of food, beverages, coat hangers, towels, toilet
tissue, drinking cups and soap for the first segment of the ferry flight for the
Aircraft.

                         4.6 Delivery Papers, Documents and Data. Boeing will
have available at the time of delivery of the Aircraft certain delivery papers,
documents and data for execution and delivery. If title for the Aircraft will be
transferred to Customer through a Boeing sales subsidiary and if the Aircraft
will be registered with the FAA, Boeing will pre-position in Oklahoma City,
Oklahoma, for filing with the FAA at the time of delivery of the Aircraft an
executed original Form 8050-2, Aircraft Bill of Sale, indicating transfer of
title to the Aircraft from Boeing's sales subsidiary to Customer.

                         4.7 Delegation of Authority. Boeing will present a
certified copy of a Resolution of Boeing's Board of Directors, designating and
authorizing certain persons to act on its behalf in connection with delivery of
the Aircraft.

                5.       DELIVERY ACTIONS BY CUSTOMER.

                         5.1 Aircraft Radio Station License. At delivery
Customer will provide its Aircraft Radio Station License to be placed on board
the Aircraft following delivery.

                         5.2. Aircraft Flight Log. At delivery Customer will
provide the Aircraft Flight Log for the Aircraft.

                         5.3 Delegation of Authority. Customer will present to
Boeing at delivery of the Aircraft an original or certified copy of Customer's
Delegation of Authority designating and authorizing certain persons to act on
its behalf in connection with delivery of the specified Aircraft.

                               BOEING PROPRIETARY

P.A. No. 2497                         B-4

<PAGE>

                             ESCALATION ADJUSTMENT

                         AIRFRAME AND OPTIONAL FEATURES

                                    between

                               THE BOEING COMPANY

                                      and

                             ALASKA AIRLINES, INC.

           Supplemental Exhibit AE1 to Purchase Agreement Number 2497

                               BOEING PROPRIETARY

<PAGE>

1.        Alternate Escalation Formula

          Airframe and Optional Features price adjustments (Airframe Price
Adjustment) are used to allow prices to be stated in current year dollars at the
signing of this Purchase Agreement and to adjust the amount to be paid by
Customer at delivery for the effects of economic fluctuation. The Airframe Price
Adjustment will be determined at the time of Aircraft delivery in accordance
with the following formula:

          P(a) =(P)(L + M) - P

          Where:

                  P(a) = Airframe Price Adjustment.
                         (for the 737-800 Aircraft the Airframe Price includes
                         the Engine Price at its basic thrust level)

                  L =    .65 x ( ECI
                               -------
                               ECI(b))  where ECI(b) is the base year index
                                        (as set forth in Table 1 of this
                                        Purchase Agreement)

                  M =    .35 x ( CPI
                               -------
                               CPI(b))  where CPI(b) is the base year index (as
                                        set forth in Table 1 of this Purchase
                                        Agreement)

                  P =    Airframe Price plus Optional Features Price (as set
                         forth in Table 1 of this Purchase Agreement).

                  ECI is a value determined using the U.S. Department of Labor,
                  Bureau of Labor Statistics Employment Cost Index Manufacturing
                  - Total Compensation (BLS Series ID ECU12402I), calculated by
                  establishing a three-month arithmetic average value (expressed
                  as a decimal and rounded to the nearest tenth) using the
                  values for the 11th, 12th and 13th months prior to the month
                  of scheduled delivery of the applicable Aircraft. As the
                  Employment Cost Index values are only released on a quarterly
                  basis, the value released for the month of March will be used
                  for the months of January and February; the value for June
                  used for April and May; the value for September used for July
                  and August; and the value for December used for October and
                  November.

                  CPI is a value determined using the U.S. Department of Labor,
                  Bureau of Labor Statistics Consumer Price Index (BLS Series ID

                               BOEING PROPRIETARY

<PAGE>

                  CUUR0000SA0), calculated as a 3-month arithmetic average of
                  the released monthly values (expressed as a decimal and
                  rounded to the nearest tenth) using the values for the 11th,
                  12th and 13th months prior to the month of scheduled delivery
                  of the applicable Aircraft.

                  As an example, for an Aircraft scheduled to be delivered in
                  the month of July, the months June, July and August of the
                  preceding year will be utilized in determining the value of
                  ECI and CPI.

Note:     i.   In determining the values of L and M, all calculations and
          resulting values will be expressed as a decimal rounded to the nearest
          ten-thousandth.

          ii.  .65 is the numeric ratio attributed to labor in the Airframe
          Price Adjustment formula.

          iii. .35 is the numeric ratio attributed to materials in the
          Airframe Price Adjustment formula.

          iv.  The denominators (base year indices) are the actual average
          values reported by the U.S. Department of Labor, Bureau of Labor
          Statistics. The actual average values are calculated as a 3-month
          arithmetic average of the released monthly values (expressed as a
          decimal and rounded to the nearest tenth) using the values for the
          11th, 12th and 13th months prior to the airframe base year. The
          applicable base year and corresponding denominator is provided by
          Boeing in Table 1 of this Purchase Agreement.

          v.   The final value of P(a) will be rounded to the nearest dollar.

          vi.  The Airframe Price Adjustment will not be made if it will result
          in a decrease in the Aircraft Basic Price.

2.    Values to be Utilized in the Event of Unavailability.

      2.1 If the Bureau of Labor Statistics substantially revises the
methodology used for the determination of the values to be used to determine the
ECI and CPI values (in contrast to benchmark adjustments or other corrections of
previously released values), or for any reason has not released values needed to
determine the applicable Airframe Price Adjustment, the parties will, prior to
the delivery of any such Aircraft, select a substitute from other Bureau of
Labor Statistics data or similar data reported by non-governmental
organizations. Such substitute will result in the same adjustment, insofar as
possible, as would have been calculated utilizing the original values adjusted
for fluctuation during the applicable time period. However, if within 24 months
after delivery of the Aircraft, the Bureau of Labor Statistics should resume
releasing values for the months needed to determine the Airframe Price
Adjustment; such values will be used to determine any increase or decrease in
the Airframe Price Adjustment for the Aircraft from that determined at the time
of delivery of the Aircraft.

                               BOEING PROPRIETARY

<PAGE>

      2.2 Notwithstanding Article 2.1 above, if prior to the scheduled delivery
month of an Aircraft the Bureau of Labor Statistics changes the base year for
determination of the ECI and CPI values as defined above, such re-based values
will be incorporated in the Airframe Price Adjustment calculation.

      2.3 In the event escalation provisions are made non-enforceable or
otherwise rendered void by any agency of the United States Government, the
parties agree, to the extent they may lawfully do so, to equitably adjust the
Aircraft Price of any affected Aircraft to reflect an allowance for increases or
decreases consistent with the applicable provisions of paragraph 1 of this
Supplemental Exhibit AE1 in labor compensation and material costs occurring
since August of the year prior to the price base year shown in the Purchase
Agreement.

      2.4 If within 12 months of Aircraft delivery, the published index values
are revised due to an acknowledged error by the Bureau of Labor Statistics, the
Airframe Price Adjustment will be re-calculated using the revised index values
(this does not include those values noted as preliminary by the Bureau of Labor
Statistics). A credit memorandum or supplemental invoice will be issued for the
Airframe Price Adjustment difference that results from the revised index values
for the delivered Aircraft. Customer may elect that the credit or supplemental
invoice be applied against the applicable delivered Aircraft, the next Aircraft
to deliver, or to goods and services. The adjustment though added to the invoice
of the next Aircraft to deliver will continue to relate to the delivered
Aircraft. Interest charges will not apply for the period of original invoice to
issuance of credit memorandum or supplemental invoice.

Note:     i.    The values released by the Bureau of Labor Statistics and
          available to Boeing 30 days prior to the first day of the scheduled
          delivery month of an Aircraft will be used to determine the ECI and
          CPI values for the applicable months (including those noted as
          preliminary by the Bureau of Labor Statistics) to calculate the
          Airframe Price Adjustment for the Aircraft invoice at the time of
          delivery. The values will be considered final and no Airframe Price
          Adjustments will be made after Aircraft delivery for any subsequent
          changes in published Index values, subject always to paragraph 2.4
          above.

          ii.   The maximum number of digits to the right of the decimal after
          rounding utilized in any part of the Airframe Price Adjustment
          equation will be 4, where rounding of the fourth digit will be
          increased to the next highest digit when the 5th digit is equal to 5
          or greater.

                               BOEING PROPRIETARY

<PAGE>

                      BUYER FURNISHED EQUIPMENT VARIABLES

                                    between

                               THE BOEING COMPANY

                                      and

                             ALASKA AIRLINES, INC.

          Supplemental Exhibit BFE1 to Purchase Agreement Number 2497


                               Boeing Proprietary
P.A. No. 2497                         BFE1

<PAGE>

                      BUYER FURNISHED EQUIPMENT VARIABLES

                                  relating to

                             BOEING MODEL AIRCRAFT

This Supplemental Exhibit BFE1 contains vendor selection dates, on-dock dates
and other variables applicable to the Aircraft.

1.    Supplier Selection.

      Customer will:

      1.1 Select and notify Boeing of the suppliers and part numbers of the
following BFE items by the following dates:

          Galley System             Same as July 2005 737-800 aircraft under
                                    Purchase Agreement 1954.

          Galley Inserts            Same as July 2005 737-800 aircraft under
                                    Purchase Agreement 1954.

          Seats (passenger)         Same as July 2005 737-800
                                    aircraft under Purchase Agreement 1954.

          Overhead & Audio System   Same as July 2005 737-800
                                    aircraft under Purchase Agreement 1954.

          In-Seat Video System      Not applicable

          Miscellaneous Emergency   Same as July 2005 737-800
             Equipment              aircraft under Purchase Agreement 1954.

          Cargo Handling            Same as July 2005 737-800
             Systemsasa             aircraft under Purchase Agreement 1954.

                               Boeing Proprietary
P.A. No. 2497                        BFE1-1

<PAGE>

2.    On-dock Dates

On or before July 1, 2005, Boeing will provide to Customer a BFE Requirements
On-Dock/Inventory Document (BFE Document) or an electronically transmitted BFE
Report which may be periodically revised, setting forth the items, quantities,
on-dock dates and shipping instructions relating to the in-sequence installation
of BFE.

3.    Additional Delivery Requirements

Customer will insure that Customer's BFE suppliers provide sufficient
information to enable Boeing, when acting as Importer of Record for Customer's
BFE, to comply with all applicable provisions of the U.S. Customs Service.

                               Boeing Proprietary
P.A. No. 2497                        BFE1-2

<PAGE>

                           CUSTOMER SUPPORT VARIABLES

                                    between

                               THE BOEING COMPANY

                                      and

                             ALASKA AIRLINES, INC.

           Supplemental Exhibit CS1 to Purchase Agreement Number 2497

                               Boeing Proprietary
P.A. No. 2497                         CS1

<PAGE>

                           CUSTOMER SUPPORT VARIABLES

                                  relating to

                         BOEING MODEL 737-890 AIRCRAFT

Customer currently operates an aircraft of the same model as the Aircraft. Upon
Customer's request, Boeing will develop and schedule a customized Customer
Support Program to be furnished in support of the Aircraft. The customized
program will be based upon and equivalent to the entitlements summarized below.

1.    Maintenance Training.

      1.1   Maintenance Training Minor Model Differences Course, if required,
            covering operational, structural or systems differences between
            Customer's newly-purchased Aircraft and an aircraft of the same
            model currently operated by Customer; 1 class of 15 students;

      1.2   Training materials, if applicable, will be provided to each student.
            In addition, one set of training materials as used in Boeing's
            training program, including visual aids, text and graphics will be
            provided for use in Customer's own training program.

2.    Flight Training.

      Boeing will provide, if required, one classroom course to acquaint up to
      15 students with operational, systems and performance differences between
      Customer's newly-purchased Aircraft and an aircraft of the same model
      currently operated by Customer.

      Any training materials used in Flight Training, if required, will be
      provided for use in Customer's own training program.

3.    Planning Assistance.

      3.1   Maintenance and Ground Operations.

            Upon request, Boeing will provide planning assistance regarding
            Minor Model Differences requirements for facilities, tools and
            equipment.

      3.2   Spares.

            Boeing will revise, as applicable, the customized Recommended Spares
            Parts List (RSPL) and Illustrated Parts Catalog (IPC).

                               Boeing Proprietary
P.A. No. 2497                        CS1-1

<PAGE>

4.    Technical Data and Documents.

      Boeing will revise, as applicable, technical data and documents provided
      with previously delivered aircraft.

                               Boeing Proprietary
P.A. No. 2497                        CS1-2

<PAGE>

                               ENGINE ESCALATION,
                      ENGINE WARRANTY AND PATENT INDEMNITY

                                    between

                               THE BOEING COMPANY

                                      and

                             ALASKA AIRLINES, INC.

           Supplemental Exhibit EE1 to Purchase Agreement Number 2497

                               Boeing Proprietary
P.A. No. 2497                         EE1

<PAGE>

                               ENGINE ESCALATION,
                      ENGINE WARRANTY AND PATENT INDEMNITY

                                  relating to

                         BOEING MODEL 737-890 AIRCRAFT

1.    ENGINE ESCALATION. No separate engine escalation methodology is defined
for the 737-600, -700, -800 or -900 Aircraft. Pursuant to the AGTA, the engine
prices for these Aircraft are included in and will be escalated in the same
manner as the Airframe.

2.    ENGINE WARRANTY AND PRODUCT SUPPORT PLAN. Boeing has obtained from CFM
International, Inc. (or CFM International, S.A., as the case may be) (CFM) the
right to extend to Customer the provisions of CFM's warranty as set forth below
(herein referred to as the "Warranty"); subject, however, to Customer's
acceptance of the conditions set forth herein. Accordingly, Boeing hereby
extends to Customer and Customer hereby accepts the provisions of CFM's Warranty
as hereinafter set forth, and such Warranty shall apply to all CFM56-7 type
Engines (including all Modules and Parts thereof) installed in the Aircraft at
the time of delivery or purchased from Boeing by Customer for support of the
Aircraft except that, if Customer and CFM have executed, or hereafter execute, a
General Terms Agreement, then the terms of that Agreement shall be substituted
for and supersede the provisions of Paragraphs 2.1 through 2.10 below and
Paragraphs 2.1 through 2.10 below shall be of no force or effect and neither
Boeing nor CFM shall have any obligation arising therefrom. In consideration for
Boeing's extension of the CFM Warranty to Customer, Customer hereby releases and
discharges Boeing from any and all claims, obligations and liabilities
whatsoever arising out of the purchase or use of such CFM56-7 type Engines and
Customer hereby waives, releases and renounces all its rights in all such
claims, obligations and liabilities. In addition, Customer hereby releases and
discharges CFM from any and all claims, obligations and liabilities whatsoever
arising out of the purchase or use of such CFM56-7 type Engines except as
otherwise expressly assumed by CFM in such CFM Warranty or General Terms
Agreement between Customer and CFM and Customer hereby waives, releases and
renounces all its rights in all such claims, obligations and liabilities.

      2.1.  Title. CFM warrants that at the date of delivery, CFM has legal
      title to and good and lawful right to sell its CFM56-7 type Engine and
      Products and furthermore warrants that such title is free and clear of all
      claims, liens and encumbrances of any nature whatsoever.

                               Boeing Proprietary
P.A. No. 2497                        EE1-1

<PAGE>

      2.2.  Patents.

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

            2.2.2 CFM's liability hereunder is conditioned upon Customer
            promptly notifying CFM in writing and giving CFM authority,
            information and assistance (at CFM's expense) for the defense of any
            suit. In case said equipment or part is held in such suit to
            constitute infringement and the use of said equipment or part is
            enjoined, CFM shall expeditiously, at its own expense and at its
            option, either (i) procure for Customer the rights to continue using
            said product or part; (ii) replace the same with a satisfactory and
            noninfringing product or part; or (iii) modify the same so it
            becomes satisfactory and noninfringing. The foregoing shall
            constitute the sole remedy of Customer and the sole liability of CFM
            for patent infringement.

            2.2.3 The above provisions also apply to products which are the same
            as those covered by this Agreement and are delivered to Customer as
            part of the installed equipment on CFM56-7 powered Aircraft.

      2.3. Initial Warranty. CFM warrants that CFM56-7 Engine products will
      conform to CFM's applicable specifications and will be free from defects
      in material and workmanship prior to Customer's initial use of such
      products.

      2.4.  Warranty Pass-On.

            2.4.1 If requested by Customer and agreed to by CFM in writing, CFM
            will extend warranty support for Engines sold by Customer to
            commercial airline operators, or to other aircraft operators. Such
            warranty support will be limited to the New Engine Warranty, New
            Parts Warranty, Ultimate Life Warranty and Campaign Change Warranty
            and will require such operator(s) to agree in writing to be bound by
            and comply with all the terms and conditions, including the
            limitations, applicable to such warranties.

                               Boeing Proprietary
P.A. No. 2497                        EE1-2

<PAGE>

            2.4.2 Any warranties set forth herein shall not be transferable to a
            third party, merging company or an acquiring entity of Customer.

            2.4.3 In the event Customer is merged with, or acquired by, another
            aircraft operator which has a general terms agreement with CFM, the
            Warranties as set forth herein shall apply to the Engines, Modules,
            and Parts.

      2.5.  New Engine Warranty.

            2.5.1. CFM warrants each new Engine and Module against Failure for
            the initial 3000 Flight Hours as follows:

                  (i) Parts Credit Allowance will be granted for any Failed
            Parts.

                  (ii) Labor Allowance for disassembly, reassembly, test and
            Parts repair of any new Engine Part will be granted for replacement
            of Failed Parts.

                  (iii) Such Parts Credit Allowance, test and Labor Allowance
            will be: 100% from new to 2500 Flight Hours and decreasing pro rata
            from 100% at 2500 Flight Hours to zero percent at 3000 Flight Hours.

            2.5.2 As an alternative to the above allowances, CFM shall, upon
            request of Customer:

                  (i) Arrange to have the failed Engines and Modules repaired,
            as appropriate, at a facility designated by CFM at no charge to
            Customer for the first 2500 Flight Hours and at a charge to Customer
            increasing pro rata from zero percent of CFM's repair cost at 2500
            Flight Hours to 100% of such CFM repair costs at 3000 Flight Hours.

                  (ii) Transportation to and from the designated facility shall
            be at Customer's expense.

      2.6. New Parts Warranty. In addition to the warranty granted for new
      Engines and new Modules, CFM warrants Engine and Module Parts as follows:

            2.6.1. During the first 1000 Flight Hours for such Parts and
            Expendable Parts, CFM will grant 100% Parts Credit Allowance or
            Labor Allowance for repair labor for failed Parts.

                               Boeing Proprietary
P.A. No. 2497                        EE1-3

<PAGE>

            2.6.2. CFM will grant a pro rata Parts Credit Allowance for Scrapped
            Parts decreasing from 100% at 1000 Flight Hours Part Time to zero
            percent at the applicable hours designated in Table 1.

            2.7. Ultimate Life Warranty.

            2.7.1. CFM warrants Ultimate Life limits on the following Parts:

                   (i)    Fan and Compressor Disks/Drums

                   (ii)   Fan and Compressor Shafts

                   (iii)  Compressor Discharge Pressure Seal (CDP)

                   (iv)   Turbine Disks

                   (v)    HPT Forward and Stub Shaft (vi) LPT Driving Cone

                   (vii)  LPT Shaft and Stub Shaft

            2.7.2. CFM will grant a pro rata Parts Credit Allowance decreasing
            from 100% when new to zero percent at 25,000 Flight Hours or 15,000
            Flight Cycles, whichever comes earlier. Credit will be granted only
            when such Parts are permanently removed from service by a CFM or a
            U.S. and/or French Government imposed Ultimate Life limitation of
            less than 25,000 Flight Hours or 15,000 Flight Cycles.

      2.8.  Campaign Change Warranty.

            2.8.1. A campaign change will be declared by CFM when a new Part
            design introduction, Part modification, Part Inspection, or
            premature replacement of an Engine or Module is required by a
            mandatory time compliance CFM Service Bulletin or FAA Airworthiness
            Directive. Campaign change may also be declared for CFM Service
            Bulletins requesting new Part introduction no later than the next
            Engine or Module shop visit. CFM will grant following Parts Credit
            Allowances:

            Engines and Modules

                   (i) 100% for Parts in inventory or removed from service when
                   new or with 2500 Flight Hours or less total Part Time.

                   (ii) 50% for Parts in inventory or removed from service with
                   over 2500 Flight Hours since new, regardless of warranty
                   status.

                               Boeing Proprietary
P.A. No. 2497                        EE1-4

<PAGE>

            2.8.2. Labor Allowance - CFM will grant 100% Labor Allowance for
            disassembly, reassembly, modification, testing, or Inspection of CFM
            supplied Engines, Modules, or Parts therefor when such action is
            required to comply with a mandatory time compliance CFM Service
            Bulletin or FAA Airworthiness Directive. A Labor Allowance will be
            granted by CFM for other CFM issued Service Bulletins if so
            specified in such Service Bulletins.

            2.8.3. Life Controlled Rotating Parts retired by Ultimate Life
            limits including FAA and/or DGAC Airworthiness Directive, are
            excluded from Campaign Change Warranty.

      2.9. LIMITATIONS. THE PROVISIONS SET FORTH HEREIN ARE EXCLUSIVE AND ARE IN
      LIEU OF ALL OTHER WARRANTIES WHETHER WRITTEN, ORAL OR IMPLIED. THERE ARE
      NO IMPLIED WARRANTIES OF FITNESS OR MERCHANTABILITY. SAID PROVISIONS SET
      FORTH THE MAXIMUM LIABILITY OF CFM WITH RESPECT TO CLAIMS OF ANY KIND,
      INCLUDING NEGLIGENCE, ARISING OUT OF MANUFACTURE, SALE, POSSESSION, USE OR
      HANDLING OF THE PRODUCTS OR PARTS THEREOF OR THEREFOR, AND IN NO EVENT
      SHALL CFM'S LIABILITY TO CUSTOMER EXCEED THE PURCHASE PRICE OF THE PRODUCT
      GIVING RISE TO CUSTOMER'S CLAIM OR INCLUDE INCIDENTAL OR CONSEQUENTIAL
      DAMAGES.

      2.10.Indemnity and Contribution.

            2.10.1. IN THE EVENT CUSTOMER ASSERTS A CLAIM AGAINST A THIRD PARTY
            FOR DAMAGES OF THE TYPE LIMITED OR EXCLUDED IN LIMITATIONS,
            PARAGRAPH 2.9. ABOVE, CUSTOMER SHALL INDEMNIFY AND HOLD CFM HARMLESS
            FROM AND AGAINST ANY CLAIM BY OR LIABILITY TO SUCH THIRD PARTY FOR
            CONTRIBUTION OR INDEMNITY, INCLUDING COSTS AND EXPENSES (INCLUDING
            ATTORNEYS' FEES) INCIDENT THERETO OR INCIDENT TO ESTABLISHING
            SUCCESSFULLY THE RIGHT TO INDEMNIFICATION UNDER THIS PROVISION. THIS
            INDEMNITY SHALL APPLY WHETHER OR NOT SUCH DAMAGES WERE OCCASIONED IN
            WHOLE OR IN PART BY THE FAULT OR NEGLIGENCE OF CFM, WHETHER ACTIVE,
            PASSIVE OR IMPUTED.

            2.10.2. CUSTOMER SHALL INDEMNIFY AND HOLD CFM HARMLESS FROM ANY
            DAMAGE, LOSS, CLAIM, AND

                               Boeing Proprietary
P.A. No. 2497                        EE1-5

<PAGE>

            LIABILITY OF ANY KIND (INCLUDING EXPENSES OF LITIGATION AND
            ATTORNEYS' FEES) FOR PHYSICAL INJURY TO OR DEATH OF ANY PERSON, OR
            FOR PROPERTY DAMAGE OF ANY TYPE, ARISING OUT OF THE ALLEGED
            DEFECTIVE NATURE OF ANY PRODUCT OR SERVICE FURNISHED UNDER THIS
            AGREEMENT, TO THE EXTENT THAT THE PAYMENTS MADE OR REQUIRED TO BE
            MADE BY CFM EXCEED ITS ALLOCATED SHARE OF THE TOTAL FAULT OR LEGAL
            RESPONSIBILITY OF ALL PERSONS ALLEGED TO HAVE CAUSED SUCH DAMAGE,
            LOSS, CLAIM, OR LIABILITY BECAUSE OF A LIMITATION OF LIABILITY
            ASSERTED BY CUSTOMER OR BECAUSE CUSTOMER DID NOT APPEAR IN AN ACTION
            BROUGHT AGAINST CFM. CUSTOMER'S OBLIGATION TO INDEMNIFY CFM
            HEREUNDER SHALL BE APPLICABLE AT SUCH TIME AS CFM IS REQUIRED TO
            MAKE PAYMENT PURSUANT TO A FINAL JUDGEMENT IN AN ACTION OR
            PROCEEDING IN WHICH CFM WAS A PARTY, PERSONALLY APPEARED, AND HAD
            THE OPPORTUNITY TO DEFEND ITSELF. THIS INDEMNITY SHALL APPLY WHETHER
            OR NOT CUSTOMER'S LIABILITY IS OTHERWISE LIMITED.

                               Boeing Proprietary
P.A. No. 2497                        EE1-6

<PAGE>

                                    TABLE 1
                                      737X
                           CFM56 WARRANTY PARTS LIST
                                  FLIGHT HOURS

<TABLE>
<CAPTION>
                                                   Flight Hours
                                      --------------------------------------
                                      2000   3000  4000  6000   8000   12000
                                      ----   ----  ----  ----   ----   -----
<S>                                   <C>    <C>   <C>   <C>    <C>    <C>
Fan Rotor/Booster
    Blades                                     X
    Disk, Drum                                                           X
    Spinner                                    X

Fan Frame
    Casing                                                        X
    Hub & Struts                                     X
    Fairings                                         X
    Splitter (Mid Ring)                              X
    Vanes                                      X
    Engine Mount                                     X

No. 1 & No. 2 Bearing Support
    Bearings                                         X
    Shaft                                                                X
    Support (Case)                                   X

Inlet Gearbox & No. 3 Bearing
    Bearings                                         X
    Gear                                             X
    Case                                             X

Compressor Rotor
    Blades                                     X
    Disk & Drums                                                         X
    Shaft                                                                X

Compressor Stator
    Casing                                                        X
    Shrouds                                    X
    Vanes                                      X
    Variable Stator Actuating Rings            X

Combustor Diffuser Nozzle (CDN)
    Casings                                    X
    Combustor Liners                           X
    Fuel Atomizer                              X
    HPT Nozzle                                 X
    HPT Nozzle Support                               X
    HPT Shroud                                 X
</TABLE>

                               Boeing Proprietary
P.A. No. 2497                        EE1-7
<PAGE>

                                     TABLE 1
                                      737X
                            CFM56 WARRANTY PARTS LIST
                                   (continued)

<TABLE>
<CAPTION>
                                                              Flight Hours
                                     --------------------------------------------------------------
                                     2000        3000        4000       6000       8000       12000
                                     ----        ----        ----       ----       ----       -----
<S>                                  <C>         <C>         <C>        <C>        <C>        <C>
HPT Rotor
    Blades                                                    X
    Disks                                                                                       X
    Shafts                                                                                      X
    Retaining Ring                                 X

LP Turbine
    Casing                                                                X
    Vane Assemblies                                X
    Interstage Seals                               X
    Shrouds                                        X
    Disks                                                                            X
    Shaft                                                                                       X
    Bearings                                                  X
    Blades                                         X

Turbine Frame
    Casing & Struts                                                       X
    Hub                                                       X
    Sump                                                      X

Accessory & Transfer Gearboxes
    Case                                                      X
    Shafts                                                    X
    Gears                                                     X
    Bearings                                                  X

Air-Oil Seals                                      X

Controls & Accessories
    Engine                             X

Condition Monitoring Equipment         X
</TABLE>

                               BOEING PROPRIETARY

P.A. No. 2497                       EE1-8


<PAGE>

                         SERVICE LIFE POLICY COMPONENTS

                                     between

                               THE BOEING COMPANY

                                       and

                              Alaska Airlines, Inc.

           Supplemental Exhibit SLP1 to Purchase Agreement Number 2497

P.A. No. 2497                          SLP1
                               Boeing Proprietary
<PAGE>

                         SERVICE LIFE POLICY COMPONENTS

                                   relating to

                            BOEING MODEL 737 AIRCRAFT

This is the listing of SLP Components for the Aircraft which relate to Part 3,
Boeing Service Life Policy of Exhibit C, Product Assurance Document to the AGTA
and is a part of Purchase Agreement No. 2497.

1.    Wing.

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

      (b)   Wing spar webs, chords and stiffeners.

      (c)   Inspar wing ribs.

      (d)   Inspar splice plates and fittings.

      (e)   Main landing gear support structure.

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

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

      (h)   Wing-to-body structural attachments.

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

      (j)   Trailing edge flap tracks and carriages.

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

P.A. No. 2497                     SLP1-1

                               Boeing Proprietary
<PAGE>

2.    Body.

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

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

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

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

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

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

      (g)   Forward and aft pressure bulkheads.

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

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

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

P.A. No. 2497                  SLP1-2

                               Boeing Proprietary
<PAGE>

3.    Vertical Stabilizer.

      (a)   External skins between front and rear spars.

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

      (c)   Inspar ribs.

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

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

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

4.    Horizontal Stabilizer.

      (a)   External skins between front and rear spars.

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

      (c)   Inspar ribs.

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

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

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

5.    Engine Strut.

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

      (b)   Internal strut chords, frames and bulkheads.

      (c)   Strut to wing fittings and diagonal brace.

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

P.A. No. 2497                   SLP1-3

                               Boeing Proprietary
<PAGE>

6.    Main Landing Gear.

      (a)   Outer cylinder.

      (b)   Inner cylinder, including axles.

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

      (d)   Drag strut.

      (e)   Bell crank.

      (f)   Orifice support tube.

      (g)   Trunnion link.

      (h)   Downlock links including spindles and universals.

      (i)   Torsion links.

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

7.    Nose Landing Gear.

      (a)   Outer cylinder.

      (b)   Inner cylinder, including axles.

      (c)   Orifice support tube.

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

      (e)   Steering plates and steering collars.

      (f)   Torsion links.

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

P.A. No. 2497                  SLP1-4

                               Boeing Proprietary
<PAGE>

2497-1

Alaska Airlines, Inc.
19300 International Blvd.
Seattle, Washington 98188

Subject: Option Aircraft

Reference:  Purchase Agreement 2497 (the Purchase Agreement) between The Boeing
            Company (Boeing) and Alaska Airlines, Inc. (Customer) relating to
            Model 737-890 aircraft (the Aircraft)

This Letter Agreement amends the Purchase Agreement. All terms used but not
defined in this Letter Agreement have the same meaning as in the Purchase
Agreement.

Boeing agrees to manufacture and sell to Customer additional Model 737-890
aircraft as THE OPTION AIRCRAFT. The delivery months, number of aircraft,
Advance Payment Base Price per aircraft and advance payment schedule are listed
in the Attachments to this Letter Agreement. The Airframe Price shown includes
the Engine Price.

1.    Aircraft Description and Changes

            1.1 Aircraft Description: The Option Aircraft are described by the
Detail Specification listed in the Attachments.

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

                  (i)   Changes applicable to the basic Model 737 aircraft which
                        are developed by Boeing between the date of the Detail
                        Specification and the signing of the definitive
                        agreement to purchase the Option Aircraft;

                  (ii)  Changes required to obtain required regulatory
                        certificates; and

                  (iii) Changes mutually agreed upon.

2.    Price

            2.1 The pricing elements of the Option Aircraft are listed in the
Attachments.

P.A. No. 2497
Option_Aircraft

                               BOEING PROPRIETARY

<PAGE>

Alaska Airlines, Inc.
2497-1 Page 2

      2.2 Price Adjustments.

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

                  2.2.2 Escalation Adjustments. The Airframe Price and the price
of Optional Features for Option Aircraft will be escalated using 1) Boeing's
standard escalation provisions (ECI-W formula) or alternate escalation
provisions (ECI-MFG/CPI formula) to be selected by Customer at the date of
execution of the definitive agreement for the Option Aircraft, or 2) a different
Boeing then current escalation provisions should such exist at the date of
execution of the definitive agreement for the Option Aircraft.

                  2.2.3 Base Price Adjustments. The Airframe Price of the Option
Aircraft will be adjusted to Boeing's current price as of the date of execution
of the definitive agreement for the Option Aircraft.

3.    Payment.

      3.1 Customer will pay a deposit to Boeing in the amount shown in the
Attachment for each Option Aircraft (Deposit), on the date of this Letter
Agreement. If Customer exercises an option, the Deposit will be credited against
the first advance payment due. If Customer does not exercise an option, Boeing
will retain the Deposit for that Option Aircraft.

      3.2 Following option exercise, advance payments in the amounts and at the
times listed in the Attachment will be payable for the Option Aircraft. The
remainder of the Aircraft Price for the Option Aircraft will be paid at the time
of delivery.

4.    Option Exercise.

      4.1 Customer may exercise an option by giving written notice to Boeing on
or before the date 18 months prior to the delivery dates listed in the
Attachments (Option Exercise Date).

      4.2 If Boeing must make production decisions which are dependent on
Customer's exercising an option earlier than the Option Exercise Date, Boeing
may accelerate the Option Exercise Date subject to Customer's agreement. If
Boeing and Customer fail to agree to a revised Option Exercise Date, either
party may terminate the option and Boeing will refund to Customer, without
interest, any Deposit and advance payments received by Boeing with respect to
the terminated Option Aircraft.

P.A. No. 2497
Option_Aircraft

                               BOEING PROPRIETARY

<PAGE>

Alaska Airlines, Inc.
2497-1 Page 3

5.    Contract Terms.

      Boeing and Customer will use their best efforts to reach a definitive
agreement for the purchase of an Option Aircraft, including the terms and
conditions contained in this Letter Agreement, in the Purchase Agreement, and
other terms and conditions as may be agreed upon. In the event the parties have
not entered into a definitive agreement within 30 days following option
exercise, other than as a result of Boeing's failure to timely provide an
agreement to Customer for review and execution, either party may terminate the
purchase of such Option Aircraft by giving written notice to the other within 5
days. If Customer and Boeing fail to enter into a definitive agreement
containing terms consistent with Purchase Agreement No. 2497 that was delivered
to Customer within 20 days following Option exercise, Boeing will retain the
Deposit for that Option Aircraft.

Sincerely,

THE BOEING COMPANY

By__________________________

Its Attorney-In-Fact

ACCEPTED AND AGREED TO this

Date: June 15, 2005

Alaska Airlines, Inc.

By__________________________

Its Vice President Finance & Treasurer

Attachment

P.A. No. 2497
Option_Aircraft

                               BOEING PROPRIETARY

<PAGE>

                                   Attachment
                     Option Aircraft Letter Agreement 2497-1
       737-800 Aircraft Delivery, Description, Price and Advance Payments
                                  ECI-W Formula

                                      [***]

*     Indicates that certain information contained herein has been omitted and
      filed separately with the Securities and Exchange Commission. Confidential
      treatment has been requested with respect to the omitted portions.

<PAGE>

2497-2

Alaska Airlines, Inc.
19300 International Blvd.
Seattle, Washington 98188

Subject: Aircraft Model Substitution

Reference:  Purchase Agreement No. 2497 (the Purchase Agreement) between The
            Boeing Company (Boeing) and Alaska Airlines, Inc. (Customer)
            relating to Model 737-890 aircraft (the Aircraft)

This letter agreement (Letter Agreement) amends and supplements the Purchase
Agreement. All terms used but not defined in this Letter Agreement have the same
meaning as in the Purchase Agreement.

Customer may substitute the purchase of Boeing Model 737-900X aircraft (737-900X
SUBSTITUTE AIRCRAFT) in place of any of the Aircraft, subject to the following
terms and conditions:

1.    737-900X Offering.

      Boeing's offer of the 737-900X Substitution Aircraft proposed herein is
subject to Boeing's decision to launch the 737-900X Aircraft. Based on Boeing's
launching the 737-900X Aircraft, Boeing may use up to two (2) of the 737-900X
Substitution Aircraft prior to delivery for flight and ground testing relating
to the development and certification. The parties shall mutually agree upon any
special terms related to use of any Substitution Aircraft for flight and ground
testing.

2.    Customer's Written Notice.

Customer will provide written notice of its intention to substitute the purchase
of an Aircraft with the purchase of a Substitute Aircraft,

      (a) no later than the first day of the month that is fifteen (15) months
prior to the scheduled month of delivery of the Aircraft for which it will be
substituted, provided that a 737-900X Substitute Aircraft has been previously
certified and delivered to Customer, or;

P.A. No. 2497
Aircraft_Model_Substitution

                               BOEING PROPRIETARY

<PAGE>

Alaska Airlines, Inc.
2497-2 Page 2

      (b) no later than the first day of the month that is twenty-four (24)
months prior to the scheduled month of delivery of the Aircraft for which it
will be substituted, if a 737-900X Substitute Aircraft has been made offerable
but has not been previously certified and delivered to Customer.

2.    Boeing's Production Capability.

Customer's substitution right is conditioned upon Boeing's having production
capability for the 737-900X Substitute Aircraft in the scheduled delivery month
of the Aircraft for which it will be substituted.

If offerable, Boeing will tentatively quote delivery positions for 737-900X
Substitute Aircraft to allow Customer to secure quotes from Buyer Furnished
Equipment vendors, and Boeing to secure quotes from Seller Furnished Equipment
vendors which supports the required on-dock dates. If Boeing is unable to
manufacture the 737-900X Substitute Aircraft in the scheduled delivery month of
the Aircraft for which it will be substituted, then Boeing shall promptly make a
written offer of an alternate delivery month for Customer's consideration and
written acceptance within thirty (30) days of such offer.

3.    Definitive Agreement.

Customer's substitution right and Boeing's obligation in this Letter Agreement
are further conditioned upon Customer's and Boeing's executing a definitive
agreement for the purchase of the 737-900X Substitute Aircraft within thirty
(30) days of Customer's substitution notice to Boeing or of Customer's
acceptance of an alternate delivery month in accordance with paragraph 2. above.

4.    Price, Escalation Adjustments and Advance Payments.

The Airframe Price and the price of Optional Features will be adjusted to
Boeing's then-current prices for such elements as of the date of execution of
the definitive purchase agreement for the 737-900X Substitute Aircraft. The
Airframe Price and the price of Optional Features for 737-900X Substitute
Aircraft will be escalated using 1) Boeing's standard escalation provisions
(ECI-W formula) or alternate escalation provisions (ECI-MFG/CPI formula) to be
selected by Customer at the date of execution of the definitive agreement for
the 737-900X Substitution Aircraft, or 2) a different Boeing then current
escalation provisions should such exist at the date of execution of the
definitive agreement for the 737-900X Substitution Aircraft. The representative
escalation indices and methodology will be used to estimate the Advance Payment
Base Prices for 737-900X Substitution Aircraft.

If the Advance Payment Base Price for any 737-900X Substitute Aircraft is higher
than that of the Aircraft, Customer will pay to Boeing the amount of the
difference

P.A. No. 2497
Aircraft_Model_Substitution

                               BOEING PROPRIETARY

<PAGE>

Alaska Airlines, Inc.
2497-2 Page 3

as of the date of execution of the definitive agreement for the 737-900X
Substitute Aircraft. If the Advance Payment Base Price of the 737-900X
Substitute Aircraft is lower than that of the Aircraft, Boeing will retain any
excess amounts previously paid by Customer until the next payment is due from
Customer, at which point Customer may reduce the amount of such payment by the
amount of the excess. In no case will Boeing refund or pay interest on any
excess amounts created by virtue of Customer's exercise of the rights of
substitution described in this agreement.

5.    Confidential Treatment.

Customer understands that certain commercial and financial information contained
in this Letter Agreement are considered by Boeing as confidential. Customer
agrees that it will treat this Letter Agreement and the information contained
herein as confidential and will not, without the prior written consent of
Boeing, disclose this Letter Agreement or any information contained herein to
any other person or entity.

Sincerely,

THE BOEING COMPANY

By______________________________

Its Attorney-In-Fact

ACCEPTED AND AGREED TO this

Date: June 15, 2005

ALASKA AIRLINES, INC.

By______________________________

Its Vice President Finance & Treasurer

P.A. No. 2497
Aircraft_Model_Substitution

                                       BOEING PROPRIETARY

<PAGE>

2497-3

Alaska Airlines, Inc.
19300 International Blvd.
Seattle, Washington 98188

Subject: Seller Purchased Equipment

Reference:  Purchase Agreement No. 2497 (the Purchase Agreement) between The
            Boeing Company (Boeing) and Alaska Airlines, Inc. (Customer)
            relating to Model 737-890 aircraft (the Aircraft)

This Letter Agreement amends and supplements the Purchase Agreement. All terms
used but not defined in this Letter Agreement have the same meaning as in the
Purchase Agreement.

Definition of Terms:

SELLER PURCHASED EQUIPMENT (SPE): Buyer Furnished Equipment (BFE) that Boeing
purchases for Customer.

DEVELOPMENTAL BUYER FURNISHED EQUIPMENT (DBFE): BFE not previously certified for
installation on the same model aircraft.

DEVELOPMENTAL SELLER PURCHASED EQUIPMENT (DSPE): DBFE which is converted to SPE.
This Letter Agreement does not include developmental avionics. Developmental
avionics are avionics that have not been previously certified for installation
on the same model aircraft.

P.A. No. 2497
Aircraft_Purchased_Substitution

                               BOEING PROPRIETARY

<PAGE>

Alaska Airlines, Inc.
2497-3 Page 2

1.    Price.

      Advance Payments. An estimated SPE price is included in the Advance
Payment Base Prices shown in Table 1 for the purpose of establishing the advance
payments for the Aircraft.

      Aircraft Price. The Aircraft Price will be adjusted to reflect the actual
costs charged to Boeing by the SPE suppliers and transportation charges.

2.    Responsibilities.

      2.1   Customer is responsible for:

            (i)   selecting and notifying Boeing of the supplier for all items
                  identified in paragraph 1.1 of Supplemental Exhibit BFE1 of
                  the Purchase Agreement,

            (ii)  selecting a FAA certifiable part; and

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

      2.2.  Boeing is responsible for:

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

            (ii)  coordinating with the suppliers on technical issues;

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

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

            (v)   obtaining for Customer the supplier's standard warranty for
                  the SPE. SPE is deemed to be BFE for purposes of Part 2 and
                  Part 4 of Exhibit C, the Product Assurance Document.

P.A. No. 2497
Aircraft_Purchased_Substitution

                               BOEING PROPRIETARY

<PAGE>

Alaska Airlines, Inc.
2497-3 Page 3

3.    Changes.

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

4.    Proprietary Rights.

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

5.    Remedies.

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

      (i) delay delivery of the Aircraft;

      (ii) deliver the Aircraft without installing the SPE;

      (iii) with Customer's prior written consent, substitute a comparable part
and invoice Customer for the cost;

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

6.    Customer's Indemnification of Boeing.

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

P.A. No. 2497
Aircraft_Purchased_Substitution

                               BOEING PROPRIETARY

<PAGE>

Alaska Airlines, Inc.
2497-3 Page 4

to any nonconformance or defect caused solely by Boeing's installation of the
SPE.

Sincerely,

THE BOEING COMPANY

By_____________________________

Its Attorney-In-Fact

ACCEPTED AND AGREED TO this

Date: June 15, 2005

Alaska Airlines, Inc.

By_____________________________

Its Vice President Finance & Treasurer

P.A. No. 2497
Aircraft_Purchased_Substitution

                               BOEING PROPRIETARY

<PAGE>

2497-4

Alaska Airlines, Inc.
19300 International Blvd.
Seattle, Washington 98188

Subject: Demonstration Flight Waiver

Reference:  Purchase Agreement No. 2497 (the Purchase Agreement) between The
            Boeing Company (Boeing) and Alaska Airlines, Inc. (Customer)
            relating to Model 737-890 aircraft (the Aircraft)

This letter agreement (Letter Agreement) amends and supplements the Purchase
Agreement. All terms used but not defined in this Letter Agreement shall have
the same meaning as in the Purchase Agreement.

Definition of Terms:

CORRECTION COSTS: Customer's direct labor costs and the cost of any material
required to correct a Flight Discrepancy where direct labor costs are equal to
the warranty labor rate in effect between the parties at the time such labor is
expended.

FLIGHT DISCREPANCY: A failure or malfunction of an Aircraft, or the accessories,
equipment or parts installed on the Aircraft which results from a defect in the
Aircraft, Boeing Product, engine or Supplier Product or a nonconformance to the
Detail Specification for the Aircraft.

The AGTA provides that each aircraft will be test flown prior to delivery for
the purpose of demonstrating the functioning of such Aircraft and its equipment
to Customer; however, Customer may elect to waive this test flight. For each
test flight waived, Boeing agrees to provide Customer an amount of jet fuel at
delivery that, including the standard fuel entitlement, totals the following
amount of fuel:

<TABLE>
<CAPTION>
AIRCRAFT                   TOTAL FUEL ENTITLEMENT
 MODEL                          (U.S. GALLONS)
--------           -----------------------------------
<S>                <C>
  737              Full tanks (approx. 5,300 to 6,800,
                          depending on model)
</TABLE>

Further, Boeing agrees to reimburse Customer for any Correction Costs incurred
as a result of the discovery of a Flight Discrepancy during the first flight of
the aircraft by Customer following delivery to the extent such Correction Costs
are

P.A. No. 2497
Demonstration_Flight_Waiver

                               BOEING PROPRIETARY

<PAGE>

Alaska Airlines, Inc.
2497-4 Page 2

not covered under a warranty provided by Boeing, the engine manufacturer or any
of Boeing's suppliers.

Should a Flight Discrepancy be detected by Customer which requires the return of
the Aircraft to Boeing's facilities at Seattle, Washington, so that Boeing may
correct such Flight Discrepancy, Boeing and Customer agree that title to and
risk of loss of such Aircraft will remain with Customer. In addition, it is
agreed that Boeing will have responsibility for the Aircraft while it is on the
ground at Boeing's facilities in Seattle, Washington, as is chargeable by law to
a bailee for mutual benefit, but Boeing shall not be chargeable for loss of use.

To be reimbursed for Correction Costs, Customer shall submit a written itemized
statement describing any flight discrepancies and indicating the Correction Cost
incurred by Customer for each discrepancy. This request must be submitted to
Boeing's Contracts Regional Director at Renton, Washington, within ninety (90)
days after the first flight by Customer.

Sincerely,

THE BOEING COMPANY

By_____________________________

Its Attorney-In-Fact

ACCEPTED AND AGREED TO this

Date: June 15, 2005

ALASKA AIRLINES, INC.

By________________________________

Its Vice President Finance & Treasurer

P.A. No. 2497
Demonstration_Flight_Waiver

                               BOEING PROPRIETARY

<PAGE>

2497-5

Alaska Airlines, Inc.
19300 International Blvd.
Seattle, Washington 98188

Subject: Loading of Software Owned by or Licensed to Customer

Reference:  Purchase Agreement No. 2497 (the Purchase Agreement) between The
            Boeing Company (Boeing) and Alaska Airlines, Inc. (Customer)
            relating to Model 737-890 aircraft (the Aircraft)

This Letter Agreement amends and supplements the Purchase Agreement. All terms
used but not defined in this Letter Agreement have the same meaning as in the
Purchase Agreement.

Prior to delivery of an Aircraft to Customer, Customer may request Boeing to
install software owned by or licensed to Customer (Software) in the following
systems in the Aircraft: i) aircraft communications addressing and reporting
system (ACARS), ii) digital flight data acquisition unit (DFDAU), iii) flight
management system (FMS), iv) cabin management system (CMS), v) satellite
communications system (SATCOM), vi) engine indication and crew alerting system
(EICAS) and vii) airplane information management system (AIMS). The Software is
not part of the configuration of the Aircraft certified by the FAA. If requested
by Customer, Boeing will install the Software after the FAA has issued the
standard airworthiness certificate or the export certificate of airworthiness,
whichever is applicable, but before delivery of the Aircraft on the following
conditions:

1.    Customer and Boeing agree that the Software is deemed to be BFE for the
      purposes of Articles 3.1.3, 3.2, 3.4, 3.5, 3.10, 9, 10 and 11 of Exhibit
      A, Buyer Furnished Equipment Provisions Document, to the AGTA and such
      articles apply to the installation of the Software.

P.A. No. 2497
Customer_Software

                               BOEING PROPRIETARY

<PAGE>

Alaska Airlines, Inc.
2497-5 Page 2

      Customer and Boeing further agree that the installation of the Software is
      deemed to be a service under Exhibit B, Customer Support Document, to the
      AGTA. Boeing makes no warranty as to the performance of such installation
      and Article 11 of Part 2 of Exhibit C of the AGTA, Disclaimer and Release;
      Exclusion of Liabilities and Article 8.2, Insurance, of the AGTA apply to
      the installation of the Software.

Sincerely,

THE BOEING COMPANY

By_______________________________

Its Attorney-In-Fact

ACCEPTED AND AGREED TO this

Date: June 15, 2005

ALASKA AIRLINES, INC.

By_______________________________

Its Vice President Finance & Treasurer

P.A. No. 2497
Customer_Software

                               BOEING PROPRIETARY

<PAGE>

2497-6

Alaska Airlines, Inc.
19300 International Blvd.
Seattle, Washington 98188

Subject: Promotion Support

Reference:  Purchase Agreement No. 2497 (the Purchase Agreement) between The
            Boeing Company (Boeing) and Alaska Airlines, Inc. (Customer)
            relating to Model 737-890 aircraft (the Aircraft)

This letter agreement (Letter Agreement) amends and supplements the Purchase
Agreement. All terms used but not defined in this Letter Agreement shall have
the same meaning as in the Purchase Agreement.

Boeing agrees to make available to Customer [***] for Customer's marketing and
promotion programs associated with the introduction of the first Aircraft into
service, and [***] for each subsequent Aircraft which delivers through December
31, 2007. These programs may include marketing research; tourism development;
corporate identity; direct marketing; video tape, or still photography;
planning, design and production of collateral materials; management of promotion
programs and advertising campaigns.

Boeing's obligation to provide the support will commence at the time the
purchase of the Aircraft becomes firm (not subject to cancellation by either
party) and will terminate January 1, 2008. There will be no cash payments or
other support in lieu thereof.

----------
*     Indicates that certain information contained herein has been omitted and
      filed separately with the Securities and Exchange Commission. Confidential
      treatment has been requested with respect to the omitted portions.

P.A. No. 2497
Promotion_Support

                               BOEING PROPRIETARY

<PAGE>

Alaska Airlines, Inc.
2497-6 Page 3

Following the execution of this Letter Agreement, a Boeing Airline Promotion
representative will meet with Customer's designated representative to discuss
the extent, selection, scheduling, and funds disbursement process for the
program.

Sincerely,

THE BOEING COMPANY

By______________________________________

Its Attorney-In-Fact

ACCEPTED AND AGREED TO this

Date: June 15, 2005

Alaska Airlines, Inc.

By______________________________________

Its Vice President Finance & Treasurer

P.A. No. 2497
Promotion_Support

                               BOEING PROPRIETARY
<PAGE>

6-1162-MSA-588

Alaska Airlines, Inc.
19300 International Blvd.
Seattle, Washington 98188

Subject:    Aircraft Performance Guarantees

Reference:  Purchase Agreement No. 2497 (the Purchase Agreement) between The
            Boeing Company (Boeing) and Alaska Airlines, Inc. (Customer)
            relating to Model 737-890 aircraft (the Aircraft)

This letter agreement (Letter Agreement) amends and supplements the Purchase
Agreement. All terms used but not defined in this Letter Agreement have the same
meaning as in the Purchase Agreement.

1.    Aircraft Performance Guarantees.

      Boeing agrees to provide Customer with the performance guarantees in the
Attachment. These guarantees are exclusive and expire upon delivery of the
Aircraft to Customer.

2.    Confidential Treatment.

      Customer understands that certain commercial and financial information
contained in this Letter Agreement is considered by Boeing as confidential.
Customer agrees that it will treat this Letter Agreement and the information
contained herein as confidential and will not, without the prior written consent
of Boeing, disclose this Letter Agreement or any information contained herein to
any other person or entity.

P.A. No. 2497
Performance_Guarantees
                               BOEING PROPRIETARY

<PAGE>

Alaska Airlines
6-1162-MSA-588 Page 2

Sincerely,

THE BOEING COMPANY

By___________________________________

Its Attorney-In-Fact

ACCEPTED AND AGREED TO this

Date: June 15, 2005

ALASKA AIRLINES, INC.

By___________________________________

Its Vice President Finance & Treasurer

Attachment

P.A. No. 2497
Performance_Guarantees
                               BOEING PROPRIETARY

<PAGE>

Attachment
6-5516-MSA-588
Page 1

               MODEL 737-890 WITH WINGLETS PERFORMANCE GUARANTEES

                            FOR ALASKA AIRLINES, INC.

<TABLE>
<CAPTION>
SECTION                  CONTENTS
<S>            <C>
   1           AIRCRAFT MODEL APPLICABILITY

   2           FLIGHT PERFORMANCE

   3           MANUFACTURER'S EMPTY WEIGHT

   4           SOUND LEVELS

   5           AIRCRAFT CONFIGURATION

   6           GUARANTEE CONDITIONS

   7           GUARANTEE COMPLIANCE

   8           EXCLUSIVE GUARANTEES
</TABLE>

P.A. No. 2497
Performance_Guarantees
                               BOEING PROPRIETARY

<PAGE>

Attachment
6-1162-MSA-588
Page 2

1     AIRCRAFT MODEL APPLICABILITY

      The guarantees contained in this Attachment (the "Performance Guarantees")
      are applicable to the 737-890 Aircraft with a maximum takeoff weight of
      [***] pounds, a maximum landing weight of [***] pounds, and a maximum zero
      fuel weight of [***] pounds, and equipped with winglets and with Boeing
      furnished CFM56-7B26 engines.

2     FLIGHT PERFORMANCE

2.1   TAKEOFF

      The FAA approved takeoff field length at a gross weight at the start of
      the ground roll of [***] pounds, at a temperature of [***](degrees)C, at a
      sea level altitude, and using maximum takeoff thrust, shall not be more
      than the following guarantee value:

                  GUARANTEE:        [***] Feet

2.2   LANDING

      The FAA approved landing field length at a gross weight of [***] pounds
      and at a sea level altitude, shall not be more than the following
      guarantee value:

                  GUARANTEE:        [***] Feet

2.3   MISSION

2.3.1 MISSION BLOCK FUEL

      The block fuel for a stage length of [***] statute miles in still air with
      a [***] pound payload using the conditions and operating rules defined
      below, shall not be more than the following guarantee value:

                  NOMINAL:          [***] Pounds
                  TOLERANCE:        [***] Pounds
                  GUARANTEE:        [***] Pounds

      Conditions and operating rules:

      Stage Length:      The stage length is defined as the sum of the distances
                         for the climbout maneuver, climb, cruise, and descent.

P.A. No. 2497
Performance_Guarantees
                               BOEING PROPRIETARY

* Indicates that certain information contained herein has been omitted and filed
  separately with the Securities and Exchange Commission. Confidential treatment
  has been requested with respect to the omitted portions.



<PAGE>

Attachment
6-1162-MSA-588
Page 3

      Block Fuel:        The block fuel is defined as the sum of the fuel used
                         for taxi-out, takeoff and climbout maneuver, climb,
                         cruise, descent, approach and landing maneuver, and
                         taxi-in.

      Takeoff:           The takeoff gross weight is not limited by the airport
                         conditions.

                         Maximum takeoff thrust is used for the takeoff.

                         The takeoff gross weight shall conform to FAA
                         Regulations.

      Climbout           Following the takeoff to [***] feet, the Aircraft
      Maneuver:          accelerates to [***] KCAS while climbing to [***] feet
                         above the departure airport altitude and retracting
                         flaps and landing gear.

      Climb:             The Aircraft climbs from [***] feet above the departure
                         airport altitude to [***] feet altitude at [***] KCAS.

                         The Aircraft then accelerates at a rate of climb of
                         [***] feet per minute to a climb speed of [***] KCAS.

                         The climb continues at [***] KCAS until 0.78 Mach
                         number is reached.

                         The climb continues at 0.78 Mach number to the initial
                         cruise altitude.

                         The temperature is standard day during climb.

                         Maximum climb thrust is used during climb.

      Cruise:            The Aircraft cruises at 0.79 Mach number.

                         The initial cruise altitude is 39,000 feet.

                         A step climb or multiple step climbs of 4,000 feet
                         altitude may be used when beneficial to minimize fuel
                         burn.

                         The temperature is standard day during cruise.

P.A. No. 2497
Performance_Guarantees
                               BOEING PROPRIETARY

* Indicates that certain information contained herein has been omitted and filed
  separately with the Securities and Exchange Commission. Confidential treatment
  has been requested with respect to the omitted portions.
<PAGE>

Attachment
6-1162-MSA-588
Page 4

                         The cruise thrust is not to exceed maximum cruise
                         thrust except during a step climb when maximum climb
                         thrust may be used.

      Descent:           The Aircraft descends from the final cruise altitude at
                         0.78 Mach number until 250 KCAS is reached.

                         The descent continues at 250 KCAS to an altitude of
                         1,500 feet above the destination airport altitude.

                         Throughout the descent, the cabin pressure is
                         controlled to a maximum rate of descent equivalent to
                         300 feet per minute at sea level.

                         The temperature is standard day during descent.

      Approach           The Aircraft decelerates to the final approach speed
      and Landing        while extending landing gear and flaps, then descends
      Maneuver:          and lands.

                         The destination airport altitude is a sea level
                         airport.

      Fixed              For the purpose of this guarantee and for the purpose
      Allowances:        of establishing compliance with this guarantee, the
                         following shall be used as fixed quantities and
                         allowances:

                         Operational Empty Weight, OEW (Paragraph 2.3.3): 93,582
                         Pounds

                         Taxi-Out:

                               Fuel             200 Pounds

                         Takeoff and Climbout Maneuver:

                               Fuel             500 Pounds
                               Distance         3.5 Nautical Miles

                         Approach and Landing Maneuver:

                               Fuel             229 Pounds

                         Taxi-In (shall be consumed from the reserve fuel):

                               Fuel             200 Pounds

P.A. No. 2497
Performance_Guarantees
                               BOEING PROPRIETARY

<PAGE>

Attachment
6-1162-MSA-588
Page 5

                         Usable reserve fuel remaining upon completion of the
                         approach and landing maneuver: 7,396 Pounds

                         For information purposes, the reserve fuel is based on
                         a standard day temperature and a) a 200 pound general
                         purpose fuel, b) a missed approach and flight to a 200
                         nautical mile alternate, c) an approach and landing
                         maneuver at the alternate airport, and d) a 45 minute
                         hold at 1,500 feet above a sea level alternate airport.

      2.3.2              OPERATIONAL EMPTY WEIGHT BASIS

                         The Operational Empty Weight (OEW) derived in Paragraph
                         2.3.3 is the basis for the mission guarantee of
                         Paragraph 2.3.1.

P.A. No. 2497
Performance_Guarantees
                               BOEING PROPRIETARY

<PAGE>

Attachment
6-1162-MSA-588
Page 6

2.3.3 737-890 WEIGHT SUMMARY ALASKA AIRLINES

<TABLE>
<CAPTION>
                                                                                       Pounds
                                                                                       ------
<S>                                                                                    <C>
STANDARD MODEL SPECIFICATION MEW                                                       [***]
     Configuration Specification D019A001, Rev. F
          dated  August 29, 2003
     175 Tourist Class Passengers
     CFM56-7  Engines
     156,000 Pounds (70,760 kg.) Maximum Taxi Weight
     6,875 U.S. Gallons (26,024 l.) Fuel Capacity

   Changes for Alaska Airlines
     Interior Change to 160 (16FC/144YC) Passengers*                                    [***]
       (Ref: LOPS-378-1455)
     174,700 lb (79,242 kg) Maximum Taxi Weight                                         [***]
     60 Minute Standby Power Capability                                                 [***]
     Cargo Compartment Changes                                                          [***]
     HUD Options                                                                        [***]
     Winglets                                                                           [***]
     Additional Customer Options (Based on 737-800 CSOS ASA38W0002)                     [***]

ALASKA AIRLINES MANUFACTURER'S EMPTY WEIGHT (MEW)                                       [***]

   Standard and Operational Items Allowance                                             [***]
        (Paragraph 2.3.4)

ALASKA AIRLINES OPERATIONAL EMPTY WEIGHT (OEW)                                          [***]
</TABLE>

<TABLE>
<CAPTION>
                                                 Quantity    Pounds    Pounds
<S>                                              <C>         <C>       <C>
* Seat Weight Included:                                                 4,854

  First Class Doubles                                8        1,056

  Economy Class Triple                              46        3,611
  Economy Class Triple w/3 In-Arm Food Trays         2          187
</TABLE>

P.A. No. 2497
Performance_Guarantees
                               BOEING PROPRIETARY

* Indicates that certain information contained herein has been omitted and filed
  separately with the Securities and Exchange Commission. Confidential treatment
  has been requested with respect to the omitted portions.
<PAGE>

Attachment
6-1162-MSA-588
Page 7

2.3.4 STANDARD AND OPERATIONAL ITEMS ALLOWANCE

<TABLE>
<CAPTION>
                                                       Qty     Pounds     Pounds     Pounds
<S>                                                    <C>     <C>        <C>        <C>
STANDARD ITEMS ALLOWANCE                                                              [***]

   Unusable Fuel                                                            [***]
   Oil                                                                      [***]
   Oxygen Equipment                                                         [***]
      Passenger Portable                                  7    [***]
      Portable Oxygen Masks                              17    [***]
      Crew Masks and Goggles                              4    [***]
   Miscellaneous Equipment                                                  [***]
      Crash Axe                                           1    [***]
      Megaphones                                          2    [***]
      Flashlights                                         6    [***]
      Smoke Hoods                                         5    [***]
   Galley Structure & Fixed Inserts                                         [***]

OPERATIONAL ITEMS ALLOWANCE                                                           [***]

   Crew and Crew Baggage                                                    [***]
      Flight Crew                                         2    [***]
      Cabin Crew                                          6    [***]
      Baggage                                             8    [***]
      Briefcases                                          1    [***]
   Catering Allowance                                                       [***]
   Passenger Service Equipment                          160                 [***]
   Potable Water - 60 USG                                                   [***]
   Waste Tank Disinfectant                                                  [***]
   Emergency Equipment                                                      [***]
      Escape Slides - Forward                             2    [***]
      Escape Slides - Aft                                 2    [***]
      Life Vests - Crew                                  10    [***]

TOTAL STANDARD AND OPERATIONAL ITEMS ALLOWANCE                                        [***]
</TABLE>

P.A. No. 2497
Performance_Guarantees
                               BOEING PROPRIETARY

* Indicates that certain information contained herein has been omitted and filed
  separately with the Securities and Exchange Commission. Confidential treatment
  has been requested with respect to the omitted portions.

<PAGE>

Attachment
6-1162-MSA-588
Page 8

3     MANUFACTURER'S EMPTY WEIGHT

      The Manufacturer's Empty Weight (MEW) is guaranteed not to exceed the
      value in Section 03-60-00 of Detail Specification D019A001ASA38P-1 plus
      three-quarters of one percent.

4     SOUND LEVELS

4.1   COMMUNITY SOUND LEVELS

      The Aircraft shall be certified in accordance with Stage 3 requirements of
      FAR Part 36, essentially equivalent to ICAO Annex 16, Volume 1, Chapter 3.

4.2   JOHN WAYNE AIRPORT (SNA) SINGLE EVENT NOISE EXPOSURE LEVELS

4.2.1 The brake release gross weight for a Single Event Noise Exposure Level
      (SENEL) at the Class E limits of 93.5 dB SENEL at microphone location M1
      and 93.0 dB SENEL at microphone location M2, whichever is limiting for the
      microphone locations defined below, shall not be less than the following
      guarantee value:

                    NOMINAL:           134,900 Pounds
                    TOLERANCE:          -3,100 Pounds
                    GUARANTEE:         131,800 Pounds

4.2.2 The guarantee of Paragraph 4.2.1 is based on the following conditions,
      procedures and microphone locations:

      Takeoff            The airport pressure altitude is 54 feet.
      Conditions:

                         The airport temperature is 77(degrees) F.

                         Airport relative humidity is 70 percent.

                         4.0 knot head-wind factored in accordance with FAR
                         25.105(d)(1).

                         Flap position is 5.

                         An Aircraft center of gravity located at the forward
                         limit.

P.A. No. 2497
Performance_Guarantees
                               BOEING PROPRIETARY

<PAGE>

Attachment
6-1162-MSA-588
Page 9

      Takeoff            With brakes set, stabilize power at 70 percent N1, then
      Procedure:         simultaneously release brakes and advance power to
                         maximum rated takeoff thrust. Rotate at a speed such
                         that acceleration results in a climb-out speed of V2+20
                         KCAS. Upon reaching 800 feet geopotential altitude
                         above the runway, briskly reduce thrust on both engines
                         to the thrust required to provide a 1.2 percent
                         one-engine-inoperative climb gradient. Maintain Flaps 5
                         speed and power setting until reaching at least six
                         nautical miles from brake release.

      Microphone         Microphones M1 and M2 are located according to John
      Locations:         Wayne Airport Noise Abatement Program Quarterly Report
                         for the period January 1, 2004 through March 31, 2004.

      Microphone         Microphones M1 and M2 are defined to be the noise
      Equipment:         detection and analysis hardware or software operating
                         at John Wayne Airport for the period January 1, 2004
                         through March 31, 2004.

5     AIRCRAFT CONFIGURATION

5.1   The guarantees contained in this Attachment are based on the Aircraft
      configuration as defined in the original release of Detail Specification
      D019A001ASA38P-1 (hereinafter referred to as the Detail Specification).
      Appropriate adjustment shall be made for changes in such Detail
      Specification approved by the Customer and Boeing or otherwise allowed by
      the Purchase Agreement which cause changes to the flight performance,
      sound levels, and/or weight and balance of the Aircraft. Such adjustment
      shall be accounted for by Boeing in its evidence of compliance with the
      guarantees.

P.A. No. 2497
Performance_Guarantees
                               BOEING PROPRIETARY

<PAGE>

Attachment
6-1162-MSA-588
Page 10

5.2   The Manufacturer's Empty Weight guarantee of Section 3 will be adjusted by
      Boeing for the following in its evidence of compliance with the
      guarantees:

      (1) Changes to the Detail Specification or any other changes mutually
      agreed upon between the Customer and Boeing or otherwise allowed by the
      Purchase Agreement.

      (2) The difference between the component weight allowances given in
      Appendix IV of the Detail Specification and the actual weights.

6     GUARANTEE CONDITIONS

6.1   All guaranteed performance data are based on the International Standard
      Atmosphere (ISA) and specified variations therefrom; altitudes are
      pressure altitudes.

6.2   The FAA Regulations (FAR) referred to in this Attachment are, unless
      otherwise specified, the 737-800 Certification Basis regulations specified
      in the Type Certificate Data Sheet A16WE, Revision 33, dated March 8,
      2002.

6.3   In the event a change is made to any law, governmental regulation or
      requirement, or in the interpretation of any such law, governmental
      regulation or requirement that affects the certification basis for the
      Aircraft as described in Paragraphs 4.1 or 6.2, and as a result thereof, a
      change is made to the configuration and/or the performance of the Aircraft
      in order to obtain certification, the guarantees set forth in this
      Attachment shall be appropriately modified to reflect any such change.

6.4   The takeoff and landing guarantees, and the takeoff portion of the mission
      guarantee are based on hard surface, level and dry runways with no wind or
      obstacles, no clearway or stopway, 225 mph tires, with Category C brakes
      and anti-skid operative, and with the Aircraft center of gravity at the
      most forward limit unless otherwise specified. The takeoff performance is
      based on no engine bleed for air conditioning or thermal anti-icing and
      the Auxiliary Power Unit (APU) turned off unless otherwise specified.
      Unbalanced field length calculations and the improved climb performance
      procedure will be used for takeoff as required. The landing performance is
      based on the use of automatic spoilers.

P.A. No. 2497
Performance_Guarantees
                               BOEING PROPRIETARY

<PAGE>

Attachment
6-1162-MSA-588
Page 11

6.5   The climb, cruise, and descent portions of the mission guarantee include
      allowances for normal power extraction and engine bleed for normal
      operation of the air conditioning system. Normal electrical power
      extraction shall be defined as not less than a 50 kilowatts total
      electrical load. Normal operation of the air conditioning system shall be
      defined as pack switches in the "Auto" position, the temperature control
      switches in the "Auto" position that results in a nominal cabin
      temperature of 75(degrees)F, and all air conditioning systems operating
      normally. This operation allows a maximum cabin pressure differential of
      8.35 pounds per square inch at higher altitudes, with a nominal Aircraft
      cabin ventilation rate of 3,300 cubic feet per minute including passenger
      cabin recirculation (nominal recirculation is 47 percent). The APU is
      turned off unless otherwise specified.

6.6   The climb, cruise and descent portions of the mission guarantee are based
      on an Aircraft center of gravity location of 26.2 percent of the mean
      aerodynamic chord.

6.7   Performance, where applicable, is based on a fuel Lower Heating Value
      (LHV) of 18,580 BTU per pound and a fuel density of 6.7 pounds per U.S.
      gallon.

7     GUARANTEE COMPLIANCE

7.1   Compliance with the guarantees of Sections 2, 3 and 4 shall be based on
      the conditions specified in those sections, the Aircraft configuration of
      Section 5 and the guarantee conditions of Section 6.

7.2   Compliance with the takeoff and landing guarantees, the takeoff portion of
      the mission guarantee, and the community sound level guarantees shall be
      based on the FAA approved Airplane Flight Manual for the Model 737-800.

7.3   Compliance with the climb, cruise, and descent portions of the mission
      guarantee shall be established by calculations based on flight test data
      obtained from an aircraft in a configuration similar to that defined by
      the Detail Specification.

7.4   The OEW used for compliance with the mission guarantee shall be the actual
      MEW plus the Standard and Operational Items Allowance in Paragraph
      03-60-00 of the Detail Specification.

P.A. No. 2497
Performance_Guarantees
                               BOEING PROPRIETARY

<PAGE>

Attachment
6-1162-MSA-588
Page 12

7.5   Compliance with the Manufacturer's Empty Weight guarantee shall be based
      on information in the "Weight and Balance Control and Loading Manual -
      Aircraft Report."

7.6   The data derived from tests shall be adjusted as required by conventional
      methods of correction, interpolation or extrapolation in accordance with
      established engineering practices to show compliance with these
      guarantees.

7.7   Compliance with the single event noise exposure level guarantee of
      Paragraphs 4.2.1 will be by calculations made by Boeing using standard
      engineering practices with noise information measured by Boeing using the
      Model 737-700 with CFM56-7B (SAC) engines. The noise calculation process
      will be as follows:

7.7.1 Noise (dBA) time histories for a range of brake release gross weights
      (BRGW) for the model 737-800W with CFM56-7B26 (SAC) engines will be
      calculated by combining full power takeoff and cutback dBA time histories
      from noise data measured at the noise certification test of May 1997.
      Adjustments will be appropriate to simulate the takeoff procedure
      described in Paragraph 4.2.2. These dBA time histories will then be
      integrated as described in CALIFORNIA NOISE STANDARDS (California
      Administrative Code, Title 21, Chapter 2.5, Sub-Chapter 6, effective
      January 1, 1986, Division of Aeronautics (Department of Transportation)),
      except that the threshold noise level will be 65 dBA as used at SNA for
      noise monitors M1 and M2 to calculate SENEL at each BRGW.

7.7.2 Curve fits of SENEL vs. BRGW will then be developed for noise monitors M1
      and M2, using the data derived in Paragraph 7.7.1.

7.7.3 The SENEL versus BRGW curve fit of Paragraph 7.7.2 will then be entered at
      the noise limits of 93.5 dB SENEL for microphone location M1 and 93.0 dB
      SENEL for microphone location M2, respectively, to determine weights that
      correspond to the expected quarterly average weight capability of the
      Aircraft. These weights will be compared to the guarantee weight of
      Paragraph 4.2.1 to determine compliance with that guarantee.

7.7.4 A document will be prepared by Boeing to show compliance with the single
      event noise exposure level guarantees of Paragraph 4.2.

P.A. No. 2497
Performance_Guarantees
                               BOEING PROPRIETARY

<PAGE>

Attachment
6-1162-MSA-588
Page 13

7.7.5 The following compliance conditions apply to Paragraphs 4.2.1:

      If the guarantee weight is not met, Boeing and the Customer will work
      together to improve the weight capability (no financial penalty will be
      levied).

7.8   Compliance shall be based on the performance of the airframe and engines
      in combination, and shall not be contingent on the engine meeting its
      manufacturer's performance specification.

8     EXCLUSIVE GUARANTEES

      The only performance guarantees applicable to the Aircraft are those set
      forth in this Attachment.

P.A. No. 2497
Performance_Guarantees
                               BOEING PROPRIETARY
<PAGE>

6-1162-MSA-589

Alaska Airlines, Inc.
19300 International Blvd.
Seattle, Washington 98188

[***]

                               BOEING PROPRIETARY

* Indicates that certain information contained herein has been omitted and filed
  separately with the Securities and Exchange Commission. Confidential treatment
  has been requested with respect to the omitted portions.

<PAGE>

Alaska Airlines, Inc.
6-1162-MSA-589 Page 2

[***]


* Indicates that certain information contained herein has been omitted and filed
  separately with the Securities and Exchange Commission. Confidential treatment
  has been requested with respect to the omitted portions.

<PAGE>

Alaska Airlines, Inc.
6-1162-MSA-589 Page 3

[***]

Sincerely,

THE BOEING COMPANY

By_____________________________

Its Attorney-In-Fact

ACCEPTED AND AGREED TO this

Date: June 15, 2005

Alaska Airlines, Inc.

By_____________________________

Its Vice President Finance & Treasurer

Attachment

                               BOEING PROPRIETARY

* Indicates that certain information contained herein has been omitted and filed
  separately with the Securities and Exchange Commission. Confidential treatment
  has been requested with respect to the omitted portions.
<PAGE>

Attachment to
6-1162-MSA-589
Page 1

[***]

                               BOEING PROPRIETARY

* Indicates that certain information contained herein has been omitted and filed
  separately with the Securities and Exchange Commission. Confidential treatment
  has been requested with respect to the omitted portions.

<PAGE>

Attachment to
6-1162-MSA-589
Page 2

[***]

                               BOEING PROPRIETARY

* Indicates that certain information contained herein has been omitted and filed
  separately with the Securities and Exchange Commission. Confidential treatment
  has been requested with respect to the omitted portions.
<PAGE>

6-1162-MSA-590

Alaska Airlines, Inc.
19300 International Blvd.
Seattle, Washington 98188

Subject:    Purchase Right Aircraft

Reference:  Purchase Agreement 2497 (the Purchase Agreement) between The Boeing
            Company (Boeing) and Alaska Airlines, Inc. (Customer) relating to
            Model 737-890 aircraft (the Aircraft)

This Letter Agreement amends the Purchase Agreement. All terms used but not
defined in this Letter Agreement have the same meaning as in the Purchase
Agreement.

Boeing and Customer wish to define (1) the conditions under which Customer may
add to the Purchase Agreement additional 737-890 aircraft for which Customer has
been granted purchase rights pursuant to this Letter Agreement, and (2) the
contract terms which will be applicable to such additional aircraft in the event
Customer exercises such rights.

1.0   Purchase Rights.

      Boeing grants to Customer the right to purchase (Purchase Right) up to
fifty (50) additional 737-890 aircraft on the terms and conditions described in
this Letter Agreement (the Purchase Right Aircraft).

      1.1 The Purchase Right Aircraft may be exercised to either 737-890 firm
aircraft (Firm Aircraft) or 737-890 Option Aircraft. Delivery positions are
subject to availability, and must be scheduled for delivery no later than
December 31, 2015. No deposits are required for these Purchase Right Aircraft at
execution of this Letter Agreement.

      1.2 If Customer desires to exercise a Purchase Right, Customer shall
notify Boeing in writing requesting a delivery position for such Purchase Right
Aircraft and identify whether the exercise will be for a Firm Aircraft or an
Option Aircraft.

      1.3 Within five (5) days of its receipt of Customer's request, Boeing
shall offer a 737-890 aircraft (either Aircraft or Option Aircraft per
Customer's request) in the closest delivery position to the requested delivery
position, which is not then the subject of a commitment with another customer of
Boeing, and either (1) for an Aircraft that permits the manufacture of the
Aircraft within the standard

P.A. No. 2497
Purchase_Right_Aircraft
                               BOEING PROPRIETARY

<PAGE>

Alaska Airlines, Inc.
6-1162-MSA-590 Page 2

manufacturing lead time, or (2) in the case of an Option Aircraft is at least
eighteen (18) months prior to delivery.

      1.4 In addition, within 5 days of its receipt of Customer's request Boeing
will provide Customer pricing information for the Purchase Right Aircraft. The
Airframe Price and the price of Optional Features will be adjusted to Boeing's
then-current prices for such elements as of the date of execution of the
definitive purchase agreement for the Purchase Right Aircraft. The Airframe
Price and the price of Optional Features for the Purchase Right Aircraft will be
escalated using 1) Boeing's standard escalation provisions (ECI-W formula) or
alternate escalation provisions (ECI-MFG/CPI formula) to be selected by Customer
at the date of execution of the definitive agreement for the Purchase Right
Aircraft exercised, or 2) a different Boeing then current escalation provisions
should such exist at the date of execution of the definitive agreement for the
Purchase Right Aircraft exercised. The representative escalation indices and
methodology will be used to estimate the Advance Payment Base Prices for
exercised the Purchase Right Aircraft.

      1.5 The configuration of the Purchase Right Aircraft will be the
configuration described in Customer's Detail Specification DO19A00ASA38P-1 as of
the date of exercise of the Purchase Right as revised to include:.

            (i)   Changes applicable to the basic Model 737 aircraft which are
                  developed by Boeing between the date of the Detail
                  Specification and the signing of the definitive agreement to
                  purchase the Option Aircraft;

            (ii)  Changes required to obtain required regulatory certificates;
                  and

            (iii) Changes mutually agreed upon.

      1.6 Should Customer exercise a Purchase Right Aircraft for an Aircraft,
Advance Payments will be payable for the Purchase Right Aircraft in accordance
with that for the Aircraft as defined in the Purchase Agreement.

      1.7 Should Customer exercise a Purchase Right Aircraft for an Option
Aircraft, a Deposit will be payable for the Purchase Right Aircraft in
accordance with that for the Option Aircraft as defined in Option Aircraft
Letter Agreement 2497-1.

      1.8 Boeing and Customer will use their best efforts to reach a definitive
agreement for the purchase of a Purchase Right Aircraft, including the terms and
conditions contained in this Letter Agreement, in the Purchase Agreement, and
any other terms and conditions as may be agreed upon with in thirty (30) days
after Boeing has identified the applicable delivery position and provided the
requisite price information pursuant to Article 1.3 herein.

P.A. No. 2497
Purchase_Right_Aircraft
                               BOEING PROPRIETARY

<PAGE>

Alaska Airlines, Inc.
6-1162-MSA-590 Page 3

2.       Confidential Treatment.

      Customer understands that certain commercial and financial information
contained in this Letter Agreement is considered by Boeing as confidential.
Customer agrees that it will treat this Letter Agreement and the information
contained herein as confidential and will not, without the prior written consent
of Boeing, disclose this Letter Agreement or any information contained herein to
any other person or entity.

Sincerely,

THE BOEING COMPANY

By________________________________

Its Attorney-In-Fact

ACCEPTED AND AGREED TO this

Date: June 15, 2005

Alaska Airlines, Inc.

By________________________________

Its Vice President Finance & Treasurer

P.A. No. 2497
Purchase_Right_Aircraft
                               BOEING PROPRIETARY
<PAGE>

6-1162-MSA-592

Alaska Airlines, Inc.
19300 International Blvd.
Seattle, Washington  98188

Subject:    Special Purchase Agreement Provisions

Reference:  Purchase Agreement No. 2497 (the Purchase Agreement) between
            The Boeing Company (Boeing) and Alaska Airlines, Inc.
            (Customer) relating to Model 737-890 aircraft (Aircraft)

This letter agreement (Letter Agreement) amends and supplements the Purchase
Agreement. All terms used but not defined in this Letter Agreement have the same
meaning as in the Purchase Agreement.

This Letter Agreement modifies certain terms and conditions of the Purchase
Agreement with respect to the Aircraft.

      [***]

2.    Confidential Treatment.

      Customer understands that certain commercial and financial information
contained in this Letter Agreement is considered by Boeing as confidential.
Customer agrees that it will treat this Letter Agreement and the information
contained herein as confidential and will not, without the prior written consent
of Boeing, disclose this Letter Agreement or any information contained herein to
any other person or entity.

                               BOEING PROPRIETARY

*  Indicates that certain information contained herein has been omitted and
   filed separately with the Securities and Exchange Commission. Confidential
   treatment has been requested with respect to the omitted portions.

P.A No. 2497
Special_Purchase_Agreement_Provisions

<PAGE>

Alaska Airlines, Inc.
6-1162-MSA-592 Page 2

Sincerely,

THE BOEING COMPANY

By ___________________________________

Its Attorney-In-Fact

ACCEPTED AND AGREED TO this

Date: June 15, 2005

ALASKA AIRLINES, INC.

By ___________________________________

Its  Vice President Finance & Treasurer

                               BOEING PROPRIETARY

P.A No. 2497
Special_Purchase_Agreement_Provisions

<PAGE>

6-1162-MSA-597

Alaska Airlines, Inc.
19300 International Blvd.
Seattle, Washington  98188

Subject:    Special Matters

Reference:  Purchase Agreement No. 2497 (the Purchase Agreement) between The
            Boeing Company (Boeing) and Alaska Airlines, Inc. (Customer)
            relating to Model 737-890 aircraft (the Aircraft)

This letter agreement (Letter Agreement) amends and supplements the Purchase
Agreement. All terms used but not defined in this Letter Agreement have the same
meaning as in the Purchase Agreement.

1.    Basic Credit Memorandum.

      Concurrent with the delivery of each Aircraft, Boeing will provide a
credit memorandum equal to [***] of the escalated Airframe Price. Customer may
apply such credit memorandum to the balance of the Purchase Price due at the
time of delivery for such Aircraft, or in payment for Boeing goods and services,
but not for advance payment on the Aircraft.

2.    Special Credit Memorandum.

      Concurrent with the delivery of each Aircraft, Boeing will provide a
credit memorandum equal to [***] of the escalated Airframe Price. Customer may
apply such credit memorandum to the balance of the Purchase Price due at the
time of delivery for such Aircraft, or in payment for Boeing goods and services,
but not for advance payment on the Aircraft.

*  Indicates that certain information contained herein has been omitted and
   filed separately with the Securities and Exchange Commission. Confidential
   treatment has been requested with respect to the omitted portions.

                               BOEING PROPRIETARY

P.A No. 2497
Special_Matters

<PAGE>

Alaska Airlines, Inc.
6-1162-MSA-597 Page 2

3.    [***] Credit Memorandum.

      Concurrent with the delivery of each of the first [***] Aircraft, Boeing
will provide a credit memorandum equal to [***] of the escalated Airframe Price.
Customer may apply such credit memorandum to the balance of the Purchase Price
due at the time of delivery for such Aircraft, or in payment for Boeing goods
and services, but not for advance payment on the Aircraft. For subsequent
Aircraft [***], this [***] Credit Memorandum shall [***], to be applied as
described above.

      Boeing provides this [***] Credit Memorandum, in addition to the other
Credit Memoranda of this Letter Agreement, as a financial accommodation to
Customer in consideration of Customer becoming the operator of the Aircraft.

         [***]

4.     [***] Escalation Factors.

      4.1 Table 1 to the Purchase Agreement identifies the delivery positions
and the estimated escalation for the Aircraft. The parties agree that escalation
factors are [***] for the Aircraft deliveries prior to July 1, 2008 and will be
the factors ([***] Factors) used to determine the escalation adjustment
component of the Aircraft Price for each such Aircraft notwithstanding any other
provisions of the Purchase Agreement to the contrary, including without
limitation the provisions of Supplemental Exhibit AE1 to the Purchase Agreement.
The Fixed Factors for the applicable twenty (20) Aircraft delivering prior to
July 1, 2008 are as listed in Attachment 1.

      4.2 The Aircraft Price, Basic Credit Memorandum, Special Credit Memorandum
and [***] Credit Memorandum for the applicable twenty (20) Aircraft delivering
prior to July 1, 2008 are as listed in Attachment 1, and are subject to
adjustment per Article 4.3 below. To confirm, the [***] Factors are not
applicable to Buyer Furnished Equipment and Seller Purchased Equipment.

*  Indicates that certain information contained herein has been omitted and
   filed separately with the Securities and Exchange Commission. Confidential
   treatment has been requested with respect to the omitted portions.

                               BOEING PROPRIETARY

P.A No. 2497
Special_Matters

<PAGE>

Alaska Airlines, Inc.
6-1162-MSA-597 Page 3

      4.3 In addition, the escalation adjustment for any other sum which is
identified in the Purchase Agreement as subject to escalation and which pertains
to an Aircraft, including but not limited to changes as described in AGTA-ASA
Article 3 and Article 4 shall be calculated using the applicable [***] Factor
notwithstanding any other provisions of the Purchase Agreement to the contrary,
including without limitation the provisions of Supplemental Exhibit AE1 to the
Purchase Agreement.

5.    [***]

6.    [***]

7.    Increased Quantity Purchase.

      In addition to the Basic, Special and [***] Credit Memorandums described
above in Articles 1, 2 and 3 above, should Customer purchase additional firm
aircraft beyond the [***] firm 737-890 Aircraft and exercised Option Aircraft, a
further credit memorandum shall be applicable only to the additional groups of
aircraft purchased as follows:

[***]

8.    [***] Advance Payment Schedule.

      8.1 [***] Customer [***] pay advance payments according to the following
schedule, for Aircraft on order as of the date of signing the Purchase
Agreement.

*  Indicates that certain information contained herein has been omitted and
   filed separately with the Securities and Exchange Commission. Confidential
   treatment has been requested with respect to the omitted portions.

                               BOEING PROPRIETARY

P.A. No. 2497
Special_Matters

<PAGE>

Alaska Airlines, Inc.
6-1162-MSA-597 Page 4

<TABLE>
<CAPTION>
                                           Amount Due per Aircraft
Due Date of Payment             (Percentage times Advance Payment Base Price)
-----------------------------   ---------------------------------------------
<S>                             <C>
Definitive Purchase Agreement                    [***]

24 months prior to the first                     [***]
day of the scheduled delivery
month of the Aircraft

21 months prior to the first                     [***]
day of the scheduled delivery
month of the Aircraft

18 months prior to the first                     [***]
day of the scheduled delivery
month of the Aircraft

12 months prior to the first                     [***]
day of the scheduled delivery
month of the Aircraft

9 months prior to the first                      [***]
day of the scheduled delivery
month of the Aircraft

6 months prior to the first                      [***]
day of the scheduled delivery
month of the Aircraft
           Total                                 [***]
</TABLE>

*  Indicates that certain information contained herein has been omitted and
   filed separately with the Securities and Exchange Commission. Confidential
   treatment has been requested with respect to the omitted portions.

                               BOEING PROPRIETARY

P.A. No. 2497
Special_Matters

<PAGE>

Alaska Airlines, Inc.
6-1162-MSA-597 Page 5

[***]

9.    [***]

10.   [***]

11.   [***]

12.   Option Aircraft.

      Further to Option Aircraft Letter Agreement 2497-1 of the Purchase
Agreement, Boeing provides the following additional terms for 737-890 option
aircraft (Option Aircraft):

      [***]

      12.3 Applicable Credit Memorandums.

      The Basic, Special and [***] Credit Memorandums described in Articles 1, 2
and 3, above, shall be applicable to the Option Aircraft. To confirm, should an
Option Aircraft be exercised, which becomes an Aircraft delivery within the
first [***] Aircraft, the [***] Credit Memorandum will be [***]. For Option
Aircraft exercised as Aircraft with delivery after the [***] sequenced Aircraft
delivery, the [***] Credit Memorandum will be [***].

*  Indicates that certain information contained herein has been omitted and
   filed separately with the Securities and Exchange Commission. Confidential
   treatment has been requested with respect to the omitted portions.

                               BOEING PROPRIETARY

P.A. No. 2497
Special_Matters

<PAGE>

Alaska Airlines, Inc.
6-1162-MSA-597 Page 6

      [***]


      [***]

13.   Purchase Right Aircraft.

      In additional to the Aircraft and the Option Aircraft, per Purchase Right
Aircraft Letter Agreement 6-1162-MSA-597 Boeing will sell to Customer up to
fifty (50) 737-890 purchase right aircraft (the Purchase Right Aircraft).
Further to Purchase Right Aircraft Letter Agreement 6-1162-MSA-597, the
following additional terms are applicable:

      13.1 Price.

      13.1.1 Pricing of the Purchase Right Aircraft shall be [***].

      [***]

14.   [***]

15.   [***]

*  Indicates that certain information contained herein has been omitted and
   filed separately with the Securities and Exchange Commission. Confidential
   treatment has been requested with respect to the omitted portions.

                               BOEING PROPRIETARY

P.A. No. 2497
Special_Matters

<PAGE>

Alaska Airlines, Inc.
6-1162-MSA-597 Page 7

16.   Assignment.

      Unless otherwise described herein, the Credit Memoranda described in this
Letter Agreement are provided as a financial accommodation to Customer in
consideration of Customer's becoming the operator of the Aircraft, and cannot be
assigned, in whole or in part, without the prior written consent of Boeing.

17.   Confidential Treatment.

      Customer understands that certain commercial and financial information
contained in this Letter Agreement is considered by Boeing as confidential.
Customer agrees that it will treat this Letter Agreement and the information
contained herein as confidential and will not, without the prior written consent
of Boeing, disclose this Letter Agreement or any information contained herein to
any other person or entity.

Sincerely,

THE BOEING COMPANY

BY ____________________________________

ITS Attorney-In-Fact

ACCEPTED AND AGREED TO this

Date: June 15, 2005

ALASKA AIRLINES, INC.

By ____________________________________

Its  Vice President Finance & Treasurer

Attachment

                               BOEING PROPRIETARY

P.A. No. 2497
Special_Matters

<PAGE>

                                  ATTACHMENT I
                 SPECIAL MATTERS LETTER AGREEMENT 6-1162-MSA-597
            [***] ESCALATION FACTOR AND DELIVERY PRICING INFORMATION

AIRFRAME MODEL/MTOW: 737-800 / 174,200      DETAIL SPECIFICATION: D019A00ASA38P
                                                                  -1 (8/20/2004)

<TABLE>
<CAPTION>
ENGINE MODEL: CFM56-7B26 (1)                 BASE YEAR 2004 $S
                                             -----------------
<S>                                          <C>
AIRFRAME PRICE:                                 $58,854,000

OPTIONAL FEATURES:                              $ 2,410,000
                                                -----------
SUB-TOTAL OF AIRFRAME AND FEATURES:             $61,264,000

ENGINE PRICE (PER AIRCRAFT):                    $         0

AIRCRAFT BASIC PRICE (EXCLUDING BFE/SPE):       $61,264,000
</TABLE>

<TABLE>
<CAPTION>
                                      DELIVERY PRICING - DOES NOT INCLUDE BFE, SPE OR UNINCORPORATED CHANGES
DELIVERY          NUMBER OF   [***]   AIRCRAFT BASIC PRICE   BASIC CREDIT   SPECIAL CREDIT    [***] CREDIT
  DATE            AIRCRAFT   FACTOR      PRICE PER A/P        MEMORANDUM      MEMORANDUM       MEMORANDUM
----------------  ---------  -------  --------------------   ------------   --------------   ---------------
<S>               <C>        <C>      <C>                    <C>            <C>              <C>
Jan-2006             1        [***]      $64,394,590            [***]            [***]           [***]

Feb-2006             1        [***]      $64,584,509            [***]            [***]           [***]

Mar-2006             1        [***]      $64,725,416            [***]            [***]           [***]

Jun-2006             1        [***]      $65,166,517            [***]            [***]           [***]

Jul-2006             1        [***]      $65,325,803            [***]            [***]           [***]

Aug-2006             1        [***]      $65,466,710            [***]            [***]           [***]

Sep-2006             2        [***]      $65,607,618            [***]            [***]           [***]

Oct-2006             1        [***]      $65,711,766            [***]            [***]           [***]

Dec-2006             1        [***]      $66,005,834            [***]            [***]           [***]

Jan-2007             2        [***]      $66,152,867            [***]            [***]           [***]

Feb-2007             1        [***]      $66,318,280            [***]            [***]           [***]

Mar-2007             3        [***]      $66,471,440            [***]            [***]           [***]

May-2007             1        [***]      $66,777,760            [***]            [***]           [***]

Oct-2007             1        [***]      $67,555,813            [***]            [***]           [***]

Feb-2008             1        [***]      $68,278,728            [***]            [***]           [***]

Mar-2008             1        [***]      $68,450,267            [***]            [***]           [***]

Total Applicable
Aircraft:           20     *  Indicates that certain information contained
                              herein has been omitted and filed separately with
                              the Securities and Exchange Commission.
                              Confidential treatment has been requested with
                              respect to the omitted portions.
</TABLE>

                               BOEING PROPRIETARY

(1)-[***]