Exhibit 10

EMPLOYMENT AGREEMENT

This Employment Agreement (this "Agreement"), dated as of January 30, 2002, is entered into between Alaska Airlines, Inc., an Alaska corporation
("Alaska"), a wholly owned subsidiary of Alaska Air Group, Inc., a Delaware corporation ("AAG") and George D. Bagley ("Executive").

1.    Employment

Alaska shall employ Executive as its Executive Vice President/Operations. Executive has the authority, subject to Alaska's Charter and Bylaws, as may be granted
from time to time by the Board of Directors of Alaska. Executive will perform such duties as may be assigned from time to time by the Board of Directors of Alaska, which relate to the business of
Alaska, its subsidiaries, its affiliates, or any business ventures in which Alaska, its subsidiaries or its parent corporation may participate.

2.    Attention and Effort

Executive will devote all of his entire productive time, ability, attention and effort to Alaska's business and will serve its interests during his employment by
the Company;provided, however, that Executive may devote reasonable periods of time to (a) engaging in personal investment activities and
(b) engaging in charitable or community service activities, so long as none of the foregoing additional activities materially interfere with Executive's duties under this Agreement.

3.    Compensation, Stock Options, Officers Supplemental Retirement Plan

Alaska agrees to pay or cause to be paid to Executive, and Executive agrees to accept in exchange for the services rendered hereunder by him, the following
compensation:

3.1    Base Salary

Executive's
compensation shall consist, in part, of an annual base salary of $300,000 before all customary payroll deductions. Such annual base salary shall be paid in substantially
equal installments and at the same intervals as other officers of Alaska are paid. The Board of Directors of AAG or the Compensation Committee of the Board of Directors of AAG thereof (the
"Compensation Committee") shall determine any increases in the amount of the annual base salary.

3.2    Bonus

Executive
will be eligible to receive, in addition to the annual base salary described above, an annual bonus under Alaska's Management Incentive Plan (the "MIP") based on the objectives
that are established under the MIP from time to time by the Compensation Committee. Executive shall participate in the MIP at a rate of 45% of his base salary if "target" level goals are achieved.

3.3    Stock Options

Subject
to approval by the Shareholders of AAG of the issuance of additional shares under the 1999 Long-Term Incentive Equity Plan, and further subject to the condition that
Executive shall not have issued a Notice of Termination, AAG shall grant to Executive, between May 30, 2002 and August 28, 2002, an award of options to purchase 100,000 shares of AAG
common stock.

The
terms and conditions of such options shall include, without limitation:



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In
addition, Executive will be eligible for stock option awards under Alaska's stock option plans.

3.4    Officers Supplemental Retirement Plan

Executive
shall continue to participate in the Alaska Airlines Officers Supplemental Retirement Plan ("OSRP"). In the event of termination of the Executive for any reason other than
Cause (including, without limitation, voluntary termination by Executive), Executive shall immediately become 100% vested in all benefits under the OSRP, not withstanding anything to the contrary in
the OSRP.

3.5    Horizon Stock Options

If,
prior to the earlier of (i) January 30, 2007, or (ii) Executive's date of voluntary or involuntary termination, AAG should offer the sale to the public stock in
Horizon Air Industries, Inc. ("Horizon"), Executive shall be entitled to options for the purchase of shares in Horizon or restricted shares in Horizon, in the same amounts and on the same terms
as are offered to Horizon's then Chief Executive Officer in connection with such offering. Executive shall not be entitled to such options which result by operation of law in connection with
previously existing stock options issued to Horizon's then Chief Executive Officer. Executive shall, in addition to the options set forth above, be entitled to options which result from operation of
law in connection with previously existing stock options issued to Executive.

4.    Benefits

During the term of his employment by the Company, Executive will be entitled to participate, subject to and in accordance with applicable eligibility
requirements, in fringe benefit programs, including, but
not limited to, health, dental and vision insurance, group life insurance, car allowance and maintenance, and such other programs as shall be provided from time to time by Alaska for its officers
generally.

5.    Termination

Employment of Executive pursuant to this Agreement may be terminated as follows, but in any case, the provisions of Section 7 hereof shall survive the
termination of this Agreement and the termination of Executive's employment hereunder:

5.1    By Alaska

With
or without Cause (as defined below), Alaska may terminate the employment of Executive at any time during the term of employment upon giving Notice of Termination (as defined below).

5.2    By Executive

Executive
may terminate his employment at any time, for any reason, upon giving Notice of Termination.

5.3    Notice

The
term "Notice of Termination" shall mean at least 90 days' written notice of termination of Executive's employment, during which period Executive's employment and performance
of services will continue;provided, however, that Alaska may, upon notice to Executive and without reducing Executive's compensation during such
period, excuse Executive from any or all of his or her duties

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during such period. The effective date of the termination of Executive's employment hereunder shall be the date on which such 90-day period expires.

6.    Effect of Termination

In the event of termination of the employment of Executive, all compensation and benefits set forth in this Agreement shall terminate except as specifically
provided in this Section 6:

6.1    Termination by Alaska

If
Alaska terminates Executive's employment without Cause, Executive shall be entitled to receive (i) any unpaid annual base salary which has accrued for services already
performed as of the date termination of Executive's employment becomes effective, (ii) continued rights in then issued and outstanding options as described in Section 3.3, and
(iii) immediate vesting in OSRP as described in Section 3.4. If Executive is terminated by Alaska for Cause, Executive shall not be entitled to receive any of the foregoing benefits,
other than those set forth in clause (i) above.

6.2    Termination by Executive

In
the case of the termination of Executive's employment by Executive, Executive shall nevertheless be entitled to receive (i) any unpaid annual base salary which has accrued for
services already performed as of the date termination of Executive's employment becomes effective, (ii) continued rights in then issued and outstanding options as described in
Section 3.3(c), and (iii) immediate vesting in OSRP as described in Section 3.4.

6.3    Cause

Wherever
reference is made in this Agreement to termination being with or without Cause, "Cause" shall mean as basis for termination for reason of admission by the Executive or
reasonable substantiation by the Company of embezzlement, dishonesty or other fraud, conviction of a felony or conspiracy against the Company or any willful or intentional injury to either the
Company, its property, or its employees in connection with the business affairs of the Company.

7.    Non-competition and Non-solicitation

7.1    Applicability

This
Section 7 shall survive the termination of Executive's employment with Alaska or the expiration of the term of this Agreement.

7.2    Scope of Competition

Executive
agrees that he will not, directly or indirectly, during his employment and for a period of one (1) year from the date on which his employment with Alaska terminates for
any reason, be employed by, consult with or otherwise perform services for, own, manage, operate, join, control or participate in the ownership, management, operation or control of or be connected
with, in any manner, any Competitor. A "Competitor" shall include, (a) any entity which provides air transportation services anywhere in the world, and (b) any business whose efforts are
in competition with the efforts of the company, including, without limitation, any business whose efforts involve any research and development, products or services in competition with products or
services which are, during or at the end of the Term, either (i) produced, marketed or otherwise commercially exploited by the Company or (ii) in actual or demonstrably anticipated
research or development by the Company, unless released from such obligation in writing by Alaska's Board of Directors. Executive shall be deemed to be related to or connected with a Competitor if
such Competitor is (x) a partnership in which he is a general or limited partner or employee, (y) a corporation or association of which he is a shareholder, officer, employee or
director, or (z) a partnership, corporation or association of which he is a member,

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consultant or agent;provided, however, that nothing herein shall prevent the purchase or ownership by Executive of shares which constitute less than
five percent of the outstanding equity securities of a publicly or privately held corporation, so long as Executive has no other relationship with such corporation.

7.3    Scope of Non-solicitation

Executive
shall not, during his employment and for a period of one (1) year from the date on which his employment with Alaska terminate for any reason, directly or indirectly
solicit, influence or entice, or attempt to solicit, influence or entice, any employee or consultant of Alaska to cease his or her relationship with Alaska or solicit, influence, entice or in any way
divert any customer, distributor, partner, joint venturer or supplier of Alaska to do business or in any way become associated with any Competitor. This Section 7.3 shall apply during the time
period and geographical area described in Section 7.2 hereof.

7.4    Nondisclosure; Return of MaterialsDuring the term of his employment by Alaska and following termination of
such employment, he will not disclose (except as required by his duties to Alaska), any concept, design, process, technology, trade secret, customer list, business plan, embodiment, or invention, or
any other confidential information, of Alaska of which Executive becomes informed or aware during his employment, whether or not developed by Executive. In the event of the termination of his
employment with Alaska or the expiration of this Agreement, Executive will promptly return all documents, data and other materials of whatever nature, including, without limitation, drawings,
specifications, research, reports, embodiments, software and manuals to Alaska which pertain to Alaska and shall not retain or cause or allow any third party to retain photocopies or other
reproductions of the foregoing.

8.    Renegotiation

In the event that, on or prior to June 28, 2002 or such later date as may be applicable, Company applies for the issuance of loans, guarantees, or other
financial assistance under Section 101(a)(1) of the Air Transportation Safety and System Stabilization Act, the Company may be required, as a condition to the issuance of said loans and
guarantees, to enter into a legally binding agreement with the Air Transportation Stabilization Board limiting Executives compensation. In such event, and notwithstanding any other provisions in this
Agreement, Executive and Company agree that during the two-year period beginning September 11, 2001, and ending September 11, 2003:



The
term "total compensation" includes salary, bonuses, awards of stock and other financial benefits provided by Alaska, AAG and Horizon.

9.    Notice and Cure of Breach

Whenever a breach of this Agreement by either party is relied upon as justification for any action taken by the other party pursuant to any provision of this
Agreement, before such action is taken, the party asserting the breach of this Agreement shall give the other party at least twenty (20) days' prior written notice of the existence and the
nature of such breach before taking further action hereunder and shall give the party purportedly in breach of this Agreement the opportunity to correct such breach during the 20-day
period.

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10.  Form of Notice

All notices given hereunder shall be given in writing, shall specifically refer to this Agreement and shall be personally delivered or sent by telecopy or other
electronic facsimile transmission or by registered or certified mail, return receipt requested, at the address set forth below or at such other address as may hereafter be designated by notice given
in compliance with the terms hereof:

If to Executive:

George D. Bagley
21 Skagit Key
Bellevue, Washington 98006If to Alaska:

Alaska Airlines, Inc.
Attn: Chief Executive Officer
19300 Pacific Highway South
Seattle, WA 98188
Fax: (206) 431-3819With a copy to:

General Counsel
Fax: (206) 431-3807


If notice is mailed, such notice shall be effective upon mailing, or if notice is personally delivered or sent by telecopy or other electronic facsimile
transmission, it shall be effective upon receipt.

11.  Assignment

This Agreement is personal to Executive and shall not be assignable by Executive. Alaska may assign its rights hereunder to (a) any corporation resulting
from any merger, consolidation or other reorganization to which Alaska is a party or (b) any corporation, partnership, association or other person to which Alaska may transfer all or
substantially all of the assets and business of Alaska existing at such time. All of the terms and provisions of this Agreement shall be binding upon and shall inure to the benefit of and be
enforceable by the parties hereto and their respective successors and permitted assigns.

12.  Waivers

No delay or failure by any party hereto in exercising, protecting or enforcing any of its rights, titles, interests or remedies hereunder, and no course of
dealing or performance with respect thereto, shall constitute a waiver thereof. The express waiver by a party hereto of any right, title, interest or remedy in a particular instance or circumstance
shall not constitute a waiver thereof in any other instance or circumstance. All rights and remedies shall be cumulative and not exclusive of any other rights or remedies.

13.  Amendments in Writing

No amendment, modification, waiver, termination or discharge of any provision of this Agreement, nor consent to any departure therefrom by either party hereto,
shall in any event be effective unless the same shall be in writing, specifically identifying this Agreement and the provision intended to be amended, modified, waived, terminated or discharged and
signed by Alaska and Executive, and each such amendment, modification, waiver, termination or discharge shall be effective only in the specific instance and for the specific purpose for which given.
No provision of this Agreement shall be varied, contradicted or explained by any oral agreement, course of dealing or performance or any other matter not set forth in an agreement in writing and
signed by Alaska and Executive.

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14.  Applicable Law

This Agreement shall in all respects, including all matters of construction, validity and performance, be governed by, and construed and enforced in accordance
with, the laws of the state of Washington, without regard to any rules governing conflicts of laws.

15.  Severability

If any provision of this Agreement shall be held invalid, illegal or unenforceable in any jurisdiction, for any reason, including, without limitation, the
duration of such provision, its geographical scope or the extent of the activities prohibited or required by it, then, to the full extent permitted by law (a) all other provisions hereof shall
remain in full force and effect in such jurisdiction and shall be liberally construed in order to carry out the intent of the parties hereto as nearly as may be possible, (b) such invalidity,
illegality or unenforceability shall not affect the validity, legality or enforceability of any other provision hereof, and (c) any court or arbitrator having jurisdiction thereover shall have
the power to reform such provision to the extent necessary for such provision to be enforceable under applicable law.

16.  Headings

All headings used herein are for convenience only and shall not in any way affect the construction of, or be taken into consideration in interpreting, this
Agreement.

17.  Counterparts

This Agreement, and any amendment or modification entered into pursuant to Section 16 hereof, may be executed in any number of counterparts, each of which
counterparts, when so executed and delivered, shall be deemed to be an original and all of which counterparts, taken together, shall constitute one and the same instrument.

18.  Entire Agreement

This Agreement, including exhibits hereto incorporated by reference, on and as of the date hereof constitutes the entire agreement between Alaska and Executive
with respect to the subject matter hereof and all prior or contemporaneous oral or written communications, understandings or agreements between Alaska and Executive with respect to such subject matter
are hereby superseded and nullified in their entireties.

IN
WITNESS WHEREOF, the parties have executed and entered into this Agreement on the date set forth above.

|George D. Bagley |  | John F. Kelly
Chairman
|---------------- |  | ----------------------

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