UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC  20549
FORM 10-K

(Mark One)

X	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
 OF 	1934 [NO FEE REQUIRED]
For the fiscal year ended December 31, 1997
OR

	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
 ACT OF 	1934 [NO FEE REQUIRED]

For the transition period from  . . . . . . . .  to  . . . . . . . .

Commission File Number  0-19978


ALASKA AIRLINES, INC.
(Exact name of registrant as specified in its charter)

Alaska
(State or other jurisdiction of incorporation or organization)

92-0009235
(I.R.S. Employer Identification No.)


19300 Pacific Highway South, Seattle, Washington 98188
(Address of Principal Executive Offices)

Registrant's telephone number, including area code: (206) 431-7079

Securities registered pursuant to Section 12(g) of the Act:

Title of Class
Common Stock, $1.00 Par Value

	As of December 31, 1997, common shares outstanding totaled 500.  

	Indicate by check mark whether the registrant (1) has filed all reports
 required to be filed by Section 13 or 15(d) of the Securities Exchange Act
 of 1934 during the preceding 12 months (or for such shorter period that the
 registrant was required to file such reports), and (2) has been subject to
 such filing requirements for the past 90 days.   Yes    X    No ____

	The registrant meets the conditions set forth in General Instructions
 (J)(1)(a) and (b) of Form 10-K and is therefore filing this Form 10-K
 with the reduced disclosure format.  Items 4, 6, 10, 11, 12 and 13 have been
 omitted in accordance with such Instruction J.

	The registrant's parent, Alaska Air Group, Inc. (File No. 1-8957), files
 reports with the Commission pursuant to the Securities Exchange Act of 1934,
 as amended.

Exhibit Index begins on page 26.
<PAGE>
PART I

ITEM 1.	BUSINESS

GENERAL INFORMATION
Alaska Airlines, Inc. (Alaska or the Company) is a wholly owned 
subsidiary of Alaska Air Group, Inc.  Alaska Air Group, Inc. is a 
holding company that also owns Horizon Air Industries, Inc. (Horizon).  
Alaska is a major airline that was organized in 1932 and incorporated in 
the state of Alaska in 1937.  Alaska became a wholly owned subsidiary of 
Alaska Air Group, Inc. in 1985 pursuant to a reorganization of Alaska 
into a holding company structure.  Alaska Air Group, Inc. is a 
registrant pursuant to Section 12(b) of the Securities and Exchange Act 
of 1934 (Commission File No. 1-8957).  Alaska's executive offices are 
located at 19300 Pacific Highway South, Seattle, Washington 98188.  In 
1997, Alaska accounted for 83% of Alaska Air Group, Inc.'s total 
operating revenues.

Horizon, a Washington corporation, began service in 1981 and was 
acquired by Alaska Air Group, Inc. in 1986.  Horizon is a regional 
airline, that operates in the Pacific Northwest, Northern California and 
Western Canada.

Operations
Alaska serves 35 cities in six states (Alaska, Washington, Oregon, 
California, Nevada and Arizona), one city in Canada, four cities in 
Mexico and five cities in Russia.  In each year since 1973, Alaska has 
carried more passengers between Alaska and the U.S. mainland than any 
other airline.  In 1997, Alaska carried 12.3 million passengers.  
Passenger traffic within Alaska and between Alaska and the U.S. mainland 
accounted for 26% of Alaska's 1996 revenue passenger miles, West Coast 
traffic accounted for 66%, the Mexico markets 8% and Russia less than 
1%.  Based on passenger enplanements, Alaska's leading airports are 
Seattle, Portland, Anchorage and Los Angeles.  Based on revenues, its 
leading nonstop routes are Seattle-Anchorage, Seattle-Los Angeles and 
Seattle-San Diego.  At December 31, 1997, Alaska's operating fleet 
consisted of 78 jet aircraft.

Alaska distinguishes itself from competitors by providing a higher level 
of customer service.  The airline's excellent service in the form of 
advance seat assignments, a first class section, attention to customer 
needs, high-quality food and beverage service, well-maintained aircraft 
and other amenities has been recognized by independent studies and 
surveys of air travelers.  Alaska offers competitive fares.

The majority of Alaska flights and certain Northwest Airlines flights 
are dual-designated in airline computer reservation systems as Alaska 
Airlines and Northwest Airlines in order to facilitate feed traffic 
between the two airlines.  Alaska Airlines also serves three smaller 
cities in California, three in Washington, and many small communities in 
Alaska through code share marketing agreements with local carriers.


BUSINESS RISKS 
The Company's operations and financial results are subject to various 
uncertainties such as intense competition, volatile fuel prices, a 
largely unionized labor force, the need to finance large capital 
expenditures, government regulation, potential aircraft incidents and 
general economic conditions.

Competition
Competition in the air transportation industry is intense.  Any domestic 
air carrier deemed fit by the DOT is allowed to operate scheduled 
passenger service in the United States.  Currently, Alaska carries 
approximately 2.1% of all U.S. domestic passenger traffic.  Alaska 
competes with one or more domestic or foreign airlines on most of its 
routes.  Some of these competitors are substantially larger than Alaska 
and Horizon, have greater financial resources and have more extensive 
route systems.  Alaska's primary competitors in the West Coast, Arizona 
and Nevada markets are America West, Delta, Reno Air, Shuttle by United, 
Southwest Airlines, United and United Express.  Alaska also competes 
with Air Canada, America West, Canadian Airlines, Continental, Delta, 
Reno Air and United in the Lower 48-to-Alaska market, and with 
Aeromexico, America West, Delta and Mexicana in its Mexico markets.  
Some of these competitors are substantially larger than Alaska, have 
greater financial resources and have more extensive route systems.

Most major U.S. carriers have developed, independently or in partnership 
with others, large computerized reservation systems (CRS).  Airlines, 
including Alaska, are charged industry-set fees to have their flight 
schedules included in the various CRS displays.  These systems are 
currently the predominant means of distributing airline tickets.  In 
order to reduce anti-competitive practices, the DOT regulates the 
display of all airline schedules and fares.  Alaska is exploring 
alternatives to existing distribution methods.

Fuel
Fuel costs represented 15% of the Company's total operating expenses in 
1997.  Fuel prices, which can be volatile and are largely outside of the 
Company's control, can have a significant impact on the Company's 
operating results. Currently, a one cent change in the fuel price per 
gallon affects annual fuel costs by approximately $2.8 million.  The 
Company has in the past hedged against its exposure to fluctuations in 
the price of jet fuel, but does not currently do so.  The Company 
evaluates hedging strategies on an ongoing basis.

Unionized Labor Force
Labor costs represented 33% of the Company's total operating expenses in 
1997.  Wage rates can have a significant impact on the Company's 
operating results.  At December 31, 1997, labor unions represented 88% 
of Alaska's employees.  The air transportation industry is regulated 
under the Railway Labor Act, which vests in the National Mediation Board 
certain regulatory powers with respect to disputes between airlines and 
labor unions.  The Company cannot predict the outcome of union contract 
negotiations nor control actions (e.g. work stoppage or slowdown) unions 
might take to try to influence those negotiations.

Leverage and Future Capital Requirements
The Company, like many airlines, is highly leveraged, which increases 
the volatility of its earnings.  Due to high fixed costs, including 
aircraft lease commitments, a decrease in revenues could result in a 
disproportionately greater decrease in earnings.  In addition, the 
Company has an ongoing need to finance new aircraft deliveries and there 
is no assurance that such financing will be available in sufficient 
amounts or on acceptable terms.  See Item 7 for management's discussion 
of liquidity and capital resources.

Government Regulation; International Routes
The Company, like other airlines, is subject to regulation by the 
Federal Aviation Administration (FAA) and the United States Department 
of Transportation (DOT).  The FAA, under its mandate to ensure aviation 
safety, has the authority to ground aircraft and to suspend temporarily 
or revoke permanently the authority of an air carrier or its licensed 
personnel for failure to comply with Federal Aviation Regulations and to 
levy civil penalties for such failure.  The DOT has the authority to 
regulate certain airline economic functions including financial and 
statistical reporting, consumer protection, computerized reservations 
systems, essential air transportation and international route authority.  
The Company is subject to bilateral agreements between the United States 
and the foreign countries to which the Company provides service.  There 
can be no assurance that existing bilateral agreements between the 
United States and the foreign governments will continue or that the 
Company's designation to operate such routes will continue.

Risk of Loss and Liability; Weather
The Company, like other airlines, is exposed to potential catastrophic 
losses in the event of aircraft accidents or terrorist incidents.  
Consistent with industry standards, the Company maintains insurance 
against such losses.  However, any aircraft accident, even if fully 
insured, could cause a negative public perception of the Company with 
adverse financial consequences.  Unusually adverse weather, as occurred 
during December 1996 in the Pacific Northwest, can significantly reduce 
flight operations, resulting in lost revenues and added expenses.

OTHER INFORMATION
Frequent Flyer Program
All major airlines have developed frequent flyer programs as a way of 
increasing passenger loyalty.  Alaska's Mileage Plan allows members to 
earn mileage by flying on Alaska, Horizon and other participating 
airlines, and by using the services of non-airline partners, which 
include a credit card partner, telephone companies, hotels and car 
rental agencies.  Alaska is paid by non-airline partners for the miles 
it credits to member accounts.  Alaska has the ability to change the 
Mileage Plan terms, conditions, partners, mileage credits and award 
levels.

Mileage can be redeemed for free or discounted travel and for other 
travel industry awards.  Upon accumulating the necessary mileage, 
members notify Alaska of their award selection.  Over 70% of the flight 
awards selected are subject to blackout dates and capacity-controlled 
seating.  Effective in January 1996, miles have no expiration.  As of 
the year end 1996 and 1997, Alaska estimates that 504,000 and 652,000 
round trip flight awards could have been redeemed by Mileage Plan 
members who have mileage credits exceeding the 20,000 mile free round 
trip domestic ticket award threshold.  At December 31, 1997, fewer than 
4% of these flight awards were issued and outstanding.  For the years 
1995, 1996 and 1997, approximately 242,000, 173,000 and 185,000 round 
trip flight awards were redeemed and flown on Alaska and Horizon.  These 
awards represent approximately 7% for 1995, 4% for 1996, and 3% for 
1997, of the total passenger miles flown for each period.

Alaska maintains a liability for its Mileage Plan obligation which is 
based on its total miles outstanding, less an estimate for miles that 
will never be redeemed.  The net miles outstanding are allocated between 
those credited for travel on Alaska, Horizon or other airline partners 
and those credited for using the services of non-airline partners.  
Miles credited for travel on Alaska, Horizon or other airline partners 
are accrued at Alaska's incremental cost of providing the air travel.  
The incremental cost includes the cost of meals, fuel, reservations and 
insurance.  The incremental cost does not include a contribution to 
overhead, aircraft cost or profit.  A portion of the proceeds received 
from non-airline partners is also deferred.  At December 31, 1996 and 
1997, the total liability for miles outstanding was $17.3 million and 
$22.3 million, respectively.

Employees
Alaska had 8,578 active full-time and part-time employees at December 
31, 1997.  The following is a summary of Alaska's union contracts as of 
December 31, 1997:	

                                            			Number of
	Union                   	Employee Group      	Employees  	Contract Status 

International	            Mechanic, Rampservice 	1,786 	  Amendable 9/1/97
Association of           	and related                  			  In negotiation
Machinists and           	classifications
Aerospace Workers	
                        		Clerical, Office and  	3,094	   Amendable 5/20/99
		                        Passenger Service

Air Line Pilots 	         Pilots                	1,085    	Amendable 5/1/03
Association International 	

Association of	           Flight Attendants     	1,491 	  Amendable 3/14/99
Flight Attendants

Mexico Workers           	Mexico Airport           	61  	  Amendable 4/1/98
Association	Personnel
of Air Transport

Transport Workers        	Dispatchers	              16  	  Amendable 2/9/02
Union of America


ITEM 2.	PROPERTIES

Aircraft
The following table describes the aircraft operated by Alaska and their 
average age at December 31, 1997.
                     	Passenger							                  	Average Age
Aircraft Type	         Capacity 		Owned		Leased 		Total	   	in Years
Boeing 737-200C	            111      	7      	1      	8     	17.4
Boeing 737-400	             140      	3     	25	     28      	3.9
McDonnell Douglas MD-80    	140     	16     	26     	42	      8.2
                                   		26     	52     	78      	7.6

Twelve of the 26 aircraft owned by Alaska as of December 31, 1997 are 
subject to liens securing long-term debt.  Alaska's leased B737-200C, 
B737-400 and MD-80 aircraft have lease expiration dates in 1999, between 
2002 and 2015, and between 1998 and 2013, respectively.  Alaska has the 
option to extend most of the leases for additional periods, or the right 
to purchase the aircraft at the end of the lease term, usually at the 
then fair market value of the aircraft.  For information regarding 
obligations under capital leases and long-term operating leases, see 
Notes to Financial Statements.

Special noise ordinances or agreements restrict the type of aircraft, 
the timing and the number of flights operated by Alaska and other air 
carriers at four Los Angeles area airports plus San Diego, Palm Springs, 
San Francisco and Seattle.  At December 31, 1997, all of Alaska's 
aircraft meet the Stage 3 noise requirements under the Airport Noise and 
Capacity Act of 1990.

Ground Facilities and Services
Alaska leases ticket counter, gates, cargo and baggage, office space and 
other support areas at the majority of the airports it serves.  Alaska 
also owns terminal buildings at various Alaska cities.

Alaska has centralized operations in several buildings located at or 
near Seattle-Tacoma International Airport (Sea-Tac) in Seattle, 
Washington.  The owned buildings, including land unless located on 
leased airport property, include: a three-bay hangar facility with 
maintenance shops; a flight operations and training center; an air cargo 
facility; a reservations and office facility; a four-story office 
building; its corporate headquarters; and two storage warehouses.  
Alaska also leases a two-bay hangar/office facility at Sea-Tac.   

Alaska's other major facilities include: a regional headquarters 
building, an air cargo facility (completed in 1997) and a leased 
hangar/office facility in Anchorage; a Phoenix reservations center; and 
a leased two-bay maintenance facility in Oakland.

ITEM 3.	LEGAL PROCEEDINGS

In October 1991, Alaska gave notice of termination of its code sharing 
and frequent flyer relationship with MarkAir, an airline based in the 
state of Alaska.  Both companies have filed suit against one another in 
connection with that termination asserting breach of contract and other 
claims under state law.  In June 1992, MarkAir filed for protection 
under Chapter 11 of the U.S. Bankruptcy Code.  In June 1997, MarkAir 
claimed damages of $57 million (later revised to $70 million) in 
connection with Alaska's actions.  In January 1998, MarkAir's counsel 
notified the Company that, after application of attorneys' fees and 
prejudgement interest, its total claim was between $104 and $140 
million.  If MarkAir were to prevail at the $140 million amount, the 
after-tax effect would be to reduce shareholders' equity by 
approximately $84 million or 19%.  However, the Company believes that it 
has valid defenses and is vigorously defending itself against the 
lawsuit.  Trial is scheduled to begin in July 1998.

PART II

ITEM 5.	MARKET PRICE FOR THE REGISTRANT'S COMMON STOCK AND RELATED
	STOCKHOLDER MATTERS

All of Alaska's outstanding common stock is held by Alaska Air Group, 
Inc. and such stock is not traded in any market.  No cash dividend has 
been paid since 1989 and Alaska does not expect to pay regular dividends 
to Alaska Air Group.

ITEM 7.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 
RESULTS OF OPERATIONS

Industry Conditions
During 1997, as part of the Taxpayer Relief Act, the 10% passenger 
ticket tax was replaced with a new system that combines a percentage tax 
with a per passenger segment fee.  Effective October 1, 1997, the ticket 
tax is 9% plus $1 per segment.  The percentage tax is scheduled to 
decrease over time and the segment fee is scheduled to increase.  The $6 
international departure tax has increased to $12 and a new $12 
international arrival tax has been added.  However, the Act retains the 
$6 rate for travel between Alaska and the U.S. mainland.  This tax and 
the international taxes will be indexed to the CPI beginning January 1, 
1999.  The Taxpayer Relief Act also included these items that will 
affect the Company and the airline industry: (a) a new tax of 7.5% on 
payments to air carriers for the sale of miles in frequent flyer 
programs; (b) a phased-in increase from 50% to 80% for the deductible 
percentage of per diems paid to flight crews; and (c) faster cost 
recovery for alternative minimum tax purposes of aircraft purchased in 
1999 and later years.

During 1996, fuel prices increased significantly for the Company and 
most of its competitors (approximately 20% or 12 cents per gallon over 
1995 levels for Alaska Airlines).  During 1997, fuel prices decreased 
approximately 3.5% from 1996 levels.

RESULTS OF OPERATIONS
1997 Compared with 1996  Net income in 1997 was $76.0 million, compared 
with $45.6 million in 1996.  Operating income was $134.3 million in 1997 
compared to $90.0 million in 1996.  Severe winter storms, high fuel 
prices and matching of competitors' lower fares adversely affected the 
1996 fourth quarter.  Airline financial and statistical data is shown 
following the financial statements.  A discussion of this data follows.

Operating income increased 49.2% to $134.3 million, resulting in a 9.3% 
operating margin as compared to a 6.9% margin in 1996.  1997 operating 
revenue per available seat mile (ASM) increased 7.8% to 9.38 cents while 
operating expenses per available seat mile increased 5.1% to 8.51 cents.

The increase in revenue per ASM was due to a 7.1% increase in system 
passenger yield combined with a 1.3 point improvement in passenger load 
factor.  Most markets, including the three largest (Pacific Northwest - 
Southern California, Seattle - Anchorage and Pacific Northwest - 
Northern California), experienced increases in yields.  Most markets 
also experienced increases in load factor including the Seattle-
Anchorage market, which had a 4.9 point improvement.  The higher yields 
and load factors reflect a more stabilized competitive environment in 
1997.

Freight and mail revenues decreased 3.6% in the first half of 1997 due 
to more competition and increased 4.1% in the second half due to 
increased cargo capacity and higher mail rates.

Other-net revenues were essentially unchanged because an additional $5 
million of proceeds from partners in Alaska's frequent flyer program 
were offset by a similar increase in the frequent flyer award liability.

The table below shows the major operating expense elements on a cost per 
available seat mile (ASM) basis in 1996 and 1995.

Alaska Airlines       	Operating Expenses Per ASM (In Cents)
                             		1996 	1997 	Change  	% Change
Wages and benefits            	2.57 	2.74    	.17     	7
Employee profit sharing	        .01  	.08    	.07    	NM
Contracted services	            .25  	.28    	.03    	12
Aircraft fuel                 	1.35 	1.29   	(.06)   	(4)
Aircraft maintenance	           .38  	.44    	.06    	16
Aircraft rent	                  .98  	.96   	(.02)   	(2)
Food and beverage service	      .30  	.30     	--    	--
Commissions	                    .59  	.65    	.06    	10
Other selling expenses	         .43  	.41   	(.02)   	(5)
Depreciation and amortization	  .38	  .37   	(.01)   	(3)
Gain on sale of assets        	(.06) (.01)   	.05    	NM
Landing fees and other rentals	 .33  	.34    	.01     	3
Other                          	.59  	.66    	.07    	12
Alaska Airlines Total	         8.10 	8.51    	.41    	 5
NM = Not Meaningful

Alaska's higher unit costs were primarily due to increased labor costs.  
Significant unit cost changes are discussed below.

Employees increased 7.6% (primarily in reservations and customer service 
positions) to service the 4.1% increase in passengers and also to 
improve on-time within 15 minutes flight departure performance, which 
improved from 77% on-time in 1996 to 82% on-time in 1997.  Excluding 
profit sharing, average wages and benefits per employee were up 2.7%, 
primarily due to higher pilot wage rates and higher health insurance 
costs.  The net effect was that wages and benefits expense increased 
more than the ASM growth, resulting in a 7% increase in cost per ASM.
Profit sharing expense increased the cost per ASM by .07 cents.  
Effective for 1997, Alaska changed its profit sharing program so that 
eligible employees will receive their pro rata share of 10% of Alaska's 
adjusted pre-tax profits starting with the first dollar of pre-tax 
profits.

Fuel expense per ASM decreased 4%, primarily due to a 3.5% decrease in 
the price of fuel.

Maintenance expense per ASM increased 16% because significantly more 
engine repair expense was incurred in 1997 and a smaller proportion of 
airframe maintenance costs were capitalized.

Commission expense per ASM increased 10%, less than the 13% increase in 
passenger revenues because a lower percentage of sales were made by 
travel agents.  In addition, the commission rate paid to travel agents 
decreased from 10% to 8% for sales made after September 30, 1997.  The 
gain on sale of assets in 1996 is primarily due to the sale of three jet 
aircraft.

Other expense per ASM increased 12%, primarily due to higher costs 
related to property and other taxes, flight crew hotels, employee hiring 
and communications.

Nonoperating Income (Expense) Nonoperating expense decreased from $15.5 
million to $6.9 million, primarily due to smaller average debt balances, 
lower interest rates on variable interest rate debt and more interest 
capitalized.

LIQUIDITY AND CAPITAL RESOURCES
The table below presents the major indicators of financial condition and 
liquidity.
                               	Dec. 31, 1996  	Dec. 31, 1997  	  Change
                               (In millions, except debt-to-equity)
Cash and marketable securities	        $101.6          $212.4 	   $110.8
Working capital (deficit)		            (152.0)       		(151.4)     		0.6
Long-term debt and
  capital lease obligations	           	217.8         		215.3     		(2.5)
Shareholders' equity		                  357.0		         433.0     		76.0

Debt-to-equity                       	38%:62%        	33%:67%        	NA

1997 Financial Changes  The Company's cash and marketable securities 
portfolio increased by $111 million during 1997.  Operating activities 
provided $323 million of cash during this period including $122 million 
received from Air Group.  Additional cash was provided by the sale and 
leaseback of four B737-400 aircraft ($124 million) and issuance of long-
term debt ($28 million).  Cash was used for $293 million of capital 
expenditures including the purchase of two new MD-83 aircraft, three new 
B737-400 aircraft, a previously leased B737-400 aircraft, flight 
equipment deposits and airframe and engine overhauls, net repayment of 
short-term borrowings ($47 million) and the repayment of debt ($26 
million).

Like most airlines, the Company has a working capital deficit.  The 
existence of a working capital deficit has not in the past impaired the 
Company's ability to meet its obligations as they become due and it is 
not expected to do so in the future.

Financing Arrangements   During 1997, Alaska sold four B737-400 aircraft 
and leased them back for 18 years.

In November 1997, Standard & Poors raised its corporate credit rating on 
Alaska to double B minus from single B plus, citing a stabilized 
competitive position and improving financial profile.

Commitments  During 1997, Alaska's lease commitments increased 
approximately $194 million due to the sale and leaseback of four B737-
400 aircraft.  In addition, Alaska ordered 15 Boeing 737 series aircraft 
along with an option to acquire 10 more.  The value of the orders is 
approximately $510 million.  Alaska expects to finance the new planes 
with either leases, long-term debt or internally generated cash.

At December 31, 1997, the Company had firm orders for 24 aircraft with a 
total cost of approximately $795 million as set forth below.
	
                       	Delivery Period - Firm Orders
Aircraft		        1998  	1999  	2001  	2002   	Total
Boeing B737-400	    	9	     2    	--    	--      	11
Boeing B737-700		   --     	3	    --	    --	       3
Boeing B737-900		   --    	--     	5     	5      	10
Total		              9     	5     	5     	5      	24

Cost (Millions) 		$288  	$157  	$175  	$175    	$795

The Company accrues the costs associated with returning leased aircraft 
over the lease period.  As leased aircraft are retired, the costs are 
charged against the established reserve.  At December 31, 1997, $40 
million was reserved for leased aircraft returns.

Deferred Taxes  At December 31, 1997, net deferred tax liabilities were 
$64 million, which includes $114 million of net temporary differences 
offset by $50 million of Alternative Minimum Tax (AMT) credits.  The 
Company believes that all of its deferred tax assets, including its AMT 
credits, will be realized through profitable operations.

Year 2000 Computer Issue  During the past eight years, the Company has 
been engaged in a number of projects to improve its information 
technology infrastructure.  The Company expects to complete these 
projects during 1998 and 1999 at an estimated cost of $5 to $10 million.  
As a result of these activities, the Company's systems will be Year 2000 
compliant.  The direct cost of projects solely intended to correct Year 
2000 problems is expected to be less than $1 million.


ITEM 8.	FINANCIAL STATEMENTS

See Item 14.


ITEM 9.	DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

PART IV


ITEM 14.	EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS 
	ON FORM 8-K

(a) 	(1)	Financial Statements
                                                               		Page(s)
	Balance Sheet as of December 31, 1996 and 1997	                   12-13
	Statement of Income for the years ended 
	  December 31, 1995, 1996 and 1997	                                  14
	Statement of Shareholder's Equity for the years ended
	  December 31, 1995, 1996 and 1997                                  	15
	Statement of Cash Flows for the years ended December 31, 1995, 
	  1996 and 1997	                                                     16
	Notes to Financial Statements as of December 31, 1997	            17-22
	Report of Independent Public Accountants	                            24


	(2)	Financial Statement Schedule II, Valuation and Qualifying 
		  Accounts, for the years ended December 31, 1995, 1996 and 1997   	25

	(3)	Exhibits
		See Exhibit Index on page 26.

(b)	A report on Form 8-K announcing orders for 15 Boeing 737 aircraft 
was filed on November 20, 1997.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities 
Exchange Act of 1934, the registrant has duly caused this report to be 
signed on its behalf by the undersigned, thereunto duly authorized.

ALASKA AIRLINES, INC.


By: 	/s/ John F. Kelly							Date: February 10, 1998
	John F. Kelly
	Chairman, Chief Executive Officer and President

Pursuant to the requirements of the Securities Exchange Act of 1934, 
this report has been signed below by the following persons on February 
10, 1998 on behalf of the registrant and in the capacities indicated.

		/s/ John F. Kelly			Chairman, Chief Executive Officer, President and 
		John F. Kelly			    Director

		/s/ Harry G. Lehr			Senior Vice President/Finance 
		Harry G. Lehr			    (Principal Financial Officer)

		/s/ Bradley D. Tilden			Controller 
		Bradley D. Tilden			(Principal Accounting Officer)

		/s/ Ronald F. Cosgrave		Director
		Ronald F. Cosgrave

		/s/ Mary Jane Fate			Director
		Mary Jane Fate

		/s/ R. Marc Langland			Director
		R. Marc Langland

		 /s/ Robert L. Parker, Jr.		Director
			Robert L. Parker, Jr.

<PAGE>
<TABLE>
BALANCE SHEET
Alaska Airlines, Inc.
<CAPTION>
ASSETS

As of December 31  (In Millions)                              1996         1997
<S>                                                       <C>          <C>

Current Assets
Cash and cash equivalents                                    $49.2       $102.3
Marketable securities                                         52.4        110.1
Receivables from related companies                           100.1          4.3
Receivables - less allowance for doubtful accounts
 (1996 - $1.2; 1997 - $1.2)                                   59.8         65.5
Inventories and supplies                                      28.6         26.5
Prepaid expenses and other assets                             76.8         86.6

Total Current Assets                                         366.9        395.3

Property and Equipment
Flight equipment                                             788.8        886.4
Other property and equipment                                 200.4        222.8
Deposits for future flight equipment                          58.9         80.0
                                                           1,048.1      1,189.2
Less accumulated depreciation & amortization                 282.4        324.6
                                                             765.7        864.6
Capital leases:
Flight and other equipment                                    44.4         44.4
Less accumulated amortization                                 25.4         27.5
                                                              19.0         16.9
                                                               0.0          0.0
Total Property and Equipment - Net                           784.7        881.5

Intangible Assets                                             15.0         14.5

Other Assets                                                  81.3         79.4


Total Assets                                              $1,247.9     $1,370.7

See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
BALANCE SHEET
Alaska Airlines, Inc.
<CAPTION>
LIABILITIES AND SHAREHOLDER'S EQUITY

As of December 31  (In Millions)                              1996         1997
<S>                                                       <C>          <C>

Current Liabilities
Accounts payable                                             $71.0       $106.6
Accrued aircraft rent                                         42.4         47.7
Accrued wages, vacation and payroll taxes                     44.1         60.5
Other accrued liabilities                                     74.3         83.0
Short-term borrowings
(Interest rate: 1996 - 5.6%)                                  47.0           -
Air traffic liability                                        162.0        166.2
Note payable to related company                               54.0         54.0
Current portion of long-term debt and
  capital lease obligations                                   24.1         28.7
                                                               0.0          0.0
Total Current Liabilities                                    518.9        546.7
                                                               0.0          0.0
Long-Term Debt & Capital Lease Obligations                   217.8        215.3

Other Liabilities and Credits
Deferred income taxes                                         65.6         72.2
Deferred income                                               11.1         15.4
Other liabilities                                             77.5         88.1
                                                             154.2        175.7

Commitments

Shareholder's Equity
Common stock, $1 par value
  Authorized:  1,000 shares
  Issued:  1996 and 1997 - 500 shares                          -            -
  Capital in excess of par value                             225.8        225.8
Retained earnings                                            131.2        207.2
                                                             357.0        433.0

Total Liabilities and Shareholder's Equity                $1,247.9     $1,370.7

See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENT OF INCOME
Alaska Airlines, Inc.
<CAPTION>

Year Ended December 31
(In Millions)                                    1995       1996          1997
<S>                                          <C>         <C>           <C>
Operating Revenues
Passenger                                      $994.7    $1,146.8      $1,297.0
Freight and mail                                 84.1        82.7          82.9
Other - net                                      63.5        67.8          68.0
Total Operating Revenues                      1,142.3     1,297.3       1,447.9
Operating Expenses
Wages and benefits                              342.2       384.5         435.9
Contracted services                              35.1        36.9          42.5
Aircraft fuel                                   153.6       200.5         199.7
Aircraft maintenance                             45.2        57.1          67.4
Aircraft rent                                   137.7       146.0         148.5
Food and beverage service                        42.4        44.2          46.7
Commissions                                      75.3        88.7         100.8
Other selling expenses                           55.6        64.3          63.9
Depreciation and amortization                    58.2        55.9          56.9
Loss (gain) on sale of assets                     0.1        (9.3)         (1.2)
Landing fees and other rentals                   45.5        49.9          53.1
Other                                            79.1        88.6          99.4
Total Operating Expenses                      1,070.0     1,207.3       1,313.6
Operating Income                                 72.3        90.0         134.3
Nonoperating Income (Expense)
Interest income                                  10.3        11.5          12.2
Interest expense                                (40.3)      (29.7)        (25.0)
Interest capitalized                               -          0.6           3.4
Other - net                                       1.6         2.1           2.5
                                                (28.4)      (15.5)         (6.9)
Income before income tax                         43.9        74.5         127.4
Income tax expense                               19.1        28.9          51.4
Net Income                                      $24.8       $45.6         $76.0

See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENT OF SHAREHOLDER'S EQUITY
Alaska Airlines, Inc.
<CAPTION>
                                                 Capital in
                                       Common     Excess of    Retained
(In Millions)                           Stock     Par Value    Earnings      Total
<S>                                     <C>           <C>         <C>        <C>

Balances at December 31, 1994           $ -           $225.8       $60.8     $286.6


1995 net income                                                     24.8       24.8

Balances at December 31, 1995             -            225.8        85.6      311.4


1996 net income                                                     45.6       45.6

Balances at December 31, 1996             -            225.8       131.2      357.0


1997 net income                                                     76.0       76.0

Balances at December 31, 1997           $ -           $225.8      $207.2     $433.0

See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENT OF CASH FLOWS
Alaska Airlines, Inc.
<CAPTION>
Year Ended December 31  (In Millions)                1995      1996       1997
<S>                                               <C>         <C>        <C>
Cash flows from operating activities:
Net income                                         $24.8       $45.6      $76.0
Adjustments to reconcile net income to cash:
   Depreciation and amortization                    58.2        55.9       56.9
   Amortization of airframe and engine ovhls.       22.0        28.9       29.6
   Loss (gain) on disposition of assets              0.1        (9.3)      (1.2)
   Increase in deferred income taxes                16.1         8.2        6.6
   Decrease (increase) in accounts receivable      (25.1)       14.2       90.1
   Increase in other current assets                (12.6)      (10.5)      (7.6)
   Increase in air traffic liability                 0.4        38.3        4.0
   Increase in other current liabilities            21.5        25.7       66.2
   Other-net                                        (1.0)        6.0        2.6
Net cash provided by operating activities          104.4       203.0      323.2
Cash flows from investing activities:
Proceeds from disposition of assets                  2.5        53.0        4.5
Purchases of marketable securities                (169.4)      (53.5)    (443.6)
Sales and maturities of marketable securities      153.5       110.4      385.9
Restricted deposits                                 (1.4)        0.1       (3.2)
Flight equipment deposits returned                   8.9         -          -
Additions to flight equipment deposits               -         (41.3)     (56.4)
Additions to property and equipment                (87.9)     (188.6)    (236.6)
Net cash used in investing activities              (93.8)     (119.9)    (349.4)
Cash flows from financing activities:
Proceeds from short-term borrowings                 69.9        47.0       56.4
Repayment of short-term borrowings                 (29.0)      (65.9)    (103.4)
Loan repayments to Alaska Air Group                 (3.6)      (10.8)       -
Proceeds from sale and leaseback transactions       56.0        85.6      124.2
Proceeds from issuance of long-term debt             -           -         28.0
Long-term debt and capital lease payments          (89.6)     (115.4)     (25.9)
Net cash provided by (used in)
 financing activities                                3.7       (59.5)      79.3
Net increase in cash and cash equivalents           14.3        23.6       53.1
Cash and cash equivalents at beginning of year      11.3        25.6       49.2
Cash and cash equivalents at end of year           $25.6       $49.2     $102.3
Supplemental disclosure of cash paid during the year for:
  Interest (net of amount capitalized)             $41.1       $30.0      $21.9
  Income taxes                                       0.3        21.4       26.6
Noncash investing and financing activities:        None        None       None

See accompanying notes to financial statements.
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Alaska Airlines, Inc.
December 31, 1997

Note 1.	Summary of Significant Accounting Policies

Organization and Nature of Operations
Alaska Airlines, Inc. (Alaska), an Alaska corporation, is a wholly owned 
subsidiary of Alaska Air Group, Inc. (Air Group), a Delaware 
corporation.  Air Group is also the parent company of  Horizon Air 
Industries, Inc. (Horizon).  The Company is a major airline serving 
Alaska, the West Coast, Mexico and Eastern Russia.  It operates an all 
jet fleet and its average passenger trip is 846 miles.

Basis of Presentation
Preparation of financial statements requires the use of management's 
estimates.  Actual results could differ from those estimates.  Certain 
reclassifications have been made in prior years' financial statements to 
conform to the 1997 presentation.

Cash and Cash Equivalents
Cash equivalents consist of highly liquid investments with original 
maturities of three months or less. They are carried at cost, which 
approximates market. The Company reduces its cash balance when checks 
are disbursed.  Due to the time delay in checks clearing the banks, the 
Company normally maintains a negative cash balance on its books which is 
reported as a current liability.  The amount of the negative cash 
balance was $10.8 million and $9.0 million at December 31, 1996 and 
1997, respectively.

Inventories and Supplies
Expendable and repairable aircraft parts, as well as other materials and 
supplies, are stated at average cost.  An allowance for obsolescence is 
accrued on a straight-line basis over the estimated useful lives of the 
aircraft.  Inventories related to the retired B727 fleet and other 
surplus items are carried at their net realizable value.  The allowance 
at December 31, 1996 and 1997 for all inventories was $12.1 million and 
$12.6 million, respectively.

Property, Equipment and Depreciation
Property and equipment are recorded at cost and depreciated using the 
straight-line method over their estimated useful lives, which are as 
follows:
Aircraft and other
	flight equipment       	14-20 years
Buildings	               10-30 years
Capitalized leases and 
	leasehold improvements 	Term of lease
Other equipment	         3-15 years

Assets and related obligations for items financed under capital leases 
are initially recorded at an amount equal to the present value of the 
future minimum lease payments.  The cost of major airframe overhauls, 
engine overhauls, and other modifications which extend the life or 
improve the usefulness of aircraft are capitalized and amortized over 
their estimated period of use.  Other repair and maintenance costs are 
expensed when incurred.  The Company periodically reviews long-lived 
assets for impairment.

Capitalized Interest
Interest is capitalized on flight equipment purchase deposits and ground 
facilities progress payments as a cost of the related asset and is 
depreciated over the estimated useful life of the asset.

Intangible Assets-Subsidiaries
The excess of the purchase price over the fair value of net assets 
acquired is recorded as an intangible asset and is amortized over 40 
years.  Accumulated amortization at December 31, 1996 and 1997 was $5.4 
million and $5.9 million, respectively.  

Deferred Income
Deferred income results from the sale and leaseback of aircraft, the 
receipt of manufacturer or vendor credits, and from the sale of foreign 
tax benefits.  This income is recognized over the term of the applicable 
agreements.

Passenger Revenues
Passenger revenues are considered earned at the time service is 
provided.  Tickets sold but not yet used are reported as air traffic 
liability. 

Frequent Flyer Awards
Alaska operates a frequent flyer award program that provides travel 
awards to members based on accumulated mileage.  The estimated 
incremental cost of providing free travel is recognized as an expense 
and accrued as a liability as miles are accumulated.  Alaska also defers 
recognition of income on a portion of the payments it receives from 
travel partners associated with its frequent flyer program.  The 
frequent flyer award liability is relieved as travel awards are issued.

Contracted Services
Contracted services includes the expenses for aircraft ground handling, 
security, temporary employees and other similar services.

Other Selling Expenses
Other selling expenses includes credit card commissions, computerized 
reservations systems (CRS) charges, advertising and promotional costs.  
The costs of advertising are expensed the first time the advertising 
takes place.  Advertising expense was $12.7 million, $12.9 million, and 
$8.8 million, respectively, in 1995, 1996 and 1997.

Income Taxes
Income taxes are accounted for in accordance with Statement of Financial 
Accounting Standards No. 109, which requires the recognition of deferred 
tax assets and liabilities for the expected future tax consequences of 
events that have been recognized in the Company's financial statements 
or tax returns.

Derivative Financial Instruments
The Company periodically enters into interest rate swap agreements to 
hedge interest rate risk.  The differential to be paid or received from 
these agreements is accrued as interest rates change and is recognized 
currently in the income statement.  The Company periodically enters into 
hedge agreements to reduce its exposure to fluctuations in the price of 
jet fuel.  A gain or loss is recorded quarterly if the fuel index 
average exceeds the ceiling price or falls below the floor price.

Note 2.	Marketable Securities

Marketable securities are investments that are readily convertible to 
cash and have original maturities that exceed three months.  They are 
classified as available for sale and consisted of the following at 
December 31 (in millions):
                              	1996	   1997
Cost:
U.S. government securities  		$48.4	  $75.1
Other                         		4.0   	35.0
                            		$52.4 	$110.1
Fair value:
U.S. government securities  		$48.2  	$75.2
Other		                         4.0   	35.0
	                            	$52.2 	$110.2

There were no material unrealized holding gains or losses at December 
31, 1996 or 1997.

Of the marketable securities on hand at December 31, 1997, 54% will 
mature during 1998 and the remainder will mature during 1999.  Based on 
specific identification of securities sold, the following occurred in 
1996 and 1997 (in millions): 
                             	1996   	1997
Proceeds from sales       		$110.4	 $385.9
Gross realized gains		         0.3    	0.1
Gross realized losses	        	0.1    	0.1
Realized gains and losses are reported as a component of interest 
income.

Note 3.	Other Assets

Other assets consisted of the following at December 31 (in millions):
	1996	1997
Restricted deposits       		  $63.6	  $66.8
Leasehold rights		              8.4    	5.5
Deferred costs and other		      9.3    	7.1
		                            $81.3  	$79.4

Leasehold rights and deferred costs are amortized over the term of the 
related lease or contract.

Note 4.	Related Company Transactions

In May 1991, Air Group made a $95.2 million loan to Alaska.  The loan is 
due on demand.  Alaska made loan repayments of $6.4 million, $3.6 
million and $10.8 million in 1994, 1995 and 1996, respectively.  The 
weighted average interest rate was 7.0% in all three years.  At December 
31, 1997, the loan balance outstanding was $54.0 million.  

During 1993, the Company made a $34.4 million non-interest bearing 
advance, which was due on demand, to Alaska Air Group.  The advance was 
repaid in 1997.  During 1997, the Company received a $50.8 million non-
interest bearing advance, which is due on demand, from Alaska Air Group.


Note 5.	Long-Term Debt and Capital Lease Obligations

At December 31, 1996 and 1997, long-term debt and capital lease 
obligations were as follows (in millions):
                                   	1996    	1997
8.7%* fixed rate notes payable
	due through 2004	                $115.5	  $103.5
6.4%* variable rate notes payable
	due through 2009                  	98.6   	114.9
Capital lease obligations	          27.8    	25.6
Less current portion              	(24.1)  	(28.7)
                                 	$217.8  	$215.3
* weighted average for 1997

At December 31, 1997, borrowings of $218.4 million are secured by flight 
equipment and real property.  At December 31, 1997, Alaska had a $125 
million credit facility with commercial banks.  Advances under this 
facility may be for up to a maximum maturity of four years.  Borrowings 
may be used for aircraft acquisitions or other corporate purposes, and 
they bear interest at a rate which varies based on LIBOR.  At December 
31, 1997, no borrowings were outstanding under this credit facility.

Certain Alaska loan agreements contain provisions that require 
maintenance of specific levels of net worth, leverage and fixed charge 
coverage, and limit investments, lease obligations, sales of assets and 
additional indebtedness.  At December 31, 1997, the Company was in 
compliance with all loan provisions, and under the most restrictive loan 
provisions, Alaska had $140 million of net worth above the minimum.

At December 31, 1997, long-term debt principal payments for the next 
five years were (in millions):
1998		$26.3
1999		$26.3
2000		$57.3
2001		$47.6
2002		$14.5

Note 6.	Commitments

Lease Commitments
Lease contracts for 52 aircraft have remaining lease terms of one to 18 
years.  The majority of airport and terminal facilities are also leased.  
Total rent expense was $162.5 million, $173.3 million and $177.7 
million, in 1995, 1996 and 1997, respectively.  Future minimum lease 
payments under long-term operating leases and capital leases as of 
December 31, 1997 are shown below (in millions):
                     		Operating Leases    	Capital
                  		  Aircraft	Facilities	  Leases
1998	                   $142.1 	  $16.0    	  $4.1
1999	                    133.1    	15.8       	4.1
2000	                    124.5  	  14.0       	4.1
2001                    	115.5   	  8.9       	4.1
2002                    	116.5   	  4.2       	4.1
Thereafter              	672.2  	  28.6	       6.8
Total lease payments		$1,303.9 	  $87.5      	27.3

Less amount representing interest		           (1.7)
Present value of capital lease payments	      $25.6

Aircraft Commitments
The Company has firm orders for 24 Boeing 737 series aircraft to be 
delivered between 1998 and 2002.  The total amount of these commitments 
is approximately $795 million.  As of December 31, 1997, deposits 
related to these deliveries were $73.8 million.  In addition to the firm 
orders, the Company holds purchase options on 22 Boeing 737s.

Note 7.	Employee Benefit Plans

Pension Plans
Four defined benefit and four defined contribution retirement plans 
cover essentially all employees.  The defined benefit plans provide 
benefits based on an employee's term of service and average compensation 
for a specified period of time before retirement.  Pension plans are 
funded as required by the Employee Retirement Income Security Act of 
1974 (ERISA).  

The defined benefit plan assets are primarily common stocks and fixed 
income securities.  Plan assets exceeded the accumulated benefit 
obligation at December 31, 1996 and 1997. The following table sets forth 
the funded status of the plans at December 31, 1996 and 1997 (in 
millions):
                                	1996   	1997
Benefit obligation -
 Vested	                       $180.9  $211.5
	Nonvested                      	22.1   	38.4
Accumulated benefit 
  obligation		                 $203.0 	$249.9

Plan assets at fair value 	    $223.7 	$289.2
Projected benefit obligation  		230.7  	307.4
Plan assets less projected 
benefit obligation	              (7.0) 	(18.2)
Unrecognized transition asset	  	(0.8)   (0.5)
Unrecognized prior service cost 		2.6  		60.1
Unrecognized loss             			32.6		  (0.8)
Prepaid pension cost		          $27.4	 	$40.6
 
The weighted average discount rate used to determine the projected 
benefit obligation was 7.5% and 7.25% as of December 31, 1996 and 1997, 
respectively.  The calculation assumed a weighted average rate of 
increase for future compensation levels of 5.1% and 3.2% for 1996 and 
1997, respectively.  The expected long-term rate of return on plan 
assets used in 1996 and 1997 was 10%.

Net pension expense for the defined benefit plans included the following 
components for 1995, 1996 and 1997 (in millions):	

                          	1995   	1996   	1997
Service cost (benefits earned
during the period)	       $11.4	  $15.9	  $17.3
Interest cost on projected
benefit obligation        	12.9   	15.4	   17.3
Actual return on  assets 	(37.0) 	(23.6) 	(47.6)
Net amortization
	and deferral	             23.3    	6.5   	26.4
Net pension expense	      $10.6 	 $14.2	  $13.4
 


The defined contribution plans are deferred compensation plans under 
section 401(k) of the Internal Revenue Code.  Some of these plans 
require Company matching contributions based on a percentage of 
participants' contributions.  One plan has an Employee Stock Ownership 
Plan (ESOP) feature.  The ESOP owns Air Group common shares which are 
held in trust for eligible employees.  The Company records compensation 
for payments made to the Plan.  As Alaska's contributions are received, 
the Plan releases the shares of common stock to the employees' accounts.

Alaska also maintains an unfunded, noncontributory benefit plan for 
certain elected officers.  The present value of unfunded benefits for 
this plan was accrued as of December 31, 1996 and 1997.

Total expense for all pension plans was $18.3 million, $22.1 million and 
$24.1 million, respectively, in 1995, 1996 and 1997.

Profit Sharing Plans
Alaska has an employee profit sharing plan. Profit sharing expense for 
1995, 1996 and 1997 was $-0-, $0.9 million and $12.1 million, 
respectively.

Other Postretirement Benefits
The Company allows retirees to continue their medical, dental and vision 
benefits by paying all or a portion of the active employee plan premium 
until eligible for Medicare, currently age 65.  This results in a 
subsidy to retirees because the premiums received by the Company are 
less than the actual cost of the retirees' claims.  The accumulated 
postretirement benefit obligation (APBO) for this subsidy at December 
31, 1996 and 1997 was $13.5 million and $15.7 million, respectively.  
The APBO is unfunded and is included with other liabilities on the 
Balance Sheet.  Annual expense related to this subsidy is not considered 
material to disclose.

Note 8.	Income Taxes

Alaska files a consolidated tax return with Air Group and other Air 
Group subsidiaries.  Each member of the consolidated group, including 
Alaska, calculates its tax provision and tax liability, if applicable, 
on a separate-entity basis.  Any differences between the consolidated 
amounts and the total of the subsidiaries' amounts are included in the 
tax provision of the parent company.

Deferred income taxes result from temporary differences in the timing of 
recognition of revenue and expense for tax and financial reporting 
purposes.  Deferred tax assets and liabilities comprise the following at 
December 31 (in millions):

                                   	1996   	1997
Excess of tax over book
  depreciation	                   $142.3	 $157.0
Training expense	                    0.8	    0.1
Other - net	                         1.8    	1.3
Gross deferred tax liabilities	    144.9  	158.4
Loss carryforward	                  (2.1)  	(0.5)
Alternative minimum tax	           (44.1) 	(50.2)
Capital leases	                     (4.4)  	(4.5)
Ticket pricing adjustments         	(0.7)  	(1.1)
Frequent flyer program	             (6.5)  	(8.4)
Employee benefits	                  (8.8)  	(6.2)
Aircraft return provisions	        (12.7) 	(14.5)
Deferred gains                    	 (1.7)  	(3.5)
Capitalized interest	               (1.3)  	(1.1)
Inventory obsolescence             	(5.9)  	(4.8)
Gross deferred tax assets	         (88.2) 	(94.8)
Net deferred tax liabilities     	$ 56.7	  $63.6

Current deferred tax asset	        $(8.9)	 $(8.6)
Noncurrent deferred tax liability  	65.6  	 72.2
Net deferred tax liabilities	      $56.7	  $63.6
 
The book income and temporary differences for 1997 resulted in taxable 
income of $106 million.  This was partially offset by Net Operating 
Losses generated in prior years. At December 31, 1997, no federal loss 
carryforwards remain.

The components of income tax expense were as follows (in millions):
                    		1995   	1996   	1997
Current tax expense:
	Federal             	$3.6  	$19.9	  $42.6
	State	                0.3    	0.9    	1.9
Total current	         3.9	   20.8	   44.5
Deferred tax expense:
	Federal	             13.0    	6.9    	2.5
	State	                2.2    	1.2    	4.4
Total deferred       	15.2	    8.1    	6.9
Total tax expense	   $19.1   $28.9  	$51.4
 
Income tax expense reconciles to the amount computed by applying the 
U.S. federal rate of 35% to income before taxes as follows (in 
millions):	
                       	1995   	1996    	1997
Income before 
  income tax	          $43.9	  $74.5	  $127.4
Expected tax expense	  $15.4  	$26.1   	$44.6
Nondeductible expenses   1.9    	1.9     	2.0
State income tax  	      1.8	    0.9	     4.1
Other - net	              --	     --     	0.7
Actual tax expense	    $19.1	  $28.9   	$51.4
 Effective tax rate	   43.5%  	38.8%   	40.3%

 

Note 9.	 Financial Instruments

The estimated fair values of the Company's financial instruments were as 
follows (in millions):

                      			December 31, 1996
                         	Carrying   	Fair
                           	Amount  	Value
Cash and cash equivalents	   $49.2	  $49.2
Marketable securities	        52.4   	52.2
Restricted deposits	          63.6   	63.6
Long-term debt	              214.1	  214.1

                      			December 31, 1997
                         	Carrying    Fair
                           	Amount	  Value
Cash and cash equivalents	  $102.3 	$102.3
Marketable securities	       110.1  	110.1
Restricted deposits          	66.8   	66.8
Long-term debt	              218.4  	218.4

The fair value of cash equivalents approximates carrying value due to 
the short maturity of these instruments.  The fair value of marketable 
securities is based on quoted market prices.  The fair values of 
restricted deposits and long-term debt approximate the carrying amounts.
<PAGE>
<TABLE>
                                                Alaska  Airlines Financial and Statistical Data
<CAPTION>
                                                      Quarter Ended December 31                          Year Ended December 31

Financial Data (in millions):                    1996         1997    % Change                     1996          1997  % Change
<S>                                             <C>         <C>       <C>                       <C>          <C>       <C>
Operating Revenues:
Passenger                                       $254.8      $313.0        22.8                  $1,146.8     $1,297.0      13.1
Freight and mail                                  19.3        20.7         7.3                      82.7         82.9       0.2
Other - net                                       18.4        16.2       (12.0)                     67.8         68.0       0.3
Total Operating Revenues                         292.5       349.9        19.6                   1,297.3      1,447.9      11.6

Operating Expenses:
Wages and benefits                                96.8       106.1         9.6                     383.6        423.8      10.5
Employee profit sharing                           (6.7)        2.4         NM                        0.9         12.1       NM
Contracted services                               10.3        11.6        12.6                      36.9         42.5      15.2
Aircraft fuel                                     51.5        49.3        (4.3)                    200.5        199.7      (0.4)
Aircraft maintenance                              16.3        18.6        14.1                      57.1         67.4      18.0
Aircraft rent                                     37.6        38.2         1.6                     146.0        148.5       1.7
Food and beverage service                         10.6        11.8        11.3                      44.2         46.7       5.7
Commissions                                       19.7        22.9        16.2                      88.7        100.8      13.6
Other selling expenses                            14.5        11.7       (19.3)                     64.3         63.9      (0.6)
Depreciation and amortization                     13.6        14.9         9.6                      55.9         56.9       1.8
Gain on sale of assets                            (5.7)       (0.9)        NM                       (9.3)        (1.2)      NM
Landing fees and other rentals                    12.4        12.7         2.4                      49.9         53.1       6.4
Other                                             22.6        26.2        15.9                      88.6         99.4      12.2
Total Operating Expenses                         293.5       325.5        10.9                   1,207.3      1,313.6       8.8

Operating Income (Loss)                           (1.0)       24.4         NM                       90.0        134.3      49.2

Interest income                                    3.1         3.9                                  11.5         12.2
Interest expense                                  (6.1)       (5.9)                                (29.7)       (25.0)
Interest capitalized                               0.6         1.1                                   0.6          3.4
Other - net                                        1.3         0.1                                   2.1          2.5
                                                  (1.1)       (0.8)                                (15.5)        (6.9)

Income (Loss) Before Income Tax                  $(2.1)      $23.6                                 $74.5       $127.4

Operating Statistics:
Revenue passengers (000)                         2,804       2,958         5.5                    11,805       12,284       4.1
RPMs (000,000)                                   2,307       2,490         7.9                     9,831       10,386       5.6
ASMs (000,000)                                   3,495       3,847        10.1                    14,904       15,436       3.6
Passenger load factor                             66.0%       64.7%    (1.3)pts                     66.0%        67.3%   1.3 pts
Breakeven load factor                             69.3%       60.2%    (9.1)pts                     62.4%        60.5%  (1.9)pts
Yield per passenger mile                         11.04c      12.57c       13.8                     11.67c       12.49c      7.1
Operating revenue per ASM                         8.37c       9.10c        8.7                      8.70c        9.38c      7.8
Operating expenses per ASM                        8.40c       8.46c        0.8                      8.10c        8.51c      5.1
Fuel cost per gallon                              80.7c       71.7c      (11.0)                     75.2c        72.6c     (3.5)
Fuel gallons (000,000)                            63.9        68.8         7.7                     266.6        275.2       3.2
Average number of employees                      7,923       8,223         3.8                     7,652        8,236       7.6
Aircraft utilization (block hours)                10.8        11.2         3.7                      11.3         11.4       0.9
Operating fleet at period-end                       74          78         5.4                        74           78       5.4
NM = Not Meaningful
c=cents
</TABLE>
<PAGE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


To the Board of Directors and Shareholder of Alaska Airlines, Inc.:

We have audited the accompanying balance sheet of Alaska Airlines, Inc. 
(an Alaska corporation) as of December 31, 1997 and 1996, and the 
related statements of income, shareholder's equity and cash flows for 
each of the three years in the period ended December 31, 1997.  These 
financial statements are the responsibility of the Company's management.  
Our responsibility is to express an opinion on these financial 
statements based on our audits.

We conducted our audits in accordance with generally accepted auditing 
standards.  Those standards require that we plan and perform the audit 
to obtain reasonable assurance about whether the financial statements 
are free of material misstatement.  An audit includes examining, on a 
test basis, evidence supporting the amounts and disclosures in the 
financial statements.  An audit also includes assessing the accounting 
principles used and significant estimates made by management, as well as 
evaluating the overall financial statement presentation.  We believe 
that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present 
fairly, in all material respects, the financial position of Alaska 
Airlines, Inc. as of December 31, 1997 and 1996, and the results of its 
operations and its cash flows for each of the three years in the period 
ended December 31, 1997, in conformity with generally accepted 
accounting principles.

Our audits were made for the purpose of forming an opinion on the basic 
financial statements taken as a whole.  The schedule listed in Item 
14(a) is presented for purposes of complying with the Securities and 
Exchange Commission's rules and is not a required part of the basic 
financial statements.  This schedule has been subjected to the auditing 
procedures applied in our audits of the basic financial statements and, 
in our opinion, is fairly stated in all material respects in relation to 
the basic financial statements taken as a whole.


	
												
												/s/ Arthur Andersen LLP
	
											ARTHUR ANDERSEN LLP


Seattle, Washington
January 26, 1998

<PAGE>
<TABLE>
VALUATION AND QUALIFYING ACCOUNTS
Alaska Airlines, Inc.                                                                 Schedule II
<CAPTION>

                                                          Additions
                                           Beginning        Charged        (A)             Ending
(In Millions)                                Balance     to Expense     Deductions        Balance

<S>                                            <C>             <C>           <C>            <C>
Year Ended December 31, 1995
(a) Reserve deducted from asset
     to which it applies:
Allowance for doubtful accounts                 $2.1           $0.6          $(1.1)          $1.6
Obsolescence allowance for flight
     equipment spare parts                     $10.1           $2.0          $(1.2)         $10.9

(b) Reserve recorded as other
     long-term liabilities:
Leased aircraft return provision               $22.5           $8.0          $(0.3)         $30.2


Year Ended December 31, 1996
(a) Reserve deducted from asset
     to which it applies:
Allowance for doubtful accounts                 $1.6           $0.6          $(1.0)          $1.2
Obsolescence allowance for flight
     equipment spare parts                     $10.9           $2.2          $(1.0)         $12.1

(b) Reserve recorded as other
     long-term liabilities:
Leased aircraft return provision               $30.2           $7.6          $(2.8)         $35.0


Year Ended December 31, 1997
(a) Reserve deducted from asset
     to which it applies:
Allowance for doubtful accounts                 $1.2           $1.0          $(1.0)          $1.2
Obsolescence allowance for flight
     equipment spare parts                     $12.1           $2.0          $(1.5)         $12.6

(b) Reserve recorded as other
     long-term liabilities:
Leased aircraft return provision               $35.0           $8.0          $(2.6)         $40.4


(A) Deduction from reserve for purpose for which reserve was created.
</TABLE>
<PAGE>

EXHIBIT INDEX

Certain of the following exhibits have heretofore been filed with the 
Commission and are incorporated herein by reference from the document 
described in parenthesis.  Certain others are filed herewith.

	3.1	Articles of Incorporation of Alaska Airlines, Inc.  as  amended 
through February 26, 1991
	3.2	Bylaws  of Alaska Airlines, Inc. as amended and in effect  
February 26, 1991
	4.1	Trust Indentures and Security Agreement for Alaska Airlines 
Equipment Trust Certificates, Series A and B (Exhibit No. 4(a)(1) 
to Form S-3, Amendment No. 1, Registration No. 33-46668)
	4.2	Trust Indentures and Security Agreement for Alaska Airlines 
Equipment Trust Certificates, Series C and D (Exhibit No. 4(a)(1) 
to Form S-3, Amendment No. 2, Registration No. 33-46668)
	4.3	Participation Agreement for Alaska Airlines Equipment Trust 
Certificates, Series A and B (Exhibit No. 4(b)(1) to Form S-3, 
Amendment No. 1, Registration No. 33-46668)
	4.4	Participation Agreement for Alaska Airlines Equipment Trust 
Certificates, Series C and D (Exhibit No. 4(b)(1) to Form S-3, 
Amendment No. 2, Registration No. 33-46668)
	4.5	Lease Agreement for Alaska Airlines Equipment Trust Certificates 
(Exhibit No. 4(b)(2) to Form S-3, Registration No. 33-46668)
	10.1	Lease and Assignment of Sublease Agreement dated February 1, 1979 
between Alaska Airlines, Inc. and the Alaska Industrial 
Development Authority
	10.2	Lease and Assignment and Sublease Agreement dated April 1, 1978 
between Alaska Airlines, Inc. and the Alaska Industrial 
Development Authority
 	10.3	Management Incentive Plan (1992 Alaska Air Group, Inc. Proxy 
Statement)
	10.4	Loan Agreement dated as of December 1, 1984, between Alaska 
Airlines, Inc. and the Industrial Development Corporation of the 
Port of Seattle
	#10.5	Lease Agreement dated January 22, 1990 between International 
Lease Finance Corporation and Alaska Airlines, Inc. for the 
lease of a B737-400 aircraft, summaries of 19 substantially 
identical lease agreements and Letter Agreement #1 dated January 
22, 1990 (Exhibit 10-14 to 1990 10-K)
	#10.6	Agreement dated September 18, 1996 between Alaska Airlines, Inc. 
and Boeing for the purchase of 12 Boeing 737-400 aircraft 
(Exhibit 10.1 to Third Quarter 1996 10-Q)
	*10.7	Alaska Air Group, Inc. Supplementary Retirement Plan for Elected 
Officers
	*10.8	1995 Elected Officers Supplementary Retirement Plan
	*27	Financial Data Schedule

* Filed herewith.
# Confidential treatment was granted as to a portion of this document.