Document:

<PAGE>
                                                                  Exhibit 10.1

                                                               FOIA CONFIDENTIAL
                                                             TREATMENT REQUESTED

                        AIRCRAFT GENERAL TERMS AGREEMENT

                                    AGTA-ASA

                                     BETWEEN

                               THE BOEING COMPANY

                                       AND

                              ALASKA AIRLINES, INC.

                                    AGTA-ASA
                               BOEING PROPRIETARY

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                         PAGE
                                                                                        NUMBER
                                                                                        ------
<S>                                                                                     <C>
 ARTICLES

    1.       Subject Matter of Sale                                                        1

    2.       Price, Taxes and Payment                                                      1

    3.       Regulatory Requirements and Certificates                                      3

    4.       Detail Specification; Changes                                                 4

    5.       Representatives, Inspection, Demonstration Flights,
             Test Data and Performance Guarantee Compliance                                4

    6.       Delivery                                                                      5

    7.       Excusable Delay                                                               5

    8.       Risk Allocation/Insurance                                                     7

    9.       Assignment, Resale or Lease                                                   8

    10.      Termination for Certain Events                                                9

    11.      Notices                                                                      10

    12.      Miscellaneous                                                                11

 EXHIBITS

     A       Buyer Furnished Equipment Provisions Document

     B       Customer Support Document

     C       Product Assurance Document

APPENDICES

     I       Insurance Certificate

    II       Purchase Agreement Assignment

    III      Post-Delivery Sale Notice

    IV       Post-Delivery Lease Notice

     V       Purchaser's/Lessee's Agreement

    VI       Owner Appointment of Agent - Warranties

    VII      Contractor Confidentiality Agreement

   VIII      Post-Delivery Sale with Lease to Seller

    IX       Sale with Lease

    X        Post-Delivery Security
</TABLE>

AGTA-ASA                               i

<PAGE>

RESTRICTED LETTER AGREEMENT

      6-1162-MSA-591  AGTA Terms Revisions

AGTA-ASA                               ii

<PAGE>

                AIRCRAFT GENERAL TERMS AGREEMENT NUMBER AGTA-ASA

                                     between

                               The Boeing Company

                                       and

                              Alaska Airlines, Inc.

                                   Relating to

                                 BOEING AIRCRAFT

            This Aircraft General Terms Agreement Number AGTA-ASA (AGTA) between
The Boeing Company, including its wholly-owned subsidiary McDonnell Douglas
Corporation, (BOEING) and Alaska Airlines, Inc. (CUSTOMER) will apply to all
Boeing aircraft contracted for purchase from Boeing by Customer after the
effective date of this AGTA.

Article 1.  Subject Matter of Sale.

            1.1 Aircraft. Boeing will manufacture and sell to Customer and
Customer will purchase from Boeing aircraft under purchase agreements that
incorporate the terms and conditions of this AGTA.

            1.2 Buyer Furnished Equipment. Exhibit A, Buyer Furnished Equipment
Provisions Document to the AGTA, contains the obligations of Customer and Boeing
with respect to equipment purchased and provided by Customer, which Boeing will
receive, inspect, store, and install in an aircraft before delivery to Customer.
This equipment is defined as BUYER FURNISHED EQUIPMENT (BFE).

            1.3 Customer Support. Exhibit B, Customer Support Document to the
AGTA, contains the obligations of Boeing relating to Materials (as defined in
Part 3 thereof), training, services, and other things in support of aircraft.

            1.4 Product Assurance. Exhibit C, Product Assurance Document to the
AGTA, contains the obligations of Boeing and the suppliers of equipment
installed in each aircraft at delivery relating to warranties, patent
indemnities, software copyright indemnities, and service life policies.

Article 2.  Price, Taxes, and Payment.

            2.1 Price.

                  2.1.1 AIRFRAME PRICE is defined as the price of the airframe
for a specific model of aircraft described in a purchase agreement. (For Models
717-200, 737-600, 737-700, 737-800, 737-900, 777-200LR and 777-300ER the
Airframe Price includes the engine price at its basic thrust level.)

AGTA-ASA                        - 1 -

<PAGE>

                  2.1.2 OPTIONAL FEATURES PRICES are defined as the prices for
optional features selected by Customer for a specific model of aircraft
described in a purchase agreement.

                  2.1.3 ENGINE PRICE is defined as the price set by the engine
manufacturer for a specific engine to be installed on the model of aircraft
described in a purchase agreement (not applicable to Models 717-200, 737-600,
737-700, 737-800, 737-900, 777-200LR and 777-300ER).

                  2.1.4 AIRCRAFT BASIC PRICE is defined as the sum of the
Airframe Price, Optional Features Prices, and the Engine Price, if applicable.

                  2.1.5 ESCALATION ADJUSTMENT is defined as the price adjustment
to the Airframe Price (which includes the basic engine price for Models 717-200,
737-600, 737-700 737-800, 737-900, 777-200LR and 777-300ER) and the Optional
Features Prices resulting from the calculation using the economic price formula
contained in the Airframe and Optional Features Escalation Adjustment
supplemental exhibit to the applicable purchase agreement. The price adjustment
to the Engine Price for all other models of aircraft will be calculated using
the economic price formula in the Engine Escalation Adjustment supplemental
exhibit to the applicable purchase agreement.

                  2.1.6 ADVANCE PAYMENT BASE PRICE is defined as the estimated
price of an aircraft rounded to the nearest thousand U. S. dollars, as of the
date of signing a purchase agreement, for the scheduled month of delivery of
such aircraft using commercial forecasts of the Escalation Adjustment.

                  2.1.7 AIRCRAFT PRICE is defined as the total amount Customer
is to pay for an aircraft at the time of delivery, which is the sum of the
Aircraft Basic Price, the Escalation Adjustment, and other price adjustments
made pursuant to the purchase agreement.

            2.2 Taxes.

                  2.2.1 Taxes. TAXES are defined as all taxes, fees, charges, or
duties and any interest, penalties, fines, or other additions to tax, including,
but not limited to sales, use, value added, gross receipts, stamp, excise,
transfer, and similar taxes imposed by any domestic or foreign taxing authority
arising out of or in connection with the performance of the applicable purchase
agreement or the sale, delivery, transfer, or storage of any aircraft, BFE, or
other things furnished under the applicable purchase agreement. Except for U.S.
federal or California State income taxes imposed on Boeing or Boeing's assignee,
and Washington State business and occupation taxes imposed on Boeing or Boeing's
assignee, Customer will be responsible for and pay all Taxes. Customer is
responsible for filing all tax returns, reports, declarations and payment of any
taxes related to or imposed on BFE.

                  2.2.2 Reimbursement of Boeing. Customer will promptly
reimburse Boeing on demand, net of additional taxes thereon, for any Taxes that
are imposed on and paid by Boeing or that Boeing is responsible for collecting.

AGTA-ASA                           - 2 -

<PAGE>

            2.3 Payment.

                  2.3.1 Advance Payment Schedule. Customer will make advance
payments to Boeing for each aircraft in the amounts and on the dates indicated
in the schedule set forth in the applicable purchase agreement.

                  2.3.2 Payment at Delivery. Customer will pay any unpaid
balance of the Aircraft Price at the time of delivery of each aircraft.

                  2.3.3 Form of Payment. Customer will make all payments to
Boeing by unconditional wire transfer of immediately available funds in United
States Dollars in a bank account in the United States designated by Boeing.

                  2.3.4 Monetary and Government Regulations. Customer is
responsible for complying with all monetary control regulations and for
obtaining necessary governmental authorizations related to payments.

Article 3.  Regulatory Requirements and Certificates.

            3.1 Certificates. Boeing will manufacture each aircraft to conform
to the appropriate Type Certificate issued by the United States Federal Aviation
Administration (FAA) for the specific model of aircraft and will obtain from the
FAA and furnish to Customer at delivery of each aircraft either a Standard
Airworthiness Certificate or an Export Certificate of Airworthiness issued
pursuant to Part 21 of the Federal Aviation Regulations.

            3.2 FAA or Applicable Regulatory Authority Manufacturer Changes.

                  3.2.1 A MANUFACTURER CHANGE is defined as any change to an
aircraft, data relating to an aircraft, or testing of an aircraft required by
the FAA to obtain a Standard Airworthiness Certificate, or by the country of
import and/or registration to obtain an Export Certificate of Airworthiness.

                  3.2.2 Boeing will bear the cost of incorporating all
Manufacturer Changes into the aircraft:

                        (i) resulting from requirements issued by the
FAA prior to the date of the Type Certificate for the applicable aircraft;

                        (ii) resulting from requirements issued by the FAA prior
to the date of the applicable purchase agreement; and

                        (iii) for any aircraft delivered during the 18 month
period immediately following the date of the applicable purchase agreement
(regardless of when the requirement for such change was issued by the FAA).

AGTA-ASA                            - 3 -

<PAGE>

                  3.2.3 Customer will pay Boeing's charge for incorporating all
other Manufacturer Changes into the aircraft, including all changes for
validation of an aircraft required by any governmental agency of the country of
import and/or registration.

            3.3 FAA Operator Changes.

                  3.3.1 An OPERATOR CHANGE is defined as a change in equipment
that is required by Federal Aviation Regulations which (i) is generally
applicable to transport category aircraft to be used in United States certified
air carriage and (ii) the required compliance date is on or before the scheduled
delivery month of the aircraft.

                  3.3.2 Boeing will deliver each aircraft with Operator Changes
incorporated or, at Boeing's option, with suitable provisions for the
incorporation of such Operator Changes, and Customer will pay Boeing's
applicable charges.

            3.4 Export License. If an export license is required by United
States law or regulation for any aircraft or any other things delivered under
the purchase agreement, it is Customer's obligation to obtain such license. If
requested, Boeing will assist Customer in applying for any such export license.
Customer will furnish any required supporting documents.

Article 4.  Detail Specification; Changes.

            4.1 Configuration Changes. The DETAIL SPECIFICATION is defined as
the Boeing document that describes the configuration of each aircraft purchased
by Customer. The Detail Specification for each aircraft may be amended (i) by
Boeing to reflect the incorporation of Manufacturer Changes and Operator Changes
or (ii) by the agreement of the parties. In either case the amendment will
describe the particular changes to be made and any effect on design,
performance, weight, balance, scheduled delivery month, Aircraft Basic Price,
Aircraft Price, and/or Advance Payment Base Price.

            4.2 Development Changes. DEVELOPMENT CHANGES are defined as changes
to aircraft that do not affect the Aircraft Price or scheduled delivery month,
and do not adversely affect guaranteed weight, guaranteed performance, or
compliance with the interchangeability or replaceability requirements set forth
in the applicable Detail Specification. Boeing may, at its option, incorporate
Development Changes into both the Detail Specification and the aircraft prior to
delivery to Customer.

            4.3 Notices. Boeing will promptly notify Customer of any amendments
to a Detail Specification, including providing the associated Detail
Specification updates.

Article 5.  Representatives, Inspection, Demonstration Flights, Test Data and
            Performance Guarantee Compliance.

            5.1 Office Space. Twelve months before delivery of the first
aircraft purchased, and continuing until the delivery of the last aircraft on
firm order, Boeing will furnish, free of charge, suitable office space and
equipment for the accommodation of up to three representatives of Customer in or
conveniently located near the assembly plant.

AGTA-ASA                            - 4 -

<PAGE>

            5.2 Inspection. Customer's representatives may inspect each aircraft
at any reasonable time, provided such inspection does not interfere with
Boeing's performance.

            5.3 Demonstration Flights. Prior to delivery, Boeing will fly each
aircraft up to 4 hours to demonstrate to Customer the function of the aircraft
and its equipment using Boeing's production flight test procedures. Customer may
designate up to five representatives to participate as observers.

            5.4 Test Data; Performance Guarantee Compliance. PERFORMANCE
GUARANTEES are defined as the written guarantees in a purchase agreement
regarding the operational performance of an aircraft. Boeing will furnish to
Customer flight test data obtained on an aircraft of the same model to evidence
compliance with the Performance Guarantees. Performance Guarantees will be met
if reasonable engineering interpretations and calculations based on the flight
test data establish that the particular aircraft being delivered under the
applicable purchase agreement would, if actually flown, comply with the
guarantees.

            5.5 Special Aircraft Test Requirements. Boeing may use an aircraft
for flight and ground tests prior to delivery, without reduction in the Aircraft
Price, if the tests are considered necessary by Boeing (i) to obtain or maintain
the Type Certificate or Certificate of Airworthiness for the aircraft or (ii) to
evaluate potential improvements that may be offered for production or retrofit
incorporation.

Article 6.  Delivery.

            6.1 Notices of Delivery Dates. Boeing will notify Customer of the
approximate delivery date of each aircraft at least 30 days before the scheduled
month of delivery and again at least 14 days before the scheduled delivery date.

            6.2 Place of Delivery. Each aircraft will be delivered at a facility
selected by Boeing in the same state as the primary assembly plant for the
aircraft.

            6.3 Bill of Sale. At delivery of an aircraft, Boeing will provide
Customer a bill of sale conveying good title, free of encumbrances.

            6.4 Delay. If Customer delays acceptance of an aircraft beyond the
scheduled delivery date, Customer will reimburse Boeing for all costs incurred
by Boeing as a result of the delay.

Article 7.  Excusable Delay.

            7.1 General. Boeing will not be liable for any delay in the
scheduled delivery month of an aircraft or other performance under a purchase
agreement caused by (i) acts of God; (ii) war or armed hostilities; (iii)
government acts or priorities; (iv) fires, floods, or earthquakes; (v) strikes
or labor troubles causing cessation, slowdown, or interruption of work; (vi)
inability, after due and timely diligence, to procure materials, systems,
accessories, equipment or parts; (vii) inability, after due and timely
diligence, to obtain type certification; or (viii) any other cause

AGTA-ASA                         - 5 -

<PAGE>

to the extent such cause is beyond Boeing's control and not occasioned by
Boeing's fault or negligence. A delay resulting from any such cause is defined
as an EXCUSABLE DELAY.

            7.2 Notice. Boeing will give written notice to Customer (i) of a
delay as soon as Boeing concludes that an aircraft will be delayed beyond the
scheduled delivery month due to an Excusable Delay and, when known, (ii) of a
revised delivery month based on Boeing's appraisal of the facts.

            7.3 Delay in Delivery of Twelve Months or Less. If the revised
delivery month is 12 months or less after the scheduled delivery month, Customer
will accept such aircraft when tendered for delivery, subject to the following:

                  7.3.1 The calculation of the Escalation Adjustment will be
based on the previously scheduled delivery month.

                  7.3.2 The advance payment schedule will be adjusted to reflect
the revised delivery month.

                  7.3.3 All other provisions of the applicable purchase '
agreement, including the BFE on-dock dates for the delayed aircraft, are
unaffected by an Excusable Delay.

            7.4 Delay in Delivery of More Than Twelve Months. If the revised
delivery month is more than 12 months after the scheduled delivery month, either
party may terminate the applicable purchase agreement with respect to such
aircraft within 30 days of the notice. If either party does not terminate the
applicable purchase agreement with respect to such aircraft, all terms and
conditions of the applicable purchase agreement will remain in effect.

            7.5 Aircraft Damaged Beyond Repair. If an aircraft is destroyed or
damaged beyond repair for any reason before delivery, Boeing will give written
notice to Customer specifying the earliest month possible, consistent with
Boeing's other contractual commitments and production capabilities, in which
Boeing can deliver a replacement. Customer will have 30 days from receipt of
such notice to elect to have Boeing manufacture a replacement aircraft under the
same terms and conditions of purchase, except that the calculation of the
Escalation Adjustment will be based upon the scheduled delivery month in effect
immediately prior to the date of such notice, or, failing such election, the
applicable purchase agreement will terminate with respect to such aircraft.
Boeing will not be obligated to manufacture a replacement aircraft if
reactivation of the production line for the specific model of aircraft would be
required.

            7.6 Termination. Termination under this Article will discharge all
obligations and liabilities of Boeing and Customer with respect to any aircraft
and all related undelivered Materials (as defined in Exhibit B, Customer Support
Document), training, services, and other things terminated under the applicable
purchase agreement, except that Boeing will return to Customer, without
interest, an amount equal to all advance payments paid by Customer for the
aircraft. If Customer terminates the applicable purchase agreement as to any
aircraft, Boeing may elect, by written notice to Customer within 30 days, to
purchase from Customer any BFE related to the aircraft at the invoice prices
paid, or contracted to be paid, by Customer.

AGTA-ASA                        - 6 -

<PAGE>

            7.7 Exclusive Rights. The termination rights in this Article are in
substitution for all other rights of termination or any claim arising by
operation of law due to delays in performance covered by this Article.

Article 8.  Risk Allocation/Insurance.

            8.1 Title and Risk with Boeing.

                  8.1.1 Boeing's Indemnification of Customer. Until transfer of
title to an aircraft to Customer, Boeing will indemnify and hold harmless
Customer and Customer's observers from and against all claims and liabilities,
including all expenses and attorneys' fees incident thereto or incident to
establishing the right to indemnification, for injury to or death of any
person(s), including employees of Boeing but not employees of Customer, or for
loss of or damage to any property, including an aircraft, arising out of or in
any way related to the operation of an aircraft during all demonstration and
test flights conducted under the provisions of the applicable purchase
agreement, whether or not arising in tort or occasioned by the negligence of
Customer or any of Customer's observers.

                  8.1.2 Definition of Customer. For the purposes of this
Article, "Customer" is defined as Alaska Airlines, Inc., its divisions,
subsidiaries, affiliates, the assignees of each, and their respective directors,
officers, employees, and agents.

            8.2 Insurance.

                  8.2.1 Insurance Requirements. Customer will purchase and
maintain insurance acceptable to Boeing and will provide a certificate of such
insurance that names Boeing as an additional insured for any and all claims and
liabilities 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 any aircraft, arising out of or in any way relating to
Materials, training, services, or other things provided under Exhibit B of the
AGTA, which will be incorporated by reference into the applicable purchase
agreement, whether or not arising in tort or occasioned by the negligence of
Boeing, except with respect to legal liability to persons or parties other than
Customer or Customer's assignees arising out of an accident caused solely by a
product defect in an aircraft. Customer will provide such certificate of
insurance at least thirty (30) days prior to the scheduled delivery of the first
aircraft under a purchase agreement. The insurance certificate will reference
each aircraft delivered to Customer pursuant to each applicable purchase
agreement. Annual renewal certificates will be submitted to Boeing before the
expiration of the policy periods. The form of the insurance certificate,
attached as Appendix I, states the terms, limits, provisions, and coverages
required by this Article 8.2.1. The failure of Boeing to demand compliance with
this 8.2.1 in any year will not in any way relieve Customer of its obligations
hereunder nor constitute a waiver by Boeing of these obligations.

                  8.2.2 Noncompliance with Insurance Requirements. If Customer
fails to comply with any of the insurance requirements of Article 8.2.1 or if
any of the insurers fails to pay a claim covered by the insurance or otherwise
fails to meet any of insurer's obligations

AGTA-ASA                        - 7 -

<PAGE>

required by Appendix I, Customer will provide the same protection to Boeing as
that required by Article 8.2.1 above.

                  8.2.3 Definition of Boeing. For purposes of this article,
"Boeing" is defined as The Boeing Company, its divisions, subsidiaries,
affiliates, assignees of each, and their respective directors, officers,
employees, and agents.

Article 9.  Assignment, Resale, or Lease.

            9.1 Assignment. This AGTA and each applicable purchase agreement are
for the benefit of the parties and their respective successors and assigns. No
rights or duties of either party may be assigned or delegated, or contracted to
be assigned or delegated, without the prior written consent of the other party,
except:

                  9.1.1 Either party may assign its interest to a corporation
that (i) results from any merger, reorganization, or acquisition of such party
and (ii) acquires substantially all the assets of such party;

                  9.1.2 Boeing may assign its rights to receive money; and

                  9.1.3 Boeing may assign any of its rights and duties to any
wholly-owned subsidiary of Boeing.

                  9.1.4 Boeing may assign any of its rights and duties with
respect to Part 1, Articles 1, 2, 4 and 5 of Exhibit B, Customer Support
Document to the AGTA, to Alteon Training L.L.C.

            9.2 Transfer by Customer at Delivery. Boeing will take any requested
action reasonably required for the purpose of causing an aircraft, at time of
delivery, to be subject to an equipment trust, conditional sale, lien, or other
arrangement for Customer to finance the aircraft. However, no such action will
require Boeing to divest itself of title to or possession of the aircraft until
delivery of and payment for the aircraft. A sample form of assignment acceptable
to Boeing is attached as Appendix II.

            9.3 Sale or Lease by Customer After Delivery. If, following delivery
of an aircraft, Customer sells or leases the aircraft (including any sale and
lease-back to seller for financing purposes), Customer may assign some or all of
its rights with respect to the aircraft under the applicable purchase agreement
to the purchaser or lessee of such aircraft, and all such rights will inure to
the benefit of such purchaser or lessee effective upon Boeing's receipt of the
written agreement of the purchaser or lessee, in a form satisfactory to Boeing,
to comply with all applicable terms and conditions of the applicable purchase
agreement. Sample forms of notice to Boeing of such assignments giving examples
of language acceptable to Boeing are attached as Appendices III, IV, VIII, IX
and X.

AGTA-ASA                       - 8 -

<PAGE>

            9.4 Notice of Sale or Lease After Delivery. Customer will give
notice to Boeing as soon as practicable of the sale or lease of an aircraft,
including in the notice the name of the entity or entities with title and/or
possession of such aircraft.

            9.5 Exculpatory Clause in Post-Delivery Sale or Lease. If, following
the delivery of an aircraft, Customer sells or leases such aircraft and obtains
from the transferee any form of exculpatory clause protecting Customer from
liability for loss of or damage to the aircraft, and/or related incidental or
consequential damages, including without limitation loss of use, revenue, or
profit, Customer shall obtain for Boeing the purchaser's or lessee's written
agreement to be bound by terms and conditions substantially as set forth in
Appendix V. This Article 9.5 applies only if purchaser or lessee has not
provided to Boeing the written agreement described in Article 9.3 above.

            9.6 Appointment of Agent - Warranty Claims. If, following delivery
of an aircraft, Customer appoints an agent to act directly with Boeing for the
administration of claims relating to the warranties under the applicable
purchase agreement, Boeing will deal with the agent for that purpose, effective
upon Boeing's receipt of the agent's written agreement, in a form satisfactory
to Boeing, to comply with all applicable terms and conditions of the applicable
purchase agreement. A sample form of agreement acceptable to Boeing is attached
as Appendix VI.

            9.7 No Increase in Boeing Liability. No action taken by Customer or
Boeing relating to the resale or lease of an aircraft or the assignment of
Customer's rights under the applicable purchase agreement will subject Boeing to
any liability beyond that in the applicable purchase agreement or modify in any
way Boeing's obligations under the applicable purchase agreement.

Article 10. Termination of Purchase Agreements for Certain Events.

            10.1 Termination. If either party

                  (i)   ceases doing business as a going concern, or suspends
                        all or substantially all its business operations, or
                        makes an assignment for the benefit of creditors, or
                        generally does not pay its debts as they become due, or
                        admits in writing its inability to pay its debts; or

                  (ii)  petitions for or acquiesces in the appointment of any
                        receiver, trustee or similar officer to liquidate or
                        conserve its business or any substantial part of its
                        assets; commences any legal proceeding such as
                        bankruptcy, reorganization, readjustment of debt,
                        dissolution, or liquidation available for the relief of
                        financially distressed debtors; or becomes the object of
                        any such proceeding, unless the proceeding is dismissed
                        or stayed within a reasonable period, not to exceed 60
                        days,

the other party may terminate any purchase agreement with respect to any
undelivered aircraft, Materials, training, services, and other things by giving
written notice of termination.

AGTA-ASA                         - 9 -

<PAGE>

            10.2 Repayment of Advance Payments. If Customer terminates the
applicable purchase agreement under this Article, Boeing will repay to Customer,
without interest, an amount equal to any advance payments received by Boeing
from Customer with respect to undelivered aircraft.

Article 11. Notices.

            All notices required by this AGTA or by any applicable purchase
agreement will be written in English, will be effective on the date of receipt,
and will be delivered or transmitted by any customary means to the appropriate
address or number listed below:

            Customer   Delivery or   Alaska Airlines, Inc.
                       Courier:      19300 International Blvd. South
                                     Seattle, Washington
                                     98188
                                     Attention: Vice President - Finance

                       Mail:         Alaska Airlines, Inc.
                                     P.O. Box 68900
                                     Seattle, Washington
                                     98168
                                     Attention: Vice President - Finance

                       Facsimile:    206-392-5007
                       Telephone:    206-392-5015

            Boeing     Delivery or   Boeing Commercial Airplanes
                       Courier:      1901 Oakesdale Avenue S.W.
                                     Renton, Washington  98055
                                     U.S.A.
                                     Attention: Vice President - Contracts
                                                Mail Code 21-34

                       Mail:         Boeing Commercial Airplanes
                                     P.O. Box 3707
                                     Seattle, Washington  98124-2207
                                     U.S.A.
                                     Attention: Vice President - Contracts
                                                Mail Code 21-34

                       Facsimile:    425 237-1706
                       Telephone:    206 766-2400

AGTA-ASA                       - 10 -

<PAGE>

Article 12. Miscellaneous.

            12.1 Government Approval. Boeing and Customer will assist each other
in obtaining any governmental consents or approvals required to effect
certification and sale of aircraft under the applicable purchase agreement.

            12.2 Headings. Article and paragraph headings used in this AGTA and
in any purchase agreement are for convenient reference only and are not intended
to affect the interpretation of this AGTA or any purchase agreement.

            12.3 GOVERNING LAW. THIS AGTA AND ANY PURCHASE AGREEMENT WILL BE
INTERPRETED UNDER AND GOVERNED BY THE LAWS OF THE STATE OF WASHINGTON, U.S.A.,
EXCEPT THAT WASHINGTON'S CHOICE OF LAW RULES SHALL NOT BE INVOKED FOR THE
PURPOSE OF APPLYING THE LAW OF ANOTHER JURISDICTION.

            12.4 Waiver/Severability. Failure by either party to enforce any
provision of this AGTA or any purchase agreement will not be construed as a
waiver. If any provision of this AGTA or any provision of any purchase agreement
are held unlawful or otherwise ineffective by a court of competent jurisdiction,
the remainder of the AGTA or the applicable purchase agreement will remain in
effect.

            12.5 Survival of Obligations. The Articles and Exhibits of this AGTA
including but not limited to those relating to insurance, DISCLAIMER AND RELEASE
and the EXCLUSION OF CONSEQUENTIAL AND OTHER DAMAGES will survive termination or
cancellation of any purchase agreement or part thereof.

            12.6 AGTA Changes. The intent of the AGTA is to simplify the
standard contracting process for terms and conditions which are related to the
sale and purchase of all Boeing aircraft. This AGTA has been mutually agreed to
by the parties as of the date indicated below. From time to time the parties may
elect, by mutual agreement to update, or modify the existing articles as written
and revise this AGTA. If such changes are made, any existing executed Purchase
Agreement(s) will be governed by the terms and conditions in effect on the date
of the executed Purchase Agreement.

DATED AS OF June 15, 2005

Alaska Airlines, Inc.                             THE BOEING COMPANY

By _______________________________                By __________________________

Its ______________________________                Its _________________________

AGTA-ASA                         - 11 -

<PAGE>

                                    EXHIBIT A

                                       TO

                        AIRCRAFT GENERAL TERMS AGREEMENT

                                    AGTA-ASA

                                     BETWEEN

                               THE BOEING COMPANY

                                       AND

                              ALASKA AIRLINES, INC.

                  BUYER FURNISHED EQUIPMENT PROVISIONS DOCUMENT

                               BOEING PROPRIETARY
AGTA-ASA                                A

<PAGE>

                  BUYER FURNISHED EQUIPMENT PROVISIONS DOCUMENT

1. General.

      Certain equipment to be installed in the Aircraft is furnished to Boeing
by Customer at Customer's expense. This equipment is designated "Buyer Furnished
Equipment" (BFE) and is listed in the Detail Specification. 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 as described in the applicable Supplemental
Exhibit to this Exhibit A in a purchase agreement at the time of aircraft
purchase.

2. Supplier Selection.

      Customer will:

      2.1 Select and notify Boeing of the suppliers of BFE items by those dates
appearing in Supplemental Exhibit BFE1 to the applicable purchase agreement at
the time of aircraft purchase.

      2.2 Meet with Boeing and such selected BFE suppliers promptly after such
selection to:

            2.2.1 complete BFE configuration design requirements for such BFE;
and

            2.2.2 confirm technical data submittal requirements for BFE
certification.

3. Customer's Obligations.

      Customer will:

      3.1 comply with and cause the supplier to comply with the provisions of
the BFE Document or BFE Report; including, without limitation,

            3.1.1 deliver technical data (in English) to Boeing as required to
support installation and FAA certification in accordance with the schedule
provided by Boeing or as mutually agreed upon during the BFE meeting referred to
above;

                             BOEING PROPRIETARY
AGTA-ASA                             A-1

<PAGE>

            3.1.2 deliver BFE including production and/or flight training spares
and BFE Aircraft Software to Boeing in accordance with the quantities, schedule,
and other instructions provided therein; and

            3.1.3 assure that all BFE Aircraft Software is delivered in
compliance with Boeing's then-current Standards for Loadable Systems;

            3.1.4 assure that all BFE parts are delivered to Boeing with
appropriate quality assurance documentation;

      3.2 authorize Boeing to discuss all details of the BFE directly with the
BFE suppliers;

      3.3 authorize Boeing to conduct or delegate to the supplier quality source
inspection and supplier hardware acceptance of BFE at the supplier location;

            3.3.1 require supplier's contractual compliance to Boeing defined
quality assurance requirements, source inspection programs and supplier
delegation programs, including availability of adequate facilities for Boeing
resident personnel; and

            3.3.2 assure that all BFE supplier's quality systems are approved to
Boeing's then current standards for such systems;

      3.4 obtain from supplier a non-exclusive, perpetual, royalty-free,
irrevocable license for Boeing to copy BFE Aircraft Software. The license is
needed to enable Boeing to load the software copies in (i) the aircraft's mass
storage device (MSD), (ii) media (e.g., diskettes, CD-ROMs, etc.), (iii) the BFE
hardware and/or (iv) an intermediate device or other media to facilitate copying
of the BFE Aircraft Software into the aircraft's MSD, BFE hardware and/or media,
including media as Boeing may deliver to Customer with the aircraft;

      3.5 grant Boeing a license, extending the same rights set forth in
paragraph 3.4 above, to copy: a) BFE Aircraft Software and data Customer has
modified and/or b) other software and data Customer has added to the BFE
Aircraft Software;

      3.6 provide necessary field service representation at Boeing's facilities
to support Boeing on all issues related to the installation and certification of
BFE;

      3.7 deal directly with all BFE suppliers to obtain overhaul data,
provisioning data, related product support documentation and any warranty
provisions applicable to the BFE;

      3.8 work closely with Boeing and the BFE suppliers to resolve any
difficulties, including defective equipment, that arise;

                             BOEING PROPRIETARY
AGTA-ASA                             A-2

<PAGE>

      3.9 be responsible for modifying, adjusting and/or calibrating BFE as
required for FAA approval and for all related expenses;

      3.10 assure that a proprietary information agreement is in place between
Boeing and BFE suppliers prior to Boeing providing any documentation to such
suppliers;

      3.11 warrant that the BFE will comply with all applicable FARs and the
U.S. Food and Drug Administration (FDA) sanitation requirements for installation
and use in the Aircraft at the time of delivery. Customer will be responsible
for supplying any data and adjusting, calibrating, re-testing or updating such
BFE and data to the extent necessary to obtain applicable FAA and FDA approval
and shall bear the resulting expenses;

      3.12 warrant that the BFE will meet the requirements of the Detail
Specification; and

      3.13 be responsible for providing equipment which is FAA certifiable at
time of Aircraft delivery, or for obtaining waivers from the applicable
regulatory agency for non-FAA certifiable equipment.

4. Boeing's Obligations.

      Other than as set forth below, Boeing will provide for the installation of
and install the BFE and obtain certification of the Aircraft with the BFE
installed.

5. Nonperformance by Customer.

      If Customer's nonperformance of obligations in this Exhibit or in the BFE
Document causes a delay in the delivery of the Aircraft or causes Boeing to
perform out-of-sequence or additional work, Customer will reimburse Boeing for
all resulting expenses and be deemed to have agreed to any such delay in
Aircraft delivery. In addition Boeing will have the right to:

      5.1 provide and install specified equipment or suitable alternate
equipment and increase the price of the Aircraft accordingly; and/or

      5.2 deliver the Aircraft to Customer without the BFE installed.

6. Return of Equipment.

      BFE not installed in the Aircraft will be returned to Customer in
accordance with Customer's instructions and at Customer's expense.

                             BOEING PROPRIETARY
AGTA-ASA                             A-3

<PAGE>

7. Title and Risk of Loss.

      7.1 With respect to Aircraft manufactured in the State of Washington,
title to and risk of loss of BFE provided for such Aircraft will at all times
remain with Customer or other owner. Boeing will have only such liability for
BFE as a bailee for mutual benefit would have, but will not be liable for loss
of use.

      7.2 With respect to Aircraft manufactured in the State of California,
Customer agrees to sell and Boeing agrees to purchase each item of BFE
concurrently with its delivery to Boeing. A reasonable shipset price for the BFE
shall be established with Customer. Customer and Boeing agree that the Aircraft
Price will be increased by the amount of said shipset price and such amount will
be included on Boeing's invoice at time of Aircraft delivery. Boeing's payment
for the purchase of each shipset of BFE from Customer will be made at the time
of delivery of the Aircraft in which the BFE is installed.

8. Interchange of BFE

      To properly maintain Boeing's production flow and to preserve Boeing's
delivery commitments, Boeing reserves the right, if necessary, due to equipment
shortages or failures, to interchange new items of BFE acquired from or for
Customer with new items of the same part numbers and modification status
acquired from or for other customers of Boeing. Used BFE acquired from Customer
or from other customers of Boeing will not be interchanged.

9. Indemnification of Boeing.

      Customer hereby indemnifies and holds 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 any Aircraft, arising out of or in any way connected
with any nonconformance or defect in any BFE and whether or not arising in tort
or occasioned by the negligence of Boeing. This indemnity will not apply with
respect to any nonconformance or defect caused solely by Boeing's installation
of the BFE.

10. Patent Indemnity.

      Customer hereby indemnifies and holds harmless Boeing from and against all
claims, suits, actions, liabilities, damages and costs arising out of any actual
or alleged infringement of any patent or other intellectual property rights by
BFE or arising out of the installation, sale or use of BFE by Boeing.

                             BOEING PROPRIETARY
AGTA-ASA                             A-4

<PAGE>

11. Definitions.

      For the purposes of the above indemnities, the term "Boeing" includes The
Boeing Company, its divisions, subsidiaries and affiliates, the assignees of
each, and their directors, officers, employees and agents.

                             BOEING PROPRIETARY
AGTA-ASA                             A-5

<PAGE>

                                    EXHIBIT B

                                       TO

                        AIRCRAFT GENERAL TERMS AGREEMENT

                                    AGTA-ASA

                                     BETWEEN

                               THE BOEING COMPANY

                                       AND

                              ALASKA AIRLINES, INC.

                            CUSTOMER SUPPORT DOCUMENT

                             This document contains:

      Part 1:      Maintenance and Flight Training Programs; Operations
                   Engineering Support

      Part 2:      Field Services and Engineering Support
                   Services

      Part 3:      Technical Information and Materials

      Part 4:      Alleviation or Cessation of Performance

      Part 5:      Protection of Proprietary Information and
                   Proprietary Materials

                               BOEING PROPRIETARY
AGTA-ASA                               B
                                       i

<PAGE>

                            CUSTOMER SUPPORT DOCUMENT

                 PART 1: BOEING MAINTENANCE AND FLIGHT TRAINING
                    PROGRAMS; OPERATIONS ENGINEERING SUPPORT

1. Boeing Training Programs.

      1.1 Boeing will provide maintenance training and flight training programs
to support the introduction of a specific model of aircraft into service. The
training programs will consist of general and specialized courses and will be
described in a Supplemental Exhibit to the applicable purchase agreement.

      1.2 Boeing will conduct all training at Boeing's primary training facility
for the model of aircraft purchased unless otherwise agreed.

      1.3 All training will be presented in the English language. If translation
is required, Customer will provide interpreters.

      1.4 Customer will be responsible for all expenses of Customer's personnel.
Boeing will transport Customer's personnel between their local lodging and
Boeing's training facility.

2. Training Planning Conferences.

      Customer and Boeing will conduct planning conferences approximately 12
months before the scheduled delivery month of the first aircraft of a model to
define and schedule the maintenance and flight training programs.

3. Operations Engineering Support.

      3.1 As long as an aircraft purchased by Customer from Boeing is operated
by Customer in scheduled revenue service, Boeing will provide operations
engineering support. Such support will include:

            3.1.1 assistance with the analysis and preparation of performance
data to be used in establishing operating practices and policies for Customer's
operation of aircraft;

            3.1.2 assistance with interpretation of the minimum equipment list,
the definition of the configuration deviation list and the analysis of
individual aircraft performance;

                               BOEING PROPRIETARY
AGTA-ASA                               B
                                      1-1

<PAGE>

            3.1.3 assistance with solving operational problems associated with
delivery and route-proving flights;

            3.1.4 information regarding significant service items relating to
aircraft performance or flight operations; and

            3.1.5 if requested by Customer, Boeing will provide operations
engineering support during an aircraft ferry flight.

4. Training at a Facility Other Than Boeing's.

      If requested by Customer, Boeing will conduct the classroom portions of
the maintenance and flight training (except for the Performance Engineer
training courses) at a mutually acceptable alternate training site, subject to
the following conditions:

      4.1 Customer will provide acceptable classroom space, simulators (as
necessary for flight training) and training equipment required to present the
courses;

      4.2 Customer will pay Boeing's then-current per diem charge for each
Boeing instructor for each day, or fraction thereof, that the instructor is
outside King County, Washington, including travel time;

      4.3 Customer will reimburse Boeing for the actual costs of round-trip
transportation for Boeing's instructors and the shipping costs of training
Materials between the primary training facility and the alternate training site
outside King County, Washington;

      4.4 Customer will be responsible for all taxes, fees, duties, licenses,
permits and similar expenses incurred by Boeing and its employees as a result of
Boeing's providing training at the alternate site outside King County,
Washington or incurred as a result of Boeing providing revenue service training;
and

      4.5 Those portions of training that require the use of training devices
not available at the alternate site will be conducted at Boeing's facility or at
some other alternate site.

5. General Terms and Conditions.

      5.1 Boeing flight instructor personnel will not be required to work more
than 5 days per week, or more than 8 hours in any one 24-hour period, of which
not more than 5 hours per 8-hour workday will be spent in actual flying. These
foregoing restrictions will not apply to ferry assistance or revenue service
training services, which will be governed by FAA rules and regulations.

                               BOEING PROPRIETARY
AGTA-ASA                               B
                                      1-2

<PAGE>

      5.2 NORMAL LINE MAINTENANCE is defined as line maintenance that Boeing
might reasonably be expected to furnish for flight crew training at Boeing's
facility, and will include ground support and aircraft storage in the open, but
will not include provision of spare parts. Boeing will provide Normal Line
Maintenance services for any aircraft while the aircraft is used for flight crew
training at Boeing's facility in accordance with the Boeing Maintenance Plan
(Boeing document D6-82076) and the Repair Station Operation and Inspection
Manual (Boeing document D6-25470). Customer will provide such services if flight
crew training is conducted elsewhere. Regardless of the location of such
training, Customer will be responsible for providing all maintenance items
(other than those included in Normal Line Maintenance) required during the
training, including, but not limited to, fuel, oil, landing fees and spare
parts.

      5.3 If the training is based at Boeing's facility, and the aircraft is
damaged during such training, Boeing will make all necessary repairs to the
aircraft as promptly as possible. Customer will pay Boeing's reasonable charge,
including the price of parts and materials, for making the repairs. If Boeing's
estimated labor charge for the repair exceeds $25,000, Boeing and Customer will
enter into an agreement for additional services before beginning the repair
work.

      5.4 If the flight training is based at Boeing's facility, several airports
in surrounding states may be used, at Boeing's option. Unless otherwise agreed
in the flight training planning conference, it will be Customer's responsibility
to make arrangements for the use of such airports.

      5.5 If Boeing agrees to make arrangements on behalf of Customer for the
use of airports for flight training, Boeing will pay on Customer's behalf any
landing fees charged by any airport used in conjunction with the flight
training. At least 30 days before flight training, Customer will provide Boeing
an open purchase order against which Boeing will invoice Customer for any
landing fees Boeing paid on Customer's behalf. The invoice will be submitted to
Customer approximately 60 days after flight training is completed, when all
landing fee charges have been received and verified. Customer will pay to Boeing
within 30 days of the date of the invoice.

      5.6 If requested by Boeing, in order to provide the flight training or
ferry flight assistance, Customer will make available to Boeing an aircraft
after delivery to familiarize Boeing instructor or ferry flight crew personnel
with such aircraft. If flight of the aircraft is required for any Boeing
instructor or ferry flight crew member to maintain an FAA license for flight
proficiency or landing currency, Boeing will be responsible for the costs of
fuel, oil, landing fees and spare parts attributable to that portion of the
flight.

      5.7 If any part of the training described in Article 1.1 of this Exhibit
is not used by Customer within 12 months after the delivery of the last aircraft
under the relevant purchase agreement, Boeing will not be obligated to provide
such training.

                               BOEING PROPRIETARY
AGTA-ASA                               B
                                      1-3

<PAGE>

                            CUSTOMER SUPPORT DOCUMENT

                 PART 2: FIELD AND ENGINEERING SUPPORT SERVICES

1. Field Service Representation.

      Boeing will furnish field service representation to advise Customer with
respect to the maintenance and operation of an aircraft (FIELD SERVICE
REPRESENTATIVES).

      1.1 Field Service representation will be available at or near Customer's
main maintenance or engineering facility beginning before the scheduled delivery
month of the first aircraft and ending 12 months after delivery of the last
aircraft covered by a specific purchase agreement.

      1.2 Customer will provide, at no charge to Boeing, suitable furnished
office space and office equipment at the location where Boeing is providing
Field Service Representatives. As required, Customer will assist each Field
Service Representative with visas, work permits, customs, mail handling,
identification passes and formal introduction to local airport authorities.

      1.3 Boeing Field Service Representatives are assigned to various airports
around the world. Whenever Customer's aircraft are operating through any such
airport, the services of Boeing's Field Service Representatives are available to
Customer.

2. Engineering Support Services.

      Boeing will, if requested by Customer, provide technical advisory
assistance for any aircraft and Boeing Product (as defined in Part I of Exhibit
C). Technical advisory assistance, provided from the Seattle area or at a base
designated by Customer as appropriate, will include:

      2.1 Operational Problem Support. If Customer experiences operational
problems with an aircraft, Boeing will analyze the information provided by
Customer to determine the probable nature and cause of the problem and to
suggest possible solutions.

      2.2 Schedule Reliability Support. If Customer is not satisfied with the
schedule reliability of a specific model of aircraft, Boeing will analyze
information provided by Customer to determine the nature and cause of the
problem and to suggest possible solutions.

      2.3 Maintenance Cost Reduction Support. If Customer is concerned that
actual maintenance costs of a specific model of aircraft are excessive, Boeing
will analyze

                               BOEING PROPRIETARY
AGTA-ASA                               B
                                      2-1

<PAGE>

information provided by Customer to determine the nature and cause of the
problem and to suggest possible solutions.

      2.4 Aircraft Structural Repair Support. If Customer is designing
structural repairs and desires Boeing's support, Boeing will analyze and comment
on Customer's engineering releases relating to structural repairs not covered by
Boeing's Structural Repair Manual.

      2.5 Aircraft Modification Support. If Customer is designing aircraft
modifications and requests Boeing's support, Boeing will analyze and comment on
Customer's engineering proposals for changes in, or replacement of, systems,
parts, accessories or equipment manufactured to Boeing's detailed design. Boeing
will not analyze or comment on any major structural change unless Customer's
request for such analysis and comment includes complete detailed drawings,
substantiating information (including any information required by applicable
government agencies), all stress or other appropriate analyses, and a specific
statement from Customer of the substance of the review and the response
requested.

      2.6 Facilities, Ground Equipment and Maintenance Planning Support. Boeing
will, at Customer's request, evaluate Customer's technical facilities, tools and
equipment for servicing and maintaining aircraft, to recommend changes where
necessary and to assist in the formulation of an initial maintenance plan for
the introduction of the aircraft into service.

      2.7 Post-Delivery Service Support. Boeing will, at Customer's request,
perform work on an aircraft after delivery but prior to the initial departure
flight or upon the return of the aircraft to Boeing's facility prior to
completion of that flight. In that event the following provisions will apply.

            2.7.1 Boeing may rely upon the commitment authority of the
Customer's personnel requesting the work.

            2.7.2 As title and risk of loss has passed to Customer, the
insurance provisions of Article 8.2 of the AGTA apply.

            2.7.3 The provisions of the Boeing Warranty in Part 2 of Exhibit C
of this AGTA apply.

            2.7.4 Customer will pay Boeing for requested work not covered by the
Boeing Warranty, if any.

            2.7.5 The DISCLAIMER AND RELEASE and EXCLUSION OF CONSEQUENTIAL AND
OTHER DAMAGES provisions in Article 11 of Part 2 of Exhibit C of this AGTA
apply.

                               BOEING PROPRIETARY
AGTA-ASA                               B
                                      2-2

<PAGE>

      2.8 Additional Services. Boeing may, at Customer's request, provide
additional services for an aircraft after delivery, which may include, but not
be limited to, retrofit kit changes (kits and/or information), training, flight
services, maintenance and repair of aircraft. Such additional services will be
subject to a mutually acceptable price, schedule, scope of work and other
applicable terms and conditions. The DISCLAIMER AND RELEASE and the EXCLUSION OF
CONSEQUENTIAL AND OTHER DAMAGES provisions in Article 11 of Part 2 of Exhibit C
of this AGTA and the insurance provisions in Article 8.2 of this AGTA will apply
to any such work. Title to and risk of loss of any such aircraft will always
remain with Customer.

                               BOEING PROPRIETARY
AGTA-ASA                               B
                                      2-3

<PAGE>

                            CUSTOMER SUPPORT DOCUMENT

                   PART 3: TECHNICAL INFORMATION AND MATERIALS

1. General.

      MATERIALS are defined as any and all items that are created by Boeing or a
third party, which are provided directly or indirectly from Boeing and serve
primarily to contain, convey or embody information. Materials may include either
tangible embodiments (for example, documents or drawings), or intangible
embodiments (for example, software and other electronic forms) of information
but excludes Aircraft Software. AIRCRAFT SOFTWARE is defined as software that is
installed on and used in the operation of the aircraft.

      Boeing will furnish to Customer certain Materials to support the
maintenance and operation of the aircraft at no additional charge to Customer,
except as otherwise provided herein. Such Materials will, if applicable, be
prepared generally in accordance with Air Transport Association of America (ATA)
Specification No. 100, entitled "Specification for Manufacturers' Technical
Data". Materials will be in English and in the units of measure used by Boeing
to manufacture an aircraft.

      Digitally-produced Materials will, if applicable, be prepared generally in
accordance with ATA Specification No. 2100, dated January 1994, "Digital Data
Standards for Aircraft Support."

2. Materials Planning Conferences.

      Customer and Boeing will conduct planning conferences approximately 12
months before the scheduled delivery month of the first aircraft of a model in
order to mutually determine the proper format and quantity of Materials to be
furnished to Customer in support of the aircraft.

      When available, Customer may select one Boeing digital format as the
delivery medium. Should a Boeing digital format not be chosen, Customer may
select a reasonable quantity of printed and 16mm microfilm formats, with the
exception of the Illustrated Parts Catalog, which will be provided in one
selected format only.

3. Information and Materials - Incremental Increase.

      Until one year after the month of delivery of the last aircraft covered by
a specific purchase agreement, Customer may annually request in writing a
reasonable increase in the quantity of Materials with the exception of microfilm
master copies, digital formats,

                               BOEING PROPRIETARY
AGTA-ASA                               B
                                      3-1

<PAGE>

and others for which a specified number of copies are provided. Boeing will
provide the additional quantity at no additional charge beginning with the next
normal revision cycle. Customer may request a decrease in revision quantities at
any time.

4. Advance Representative Copies.

      All advance representative copies of Materials will be selected by Boeing
from available sources. Such advance copies will be for advance planning
purposes only.

5. Customized Materials.

      All customized Materials will reflect the configuration of each aircraft
as delivered.

6. Revisions.

      6.1 Revision Service. Boeing will provide revisions free of charge to
certain Materials to be identified in the planning conference conducted for a
specific model of aircraft, reflecting changes developed by Boeing, as long as
Customer operates an aircraft of that model.

      6.2 Revisions Based on Boeing Service Bulletin Incorporation. If Boeing
receives written notice that Customer intends to incorporate, or has
incorporated, any Boeing service bulletin in an aircraft, Boeing will at no
charge issue revisions to Materials with revision service reflecting the effects
of such incorporation into such aircraft.

7. Supplier Technical Data.

      7.1 For supplier-manufactured programmed airborne avionics components and
equipment classified as Seller Furnished Equipment (SFE) or Seller Purchased
Equipment (SPE) or Buyer Designated Equipment (BDE) which contain computer
software designed and developed in accordance with Radio Technical Commission
for Aeronautics Document No. RTCA/DO-178 dated January 1982, No. RTCA/DO-178A
dated March 1985, or later as available, Boeing will request that each supplier
of the components and equipment make software documentation available to
Customer.

      7.2 The provisions of this Article will not be applicable to items of BFE.

      7.3 Boeing will furnish to Customer a document identifying the terms and
conditions of the product support agreements between Boeing and its suppliers
requiring the suppliers to fulfill Customer's requirements for information and
services in support of the specific model of aircraft.

                               BOEING PROPRIETARY
AGTA-ASA                               B
                                      3-2

<PAGE>

8. Buyer Furnished Equipment Data.

      Boeing will incorporate BFE information into the customized Materials
providing Customer makes the information available to Boeing at least nine
months prior to the scheduled delivery month of Customer's first aircraft of a
specific model. Customer agrees to furnish the information in Boeing standard
digital format if Materials are to be delivered in Boeing standard digital
format.

9. Materials Shipping Charges.

      Boeing will pay the reasonable transportation costs of the Materials.
Customer is responsible for any customs clearance charges, duties, and taxes.

10. Customer's Shipping Address.

      The Materials furnished to Customer hereunder are to be sent to a single
address to be specified. Customer will promptly notify Boeing of any change to
the address.

                               BOEING PROPRIETARY
AGTA-ASA                               B
                                      3-3

<PAGE>

                            CUSTOMER SUPPORT DOCUMENT

                 PART 4: ALLEVIATION OR CESSATION OF PERFORMANCE

Boeing will not be required to provide any Materials, services, training or
other things at a facility designated by Customer if any of the following
conditions exist:

      1. a labor stoppage or dispute in progress involving Customer;

      2. wars or warlike operations, riots or insurrections in the country where
the facility is located;

      3. any condition at the facility which, in the opinion of Boeing, is
detrimental to the general health, welfare or safety of its personnel or their
families;

      4. the United States Government refuses permission to Boeing personnel or
their families to enter into the country where the facility is located, or
recommends that Boeing personnel or their families leave the country; or

      5. the United States Government refuses permission to Boeing to deliver
Materials, services, training or other things to the country where the facility
is located.

After the location of Boeing personnel at the facility, Boeing further reserves
the right, upon the occurrence of any of such events, to immediately and without
prior notice to Customer relocate its personnel and their families.

                               BOEING PROPRIETARY
AGTA-ASA                               B
                                      4-1

<PAGE>

                            CUSTOMER SUPPORT DOCUMENT

                  PART 5: PROTECTION OF PROPRIETARY INFORMATION
                            AND PROPRIETARY MATERIALS

1.    General.

      All Materials provided by Boeing to Customer and not covered by a Boeing
CSGTA or other agreement between Boeing and Customer defining Customer's right
to use and disclose the Materials and included information will be covered by,
and subject to the terms of this AGTA. Title to all Materials containing,
conveying or embodying confidential, proprietary or trade secret information
(Proprietary Information) belonging to Boeing or a third party (Proprietary
Materials), will at all times remain with Boeing or such third party. Customer
will treat all Proprietary Materials and all Proprietary Information in
confidence and use and disclose the same only as specifically authorized in this
AGTA.

2.    License Grant.

      Boeing grants to Customer a worldwide, non-exclusive, non-transferable
license to use and disclose Proprietary Materials in accordance with the terms
and conditions of this AGTA. Customer is authorized to make copies of Materials
(except for Materials bearing the copyright legend of a third party), and all
copies of Proprietary Materials will belong to Boeing and be treated as
Proprietary Materials under this AGTA. Customer will preserve all proprietary
legends, and all copyright notices on all Materials and insure the inclusion of
those legends and notices on all copies.

3.    Use of Proprietary Materials and Proprietary Information.

      Customer is authorized to use Proprietary Materials and Proprietary
Information for the purpose of: (a) operation, maintenance, repair, or
modification of Customer's aircraft for which the Proprietary Materials and
Proprietary Information have been specified by Boeing and (b) development and
manufacture of training devices and maintenance tools for use by Customer.

4.    Providing of Proprietary Materials to Contractors.

      Customer is authorized to provide Proprietary Materials to Customer's
contractors for the sole purpose of maintenance, repair, or modification of
Customer's aircraft for which the Proprietary Materials have been specified by
Boeing. In addition, Customer may provide Proprietary Materials to Customer's
contractors for the sole purpose of developing and manufacturing training
devices and maintenance tools for Customer's use.

                               BOEING PROPRIETARY
AGTA-ASA                               B
AGTA_Exhibit_B
                                      5-1

<PAGE>

Before providing Proprietary Materials to its contractor, Customer will first
obtain a written agreement from the contractor by which the contractor agrees
(a) to use the Proprietary Materials only on behalf of Customer, (b) to be bound
by all of the restrictions and limitations of this Part 5, and (c) that Boeing
is a third party beneficiary under the written agreement. Customer agrees to
provide copies of all such written agreements to Boeing upon request and be
liable to Boeing for any breach of those agreements by a contractor. A sample
agreement acceptable to Boeing is attached as Appendix VII.

5.    Providing of Proprietary Materials and Proprietary Information to
      Regulatory Agencies.

      When and to the extent required by a government regulatory agency having
jurisdiction over Customer or an aircraft, Customer is authorized to provide
Proprietary Materials and to disclose Proprietary Information to the agency for
use in connection with Customer's operation, maintenance, repair, or
modification of such aircraft. Customer agrees to take all reasonable steps to
prevent the agency from making any distribution, disclosure, or additional use
of the Proprietary Materials and Proprietary Information provided or disclosed.
Customer further agrees to notify Boeing immediately upon learning of any (a)
distribution, disclosure, or additional use by the agency, (b) request to the
agency for distribution, disclosure, or additional use, or (c) intention on the
part of the agency to distribute, disclose, or make additional use of
Proprietary Materials or Proprietary Information.

                               BOEING PROPRIETARY
AGTA-ASA                               B
AGTA_Exhibit_B
                                      5-2

<PAGE>

                                    EXHIBIT C

                                       TO

                        AIRCRAFT GENERAL TERMS AGREEMENT

                                    AGTA-ASA

                                     BETWEEN

                               THE BOEING COMPANY

                                       AND

                              ALASKA AIRLINES, INC.

                           PRODUCT ASSURANCE DOCUMENT

                             This document contains:

      Part 1:      Exhibit C Definitions

      Part 2:      Boeing Warranty

      Part 3       Boeing Service Life Policy

      Part 4:      Supplier Warranty Commitment

      Part 5:      Boeing Interface Commitment

      Part 6:      Boeing Indemnities against Patent and Copyright Infringement

                               BOEING PROPRIETARY
AGTA-ASA                               C
                                       i

<PAGE>

                           PRODUCT ASSURANCE DOCUMENT

                          PART 1: EXHIBIT C DEFINITIONS

      APPROVED MAINTENANCE SCHEDULE OR AMS shall mean that aircraft maintenance
program document approved by Customer's aviation authority as a condition of
granting Customer operating approval in the jurisdiction where the aircraft is
registered.

      AUTHORIZED AGENT - Agent appointed by Customer to perform corrections and
to administer warranties (see Appendix VI to the AGTA for a form acceptable to
Boeing).

      AVERAGE DIRECT HOURLY LABOR RATE - the average hourly rate (excluding all
fringe benefits, premium-time allowances, social charges, business taxes and the
like) paid by Customer to its Direct Labor employees.

      BOEING PRODUCT - any system, accessory, equipment, part or Aircraft
Software that is manufactured by Boeing or manufactured to Boeing's detailed
design with Boeing's authorization.

      CORRECT(S) - to repair, modify, provide modification kits or replace with
a new product.

      CORRECTION - a repair, a modification, a modification kit or replacement
with a new product.

      CORRECTED BOEING PRODUCT - a Boeing Product which is free of defect as a
result of a Correction.

      DIRECT LABOR - Labor spent by Customer's direct labor employees to access,
remove, disassemble, modify, repair, inspect and bench test a defective Boeing
Product, and to reassemble, reinstall a Corrected Boeing Product and perform
final inspection and testing.

      DIRECT MATERIALS - Items such as parts, gaskets, grease, sealant and
adhesives, installed or consumed in performing a Correction, excluding
allowances for administration, overhead, taxes, customs duties and the like.

      ROGUE UNIT - A Boeing Product, on which an unscheduled removal due to
breach of warranty occurs three (3) or more times both (i) within the warranty
period and (ii) within either twelve (12) consecutive months or one thousand
(1,000) consecutive operating hours.

      SPECIFICATION CONTROL DRAWING (SCD) - a Boeing document defining
specifications for certain Supplier Products.

      SUPPLIER - the manufacturer of a Supplier Product.

                               BOEING PROPRIETARY
AGTA-ASA                               C
                                      1-1

<PAGE>

      SUPPLIER PRODUCT - any system, accessory, equipment, part or Aircraft
Software that is not manufactured to Boeing's detailed design. This includes but
is not limited to parts manufactured to a SCD, all standards, and other parts
obtained from non-Boeing sources.

                               BOEING PROPRIETARY
AGTA-ASA                               C
                                      1-2

<PAGE>

                           PRODUCT ASSURANCE DOCUMENT

                             PART 2: BOEING WARRANTY

1. Applicability.

      This warranty applies to all Boeing Products. Warranties applicable to
Supplier Products are in Part 4. Warranties applicable to engines will be
provided by Supplemental Exhibits to individual purchase agreements.

2. Warranty.

      2.1 Coverage. Boeing warrants that at the time of delivery:

            (i)   the aircraft will conform to the Detail Specification except
                  for portions stated to be estimates, approximations or design
                  objectives;

            (ii)  all Boeing Products will be free from defects in material,
                  process of manufacture and workmanship, including the
                  workmanship utilized to install Supplier Products, engines and
                  BFE, and;

            (iii) all Boeing Products will be free from defects in design,
                  including selection of materials and the process of
                  manufacture, in view of the state of the art at the time of
                  design.

      2.2 Exceptions. The following conditions do not constitute a defect under
this warranty:

            (i)   conditions resulting from normal wear and tear;

            (ii)  conditions resulting from acts or omissions of Customer; and

            (iii) conditions resulting from failure to properly service and
                  maintain a Boeing Product.

3. Warranty Periods.

      3.1 Warranty. The warranty period begins on the date of aircraft or Boeing
Product delivery (Delivery) and ends at the applicable time specified in
subsections 3.1(i) through 3.1(iii) below:

            (i)   for Boeing aircraft models 777-200, -300, 737-600, -700, -800,
                  -900, 787 or new aircraft models designed and manufactured
                  with similar, new technology the warranty period ends 48
                  months after Delivery;

                               BOEING PROPRIETARY
AGTA-ASA                               C
                                      2-1

<PAGE>

            (ii)  in addition, for a Boeing Product installed at the time of
                  delivery in a 787 model aircraft but not inspected during the
                  initial 48 month warranty period, the warranty period
                  continues until the date upon which Customer first inspects
                  such Boeing Product pursuant to its Approved Maintenance
                  Schedule but not later than 10 years after Delivery of such
                  787 aircraft;

            (iii) for any other Boeing aircraft model the warranty period ends
                  36 months after Delivery.

      3.2 Warranty on Corrected Boeing Products. The warranty period applicable
to a Corrected Boeing Product shall begin on the date of delivery of the
Corrected Boeing Product or date of delivery of the kit or kits furnished to
Correct the Boeing Product and shall be for the period specified immediately
below:

            (i) For Corrected Boeing Products which have been Corrected because
      of a defect in material, the applicable warranty period is the remainder
      of the initial warranty for the defective Boeing Product.

            (ii) For Corrected Boeing Products which have been Corrected because
      of defect in workmanship, the applicable warranty period is the remainder
      of the initial warranty or 12 months following the date of delivery of the
      Corrected Boeing Product, whichever is longer.

            (iii) For Corrected Boeing Products which have been Corrected
      because of a defect in design, the applicable warranty period is 18 months
      or the remainder of the initial warranty period, whichever is longer.

      3.3 Survival of Warranties. All warranty periods are stated above. The
Performance Guarantees will not survive delivery of the aircraft.

4. Remedies.

      4.1 Correction Options. Customer may, at its option, either perform a
Correction of a defective Boeing Product or return the Boeing Product to Boeing
for Correction. During the warranty period, Boeing will not charge Customer for
tests on Boeing Products returned to Boeing for Correction on which Boeing is
unable to confirm the failure claimed, provided:

            (i)   Boeing's written instructions were followed by the Customer
                  for testing the Boeing Product prior to its return to Boeing,
                  and

                               BOEING PROPRIETARY
AGTA-ASA                               C
                                      2-2

<PAGE>

            (ii)  Customer's claim includes all applicable documentation of such
                  tests with the returned Boeing Product, including but not
                  limited to: Central Maintenance Computer (CMC), Flight
                  Maintenance Computer System, (FMCS), Flight Isolation Manual
                  (FIM), Engine Indicating and Crew Alerting System (EICAS) or
                  Built In Test Equipment (BITE) messages.

      4.2 Warranty Inspections. In addition to the remedies to Correct defects
in Boeing Products described in Article 7.3, below, Boeing will reimburse
Customer for the cost of Direct Labor to perform certain inspections of the
aircraft to determine the occurrence of a condition Boeing has identified as a
covered defect, provided the inspections are recommended by a service bulletin
or service letter issued by Boeing during the warranty period.

Such reimbursement will not apply to any inspections performed after a
Correction is available to Customer and Customer has had a reasonable time to
incorporate the Correction, given the Customer's fleet size and maintenance
schedule.

      4.3 Rogue Units.

            4.3.1 Upon written request, Boeing will lend Customer at no charge
      an interchangeable Boeing Product in exchange for a Rogue Unit. Within ten
      (10) calendar days of its receipt of the loaned Boeing Product, Customer
      will ship the Rogue Unit to Boeing. Customer will provide with the Rogue
      Unit verification of the following requirements:

            (i)   The removed Boeing Product failed three (3) times within
                  twelve (12) consecutive months or one thousand (1000)
                  consecutive operating hours during the warranty period
                  following initial delivery,

            (ii)  Removals were performed in compliance with flight or
                  maintenance manuals approved by the FAA or the comparable
                  regulatory agency for the country in which the aircraft is
                  registered, and

            (iii) Any Corrections or tests to the Boeing Product were performed
                  by Customer according to the latest revision of the Boeing
                  Component Maintenance Manual (CMM), according to written
                  instructions from Boeing, or by Boeing.

            4.3.2 Upon receipt of a Rogue Unit and the required verifications,
      Boeing will, at no-charge to Customer, either replace the Rogue Unit with
      a new Boeing Product or, if otherwise agreed, allow Customer to retain the
      loaned, Boeing Product.

                               BOEING PROPRIETARY
AGTA-ASA                               C
                                      2-3

<PAGE>

5. Discovery and Notice.

      5.1 For a claim to be valid:

            (i)   the defect must be discovered during the warranty period; and

            (ii)  Boeing Warranty must receive written notice of the discovery
                  no later than 90 days after expiration of the warranty period.
                  The notice must include sufficient information to substantiate
                  the claim.

            (iii) For claims pursuant to Article 3.1(ii) of Part 2 of this
                  Exhibit C pertaining to Boeing Products which are first
                  inspected more than 48 months after delivery of the 787 model
                  aircraft in which they are installed, Customer must have
                  provided to Boeing no later than 45 months after delivery of
                  such aircraft Customer's AMS for 787 model aircraft clearly
                  identifying the nomenclature, location on the aircraft and
                  schedule for inspection of all Boeing Products installed on
                  such aircraft and thereafter have provided promptly to Boeing
                  any revisions to such AMS.

      5.2 Receipt of Customer's or its Authorized Agent's notice of the
discovery of a defect secures Customer's rights to remedies under this Exhibit
C, even though a Correction is performed after the expiration of the warranty
period.

      5.3 Once Customer has given valid notice of the discovery of a defect, a
claim will be submitted as soon as practicable after performance of the
Correction.

      5.4 Boeing may release service bulletins or service letters advising
Customer of the availability of certain warranty remedies. When such advice is
provided, Customer will be deemed to have fulfilled the requirements for
discovery of the defect and submittal of notice under this Exhibit C as of the
in-warranty date specified in industry support information in a service bulletin
or service letter.

6. Filing a Claim.

      6.1 Authority to File. Claims may be filed by Customer or its Authorized
Agent. Appointment of an Authorized Agent will only be effective upon Boeing's
receipt of the Authorized Agent's express written agreement, in a form
satisfactory to Boeing, to be bound by and to comply with all applicable terms
and conditions of this Aircraft General Terms Agreement.

      6.2 Claim Information.

                               BOEING PROPRIETARY
AGTA-ASA                               C
                                      2-4

<PAGE>

            6.2.1 Claimant is responsible for providing sufficient information
      to substantiate Customer's rights to remedies under this Exhibit C. Boeing
      may reject a claim for lack of sufficient information. At a minimum, such
      information must include:

            (i)   identity of claimant;

            (ii)  serial or block number of the aircraft on which the defective
                  Boeing Product was delivered;

            (iii) part number and nomenclature of the defective Boeing Product;

            (iv)  purchase order number and date of delivery of the defective
                  spare part;

            (v)   description and substantiation of the defect;

            (vi)  date the defect was discovered;

            (vii) date the Correction was completed;

            (viii) the total flight hours or cycles accrued, if applicable;

            (ix)  an itemized account of direct labor hours expended in
                  performing the Correction; and

            (x)   an itemized account of any direct materials incorporated in
                  the Correction.

            (xi)  for 787 model aircraft the name and revision level of the AMS
                  that documents the required inspection and the specific
                  reference to the inspection requirement contained therein.

            6.2.2 Additional information may be required based on the nature of
      the defect and the remedies requested.

                               BOEING PROPRIETARY
AGTA-ASA                               C
                                      2-5

<PAGE>

      6.3 Boeing Claim Processing.

            6.3.1 Any claim for a Boeing Product returned by Customer or its
      Authorized Agent to Boeing for Correction must accompany the Boeing
      Product. Any claim not associated with the return of a Boeing Product must
      be submitted signed and in writing directly by Customer or its Authorized
      Agent to Boeing Warranty by any of the methods identified in Article 11,
      "Notice," of the AGTA or through an internet portal and process specified
      by Boeing.

            6.3.2 Boeing will promptly review the claim and will give
      notification of claim approval or rejection. If the claim is rejected,
      Boeing will provide a written explanation.

7. Corrections Performed by Customer or Its Authorized Agent.

      7.1 Facilities Requirements. Provided Customer, its Authorized Agent or
its third party contractor, as appropriate, are certified by the appropriate
Civil Aviation Authority or Federal Aviation Authority, Customer or its
Authorized Agent may, at its option, Correct defective Boeing Products at its
facilities or may subcontract Corrections to a third party contractor.

      7.2 Technical Requirements. All Corrections done by Customer, its
Authorized Agent or a third party contractor must be performed in accordance
with Boeing's applicable service manuals, bulletins or other written
instructions, using parts and materials furnished or approved by Boeing.

7.3 Reimbursement.

            7.3.1 Boeing will reimburse Customer's reasonable costs of Direct
      Materials and Direct Labor by credit memorandum (excluding labor hours
      expended for overhaul) at Customer's Warranty Labor Rate to Correct a
      defective Boeing Product. Claims for reimbursement must contain sufficient
      information to substantiate Direct Labor hours expended and Direct
      Materials consumed. Customer or its Authorized Agent may be required to
      produce invoices for materials.

            7.3.2 Customer's established Warranty Labor Rate will be the greater
      of the standard labor rate or 150% of Customer's Average Direct Hourly
      Labor Rate. The standard labor rate paid by Boeing to its customers is
      established and published annually. Prior to or concurrently with
      submittal of Customer's first claim for Direct Labor reimbursement,
      Customer may notify Boeing of Customer's then-current Average Direct
      Hourly Labor Rate and thereafter notify Boeing of any material change in
      such rate. Boeing will require information from Customer to substantiate
      such rates.

                               BOEING PROPRIETARY
AGTA-ASA                               C
                                      2-6

<PAGE>

            7.3.3 Reimbursement for Direct Labor hours to perform Corrections
      stated in a service bulletin will be based on the labor estimates in the
      service bulletin.

            7.3.4 Boeing will provide to Customer a single, lump sum credit
      memorandum for Customer's Direct Labor hours expended to incorporate the
      Corrections (other than of random anomalies) identified in service
      bulletins and service letters in all in-warranty aircraft covered by such
      service bulletins or service letters after Customer's submission of a
      warranty claim and verification of the incorporation of such Corrections
      with respect to the first affected in-warranty aircraft. Such credit
      memoranda will not be provided in response to any other requests for
      reimbursement including, without limitation, those arising out of program
      letters or other special offers provided by Boeing.

            7.3.5 Boeing will reimburse Customer's freight charges associated
      with a Correction of a defect on a Boeing Product performed by its
      Authorized Agent or a third party contractor.

            7.3.6 Maximum Reimbursement. Unless previously agreed in writing,
      the maximum reimbursement for Direct Labor and Direct materials for repair
      of a defective Boeing Product will not exceed 65% of Boeing's then-current
      sales price for a new replacement Boeing Product. Inspection, removal,
      reinstallation labor, final testing, inspection and transportation costs
      are separate and are not to be included in the cost elements used to
      determine the 65% limit. By mutual agreement between Customer and Boeing,
      Boeing may provide a replacement Product to Customer in lieu of credit
      reimbursement.

      7.4 Disposition of Defective Boeing Products Beyond Economical Repair.

            7.4.1 A defective Boeing Product found to be beyond economical
      repair (see Para. 7.3.6) will be retained for a period of 30 days from the
      date Boeing receives Customer's claim. During the 30 day period, Boeing
      may request return of such Boeing Products for inspection and confirmation
      of a defect.

            7.4.2 After the 30 day period, a defective Boeing Product with a
      value of U.S. $4,000 or less may be scrapped without notification to
      Boeing. Boeing will reimburse Customer or its Authorized Agent for the
      charge for any item determined to be defective under this Aircraft General
      Terms Agreement. If such Boeing Product has a value greater than U.S,
      $4,000, Customer must obtain confirmation of unrepairability by Boeing's
      on-site Customer Services Representative prior to scrapping. Confirmation
      may be in the form of the Representative's signature on Customer's claim
      or through direct communication between the Representative and Boeing
      Warranty.

8. Corrections Performed by Boeing.

                               BOEING PROPRIETARY
AGTA-ASA                               C
                                      2-7

<PAGE>

      8.1 Freight Charges. Customer or its Authorized Agent will pre-pay freight
charges to return a Boeing Product to Boeing. If during the period of the
applicable warranty Boeing determines the Boeing Product to be defective, Boeing
will pre-pay shipping charges to return the Corrected Boeing Product. Boeing
will reimburse Customer or its Authorized Agent for freight charges for Boeing
Products returned to Boeing for Correction and determined to be defective.

      8.2 Customer Instructions. The documentation shipped with the returned
defective Boeing Product may include specific technical instructions for
additional work to be performed on the Boeing Product. The absence of such
instructions will evidence Customer's authorization for Boeing to perform all
necessary Corrections and work required to return the Boeing Product to a
serviceable condition.

      8.3 Correction Time Objectives.

            8.3.1 Boeing's objective for making Corrections is 10 working days
      for avionics and electronic Boeing Products, 30 working days for
      Corrections of other Boeing Products performed at Boeing's facilities and
      40 working days for Corrections of other Boeing Products performed at a
      Boeing subcontractor's facilities. The objectives are measured from the
      date Boeing receives the defective Boeing Product and a valid claim to the
      date Boeing ships the Corrected Boeing Product.

            8.3.2 If Customer has a critical parts shortage because Boeing has
      exceeded a Correction time objective and Customer has procured spare
      Boeing Products for the defective Boeing Product in quantities shown in
      Boeing's Recommended Spare Parts List or, for 717 model aircraft only, in
      quantities shown in Boeing's Spares Planning and Requirements Evaluation
      Model, then Boeing will either expedite the Correction or provide an
      interchangeable Boeing Product, on a no charge loan basis, until the
      Corrected Boeing Product is returned.

      8.4 Title Transfer and Risk of Loss.

            8.4.1 Title to and risk of loss of any Boeing Product returned to
      Boeing will at all times remain with Customer or any other title holder of
      such Boeing Product. While Boeing has possession of the returned Boeing
      Product, Boeing will have only such liabilities as a bailee for mutual
      benefit would have but will not be liable for loss of use.

            8.4.2 If a Correction requires shipment of a new Boeing Product,
      then at the time Boeing ships the new Boeing Product, title to and risk of
      loss for the returned Boeing Product will pass to Boeing, and title to and
      risk of loss for the new Boeing Product will pass to Customer.

9. Returning an Aircraft.

                               BOEING PROPRIETARY
AGTA-ASA                               C
                                      2-8

<PAGE>

      9.1 Conditions. An aircraft may be returned to Boeing's facilities for
Correction only if:

            (i)   Boeing and Customer agree a covered defect exists;

            (ii)  Customer lacks access to adequate facilities, equipment or
                  qualified personnel to perform the Correction; and

            (iii) it is not practical, in Boeing's estimation, to dispatch
                  Boeing personnel to perform the Correction at a remote site.

      9.2 Correction Costs. Boeing will perform the Correction at no charge to
Customer. Subject to the conditions of Article 9.1, Boeing will reimburse
Customer for the costs of fuel, oil, other required fluids and landing fees
incurred in ferrying the aircraft to Boeing and back to Customer's facilities.
Customer will minimize the length of both flights.

      9.3 Separate Agreement. Prior to the return of an aircraft to Boeing,
Boeing and Customer will enter into a separate agreement covering return of the
aircraft and performance of the Correction. Authorization by Customer for Boeing
to perform additional work that is not part of the Correction must be received
within 24 hours of Boeing's request. If such authorization is not received
within 24 hours, Customer will be invoiced for work performed by Boeing that is
not part of the Correction.

10. Insurance.

      The provisions of Article 8.2 "Insurance", of this AGTA, will apply to any
work performed by Boeing in accordance with Customer's specific technical
instructions to the extent any legal liability of Boeing is based upon the
content of such instructions.

11. Disclaimer and Release; Exclusion of Liabilities.

      11.1 DISCLAIMER AND RELEASE. THE WARRANTIES, OBLIGATIONS AND LIABILITIES
OF BOEING AND THE REMEDIES OF CUSTOMER IN THIS EXHIBIT C ARE EXCLUSIVE AND IN
SUBSTITUTION FOR, AND CUSTOMER HEREBY WAIVES, RELEASES AND RENOUNCES, ALL OTHER
WARRANTIES, OBLIGATIONS AND LIABILITIES OF BOEING AND ALL OTHER RIGHTS, CLAIMS
AND REMEDIES OF CUSTOMER AGAINST BOEING, EXPRESS OR IMPLIED, ARISING BY LAW OR
OTHERWISE, WITH RESPECT TO ANY NONCONFORMANCE OR DEFECT IN ANY AIRCRAFT,
MATERIALS, TRAINING, SERVICES OR OTHER THING PROVIDED UNDER THIS AGTA AND THE
APPLICABLE PURCHASE AGREEMENT, INCLUDING, BUT NOT LIMITED TO:

            (A)   ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS;

                               BOEING PROPRIETARY
AGTA-ASA                               C
                                      2-9

<PAGE>

            (B)   ANY IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE,
                  COURSE OF DEALING OR USAGE OF TRADE;

            (C)   ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY IN TORT,
                  WHETHER OR NOT ARISING FROM THE NEGLIGENCE OF BOEING; AND

            (D)   ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY FOR LOSS OF
                  OR DAMAGE TO ANY AIRCRAFT.

      11.2 EXCLUSION OF CONSEQUENTIAL AND OTHER DAMAGES. BOEING WILL HAVE NO
OBLIGATION OR LIABILITY, WHETHER ARISING IN CONTRACT (INCLUDING WARRANTY), TORT,
WHETHER OR NOT ARISING FROM THE NEGLIGENCE OF BOEING, OR OTHERWISE, FOR LOSS OF
USE, REVENUE OR PROFIT, OR FOR ANY OTHER INCIDENTAL OR CONSEQUENTIAL DAMAGES
WITH RESPECT TO ANY NONCONFORMANCE OR DEFECT IN ANY AIRCRAFT, MATERIALS,
TRAINING, SERVICES OR OTHER THING PROVIDED UNDER THIS AGTA AND THE APPLICABLE
PURCHASE AGREEMENT.

      11.3 Definitions. For the purpose of this Article, "BOEING" or "Boeing" is
defined as The Boeing Company, its divisions, subsidiaries, affiliates, the
assignees of each, and their respective directors, officers, employees and
agents.

                               BOEING PROPRIETARY
AGTA-ASA                               C
                                     2-10

<PAGE>

                           PRODUCT ASSURANCE DOCUMENT

                       PART 3: BOEING SERVICE LIFE POLICY

1. Definitions.

      SERVICE LIFE POLICY (SLP) COMPONENT - any of the primary structural
elements (excluding industry standard parts), such as landing gear, wing,
fuselage, vertical or horizontal stabilizer, listed in the applicable purchase
agreement for a specific model of aircraft, either installed in the aircraft at
time of delivery or purchased from Boeing by Customer as a spare part. The
detailed SLP Component listing will be in Supplemental Exhibit SLP1 to each
Purchase Agreement.

2. Service Life Policy.

      2.1 SLP Commitment. If a failure is discovered in a SLP Component within
the time periods specified in Article 2.2 below, Boeing will provide Customer a
replacement SLP Component at the price calculated pursuant to Article 3.1,
below. If requested by Customer as an alternative remedy, Boeing will reimburse
Customer in accordance with the provisions of Exhibit C, Part 2, Article 7.3,
for Direct Labor and Direct Material for repair of a failed SLP Component an
amount not to exceed the difference between Boeing's then current spare parts
price for such SLP Component and the price determined pursuant to Article 3,
below.

      2.2 SLP Policy Periods.

            2.2.1 The policy period for SLP Components initially installed on an
      aircraft is 12 years after the date of delivery of the aircraft except
      that for SLP Components initially installed on a 787 aircraft the policy
      period is 15 years after the date of delivery of the aircraft.

            2.2.2 The policy period for SLP Components purchased from Boeing by
      Customer as spare parts is 12 years from delivery of such SLP Component or
      12 years from the date of delivery of the last aircraft produced by Boeing
      of a specific model, whichever first expires, except that for the 787
      aircraft such policy period is 15 years from delivery of such SLP
      Component or 15 years from the date of delivery of the last 787 aircraft
      produced by Boeing, whichever first expires.

                               BOEING PROPRIETARY
AGTA-ASA                               C
                                      3-1

<PAGE>

3. Price.

      The price Customer will pay for replacement of a failed SLP Component will
be calculated pursuant to the following formulas:

      (i)  For 787 aircraft only:

                    P = C(T-48)
                        -------
                          132

      where:

               P = price to Customer for the replacement part

               C = SLP Component sales price at time of replacement

               T = total age in months of the failed SLP Component from the date
                   of delivery to Customer to the date of discovery of such
                   condition and is greater than 48 months.

      (ii)  For all other aircraft models:

                     P = CT
                         ---
                         144

      where:

               P = price to Customer for the replacement part

               C = SLP Component sales price at time of replacement

               T = total age in months of the failed SLP Component from the date
                   of delivery to Customer to the date of discovery of such
                   condition.

4. Conditions.

      Boeing's obligations under this Part 3 of Exhibit C, "Boeing Service Life
Policy," (Policy) are conditioned upon the following:

      4.1 Customer must notify Boeing in writing of the failure within three
months after it is discovered.

      4.2 Customer must provide reasonable evidence that the claimed failure is
covered by this Policy and if requested by Boeing, that such failure was not the
result of:

            (i)   a defect or failure in a component not covered by this Policy,

            (ii)  an extrinsic force,

            (iii) an act or omission of Customer, or

            (iv)  operation or maintenance contrary to applicable governmental
                  regulations or Boeing's instructions.

                               BOEING PROPRIETARY
AGTA-ASA                               C
                                      3-2

<PAGE>

      4.3 If return of a failed SLP Component is practicable and requested by
Boeing, Customer will return such SLP Component to Boeing at Boeing's expense.

      4.4 Customer's rights and remedies under this Policy are limited to the
receipt of a Correction pursuant to Article 2 above.

5. Disclaimer and Release; Exclusion of Liabilities.

      This Part 3 and the rights and remedies of Customer and the obligations of
Boeing are subject to the DISCLAIMER AND RELEASE and EXCLUSION OF CONSEQUENTIAL
AND OTHER DAMAGES provisions of Article 11 of Part 2 of this Exhibit C.

                               BOEING PROPRIETARY
AGTA-ASA                               C
                                      3-3

<PAGE>

                           PRODUCT ASSURANCE DOCUMENT

                      PART 4: SUPPLIER WARRANTY COMMITMENT

1. Supplier Warranties and Supplier Patent and Copyright Indemnities.

      Boeing will use diligent efforts to obtain warranties and indemnities
against patent and copyright infringement enforceable by Customer from Suppliers
of Supplier Products (except for BFE and engines) installed on the aircraft at
the time of delivery that were selected and purchased by Boeing, but not
manufactured to Boeing's detailed design. Boeing will furnish copies of the
warranties and patent and copyright indemnities to Customer contained in
Supplier Product Support and Assurance Agreements, prior to the scheduled
delivery month of the first aircraft under the initial purchase agreement to the
AGTA.

2. Boeing Assistance in Administration of Supplier Warranties.

      Customer will be responsible for submitting warranty claims directly to
Suppliers; however, if Customer experiences problems enforcing any Supplier
warranty obtained by Boeing for Customer, Boeing will conduct an investigation
of the problem and assist Customer in the resolution of those claims.

3. Boeing Support in Event of Supplier Default.

      3.1 If the Supplier defaults in the performance of a material obligation
under its warranty, and Customer provides evidence to Boeing that a default has
occurred, then Boeing will furnish the equivalent warranty terms as provided by
the defaulting Supplier.

      3.2 At Boeing's request, Customer will assign to Boeing, and Boeing will
be subrogated to, its rights against the Supplier provided by the Supplier
warranty.

                               BOEING PROPRIETARY
AGTA-ASA                               C
                                      4-1

<PAGE>

                           PRODUCT ASSURANCE DOCUMENT

                       PART 5: BOEING INTERFACE COMMITMENT

1. Interface Problems.

      An Interface Problem is defined as a technical problem in the operation of
an aircraft or its systems experienced by Customer, the cause of which is not
readily identifiable by Customer but which Customer believes to be attributable
to either the design characteristics of the aircraft or its systems or the
workmanship used in the installation of Supplier Products. In the event Customer
experiences an Interface Problem, Boeing will, without additional charge to
Customer, promptly conduct an investigation and analysis to determine the cause
or causes of the Interface Problem. Boeing will promptly advise Customer at the
conclusion of its investigation of Boeing's opinion as to the causes of the
Interface Problem and Boeing's recommendation as to corrective action.

2. Boeing Responsibility.

      If Boeing determines that the Interface Problem is primarily attributable
to the design or installation of any Boeing Product, Boeing will Correct the
design or workmanship to the extent of any then-existing obligations of Boeing
under the provisions of the applicable Boeing Warranty.

3. Supplier Responsibility.

      If Boeing determines that the Interface Problem is primarily attributable
to the design or installation of a Supplier Product, Boeing will assist Customer
in processing a warranty claim against the Supplier.

4. Joint Responsibility.

      If Boeing determines that the Interface Problem is partially attributable
to the design or installation of a Boeing Product and partially to the design or
installation of a Supplier Product, Boeing will seek a solution to the Interface
Problem through the cooperative efforts of Boeing and the Supplier and will
promptly advise Customer of the resulting corrective actions and
recommendations.

5. General.

      Customer will, if requested by Boeing, assign to Boeing any of its rights
against any supplier as Boeing may require to fulfill its obligations hereunder.

                               BOEING PROPRIETARY
AGTA-ASA                               C
                                      5-1

<PAGE>

6. Disclaimer and Release; Exclusion of Liabilities.

      This Part 5 and the rights and remedies of Customer and the obligations of
Boeing herein are subject to the DISCLAIMER AND RELEASE and EXCLUSION OF
CONSEQUENTIAL AND OTHER DAMAGES provisions of Article 11 of Part 2 of this
Exhibit C.

                               BOEING PROPRIETARY
AGTA-ASA                               C
                                      5-2

<PAGE>

                           PRODUCT ASSURANCE DOCUMENT

                    PART 6: BOEING INDEMNITIES AGAINST PATENT
                           AND COPYRIGHT INFRINGEMENT

1. Indemnity Against Patent Infringement.

      Boeing will defend and indemnify Customer with respect to all claims,
suits and liabilities arising out of any actual or alleged patent infringement
through Customer's use, lease or resale of any aircraft or any Boeing Product
installed on an aircraft at delivery.

2. Indemnity Against Copyright Infringement.

      Boeing will defend and indemnify Customer with respect to all claims,
suits and liabilities arising out of any actual or alleged copyright
infringement through Customer's use, lease or resale of any Boeing created
Materials and Aircraft Software installed on an aircraft at delivery.

3. Exceptions, Limitations and Conditions.

      3.1 Boeing's obligation to indemnify Customer for patent infringement will
extend only to infringements in countries which, at the time of the
infringement, were party to and fully bound by either (a) Article 27 of the
Chicago Convention on International Civil Aviation of December 7, 1944, or (b)
the International Convention for the Protection of Industrial Property (Paris
Convention).

      3.2 Boeing's obligation to indemnify Customer for copyright infringement
is limited to infringements in countries which, at the time of the infringement,
are members of The Berne Union and recognize computer software as a "work" under
The Berne Convention.

      3.3 The indemnities provided under this Part 6 will not apply to any BFE
engines, Supplier Product, Boeing Product used other than for its intended
purpose, or Aircraft Software not created by Boeing.

      3.4 Customer must deliver written notice to Boeing (i) within 10 days
after Customer first receives notice of any suit or other formal action against
Customer and (ii) within 20 days after Customer first receives any other
allegation or written claim of infringement covered by this Part 6.

                               BOEING PROPRIETARY
AGTA-ASA                               C
                                      6-1

<PAGE>

      3.5 At any time, Boeing will have the right at its option and expense to:
(i) negotiate with any party claiming infringement, (ii) assume or control the
defense of any infringement allegation, claim, suit or formal action, (iii)
intervene in any infringement suit or formal action, and/or (iv) attempt to
resolve any claim of infringement by replacing an allegedly infringing Boeing
Product or Aircraft Software with a noninfringing equivalent.

      3.6 Customer will promptly furnish to Boeing all information, records and
assistance within Customer's possession or control which Boeing considers
relevant or material to any alleged infringement covered by this Part 6.

      3.7 Except as required by a final judgment entered against Customer by a
court of competent jurisdiction from which no appeals can be or have been filed,
Customer will obtain Boeing's written approval prior to paying, committing to
pay, assuming any obligation or making any material concession relative to any
infringement covered by these indemnities.

      3.8 BOEING WILL HAVE NO OBLIGATION OR LIABILITY UNDER THIS PART 6 FOR LOSS
OF USE, REVENUE OR PROFIT, OR FOR ANY OTHER INCIDENTAL OR CONSEQUENTIAL DAMAGES.
THE OBLIGATIONS OF BOEING AND REMEDIES OF CUSTOMER IN THIS PART 6 ARE EXCLUSIVE
AND IN SUBSTITUTION FOR, AND CUSTOMER HEREBY WAIVES, RELEASES AND RENOUNCES ALL
OTHER INDEMNITIES, OBLIGATIONS AND LIABILITIES OF BOEING AND ALL OTHER RIGHTS,
CLAIMS AND REMEDIES OF CUSTOMER AGAINST BOEING, EXPRESS OR IMPLIED, ARISING BY
LAW OR OTHERWISE, WITH RESPECT TO ANY ACTUAL OR ALLEGED PATENT, COPYRIGHT OR
OTHER INTELLECTUAL PROPERTY INFRINGEMENT OR THE LIKE BY ANY AIRCRAFT, AIRCRAFT
SOFTWARE, MATERIALS, TRAINING, SERVICES OR OTHER THING PROVIDED UNDER THIS AGTA
AND THE APPLICABLE PURCHASE AGREEMENT.

      3.9 For the purposes of this Part 6, "BOEING or Boeing" is defined as The
Boeing Company, its divisions, subsidiaries, affiliates, the assignees of each
and their respective directors, officers, employees and agents.

                               BOEING PROPRIETARY
AGTA-ASA                               C
                                      6-2

<PAGE>

                                     SAMPLE
                              INSURANCE CERTIFICATE

                               BROKER'S LETTERHEAD

[date]

Certificate of Insurance

ISSUED TO:     The Boeing Company
               Post Office Box 3707
               Mail Stop 13-57
               Seattle, Washington 98124
               Attn: Manager - Aviation Insurance for
                     Vice President - Employee Benefits,
                     Insurance and Taxes

CC:            Boeing Commercial Airplanes
               P.O. Box 3707
               Mail Stop 21-34
               Seattle, Washington 98124-2207
               U.S.A.
               Attn: Vice President - Contracts

NAMED INSURED: ALASKA AIRLINES, INC.

We hereby certify that in our capacity as Brokers to the Named Insured, the
following described insurance is in force on this date:

<TABLE>
<CAPTION>
INSURER        POLICY NO.       PARTICIPATION
-------        ----------       -------------
<S>            <C>              <C>
</TABLE>

POLICY PERIOD:      From [date and time of inception of the Policy(ies)] to
                    [date and time of expiration].

GEOGRAPHICAL LIMITS:      Worldwide (however, as respects "Aircraft Hull War and
                          Allied Perils" Insurance, as agreed by Boeing).

                               BOEING PROPRIETARY
AGTA-ASA                            App. I
                                       1

<PAGE>

                                     SAMPLE
                             INSURANCE CERTIFICATE

AIRCRAFT INSURED:      All Boeing manufactured aircraft owned or operated by the
                       Named Insured which are the subject of the following
                       purchase agreement(s), entered into between The Boeing
                       Company and _________________ (hereinafter "Aircraft"):

                       Purchase Agreement No. ____ dated ______
                       Purchase Agreement No. ____ dated ______

COVERAGES:

1.    AIRCRAFT "ALL RISKS" HULL (GROUND AND FLIGHT)

2.    AIRCRAFT HULL WAR AND ALLIED PERILS (AS PER LSW 555, OR ITS SUCCESSOR
      WORDING)

3.    AIRLINE LIABILITY

Including, but not limited to, Bodily Injury, Property Damage, Aircraft
Liability, Liability War Risks, Passenger Legal Liability, Premises/Operations
Liability, Completed Operations/Products Liability, Baggage Legal Liability
(checked and unchecked), Cargo Legal Liability, Contractual Liability and
Personal Injury.

The above-referenced Airline Liability insurance coverage is subject to War and
Other Perils Exclusion Clause (AV48B) but all sections, other than section (b)
are reinstated as per AV52C, or their successor endorsements.

LIMITS OF LIABILITY:

To the fullest extent of the Policy limits that the Named Insured carries from
the time of delivery of the first Aircraft under the first Purchase Agreement
listed under "Aircraft Insured" and thereafter at the inception of each policy
period, but in any event no less than the following:

Combined Single Limit Bodily Injury and Property Damage: U.S.$ any one
occurrence each Aircraft (with aggregates as applicable).

<TABLE>
<S>                                <C>
(717-200)                          US$300,000,000
(737-500/600)                      US$350,000,000
(737-300/700)                      US$400,000,000
(737-400)                          US$450,000,000
(737-800)                          US$500,000,000
(737-900)                          US$500,000,000
(757-200)                          US$525,000,000
(757-300)                          US$550,000,000
(767-200)                          US$550,000,000
(767-300)                          US$700,000,000
(767-400ERX)                       US$750,000,000
</TABLE>

                               BOEING PROPRIETARY
AGTA-ASA                            App. I
                                       2

<PAGE>

                                     SAMPLE
                             INSURANCE CERTIFICATE

<TABLE>
<S>                                <C>
(7E7)                              US$700,000,000
(777-200LR)                        US$800,000,000
(MD-11)                            US$800,000,000
(777-200/300)                      US$800,000,000
(777-300ER)                        US$800,000,000
(747-400)                          US$900,000,000
</TABLE>

(In regard to all other models and/or derivatives, to be specified by Boeing).

(In regard to Personal Injury coverage, limits are US$25,000,000 any one
offense/aggregate.)

DEDUCTIBLES / SELF-INSURANCE

Any deductible and/or self-insurance amount (other than standard market
deductibles) are to be disclosed and agreed by Boeing.

SPECIAL PROVISIONS APPLICABLE TO BOEING:

It is certified that Insurers are aware of the terms and conditions of AGTA-ASA
and the following purchase agreements:

PA ______ dated _______
PA ______ dated _______
PA ______ dated _______

Each Aircraft manufactured by Boeing which is delivered to the Insured pursuant
to the applicable purchase agreement during the period of effectivity of the
policies represented by this Certificate will be covered to the extent specified
herein.

Insurers have agreed to the following:

      A. In regard to Aircraft "all risks" Hull Insurance and Aircraft Hull War
and Allied Perils Insurance, Insurers agree to waive all rights of subrogation
or recourse against Boeing in accordance with AGTA-ASA which was incorporated by
reference into the applicable purchase agreement.

      B. In regard to Airline Liability Insurance, Insurers agree:

            (1) To include Boeing as an additional insured in accordance with
Customer's undertaking in Article 8.2.1 of AGTA-ASA which was incorporated by
reference into the applicable purchase agreement.

                               BOEING PROPRIETARY
AGTA-ASA                            App. I
                                       3

<PAGE>

                                     SAMPLE
                             INSURANCE CERTIFICATE

            (2) To provide that such insurance will be primary and not
contributory nor excess with respect to any other insurance available for the
protection of Boeing;

            (3) To provide that with respect to the interests of Boeing, such
insurance shall not be invalidated or minimized by any action or inaction,
omission or misrepresentation by the Insured or any other person or party (other
than Boeing) regardless of any breach or violation of any warranty, declaration
or condition contained in such policies;

            (4) To provide that all provisions of the insurance coverages
referenced above, except the limits of liability, will operate to give each
Insured or additional insured the same protection as if there were a separate
Policy issued to each.

      C. In regard to all of the above referenced policies:

            (1) Boeing will not be responsible for payment, set-off, or
assessment of any kind or any premiums in connection with the policies,
endorsements or coverages described herein;

            (2) If a policy is canceled for any reason whatsoever, or any
substantial change is made in the coverage which affects the interests of Boeing
or if a policy is allowed to lapse for nonpayment of premium, such cancellation,
change or lapse shall not be effective as to Boeing for thirty (30) days (in the
case of war risk and allied perils coverage seven (7) days after sending, or
such other period as may from time to time be customarily obtainable in the
industry) after receipt by Boeing of written notice from the Insurers or the
authorized representatives or Broker of such cancellation, change or lapse; and

            (3) For the purposes of the Certificate, "Boeing" is defined as The
Boeing Company, its divisions, subsidiaries, affiliates, the assignees of each
and their respective directors, officers, employees and agents.

SUBJECT TO THE TERMS, CONDITIONS, LIMITATIONS AND EXCLUSIONS OF THE RELATIVE
POLICIES.

(signature)

(typed name)

(title)

                               BOEING PROPRIETARY
AGTA-ASA                            App. I
                                       4
<PAGE>

                                     SAMPLE
                          PURCHASE AGREEMENT ASSIGNMENT
                (WHERE CUSTOMER REMAINS OPERATOR OF THE AIRCRAFT)

      THIS PURCHASE AGREEMENT ASSIGNMENT (Assignment) dated as of ________ 20__
between Alaska Airlines, Inc., a company organized under the laws of
________________ (Assignor) and ________________________, a company organized
under the laws of ________________ (Assignee). Capitalized terms used herein
without definition will have the same meaning as in the Boeing Purchase
Agreement.

      Assignor and The Boeing Company, a Delaware corporation (Boeing), are
parties to the Boeing Purchase Agreement, providing, among other things, for the
sale by Boeing to Assignor of certain aircraft, engines and related equipment,
including the Aircraft.

      Assignee wishes to acquire the Aircraft and certain rights and interests
under the Boeing Purchase Agreement and Assignor, on the following terms and
conditions, is willing to assign to Assignee certain of Assignor's rights and
interests under the Boeing Purchase Agreement. Assignee is willing to accept
such assignment.

It is agreed as follows:

      1. For all purposes of this Assignment, the following terms will have the
following meanings:

      Aircraft -- one Boeing Model ______ aircraft, bearing manufacturer's
serial number _______, together with all engines and parts installed on such
aircraft on the Delivery Date.

      Boeing -- Boeing shall include any wholly-owned subsidiary of Boeing, and
its successors and assigns.

      Boeing Purchase Agreement -- Purchase Agreement No. ________ dated as of
____________ between Boeing and Assignor, as amended, but excluding
______________, providing, among other things, for the sale by Boeing to
Assignor of the Aircraft, as said agreement may be further amended to the extent
permitted by its terms. The Purchase Agreement incorporated by reference
Aircraft General Terms Agreement AGTA/____ (AGTA).

      Delivery Date -- the date on which the Aircraft is delivered by Boeing to
Assignee pursuant to and subject to the terms and conditions of the Boeing
Purchase Agreement and this Assignment.

      2. Assignor does hereby assign to Assignee all of its rights and interests
in and to the Boeing Purchase Agreement, as and to the extent that the same
relate to the Aircraft and the purchase and operation thereof, except as and to
the extent expressly reserved below, including, without limitation, in such
assignment: [TO BE COMPLETED BY THE PARTIES.]

AGTA-ASA                             App. II

                                       1
<PAGE>

                                     SAMPLE
                          PURCHASE AGREEMENT ASSIGNMENT
                (WHERE CUSTOMER REMAINS OPERATOR OF THE AIRCRAFT)

      {EXAMPLES

      (a)   the right upon valid tender to purchase the Aircraft pursuant to the
            Boeing Purchase Agreement subject to the terms and conditions
            thereof and the right to take title to the Aircraft and to be named
            the "Buyer" in the bill of sale for the Aircraft;

      (b)   the right to accept delivery of the Aircraft;

      (c)   all claims for damages arising as a result of any default under the
            Boeing Purchase Agreement in respect of the Aircraft;

      (d)   all warranty and indemnity provisions contained in the Boeing
            Purchase Agreement, and all claims arising thereunder, in respect of
            the Aircraft; and

      (e)   any and all rights of Assignor to compel performance of the terms of
            the Boeing Purchase Agreement in respect of the Aircraft.}

Reserving exclusively to Assignor, however:

      {EXAMPLES

      (i)   all Assignor's rights and interests in and to the Boeing Purchase
            Agreement as and to the extent the same relates to aircraft other
            than the Aircraft, or to any other matters not directly pertaining
            to the Aircraft;

      (ii)  all Assignor's rights and interests in or arising out of any advance
            or other payments or deposits made by Assignor in respect of the
            Aircraft under the Boeing Purchase Agreement and any amounts
            credited or to be credited or paid or to be paid by Boeing in
            respect of the Aircraft;

      (iii) the right to obtain services, training, information and
            demonstration and test flights pursuant to the Boeing Purchase
            Agreement; and

      (iv)  the right to maintain plant representatives at Boeing's plant
            pursuant to the Boeing Purchase Agreement.}

Assignee hereby accepts such assignment.

      3. Notwithstanding the foregoing, so long as no event of default or
termination under [specify document] has occurred and is continuing, Assignee
hereby authorizes Assignor, to the

AGTA-ASA                             App. II

                                       2
<PAGE>

                                     SAMPLE
                          PURCHASE AGREEMENT ASSIGNMENT
                (WHERE CUSTOMER REMAINS OPERATOR OF THE AIRCRAFT)

exclusion of Assignee, to exercise in Assignor's name all rights and powers of
Customer under the Boeing Purchase Agreement in respect of the Aircraft.

      4. For all purposes of this Assignment, Boeing will not be deemed to have
knowledge of or need recognize the occurrence, continuance or the discontinuance
of any event of default or termination under [specify document] unless and until
Boeing receives from Assignee written notice thereof, addressed to its Vice
President - Contracts, Boeing Commercial Airplanes at P.O. Box 3707, Seattle,
Washington 98124, if by mail, or to 32-9430 Answerback BOEINGREN RNTN, if by
telex. Until such notice has been given, Boeing will be entitled to deal solely
and exclusively with Assignor. Thereafter, until Assignee has provided Boeing
written notice that any such events no longer continue, Boeing will be entitled
to deal solely and exclusively with Assignee. Boeing may act with acquittance
and conclusively rely on any such notice.

      5. It is expressly agreed that, anything herein contained to the contrary
notwithstanding: (a) prior to the Delivery Date Assignor will perform its
obligations with respect to the Aircraft to be performed by it on or before such
delivery, (b) Assignor will at all times remain liable to Boeing under the
Boeing Purchase Agreement to perform all obligations of Customer thereunder to
the same extent as if this Assignment had not been executed, and (c) the
exercise by Assignee of any of the assigned rights will not release Assignor
from any of its obligations to Boeing under the Boeing Purchase Agreement,
except to the extent that such exercise constitutes performance of such
obligations.

      6. Notwithstanding anything contained in this Assignment to the contrary
(but without in any way releasing Assignor from any of its obligations under the
Boeing Purchase Agreement), Assignee confirms for the benefit of Boeing that,
insofar as the provisions of the Boeing Purchase Agreement relate to the
Aircraft, in exercising any rights under the Boeing Purchase Agreement, or in
making any claim with respect to the Aircraft or other things (including,
without limitation, Material, training and services) delivered or to be
delivered, the terms and conditions of the Boeing Purchase Agreement, including,
without limitation, the DISCLAIMER AND RELEASE and EXCLUSION OF CONSEQUENTIAL
AND OTHER DAMAGES in Article 11 of Part 2 of Exhibit C to the Aircraft General
Terms Agreement which was incorporated by reference into the Boeing Purchase
Agreement and the insurance provisions in Article 8.2 of the Aircraft General
Terms Agreement which was incorporated by reference into the Boeing Purchase
Agreement therein, will apply to and be binding on Assignee to the same extent
as if Assignee had been the original "Customer" thereunder. Assignee further
agrees, expressly for the benefit of Boeing, upon the written request of Boeing,
Assignee will promptly execute and deliver such further assurances and documents
and take such further action as Boeing may reasonably request in order to obtain
the full benefits of Assignee's agreements in this paragraph.

AGTA-ASA                             App. II

                                        3
<PAGE>

                                     SAMPLE
                          PURCHASE AGREEMENT ASSIGNMENT
                (WHERE CUSTOMER REMAINS OPERATOR OF THE AIRCRAFT)

      7. Nothing contained herein will subject Boeing to any liability to which
it would not otherwise be subject under the Boeing Purchase Agreement or modify
in any respect the contract rights of Boeing thereunder, or require Boeing to
divest itself of title to or possession of the Aircraft or other things until
delivery thereof and payment therefor as provided therein.

      8. Notwithstanding anything in this Assignment to the contrary, after
receipt of notice of any event of default or termination under [specify
document], Boeing will continue to owe to Assignor moneys in payment of claims
made or obligations arising before such notice, which moneys may be subject to
rights of set-off available to Boeing under applicable law. Similarly, after
receipt of notice that such event of default or termination no longer continues,
Boeing will continue to owe to Assignee moneys in payment of claims made or
obligations arising before such notice, which moneys may be subject to rights of
set-off available to Boeing under applicable law.

      9. Effective at any time after an event of default has occurred, and for
so long as such event of default is continuing, Assignor does hereby constitute
Assignee, Assignor's true and lawful attorney, irrevocably, with full power (in
the name of Assignor or otherwise) to ask, require, demand, receive, and give
acquittance for any and all moneys and claims for moneys due and to become due
under or arising out of the Boeing Purchase Agreement in respect of the
Aircraft, to the extent assigned by this Assignment.

      10. Assignee agrees, expressly for the benefit of Boeing and Assignor that
it will not disclose, directly or indirectly, any terms of the Boeing Purchase
Agreement; provided, that Assignee may disclose any such information (a) to its
special counsel and public accountants, (b) as required by applicable law to be
disclosed or to the extent that Assignee may have received a subpoena or other
written demand under color of legal right for such information, but it will
first, as soon as practicable upon receipt of such requirement or demand,
furnish an explanation of the basis thereof to Boeing, and will afford Boeing
reasonable opportunity, to obtain a protective order or other reasonably
satisfactory assurance of confidential treatment for the information required to
be disclosed, and (c) to any bona fide potential purchaser or lessee of the
Aircraft. Any disclosure pursuant to (a) and (c) above will be subject to
execution of a confidentiality agreement substantially similar to this paragraph
10.

      11. This Assignment may be executed by the parties in separate
counterparts, each of which when so executed and delivered will be an original,
but all such counterparts will together constitute but one and the same
instrument.

AGTA-ASA                             App. II

                                       4
<PAGE>

                                     SAMPLE
                          PURCHASE AGREEMENT ASSIGNMENT
                (WHERE CUSTOMER REMAINS OPERATOR OF THE AIRCRAFT)

      12. This Assignment will be governed by, and construed in accordance with,
the laws of [______________________].

___________________________                   ___________________________
as Assignor                                   as Assignee

By _______________________                    By _______________________

Name:                                         Name:

Title:                                        Title:

[If the Assignment is further assigned by Assignee in connection with a
financing, the following language needs to be included.]

Attest:

The undersigned, as [Indenture Trustee/Agent for the benefit of the Loan
Participants/Mortgagee] and as assignee of, and holder of a security interest
in, the estate, right, and interest of the Assignee in and to the foregoing
Purchase Agreement Assignment and the Purchase Agreement pursuant to the terms
of a certain [Trust Indenture/Mortgage] dated as of _____________, agrees to the
terms of the foregoing Purchase Agreement Assignment and agrees that its rights
and remedies under such [Trust Indenture/Mortgage] shall be subject to the terms
and conditions of the foregoing Purchase Agreement Assignment, including,
without limitation, paragraph 6.

[Name of Entity],
as Indenture Trustee/Agent

By: ____________________________

Name:

Title:

AGTA-ASA                             App. II

                                        5
<PAGE>

                                     SAMPLE
                          PURCHASE AGREEMENT ASSIGNMENT
                (WHERE CUSTOMER REMAINS OPERATOR OF THE AIRCRAFT)

CONSENT AND AGREEMENT OF
THE BOEING COMPANY

      THE BOEING COMPANY, a Delaware corporation (Boeing), hereby acknowledges
notice of and consents to the foregoing Purchase Agreement Assignment
(Assignment) as it relates to Boeing in respect of the Aircraft. Boeing confirms
to Assignee that: all representations, warranties, indemnities and agreements of
Boeing under the Boeing Purchase Agreement with respect to the Aircraft will,
subject to the terms and conditions thereof and of the Assignment, inure to the
benefit of Assignee to the same extent as if Assignee were originally named
"Customer" therein.

      This Consent and Agreement will be governed by, and construed in
accordance with, the law of the State of Washington, excluding the conflict of
laws principles thereof.

Dated as of ____________________, 20___.

THE BOEING COMPANY

By ________________________
Name:
Title: Attorney-in-Fact

Aircraft Manufacturer's Serial Number(s) ____________

AGTA-ASA                             App. II

                                       6
<PAGE>

                                     SAMPLE
                            POST-DELIVERY SALE NOTICE

Boeing Commercial Airplanes
P.O. Box 3707
Seattle, Washington 98124-2207
U.S.A.

By Courier
1901 Oakesdale Ave. SW
Renton, WA  98055
U.S.A.

Attention: Vice President - Contracts
           Mail Code 21-34

Ladies and Gentlemen:

In connection with the sale by Alaska Airlines, Inc. (Seller) to
________________ (Purchaser) of the aircraft identified below, reference is made
to Purchase Agreement No. _____ dated as of ___________, 20__, between The
Boeing Company (Boeing) and Seller (the Purchase Agreement) under which Seller
purchased certain Boeing Model ________ aircraft, including the aircraft bearing
Manufacturer's Serial No.(s) ______________________ (the Aircraft). The Purchase
Agreement incorporated by reference Aircraft General Terms Agreement AGTA-ASA
(AGTA).

Capitalized terms used herein without definition will have the same meaning as
in the Purchase Agreement.

Seller has sold the Aircraft, including in that sale the assignment to Purchaser
of all remaining rights related to the Aircraft under the Purchase Agreement. To
accomplish this transfer of rights, as authorized by the provisions of the
Purchase Agreement:

(1) Purchaser acknowledges it has reviewed those provisions of the Purchase
Agreement related to those rights assigned and agrees to be bound by and comply
with all applicable terms and conditions of the Purchase Agreement, including,
without limitation, the DISCLAIMER AND RELEASE and EXCLUSION OF CONSEQUENTIAL
AND OTHER DAMAGES in Article 11 of Part 2 of Exhibit C to the AGTA and the
insurance provisions in Article 8.2 of the AGTA. Purchaser further agrees upon
the written request of Boeing, to promptly execute and deliver such further
assurances and documents and take such further action as Boeing may reasonably
request in order to obtain the full benefits of Purchaser's agreements in this
paragraph; and

(2) Seller will remain responsible for any payments due Boeing as a result of
obligations relating to the Aircraft incurred by Seller to Boeing prior to the
effective date of this letter.

AGTA-ASA                            App. III

                                        1
<PAGE>

                                     SAMPLE
                            POST-DELIVERY SALE NOTICE

We request that Boeing acknowledge receipt of this letter and confirm the
transfer of rights set forth above by signing the acknowledgment and forwarding
one copy of this letter to each of the undersigned.

Very truly yours,

Alaska Airlines, Inc.                       Purchaser

By _________________________                By _________________________

Its ________________________                Its ________________________

Dated ______________________                Dated ______________________

Receipt of the above letter is acknowledged and the assignment of rights under
the Purchase Agreement with respect to the Aircraft described above is
confirmed, effective as of this date.

THE BOEING COMPANY

By __________________________

Its Attorney-in-Fact

Dated _______________________

Aircraft Manufacturer's Serial Number ____________

AGTA-ASA                           App. III

                                       2
<PAGE>

                                     SAMPLE
                           POST-DELIVERY LEASE NOTICE

Boeing Commercial Airplanes
P.O. Box 3707
Seattle, Washington 98124-2207
U.S.A.

By Courier
1901 Oakesdale Ave. SW
Renton, WA 98055
U.S.A.

Attention: Vice President - Contracts
           Mail Code 21-34

Ladies and Gentlemen:

In connection with the lease by Alaska Airlines, Inc. (Lessor) to ___________
(Lessee) of the aircraft identified below, reference is made to Purchase
Agreement No. ____ dated as of ________, 20__, between The Boeing Company
(Boeing) and Lessor (the Purchase Agreement) under which Lessor purchased
certain Boeing Model _______ aircraft, including the aircraft bearing
Manufacturer's Serial No.(s) ___________________ (the Aircraft). The Purchase
Agreement incorporated by reference Aircraft General Terms Agreement AGTA-ASA
(AGTA).

Capitalized terms used herein without definition will have the same meaning as
in the Purchase Agreement.

Lessor has leased the Aircraft, including in that lease the transfer to Lessee
of all remaining rights related to the Aircraft under the Purchase Agreement. To
accomplish this transfer of rights, as authorized by the provisions of the
Purchase Agreement:

(1) Lessor authorizes Lessee to exercise, to the exclusion of Lessor, all rights
and powers of Lessor with respect to the remaining rights related to the
Aircraft under the Purchase Agreement. This authorization will continue until
Boeing receives written notice from Lessor to the contrary, addressed to Vice
President - Contracts, Mail Code 21-34, Boeing Commercial Airplanes, P.O. Box
3707, Seattle, Washington 98124-2207. Until Boeing receives such notice, Boeing
is entitled to deal exclusively with Lessee with respect to the Aircraft under
the Purchase Agreement. With respect to the rights and obligations of Lessor
under the Purchase Agreement, all actions taken or agreements entered into by
Lessee during the period prior to Boeing's receipt of this notice are final and
binding on Lessor. Further, any payments made by Boeing as a result of claims
made by Lessee prior to receipt of such notice will be made to the credit of
Lessee and after such notice will be made to Lessor.

AGTA-ASA                             App. IV

                                        1
<PAGE>

                                     SAMPLE
                           POST-DELIVERY LEASE NOTICE

(2) Lessee accepts the authorization above, acknowledges it has reviewed those
provisions of the Purchase Agreement related to the authority granted and agrees
to be bound by and comply with all applicable terms and conditions of the
Purchase Agreement including, without limitation, the DISCLAIMER AND RELEASE and
EXCLUSION OF CONSEQUENTIAL AND OTHER DAMAGES in Article 11 of Part 2 of Exhibit
C AGTA and the insurance provisions in Article 8.2 of the AGTA. Lessee further
agrees, upon the written request of Boeing, to promptly execute and deliver such
further assurances and documents and take such further action as Boeing may
reasonably request in order to obtain the full benefits of Lessee's agreements
in this paragraph.

(3) Lessor will remain responsible for any payments due Boeing as a result of
obligations relating to the Aircraft incurred by Lessor to Boeing prior to the
effective date of this letter.

We request that Boeing acknowledges receipt of this letter and confirm the
transfer of rights set forth above by signing the acknowledgment and forwarding
one copy of this letter to each of the undersigned.

Very truly yours,

Alaska Airlines, Inc.                    Lessee

By _______________________               By _______________________

Its ______________________               Its ______________________

Dated ____________________               Dated ____________________

Receipt of the above letter is acknowledged and transfer of rights under the
Purchase Agreement with respect to the Aircraft described above is confirmed,
effective as of this date.

THE BOEING COMPANY

By _______________________

Its ______________________

Dated ____________________

AGTA-ASA                             App. IV

                                       2
<PAGE>

                                     SAMPLE
                           POST-DELIVERY LEASE NOTICE

Aircraft Manufacturer's Serial Number ____________

AGTA-ASA                             App. IV

                                       3
<PAGE>

                                     SAMPLE
                         PURCHASER'S/LESSEE'S AGREEMENT

Boeing Commercial Airplanes
P. O. Box 3707
Seattle, Washington 98124-2207
U.S.A.

By Courier
1901 Oakesdale Ave. SW
Renton, WA 98055
U.S.A.

Attention Vice President - Contracts
          Mail Code 21-34

Ladies and Gentlemen:

In connection with the sale/lease by Alaska Airlines, Inc. (Seller/Lessor) to
_______________________ (Purchaser/Lessee) of the aircraft identified below,
reference is made to the following documents:

(i) Purchase Agreement No. _____ dated as of ___________, 20__, between The
Boeing Company (Boeing) and Seller/Lessor (the Purchase Agreement) under which
Seller/Lessor purchased certain Boeing Model ________ aircraft, including the
aircraft bearing Manufacturer's Serial No.(s) ______________________ (the
Aircraft); and

(ii) Aircraft Sale/Lease Agreement dated as of ___________, 20__, between
Seller/Lessor and Purchaser/Lessee (the Aircraft Agreement) under which
Seller/Lessor is selling/leasing the Aircraft.

Capitalized terms used herein without definition will have the same meaning as
in the Purchase Agreement.

1. Seller/Lessor has sold/leased the Aircraft under the Aircraft Agreement,
including therein a form of exculpatory clause protecting Seller/Lessor from
liability for loss of or damage to the aircraft, and/or related incidental or
consequential damages, including without limitation loss of use, revenue or
profit.

2. Disclaimer and Release; Exclusion of Consequential and Other Damages

      2.1 In accordance with Seller/Lessor's obligation under Article 9.5 of
AGTA-ASA which was incorporated by reference into the Purchase Agreement,
Purchaser/Lessee hereby agrees that:

AGTA-ASA                             App. V

                                       1
<PAGE>

                                     SAMPLE
                         PURCHASER'S/LESSEE'S AGREEMENT

      2.2 DISCLAIMER AND RELEASE. IN CONSIDERATION OF THE SALE/LEASE OF THE
AIRCRAFT, PURCHASER/LESSEE HEREBY WAIVES, RELEASES AND RENOUNCES ALL WARRANTIES,
OBLIGATIONS AND LIABILITIES OF BOEING AND ALL OTHER RIGHTS, CLAIMS AND REMEDIES
OF PURCHASER/LESSEE AGAINST BOEING, EXPRESS OR IMPLIED, ARISING BY LAW OR
OTHERWISE, WITH RESPECT TO ANY NONCONFORMANCE OR DEFECT IN ANY AIRCRAFT, BOEING
PRODUCT, MATERIALS, TRAINING, SERVICES OR OTHER THING PROVIDED UNDER THE
AIRCRAFT AGREEMENT, INCLUDING, BUT NOT LIMITED TO:

            (A)   ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS;

            (B)   ANY IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE,
                  COURSE OF DEALING OR USAGE OF TRADE;

            (C)   ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY IN TORT,
                  WHETHER OR NOT ARISING FROM THE NEGLIGENCE OF BOEING; AND

            (D)   ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY FOR LOSS OF
                  OR DAMAGE TO ANY AIRCRAFT.

      2.3 EXCLUSION OF CONSEQUENTIAL AND OTHER DAMAGES. BOEING WILL HAVE NO
OBLIGATION OR LIABILITY, WHETHER ARISING IN CONTRACT (INCLUDING WARRANTY), TORT,
WHETHER OR NOT ARISING FROM THE NEGLIGENCE OF BOEING, OR OTHERWISE, FOR LOSS OF
USE, REVENUE OR PROFIT, OR FOR ANY OTHER INCIDENTAL OR CONSEQUENTIAL DAMAGES
WITH RESPECT TO ANY NONCONFORMANCE OR DEFECT IN ANY AIRCRAFT, MATERIALS,
TRAINING, SERVICES OR OTHER THING PROVIDED UNDER THE AIRCRAFT AGREEMENT.

      2.4 Definitions. For the purpose of this paragraph 2, "BOEING" or "Boeing"
is defined as The Boeing Company, its divisions, subsidiaries, affiliates, the
assignees of each, and their respective directors, officers, employees and
agents.

Alaska Airlines, Inc. (Seller/Lessor)                   Purchaser/Lessee

AGTA-ASA                             App. V

                                        2
<PAGE>

                                     SAMPLE
                         PURCHASER'S/LESSEE'S AGREEMENT

By _________________________            By _________________________

Its ________________________            Its ________________________

Dated ______________________            Dated ______________________

AGTA-ASA                             App. V

                                        3
<PAGE>

                                     SAMPLE
              POST-DELIVERY OWNER APPOINTMENT OF AGENT - WARRANTIES

Boeing Commercial Airplanes
P.O. Box 3707
Seattle, Washington 98124-2207
U.S.A.

By Courier
1901 Oakesdale Ave. SW
Renton, WA 98055
U.S.A.

Attention: Vice President - Contracts
           Mail Code 21-34

Ladies and Gentlemen:

1. Reference is made to Purchase Agreement No. ____ dated as of __________,
20__, between The Boeing Company (Boeing) and Alaska Airlines, Inc. (Customer)
(the Purchase Agreement), under which Customer purchased certain Boeing Model
________ aircraft including the aircraft bearing Manufacturer's Serial No.(s)
_____________ (the Aircraft). The Purchase Agreement incorporated by reference
Aircraft General Terms Agreement AGTA-ASA (AGTA).

Capitalized terms used herein without definition will have the same meaning as
in the Purchase Agreement.

To accomplish the appointment of an agent, Customer confirms:

A. Customer has appointed ____________________ as agent (Agent) to act directly
with Boeing with respect to the remaining warranties under the Purchase
Agreement and requests Boeing to treat Agent as Customer for the administration
of claims with respect to such warranties; provided however, Customer remains
liable to Boeing to perform the obligations of Customer under the Purchase
Agreement.

B. Boeing may continue to deal exclusively with Agent concerning the matters
described herein unless and until Boeing receives written notice from Customer
to the contrary, addressed to Vice President - Contracts, Mail Code 21-34,
Boeing Commercial Airplanes, P.O. Box 3707, Seattle, Washington 98124-2207,
U.S.A. With respect to the rights and obligations of Customer under the Purchase
Agreement, all actions taken by Agent or agreements entered into by Agent during
the period prior to Boeing's receipt of such notice are final and binding on
Customer. Further, any payments made by Boeing as a result of claims made by
Agent will be made to the credit of Agent unless otherwise specified when each
claim is submitted.

AGTA-ASA                             App. VI

                                        1
<PAGE>

                                     SAMPLE
              POST-DELIVERY OWNER APPOINTMENT OF AGENT - WARRANTIES

C. Customer will remain responsible for any payments due Boeing as a result of
obligations relating to the Aircraft incurred by Customer to Boeing prior to the
effective date of this letter.

We request that Boeing acknowledge receipt of this letter and confirm the
appointment of Agent as stated above by signing the acknowledgment and
forwarding one copy of this letter to each of the undersigned.

Very truly yours,

Alaska Airlines, Inc.

By ____________________________

AGTA-ASA                             App. VI

                                       2
<PAGE>

                                     SAMPLE
              POST-DELIVERY OWNER APPOINTMENT OF AGENT - WARRANTIES

                                AGENT'S AGREEMENT

Agent accepts the appointment as stated above, acknowledges it has reviewed the
those portions of the Purchase Agreement related to the authority granted it
under the Purchase Agreement and agrees that, in exercising any rights or making
any claims thereunder, Agent will be bound by and comply with all applicable
terms and conditions of the Purchase Agreement including, without limitation,
the DISCLAIMER AND RELEASE and EXCLUSION OF CONSEQUENTIAL AND OTHER DAMAGES in
Article 11 of Part 2 of Exhibit C to the AGTA. Agent further agrees, upon the
written request of Boeing, to promptly execute and deliver such further
assurances and documents and take such further action as Boeing may reasonably
request in order to obtain the full benefits of the warranties under the
Purchase Agreement.

Very truly yours,

Agent

By ____________________________

Its ___________________________

Dated _________________________

Receipt of the above letter is acknowledged and the appointment of Agent with
respect to the above-described rights under the Purchase Agreement is confirmed,
effective as of this date.

THE BOEING COMPANY

By ____________________________

Its ___________________________

Dated _________________________

Aircraft Manufacturer's Serial Number __________

AGTA-ASA                             App. VI

                                       3
<PAGE>

                                     SAMPLE
                      CONTRACTOR CONFIDENTIALITY AGREEMENT

Boeing Commercial Airplanes
P.O. Box 3707
Seattle, Washington 98124-2207

Attention: Vice President - Contracts
           Mail Stop 21-34

Ladies and Gentlemen:

This Agreement is entered into between ____________________ (Contractor) and
Alaska Airlines, Inc. (Customer) and will be effective as of the date stated
below.

In connection with Customer's provision to Contractor of certain Materials,
Proprietary Materials and Proprietary Information, reference is made to Purchase
Agreement No. _____ dated as of _______, 20___ between The Boeing Company
(Boeing) and Customer.

Capitalized terms used herein without definition will have the same meaning as
in the Purchase Agreement.

Boeing has agreed to permit Customer to make certain Materials, Proprietary
Materials and Proprietary Information relating to Customer's Boeing Model
________ aircraft, Manufacturer's Serial Number ______, Registration No.
________ (the Aircraft) available to Contractor in connection with Customer's
contract with Contractor (the Contract) to maintain/repair/modify the Aircraft.
As a condition of receiving the Proprietary Materials and Proprietary
Information, Contractor agrees as follows:

1. For purposes of this Agreement:

      "AIRCRAFT SOFTWARE" means software that is installed and used in the
operation of an Aircraft.

      "MATERIALS" are defined as any and all items that are created by Boeing or
a third party, which are provided directly or indirectly from Boeing and serve
primarily to contain, convey or embody information. Materials may include either
tangible embodiments (for example, documents or drawings), or intangible
embodiments (for example, software and other electronic forms) of information
but excludes Aircraft Software.

      "PROPRIETARY INFORMATION" means any and all proprietary, confidential
and/or trade secret information owned by Boeing or a Third Party which is
contained, conveyed or embodied in Proprietary Materials.

AGTA-ASA                            App. VII

                                        1

                               BOEING PROPRIETRY

<PAGE>

                                     SAMPLE
                      CONTRACTOR CONFIDENTIALITY AGREEMENT

      "PROPRIETARY MATERIALS" means Materials that contain, convey, or embody
Proprietary Information.

      "THIRD PARTY" means anyone other than Boeing, Customer and Contractor.

2. Boeing has authorized Customer to grant to Contractor a worldwide,
non-exclusive, personal and nontransferable license to use Proprietary Materials
and Proprietary Information, owned by Boeing, internally in connection with
performance of the Contract or as may otherwise be authorized by Boeing in
writing. Contractor will keep confidential and protect from disclosure to any
person, entity or government agency, including any person or entity affiliated
with Contractor, all Proprietary Materials and Proprietary Information.
Individual copies of all Materials are provided to Contractor subject to
copyrights therein, and all such copyrights are retained by Boeing or, in some
cases, by Third Parties. Contractor is authorized to make copies of Materials
(except for Materials bearing the copyright legend of a Third Party) provided,
however, Contractor preserves the restrictive legends and proprietary notices on
all copies. All copies of Proprietary Materials will belong to Boeing and be
treated as Proprietary Materials under this Agreement.

3. Contractor specifically agrees not to use Proprietary Materials or
Proprietary Information in connection with the manufacture or sale of any part
or design. Unless otherwise agreed with Boeing in writing, Proprietary Materials
and Proprietary Information may be used by Contractor only for work on the
Aircraft for which such Proprietary Materials have been specified by Boeing.
Customer and Contractor recognize and agree that they are responsible for
ascertaining and ensuring that all Materials are appropriate for the use to
which they are put.

4. Contractor will not attempt to gain access to information by reverse
engineering, decompiling, or disassembling any portion of any software provided
to Contractor pursuant to this Agreement.

5. Upon Boeing's request at any time, Contractor will promptly return to Boeing
(or, at Boeing's option, destroy) all Proprietary Materials, together with all
copies thereof and will certify to Boeing that all such Proprietary Materials
and copies have been so returned or destroyed.

6. To the extent required by a government regulatory agency having jurisdiction
over Contractor, Customer or the Aircraft, Contractor is authorized to provide
Proprietary Materials and disclose Proprietary Information to the agency for the
agency's use in connection with Contractor's, authorized use of such Proprietary
Materials and/or Proprietary Information in connection with Contractor's
maintenance, repair, or modification of the Aircraft. Contractor agrees to take
reasonable steps to prevent such agency from making any distribution or
disclosure, or additional use of the Proprietary Materials and Proprietary
Information so provided or disclosed. Contractor further agrees to promptly
notify Boeing upon learning of any (i) distribution, disclosure, or additional
use by such agency, (ii) request to such agency for

AGTA-ASA                            App. VII

                                        2

                               BOEING PROPRIETRY

<PAGE>

                                     SAMPLE
                      CONTRACTOR CONFIDENTIALITY AGREEMENT

distribution, disclosure, or additional use, or (iii) intention on the part of
such agency to distribute, disclose, or make additional use of the Proprietary
Materials or Proprietary Information.

7. Boeing is a third-party beneficiary under this Agreement, and Boeing may
enforce any and all of the provisions of the Agreement directly against
Contractor. Contractor hereby submits to the jurisdiction of the Washington
state courts and the United States District Court for the Western District of
Washington with regard to any claims Boeing may make under this Agreement. It is
agreed that Washington law (excluding Washington's conflict-of-law principles)
governs this Agreement.

8. No disclosure or physical transfer by Boeing or Customer to Contractor, of
any Proprietary Materials or Proprietary Information covered by this Agreement
will be construed as granting a license, other than as expressly set forth in
this Agreement or any ownership right in any patent, patent application,
copyright or proprietary information.

9. The provisions of this Agreement will apply notwithstanding any markings or
legends, or the absence thereof, on any Proprietary Materials.

10. This Agreement is the entire agreement of the parties regarding the
ownership and treatment of Proprietary Materials and Proprietary Information,
and no modification of this Agreement will be effective as against Boeing unless
in writing signed by authorized representatives of Contractor, Customer and
Boeing.

11. Failure by either party to enforce any of the provisions of this Agreement
will not be construed as a waiver of such provisions. If any of the provision of
this Agreement is held unlawful or otherwise ineffective by a court of competent
jurisdiction, the remainder of the Agreement will remain in full force.

ACCEPTED AND AGREED TO this

Date: _____________________, 20___

Alaska Airlines, Inc.                         Contractor

By ___________________________                By __________________________

Its __________________________                Its _________________________

AGTA-ASA                            App. VII

                                        3

                               BOEING PROPRIETRY
<PAGE>

                                     SAMPLE

POST-DELIVERY SALE WITH LEASE TO SELLER

[Notice from Owner/Seller and subsequent Buyer regarding post-delivery sale and
lease back of an aircraft and transfer of all remaining Purchase Agreement
rights.]

                , 200_

Boeing Commercial Airplanes
P.O. Box 3707
Seattle, Washington 98124-2207

By Courier
1901 Oakesdale Ave. SW
Renton, WA  _____

Attention: Vice President - Contracts
           Mail Code 21-34

Ladies and Gentlemen:

In connection with ________________'s (Seller's) sale to and lease back from
________________ (Buyer) of the aircraft identified below, reference is made to
the following documents:

1. Purchase Agreement No. _______ dated as of _________________, between The
Boeing Company (Boeing) and Seller (the Agreement) under which Seller purchased
certain Boeing Model _____________ aircraft, including the aircraft bearing
Manufacturer's Serial No.(s) _________(the Aircraft). The Agreement incorporates
by reference the terms of AGTA-___ dated __________ ___, _____, between Seller
and Boeing.

2. Aircraft Sale Agreement dated as of ___________________, between Seller and
___________________________________ (Buyer).

3. Aircraft Lease Agreement dated as of ___________________, between Buyer and
Seller.

Capitalized terms used herein without definition will have the same meaning as
in the Agreement.

Seller confirms for the benefit of Boeing it owns and controls the rights it
purports to assign herein.

Seller has sold the Aircraft, including in that sale the transfer to Buyer of
all remaining rights related to the Aircraft under the Agreement. To accomplish
this transfer of rights, as authorized by the provisions of the Agreement:

(1) Buyer acknowledges it has reviewed the Agreement and agrees that in
exercising any rights under the Agreement or asserting any claims with respect
to the Aircraft or other things (including without limitation, Materials,
training and services) delivered or to be delivered, it is bound by and will
comply with all applicable terms, conditions, and limitations of the Agreement

AGTA-ASA                            App. VIII

                                        1
<PAGE>

including but not limited to those related to any exclusion or limitation of
liabilities or warranties, indemnity and insurance; and

(2) Buyer authorizes Seller to exercise, to the exclusion of Buyer all rights
and powers of "Customer" with respect to the remaining rights related to the
Aircraft under the Agreement. This authorization will continue until Boeing
receives written notice from Buyer to the contrary, addressed to Vice President
- Contracts, Mail Code 21-34, Boeing Commercial Airplanes, P.O. Box 3707,
Seattle, Washington 98124-2207 (if by mail) or (425)237-1706 (if by facsimile).
Until Boeing receives this notice, Boeing is entitled to deal exclusively with
Seller as "Customer" with respect to the Aircraft under the Agreement. With
respect to the rights, powers, duties and obligations of "Customer" under the
Agreement, all actions taken by Seller or agreements entered into by Seller
during the period prior to Boeing's receipt of that notice are final and binding
on Buyer. Further, any payments made by Boeing as a result of claims made by
Seller prior to receipt of such notice are to be made to the credit of Seller.

(3) Seller accepts the authorization set forth in paragraph (2) above,
acknowledges it has reviewed the Agreement and agrees that in exercising any
rights under the Agreement or asserting any claims with respect to the Aircraft
or other things (including without limitation, Materials, training and services)
delivered or to be delivered, it is bound by and will comply with all applicable
terms, conditions, and limitations of the Agreement including but not limited to
those relating to any exclusion or limitation of liabilities or warranties,
indemnity and insurance.

(4) Seller agrees to remain responsible for any payments due Boeing as a result
of obligations relating to the Aircraft incurred by Seller to Boeing prior to
the effective date of this letter.

We request that Boeing acknowledge receipt of this letter and confirm the
transfer of rights set forth above by signing the acknowledgment and forwarding
one copy of this letter to each of the undersigned.

Very truly yours,

Seller                                   Buyer

By ___________________                      By ___________________

Its __________________                      Its ________________

Dated ________________                      Dated _________________

AGTA-ASA                             App. VIII

                                        2
<PAGE>

Receipt of the above letter is acknowledged and the transfers of rights under
the Agreement with respect to the Aircraft described above are confirmed,
effective as of the date indicated below.

The Boeing Company

By ____________________

Its ____________________

Dated _________________

AGTA-ASA                             App. VIII

                                        3
<PAGE>

SALE WITH LEASE

[NOTICE FROM 1ST TIER OWNER/SELLER AND SUBSEQUENT BUYER REGARDING POST-DELIVERY
SALE AND LEASE OF AN AIRCRAFT. REMAINING PA RIGHTS HAVE BEEN ASSIGNED TO THE NEW
OWNER; THE NEW OWNER AUTHORIZES A LESSEE TO EXERCISE SUCH RIGHTS DURING THE TERM
OF A LEASE. ]

[Date]

Boeing Commercial Airplanes
P.O. Box 3707
Seattle, Washington 98124-2207

Attention: Vice President - Contracts
           Mail Code 21-34

Ladies and Gentlemen:

In connection with the sale by ____________________ (Seller) to
___________________ (Purchaser) and subsequent lease of the aircraft identified
below, reference is made to the following documents:

1. Purchase Agreement No. ______ dated as of __________, _____, between The
Boeing Company (Boeing) and __________________ (Seller)(the Agreement) under
which Seller purchased certain Boeing Model _________ aircraft, including the
aircraft bearing Manufacturer's Serial No(s). ____________ (the Aircraft).

2. Aircraft sale agreement dated as of __________, ________, between Seller and
_____________(Purchaser).

3. Aircraft lease agreement dated as of __________, _____, between __Purchaser
and _________ (Lessee)(Lease).

Capitalized terms used herein without definition will have the same meaning as
in the Agreement.

Seller has sold the Aircraft, including in that sale the assignment to Purchaser
of all remaining rights related to the Aircraft under the Agreement. To
accomplish this transfer of rights, as authorized by the provisions of the
Agreement:

(1) Seller confirms for the benefit of the Manufacturer it owns and controls the
rights it purports to have assigned.

(2) Purchaser agrees that in exercising any rights under the Agreement or
asserting any claims with respect to the Aircraft or other things (including
without limitation, [data and documents/Materials], training and services)
delivered or to be delivered, it is bound by and will comply with all applicable
terms, conditions, and limitations of the Agreement including but not limited to
those related to any exclusion or limitation of liabilities or warranties,
indemnity and insurance; and

(2) Seller will remain responsible for any payment due Boeing as a result of
obligations relating to the Aircraft incurred by Seller to Boeing prior to the
effective date of this letter.

AGTA-ASA                              App. IX

                                        1
<PAGE>

(3) Purchaser authorizes Lessee during the term of the Lease to exercise, to the
exclusion of Purchaser all rights and powers of ["Buyer"/ "Customer"] with
respect to the remaining rights related to the Aircraft under the Agreement .
This authorization will continue until Boeing receives written notice from
Purchaser to the contrary, addressed to Vice President - Contracts, Mail Code
21-34, Boeing Commercial Airplanes, P.O. Box 3707, Seattle, Washington
98124-2207 (if by mail) or (425)237-1706 (if by facsimile). Until Boeing
receives this notice, Boeing is entitled to deal exclusively with Lessee as
["Buyer"/ "Customer"] with respect to the Aircraft under the Agreement. With
respect to the rights, powers, duties and obligations of ["Buyer"/"Customer"]
under the Agreement, all actions taken by Lessee or agreements entered into by
Lessee during the period prior to Boeing's receipt of that notice are final and
binding on Purchaser. Further, any payments made by Boeing as a result of claims
made by Lessee prior to receipt of this notice are to be made to the credit of
Lessee.

(4) Lessee accepts the authorization set forth in paragraph (3) above,
acknowledges it has reviewed the Agreement and agrees that in exercising any
rights under the Agreement or asserting any claims with respect to the Aircraft
or other things (including without limitation, [data and documents/Materials],
training and services) delivered or to be delivered, it is bound by and will
comply with all applicable terms, conditions, and limitations of the Agreement
including but not limited to those related to any exclusion or limitation of
liabilities or warranties, indemnity and insurance.

We request that Boeing acknowledge receipt of this letter and confirm the
transfer of rights set forth above by signing the acknowledgment and forwarding
one copy of this letter to each of the undersigned.

Very truly yours,

_______________ (Seller)         _______________________ (Purchaser)
By ___________________                  By ___________________

Its ___________________                 Its ________________

Dated ________________                  Dated _________________

_____________________ (Lessee)
By ___________________

Its ___________________

Dated ________________

AGTA-ASA                              App. IX

                                        2
<PAGE>

Receipt of the above letter is acknowledged and the transfers of rights under
the Agreement with respect to the Aircraft described above are confirmed,
effective as of the date indicated below.

The Boeing Company

By ____________________

Its Attorney-in-Fact

Date ___________________

MSN ______________

AGTA-ASA                              App. IX

                                       3
<PAGE>

SAMPLE

Post-Delivery Security

                , 200_

Boeing Commercial Airplanes
P.O. Box 3707
Seattle, Washington 98124-2207
U.S.A.

By Courier
1901 Oakesdale Ave. SW
Renton, WA  98055
U.S.A.

Attention:    Vice President-Contracts
              Mail Code 21-34

Ladies and Gentlemen:

      Reference is made to Purchase Agreement No. ________ dated as of
_______________, (the "Agreement") between The Boeing Company ("Boeing") and
__________________________ ("Borrower") pursuant to which Borrower purchased
from Boeing one (1) Boeing model _______ aircraft bearing Manufacturer's Serial
Number _______(the "Aircraft"). The Agreement incorporates by reference the
terms of Aircraft General Terms Agreement AGTA - ___ , dated ________ __, ____,
between Borrower and Boeing.

      Capitalized terms used herein without definition will have the same
meanings as in the Agreement.

Borrower confirms for the benefit of Boeing it owns and controls the rights it
purports to assign herein.

      In connection with Borrower's financing of the Aircraft, Borrower is
entering into a [trust indenture/ mortgage], dated as of ___________, 2003,
between Borrower and [Indenture Trustee/Mortgagee] [(the Trust
Indenture/Mortgage)], which grants a security interest in [the warranty rights/
all of its rights] contained in the Agreement related to the Aircraft (Assigned
Rights). Borrower is authorized to exercise the Assigned Rights until such time
as the [Indenture Trustee/ Mortgagee] notifies Boeing as provided below that an
Event of Default under the [Trust Indenture/ Mortgage] has occurred and is
continuing. In connection with this assignment for security purposes, as
authorized by the provisions of the Agreement:

AGTA-ASA                             App. X
                                       1
<PAGE>

      1. [Indenture Trustee/Mortgagee], as assignee of, and holder of a security
interest in, the estate, right, and interest of the Borrower in and to the
Agreement pursuant to the terms of a certain [Trust Indenture/Mortgage],
acknowledges that it has received copies of the applicable provisions of the
Agreement and agrees that in exercising any rights under the Agreement or
asserting any claims with respect to the Aircraft or other things (including
without limitation, Materials, training and services) delivered or to be
delivered, its rights and remedies under the [Trust Indenture/Mortgage] shall be
subject to the terms and conditions of the Agreement including but not limited
to those related to any exclusion or limitation of liabilities or warranties,
indemnity and insurance.

2.    Borrower is authorized to exercise, to the exclusion of [Indenture
Trustee/Mortgagee] all rights and powers of "Customer" under the Agreement,
unless and until Boeing receives a written notice from [Indenture
Trustee/Mortgagee], addressed to its Vice President - Contracts, Boeing
Commercial Airplanes at P.O. Box 3707, Seattle, Washington 98124, Mail Code
21-34 (if by mail), or (425)237-1706 (if by facsimile) that an event of default
under the [Trust Indenture/Mortgage] has occurred and is continuing. Until such
notice has been given, Boeing will be entitled to deal solely and exclusively
with Borrower. Thereafter, until [Indenture Trustee/Mortgagee] has provided
Boeing written notice that any such event no longer continues, Boeing will be
entitled to deal solely and exclusively with [Indenture Trustee/Mortgagee].
Boeing may act with acquittance and conclusively rely on any such notice.

Borrower will remain responsible to Boeing for any amounts due Boeing with
respect to the Aircraft under the Agreement prior to Boeing's receipt of such
notice. We request that Boeing acknowledge receipt of this letter and confirm
the transfer of rights set forth above by signing its acknowledgment and
forwarding one copy of this letter to each of the undersigned.

Very truly yours,

____________________________                    ______________________________
                                             Indenture Trustee / Mortgagee

By:_________________________________            By:_____________________________
Its:                                            Its:

Receipt of the above letter is acknowledged and the transfer of rights under the
Agreement with respect to the Aircraft described above is confirmed, effective
as of the date indicated below.

THE BOEING COMPANY

By:_________________________________
Its: _________________________________

AGTA-ASA                             App. X
                                       2
<PAGE>

Date: _______________________________
MSN  _______________

AGTA-ASA                             App. X
                                       3
<PAGE>

6-1162-MSA-591

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

Subject:      Aircraft General Terms Agreement Terms Revisions

Reference:    Aircraft General Terms Agreement No. AGTA-ASA (the AGTA) between
              The Boeing Company (Boeing) and Alaska Airlines, Inc. (Customer)

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

This Letter Agreement modifies certain terms and conditions of the AGTA.

1.0   Basic Articles to the AGTA.

[***]

      1.2 Article 3 Regulatory Requirements and Certificates is deleted in its
entirety and replaced by the following:

      Article 3. Regulatory Requirements and Certificates.

                  3.1 Certificates. Boeing will manufacture each aircraft to
      conform to the appropriate Type Certificate issued by the United States
      Federal Aviation Administration (FAA) for the specific model of aircraft
      and will obtain from the FAA and furnish to Customer at delivery of each
      aircraft either a Standard Airworthiness Certificate or an Export
      Certificate of Airworthiness issued pursuant to Part 21 of the Federal
      Aviation Regulations, as designated by Customer. Boeing will provide a
      Certificate of Sanitary Construction at the time of delivery of each
      Aircraft.

                               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 protions.

AGTA-ASA
AGTA_Terms_Revisions

<PAGE>

Alaska Airlines, Inc.
6-1162-MSA-591 Page 2

                  3.2 FAA or Applicable Regulatory Authority Manufacturer
      Changes.

                        3.2.1 A MANUFACTURER CHANGE is defined as any change to
      an aircraft, data relating to an aircraft, or testing of an aircraft
      required by the FAA to obtain a Standard Airworthiness Certificate, or by
      the country of import and/or registration to obtain an Export Certificate
      of Airworthiness.

                        3.2.2 Boeing will bear the cost of incorporating all
      Manufacturer Changes into the aircraft:

                              (i) resulting from requirements issued by the FAA
      prior to the date of the Type Certificate for the applicable aircraft;

                              (ii) resulting from requirements issued by the FAA
      prior to the date of the applicable purchase agreement; and

                              (iii) for any aircraft delivered during the 18
      month period immediately following the date of the applicable purchase
      agreement (regardless of when the requirement for such change was issued
      by the FAA). For the avoidance of doubt, "the date of the applicable
      purchase agreement means the date of execution of a purchase agreement for
      the initial firm aircraft, and the date of execution of a supplement to
      such purchase agreement that adds additional aircraft for the aircraft
      orders added by such supplement.

                        3.2.3 Customer will pay Boeing's charge for
      incorporating all other Manufacturer Changes into the aircraft, including
      all changes for validation of an aircraft required by any governmental
      agency of the country of import and/or registration. [***]

                  3.3 FAA Operator Changes.

                        3.3.1 An OPERATOR CHANGE is defined as a change in
      equipment that is required by Federal Aviation Regulations which (i) is
      generally applicable to transport category aircraft to be used in United
      States certified air carriage and (ii) the required compliance date is on
      or before the scheduled delivery month of the aircraft.

                               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 protions.

AGTA-ASA
AGTA_Terms_Revisions

<PAGE>

Alaska Airlines, Inc.
6-1162-MSA-591 Page 3

                        3.3.2 Boeing will deliver each aircraft with Operator
      Changes incorporated or, at Boeing's option, with suitable provisions for
      the incorporation of such Operator Changes, and Customer will pay Boeing's
      applicable charges[***].

                  3.4 Export License. If an export license is required by United
      States law or regulation for any aircraft or any other things delivered
      under the purchase agreement, it is Customer's obligation to obtain such
      license. If requested, Boeing will assist Customer in applying for any
      such export license. Customer will furnish any required supporting
      documents.

      1.3 Article 5.3 Demonstration Flights is deleted in its entirety and
replaced by the following:

                  5.3 Demonstration Flights. Prior to delivery, Boeing will fly
      each aircraft up to 4 hours to demonstrate to Customer the function of the
      aircraft and its equipment using Boeing's production flight test
      procedures. Customer may designate up to five representatives to
      participate as observers. Boeing will continue its practice of permitting
      Customer's licensed and qualified pilot observer to participate in flying
      the Aircraft provided that the flights shall always be under the command
      of Boeing's pilot.

      1.4 Article 5.4 Test Data; Performance Guarantee Compliance is deleted in
its entirety and replaced by the following:

                  5.4 Test Data; Performance Guarantee Compliance. PERFORMANCE
      GUARANTEES are defined as the written guarantees in a purchase agreement
      regarding the operational performance of an aircraft. Boeing will furnish
      to Customer certified correct, by Boeing as applicable, flight test data
      obtained on an aircraft of the same model to evidence compliance with the
      Performance Guarantees. Performance Guarantees will be met if reasonable
      engineering interpretations and calculations based on the flight test data
      establish that the particular aircraft being delivered under the
      applicable purchase agreement would, if actually flown, comply with the
      guarantees.

      1.5 Article 5.5 Special Aircraft Test Requirements is deleted in its
entirety and replaced by the following:

                               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 protions.

AGTA-ASA
AGTA_Terms_Revisions

<PAGE>

Alaska Airlines, Inc.
6-1162-MSA-591 Page 4

                  5.5 Special Aircraft Test Requirements. Boeing may use an
      aircraft for flight and ground tests prior to delivery, without reduction
      in the Aircraft Price, if the tests are considered necessary by Boeing (i)
      to obtain or maintain the Type Certificate or Certificate of Airworthiness
      for the aircraft or (ii) to evaluate potential improvements that may be
      offered for production or retrofit incorporation (provided Customer has
      given written consent for (ii) items).

      1.6 Article 6.3 Bill of Sale is deleted in its entirety and replaced by
the following:

                  6.3 Bill of Sale. At delivery of an aircraft, Boeing will
      provide Customer a bill of sale conveying good title, free of any and all
      encumbrances, and such other documents of title as Customer may reasonably
      request.

      1.7 Article 7.3.1 is deleted in its entirety and replaced by the
following:

                        7.3.1 The calculation of the Escalation Adjustment will
      be based on the originally scheduled delivery month (or the last scheduled
      delivery month prior to the commencement of the delay, if the original
      schedule had been modified by mutual agreement).

      1.8 Article 7.6 Termination is deleted in its entirety and replaced by the
following:

                  7.6 Termination. Termination under this Article will discharge
      all obligations and liabilities of Boeing and Customer with respect to any
      aircraft and all related undelivered Materials (as defined in Exhibit B,
      Customer Support Document), training, services, and other things
      terminated under the applicable purchase agreement, except that Boeing
      will return to Customer, without interest, an amount equal to all advance
      payments paid by Customer for the aircraft. If Customer terminates the
      applicable purchase agreement as to any aircraft, Boeing may elect, by
      written notice to Customer within 30 days, to purchase from Customer any
      BFE related to the aircraft at the invoice prices paid, [***], or
      contracted to be paid, by Customer.

                               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 protions.

AGTA-ASA
AGTA_Terms_Revisions

<PAGE>

Alaska Airlines, Inc.
6-1162-MSA-591 Page 5

[***]

      1.11 Article 10.1 Termination is deleted in its entirety and replaced by
the following:

                  10.1  Termination. If either party

                        (i) ceases doing business as a going concern, or
                        suspends all or substantially all its business
                        operations, or makes an assignment for the benefit of
                        creditors, or generally does not pay its debts as they
                        become due, or admits in writing its inability to pay
                        its debts; or

                        (ii) petitions for or acquiesces in the appointment of
                        any receiver, trustee or similar officer to liquidate or
                        conserve its business or any substantial part of its
                        assets; commences any legal proceeding such as
                        bankruptcy, reorganization, readjustment of debt,
                        dissolution, or liquidation available for the relief of
                        financially distressed debtors; or becomes the object of
                        any such proceeding, unless the proceeding is dismissed
                        or stayed within a reasonable period, not to exceed 60
                        days,

            the other party may terminate any purchase agreement with respect to
            any undelivered aircraft, Materials, training, services, and other
            things by giving written notice of termination. Notwithstanding
            Article 10.1. (i) and (ii) above, if a party has performed all of
            its obligations under the applicable purchase agreement and provides
            adequate assurance that it will perform its future obligations under
            such purchase agreement, the other party shall not have the right to
            terminate such purchase agreement under Article 10.1 (i) or (ii).

      1.12 Article 12.7 Government Agency Reference is added:

                  12.7 Government Agency Reference. The reference to the FAA or
      other government agencies includes the successor to such agency of the U.
      S. Government.

                               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 protions.

AGTA-ASA
AGTA_Terms_Revisions

<PAGE>

Alaska Airlines, Inc.
6-1162-MSA-591 Page 6

2.0 Exhibit A BUYER FURNISHED EQUIPMENT PROVISIONS DOCUMENT to the AGTA.

      2.1. Articles 3.4 and 3.5 are deleted in its entirety and replaced by the
following.

            3.4 obtain from supplier a non-exclusive, perpetual, royalty-free,
      irrevocable license for Boeing to copy BFE Aircraft Software solely for
      the benefit of Customer. The license is needed to enable Boeing to load
      the software copies in (i) the aircraft's mass storage device (MSD), (ii)
      media (e.g., diskettes, CD-ROMs, etc.), (iii) the BFE hardware and/or (iv)
      an intermediate device or other media to facilitate copying of the BFE
      Aircraft Software into the aircraft's MSD, BFE hardware and/or media,
      including media as Boeing may deliver to Customer with the aircraft (it is
      understood that Boeing's rights are limited to supporting Customer and
      Boeing acquires no right under this Agreement to use the software for
      itself or for any other customer);

            3.5 grant Boeing a license, extending the same rights set forth in
      paragraph 3.4 above (and subject to the same limitations), to copy: a) BFE
      Aircraft Software and data Customer has modified and/or b) other software
      and data Customer has added to the BFE Aircraft Software;

      2.2. Article 5 Nonperformance by Customer is deleted in its entirety and
replaced by the following.

      5. Nonperformance by Customer.

            If Customer's nonperformance of obligations in this Exhibit or in
      the BFE Document causes a delay in the delivery of the Aircraft or causes
      Boeing to perform out-of-sequence or additional work, Customer will
      reimburse Boeing for all resulting expenses and be deemed to have agreed
      to any such delay in Aircraft delivery. In addition Boeing will have the
      right to:

            5.1 provide and install specified equipment or suitable alternate
      equipment and increase the price of the Aircraft accordingly; and/or

            5.2 deliver the Aircraft to Customer without the BFE installed.

                               BOEING PROPRIETARY

AGTA-ASA
AGTA_Terms_Revisions

<PAGE>

Alaska Airlines, Inc.
6-1162-MSA-591 Page 7

      Notwithstanding Article 5.1, in the event of Customer's nonperformance of
      its obligations under this Exhibit A, Boeing will not substitute
      alternative equipment for late BFE equipment without Buyer's approval. In
      addition to those expenses previously outlined in this Article 5, Buyer
      agrees to reimburse Boeing for any expenses which result from any delay
      caused by Buyer's failure to promptly approve the substitution.

3.0   Exhibit B CUSTOMER SUPPORT DOCUMENT to the AGTA.

      3.1. Part 5 Article 4 Providing of Proprietary Materials to Contractors is
deleted in its entirety and replaced by the following.

      4.    Providing of Proprietary Materials to Contractors.

            Customer is authorized to provide Proprietary Materials to
      Customer's contractors for the sole purpose of maintenance, repair, or
      modification of Customer's aircraft for which the Proprietary Materials
      have been specified by Boeing. In addition, Customer may provide
      Proprietary Materials to Customer's contractors for the sole purpose of
      developing and manufacturing training devices and maintenance tools for
      Customer's use. Before providing Proprietary Materials to its contractor,
      either (i) Customer's contractor is, at the time of transfer of the
      Proprietary Materials, bound by a Boeing Customer Services GTA or other
      appropriate applicable agreement satisfactory to Boeing protecting
      Boeing's Proprietary Materials, or (ii) Customer will first obtain a
      written agreement from the contractor by which the contractor agrees (a)
      to use the Proprietary Materials only on behalf of Customer, (b) to be
      bound by all of the restrictions and limitations of this Part 5, and (c)
      that Boeing is a third party beneficiary under the written agreement.
      Customer agrees to provide copies of all such written agreements to Boeing
      upon request and be liable to Boeing for any breach of those agreements by
      a contractor. A sample agreement acceptable to Boeing is attached as
      Appendix VII.

[***]

4.0   Exhibit C PRODUCT ASSURANCE DOCUMENT to the AGTA.

      4.1. Part 1 term Correct(s) is deleted in its entirety and replaced by the
following.

                               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 protions.

AGTA-ASA
AGTA_Terms_Revisions

<PAGE>

Alaska Airlines, Inc.
6-1162-MSA-591 Page 8

            CORRECT(S) - to repair, modify, provide modification kits or replace
      with a new product having the same part number or being an improved part
      that is compatible and has the same functionality.

      4.2. Part 1 term CORRECTION is deleted in its entirety and replaced by the
following.

            CORRECTION - a repair, a modification, a modification kit or
      replacement with a new product that has the same or improved
      functionality, compatibility and interchangeability.

      4.3. Part 2 Article 2.1 Coverage item (ii) is deleted in its entirety and
replaced by the following.

            (ii)  all Boeing Products will be free from defects in material,
                  process of manufacture and workmanship, including the
                  workmanship utilized to install Supplier Products, engines and
                  BFE (including conforming to the installation instructions of
                  the manufacturer so as to not invalidate any applicable
                  warranty from such manufacturer), and;

[***]

      4.5. Part 2 Article 7.3.4 is deleted in its entirety and replaced by the
following.

                  7.3.4 Boeing will provide to Customer a single, lump sum
            credit memorandum for Customer's Direct Labor hours expended to
            incorporate the Corrections (other than of random anomalies)
            identified in service bulletins and service letters in all
            in-warranty aircraft covered by such service bulletins or service
            letters after Customer's submission of a warranty claim and
            verification of the incorporation of such Corrections with respect
            to the first affected in-warranty aircraft. Other than a request for
            reimbursement for incorporating the Corrections into aircraft
            delivered to Customer by Boeing after the reimbursement request was
            made, such credit memoranda will not be provided in response to any
            other requests for reimbursement including, without limitation,
            those arising out of program letters or other special offers
            provided by Boeing.

                               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 protions.

AGTA-ASA
AGTA_Terms_Revisions

<PAGE>

Alaska Airlines, Inc.
6-1162-MSA-591 Page 9

      4.5. Part 2 Article 8.3.2 is deleted in its entirety and replaced by the
following.

                  8.3.2 If Customer has a critical parts shortage because Boeing
            has exceeded a Correction time objective and Customer has procured
            spare Boeing Products for the defective Boeing Product in quantities
            shown in Boeing's Recommended Spare Parts List or, for 717 model
            aircraft only, in quantities shown in Boeing's Spares Planning and
            Requirements Evaluation Model, then Boeing will either expedite the
            Correction or provide an interchangeable Boeing Product, on a no
            charge loan basis, until the Corrected Boeing Product is returned.
            "Recommended Spare Parts List" is defined as that spare parts list
            produced by the Boeing Spares Organization using operating
            parameters and ground rules supplied by Customer that is acceptable
            to Customer.

[***]

6.0   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 protions.

AGTA-ASA
AGTA_Terms_Revisions

<PAGE>

Alaska Airlines, Inc.
6-1162-MSA-591 Page 10

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

AGTA-ASA
AGTA_Terms_Revisions

<PAGE>

Attachment A to
6-1162-MSA-591 Page 1

                                     SAMPLE
                             INSURANCE CERTIFICATE

                              BROKER'S LETTERHEAD

[ date ]

Certificate of Insurance

ISSUED TO:          The Boeing Company
                    Post Office Box 3707
                    Mail Stop 13-57
                    Seattle, Washington 98124
                    Attn: Manager - Aviation Insurance for
                          Vice President - Employee Benefits,
                          Insurance and Taxes

CC:                 Boeing Commercial Airplanes
                    P.O. Box 3707
                    Mail Stop 21-34
                    Seattle, Washington 98124-2207
                    U.S.A.
                    Attn: Vice President - Contracts

NAMED INSURED:      ALASKA AIRLINES, INC.

We hereby certify that in our capacity as Brokers to the Named Insured, the
following described insurance is in force on this date:

INSURER                 POLICY NO.         PARTICIPATION

POLICY PERIOD:      From [date and time of inception of the Policy(ies)] to
                    [date and time of expiration].

GEOGRAPHICAL LIMITS:     Worldwide (however, as respects "Aircraft Hull War and
                         Allied Perils" Insurance, as carried by the Named
                         Insured).

                               BOEING PROPRIETARY

AGTA-ASA                            App. I
                                       1
AGTA_Terms_Revisions

<PAGE>

Attachment A to
6-1162-MSA-591 Page 2

                                     SAMPLE
                             INSURANCE CERTIFICATE

AIRCRAFT INSURED:   All Boeing manufactured aircraft owned or operated by the
                    Named Insured which are the subject of the following
                    purchase agreement(s), entered into between The Boeing
                    Company and _________________ (hereinafter "Aircraft"):

                    Purchase Agreement No. ____ dated ______
                    Purchase Agreement No. ____ dated ______

COVERAGES:

1.    AIRCRAFT "ALL RISKS" HULL (GROUND AND FLIGHT)

2.    AIRCRAFT HULL WAR AND ALLIED PERILS (AS PER LSW 555, OR ITS SUCCESSOR
      WORDING AND WHICH MAY BE PROVIDED BY THE FAA AND NOT THE INSURANCE MARKET)

3.    AIRLINE LIABILITY

Including, but not limited to, Bodily Injury, Property Damage, Aircraft
Liability, Liability War Risks, Passenger Legal Liability, Premises/Operations
Liability, Completed Operations/Products Liability, Baggage Legal Liability
(checked and unchecked), Cargo Legal Liability, Contractual Liability and
Personal Injury.

The above-referenced Airline Liability insurance coverage is subject to War and
Other Perils Exclusion Clause (AVN48B) but all sections, other than section (b)
are reinstated as per AVN52D, or their successor endorsements.

LIMITS OF LIABILITY:

To the fullest extent of the Policy limits that the Named Insured carries from
the time of delivery of the first Aircraft under the first Purchase Agreement
listed under "Aircraft Insured" and thereafter at the inception of each policy
period, but in any event no less than the following:

Combined Single Limit Bodily Injury and Property Damage: U.S.$ any one
occurrence each Aircraft (with aggregates as applicable).

<TABLE>
<S>               <C>
(717-200)         US$300,000,000
(737-500/600)     US$350,000,000
(737-300/700)     US$400,000,000
(737-400)         US$450,000,000
</TABLE>

                               BOEING PROPRIETARY

AGTA-ASA                            App. I
                                       2
AGTA_Terms_Revisions

<PAGE>

Attachment A to
6-1162-MSA-591 Page 3

                                     SAMPLE
                             INSURANCE CERTIFICATE

<TABLE>
<S>               <C>
(737-800)         US$500,000,000
(737-900)         US$500,000,000
(757-200)         US$525,000,000
(757-300)         US$550,000,000
(767-200)         US$550,000,000
(767-300)         US$700,000,000
(767-400ERX)      US$750,000,000
(7E7)             US$700,000,000
(777-200LR)       US$800,000,000
(MD-11)           US$800,000,000
(777-200/300)     US$800,000,000
(777-300ER)       US$800,000,000
(747-400)         US$900,000,000
</TABLE>

(In regard to all other models and/or derivatives, to be specified by Boeing).

(In regard to Personal Injury coverage, limits are US$25,000,000 any one
offense/aggregate.)

DEDUCTIBLES / SELF-INSURANCE

Any deductible and/or self-insurance amount (other than standard market
deductibles) are to be disclosed to Boeing.

SPECIAL PROVISIONS APPLICABLE TO BOEING:

It is certified that Insurers are aware of the terms and conditions of AGTA-ASA
and the following purchase agreements:

PA ______ dated _______
PA ______ dated _______
PA ______ dated _______

Each Aircraft manufactured by Boeing which is delivered to the Insured pursuant
to the applicable purchase agreement during the period of effectivity of the
policies represented by this Certificate will be covered to the extent specified
herein.

                               BOEING PROPRIETARY

AGTA-ASA                            App. I
                                       3
AGTA_Terms_Revisions

<PAGE>

Attachment A to
6-1162-MSA-591 Page 4

                                     SAMPLE
                             INSURANCE CERTIFICATE

Insurers have agreed to the following:

      A. In regard to Aircraft "all risks" Hull Insurance and Aircraft Hull War
and Allied Perils Insurance, Insurers agree to waive all rights of subrogation
or recourse against Boeing in accordance with AGTA-ASA which was incorporated by
reference into the applicable purchase agreement.

      B. In regard to Airline Liability Insurance, Insurers agree:

            (1) To include Boeing as an additional insured to the extent of
Customer's undertaking in Article 8.2.1 of AGTA-ASA which was incorporated by
reference into the applicable purchase agreement.

            (2) To provide that such insurance will be primary and not
contributory nor excess with respect to any other insurance available for the
protection of Boeing to the extent of Customer's undertaking in Article 8.2.1 of
AGTA-ASA;

            (3) To provide that with respect to the interests of Boeing, such
insurance shall not be invalidated or minimized by any action or inaction,
omission or misrepresentation by the Insured or any other person or party (other
than Boeing) regardless of any breach or violation of any warranty, declaration
or condition contained in such policies;

            (4) To provide that all provisions of the insurance coverages
referenced above, except the limits of liability, will operate to give each
Insured or additional insured the same protection as if there were a separate
Policy issued to each.

      C. In regard to all of the above referenced policies:

            (1) Boeing will not be responsible for payment, set-off, or
assessment of any kind or any premiums in connection with the policies,
endorsements or coverages described herein;

            (2) If a policy is canceled for any reason whatsoever, or any
substantial change is made in the coverage which affects the interests of Boeing
or if a policy is allowed to lapse for nonpayment of premium, such cancellation,
change or lapse shall not be effective as to Boeing for thirty (30) days (in the
case of war risk and allied perils coverage seven (7) days after sending, or
such other period as may from time to time be customarily obtainable in the
industry) after

                               BOEING PROPRIETARY

AGTA-ASA                            App. I
                                       4
AGTA_Terms_Revisions

<PAGE>

Attachment A to
6-1162-MSA-591 Page 5

                                     SAMPLE
                             INSURANCE CERTIFICATE

receipt by Boeing of written notice from the Insurers or the authorized
representatives or Broker of such cancellation, change or lapse; and

            (3) For the purposes of the Certificate, "Boeing" is defined as The
Boeing Company, its divisions, subsidiaries, affiliates, the assignees of each
and their respective directors, officers, employees and agents.

            (4) If war risk and allied perils coverage has been obtained by
Customer from the FAA and not the commercial market, Broker will so advise
Boeing.

SUBJECT TO THE TERMS, CONDITIONS, LIMITATIONS AND EXCLUSIONS OF THE RELATIVE
POLICIES.

(signature)

(typed name)

(title)

                               BOEING PROPRIETARY

AGTA-ASA                            App. I
                                       5
AGTA_Terms_Revisions<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)-[***]

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00088-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00088-of-00352.parquet"}]]