Alaska Air Group Highlights Fleet Upgrades at Annual Stockholders Meeting

Alaska Air Group, Inc. , the parent company of Alaska Airlines, Inc. and Horizon Air Industries, Inc., held its annual meeting of stockholders today in Anchorage, where Alaska Airlines was founded 75 years ago.

During a presentation to stockholders, Alaska Air Group’s Chairman and Chief Executive Officer Bill Ayer highlighted Alaska Airlines’ transition to an all-Boeing 737 fleet and Horizon Air’s transition to a simplified fleet with additional larger aircraft.

"The new aircraft we’re adding to the Alaska and Horizon fleets, coupled with our options, position us for greater efficiency and substantial growth well into the next decade," Ayer said.

With the delivery of its 22nd 737-800 in May, 82 percent of Alaska’s fleet now consists of 737 series aircraft. The airline announced a major fleet order in June 2005 for up to 100 aircraft, including 35 firm orders for 737-800s. In March 2006, Alaska decided to retire its 26 MD-80s by the end of 2008. Since 2005, the airline has upped its number of 737-800 firm orders and is now committed to a total of 54 aircraft. It also holds options for 49 aircraft.

"By the end of 2008, Alaska Airlines will have an all-737 fleet that is one of the youngest in the industry," Alaska’s Chief Financial Officer Brad Tilden said. "We are excited about the operational improvement that a single fleet provides as well as the improved economics and significantly reduced emissions of modern 737 aircraft."

The options Alaska holds will allow it to match aircraft orders with changing business conditions. As the economic outlook for the early part of the next decade becomes more visible, Alaska will decide how many of its remaining options to convert into firm orders.

Alaska Airlines’ 737-800s carry 16 passengers in first class and 141 in the main cabin. They are equipped with larger overhead bins and leather seats, and provide more under-seat capacity than the 140-seat MD-80s they replace.

Compared with "classic" 737 models, Boeing’s Next-Generation aircraft also feature a higher cruise speed, more range and quieter engines with improved fuel efficiency and thrust. All Alaska Airlines’ 737-800 aircraft are equipped with winglets, which reduce fuel burn by 3.5 percent, saving the carrier about $200,000 annually per aircraft.

Horizon Air also is pursuing a major fleet upgrade. Since January, Horizon has taken delivery of eight of 13 new 76-seat Bombardier Q400 high-speed turboprops from a fleet order announced in October 2005. The remaining five aircraft are scheduled for delivery by the end of July.

In April, Horizon placed an order with Bombardier for 15 more Q400s, with 20 options. The first of these aircraft is scheduled for delivery in late 2008. As part of a process to simplify its fleet from three aircraft types to two, Horizon plans to sublease or retire its remaining 37-seat Bombardier Q200 turboprops concurrent with the delivery of its new Q400s.

Horizon’s current fleet of 72 aircraft includes 23 Q200s, 28 Q400s and 21 70-seat Bombardier CRJ-700s regional jets.

Alaska’s current fleet of 114 aircraft includes 12 737-900s, 22 737-800s, 20 737-700s, 35 737-400s and 20 MD-80s, as well as one 737-400 Freighter and four 737-400 "Combi" passenger-freight aircraft serving the state of Alaska. The airline plans to add one more 737-400 Combi to its fleet in December to enhance service to smaller communities in southeast Alaska and increase passenger and cargo capacity supporting oil and gas activities on the North Slope.

Alaska Airlines and Horizon Air together serve 92 cities through an expansive network in Alaska, the Lower 48, Canada and Mexico. Alaska recently announced daily nonstop service starting in October between Seattle and Honolulu and Lihue, on the island of Kauai, as well as seasonal daily nonstop service beginning in December between Anchorage and Honolulu. This year Alaska Airlines celebrates its 75th anniversary, marking the airline’s growth from a single-aircraft operation in 1932 to one of the largest U.S. carriers. Earlier this year, Horizon Air was named 2007 Regional Airline of the Year by Air Transport World magazine. For reservations, visit alaskaair.com/horizonair.com. For more news and information, visit the Alaska Airlines/Horizon Air Newsroom at alaskaair.com/newsroom.

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SOURCE: Alaska Air Group, Inc.