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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 8-K
CURRENT REPORT

Pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934

October 6, 2003
(Date of Report)

ALASKA AIR GROUP, INC.
(Exact name of registrant as specified in its charter)
Commission file number 1-8957
Delaware | | 91-1292054
(State or other jurisdiction of | | (I.R.S. Employer
incorporation or organization) | | Identification No.)
19300 Pacific Highway South, Seattle, Washington 98188
(Address of principal executive offices)
(206) 392-5040
(Registrant’s telephone number)

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| ITEM 9. Regulation FD Disclosure
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ITEM 9. Regulation FD Disclosure

Pursuant to 17 CFR Part 243 (“Regulation FD”), Alaska Air Group, Inc. is submitting this current report on Form 8-K to present information relating to its financial and operational outlook for 2003. This report includes information regarding forecasts of available seat miles (ASMs), cost per available seat mile (CASM) and fuel consumption, as well as certain actual results for revenue passenger miles (RPMs), load factor and revenue per available seat mile (RASM), for its subsidiaries Alaska Airlines, Inc. and Horizon Air. Please see the cautionary statement under “Forward-Looking Information” at the end of this report.

In accordance with General Instruction B.2 of Form 8-K, the following information shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing. This Report will not be deemed an admission as to the materiality of any information required to be disclosed solely to satisfy the requirements of Regulation FD.

References in this report on Form 8-K to “Air Group,” “the Company,” “we,” “us,” and “our” refer to Alaska Air Group, Inc. and its subsidiaries, unless otherwise specified. Alaska Airlines, Inc. and Horizon Air Industries, Inc. are referred to as “Alaska” and “Horizon,” respectively, and together as our “airlines.”

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Third Quarter 2003
| | Forecast | | Change
| | Q3 | | Yr/Yr
Alaska Airlines | | | | | | | |
Capacity (ASMs in millions) | | | 5,693 | | | | 9.3 | %
Traffic (RPMs in millions) | | | 4,126 | | | | 12.3 | %
Passenger load factor | | | 72.5 | % | | 2.0 | pts
Fuel gallons (000,000) | | | 92.9 | | | | 7.3 | %
Cost per ASM excluding fuel (cents) | | | 7.7 – 7.8 | | | | (4.9%) – (3.7 | %)
Alaska’s September traffic increased 9.3% to 1.086 billion revenue passenger miles (RPMs) from 993.8 million flown a year earlier. Capacity during September was 1.705 billion available seat miles (ASMs), 7.9% higher than the 1.579 billion in September 2002.

The passenger load factor (the percentage of available seats occupied by fare paying passengers) for September 2003 was 63.7%, compared to 62.9% in September 2002. The airline carried 1,144,700 passengers compared to 1,096,300 in September 2002.

For August 2003, RASM increased by 3.9% as compared to August 2002. For July 2003, RASM increased by 3.3% as compared to July 2002.
Horizon Air | | | | | | | |
Capacity (ASMs in millions) | | | 701 | | | | 6.7 | %
Traffic (RPMs in millions) | | | 466 | | | | 9.9 | %
Passenger load factor | | | 66.5 | % | | 2.0pts
Fuel gallons (000,000) | | | 14.5 | | | | (1.4 | %)
Cost per ASM excluding fuel (cents) | | | 14.4 | | | | (2.7 | %)
Horizon’s September traffic increased 6.7% to 131.1 million RPMs from 122.9 million flown a year earlier. Capacity for September was 211.7 million ASMs, 5.3% higher than last year’s 201.0 million.

The passenger load factor for September 2003 was 61.9%, compared to 61.1% last September. The airline carried 402,800 passengers compared to 399,200 in September 2002.

For August 2003, RASM increased by 7.1% as compared to August 2002. For July 2003, RASM increased by 7.8% as compared to July 2002.

Capacity Estimates for 2003

Provided below are capacity (ASMs in millions) estimates for the full year of 2003:
Alaska Airlines capacity | | | 20,747 | | | | 7.2 | %
Horizon Air capacity | | | 2,610 | | | | 7.5 | %
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Other Financial Information

Cash and Short-Term Investments

Cash and short-term investments amounted to approximately $748 million at September 30, 2003 compared to $730 million at August 31, 2003. The increase of $18 million is principally due to cash flows from operations and the financing of one 737-900, partially offset by a contribution to our Pension Plan and the delivery of one aircraft.

Fuel Cost per Gallon (including realized hedging gains)
| | Cost per Gallon | | % Change from Prior Year
Alaska: | | | | | | | |
July | | 84.8 cents | | | 10.8 | %
August | | 94.1 cents | | | 17.5 | %
September | | 85.6 cents | | | (4.3 | %)
Horizon: | | | | | | | |
July | | 87.1 cents | | | 12.7 | %
August | | 94.8 cents | | | 19.4 | %
September | | 88.0 cents | | | (1.7 | %)
Fuel hedge positions entered into by Alaska and Horizon include a combination of swap and cap positions and are currently as follows:
| | Approximate % of Expected | | Approximate Crude Oil
| | Fuel Requirements | | Price per Barrel
June – December 2003 | | | 35 | % | | $ | 22 |
January – December 2004 | | | 25 | % | | $ | 27 |
January – December 2005 | | | 16 | % | | $ | 25 |
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Operating Fleet Plan

Provided below are estimated changes in the Alaska and Horizon fleets for 2003:
| | | | | | | | | | Estimated
| | | | | | | | | | Change
| | | | | | On Hand | | During
| | Seats | | YE 2002 | | 2003
Alaska Airlines | | | | | | | | | | | |
B737-200C | | | 111 | | | | 9 | | | | |
B737-400 | | | 138 | | | | 40 | | | | |
B737-700 | | | 120 | | | | 16 | | | | 6 |
B737-900 | | | 172 | | | | 6 | | | | 5 |
MD-80 | | | 140 | | | | 31 | | | | (4 | )
Total | | | | | | | 102 | | | | 7 |
Horizon Air | | | | | | | | | | | |
Dash 8-100/200 | | | 37 | | | | 28 | | | | |
Dash 8-400 | | | 70 | | | | 15 | | | | |
F-28 | | | 69 | | | | 4 | | | | (4 | )
CRJ 700 | | | 70 | | | | 16 | | | | 2 |
Total | | | | | | | 63 | | | | (2 | )
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FORWARD-LOOKING INFORMATION

This report may contain forward-looking statements that are based on the best information currently available to management. These forward-looking statements are intended to be subject to the safe harbor protection provided by Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements relate to future events or our future financial performance and involve known and unknown risks and uncertainties that may cause our actual results or performance to be materially different from those indicated by any forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “forecast,” “may,” “will,” “could,” “should,” “expect,” “plan,” “believe,” “potential” or other similar words indicating future events or contingencies. Some of the things that could cause our actual results to differ from our expectations are: economic conditions; the continued impact of terrorist attacks, global instability and potential U.S. military involvement; our significant indebtedness; downgrades of our credit ratings; the competitive environment and other trends in our industry; changes in laws and regulations; changes in our operating costs including fuel; changes in our business plans; interest rates and the availability of financing; liability and other claims asserted against us; labor disputes; our ability to attract and retain qualified personnel; and inflation. For a discussion of these and other risk factors, see Item 1 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2002. All of the forward-looking statements are qualified in their entirety by reference to the risk factors discussed therein. These risk factors may not be exhaustive. We operate in a continually changing business environment, and new risk factors emerge from time to time. Management cannot predict such new risk factors, nor can it assess the impact, if any, of such new risk factors on our business or events described in any forward-looking statements. We disclaim any obligation to publicly update or revise any forward-looking statements after the date of this report to conform them to actual results.

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Signature

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

ALASKA AIR GROUP, INC.

Registrant

Date: October 6, 2003 | |

/s/ Glenn S. Johnson

Glenn S. Johnson
Vice President/Finance and Controller

/s/ Bradley D. Tilden

Bradley D. Tilden
Executive Vice President/Finance and Chief Financial Officer

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