Alaska Air Group Well Positioned, CEO Says.

Business Editors/Travel Writers

SEATTLE--(BUSINESS WIRE)--May 16, 2000

Alaska Airlines is steadily making improvements in operational performance, shareholders were told today at the Alaska Air Group annual meeting.

Following the tragedy of Flight 261 on January 31, the airline twice grounded large portions of its fleet for unscheduled inspections that resulted in numerous cancellations and delays. And that, in turn, required the re-routing and rebooking of thousands of customers -- a task that required considerable time from customer service and reservations sales agents.

"We've taken a number of steps to return our performance to the level that customers expect of us and that we expect of ourselves," said John Kelly, the chairman, president and CEO of Alaska Air Group. "Our on-time performance is improving at a steady rate, our baggage handling proficiency has been tops in the industry since January, and our toll-free phone centers have made significant improvements." He added, "The Flight 261 tragedy has changed us all in profound ways. But the fact is, we're the same people who helped build Alaska's reputation for going the extra mile. That spirit has not changed."

Related to operational improvements, Kelly announced at the meeting that Bill Ayer, president of Alaska Airlines, will assume the additional title of chief operating officer, effective immediately. Kelly said, "Going forward, I felt -- and the board of directors agreed -- that it was important to clarify and more clearly delineate Bill's actual responsibilities with a title that more accurately reflects them."

In other news, shareholders passed a proposal that certain significant corporate actions be approved by a simple majority of shareholders rather than the long-standing 80 percent super-majority. This action follows a growing trend with publicly held companies.

Shareholders also reelected Kelly, Bruce R. Kennedy, and Mary Jane Fate to three-year terms on the board of directors of Alaska Air Group, and elected J. Kenneth Thompson to a three-year term.

Kelly has been a director since 1989. In addition to being chairman, president and CEO of Alaska Air Group, he is chairman and CEO of Alaska Airlines, and chairman of Horizon Air.

Kennedy, a director since 1972, is chairman emeritus of Alaska Air Group, and a former chairman, president and CEO of Alaska Airlines.

Fate has been a director since 1979 and is the former executive director of the Baan o yeel kon Corporation (an Alaska Native village corporation).

Thompson was appointed last year to fill the remaining term of a vacant seat on the board. He is chairman and CEO of Pacific Rim Leadership Development Inc., and former executive vice president of ARCO's Asia Pacific oil and gas operating companies in Alaska, California, Indonesia, China and Singapore.

Alaska Air Group is the parent company of Alaska Airlines and Horizon Air Industries. The two carriers serve more than 70 cities in the Western U.S., Canada and Mexico.