Exhibit 99.1

Investor Update – August 21, 2008

References in this update to “Air Group,” “Company,” “we,” “us,” and “our” refer to Alaska Air Group, Inc. and its subsidiaries, unless otherwise specified.

This update includes forecasted operational and financial information for our subsidiaries Alaska Airlines, Inc. (Alaska) and Horizon Air Industries, Inc. (Horizon). Our disclosure of operating cost per available seat mile, excluding fuel and other items, provides us (and may provide investors) with the ability to measure and monitor our performance without these items. The most directly comparable GAAP measure is total operating expense per available seat mile. However, due to the large fluctuations in fuel prices, we are unable to predict total operating expense for any future period with any degree of certainty. In addition, we believe the disclosure of fuel expense on an economic basis is useful to investors in evaluating our ongoing operational performance. Please see the cautionary statement under “Forward-Looking Information.”

We are providing unaudited information about fuel price movements and the impact of our hedging program on our financial results. Management believes it is useful to compare results between periods on an “economic basis.” Economic fuel expense is defined as the raw or “into-plane” fuel cost less the cash we receive from hedge counterparties for hedges that settle during the period, offset by the premium expense that we recognize. Economic fuel expense more closely approximates the net cash outflow associated with purchasing fuel for our operation.

Forward-Looking Information

This update contains forward-looking statements subject to the safe harbor protection provided by Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. These statements relate to future events and involve known and unknown risks and uncertainties that may cause actual outcomes to be materially different from those indicated by any forward-looking statements. For a comprehensive discussion of potential risk factors, see Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2007. Some of these risks include increased competition, significant fuel costs, general economic conditions, labor costs and relations, our significant indebtedness, inability to meet cost reduction goals, terrorist attacks, seasonal fluctuations in our financial results, an aircraft accident, laws and regulations, and government fees and taxes. 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 expressly disclaim any obligation to publicly update or revise any forward-looking statements after the date of this report to conform them to actual results. Over time, our actual results, performance or achievements will likely differ from the anticipated results, performance or achievements that are expressed or implied by our forward-looking statements, and such differences might be significant and materially adverse.

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  ALASKA AIRLINES – MAINLINE

   July 2008 Statistics

	July 2008	Change Y-O-Y
Capacity (ASMs in millions)	2,244	2.4%
Traffic (RPMs in millions)	1,788	(2.2)%
Revenue passengers (000s)	1,618	(6.7)%
Load factor*	79.7%	(3.7)pts
RASM (cents)	12.98	0.5%
Passenger RASM (cents)	12.03	1.0%
Raw fuel cost ($ in millions)	$129.1	69.5%
Raw fuel cost/gal.	$4.19	77.5%
Economic fuel expense ($ in millions)	$111.1	54.6%
Economic fuel expense/gal.	$3.61	61.8%

    *percentage of available seats occupied by fare-paying passengers

   Advance Booked Load Factors

	August	September	October
Point Change Y-O-Y	-2 pts	+1 pt	+3 pts

Over the past several months, we have seen a change in the advance bookings trend where the year-over-year advance booked load factors trend higher two to three months prior to the travel date, but begin to weaken as the travel date approaches.

   Forecast Information

	Forecast   Q3 2008	Change   Y-O-Y	Forecast   FY 2008	Change   Y-O-Y
Capacity (ASMs in millions)	6,200 – 6,300	(1)% – (2)%	24,200	0%
Unit Costs:
Cost per ASM on a GAAP basis (cents)*	13.9 – 14.0	34% – 35%	N/A	N/A
Less: Fuel cost per ASM (cents)*	6.0	88%	N/A	N/A
Less: Fleet transition charges	0.5	N/A	N/A	N/A
Cost per ASM excluding fuel (cents)*	7.4 – 7.5	3% – 4%	7.5 – 7.6	0% – 1%
Fuel Gallons (000,000)	87	(7)%	335	(5)%
Economic fuel cost per gallon**	$3.41	52%	N/A	N/A

*For Alaska, our forecasts of mainline cost per ASM and fuel cost per ASM are based on forward-looking estimates, which will likely differ from actual results due to several factors including, but not limited to, the volatility of fuel prices. Fuel cost per ASM is stated on a GAAP basis and thus includes actual quarter-to-date mark-to-market adjustments related to hedge accounting. We expect that our economic fuel cost per ASM will differ from the fuel cost per ASM amount above.

**Because of the volatility of fuel prices, actual amounts may differ significantly from our estimates. We are unable to forecast economic fuel cost per gallon for the full year 2008.

   Fleet Transition and Restructuring Charges Expected in Third Quarter

As disclosed previously, Alaska has four MD-80 aircraft under long-term leases. As these aircraft cease operating, we will have charges reflecting the aggregate lease payments and maintenance obligations remaining under the lease terms. Two of these aircraft were retired and placed in a storage facility during the second quarter, and the other two will be retired by the end of August. We expect a charge of approximately $28 million to $30 million during the third quarter associated with the retirement of these two aircraft.

The forecast does not include the impact of severance charges associated with the previously announced reduction in management headcount. We expect the charge to be between $2 million and $3 million, which will be recorded in the third quarter.

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  ALASKA – PURCHASED CAPACITY

Alaska has Capacity Purchase Agreements (CPA) with Horizon for certain routes and with a third party whereby Alaska purchases capacity for service between Anchorage and Dutch Harbor, AK.

   July 2008 Statistics

The following data represents the Horizon CPA flying only as that flying represents approximately 95% of the total purchased capacity.

	July 2008	Change Y-O-Y
Capacity (ASMs in millions)	133	0%
Traffic (RPMs in millions)	106	(3.4)%
Load factor*	79.7%	(2.8)pts
Passenger RASM (cents)	21.39	2.2%

  *Percentage of available seats occupied by fare-paying passengers

   Advance Booked Load Factors

	August	September	October
Point Change Y-O-Y	-4 pts	-1 pt	flat

Over the past several months, we have seen a change in the advance bookings trend where the year-over-year advance booked load factors trend higher two to three months prior to the travel date, but begin to weaken as the travel date approaches.

   Forecast Information (Horizon CPA)

	Forecast   Q3 2008	Change   Y-O-Y	Forecast   FY 2008	Change   Y-O-Y
Capacity (ASMs in millions)	375	0%	1,400	3%
Cost per ASM (cents)*	22.4	9%	22.1 – 22.2	4% – 5%

    * Costs associated with the Horizon CPA agreement are eliminated in consolidation

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  HORIZON AIR

   July 2008 Statistics

	July 2008	Change Y-O-Y
Capacity (ASMs in millions)	336	(8.8)%
Traffic (RPMs in millions)	260	(11.7)%
Revenue passengers (000s)	705	(3.7)%
Load factor*	77.3%	(2.5) pts
System RASM (cents)	21.63	16.1%
Raw fuel cost ($ in millions)	$25.8	79.4%
Raw fuel cost/gal.	$4.22	73.0%
Economic fuel expense ($ in millions)	$22.1	63.1%
Economic fuel expense/gal.	$3.62	57.4%

  *percentage of available seats occupied by fare-paying passengers

   Line-of-Business Information

Horizon’s line-of-business traffic and revenue information is presented below. In CPA arrangements, Horizon is (or was, in the case of the Frontier CPA which ended in November 2007) insulated from market revenue factors and is guaranteed contractual revenue amounts based on operational capacity. As a result, yield and load factor information is not presented. Horizon bears the revenue risk in its brand flying markets. Revenue from the Alaska CPA is eliminated in consolidation.

July 2008

	Capacity Mix			Load Factor			Yield		RASM
	Actual (000s)	Change Y-O-Y	Current % Total	Actual	Point change Y-O-Y		Actual	Change Y-O-Y	Actual	Change Y-O-Y
Brand Flying	204	8.1%	61%	75.7%	(1.4)	pts	27.91¢	5.4%	21.59¢	3.7%
Alaska CPA	132	0%	39%	NM	NM		NM	NM	21.69¢	10.1%
Frontier CPA	—	(100.0)%	0%	NM	NM		NM	NM	NM	NM
System Total	336	(8.8)%	100%	77.3%	(2.5)	pts	27.64¢	19.8%	21.63¢	16.1%

    NM = Not Meaningful

   Advance Booked Load Factors – Brand Flying Only

	August	September	October
Point Change Y-O-Y	-2 pts	flat	+1 pt

Over the past several months, we have seen a change in the advance bookings trend where the year-over-year advance booked load factors trend higher two to three months prior to the travel date, but begin to weaken as the travel date approaches.

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  HORIZON AIR - (continued)

   Forecast Information

	Forecast   Q3 2008	Change   Y-O-Y	Forecast   FY 2008	Change   Y-O-Y
Capacity (ASMs in millions)	940	(13)%	3,600 – 3,650	(9)%
Unit Costs
Cost per ASM on a GAAP basis (cents)*	22.1 – 22.2	29% – 30%	N/A	N/A
Less: Fuel cost per ASM (cents)*	8.0	120%	N/A	N/A
Cost per ASM excluding fuel (cents)*	14.1 – 14.2	4% – 5%	14.7 – 14.8	1% – 2%
Fuel Gallons (000,000)	17	0%	67	4%
Economic fuel cost per gallon**	$3.43	49%	N/A	N/A

*For Horizon, our forecasts of cost per ASM and fuel cost per ASM are based on forward-looking estimates, which will likely differ significantly from actual results. There are several factors impacting our estimates including, but not limited to, the volatility of fuel prices, fleet transition activity, and the actual timing of aircraft or engine maintenance events.

Fuel cost per ASM is stated on a GAAP basis and thus includes mark-to-market adjustments related to hedge accounting. We expect that our economic fuel cost per ASM will differ from the fuel cost per ASM amount above.

**Because of the volatility of fuel prices, actual amounts may differ significantly from our estimates. We are unable to forecast economic fuel cost per gallon for fiscal 2008.

   Fleet Transition Charges Expected in Third Quarter

There may be further fleet transition charges associated with the transition out of the CRJ-700 aircraft, one of which is expected to exit the fleet during the third quarter. The amount of any third quarter charge cannot be estimated at this time because the method of aircraft disposition is not yet known.

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  AIR GROUP

Future Fuel Hedge Positions

	Approximate % of Expected Fuel Requirements	Approximate Crude Oil Price per Barrel
Third Quarter 2008	50%	$78
Fourth Quarter 2008	50%	$77
Remainder of 2008	50%	$78
First Quarter 2009	50%	$108
Second Quarter 2009	50%	$108
Third Quarter 2009	35%	$108
Fourth Quarter 2009	30%	$111
Full Year 2009	41%	$108
First Quarter 2010	12%	$121
Second Quarter 2010	10%	$120
Third Quarter 2010	5%	$120
Fourth Quarter 2010	5%	$120
Full Year 2010	8%	$120
First Quarter 2011	6%	$113
Full Year 2011	1%	$113

Cash and Share Count

(in millions)	July 31, 2008	December 31, 2007
Cash and marketable securities	$1,056	$823
Common shares outstanding	36.019	38.051

Capital Expenditures

Total capital expenditures for 2008 are expected to be as follows (in millions):

	Total 2008 Estimate
	Aircraft-related	Non-aircraft	Total
Alaska	$390	$75	$465
Horizon	100	5	105
Total Air Group	$490	$80	$570

Firm Aircraft Commitments

	2008	2009	2010	Thereafter	Total
Alaska (B737-800)	17*	6	6	3	32
Horizon (Q400)	4	11	-	-	15
Totals	21	17	6	3	47

* includes one operating lease arrangement

In addition to the firm orders noted above, Alaska has options to acquire 45 additional B737-800s and Horizon has options to acquire 20 Q400s.

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  AIR GROUP – (continued)

   Projected Fleet Count

		Actual Fleet Count			Expected Fleet Activity
					Changes by Quarter
Alaska	Seats	Dec. 31, 2006	Dec. 31, 2007	June 30, 2008	Q3	Q4	Dec. 31, 2008	2009 Changes	Dec. 31, 2009***
737-200	—	2	—	—	—	—	—	—	—
737-400F*	—	1	1	1	—	—	1	—	1
737-400C*	72	—	5	5	—	—	5	—	5
737-400	144	39	34	34	—	(2)	32	(4)	28
737-700	124	22	20	20	—	—	20	(1)	19
737-800	157	15	29	36	5	5	46	6	52
737-900	172	12	12	12	—	—	12	—	12
MD-80	140	23	14	7	(7)	—	—	—	—
Totals		114	115	115	(2)	3	116	1	117
		Actual Fleet Count			Expected Fleet Activity
					Changes by Quarter
Horizon	Seats	Dec. 31, 2006	Dec. 31, 2007	June 30, 2008	Q3	Q4	Dec. 31, 2008	2009 Changes	Dec. 31, 2009
Q200	37	28	16	11	(4)	(7)	—	—	—
Q400	74-76	20	33	34	—	3	37	11	48
CRJ700**	70	21	21	20	(1)	(1)	18	(18)	—
Totals		69	70	65	(5)	(5)	55	(7)	48

  *F=Freighter; C=Combination freighter/passenger

  ** The planned CRJ fleet at December 31, 2008 and 2009 is subject to change as we finalize the fleet exit plan.

  *** The expected fleet count at December 31, 2009 for Alaska is subject to change as we finalize the capacity reduction plan.

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