PURCHASE AGREEMENT NUMBER 2497

Purchase and Sale Agreement

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Title: PURCHASE AGREEMENT NUMBER 2497
Date: 8/5/2005
Industry: Airline Sector: Transportation

PURCHASE AGREEMENT NUMBER 2497, Parties: alaska air group inc , boeing company , alaska airlines inc.

<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>

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>

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>

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>

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>

Flight Hours

--------------------------------------

2000 3000 4000 6000 8000 12000

---- ---- ---- ---- ---- -----

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>

Flight Hours

--------------------------------------------------------------

2000 3000 4000 6000 8000 12000

---- ---- ---- ---- ---- -----

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.

(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.

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 inc

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