ALASKA AIR GROUP, INC. (ALK) Business

ITEM 1. BUSINESS

Alaska Air Group, Inc. ("Air Group" or the "Company") is a Delaware corporation incorporated in 1985. Air Group operated three airlines, Alaska Airlines, Hawaiian Airlines, and Horizon Air, through October 29, 2025. On that date, Alaska Airlines' and Hawaiian Airlines' operations were combined under Alaska's Federal Aviation Administration (FAA) operating certificate. Hawaiian Airlines is preserved as a distinct brand, providing a unique guest experience to guests traveling to, from, or within the Hawaiian Islands. Alaska Airlines was organized in 1932 and incorporated in 1937 in the state of Alaska. Hawaiian Airlines was originally incorporated in 1929 in the Territory of Hawai'i, and has been a Delaware corporation and wholly-owned subsidiary of Hawaiian Holdings, Inc. since 2005. Hawaiian Holdings, Inc. was acquired by Air Group in 2024. Horizon Air is a Washington corporation that was incorporated and began service in 1981, and was acquired by Air Group in 1986. Air Group acquired Virgin America in 2016, then legally merged the entity with Alaska in 2018, at which time the airlines' operating certificates were also combined. The Company also includes McGee Air Services, an aviation services provider that was established as a wholly-owned subsidiary of Alaska in 2016, and other subsidiaries.

A summary of our operations is presented below:

•Alaska and Hawaiian - includes scheduled air transportation of passengers and cargo on Boeing 737 (B737), Boeing 787 (B787), Boeing 717 (B717), Airbus A330 (A330), Airbus A321neo (A321neo), and Airbus A330-300F (A330-300F) aircraft throughout North America, Latin America, Asia, and the Pacific.

•Regional - includes scheduled air transportation of passengers on Horizon and a third-party carrier (SkyWest) on Embraer E175 (E175) aircraft throughout the western region of North America. All capacity is sold to Alaska under capacity purchase agreements (CPA).

Alaska is the fourth largest global carrier in the United States, and the fifth largest provider of air transportation, offering unparalleled guest service, connectivity, and schedules from hubs in Seattle, Honolulu, Portland, Anchorage, Los Angeles, San Diego, and San Francisco. With our regional partners, we fly to more than 140 destinations throughout North America, Latin America, Asia, and the Pacific. We will serve Europe beginning in spring 2026. Alaska is a member of the oneworld® alliance. With oneworld and other global partners, our guests have access to more than 900 destinations in 170 territories. Starting in spring 2026, Alaska's oneworld benefits will extend to guests traveling on Hawaiian-branded aircraft. We have operated in a highly competitive and often challenging industry for more than 90 years. Our airlines' top priority is ensuring the safety of our guests and employees, an area we continually invest in. Our success over many decades is attributable to the prioritization of safety as our number one value, as well as our people, business model, and commitment to sustainable growth over the long-term.

In 2025, we made significant progress towards integrating Hawaiian into Air Group. We consolidated most back-office functions, established station co-locations, and began the integration of Alaska and Hawaiian operational systems. In August 2025, we launched Atmos™ Rewards, a single loyalty program combining Alaska Airlines’ Mileage Plan™ and Hawaiian Airlines’ HawaiianMiles™, offering flexible earning options and expanded redemption across our global network. In October 2025, Alaska and Hawaiian received a single operating certificate (SOC) from the FAA, officially recognizing Alaska and Hawaiian as one airline under the Alaska certificate. We preserved Hawaiian as a distinct, guest-facing brand, establishing distinct brand promises for both Alaska and Hawaiian that capture what makes each brand special, supported by a set of shared values developed with input from employees. As part of our commitment to the Hawaiian Airlines brand and the Hawai'i community, we launched a five-year, $600 million Kahu'ewai Hawai'i Investment Plan to modernize airport operations, enhance the guest experience, support employees, and invest in communities and sustainability in Hawai'i.

These milestones position us for a transition to a single passenger service system (PSS) in spring 2026, which will allow us to provide one reservation system and inventory of flights to our guests, while unlocking additional synergies from the acquisition. We also continue to pursue joint collective bargaining agreements for union-represented employees, which we expect to achieve over the next few years. Our integration efforts support our Alaska Accelerate vision of connecting guests to the world with a remarkable travel experience rooted in safety, care, and performance.

AIR GROUP

Our airlines operate different aircraft, which serve different missions, described in more detail below. The majority of our revenue is generated by transporting passengers. We deploy aircraft in ways that we believe will best optimize our consolidated revenue and profitability.

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The percentage of consolidated revenue by category is presented below:

PASSENGER SERVICE

Alaska and Hawaiian offer passenger service on B737, B787, B717, A330, and A321neo aircraft throughout North America, Latin America, Asia, and the Pacific. The largest concentration of departures is from hubs in Seattle, Honolulu, Portland, Anchorage, Los Angeles, San Diego, and San Francisco. Alaska and Hawaiian carried 47 million revenue passengers in 2025, up from 39 million in 2024, which includes Hawaiian results from September 18, 2024 through December 31, 2024.

The percentage of Alaska and Hawaiian passenger capacity by principal geographic region (as defined by the U.S. Department of Transportation) is presented below:

(a) Includes Hawaiian's capacity covering the post-acquisition period from September 18, 2024 through December 31, 2024.

Regional operations include passenger service on E175 aircraft operated by Horizon and third-party carrier SkyWest under CPAs with Alaska, primarily in the states of Washington, Oregon, California, Alaska, and Idaho. Regional operations carried approximately 11 million revenue passengers in 2025, up from 10 million in 2024. Horizon is the largest regional airline in the Pacific Northwest and carried approximately 55% of Air Group's Regional passengers.

The percentage of Regional passenger capacity by region is presented below:

LOYALTY PROGRAM

Our loyalty program, Atmos™ Rewards, brings together the best features of Alaska Airlines’ Mileage Plan™ and Hawaiian Airlines’ HawaiianMiles™ into a single program. The two programs operated separately with distinct program terms and rules until the launch of Atmos Rewards in October 2025. In 2025, Air Group loyalty program members redeemed points and companion certificates for nearly eight million award tickets on our airlines and partner airlines. Loyalty program revenue, including that in the Passenger revenue line item in the consolidated statements of operations, represented approximately 16% of Air Group's total revenue in 2025.

Atmos Rewards awards points for flights on any of our airlines. Points can also be earned by flying with one of our partner airlines as well as through use of our co-branded credit cards, and through transactions with other non-airline partners. Points awarded do not expire and can be redeemed for flights across a global network of over 1,000 destinations and more than 30 airline partners, hotel stays, events, and curated experiences. Members can achieve tier status (Atmos Silver, Atmos Gold, Atmos Platinum, and Atmos Titanium) by earning qualifying points. Tier status unlocks incremental benefits such as bonus

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points, complimentary upgrades, free checked bags, and priority boarding. As part of the oneworld alliance, Atmos Rewards members with tier status also enjoy reciprocal benefits when flying with other oneworld alliance airlines.

Alaska offers three co-branded credit cards issued by Bank of America N.A.: the Atmos Rewards Ascent Visa Signature, the Atmos Rewards Summit Visa Infinite, and the Atmos Rewards Visa Signature Business. All three cards provide core benefits including annual companion fares, free checked bags, status points, preferred boarding, earning and redeeming points, and exclusive discounts. The Summit Visa Infinite was launched in August 2025, and stands out as a premium product for frequent travelers, offering global companion awards, complimentary Alaska Lounge access, accelerated status attainment, partner program points transfer, instant travel delay credits, same-day change fee waivers, and more. Two other co-branded card products are also available for Atmos Rewards members, the Hawaiian Airlines Barclays' World Elite Mastercard and the Bank of Hawai'i Visa debit card, which provide additional earning opportunities and program benefits.

Alaska and Hawaiian also have complimentary loyalty programs designed exclusively for residents of Alaska and Hawai'i. Club 49™ is offered to Alaska Residents who are Atmos Rewards members, providing benefits such as two free checked bags, last-minute travel discounts, exclusive weekly fare sales, and discounts on cargo shipments to, from or within the state of Alaska. Huaka'i by Hawaiian is available to kama‘āina (Hawai'i residents) with an Atmos Rewards account, offering perks such as a free checked bag between islands, quarterly Neighbor Island discounts, and monthly network-wide discounts.

CARGO AND OTHER

Alaska operates a cargo business that plays a critical role in the communities our airlines serve. We provide freight and mail services using both freighter aircraft and the belly capacity on passenger aircraft. Alaska has five dedicated freighter aircraft that operate primarily to and within the state of Alaska. The majority of Alaska's cargo services are provided to commercial businesses. We also provide cargo services to Amazon.com, Inc (Amazon) under an Air Transportation Services Agreement (ATSA). Under the ATSA, we operate 10 A330-300F aircraft for which we supply flight crews, perform maintenance and certain administrative functions, and procure aircraft insurance. In return, we receive a fixed monthly fee per aircraft, a per flight hour fee, and a per flight cycle fee for each flight cycle operated, and are reimbursed for certain operating expenses, including fuel, certain maintenance, and insurance premiums.

The Company also earns other revenue for lounge memberships, hotel and car commissions, travel insurance, and certain other immaterial items not intrinsically tied to providing air travel to passengers.

AGREEMENTS WITH OTHER AIRLINES

Alaska has various types of marketing agreements with other airlines. These agreements fall into three categories: loyalty program, codeshare, and interline.

•Loyalty program agreements enable our members to accrue points and/or redeem them for flights on partner airlines.

•Codeshare agreements allow one or more marketing carriers to sell seats on a single operating carrier that serves passengers under multiple flight numbers. The sale of codeshare seats can vary depending on the sale arrangement. For example, in a free-sale arrangement, the marketing carrier sells the operating carrier's inventory without any restriction; whereas in a block-space arrangement, a fixed amount of seats are sold to the marketing carrier by the operating carrier. The interchangeability of the flight code between carriers provides a greater selection of flights for customers, along with increased flexibility for point accrual and redemption.

•Interline agreements allow airlines to jointly offer a competitive, single-fare itinerary to customers traveling via multiple carriers to a final destination. An interline itinerary offered by one airline may not necessarily be offered by the other, and the fares collected from passengers are prorated and distributed to interline partners according to preexisting agreements between the carriers.

These agreements help increase our traffic and revenue by providing a more diverse network and schedule options to our guests.

Alaska is a member of the oneworld alliance. Starting in spring 2026, Alaska's oneworld benefits will extend to guests traveling on Hawaiian-branded aircraft. Elite Atmos Rewards members receive tier status matching across other member airlines. Depending on tier status, guests can enjoy a variety of privileges, including access to more than 600 international first and business class lounges, fast track through security, priority baggage benefits, priority check-in desks, upgrades, and priority boarding.

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Alliances are an important part of our strategy and enhance our revenue by:

•offering our guests more travel destinations and better point earn and redemption opportunities, including status points on U.S. and international airline partners;

•providing a consistent and seamless guest experience whether flying on Alaska or one of our partners;

•giving us access to more connecting traffic from other airlines; and

•providing members of our partners’ loyalty programs an opportunity to travel on Alaska and our regional partners while earning points in our partners’ programs.

Most of our codeshare relationships are free-sale codeshares, where the marketing carrier sells seats on the operating carrier’s flights from the operating carrier’s inventory, but takes no inventory risk. Our marketing agreements have various termination dates, and one or more may be in the process of renegotiation at any time. Our codeshare and interline agreements generated approximately 5% of our total operating revenue for each of the years ended December 31, 2025, 2024, and 2023.

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Alaska's marketing agreements with other airlines are as follows:

(a) These airlines do not have their own loyalty program. However, Atmos Rewards members can earn and redeem points on these airlines' route systems.

(b) These airline partnerships are limited to earning points. Atmos Rewards members can earn points when purchasing these airlines' flights on www.alaskaair.com and www.hawaiianairlines.com.

(c) Includes Japan Transocean (NU)

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GENERAL

The airline industry is highly competitive and subject to potentially volatile business cycles, resulting from factors such as uncertain economic conditions, volatile fuel prices, supply chain dependencies, pandemics, a largely unionized work force, the need to finance large capital expenditures and the related availability of capital, government regulation - including taxes and fees, and potential aircraft incidents. Airlines have high fixed costs, primarily for wages, aircraft fuel, aircraft ownership, and facilities rents. Because expenses of a flight do not vary significantly based on the number of passengers carried, a relatively small change in the number of passengers or in pricing has a disproportionate effect on an airline’s operating and financial results. In other words, a minor shortfall in expected revenue levels could cause a disproportionately negative impact to our operating and financial results. Passenger demand and ticket prices are, in large measure, influenced by the general state of the economy, current global economic and political events, and total available airline seat capacity.

SAFETY

The safety and well-being of our employees and guests is the foundation of our work at Alaska Air Group. The Company's primary safety objectives are to identify, assess, monitor, and mitigate safety risks to as low as reasonably practical, which we do using our Safety Management System (SMS). Our safety principles and safety initiatives are critical to empowering employees to pause the operation any time something appears to be unsafe. Safety goals and objectives are regularly reviewed and communicated to employees, and are continually measured to evaluate our progress. Alaska, Hawaiian, and Horizon employees are also rewarded for reporting safety concerns and meeting measurable safety targets as both our Performance Based Pay (PBP) and Operational Performance Rewards (OPR) programs include payouts for achievement to stated goals.

All Air Group airlines operate under one SMS. In October 2025, Hawaiian was integrated into the SMS following receipt of a single operating certificate, enabling a standardized and consistent safety framework across Air Group. All employees received training for the Air Group SMS, our "Ready, Safe, Go" principles, and our mobile safety reporting systems.

Air Group's Board of Directors has a Safety Committee that is responsible for oversight of safety-related risk and management's efforts to ensure the safety of all passengers and employees. The Committee receives regular updates from management throughout the year and provides feedback to create and maintain a strong safety culture.

FUEL

Our business and financial results are highly impacted by the price and the availability of aircraft fuel. Aircraft fuel expense includes raw fuel expense, or the price that we generally pay at the airport, including taxes and fees, plus any impact of our fuel hedging. In addition, management reviews economic fuel costs, which include the impact of settled fuel hedge positions but excludes mark-to-market adjustments. Management considers economic fuel costs to be the best estimate of the cash cost of fuel. Air Group primarily purchases its fuel based on U.S. West Coast and Singapore jet fuel prices.

The cost composition of our aircraft fuel expense is as follows:

(a) Other includes gains and losses on settled fuel hedges, unrealized mark-to-market fuel hedge gains and losses, taxes, and other into-plane costs.

(b) Inclusive of Hawaiian for the post-acquisition period from September 18, 2024 through December 31, 2024.

Alaska and Hawaiian previously used crude oil call options to hedge fuel expense. Alaska's fuel hedge program was suspended in 2023 and all remaining positions were settled in 2025. Hawaiian's fuel hedge program was suspended in the beginning of 2025, with all remaining positions settled later in the year. No hedge positions remain open as of December 31, 2025.

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Sustainable aviation fuel (SAF) is an important part of our long-term environmental sustainability strategy and our ambition to achieve net zero carbon emissions. While SAF technologies and market development have advanced in recent years, limited supply and high cost of SAF continue to constrain widespread adoption. We advance SAF through a multi-faceted approach that includes entering into offtake agreements, investing in research and emerging technology, partnering with fuel producers, engaging our guests, and advocating for public policies that support SAF adoption. These efforts all aim to accelerate the growth of the SAF market, increase supply, enhance energy security, support regional economic development, and enable long-term decarbonization of air travel.

We believe that operating fuel-efficient aircraft and executing on operational best practices are the best strategies to mitigate high fuel prices. Maintaining a young, fuel-efficient fleet helps reduce our fuel consumption rate, as well as the amount of greenhouse gases and other pollutants that our aircraft emit.

COMPETITION

Competition in the airline industry can be intense and unpredictable. Our competitors consist primarily of other airlines and, to a lesser extent, other forms of transportation. Competition can be direct, in the form of another carrier flying the exact non-stop route, or indirect, where a carrier serves the same two cities non-stop from an alternative airport in that city or via an itinerary requiring a connection at another airport. Our airlines compete with other U.S. and foreign airlines on nearly all of our domestic and international routes. Our largest competitor is Delta Air Lines Inc. (Delta). Approximately 78% of our capacity to and from Seattle competes with Delta. In addition to Delta, Southwest Airlines and United Airlines are significant competitors in the state of Hawai'i and on the West Coast. Our Hawai'i, California, transcontinental, and international routes have a higher concentration of competitors when compared to our routes within the Pacific Northwest.

We believe that the following competitive factors matter to guests when making an air travel purchase decision:

•Fares and ancillary services

Ticket and other fee pricing is a significant competitive factor in the airline industry. Travelers are able to easily compare fares and identify competitor promotions and discounts. Pricing is driven by a variety of factors including, but not limited to, market-specific capacity, market share per route/geographic area, cost structure, fare vs. ancillary revenue strategies, and demand.

The airline industry is highly competitive, with carriers constantly seeking to defend and grow market share. Some carriers in our markets often discount fares to drive traffic in new markets or to stimulate traffic when necessary to improve load factors. Historically, markets that faced competition from low-cost and ultra-low-cost carriers were subject to disruptive ticket and fee pricing as the carriers' low unit cost allowed them to serve markets at very low fares. Legacy carriers with expansive networks and diversified product offerings have experienced greater success attracting more price-conscious customers with their basic economy offerings. These factors can reduce our pricing power and that of the airline industry as a whole. Fares below operating costs can be harmful if sustained over a long period of time. We will defend our position in our core markets, and if necessary, adjust capacity to better match supply with demand. Our cost discipline and high productivity have historically enabled us to maintain competitive fares.

•Routes served, flight schedules, codesharing and interline agreements, and alliances

We compete with other airlines based on markets served and the frequency of service to those markets. Some airlines have more extensive route structures than we do, and they offer significantly more international routes. In order to expand opportunities for our guests, we enter into codeshare and interline agreements with other airlines. These agreements allow us to offer our guests access to more destinations than we can on our own and to gain exposure in markets we do not serve. The agreements also make it more convenient for guests to purchase flights to their final destinations through our airlines' distribution channels.

Alaska's membership in the oneworld alliance provides its guests increased global network utility, and positions the airline to capture an incremental share of global travelers and corporate accounts. Through oneworld, guests can travel to more than 900 destinations in 170 territories. We expect Hawaiian to join the oneworld alliance in spring 2026.

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•Loyalty programs

We compete with other airlines for customer loyalty in order to build long-term relationships with our guests. Our Atmos Rewards program offers some of the most competitive advantages in the industry. Points awarded do not expire and can be redeemed for flights across our/partner global network, hotel stays, events, and curated experiences. The program has multiple status tiers that offer a variety of benefits including additional earnings opportunities, complimentary upgrades, free checked bags, and priority boarding. Our loyalty program also offers exclusive benefits to residents in the states of Alaska and Hawai'i through our Club 49 and Huaka'i programs, which show our gratitude for major communities we serve. Members of our loyalty program also have access to co-branded credit cards as an additional way to earn points and take advantage of additional benefits. As a member of oneworld, Atmos Rewards members with tier status are provided reciprocal benefits when flying other oneworld members, including upgrades, lounge access, and priority boarding.

•Product and customer service

We compete with other airlines in areas of customer service, such as on-time performance and the quality of guest experience offered across our network. Key competitive factors include the availability and mix of premium seating options, onboard amenities, inflight connectivity and entertainment offerings, aircraft type, and overall cabin comfort.

We continue to expand the mix of premium seating, including First Class and Premium Class, across our fleet and invest in cabin retrofits aimed at modernizing interiors and enhancing comfort and functionality throughout the cabin. These initiatives intend to maintain competition in markets with growing premium travel demand. The acquisition of Hawaiian expanded our premium product portfolio and introduced lie-flat seating to our mainline fleet, providing an enhanced comfort option on select long haul routes. In 2025, we began installing Starlink Wi-Fi across our fleet, providing faster and more reliable inflight connectivity. Fleetwide installation is expected to be completed by the end of 2027.

In addition to onboard product initiatives, we are making targeted improvements to airport facilities, recognizing that the guest experience begins prior to boarding our aircraft. These improvements include lobby renovations, enhancements to check‑in and boarding environments, and lounge expansions designed to increase space and comfort.

Our employees are a critical element of our brand and reputation. We have a highly engaged workforce that strives to provide genuine and caring service to our guests at the airport, lounge, onboard, and call centers. We heavily emphasize our service standards with our employees through training and education programs, and incentive pay related to operational performance and guest satisfaction.

Besides competing with other airlines, we compete with ground transportation in our short-haul markets. Demand for our services, especially business related travel, is also impacted by alternative technologies, such as video conferencing and internet-based meeting tools.

TICKET DISTRIBUTION

Our tickets are distributed through multiple channels:

•Direct to customer: The Company sells direct at www.alaskaair.com and www.hawaiianairlines.com and through the Alaska Airlines and Hawaiian Airlines apps. Selling direct is our most cost efficient sales channel. Direct sales are also preferable from a branding and customer relationship standpoint, because we can establish ongoing communication with the guest and tailor outreach accordingly. As a result, we prioritize efforts that drive more business to our direct sales channels. We also have reservation call centers where guests can book reservations.

In October 2025, Alaska and Hawaiian completed a sales system cutover, moving all ticket sales for flights in spring 2026 and beyond into a unified PSS. We expect to fully transition the airlines' operations to a single PSS in spring 2026.

•Traditional and online travel agencies: We use travel agencies to sell to guests. Corporate travel agencies typically use Global Distribution Systems to obtain their fare and inventory data from airlines. Bookings made through these agencies result in a fee that is charged to our airlines. Many large corporate customers require use of these agencies. Online travel agencies source content from the airline directly via more modern and cost-efficient alternatives. Some of our competitors may rely on travel agencies to a lesser extent than we do, and, as a result, may have lower ticket distribution costs.

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In 2025, 74% of our total sales were conducted direct to customer with the remaining 26% through traditional and online travel agencies.

SEASONALITY AND OTHER FACTORS

Our results of operations for any interim period are not necessarily indicative of those for the entire year because our business is subject to seasonal fluctuations. In typical years, our profitability is generally lowest during the first and fourth quarters due principally to fewer departures and passengers. Profitability typically increases in the second and third quarters as a result of vacation travel. Some of the negative impacts of seasonality are offset by travel from the West Coast to leisure destinations and expansion to leisure and business destinations in the mid-continental and eastern U.S. Seasonality and operating fluctuations may have a significant impact on operating results in an interim or annual period, and are not necessarily indicative of future operating results.

In a typical year, in addition to passenger loads, factors that could cause our operating results to vary include:

•pricing initiatives by us or our competitors;

•      changes in fuel costs;

•increases in competition at our primary airports;

•general economic conditions, in both the U.S. and other countries, and resulting changes in both leisure and business passenger demand;

•increases or decreases in passenger and volume-driven variable costs; and

•air space and Air Traffic Control delays, particularly in our West Coast hubs.

Many of the markets we serve experience inclement weather conditions in the winter, causing increased costs associated with deicing aircraft, flight cancellations, and accommodating displaced passengers. In certain geographies such as the Pacific Northwest, Alaska, and Hawai'i, we may be more susceptible to adverse weather conditions than some of our competitors who have different network exposures.

No material part of Alaska Air Group's or its subsidiaries' business is dependent upon a single customer, or upon a few high-volume customers.

ENVIRONMENTAL SUSTAINABILITY STRATEGY

The Company has an ambition to achieve net zero carbon emissions by 2040. We developed a five-part path to guide our long-term journey to net zero carbon emissions, and this strategy is complemented with near-term voluntary environmental sustainability goals. Our five-part path roadmap includes:

•Increasing operational efficiency: We take pride in consistently delivering top-of-industry operational performance. By having consistently leading operational performance, we also optimize our fuel efficiency. Alaska and Horizon use Flyways AI, a technology which leverages artificial intelligence to enable more fuel-efficient flight paths. Other key fuel efficiency initiatives include reducing auxiliary power unit usage and connecting to ground power, taxiing with just one engine where conditions allow, and routine engine cleaning to improve performance and extend on-wing life which reduces emissions and cost. Replacing our ground service equipment through the acquisition and use of electric and other lower-emissions equipment also improves operational efficiency. Currently, not all airports have the necessary infrastructure in place to support charging and use of these units to enable their full operational reliability, and we are actively working with our airport partners to make these improvements.

•Renewing our fleet with more efficient airplanes: We strive to operate our airlines with aircraft that are as fuel efficient as possible. We have purchase commitments for B737 and B787 aircraft. Due to their designs, up-gauge capacity, and engines, the new aircraft are approximately 15% to 25% more efficient on a seat-by-seat basis than the aircraft they replace.

•Using SAF: The use of SAF is important in enabling near-term progress towards our net zero carbon emissions ambitions, as it can be used alongside traditional jet fuel as a drop-in fuel while producing up to 80% lower carbon

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emissions on a lifecycle basis. Reaching these ambitions will require the use of SAF at quantities not yet available in the SAF market today. We are working in collaboration with the aviation industry, companies in the private sector, and governments at the federal and state levels to advancing the scalability of SAF production and reducing its cost.

Alaska enables business travel partners to purchase Scope 3 SAF credits to support our SAF initiatives and reduce their emissions impact. We also offer data to guests to help them understand their travel related emissions in an effort to bring attention to the importance of SAF.

•Investing in new technologies: Our net zero carbon emissions ambition requires technologies that are not yet fully developed or available at the scale required to decarbonize our industry. We are focused on doing our part to aid in the development of these technologies, and to foster support via public policy and private sector capital investments. To enable these technologies and accelerate our path to net zero carbon emissions, among other business needs, we have an investment arm called Alaska Star Ventures (ASV). Through ASV, we have partnered and invested with companies focused on new technologies including:

◦Breakthrough Energy Ventures (BEV) is a fund that was launched in 2025 in partnership with oneworld alliance member airline. ASV is a cornerstone investor in the fund. BEV intends to benefit the SAF market by accelerating the global development of long-term aviation fuel solutions that are cost effective, scalable, and have lower emissions than conventional fuels.

◦ZeroAvia is a company developing hydrogen-electric powertrain technology for regional aircraft.

◦JetZero is a company developing a blended wing body using existing engine technology while delivering up to 50% better fuel efficiency.

◦Twelve is a power-to-liquid SAF provider utilizing recaptured carbon dioxide as feedstock to bring its E-Jet® fuel to commercial use. This fuel is a low carbon jet fuel produced from recaptured carbon dioxide, water, and renewable energy.

•Harnessing credible carbon offset and carbon removal technologies: Our primary focus is reducing emissions from our operations through fleet modernization, operational efficiencies and the adoption of SAF, but we know that we will likely need to utilize carbon offsets and removals to reach our net zero carbon emissions ambition. Carbon offsets and removals will be used only to address emissions that remain after all practical reduction measures have been implemented. The Company does not have material investments in any carbon offsets or carbon removal technology. We are continually exploring how the market develops for high-quality, durable carbon credits from carbon offsets and removals projects to refine our plans to achieving net zero carbon emissions.

CORPORATE RESPONSIBILITY GOVERNANCE

The Governance, Nominating, and Corporate Responsibility Committee of the Board of Directors is responsible for overseeing various environmental sustainability initiatives and disclosures. This includes annual reporting of voluntary goals and evaluation of environmental and climate impacts. On a quarterly basis, the committee reviews environmental sustainability progress, including performance on enterprise-wide publicly reported corporate impacts goals and climate-related issues. A dedicated Climate Working Group oversees management’s climate strategy and path to net zero carbon emissions. The Climate Working Group is responsible for providing expert guidance on, and oversight for, our work to achieve net zero carbon emissions and other climate-related goals and strategy. The Audit Committee of the Board of Directors oversees Air Group's financial reporting process, including disclosures on corporate responsibility matters within the Company's financial statements. The Company's Executive Committee is responsible for overseeing the progress toward our climate goals and providing input on Air Group's climate strategy.

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HUMAN CAPITAL

OUR PEOPLE

Our business is labor intensive. As of December 31, 2025, Air Group entities employed 35,951 active employees (22,377 at Alaska, 6,456 at Hawaiian, 3,846 at Horizon, and 3,272 at McGee Air Services). Of those employees, 89% are full-time and 11% are part-time. Wages and benefits, including variable incentive pay, represented approximately 46% of our total non-fuel operating expenses in 2025 and 2024.

Aligning employees' goals with the Company's goals is critical in achieving success. During the year, Alaska, Hawaiian, and Horizon employees participated in the PBP and OPR programs, which reward employees across all work groups based on metrics related to profitability, safety, synergy capture, guest experience, completion rate, and on-time rate. Alaska, Hawaiian, and Horizon employees earned $245 million under these incentive programs during the year.

COLLECTIVE BARGAINING

Most major airlines, including Alaska, Hawaiian, and Horizon, have employee groups that are covered by collective bargaining agreements (CBA). Airlines with unionized workforces generally have higher labor costs than carriers without unionized workforces. Those with unionized workforces may not have the ability to adjust labor costs downward quickly in response to new competition or slowing demand. At December 31, 2025, labor unions represented 81% of Air Group employees.

With one exception discussed below, Alaska has begun negotiations for joint collective bargaining agreements (JCBAs) covering each represented Alaska and Hawaiian workgroup. The process for determining which union will represent the combined technicians and related workgroup remains ongoing and, as a result, JCBA negotiations have not begun concerning that workgroup. Alaska intends to initiate those negotiations after the representation issue has been resolved. At December 31, 2025, Transition and Process Agreements are in place for certain workgroups, which define the process for negotiating JCBAs and set forth interim agreements until a JCBA is reached.

Our relations with U.S. labor organizations representing our employees are governed by the Railway Labor Act (RLA). Under the RLA, collective bargaining agreements do not expire, but instead become amendable as of a stated date. If either party wishes to modify the terms of any such agreement, it must notify the other party in the manner prescribed by the RLA and/or described in the agreement. After receipt of such notice, the parties must meet for direct negotiations, and if no agreement is reached, either party may request the National Mediation Board to initiate a process including mediation, arbitration, and a potential “cooling off” period that must be followed before either party may engage in self-help. Certain employees located outside the U.S. are also represented by unions or local representative groups.

Alaska’s union contracts at December 31, 2025 were as follows:

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Hawaiian’s union contracts at December 31, 2025 were as follows:

Horizon’s union contracts at December 31, 2025 were as follows:

(a) Negotiations with IBT, AFA, and TWU for updated collective bargaining agreements are ongoing as of the date of this filing. A mediator from the National Mediation Board is participating in negotiations with AFA and TWU.

McGee Air Services' union contract at December 31, 2025 was as follows:

CULTURE AND BELONGING

We remain steadfast in our commitment to recruit, retain, and promote the best talent. This is part of our commitment to Do the Right Thing by our guests, employees, and communities, and to create a culture in which employees can do their best work, and best serve the breadth of our customer base.

EMPLOYEE TRAINING

The Alaska Air Group companies invest in employee programs and training that aid advancement throughout the enterprise. Our Pathways Program provides a clear and direct path for Horizon pilots, flight attendants, technicians, and dispatchers to progress to Alaska. In 2025, the program was extended to aspiring pilots in the state of Hawai'i to potentially join Horizon. Our Leader Academy helps supervisors and managers further develop their leadership and communication skills. Providing meaningful advancement opportunities to employees throughout Air Group is important, and we continue to evaluate new programs which support our people and advance our long-term strategic goals.

COMMUNITY INVOLVEMENT

We are dedicated to actively supporting the communities we serve. In 2025, Air Group companies donated approximately $19 million in cash and in-kind travel to over 1,190 charitable organizations, and our employees volunteered more than 45,000 hours of community service related to youth and education, medical research, and transportation. Air Group also encourages its guests to play a role in supporting these communities. During the year, Atmos Rewards members donated more than 100 million points through the Atmos Giving program.

The Alaska Airlines Foundation provides grants to nonprofits that offer educational and career-development programs to young people. Organizations are invited to apply bi-annually for grants ranging from $5,000 to $20,000, with preference given to organizations that can demonstrate partnership and long-term program sustainability. Since inception in 1999, the Foundation has donated nearly $6 million in grants, including more than $300,000 in 2025. The Company launched the combined Alaska Airlines | Hawaiian Airlines Foundation, which will begin accepting grant requests in 2026.

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EXECUTIVE OFFICERS

The executive officers of Alaska Air Group, Inc. and its airline subsidiaries who have significant decision-making responsibilities, their positions, and their respective ages are as follows:

Mr. Minicucci was elected President and Chief Executive Officer (CEO) of Alaska Air Group, Inc. in March 2021 and President of Alaska Airlines, Inc. in May 2016. He leads Air Group's Management Executive Committee, and was elected to the Alaska Air Group, Inc. Board of Directors in May 2020. He joined Alaska Airlines, Inc. in May 2004 and has served in several roles including Executive Vice President Operations from December 2008 to May 2016 and Chief Operating Officer from December 2008 to November 2019. He was Chief Executive Officer of Virgin America, Inc. from December 2016 to July 2018, when Virgin America, Inc. was merged into Alaska Airlines, Inc.

Mr. Tackett was elected Executive Vice President Finance and Chief Financial Officer of Alaska Air Group, Inc. and Alaska Airlines, Inc. in March 2020, and is a member of Air Group’s Management Executive Committee. He joined Alaska Airlines, Inc. in December 2000 and has served in several roles including Managing Director Financial Planning and Analysis from December 2008 to August 2011, Vice President Labor Relations from August 2011 to February 2015, Vice President Revenue Management from February 2015 to August 2017, Senior Vice President Revenue and E-commerce from August 2017 to September 2018, and Executive Vice President Planning and Strategy from September 2018 to March 2020.

Mr. Levine was elected Executive Vice President Corporate and Public Affairs and Chief Legal Officer of Alaska Air Group, Inc. and Alaska Airlines, Inc. in September 2025, and Corporate Secretary of Alaska Air Group, Inc. and Alaska Airlines, Inc. in August 2017 and Corporate Secretary of Horizon Air Industries, Inc. in January 2020, and Chief Ethics and Compliance Officer in January 2016. He is a member of Air Group’s Management Executive Committee. He joined Alaska Airlines, Inc. in February 2006 and has served in several roles including Senior Attorney from February 2006 to July 2009, Associate General Counsel and Managing Director Commercial Law and General Litigation from July 2009 to February 2011, Deputy General Counsel and Managing Director Legal from February 2011 to January 2016, Vice President Legal from January 2016 to

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January 2020, Senior Vice President Legal from January 2020 to August 2025, and General Counsel of Alaska Air Group, Inc. and Alaska Airlines, Inc. since January 2016.

Mr. Berry was elected Executive Vice President and Chief Operating Officer of Alaska Airlines, Inc. in November 2025 and is a member of Air Group's Management Executive Committee. He joined Alaska Airlines, Inc. in June 2013 and has served in several roles including Director Cargo Operations and Compliance from June 2013 to September 2015, Managing Director Cargo from September 2015 to June 2019, and President of Alaska Airlines, Inc.'s wholly owned subsidiary McGee Air Services from January 2019 to December 2020. He was Vice President Cargo of Air Canada from January 2021 to February 2023 and returned to Alaska Air Group, Inc. as Senior Vice President Operations of Horizon Air Industries, Inc. from February 2023 to October 2023, Executive Vice President Cargo of Alaska Air Group, Inc. from September 2024 to October 2025, and President of Horizon Air Industries, Inc. from November 2023 to November 2025.

Ms. Birkett Rakow was elected Executive Vice President of Alaska Airlines, Inc. and Chief Executive Officer of Hawaiian Airlines in November 2025 and is a member of Air Group's Executive Management Executive Committee. She joined Alaska Airlines, Inc. in September 2017 and has served as Vice President External Relations from September 2017 to February 2021 and Vice President Public Affairs and Sustainability from February 2021 to November 2021, Senior Vice President Public Affairs and Sustainability from November 2021 to August 2025, and Executive Vice President Public Affairs and Sustainability from September 2025 to November 2025.

Mr. Harrison was elected Executive Vice President and Chief Commercial Officer of Alaska Airlines, Inc. in August 2015 and is a member of Air Group's Management Executive Committee. He joined Alaska Airlines, Inc. in November 2003 and has served in several roles including Managing Director Internal Audit from November 2003 to February 2006, Managing Director Finance Planning and Analysis from February 2006 to February 2007, Managing Director Network Planning and Financial Planning and Analysis from February 2007 to March 2008, Managing Director Planning from March 2008 to December 2008, Vice President of Planning and Revenue Management from December 2008 to May 2014, Senior Vice President of Planning and Revenue Management from May 2014 to February 2015, and Executive Vice President and Chief Revenue Officer from February 2015 to August 2015.

Ms. von Muehlen was elected Executive Vice President and Advisor to the Chief Operating Officer of Alaska Airlines, Inc. in November 2025. She joined Alaska Airlines, Inc. in July 2011 and has served in several roles including Managing Director Airframe, Engine, Components Maintenance Repair and Overhaul of Alaska Airlines, Inc. from December 2012 to January 2018, Chief Operating Officer of Horizon Air Industries, Inc. from January 2018 to January 2019, Senior Vice President Maintenance and Engineering of Alaska Airlines, Inc. from January 2019 to April 2021, and Executive Vice President and Chief Operating Officer from April 2021 to November 2025.

Ms. Schneider was elected President and Chief Executive Officer of Horizon Air Industries, Inc. in November 2025 and is a member of Air Group’s Management Executive Committee. She joined Alaska Airlines, Inc. in March 1989 and has served in several roles including Senior Vice President Inflight Services and Station Operations from September 1998 to July 2003, Senior Vice President Customer Service of Horizon Air Industries, Inc. from July 2003 to March 2009, Senior Vice President People and Customer Service of Horizon Air Industries, Inc. from March 2009 to August 2011, Vice President of Inflight Services from August 2011 to January 2017, Vice President Inflight Services and Call Center Services from January 2017 to August 2017, Vice President of People from August 2017 to June 2019, and Senior Vice President of People at Alaska Airlines, Inc. from June 2019 to November 2025.

REGULATION

GENERAL

The airline industry is highly regulated, most notably by the federal government. The Department of Transportation (DOT), the Transportation Security Administration (TSA), and the FAA exercise significant regulatory authority over air carriers.

•DOT: A U.S. airline is required to hold a certificate of public convenience and necessity issued by the DOT in order to provide passenger and cargo air transportation in the country. Subject to certain individual airport capacity, noise and other restrictions, this certificate permits an air carrier to operate between any two points in the U.S. Certificates do not expire, but may be revoked for failure to comply with federal aviation statutes, regulations, orders or the terms of the certificates. While airlines are permitted to establish their own fares without government regulation, the DOT has jurisdiction over the approval of international codeshare agreements, marketing alliance agreements between major U.S. carriers, international and some domestic route authorities, Essential Air Service market subsidies, carrier liability for personal or property damage, and certain airport rates and charges disputes. International treaties may also contain restrictions or requirements

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for flying outside of the U.S. and impose different carrier liability limits than those applicable to domestic flights. The DOT has been active in reviewing airlines' operational performance and in implementing a variety of consumer protection regulations and directives, covering subjects such as advertising, passenger communications, denied boarding compensation, tarmac delay response, ticket refunds, family seating requirements, fee disclosures for ancillary services, and accommodations for passengers with disabilities. In 2024, the DOT issued a final rule requiring disclosure of certain ancillary fees, which was stayed by the U.S. Court of Appeals for the Fifth Circuit. We continue to monitor activity related to the rule and will assess its impact. Airlines are subject to enforcement actions that are brought by the DOT for alleged violations of consumer protection and other economic regulations. We are not aware of any regulatory investigations or enforcement proceedings that could either materially affect our financial position or impact our authority to operate.

•FAA: The FAA, through Federal Aviation Regulations (FARs), generally regulates all aspects of airline operations, including establishing personnel, maintenance and flight operation standards. U.S. airlines are required to hold a valid air carrier operating certificate issued by the FAA. Pursuant to these regulations, we have established, and the FAA has approved, our operations specifications and a maintenance program for each type of aircraft we operate. Each maintenance program provides for the ongoing maintenance of the relevant aircraft type, ranging from frequent routine inspections to major overhauls. Periodically, the FAA issues Airworthiness Directives (ADs) that must be incorporated into our aircraft maintenance program and operations. All airlines are subject to enforcement actions that are brought by the FAA from time to time for alleged violations of FARs or ADs. At this time, we are not aware of any enforcement proceedings that could either materially affect our financial position or impact our authority to operate.

•TSA: Airlines serving the U.S. must operate a TSA-approved Aircraft Operator Standard Security Program (AOSSP), and comply with TSA Security Directives (SDs) and regulations. Under TSA authority, we are required to collect a September 11 Security Fee of $5.60 per one-way trip from passengers and remit that sum to the government to fund aviation security measures. Airlines are subject to enforcement actions that are brought by the TSA for alleged violations of the AOSSP, SDs or security regulations. We are not aware of any enforcement proceedings that could either materially affect our financial position or impact our authority to operate.

The Department of Justice (DOJ) and DOT have jurisdiction over airline competition matters. The U.S. Postal Service has jurisdiction over certain aspects of mail transportation services. Labor relations are regulated under the RLA. To the extent we continue to fly to foreign countries and pursue alliances with international carriers, we may be subject to certain regulations of foreign agencies and international treaties.

We are also subject to the oversight of the Occupational Safety and Health Administration (OSHA) concerning employee safety and health matters. The OSHA and other federal agencies have been authorized to create and enforce regulations that have an impact on our operations. In addition to these federal activities, various states have been delegated certain authorities under these federal statutes. Many state and local governments have adopted employee safety and health laws and regulations. We maintain our safety and health programs in order to meet or exceed these requirements.

ENVIRONMENTAL

We are also subject to various laws and government regulations concerning environmental matters, both domestically and internationally. Domestic regulations that have an impact to our operations include the Airport Noise and Capacity Act of 1990, the Clean Air Act, Resource Conservation and Recovery Act, Clean Water Act, Safe Drinking Water Act, the Comprehensive Environmental Response and Compensation Liability Act, the National Environmental Policy Act (including Environmental Justice), Emergency Planning and Community Right-to-Know Act and the Toxic Substances Control Act. Many state and local environmental regulations exceed these federal regulations.

The Airport Noise and Capacity Act recognizes the rights of airport operators with noise problems to implement local noise abatement programs so long as they do not interfere unreasonably with interstate or foreign commerce or the national air transportation system. Authorities in several cities have established aircraft noise reduction programs, including the imposition of nighttime curfews. We believe we have sufficient scheduling flexibility to accommodate local noise restrictions.

The domestic U.S. airline industry committed to carbon neutral growth starting in 2020 for both domestic and international growth. The mechanism to comply with this commitment internationally is through the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), which is a global, market-based measure that allows for eligible emissions offsets or the use of CORSIA-eligible sustainable aviation fuel to mitigate the growth emissions. The program is regulated by the FAA who then affirms compliance to the International Civil Aviation Organization. The FAA has approved Alaska's and Horizon's monitoring, verification, and reporting plans.

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As a result of the COVID-19 pandemic, the CORSIA growth baseline year was modified and set to 85% of 2019 carbon dioxide emissions. This does not have a direct impact on domestic flights, however the U.S. Environmental Protection Agency (EPA) finalized a rule in 2020 on aircraft emission standards which aligns with the international agreements. Additional emissions reporting requirements and potential requirements to decarbonize both aircraft and ground equipment could have a significant impact on our industry.

INSURANCE

We carry insurance of types customary in the airline industry and in amounts deemed adequate to protect our interests and property and to comply both with applicable regulations and certain credit and lease agreements. The insurance policies principally provide coverage for airline hull, spares and comprehensive legal liability, war and allied perils, physical and real property, and workers’ compensation. In addition, we currently carry a cyber insurance policy in the event of security breaches from malicious parties.

We believe that our emphasis on safety and our state-of-the-art flight deck technology help control the cost of our insurance.

WHERE YOU CAN FIND MORE INFORMATION

Our filings with the Securities and Exchange Commission, including our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports are available on our website at www.alaskaair.com, free of charge, as soon as reasonably practicable after these reports are electronically filed with, or furnished to, the SEC. The information contained on our website is not a part of this annual report on Form 10-K.

GLOSSARY OF TERMS

Aircraft Utilization - block hours per day; this represents the average number of hours per day our aircraft are in transit

Aircraft Stage Length - represents the average miles flown per aircraft departure

ASMs - available seat miles, or “capacity”; represents total seats available across the fleet multiplied by the number of miles flown

CASM - operating costs per ASM; represents all operating expenses including fuel, freighter costs, and special items

CASMex - operating costs excluding fuel, freighter costs, and special items per ASM, or “unit cost”

Debt-to-capitalization ratio - represents adjusted debt (long-term debt plus capitalized operating and finance lease liabilities) divided by total equity plus adjusted debt

Diluted Earnings per Share - represents earnings per share (EPS) using fully diluted shares outstanding

Diluted Shares - represents the total number of shares that would be outstanding if all possible sources of conversion, such as stock options, were exercised

Economic Fuel - best estimate of the cash cost of fuel, net of the impact of our fuel-hedging program and excluding operations under the Air Transportation Service Agreement (ATSA) with Amazon

Freighter Costs - operating expenses directly attributable to the operation of B737 freighter aircraft and A330-300 freighter aircraft exclusively performing cargo missions

Load Factor - RPMs as a percentage of ASMs; represents the number of available seats that were filled with revenue passengers

PRASM - passenger revenue per ASM, or “passenger unit revenue”

RASM - operating revenue per ASMs, or “unit revenue”; operating revenue includes all passenger revenue, freight & mail, loyalty program revenue, and other ancillary revenue; represents the average total revenue for flying one seat one mile

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RPMs - revenue passenger miles, or “traffic”; represents the number of seats that were filled with revenue passengers; one passenger traveling one mile is one RPM

Yield - passenger revenue per RPM; represents the average passenger revenue for flying one passenger one mile