UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

FORM 8-K

CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934

September 17, 2004
(Date of earliest event reported)

ALASKA AIR GROUP, INC.

Delaware
(State or Other Jurisdiction of Incorporation)

(206) 392-5040

     Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

     o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

     o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

     o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

     o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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ITEM 7.01. Regulation FD Disclosure

Pursuant to 17 CFR Part 243 (“Regulation FD”), Alaska Air Group, Inc. is submitting this current report on Form 8-K to present information relating to its financial and operational outlook for 2004. This report includes information regarding forecasts of available seat miles (ASMs), cost per available seat mile (CASM) excluding fuel consumption and the restructuring charges associated with our recently announced restructuring efforts, as well as certain actual results for revenue passenger miles (RPMs), load factor and revenue per available seat mile (RASM), for its subsidiaries Alaska Airlines, Inc. and Horizon Air. Our disclosure of operating cost per available seat mile, excluding fuel and restructuring charges provides us the ability to measure and monitor our performance without these items. In addition, we believe the disclosure of financial performance without restructuring charges and mark-to-market hedging gains is useful to investors in evaluating our ongoing operational performance. The most directly comparable GAAP measure is total operating expense per available seat mile. However, due to the large fluctuations in fuel prices, we are unable to predict total operating expense for any future period with any degree of certainty. Please see the cautionary statement under “Forward-Looking Information” at the end of this report.

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

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

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Third Quarter 2004

Alaska Airlines’ August traffic increased 7.9% to 1.655 billion RPMs from 1.534 billion flown a year earlier. Capacity during August was 2.091 billion ASMs, 5.1% higher than the 1.988 billion in August 2003.

The passenger load factor (the percentage of available seats occupied by fare-paying passengers) for the month was 79.2%, compared to 77.1% in August 2003. The airline carried 1,655,900 passengers compared to 1,584,200 in August 2003.

For August 2004, RASM increased by 2.3% as compared to August 2003 due to an increase in load factor. For July 2004, RASM increased by 8.8% as compared to July 2003.

Forecasted cost per ASM excludes the charges that will be recorded as a result of our recently announced restructuring initiatives. Those initiatives will result in a net reduction of approximately 900 employees. The up-front termination costs and related accounting charges associated with this program, the majority of which will be recorded in the third and fourth quarter of 2004, are expected to be significant but have not yet been finalized.

Horizon Air’s August traffic increased 25.2% to 211.1 million RPMs from 168.6 million flown a year earlier. Capacity for August was 284.2 million ASMs, 16.1% higher than the 244.9 million in August 2003.

The passenger load factor for the month was 74.3%, compared to 68.8% in August 2003. The airline carried 577,500 passengers compared to 490,500 in August 2003.

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For the third quarter of 2004, CASM excluding fuel is expected to decrease 9.2% compared to the third quarter of 2003, reflecting changes in Horizon’s flying mix from the traditional native network to a mix of native network flying and contract flying with Frontier Airlines. Under the contract flying agreement with Frontier, Horizon does not incur many of the normal costs of operations such as fuel, marketing costs and station labor and rents, resulting in significantly lower CASM (excluding fuel) and RASM. Horizon is currently operating nine 70-seat Bombardier CRJ-700 aircraft under the Frontier JetExpress brand, representing approximately 20% to 25% of total Horizon capacity and approximately 9% to 10% of total Horizon revenue.

For August 2004, RASM decreased by 13.7% as compared to August 2003 resulting from the contract flying with Frontier. For July 2004, RASM decreased by 12.4% as compared to July 2003.

Capacity Estimates for 2004
Provided below are current capacity (ASMs in millions) estimates for the full year of 2004:

Other Financial Information
Cash and Short-Term Investments
Cash and short-term investments was approximately $871 million at August 31, 2004 compared to $837 million at July 31, 2004. The increase of $34 million is principally due to cash provided from operations.

Fuel Hedging
Beginning in the second quarter of 2004, we lost the ability to defer, as a component of Accumulated Other Comprehensive Income, recognition of any unrealized gain or loss on our fuel hedge contracts until the hedged fuel is consumed (also known as the ability to use “hedge accounting”). The implications of this loss going forward are as follows:

To help investors understand our results, we will regularly provide unaudited information about fuel price movements and the impact of our hedging program on our financial results. Management believes it is useful to compare results between periods that exclude the hedging gains/losses recorded on a GAAP basis and include the cash received or due on hedge positions settled during the period (although the related impact may have been

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recognized for financial reporting purposes in a prior period). We refer to this as the comparison of “raw fuel cost” to “economic fuel cost”, which is presented below for August 2004.

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Excluding all gains on hedges recorded under generally accepted accounting principles and including the cash settlement received or due for hedges settled during the period, Alaska and Horizon’s pre-tax income (loss) would have been higher by approximately $4.1 million and $0.6 million, respectively.

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Alaska Air Group’s future hedge positions are as follows:

Operating Fleet Plan
The following table provides a fleet summary for Alaska and Horizon for actual airplanes on hand at the end of 2003 and changes in 2004 and 2005 based on our contractual obligations and expected retirement plans:

Alaska has no firm commitments for aircraft deliveries beyond 2005. However, we plan to acquire three B737-800s in 2006. These planned acquisitions are not included in the table above since we do not have firm orders at this time. Horizon has two CRJ 700s scheduled for delivery per year from 2006 to 2009 and none thereafter.

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FORWARD-LOOKING INFORMATION

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Signature

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

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