March 26, 2021 Dear Stockholders: On behalf of the Board of Directors, we invite you to attend Alaska Air Groups 2021 Annual Meeting of Stockholders, which will be held on Thursday, May 6, 2021, beginning at 1 p.m. Pacific Daylight Time. This years annual meeting will be conducted via live webcast only. You can attend via the Internet at www.proxyvote.com, where you will be able to vote and submit questions electronically prior to and during the meeting. Specific instructions for accessing the meeting are provided in the notice, proxy card or voting instruction form you received. In addition to the EDGAR version of the 2021 Proxy Statement filed with the SEC, we have produced an interactive proxy statement that is organized to make our governance provisions, executive compensation disclosures, proposals, and other key information easy to find and evaluate. The interactive proxy statement can be accessed at www.alaskaair.com under About Alaska/Investor Relations. We hope you will join us on May 6 as we discuss Alaska Air Groups 2020 financial and operational performance as well as our response to COVID-19, and vote on issues of importance to our company and to you. Whether or not you choose to participate on meeting day, your vote is important, and we encourage you to cast your ballot in one of the ways outlined in this Proxy Statement. Sincerely, Patricia M. Bedient Bradley D. Tilden Lead Independent Director Chairman and CEO NOTICE OF 2021 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT The Board of Directors of Alaska Air Group, Inc. (Air Group or the Company) is soliciting proxies for the 2021 Annual Meeting of Stockholders (the Annual Meeting). This Proxy Statement contains important information for you to consider when deciding how to vote on the matters brought before the meeting. Please read it carefully. DATE Thursday, May 6, 2021 TIME 1 p.m. Pacific Daylight Time VIRTUAL MEETING ACCESS www.proxyvote.com MATTERS TO BE VOTED ON 1. Election of the 13 nominees named in this Proxy Statement to the Board of Directors, each for a one-year term 2. Approval (on an advisory basis) of the compensation of the Companys Named Executive Officers 3. Ratification of the appointment of KPMG LLP as the Companys independent registered public accountants (the independent accountants) for fiscal year 2021 4. Approval of the amendment and restatement of the Companys 2016 Performance Incentive Plan 5. Other business as may properly come before the meeting or any postponement or adjournment thereof The Board of Directors set Friday, March 12, 2021, as the record date for the Annual Meeting. This means that owners of Alaska Air Group common stock as of the close of business on that date are entitled to receive this notice, attend and vote during the Annual Meeting. There were 124,388,615 shares of Air Group common stock outstanding on the record date. Internet Availability of Proxy Materials. On or about March 26, 2021, stockholders of record, beneficial owners and employee participants in the Companys 401(k) plans were mailed a Notice of Internet Availability of Proxy Materials (the Notice) directing them to a website where they can access the Companys 2021 Proxy Statement and Annual Report on Form 10-K for the year ended December 31, 2020 (the Annual Meeting Materials). The Companys 2020 Form 10-K was filed with the Securities and Exchange Commission (SEC) on February 26. 2021. If you prefer to receive a paper copy of the proxy materials, please follow the instructions on the Notice and the Annual Meeting Materials will be mailed to you. Attending the Annual Meeting. We will host the 2021 Annual Meeting live via the Internet and telephone only. Any stockholder can listen to and participate in the Annual Meeting. Whether or not you attend the meeting, we encourage you to vote by Internet or phone or to complete, sign and mail your voting instruction form or proxy prior to the meeting. Submit Your Questions. We invite you to submit any questions of general stockholder interest to the Assistant Corporate Secretary via email at [email protected], or via the Shareholder Forum at www.proxyvote.com. We will include answers to your questions on www.alaskaair.com under About Alaska/Investor Relations following the meeting. If you encounter issues accessing the website or the virtual meeting, please contact [email protected]. ALASKA AIR GROUP, INC. NOTICE OF ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT TABLE OF CONTENTS TO OUR SHAREHOLDERS 1 PROXY STATEMENT SUMMARY 3 CORPORATE GOVERNANCE 7 Board Leadership 7 Executive Sessions and Lead Independent Director 8 Risk Oversight 8 Code of Conduct and Ethics 9 Prohibition of Speculative Transactions in Company Securities 9 ESG Highlights 9 Political Contributions and Engagement 11 Stockholder Communications 13 Virtual Meeting Philosophy 14 ELECTION OF DIRECTORS 15 Proposal 1: Election of Directors to One-Year Terms 15 Structure of the Board of Directors 22 Director Independence 26 Director Nomination Policy 27 Certain Relationships and Related Person Transactions 31 2020 Director Compensation 32 Director Stock Ownership Policy 33 NAMED EXECUTIVE OFFICER COMPENSATION 34 Proposal 2: Advisory Vote to Approve the Compensation of the Companys Named Executive Officers 34 Compensation Discussion and Analysis 36 Compensation and Leadership Development Committee Report 55 Compensation and Leadership Development Committee Interlocks and Insider Participation 55 2020 Summary Compensation Table 56 2020 Grants of Plan-Based Awards 59 Outstanding Equity Awards at 2020 Fiscal Year End 61 2020 Options Exercised and Stock Vested 64 Pension and Other Retirement Plans 65 2020 Nonqualified Deferred Compensation 67 Potential Payments Upon Change of Control and Termination 68 CEO Pay Ratio 71 AUDIT COMMITTEE MATTERS 72 Proposal 3: Ratification of the Appointment of the Companys Independent Accountants for Fiscal Year 2021 72 Independent Registered Public Accountants 72 Audit Committee Report 74 2016 PERFORMANCE INCENTIVE PLAN AMENDMENT AND RESTATEMENT 75 Proposal 4: Approval of the Amendment and Restatement of the Companys 2016 Performance Incentive Plan 75 SECURITIES OWNERSHIP 86 Securities Ownership of Management 86 5% or More Beneficial Owners 87 Delinquent Section 16(a) Reports 87 QUESTIONS AND ANSWERS 88 EXHIBIT A 97 TO OUR SHAREHOLDERS 2020 is behind us, and it was a year like no other. The coronavirus pandemic forced nearly all of us to change our daily lives, and for many it resulted in the loss of loved ones. On top of the tragedy of the coronavirus, we encountered senseless racial violence and experienced deep political division in our country. Any one of these events on its own would have been challenging but having them all in one year was harrowing. The resulting uncertainty and financial hardship were unlike anything we have experienced in our 88-year history. In the very early days of the pandemic, we focused our attention on two critical priorities: maintaining the health and safety of our employees and guests, and ensuring our airlines come out of this crisis strong. The people of Alaska and Horizon delivered on both fronts, and our company is well prepared for the future because of it. In April, we launched our Next-Level Care initiative, drawing on the expertise of medical and health care professionals with insights from employees and guests to change the travel experience with safety and comfort in mind. The layers of safety we created were instrumental in helping our guests and employees stay healthy and for rebuilding guest confidence in travel. We know these measures are working, as guest post-flight surveys indicate the vast majority experienced a safe and healthy environment when travelling with us. Financially, our 2020 results were both sobering and a source of optimism. While our revenues declined a staggering $5.2 billion, our teams managed to reduce our cash burn to less than $4 million per day by the end of the year. This result was among the best in the industry and was integral to our preserving our balance sheet strength through this crisis. Our adjusted net debt, which factors in debt and lease obligations and backs out cash, was essentially unchanged from 2019. Having a strong balance sheet and operating with low costs have been the cornerstone of our management philosophy for many years, they will continue to be critically important as we navigate the recovery ahead. It has been inspiring to watch our employees rally behind the company as we faced these challenges. Employees helped our guests connect to our health and safety messaging in creative ways, like our Safety Dance video which featured several talented crew members. They also helped inspire guests to get back to travelling with our Friends and Family promotion. And, incredibly, thousands of employees took voluntary or incentive leaves and early retirements, which were instrumental for preserving cash and reducing the need to furlough as we navigated this crisis. We could not have accomplished all that we did this year without these incredible contributions. In 2020 we spent time learning about systemic racism, listening to our employees and taking a hard look at the work we must do to advance racial equity at Alaska and Horizon and in our communities. We have recently published our 2025 diversity, equity and inclusion goals which will hold us accountable to our commitments to increase racial diversity, increase our employee engagement scores around inclusion related topics, and create career pathways for at least 175,000 young people by supporting programs that empower and enable opportunity through a lens of racial equity. Signs of brighter days to come have recently begun to emerge. After slow and choppy recovery in 2020, the vaccine roll out is gaining momentum and weve experienced several weeks of encouraging bookings improvement.