Alaska Air Group, Inc.

Legal and litigation · Product liability and warranty claims

An accident or incident involving one of our aircraft or an aircraft operated by one of our commercial partners or CPA carriers could involve loss of life and result in a loss of confidence in our Company by the flying public and/or aviation authorities. We could experience significant claims from injured passengers, bystanders and surviving relatives, as well as costs for the repair or replacement of a damaged aircraft.

Industry regulation · Regulatory compliance and changes

Airlines are subject to extensive regulatory and legal requirements, both domestically and internationally, that involve substantial operational impacts and compliance costs. The FAA will periodically issue directives or other regulations regarding maintenance or operation of aircraft, which could result in temporary groundings, delays, or adjustments to operations.

Tax and financial reporting · Tax compliance and changes in tax law

The Company's ability to use its net operating loss carryforwards to offset future taxable income for U.S. federal and state income tax purposes may be limited. At December 31, 2025, Air Group had $2 billion of gross U.S. federal net operating loss carryforwards. If future operating results or economic conditions are less favorable than expected, the company may be required to record additional valuation allowances against its deferred tax assets, which could be material.

Legal and litigation · Employment and labor law compliance

Legislative and regulatory initiatives and reforms at the federal, state, and local levels include increasingly stringent environmental, governance, and workers' benefits laws. In some instances, it is impossible for us to comply with federal, state, and local laws simultaneously, exposing us to greater liability and operational complexity. In recent years, the airline industry has experienced an increase in litigation over the application of state and local employment laws, particularly in California.

Supply chain and procurement · Geographic concentration of suppliers

Additionally, further consolidation among aircraft and aircraft parts manufacturers could further limit the number of suppliers. This could result in production instability in the locations in which the aircraft and its parts are manufactured or an inability to operate our aircraft.

Supply chain and procurement · Raw material availability and cost volatility

Boeing has significant production constraints for the B737 and B787 aircraft, as well as regulatory delays for certain B737 aircraft. These challenges have impacted and will continue to impact the timing of deliveries. If we are unable to receive aircraft in a timely manner, our growth plans could be negatively impacted.

Human capital and workforce · Key personnel dependence and succession

Our executive officers and other senior management personnel are critical to the long-term success of our business. If we experience significant turnover and loss of key personnel, and fail to find suitable replacements with comparable skills, our performance could be adversely impacted.

Core operations · Operational disruption and business continuity

Our operations are often affected by delays, cancellations and other conditions caused by factors largely beyond our control. Factors that might impact our operations include: congestion, construction, space constraints at airports, and/or air traffic control problems; adverse weather conditions and natural disasters; contagious illness and fear of contagion; increased security measures or breaches in security; international or domestic conflicts or terrorist activity.

Social and demographic · Public perception and reputation

Any aircraft accident or incident, even if it is fully insured or does not involve one of our aircraft, could cause a public perception that our airlines or the aircraft we or our partners fly are less safe or reliable than other transportation alternatives. This would harm our business.

Natural and catastrophic events · Climate change and environmental impact

Increased frequency or duration of extreme weather conditions could cause significant and prolonged impacts to our operation, disrupt our supply chain, and influence consumer travel decisions. Additionally, we have made commitments to reduce our greenhouse gas emissions which may require us to make significant investments in emerging and yet unproven technologies.

Economic and market conditions · Consumer spending and confidence

We are dependent on consumer confidence, as well as the health of the U.S. economy and economies of other countries in which we operate. For some consumers, leisure travel is a discretionary expense, and shorter distance travelers, in particular, have the option to replace air travel with surface travel.

Market position and competition · Industry consolidation and market concentration

The airline industry may undergo further consolidation or restructuring. In addition, regulatory, policy, and legal developments could impact the extent to which airlines can merge, or form and maintain marketing alliances and joint ventures with other airlines. Competitors have been able to grow and increase their competitive influence by merging with other airlines, as Alaska did with Virgin America in 2016 and Hawaiian in 2024.

Market position and competition · Pricing pressure and margin compression

The airline industry is highly competitive and susceptible to price discounting and changes in capacity, which could have a material adverse effect on our business. The resulting increased competition in both domestic and international markets may have a material adverse effect on our results of operations, financial condition, or liquidity if we are unable to attract and retain guests.

Strategic execution · Merger acquisition and divestiture risks

We may be unable to integrate Hawaiian's business with ours successfully and realize the anticipated benefits of the acquisition. We must devote significant management attention and resources to integrating the business practices and operations of Hawaiian Airlines. Potential difficulties include the inability to successfully combine the Hawaiian Airlines business with that of Alaska's in a manner that permits us to achieve anticipated net synergies and other anticipated benefits of the acquisition.

Market and investment · Asset valuation and impairment

The application of the acquisition method of accounting resulted in us recording goodwill and identifiable intangible assets, which could result in significant future impairment charges. We could record impairment charges in our results of operations as a result of, among other items, extreme fuel price volatility, a significant decline in the fair value of certain tangible or intangible assets, unfavorable trends in forecasted results of operations and cash flows.

Capital structure and performance · Debt management and refinancing

We have a significant amount of debt and fixed obligations. We carry, and will continue to carry for the foreseeable future, a substantial amount of debt and aircraft lease commitments. Our outstanding long-term debt and other fixed obligations could limit our ability to obtain additional financing to fund our future capital expenditures or working capital.

International and currency · International operations and emerging markets

Managing Hawaiian's international network successfully, which comprises multiple countries in which Air Group did not have prior experience. Our increasing presence in international locations and our membership in the oneworld alliance exposes us to additional global regulations and risks.

Technology infrastructure · Technology systems and infrastructure failure

We heavily depend on automated systems to operate our business. Failure to appropriately maintain and upgrade these systems may result in service disruptions or system failures. In July and October of 2025, Alaska Air Group experienced IT outages that affected operations. Temporary ground stops were put in place for Alaska and Horizon.

Cybersecurity and data protection · Third party data security and vendors

We continue to expand our reliance on third party providers for management or hosting of operational and financial systems. Should these providers fail to meet established service requirements or provide inadequate technical support, we could experience disruptions in our operation, ticketing or financial systems. Unauthorized access of personal and financial data via fraud or other means of deception could result in data loss, theft, modification, or unauthorized disclosure.

Cybersecurity and data protection · Data breaches and cyber attacks

Cybersecurity threats have and will continue to impact our business. While we have not experienced a material breach of our systems and information to date, unauthorized parties have previously gained access to our systems and information, including through fraudulent misrepresentation and other means of deception. In June 2025, Hawaiian Airlines identified a cybersecurity incident affecting certain information technology systems.