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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 30, 1996
REGISTRATION NO. 333-_______
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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ALASKA AIR GROUP, INC.
AND
ALASKA AIRLINES, INC.
(Exact name of registrant as specified in its charter)
ALASKA-ALASKA AIRLINES, INC. 92-0009235-ALASKA AIRLINES, INC.
DELAWARE-ALASKA AIR GROUP, INC. 91-1292054-ALASKA AIR GROUP, INC.
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
19300 Pacific Highway South
Seattle, Washington 98188
(206) 433-3200
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
KEITH LOVELESS
Corporate Secretary and Associate General Counsel
19300 Pacific Highway South
Seattle, Washington 98188
(206) 433-3131
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
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Copies to:
Stephen A. McKeon, Esq.
L. Michelle Wilson, Esq.
Perkins Coie
1201 Third Avenue, 40th Floor
Seattle, Washington 98101-3099
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Approximate date of commencement of proposed sale
to the public: From time to time after the effective
date of this Registration Statement.
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If any of the securities being registered on this form are to be
offered pursuant to dividend reinvestment plans, please check the following box.
/ /
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If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, as amended, other than securities offered only in
connection with dividend or interest reinvestment plans, check the following
box. /x/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1993, as amended, please
check the following box and list the Securities Act registration statement
number of the earlier effective registration statement for the same offering.
/ / _______________
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act of 1993, as amended, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /_______________
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. / /
<TABLE>
CALCULATION OF REGISTRATION FEE
<CAPTION>
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TITLE OF EACH CLASS OF AMOUNT TO BE PROPOSED MAXIMUM OFFERING PROPOSED MAXIMUM AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED (1) PRICE PER UNIT (2) OFFERING PRICE (2) REGISTRATION FEE
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<S> <C> <C> <C> <C>
Convertible Debt Securities of
Alaska Air Group, Inc.......... 100%
Common Stock, $1.00 par value, of
Alaska Air Group, Inc. (3)..... _
Guarantees of Alaska Air Group, _
Inc.(4)........................
Debt Securities of Alaska 100%
Airlines, Inc..................
Equipment Trust Certificates of
Alaska Airlines, Inc........... 100%
Total.......................... $182,250,000 $182,250,000 $62,845
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</TABLE>
(1) If any of these securities are issued at an original issue discount, the
principal amount will be increased such that the aggregate proceeds will
equal $182,250,000.
(2) Estimated solely for the purpose of computing the registration fee.
(3) Such indeterminate number of shares of Common Stock as may from time to
time be issued at indeterminate prices or issuable upon conversion of
Convertible Debt Securities. Includes rights to purchase Series A
Participating Preferred Stock of Alaska Air Group, Inc. associated with
the Common Stock.
(4) To be issued in connection with Debt Securities and Equipment Trust
Certificates of Alaska Airlines, Inc.
The registrant has filed a Registration Statement on Form S-3 (No.
33-52265) which first became effective on March 23, 1994. Pursuant to Rule 429
under the Securities Act of 1933, as amended, (i) the Prospectuses contained
herein (excluding the Prospectus relating solely to Common Stock of Alaska Air
Group, Inc.) relate to the principal amount of $200,000,000 of securities
(together with Common Stock of Alaska Air Group, Inc. issuable upon conversion
and guarantees of Alaska Air Group, Inc.) covered by Registration Statement No.
33-52265, of which securities in the principal amount of $67,750,000 remain
unissued, and (ii) the Prospectuses contained herein relate to the principal
amount of $182,250,000 of securities (together with Common Stock of Alaska Air
Group, Inc. issuable upon conversion and guarantees of Alaska Air Group, Inc.)
covered by this Registration Statement, all of which remain unissued. A filing
fee of $68,966 was paid in connection with Registration Statement No. 33-52265.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
<PAGE> 3
EXPLANATORY NOTE
This Registration Statement consists of four separate forms of
Prospectuses, covering securities to be registered as follows:
(1) Convertible Debt Securities of Alaska Air Group, Inc.
(2) Debt Securities of Alaska Airlines, Inc. and Guarantees, if
any, of Alaska Air Group, Inc.
(3) Common Stock of Alaska Air Group, Inc.
(4) Equipment Trust Certificates of Alaska Airlines, Inc. and
Guarantees, if any, of Alaska Air Group, Inc.
None of these Prospectuses will be used to consummate sales of
securities unless accompanied by a Prospectus Supplement applicable to the
securities offered.
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE> 5
SUBJECT TO COMPLETION, DATED MAY 30, 1996
PROSPECTUS
ALASKA AIR GROUP, INC.
CONVERTIBLE DEBT SECURITIES
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Alaska Air Group, Inc. ("Air Group") may from time to time offer its
convertible debt securities (the "Convertible Debt Securities"), consisting of
debentures, notes and/or other evidences of indebtedness representing unsecured
obligations of Air Group convertible into Common Stock, par value $1.00 per
share ("Common Stock"). The Convertible Debt Securities offered pursuant to this
Prospectus may be issued in one or more series or issuances and will be limited
to $250,000,000 aggregate public offering price. Certain specific terms of the
Convertible Debt Securities in respect of which this Prospectus is being
delivered are set forth in the accompanying Prospectus Supplement (the
"Prospectus Supplement"), including, where applicable, the specific designation,
aggregate principal amount, the denomination, maturity, premium, if any, the
rate (which may be fixed or variable), time and method of calculating payment of
interest, if any, the place or places where principal of, premium, if any, and
interest, if any, on such Convertible Debt Securities will be payable, any terms
of redemption at the option of Air Group or the holder, any sinking fund
provisions, terms for conversion into Common Stock, the initial public offering
price and other special terms. The Prospectus Supplement will indicate whether
the Convertible Debt Securities will be Convertible Senior Debt Securities,
which will rank equally with all other unsubordinated and unsecured indebtedness
of Air Group, or as Convertible Subordinated Debt Securities which will be
subordinated in right of payment to all Senior Indebtedness of Air Group (as
hereinafter defined). See "Description of Convertible Debt
Securities--Subordination of Convertible Subordinated Debt Securities."
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------
Air Group may sell the Convertible Debt Securities to or through
underwriters, through dealers or agents or directly to purchasers. See "Plan of
Distribution." The accompanying Prospectus Supplement sets forth the names of
any underwriters, dealers or agents involved in the sale of the Convertible Debt
Securities in respect of which this Prospectus is being delivered, and any
applicable fee, commission or discount arrangements with them.
This Prospectus may not be used to consummate sales of Convertible Debt
Securities unless accompanied by a Prospectus Supplement applicable to the
Convertible Debt Securities being sold.
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THE DATE OF THIS PROSPECTUS IS __________, 1996.
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No dealer, salesperson or other individual has been authorized to give
any information or to make any representations not contained in this Prospectus
in connection with the offering covered by this Prospectus. If given or made,
such information or representations must not be relied upon as having been
authorized by Air Group or the Underwriter. This Prospectus does not constitute
an offer to sell, or a solicitation of an offer to buy, the Convertible Debt
Securities in any jurisdiction where, or to any person to whom, it is unlawful
to make such offer or solicitation. Neither the delivery of this Prospectus nor
any sale made hereunder shall, under any circumstances, create an implication
that there has not been any change in the facts set forth in this Prospectus or
in the affairs of Air Group since the date hereof.
AVAILABLE INFORMATION
Air Group is subject to the reporting requirements of the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and, in accordance therewith,
files reports and other information with the Securities and Exchange Commission
(the "Commission"). Such reports and other information may be inspected and
copied at the public reference facilities maintained by the Commission at Room
1024, 450 Fifth Street, N.W., Washington, D.C. 20549; 75 World Trade Center,
Suite 1300, New York, New York 10048; and Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661. Copies of such material may also be
obtained at prescribed rates from the Public Reference Section of the
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549. In addition, such
material filed by Air Group may be inspected and copied at the offices of the
New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005.
This Prospectus constitutes a part of registration statements on Form
S-3 (together with all amendments and exhibits, the "Registration Statements")
filed by Air Group and Alaska Airlines, Inc. ("Alaska") with the Commission
under the Securities Act of 1933, as amended (the "Securities Act"). This
Prospectus does not contain all of the information included in the Registration
Statements, certain parts of which are omitted in accordance with the rules and
regulations of the Commission. Statements contained herein concerning the
provisions of any document do not purport to be complete and, in each instance,
reference is made to the copy of such document filed as an exhibit to the
Registration Statements or otherwise filed with the Commission. Each such
statement is subject to and qualified in its entirety by such reference.
Reference is made to such Registration Statements and to the exhibits relating
thereto for further information with respect to Air Group and the Convertible
Debt Securities offered hereby.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents have been filed with the Commission pursuant to
the 1934 Act and are incorporated into this Prospectus by reference and made a
part hereof: Air Group's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995 and Air Group's Quarterly Report on Form 10-Q for the fiscal
quarter ended March 31, 1996.
All documents filed by Air Group pursuant to Section 13(a), 13(c), 14
or 15(d) of the 1934 Act subsequent to the date of this Prospectus and prior to
the termination of this offering shall be deemed to be incorporated by reference
in this Prospectus, and to be a part hereof from the date of filing of such
documents. Any statement incorporated by reference herein shall be deemed to be
modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any statement modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Prospectus. Air Group will provide without charge to each person to whom a copy
of this Prospectus is delivered, upon the written or oral request of such
person, a copy of any document incorporated by reference in this Prospectus
(other than
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exhibits to such documents unless such exhibits are specifically incorporated by
reference to such documents). Requests for such copies should be directed to the
office of the Corporate Secretary, Alaska Air Group, Inc., P.O. Box 68947,
Seattle, Washington 98168 (telephone (206) 433-3131).
AIR GROUP AND ALASKA
Air Group is a holding company incorporated in Delaware in 1985. Its
principal subsidiaries are Alaska and Horizon Air Industries, Inc. ("Horizon").
Alaska, founded in 1932, provides scheduled air transportation to 37 cities in
Alaska, Washington, Oregon, Nevada, California and Arizona, three cities in
Mexico, four cities in Russia, one city in Canada and many smaller communities
in Alaska and California through code-sharing agreements with local carriers. As
of December 31, 1995, Alaska Airlines operated 24 owned and 50 leased jet
aircraft with an average age of 6.6 years. During 1995, Alaska entered into a
marketing agreement with Northwest Airlines whereby certain Alaska flights and
certain Northwest flights are dual-designated in airline computer reservation
systems as Alaska Airlines and Northwest Airlines. Horizon, a regional commuter
carrier founded in 1981, provides scheduled air transportation to 36 cities in
Washington, Oregon, Montana, Idaho, California and Wyoming, as well as four
cities in Canada. Horizon provides interconnecting passenger traffic to Alaska
Airlines through its major hub cities, Seattle, Portland and Spokane. As of
December 31, 1995, Horizon operated five owned and 62 leased aircraft with an
average age of 9.8 years. The principal executive offices of Air Group are
located at 19300 Pacific Highway South, Seattle, Washington 98188 (telephone
(206) 433-3200).
For the year ended December 31, 1995, Air Group's consolidated
operating revenues were $1.4 billion, of which 89% came from scheduled passenger
services, 7% came from freight and mail, and 4% came from mileage plan partners
and other nonpassenger sources. Alaska Airlines carried approximately 10.1
million passengers in 1995 and accounted for approximately 80% of Air Group's
consolidated 1995 operating revenues. Horizon carried approximately 3.8 million
passengers in 1995 and accounted for the remaining 20% of Air Group's
consolidated 1995 operating revenues.
In each year since 1973, Alaska has carried more passengers between
Alaska and the U.S. mainland than any other airline. Passenger traffic within
Alaska and between Alaska and the U.S. mainland accounted for 27% of Alaska's
total revenue passenger miles in 1995, while West Coast traffic accounted for
66% and the Mexico markets 7%. Based on passenger enplanements, Alaska's leading
airports are Seattle, Portland, Anchorage and Los Angeles. Based on revenues,
its leading nonstop routes were Seattle-Anchorage, Seattle-Los Angeles and
Seattle-San Francisco.
USE OF PROCEEDS
Unless otherwise indicated in the accompanying Prospectus Supplement,
the net proceeds to Air Group from the sale of the Convertible Debt Securities
offered hereby will be added to the working capital of Air Group and will be
available for general corporate purposes, among which may be the repayment of
outstanding indebtedness and financing of capital expenditures by Alaska and
Horizon, including the acquisition of aircraft and related equipment.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges
for Air Group for the periods indicated. Earnings represents earnings before
accounting change, income tax expense and fixed charges (excluding interest
capitalized). Fixed charges consist of interest and the portion of rental
expense deemed representative of the interest factor.
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<TABLE>
<CAPTION>
1996 1995 1994 1993 1992 1991
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Quarter Ended March 31, Year Ended December 31,
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<S> <C> <C> <C> <C> <C> <C>
Ratio..................... (a) 1.28 1.36 (a) (a) 1.10
</TABLE>
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(a) For the quarter ended March 31, 1996, Air Group's earnings were
inadequate to cover fixed charges by $13.5 million. For the years ended
December 31, 1993 and 1992, Air Group's earnings were inadequate to cover
fixed charges by $46.3 million and $131.8 million, respectively.
DESCRIPTION OF CONVERTIBLE DEBT SECURITIES
The Convertible Senior Debt Securities are to be issued under an
Indenture between Air Group and a Trustee (the "Convertible Senior Debt
Indenture"). The Convertible Subordinated Debt Securities are to be issued under
an Indenture between Air Group and a Trustee (the "Convertible Subordinated Debt
Indenture"). The Convertible Senior Debt Securities Indenture and the
Convertible Subordinated Debt Securities Indenture are referred to herein
individually as the "Indenture" and collectively as the "Indentures." A copy of
each Indenture is filed as an exhibit to the Registration Statement. Information
regarding the Trustee will be set forth in the applicable Prospectus Supplement.
The Convertible Debt Securities offered pursuant to this Prospectus
will be limited to $250,000,000 aggregate principal amount (or such greater
amount, if Convertible Debt Securities are issued at an original issue discount,
as shall result in aggregate proceeds of $250,000,000 to Air Group). The
statements herein relating to the Convertible Debt Securities and the Indentures
are summaries and are subject to the detailed provisions of the Indentures. The
following summaries of certain provisions of the Indentures do not purport to be
complete and are subject to, and are qualified in their entirety by reference
to, all the provisions of the Indentures, including the definitions therein of
certain terms capitalized in this Prospectus. Whenever particular Sections or
defined terms of the Indentures are referred to herein or in a Prospectus
Supplement, such Sections or defined terms are incorporated herein or therein by
reference.
GENERAL
The Indentures do not limit the aggregate principal amount of
Convertible Debt Securities which may be issued thereunder and provide that
Convertible Debt Securities may be issued from time to time in one or more
series. The Convertible Senior Debt Securities will be unsecured and
unsubordinated obligations of Air Group and will rank on a parity with all other
unsecured and unsubordinated indebtedness of Air Group. The Convertible
Subordinated Debt Securities will be unsecured obligations of Air Group and, as
set forth below under "Subordination of Convertible Debt Securities," will be
subordinated in right of payment to all Senior Indebtedness. The Indenture does
not limit Air Group's right to incur additional Senior Indebtedness. As of
December 31, 1995, Senior Indebtedness of Air Group on a consolidated basis
aggregated approximately $467,409,000.
Reference is made to the Prospectus Supplement which accompanies this
Prospectus for a description of the specific series of Convertible Debt
Securities being offered thereby, including: (1) the specific designation of
such Convertible Debt Securities; (2) any limit upon the aggregate principal
amount of such Convertible Debt Securities; (3) the date or dates on which the
principal of such Convertible Debt Securities will mature or the method of
determining such date or dates; (4) the rate or rates (which may be fixed or
variable) at which such Convertible Debt Securities will bear interest, if any,
or the method of calculating such rate or rates; (5) the date or dates from
which interest, if any, will accrue or the method by which such date or dates
will be determined; (6) the date or dates on which interest, if any, will be
payable and the record date or dates therefor; (7) the place or places where
principal of, premium, if any, and interest, if any, on such Convertible Debt
Securities will be payable;
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(8) the period or periods within which, the price or prices at which, and the
terms and conditions upon which, such Convertible Debt Securities may be
redeemed, in whole or in part, at the option of Air Group; (9) the obligation,
if any, of Air Group to redeem or purchase such Convertible Debt Securities
pursuant to any sinking fund or analogous provisions, upon the happening of a
specified event or at the option of a holder thereof and the period or periods
within which, the price or prices at which and the terms and conditions upon
which, such Convertible Debt Securities shall be redeemed or purchased, in whole
or in part, pursuant to such obligations; (10) the denominations in which such
Convertible Debt Securities are authorized to be issued; (11) the terms and
conditions upon which conversion will be effected, including the conversion
price, the conversion period and other conversion provisions in addition to or
in lieu of those described below; (12) if other than the principal amount
thereof, the portion of the principal amount of such Convertible Debt Securities
which will be payable upon declaration of the acceleration of the maturity
thereof or the method by which such portion shall be determined; (13) the person
to whom any interest on any such Convertible Debt Security shall be payable if
other than the person in whose name such Convertible Debt Security is registered
on the applicable record date; (14) any addition to, or modification or deletion
of, any Event of Default (as hereinafter defined) or any covenant of Air Group
specified in the Indenture with respect to such Convertible Debt Securities;
(15) the application, if any, of such means of covenant defeasance as may be
specified for such Convertible Debt Securities; (16) if applicable, provisions
related to the issuance of Convertible Debt Securities in book entry form; (17)
any addition to, or modification or deletion of, any provision of the Indenture
related to the subordination of such Convertible Debt Securities; and (18) any
other special terms pertaining to such Convertible Debt Securities. Unless
otherwise specified in the applicable Prospectus Supplement, the Convertible
Debt Securities will not be listed on any securities exchange. (Section 3.1 of
the Indentures.)
Unless otherwise specified in the applicable Prospectus Supplement,
Convertible Debt Securities will be issued in fully registered form without
coupons. Where Convertible Debt Securities of any series are issued in bearer
form, the special restrictions and considerations, including special offering
restrictions and special federal income tax considerations, applicable to any
such Convertible Debt Securities and to payment on and transfer and exchange of
such Convertible Debt Securities will be described in the applicable Prospectus
Supplement.
Convertible Debt Securities may be sold at a substantial discount below
their stated principal amount, bearing no interest or interest at a rate which
at the time of issuance is below market rates. Certain federal income tax
consequences and special considerations applicable to any such Convertible Debt
Securities will be described in the applicable Prospectus Supplement.
The general provisions of the Indentures do not afford holders of the
Convertible Debt Securities protection in the event of a highly leveraged or
other transaction involving Air Group or Alaska that may adversely affect
holders of Convertible Debt Securities. Any covenants or other provisions
included in a supplement or amendment to any Indenture for the benefit of the
holders of any particular series of Convertible Debt Securities will be
described in the applicable Prospectus Supplement.
PAYMENT, REGISTRATION, TRANSFER AND EXCHANGE
Unless otherwise provided in the applicable Prospectus Supplement,
payments in respect of the Convertible Debt Securities will be made at the
office or agency of Air Group maintained for that purpose, as Air Group may
designate from time to time, except that, at the option of Air Group, interest
payments, if any, on Convertible Debt Securities in registered form may be made
by (i) checks mailed by the Trustee to the holders of Convertible Debt
Securities entitled thereto at their registered addresses or (ii) wire transfer
to an account maintained by the Person entitled thereto as specified in the
Register. (Sections 3.7 and 9.2 of the Indentures.) Unless otherwise indicated
in an applicable Prospectus Supplement, payment of any installment of interest
on Convertible Debt Securities in
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registered form will be made to the Person in whose name such Convertible Debt
Security is registered at the close of business on the regular record date for
such interest. (Section 3.7 of the Indentures.)
Unless otherwise provided in the applicable Prospectus Supplement,
Convertible Debt Securities in registered form will be transferable or
exchangeable at the agency of Air Group maintained for such purpose as
designated by Air Group from time to time. (Sections 3.5 and 9.2 of the
Indentures.) Convertible Debt Securities may be transferred or exchanged without
service charge, other than any tax or other governmental charge imposed in
connection therewith. (Section 3.5 of the Indentures.)
CONVERSION RIGHTS
The terms on which Convertible Debt Securities of any series are
convertible into Common Stock will be set forth in the Prospectus Supplement
relating thereto. Such terms shall include provisions as to whether conversion
is mandatory, at the option of the holder, or at the option of Air Group, and
may include provisions in which the number of shares of Common Stock to be
received by the holders of Convertible Debt Securities would be calculated
according to the market price of Common Stock as of a time stated in the
Prospectus Supplement.
SUBORDINATION OF CONVERTIBLE SUBORDINATED DEBT SECURITIES
Unless otherwise provided in the applicable Prospectus Supplement, the
obligation of Air Group to make payment on account of the principal of, and
premium, if any, and interest on Convertible Subordinated Debt Securities will
be subordinated and junior in right of payment, as set forth in the Convertible
Subordinated Debt Securities Indenture and described below, to the prior payment
in full of all Senior Indebtedness.
"Senior Indebtedness" means all Indebtedness of Air Group unless such
Indebtedness, by its terms or the terms of the instrument creating or evidencing
it, is subordinate in right of payment to or pari passu with the Convertible
Subordinated Debt Securities. (Section 1.1 of the Convertible Subordinated Debt
Securities Indenture.) Air Group's 73/4% Convertible Subordinated Debentures Due
2010 and 67/8% Convertible Subordinated Debentures Due 2014 do not constitute
Senior Indebtedness. "Indebtedness," when used with respect to Air Group, means,
without duplication, the principal of, and premium, if any, and accrued and
unpaid interest (including post-petition interest) on (i) indebtedness of Air
Group for money borrowed, (ii) Indebtedness guarantees by Air Group of
indebtedness for money borrowed by any other person, (iii) indebtedness of Air
Group evidenced by notes, debentures, bonds or other instruments of indebtedness
for payment of which Air Group is responsible or liable, by Indebtedness
guarantees or otherwise, (iv) obligations for the reimbursement of any obligor
on any letter of credit, bankers' acceptance or similar credit transaction, (v)
obligations of Air Group under Capital Leases and Flight Equipment leases, (vi)
obligations under interest rate and currency swaps, caps, collars, options,
forward or spot contracts or similar arrangements or with respect to foreign
currency hedges, and (vii) commitment and other bank financing fees under
contractual obligations associated with bank debt; provided, however, that
Indebtedness shall not include amounts owed to trade creditors in the ordinary
course of business. (Section 1.1 of the Convertible Subordinated Debt Securities
Indenture.)
No payment on account of principal of, or premium, if any, or interest
on, the Convertible Subordinated Debt Securities may be made if (i) any Senior
Indebtedness is not paid when due or (ii) the maturity of any Senior
Indebtedness is accelerated unless, in either case, (a) such failure to pay or
acceleration relates to such Senior Indebtedness in an aggregate amount equal to
less than $25 million, (b) the default has been cured or waived or has ceased to
exist, (c) such acceleration has been rescinded, or (d) such Senior Indebtedness
has been paid in full. During the continuance of any default (other than a
default described in the preceding sentence) on Senior Indebtedness pursuant to
which the maturity thereof may be accelerated immediately (i.e., without further
notice and after the expiration of any applicable grace periods) and upon notice
by holders of at least $25 million of
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Senior Indebtedness to Air Group and the Trustee (a "Payment Notice"), Air Group
may not make any payments (a "Payment Block") on the Convertible Subordinated
Debt Securities until 120 days have elapsed following the receipt of such
Payment Notice. After 120 days Air Group may resume payment on the Convertible
Subordinate Debt Securities unless payment is prohibited by the first sentence
of this paragraph. No more than one Payment Notice is permitted for any one
default on Senior Indebtedness (which shall not bar subsequent Payment Notices
for other such defaults). All events of default on Senior Indebtedness occurring
within a 30-day period shall be treated as one event of default on such Senior
Indebtedness for purposes of the preceding sentence. No more than two Payment
Blocks are permitted within any 12-month period. Except as provided in the next
paragraph, a failure to make any payment with respect to the Convertible
Subordinated Debt Securities as a result of the foregoing provisions will not
limit the right of the holders of the Convertible Subordinated Debt Securities
to accelerate the maturity thereof as a result of such payment default. (Section
13.2 of the Convertible Subordinated Debt Securities Indenture.)
Upon any distribution of the assets of Air Group upon any dissolution,
total or partial liquidation or reorganization of or similar proceeding relating
to Air Group, the holders of Senior Indebtedness will be entitled to receive
payment in full before the holders of the Convertible Subordinated Debt
Securities are entitled to receive any payment. Upon any Event of Default with
respect to the Convertible Subordinated Debt Securities, the Trustee or holders
of 25% of the Convertible Subordinated Debt Securities must give notice of such
Event of Default and the intention to accelerate to Air Group and any other
holders of Senior Indebtedness which have theretofore requested such notice, and
such acceleration shall not become effective unless and until such Event of
Default is continuing on the 60th day after the date of delivery of such notice
of intention to accelerate; provided, however, that the Convertible Subordinated
Debt Securities shall become immediately due and payable upon notice in the
event of a bankruptcy or insolvency of Air Group. (Section 13.3 of the
Convertible Subordinated Debt Securities Indenture.) By reason of such
subordination, in the event of insolvency, creditors of Air Group who are
holders of Senior Indebtedness or of other unsubordinated Indebtedness of Air
Group may recover more, ratably, than the holders of the Convertible
Subordinated Debt Securities.
CONSOLIDATION, MERGER OR SALE BY THE ISSUER
The Indentures provide that Air Group may, without the consent of the
holders of Convertible Debt Securities, merge or consolidate with or into any
other corporation or sell, convey, transfer or otherwise dispose of all or
substantially all of its assets to any person, firm or corporation, if (i) (a)
in the case of a merger or consolidation, Air Group is the surviving corporation
or (b) in the case of a merger or consolidation where Air Group is not the
surviving corporation and in the case of such a sale, conveyance or other
disposition, the successor or acquiring corporation is a corporation organized
and existing under the laws of the United States of America or a State thereof
and such corporation expressly assumes by supplemental indenture all the
obligations of Air Group under the Convertible Debt Securities and any coupons
appertaining thereto and under the Indentures, and (ii) immediately after giving
effect to such merger or consolidation, or such sale, conveyance, transfer or
other disposition, no Default (as hereinafter defined) or Event of Default shall
have occurred and be continuing. In the event a successor corporation assumes
the obligations of Air Group, such successor corporation shall succeed to and be
substituted for Air Group under the Indentures and under the Convertible Debt
Securities and any coupons appertaining thereto and all obligations of Air Group
shall terminate. (Section 7.1 of the Indentures.)
EVENTS OF DEFAULT, NOTICE AND CERTAIN RIGHTS ON DEFAULT
The Indentures provide that, if an Event of Default specified therein
occurs with respect to the Convertible Debt Securities of any series issued
thereunder and is continuing, the Trustee for such series or the holders of 25%
in aggregate principal amount of all of the outstanding Convertible Debt
Securities of that series, by written notice to Air Group (and to the Trustee
for such series, if notice is given by such holders of Convertible Debt
Securities),
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<PAGE> 12
may declare the principal (or, if the Convertible Debt Securities of that series
are original issue discount Convertible Debt Securities or indexed Convertible
Debt Securities, such portion of the principal amount specified in the
Prospectus Supplement) of all the Convertible Debt Securities of that series to
be due and payable, subject in the case of Convertible Subordinated Debt
Securities to the 60 day prior notice requirement described above under
"Subordination of Convertible Subordinated Debt Securities," provided that
Convertible Debt Securities shall become immediately due and payable without
prior notice upon a bankruptcy or insolvency of Air Group. (Section 5.2 of the
Indentures.)
"Events of Default" with respect to Convertible Debt Securities of any
series issued thereunder are defined in the Indentures as being: default for 30
days in payment of any interest on any Convertible Debt Security of that series
or any coupon appertaining thereto or any additional amount payable with respect
to Convertible Debt Securities of such series as specified in the applicable
Prospectus Supplement when due; default for ten days in payment of principal,
premium, if any, or on redemption or otherwise, or in the making of a mandatory
sinking fund payment of any Convertible Debt Securities of that series when due;
default for 60 days after notice to Air Group by the Trustee for such series, or
by the holders of 25% in aggregate principal amount of the Convertible Debt
Securities of such series then outstanding, in the performance of any other
agreement in the Convertible Debt Securities of that series, in the Indentures
or in any supplemental indenture or board resolution referred to therein under
which the Convertible Debt Securities of that series may have been issued;
default resulting in acceleration of other indebtedness of Air Group for
borrowed money where the aggregate principal amount so accelerated exceeds $25
million and such acceleration is not rescinded or annulled within ten days after
the written notice thereof to Air Group by the Trustee or to Air Group and the
Trustee by the holders of 25% in aggregate principal amount of the Convertible
Debt Securities of such series then outstanding, provided that such Event of
Default will be cured or waived if the default that resulted in the acceleration
of such other indebtedness is cured or waived; and certain events of bankruptcy,
insolvency or reorganization of Air Group. (Section 5.1 of the Indentures.)
Events of Default with respect to a specified series of Convertible Debt
Securities may be added to the Indenture under which the series is issued and,
if so added, will be described in the applicable Prospectus Supplement.
(Sections 3.1 and 5.1(7) of the Indentures.)
The Indentures provide that the Trustee for any series of Convertible
Debt Securities shall, within 90 days after the occurrence of a Default with
respect to Convertible Debt Securities of that series, give to the holder of the
Convertible Debt Securities of that series notice of all uncured Defaults known
to it, provided that, except in the case of default in payment on the
Convertible Debt Securities of that series, the Trustee may withhold the notice
if and so long as a committee of its Responsible Officers (as described therein)
in good faith determines that withholding such notice is in the interest of the
holders of the Convertible Debt Securities of that series. (Section 6.6 of the
Indentures.) "Default" means any event which is, or, after notice or passage of
time or both, would be, an Event of Default. (Section 1.1 of the Indentures.)
The Indentures provide that the holders of a majority in aggregate
principal amount of the Convertible Debt Securities of each series affected
(with each such series voting as a class) may direct the time, method and place
of conducting any proceeding for any remedy available to the Trustee for such
series, or exercising any trust or power conferred on such Trustee. (Section 5.8
of the Indentures.)
The Indenture includes a covenant that Air Group will file annually
with the Trustee a certificate as to Air Group's compliance with all conditions
and covenants of the applicable Indenture. (Section 9.7 of the Indentures.)
The holders of a majority in aggregate principal amount of any series
of Convertible Debt Securities by notice to the Trustee for such series may
waive, on behalf of the holders of all Convertible Debt Securities of such
series, any past Default or Event of Default with respect to that series and its
consequences except a Default or
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<PAGE> 13
Event of Default in the payment of the principal of, premium, if any, or
interest, if any, on any Convertible Debt Security and certain other defaults.
(Section 5.7 of the Indentures.)
MODIFICATION OF THE INDENTURES
The Indenture contains provisions permitting Air Group and the Trustee
to enter into one or more supplemental indentures without the consent of the
holders of any of the Convertible Debt Securities in order (i) to evidence the
succession of another corporation to Air Group and the assumption of the
covenants of Air Group by a successor to Air Group; (ii) to add to the covenants
of Air Group or surrender any right or power of Air Group; (iii) to add
additional Events of Default with respect to any series; (iv) to add or change
any provisions to such extent as necessary to permit or facilitate the issuance
of Convertible Debt Securities in bearer form; (v) to add to, change or
eliminate any provision affecting Convertible Debt Securities not yet issued;
(vi) to secure the Convertible Debt Securities; (vii) to establish the form or
terms of Convertible Debt Securities; (viii) to evidence and provide for
successor Trustees; (ix) if allowed without penalty under applicable laws and
regulations, to permit payment in respect of Convertible Debt Securities in
bearer form in the United States; (x) to correct or supplement any inconsistent
provisions or to make any other provisions with respect to matters or questions
arising under the Indentures, provided that such action does not adversely
affect the interests of any holder of Convertible Debt Securities of any series
issued under such Indentures; or (xi) to cure any ambiguity or correct any
mistake. (Section 8.1 of the Indentures.)
The Indenture also contains provisions permitting Air Group and the
Trustee, with the consent of the holders of a majority in aggregate principal
amount of the outstanding Convertible Debt Securities of each series affected by
such supplemental indenture, to execute supplemental indentures adding any
provisions to or changing or eliminating any of the provisions of the Indenture
or any supplemental indenture or modifying the rights of the holders of
Convertible Debt Securities of such series, except that no such supplemental
Indenture may, without the consent of the holder of each Convertible Debt
Security so affected; (i) change the time for payment of principal or interest
on any Convertible Debt Security; (ii) reduce the principal of, or any
installment of principal of, or interest on any Convertible Debt Security; (iii)
reduce the amount of premium, if any, payable upon the redemption of any
Convertible Debt Security; (iv) reduce the amount of principal payable upon
acceleration of the maturity of an Original Issue Discount Convertible Debt
Security; (v) impair the right to institute suit for the enforcement of any
payment on or with respect to any Convertible Debt Security; (vi) reduce the
percentage in principal amount of the outstanding Convertible Debt Securities of
any series the consent of whose holders is required for modification or
amendment of the Indenture or for waiver of compliance with certain provisions
of the Indentures or for waiver of certain defaults; (vii) change the obligation
of Air Group to maintain an office or agency in the places and for the purposes
specified in the Indentures; or (viii) modify the provisions relating to waiver
of certain defaults or any of the foregoing provisions. (Section 8.2 of the
Indentures.)
COVENANT DEFEASANCE
If indicated in the Prospectus Supplement, Air Group may elect to be
released from its obligations with respect to certain covenants applicable to
the Convertible Debt Securities of or within any series ("covenant defeasance"),
upon the deposit with the Trustee for such series (or other qualifying trustee),
in trust for such purpose, of money and/or Government Obligations which through
the payment of principal and interest in accordance with their terms will
provide money in the amount sufficient to pay the principal of and any premium
or interest on such Convertible Debt Securities to Maturity or redemption, as
the case may be, and any mandatory sinking fund or analogous payment thereon.
Upon the occurrence of a covenant defeasance, Air Group will be released only
from its obligations to comply with certain covenants contained in the Indenture
relating to such Convertible Debt Securities, will continue to be obligated in
all other respects under such Convertible Debt
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<PAGE> 14
Securities and will continue to be contingently liable with respect to the
payment of principal, interest, if any, and premium, if any, with respect to
such Convertible Debt Securities.
Unless otherwise specified in the applicable Prospectus Supplement and
except as described below, the conditions to covenant defeasance are as follows:
(i) such covenant defeasance must not result in a breach or violation of, or
constitute a Default or Event of Default under, the Indentures, or result in a
breach or violation of, or constitute a default under, any other material
agreement or instrument of Air Group; (ii) certain bankruptcy related Defaults
or Events of Default with respect to Air Group must not have occurred and be
continuing during the period commencing on the date of the deposit of the trust
funds to covenant defease such Convertible Debt Securities and ending on the
91st day after such date; (iii) Air Group must deliver to the Trustee an Opinion
of Counsel to the effect that the holders of such Convertible Debt Securities
will not recognize income, gain or loss for federal income tax purposes as a
result of such covenant defeasance and will be subject to federal income tax on
the same amounts and in the same manner and at all the same times as would have
been the case if such covenant defeasance had not occurred; (iv) Air Group must
deliver to the Trustee an Officers' Certificate and an Opinion of Counsel with
respect to compliance with the conditions precedent to such covenant defeasance;
and (v) any additional conditions to such covenant defeasance which may be
imposed on Air Group pursuant to the Indentures. (Article 4 of the Indentures.)
The Indenture requires that a nationally recognized firm of independent public
accountants deliver to the Trustee a written certification as to the sufficiency
of the trust funds deposited for the covenant defeasance of such Convertible
Debt Securities. The Indenture does not provide the holders of such Convertible
Debt Securities with recourse against such firm. As described above, in the
event of a covenant defeasance, Air Group remains contingently liable with
respect to the payment of principal, interest, if any, and premium, if any, with
respect to the Convertible Debt Securities.
If Air Group exercises its covenant defeasance option, payment of such
Convertible Debt Securities may not be accelerated by reason of a Default or an
Event of Default with respect to the covenants to which such covenant defeasance
is applicable. However, if such acceleration were to occur, the realizable value
at the acceleration date of the money and Government Obligations in the
defeasance trust could be less than the principal and interest then due on such
Convertible Debt Securities, in that the required deposit in the defeasance
trust is based upon scheduled cash flow rather than market value, which will
vary depending upon interest rates and other factors.
DESCRIPTION OF CAPITAL STOCK
Air Group is authorized to issue 50,000,000 shares of Common Stock,
$1.00 par value ("Common Stock"), and 5,000,000 shares of preferred stock.
Voting Rights. Each holder of Common Stock is entitled to one vote per
share on all matters submitted to a vote of such class. Holders of Common Stock
do not have cumulative rights. The Board of Directors is classified into three
classes, with approximately one-third of the Directors elected each year to
three-year terms. A vote of a majority of the shares present at a meeting is
required to elect each nominee as a Director and to approve most other matters
brought before the stockholders for a vote, excluding certain extraordinary
transactions.
Dividend Rights. Holders of Common Stock share ratably in dividends
that may be declared by the Board of Directors out of funds legally available
therefor.
Liquidation Rights. Upon any liquidation of Air Group, the holders of
Common Stock are entitled to share ratably in the net assets of Air Group
available for distribution on the Common Stock.
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<PAGE> 15
Other. The Common Stock has no preemptive or conversion rights and
there are no redemption provisions applicable thereto. The Common Stock is
listed on the New York Stock Exchange. The registrar and transfer agent for the
Common Stock is The First National Bank of Boston.
Potential Rights of Preferred Stock. Under Air Group's Certificate of
Incorporation, the Board of Directors has authority to issue up to 5,000,000
shares of preferred stock. Such shares would have such voting, dividend,
liquidation, conversion, redemption and other rights as may be determined by the
Board of Directors, subject to the provisions of the Certificate of
Incorporation. Shares of Common Stock would be subject to the preferences,
rights and powers of any such shares of preferred stock as set forth in Air
Group's Certificate of Incorporation and in the resolutions establishing one or
more series of preferred stock. No preferred stock was outstanding at the date
of this Prospectus.
Certain Other Provisions. Air Group's Certificate of Incorporation
contains certain provisions sometimes referred to as "anti-takeover" provisions.
In the event that Air Group at any time has a stockholder who is a beneficial
owner of more than 15% of the voting power of Air Group, these provisions would
require the affirmative vote of the holders of not less than 80% of the
outstanding shares of voting stock to approve a consolidation or merger of Air
Group with any other corporation, the conveyance to any corporation or other
person or any other disposition of all or substantially all of Air Group's
assets, or the disposition by Air Group of all or substantially all of the stock
or assets of any major subsidiary; provided, however, that this 80% voting
requirement does not apply to a transaction which is approved by 80% of the
disinterested members of the Board of Directors.
Air Group is party to a Rights Agreement designed to deter partial and
two-tier tender offers, stock accumulation programs and other coercive tactics
that might be used to gain control without giving the Board of Directors the
opportunity to negotiate on behalf of the stockholders. In accordance with the
Rights Agreement, one right is attached to each share of outstanding Common
Stock. A holder of a right may, under certain circumstances, purchase at a
discount from market value either shares of a special class of voting preferred
stock of Air Group or shares of capital stock of a corporate entity attempting
to acquire Air Group or surviving a merger or consolidation with Air Group.
PLAN OF DISTRIBUTION
Air Group may sell Convertible Debt Securities to one or more
underwriters for public offering and sale by them or may sell Convertible Debt
Securities to investors or other persons directly or through agents. Any such
underwriter or agent involved in the offer and sale of the Convertible Debt
Securities will be named in an applicable Prospectus Supplement.
Underwriters may offer and sell the Convertible Debt Securities at a
fixed price or prices, which may be changed, or at prices related to prevailing
market prices or at negotiated prices. Air Group also may, from time to time,
authorize underwriters acting as Air Group's agents to offer and sell the
Convertible Debt Securities upon the terms and conditions as shall be set forth
in any Prospectus Supplement. In connection with the sale of Convertible Debt
Securities, underwriters may be deemed to have received compensation from Air
Group in the form of underwriting discounts or commission and may also receive
commissions from purchasers of Convertible Debt Securities for whom they may act
as agent. Underwriters may sell Convertible Debt Securities to or through
dealers, and such dealers may receive compensation in the form of discounts,
concessions or commissions from the underwriters and/or commissions (which may
be changed from time to time) from the purchasers for whom they may act as
agent.
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<PAGE> 16
Any underwriting compensation paid by Air Group to underwriters or
agents in connection with the offering of Convertible Debt Securities, and any
discounts, concessions or commissions allowed by underwriters to participating
dealers, will be set forth in an applicable Prospectus Supplement. Underwriters,
dealers and agents participating in the distribution of the Convertible Debt
Securities may be deemed to be underwriters, and any discounts and commissions
received by them and any profit realized by them on resale of the Convertible
Debt Securities may be deemed to be underwriting discounts and commissions under
the Securities Act. Underwriters, dealers and agents may be entitled, under
agreements with Air Group, to indemnification against and contribution toward
certain civil liabilities, including liabilities under the Securities Act, and
to reimbursement by Air Group for certain expenses.
Underwriters, dealers and agents may engage in transactions with, or
perform services for, Air Group and its subsidiaries in the ordinary course of
business.
LEGAL OPINIONS
Unless otherwise indicated in the applicable Prospectus Supplement, the
validity of the Convertible Debt Securities offered hereby will be passed upon
for Air Group by Perkins Coie, Seattle, Washington.
EXPERTS
The financial statements and schedule of Air Group incorporated by
reference in this Prospectus and in the Registration Statement have been audited
by Arthur Andersen LLP, independent public accountants, as indicated in their
reports with respect thereto, and are incorporated herein in reliance upon the
authority of said firm as experts in accounting and auditing in giving said
reports.
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<PAGE> 17
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE> 18
SUBJECT TO COMPLETION, DATED MAY 30, 1996
PROSPECTUS
ALASKA AIRLINES, INC.
DEBT SECURITIES
-----------
Alaska Airlines, Inc. ("Alaska") may from time to time offer its Debt
Securities, consisting of debentures, notes and/or other evidences of
indebtedness representing unsecured obligations of Alaska, in amounts, at prices
and on terms to be determined at the time of offering. The Debt Securities
offered pursuant to this Prospectus may be issued in one or more series and will
be limited to $250,000,000 aggregate principal amount (or such greater amount,
if Debt Securities are issued at an original issue discount, as shall result in
aggregate proceeds of $250,000,000). Certain specific terms of the Debt
Securities in respect of which this Prospectus is being delivered are set forth
in the accompanying Prospectus Supplement (the "Prospectus Supplement"),
including, where applicable, the specific designation, aggregate principal
amount, the denomination, maturity, premium, if any, the rate (which may be
fixed or variable), time and method of calculating payment of interest, if any,
the place or places where principal of, premium, if any, and interest, if any,
on such Debt Securities will be payable, any terms of redemption at the option
of Alaska or the holder, any sinking fund provisions, the terms of any guarantee
by Alaska Air Group, Inc. ("Air Group"), the initial public offering price and
other special terms, together with any other terms in connection with the
offering and sale of the Debt Securities, and the net proceeds to Alaska from
such offering. The Debt Securities may be issued in registered form or bearer
form, or both.
------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------
Alaska may sell the Debt Securities to or through underwriters, through
dealers or agents or directly to purchasers. See "Plan of Distribution." The
accompanying Prospectus Supplement sets forth the names of any underwriters,
dealers or agents involved in the sale of the Debt Securities in respect of
which this Prospectus is being delivered and any applicable fee, commission or
discount arrangements with them.
This Prospectus may not be used to consummate sales of Debt Securities
unless accompanied by a Prospectus Supplement.
------------
THE DATE OF THIS PROSPECTUS IS __________, 1996.
<PAGE> 19
No dealer, salesperson or other individual has been authorized to give
any information or to make any representations not contained in this Prospectus
in connection with the offering covered by this Prospectus. If given or made,
such information or representations must not be relied upon as having been
authorized by Air Group, Alaska or the Underwriter. This Prospectus does not
constitute an offer to sell, or a solicitation of an offer to buy, the Debt
Securities in any jurisdiction where, or to any person to whom, it is unlawful
to make such offer or solicitation. Neither the delivery of this Prospectus nor
any sale made hereunder shall, under any circumstances, create an implication
that there has not been any change in the facts set forth in this Prospectus or
in the affairs of Alaska since the date hereof.
AVAILABLE INFORMATION
Each of Alaska and Air Group is subject to the reporting requirements
of the Securities Exchange Act of 1934, as amended (the "1934 Act"), and, in
accordance therewith, files reports and other information with the Securities
and Exchange Commission (the "Commission"). Such reports and other information
may be inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549; 75
World Trade Center, Suite 1300, New York, New York 10048; and Citicorp Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such
material may also be obtained at prescribed rates from the Public Reference
Section of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549. In
addition, such material filed by Air Group may be inspected and copied at the
offices of the New York Stock Exchange, Inc., 20 Broad Street, New York, New
York 10005.
So long as Alaska is subject to such periodic reporting requirements,
it will continue to furnish the information required thereby to the Commission
and will furnish copies of such reports and other information to the holders of
Certificates. Alaska's obligation to file periodic reports with the Commission
will be suspended if each class of Alaska's securities is held of record by
fewer than 300 holders at the beginning of any fiscal year of Alaska other than
a fiscal year in which a registration statement with respect to any such
securities becomes effective. Accordingly, in such case, Alaska may cease to
file reports with the Commission in respect of such fiscal year. In the event
Alaska ceases to file periodic reports with the Commission, Alaska is obligated
pursuant to the Indenture (as hereinafter defined) to distribute to the holders
of Debt Securities annual reports containing audited consolidated financial
statements and a report thereon by Alaska's independent public accountants and
quarterly reports for the first three quarters of each fiscal year containing
unaudited condensed financial information.
This Prospectus constitutes a part of registration statements on Form
S-3 (together with all amendments and exhibits, the "Registration Statements")
filed by Alaska and Air Group with the Commission under the Securities Act of
1933, as amended (the "Securities Act"). This Prospectus does not contain all of
the information included in the Registration Statements, certain parts of which
are omitted in accordance with the rules and regulations of the Commission.
Statements contained herein concerning the provisions of any document do not
purport to be complete and, in each instance, reference is made to the copy of
such document filed as in exhibit to the Registration Statements or otherwise
filed with the Commission. Each such statement is subject to and qualified in
its entirety by such reference. Reference is made to such Registration
Statements and to the exhibits relating thereto for further information with
respect to Alaska, Air Group and the Debt Securities offered hereby.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents have been filed with the Commission pursuant to
the 1934 Act and are incorporated into this Prospectus by reference and made a
part hereof: Each of Alaska's and Air Group's Annual Report on Form 10-K for the
fiscal year ended December 31, 1995 and Quarterly Report on Form 10-Q for the
fiscal quarter ended March 31, 1996.
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<PAGE> 20
All documents filed by Alaska and Air Group pursuant to Section 13(a),
13(c), 14 or 15(d) of the 1934 Act subsequent to the date of this Prospectus and
prior to the termination of this offering shall be deemed to be incorporated by
reference in this Prospectus, and to be a part hereof from the date of filing of
such documents. Any statement incorporated by reference herein shall be deemed
to be modified or superseded for purposes of this Prospectus to the extent that
a statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any statement modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Prospectus. Alaska and Air Group will provide without charge to each person to
whom a copy of this Prospectus is delivered, upon the written or oral request of
such person, a copy of any document incorporated by reference in this Prospectus
(other than exhibits to such documents unless such exhibits are specifically
incorporated by reference to such documents). Requests for such copies should be
directed to the office of the Corporate Secretary, Alaska Airlines, Inc., P.O.
Box 68947, Seattle, Washington 98168 (telephone (206) 433-3131).
ALASKA AND AIR GROUP
Air Group is a holding company incorporated in Delaware in 1985. Its
principal subsidiaries are Alaska and Horizon Air Industries, Inc. ("Horizon").
Alaska, founded in 1932, provides scheduled air transportation to 37 cities in
Alaska, Washington, Oregon, Nevada, California and Arizona, three cities in
Mexico, four cities in Russia, one city in Canada and many smaller communities
in Alaska and California through code-sharing agreements with local carriers. As
of December 31, 1995, Alaska Airlines operated 24 owned and 50 leased jet
aircraft with an average age of 6.6 years. During 1995, Alaska entered into a
marketing agreement with Northwest Airlines whereby certain Alaska flights and
certain Northwest flights are dual-designated in airline computer reservation
systems as Alaska Airlines and Northwest Airlines. Horizon, a regional commuter
carrier founded in 1981, provides scheduled air transportation to 36 cities in
Washington, Oregon, Montana, Idaho, California and Wyoming, as well as four
cities in Canada. Horizon provides interconnecting passenger traffic to Alaska
Airlines through its major hub cities, Seattle, Portland and Spokane. As of
December 31, 1995, Horizon operated five owned and 62 leased aircraft with an
average age of 9.8 years. The principal executive offices of Air Group are
located at 19300 Pacific Highway South, Seattle, Washington 98188 (telephone
(206) 433-3200).
For the year ended December 31, 1995, Air Group's consolidated
operating revenues were $1.4 billion, of which 89% came from scheduled passenger
services, 7% came from freight and mail, and 4% came from mileage plan partners
and other nonpassenger sources. Alaska Airlines carried approximately 10.1
million passengers in 1995 and accounted for approximately 80% of Air Group's
consolidated 1995 operating revenues. Horizon carried approximately 3.8 million
passengers in 1995 and accounted for the remaining 20% of Air Group's
consolidated 1995 operating revenues.
In each year since 1973, Alaska has carried more passengers between
Alaska and the U.S. mainland than any other airline. Passenger traffic within
Alaska and between Alaska and the U.S. mainland accounted for 27% of Alaska's
total revenue passenger miles in 1995, while West Coast traffic accounted for
66% and the Mexico markets 7%. Based on passenger enplanements, Alaska's leading
airports are Seattle, Portland, Anchorage and Los Angeles. Based on revenues,
its leading nonstop routes were Seattle-Anchorage, Seattle-Los Angeles and
Seattle-San Francisco.
USE OF PROCEEDS
Unless otherwise indicated in the accompanying Prospectus Supplement,
the net proceeds to Alaska from the sale of the Debt Securities offered hereby
will be added to the working capital of Alaska and will be available for general
corporate purposes, among which may be repayment of outstanding indebtedness and
the financing of capital expenditures by Alaska, including the acquisition by
Alaska of aircraft and related equipment.
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<PAGE> 21
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges
for Alaska and Air Group for the periods indicated. Earnings represents earnings
before accounting change, income tax expense and fixed charges (excluding
interest capitalized). Fixed charges consist of interest and the portion of
rental expense deemed representative of the interest factor.
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992 1991
----------------------- -------------------------------------------------------------------
Quarter Ended March 31, Year Ended December 31,
----------------------- -------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Alaska...................... (a) 1.46 1.45 (a) (a) 1.14
Air Group................. (b) 1.28 1.36 (b) (b) 1.10
</TABLE>
- -----------
(a) For the quarter ended March 31, 1996, Alaska's earnings were inadequate
to cover fixed charges by $9.3 million. For the years ended December 31,
1993 and 1992, Alaska's earnings were inadequate to cover fixed charges
by $44.5 million and $126.4 million, respectively.
(b) For the quarter ended March 31, 1996, Air Group's earnings were
inadequate to cover fixed charges by $13.5 million. For the years ended
December 31, 1993 and 1992, Air Group's earnings were inadequate to cover
fixed charges by $46.3 million and $131.8 million, respectively.
DESCRIPTION OF DEBT SECURITIES
The Debt Securities are to be issued under an Indenture between Alaska,
Air Group and a Trustee (the "Indenture"). In the event that any Debt Securities
are guaranteed by Air Group (see "Guarantees of Debt Securities"), the
applicable Indenture will be supplemented by a Supplemental Indenture among
Alaska, as issuer, Air Group, as Guarantor, and the Trustee (each, a
"Supplemental Indenture"). A copy of the Indenture is filed as an exhibit to the
Registration Statement. Any such Supplemental Indenture will be filed as an
exhibit to a Current Report on Form 8-K, Quarterly Report on Form 10-Q or Annual
Report on Form 10-K to be filed by Alaska with the Commission following the
issuance of such series of guaranteed Debt Securities. Information regarding the
Trustee will be set forth in the applicable Prospectus Supplement.
The Debt Securities offered pursuant to this Prospectus will be limited
to $250,000,000 aggregate principal amount (or such greater amount, if Debt
Securities are issued at an original issue discount, as shall result in
aggregate proceeds of $250,000,000). The statements herein relating to the Debt
Securities and the Indenture are summaries and reference is made to the detailed
provisions of the Indenture, including the definitions therein of certain terms
capitalized in this Prospectus. Whenever particular Sections or defined terms of
the Indenture are referred to herein or in a Prospectus Supplement, such
Sections or defined terms are incorporated herein or therein by reference.
GENERAL
The Indenture does not limit the aggregate principal amount of Debt
Securities which may be issued thereunder. Debt Securities may be issued from
time to time in one or more series. The Debt Securities will be unsecured and
unsubordinated obligations of Alaska and will rank on a parity with all other
unsecured and unsubordinated indebtedness of Alaska.
Reference is made to the Prospectus Supplement which accompanies this
Prospectus for a description of the specific series of Debt Securities being
offered thereby including: (1) the specific designation of such Debt Securities;
(2) any limit upon the aggregate principal amount of such Debt Securities; (3)
the date or dates on which
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the principal of such Debt Securities will mature or the method of determining
such date or dates; (4) the rate or rates (which may be fixed or variable) at
which such Debt Securities will bear interest, if any, or the method of
calculating such rate or rates; (5) the date or dates from which interest, if
any, will accrue or the method by which such date or dates will be determined;
(6) the date or dates on which interest, if any, will be payable and the record
date or dates therefor; (7) the place or places where principal of, premium, if
any, and interest, if any, on such Debt Securities will be payable; (8) the
period or periods within which, the price or prices at which, and the terms and
conditions upon which, such Debt Securities may be redeemed, in whole or in
part, at the option of Alaska; (9) the obligation, if any, of Alaska to redeem
or purchase such Debt Securities pursuant to any sinking fund or analogous
provisions, upon the happening of a specified event, or at the option of a
holder thereof and the period or periods within which, the price or prices at
which and the terms and conditions upon which, such Debt Securities shall be
redeemed or purchased, in whole or in part, pursuant to such obligations; (10),
if applicable, the terms of any Guarantee; (11) the denominations in which such
Debt Securities are authorized to be issued; (12) if other than the principal
amount thereof, the portion of the principal amount of such Debt Securities
which will be payable upon declaration of the acceleration of the maturity
thereof or the method by which such portion shall be determined; (13) the person
to whom any interest on any such Debt Security shall be payable if other than
the person in whose name such Debt Security is registered on the applicable
record date; (14) any addition to, or modification or deletion of, any Event of
Default (as hereinafter defined) or any covenant of Alaska specified in the
Indenture with respect to such Debt Securities; (15) the application, if any, of
such means of defeasance or covenant defeasance as maybe specified for such Debt
Securities; (16) if applicable, provisions related to the issuance of Debt
Securities in book entry form; and (17) any other special terms pertaining to
such Debt Securities. Unless otherwise specified in the applicable Prospectus
Supplement, the Debt Securities will not be listed on any securities exchange.
(Section 3.1.)
Unless otherwise specified in the applicable Prospectus Supplement,
Debt Securities will be issued in fully registered form without coupons. Where
Debt Securities of any series are issued in bearer form, the special
restrictions and considerations, including special offering restrictions and
special Federal income tax considerations, applicable to any such Debt
Securities and to payment on and transfer and exchange of such Debt Securities
will be described in the applicable Prospectus Supplement.
Debt Securities may be sold at a substantial discount below their
stated principal amount, bearing no interest or interest at a rate which at the
time of issuance is below market rates. Certain Federal income tax consequences
and special considerations applicable to any such Debt Securities will be
described in the applicable Prospectus Supplement.
The general provisions of the Indenture do not afford holders of the
Debt Securities protection in the event of a highly leveraged or other
transaction involving Air Group or Alaska that may adversely affect holders of
Debt Securities. Any covenants or other provisions included in a supplement or
amendment to any Indenture for the benefit of the holders of any particular
series of Debt Securities will be described in the applicable Prospectus
Supplement.
PAYMENT, REGISTRATION, TRANSFER AND EXCHANGE
Unless otherwise provided in the applicable Prospectus Supplement,
payments in respect of the Debt Securities will be made at the office or agency
of Alaska maintained for that purpose as Alaska may designate from time to time
except that, at the option of Alaska, interest payments, if any, on Debt
Securities in registered form may be made by (i) checks mailed by the Trustee to
the holders of Debt Securities entitled thereto at their registered addresses or
(ii) wire transfer to an account maintained by the Person entitled thereto as
specified in the Register. (Sections 3.7(a) and 9.2.) Unless otherwise indicated
in an applicable Prospectus Supplement, payment of any
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installment of interest on Debt Securities in registered form will be made to
the Person in whose name such Debt Security is registered at the close of
business on the regular record date for such interest. (Section 3.7(a).)
Unless otherwise provided in the applicable Prospectus Supplement, Debt
Securities in registered form will be transferable or exchangeable at the agency
of Alaska maintained for such purpose as designated by Alaska from time to time.
(Sections 3.5 and 9.2.) Debt Securities may be transferred or exchanged without
service charge, other than any tax or other governmental charge imposed in
connection therewith. (Section 3.5.)
GUARANTEES OF DEBT SECURITIES
Air Group shall unconditionally guarantee to the holders from time to
time of any series of Debt Securities that is not Investment Grade at the time
of issuance the full and prompt payment of principal, premium, if any, and
interest when and as the same shall become due and payable, whether at maturity,
upon redemption or otherwise. The terms of any such guarantees (each, a
"Guarantee") will be set forth in the applicable Supplemental Indenture. Any
such Guarantee will be an unsecured obligation of Air Group. A series of Debt
Securities shall be "Investment Grade" if so designated by at least one
nationally recognized statistical rating organization (as that term is used in
Rule 15c3-1(c)(2)(vi)(F) under the 1934 Act).
If a Guarantee is applicable to Debt Securities offered hereby,
reference is made to the related Supplemental Indenture and the accompanying
Prospectus Supplement for a description of the specific terms of such Guarantee,
including events of default relating thereto and, where applicable,
subordination provisions of such Guarantee and covenants of Air Group.
The consolidated financial statements of Air Group are incorporated by
reference herein. See "Incorporation of Certain Documents by Reference." As
indicated by comparison of such consolidated financial statements with those of
Alaska, the total assets, revenues and shareholders' equity of Alaska comprise a
substantial portion of the consolidated total assets, revenues and shareholders'
equity of Air Group.
CONSOLIDATION, MERGER OR SALE BY ALASKA
The Indenture provides that Alaska may merge or consolidate with or
into any other corporation or sell, convey, transfer or otherwise dispose of all
or substantially all of its assets to any person, firm or corporation, if (i)
(a) in the case of a merger or consolidation, Alaska is the surviving
corporation or (b) in the case of a merger or consolidation where Alaska is not
the surviving corporation and in the case of such a sale, conveyance or other
disposition, the successor or acquiring corporation is a corporation organized
and existing under the laws of the United States of America or a State thereof
and such corporation expressly assumes by supplemental indenture all the
obligations of Alaska under the Debt Securities and any coupons pertaining
thereto and under the Indenture, and (ii) immediately after giving effect to
such merger or consolidation, or such sale, conveyance, transfer or other
disposition, no Default (as hereinafter defined) or Event of Default shall have
occurred and be continuing. In the event a successor corporation assumes the
obligations of Alaska, such successor corporation shall succeed to and be
substituted for Alaska under the Indenture and under the Debt Securities and any
coupons appertaining thereto and all obligations of Alaska shall terminate.
(Section 7.1.)
EVENTS OF DEFAULT, NOTICE AND CERTAIN RIGHTS ON DEFAULT
The Indenture provides that, if an Event of Default specified therein
occurs with respect to the Debt Securities of any series issued thereunder and
is continuing, the Trustee for such series or the holders of 25% in aggregate
principal amount of all of the outstanding Debt Securities of that series, by
written notice to Alaska (and to the Trustee for such series, if notice is given
by such holders of Debt Securities), may declare the principal (or, if
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the Debt Securities of that series are original issue discount Debt Securities
or indexed Debt Securities, such portion of the principal amount specified in
the Prospectus Supplement) of all the Debt Securities of that series to be due
and payable.
"Events of Default" with respect to Debt Securities of any series
issued thereunder are defined in the Indenture as being: default for 30 days in
payment of any interest on any Debt Security of that series or any coupon
appertaining thereto or any additional amount payable with respect to Debt
Securities of such series as specified in the applicable Prospectus Supplement
when due; default for ten days in payment of principal, premium, if any, or on
redemption or otherwise, or in the making of a mandatory sinking fund payment of
any Debt Securities of that series when due; default for 60 days after notice to
Alaska by the Trustee for such series, or by the holders of 25% in aggregate
principal amount of the Debt Securities of such series then outstanding, in the
performance of any other agreement in the Debt Securities of that series, in the
Indenture or in any supplemental indenture or board resolution referred to
therein under which the Debt Securities of that series may have been issued;
default resulting in acceleration of other indebtedness of Alaska for borrowed
money where the aggregate principal amount so accelerated exceeds $25 million
and such acceleration is not rescinded or annulled within ten days after the
written notice thereof to Alaska by the Trustee or to Alaska and the Trustee by
the holders of 25% in aggregate principal amount of the Debt Securities of such
series then outstanding, provided that such Event of Default will be cured or
waived if the default that resulted in the acceleration of such other
indebtedness is cured or waived; and certain events of bankruptcy, insolvency or
reorganization of Alaska. (Section 5.1 of the Indenture.) Events of Default with
respect to a specified series of Debt Securities may be added to the Indenture
and, if so added, will be described in the applicable Prospectus Supplement.
(Sections 3.1 and 5.1(7) of the Indenture.)
The Indenture provides that the Trustee for any series of Debt
Securities shall, within ninety days after the occurrence of a Default with
respect to Debt Securities of that series, give to the holder of the Debt
Securities of that series notice of all uncured Defaults known to it, PROVIDED
that, except in the case of default in payment on the Debt Securities of that
series, the Trustee may withhold the notice if and so long as a committee of its
Responsible Officers (as defined therein) in good faith determines that
withholding such notice is in the interest of the holders of the Debt Securities
of that series. (Section 6.5.) "Default" means any event which is, or, after
notice or passage of time or both, would be, an Event of Default. (Section 1.1.)
The Indenture provides that the holders of a majority in aggregate
principal amount of the Debt Securities of each series affected (with each such
series voting as a class) may direct the time, method and place of conducting
any proceeding for any remedy available to the Trustee for such series, or
exercising any trust or power conferred on such Trustee. (Section 5.8.)
The Indenture includes a covenant that Alaska will file annually with
the Trustee a certificate as to Alaska's compliance with all conditions and
covenants of the Indenture. (Section 9.7.)
The holders of a majority in aggregate principal amount of any series
of Debt Securities by notice to the Trustee for such series may waive, on behalf
of the holders of all Debt Securities of such series, any past Default or Event
of Default with respect to that series and its consequences except a Default or
Event of Default in the payment of the principal of, premium, if any, or
interest, if any, on any Debt Security and certain other defaults. (Section
5.7.)
MODIFICATION OF THE INDENTURES
The Indenture contains provisions permitting Alaska and the Trustee to
enter into one or more supplemental indentures without the consent of the
holders of any of the Debt Securities in order (i) to evidence the succession of
another corporation to Alaska and the assumption of the covenants of Alaska by a
successor to Alaska; (ii) to add
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to the covenants of Alaska or surrender any right or power of Alaska; (iii) to
add additional Events of Default, with respect to any series; (iv) to add to,
change or eliminate any provision affecting Debt Securities not yet issued; (v)
to secure the Debt Securities; (vi) to establish the form or terms of Debt
Securities; (vii) to evidence and provide for successor Trustees; (viii) if
allowed without penalty under applicable laws and regulations, to permit payment
in respect of Debt Securities in bearer form in the United States; (ix) to
correct or supplement any inconsistent provisions or to make any other
provisions with respect to matters or questions arising under the Indenture,
provided that such action does not adversely affect the interests of any holder
of Debt Securities of any series issued under the Indenture; or (x) to cure any
ambiguity or correct any mistake. (Section 8.1.)
The Indenture also contains provisions permitting Alaska and the
Trustee, with the consent of the holders of a majority in aggregate principal
amount of the outstanding Debt Securities of each series affected by such
supplemental Indenture, to execute supplemental indentures adding any provisions
to or changing or eliminating any of the provisions of the indentures or any
supplemental indenture or modifying the rights of the holders of Debt Securities
of such series, except that no such supplemental indenture may, without the
consent of the holder of each Debt Security so affected, (i) change the time for
payment of principal or interest on any Debt Security; (ii) reduce the principal
of, or any installment of principal of or interest on any Debt Security; (iii)
reduce the amount of premium, if any, payable upon the redemption of any Debt
Security; (iv) reduce the amount of principal payable upon acceleration of the
maturity of an Original Issue Discount Debt Security; (v) impair the right to
institute suit for the enforcement of any payment on or with respect to any Debt
Security; (vi) reduce the percentage in principal amount of the outstanding Debt
Securities of any series the consent of whose holders is required for
modification or amendment of the Indenture or for waiver of compliance with
certain provisions of the Indenture or for waiver of certain defaults; (vii)
change the obligation of Alaska to maintain an office or agency in the places
and for the purposes specified in the Indenture; or (viii) modify the provisions
relating to waiver of certain defaults or any of the foregoing provisions.
(Section 8.2 of the Indenture.)
DEFEASANCE AND COVENANT DEFEASANCE
If indicated in the Prospectus Supplement, Alaska may elect either (i)
to defease and be discharged from any and all obligations with respect to the
Debt Securities of or within any series (except as described below)
("defeasance") or (ii) to be released from its obligations with respect to
certain covenants applicable to the Debt Securities of or within any series
("covenant defeasance"), upon the deposit with the Trustee for such series (or
other qualifying trustee), in trust for such purpose, of money and/or Government
Obligations which through the payment of principal and interest in accordance
with their terms will provide money in the amount sufficient to pay the
principal of and any premium or interest on such Debt Securities to Maturity or
redemption, as the case may be, and any mandatory sinking fund or analogous
payments thereon. Upon the occurrence of a defeasance, Alaska will be deemed to
have paid and discharged the entire indebtedness represented by such Debt
Securities and any coupons appertaining thereto and to have satisfied all of its
other obligations under such Debt Securities and any coupons appertaining
thereto (except for (i) the rights of holders of such Debt Securities to
receive, solely from the trust funds deposited to defease such Debt Securities,
payments in respect of the principal of, premium, if any, and interest, if any,
on such Debt Securities or any coupons appertaining thereto when such payments
are due and (ii) certain other obligations as provided in the Indenture). Upon
the occurrence of a covenant defeasance, Alaska will be released only from its
obligations to comply with certain covenants contained in the Indenture relating
to such Debt Securities, will continue to be obligated in all other respects
under such Debt Securities and will continue to be contingently liable with
respect to the payment of principal, interest, if any, and premium, if any, with
respect to such Debt Securities.
Unless otherwise specified in the applicable Prospectus Supplement and
except as described below, the conditions to both defeasance and covenant
defeasance are as follows: (i) such defeasance or covenant defeasance must not
result in a breach or violation of, or constitute a Default or Event of Default
under, the Indenture, or result
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in a breach or violation of, or constitute a default under, any other material
agreement or instrument of Alaska; (ii) certain bankruptcy related Defaults or
Events of Default with respect to Alaska must not have occurred and be
continuing during the period commencing on the date of the deposit of the trust
funds to defease such Debt Securities and ending on the 91st day after such
date; (iii) Alaska must deliver to the Trustee an Opinion of Counsel to the
effect that the holders of such Debt Securities will not recognize income, gain
or loss for Federal income tax purposes a result of such defeasance or covenant
defeasance and will be subject to Federal income tax on the same amounts and in
the same manner and at all the same times as would have been the case if such
defeasance or covenant defeasance had not occurred; (iv) Alaska must deliver to
the Trustee an Officers' Certificate and an Opinion of Counsel with respect to
compliance with the conditions precedent to such defeasance or covenant
defeasance; and (v) any additional conditions to such defeasance or covenant
defeasance which may be imposed on Alaska pursuant to the Indenture. (Article
4.) The Indenture requires that a nationally recognized firm of independent
public accountants deliver to the Trustee a written certification as to the
sufficiency of the trust funds deposited for the defeasance or covenant
defeasance of such Debt Securities. The Indentures do not provide the holders of
such Debt Securities with recourse against such firm. If indicated in the
Prospectus Supplement, in addition to obligations of the United States or an
agency or instrumentality thereof, Government Obligations may include
obligations of the government or an agency or instrumentality of the government
issuing the currency in which Debt Securities of such series are payable.
(Sections 1.1 and 3.1.) In the event that Government Obligations deposited with
the Trustee for the defeasance of such Debt Securities decrease in value or
default subsequent to their being deposited, Alaska will have no further
obligation, and the holders of such Debt Securities will have no additional
recourse against Alaska, as a result of such decrease in value or default. As
described above, in the event of a covenant defeasance, Alaska remains
contingently liable with respect to the payment of principal, interest, if any,
and premium, if any, with respect to the Debt Securities.
Alaska may exercise its defeasance option with respect to such Debt
Securities notwithstanding its prior exercise of its covenant defeasance option.
If Alaska exercises its defeasance option, payment of such Debt Securities may
not be accelerated because of a Default or an Event of Default. If Alaska
exercises its covenant defeasance option, payment of such Debt Securities may
not be accelerated by reason of a Default or an Event of Default with respect to
the covenants to which such covenant defeasance is applicable. However, if such
acceleration to occur, the realizable value at the acceleration date of the
money and Government Obligations in the defeasance trust could be less than the
principal and interest then due on such Debt Securities, in that the required
deposit in the defeasance trust is based upon scheduled cash flow rather than
market value, which will vary depending upon interest rates and other factors.
PLAN OF DISTRIBUTION
Alaska may sell Debt Securities to one or more underwriters for public
offering and sale by them or may sell Debt Securities to investors or other
persons directly or through agents. Any such underwriter or agent involved in
the offer and sale of the Debt Securities will be named in an applicable
Prospectus Supplement.
Underwriters may offer and sell the Debt Securities at a fixed price or
prices, which may be changed, or from time to time at market prices prevailing
at the time of sale, at prices related to such prevailing market prices or at
negotiated prices. Alaska also may, from time to time, authorize underwriters
acting as Alaska's agents to offer and sell the Debt Securities upon the terms
and conditions as shall be set forth in any Prospectus Supplement. In connection
with the sale of Debt Securities, underwriters may be deemed to have received
compensation from Alaska in the form of underwriting discounts or commissions
and may also receive commissions from purchasers of Debt Securities for whom
they may act as agent. Underwriters may sell Debt Securities to or through
dealers, and such dealers may receive compensation in the form of discounts,
concessions or commissions from the underwriters and/or commissions (which may
be changed from time to time) from the purchasers for whom they may act as
agent.
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Any underwriting compensation paid by Alaska to underwriters or agents
in connection with the offering of Debt Securities, and any discounts,
concessions or commissions allowed by underwriters to participating dealers,
will be set forth in an applicable Prospectus Supplement. Underwriters, dealers
and agents participating in the distribution of the Debt Securities may be
deemed to be underwriters, and any discounts and commissions received by them
and any profit realized by them on resale of the Debt Securities may be deemed
to be underwriting discounts and commissions under the Securities Act.
Underwriters, dealers and agents may be entitled, under agreements with Alaska,
to indemnification against and contribution toward certain civil liabilities,
including liabilities under the Securities Act, and to reimbursement by Alaska
for certain expenses.
Underwriters, dealers and agents may engage in transactions with, or
perform services for, Alaska and its subsidiaries in the ordinary course of
business.
LEGAL OPINIONS
Unless otherwise indicated in the applicable Prospectus Supplement, the
validity of the Debt Securities offered hereby will be passed upon for Alaska by
Perkins Coie, Seattle, Washington.
EXPERTS
The financial statements and schedule of Air Group and of Alaska
incorporated by reference in this Prospectus and in the Registration Statement
have been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their reports with respect thereto, and are incorporated herein in
reliance upon the authority of said firm as experts in accounting and auditing
in giving said reports.
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE> 29
SUBJECT TO COMPLETION, DATED MAY 30, 1996
PROSPECTUS
ALASKA AIR GROUP, INC.
------------
COMMON STOCK
------------
Alaska Air Group, Inc. ("Air Group") may from time to time offer shares
of its Common Stock, par value $1.00 per share ("Common Stock"). The Common
Stock offered pursuant to this Prospectus will be limited to $182,250,000
aggregate public offering price. Certain specific terms of the offering of the
Common Stock in respect of which this Prospectus is being delivered are set
forth in the accompanying Prospectus Supplement (the "Prospectus Supplement"),
including any initial offering price.
------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------
Air Group may sell the Common Stock to or through underwriters, through
dealers or agents or directly to purchasers. See "Plan of Distribution." The
accompanying Prospectus Supplement sets forth the names of any underwriters,
dealers or agents involved in the sale of the Common Stock in respect of which
this Prospectus is being delivered, and any applicable fee, commission or
discount arrangements with them.
This Prospectus may not be used to consummate sales of Common Stock
unless accompanied by a Prospectus Supplement applicable to the Common Stock
being sold.
------------
THE DATE OF THIS PROSPECTUS IS __________, 1996.
<PAGE> 30
No dealer, salesperson or other individual has been authorized to give
any information or to make any representations not contained in this Prospectus
in connection with the offering covered by this Prospectus. If given or made,
such information or representations must not be relied upon as having been
authorized by Air Group or the Underwriter. This Prospectus does not constitute
an offer to sell, or a solicitation of an offer to buy, the Common Stock in any
jurisdiction where, or to any person to whom, it is unlawful to make such offer
or solicitation. Neither the delivery of this Prospectus nor any sale made
hereunder shall, under any circumstances, create an implication that there has
not been any change in the facts set forth in this Prospectus or in the affairs
of Air Group since the date hereof.
AVAILABLE INFORMATION
Air Group is subject to the reporting requirements of the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and, in accordance therewith,
files reports and other information with the Securities and Exchange Commission
(the "Commission"). Such reports and other information may be inspected and
copied at the public reference facilities maintained by the Commission at Room
1024, 450 Fifth Street, N.W., Washington, D.C. 20549; 75 World Trade Center,
Suite 1300, New York, New York 10048; and Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661. Copies of such material may also be
obtained at prescribed rates from the Public Reference Section of the
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549. In addition, such
material filed by Air Group may be inspected and copied at the offices of the
New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005.
This Prospectus constitutes a part of a registration statement on Form
S-3 (together with all amendments and exhibits, the "Registration Statement")
filed by Air Group and Alaska Airlines, Inc. ("Alaska") with the Commission
under the Securities Act of 1933, as amended (the "Securities Act"). This
Prospectus does not contain all of the information included in the Registration
Statement, certain parts of which are omitted in accordance with the rules and
regulations of the Commission. Statements contained herein concerning the
provisions of any document do not purport to be complete and, in each instance,
reference is made to the copy of such document filed as an exhibit to the
Registration Statement or otherwise filed with the Commission. Each such
statement is subject to and qualified in its entirety by such reference.
Reference is made to such Registration Statement and to the exhibits relating
thereto for further information with respect to Air Group and the Common Stock
offered hereby.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents have been filed with the Commission pursuant to
the 1934 Act and are incorporated into this Prospectus by reference and made a
part hereof: Air Group's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995 and Air Group's Quarterly Report on Form 10-Q for the fiscal
quarter ended March 31, 1996.
All documents filed by Air Group pursuant to Section 13(a), 13(c), 14
or 15(d) of the 1934 Act subsequent to the date of this Prospectus and prior to
the termination of this offering shall be deemed to be incorporated by reference
in this Prospectus, and to be a part hereof from the date of filing of such
documents. Any statement incorporated by reference herein shall be deemed to be
modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any statement modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Prospectus. Air Group will provide without charge to each person to whom a copy
of this Prospectus is delivered, upon the written or oral request of such
person, a copy of any document incorporated by reference in this Prospectus
(other than exhibits to such documents unless such exhibits are specifically
incorporated by reference to such documents).
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Requests for such copies should be directed to the office of the Corporate
Secretary, Alaska Air Group, Inc., P.O. Box 68947, Seattle, Washington 98168
(telephone (206) 433-3131).
AIR GROUP AND ALASKA
Air Group is a holding company incorporated in Delaware in 1985. Its
principal subsidiaries are Alaska and Horizon Air Industries, Inc. ("Horizon").
Alaska, founded in 1932, provides scheduled air transportation to 37 cities in
Alaska, Washington, Oregon, Nevada, California and Arizona, three cities in
Mexico, four cities in Russia, one city in Canada and many smaller communities
in Alaska and California through code-sharing agreements with local carriers. As
of December 31, 1995, Alaska Airlines operated 24 owned and 50 leased jet
aircraft with an average age of 6.6 years. During 1995, Alaska entered into a
marketing agreement with Northwest Airlines whereby certain Alaska flights and
certain Northwest flights are dual-designated in airline computer reservation
systems as Alaska Airlines and Northwest Airlines. Horizon, a regional commuter
carrier founded in 1981, provides scheduled air transportation to 36 cities in
Washington, Oregon, Montana, Idaho, California and Wyoming, as well as four
cities in Canada. Horizon provides interconnecting passenger traffic to Alaska
Airlines through its major hub cities, Seattle, Portland and Spokane. As of
December 31, 1995, Horizon operated five owned and 62 leased aircraft with an
average age of 9.8 years. The principal executive offices of Air Group are
located at 19300 Pacific Highway South, Seattle, Washington 98188 (telephone
(206) 433-3200).
For the year ended December 31, 1995, Air Group's consolidated
operating revenues were $1.4 billion, of which 89% came from scheduled passenger
services, 7% came from freight and mail, and 4% came from mileage plan partners
and other nonpassenger sources. Alaska Airlines carried approximately 10.1
million passengers in 1995 and accounted for approximately 80% of Air Group's
consolidated 1995 operating revenues. Horizon carried approximately 3.8 million
passengers in 1995 and accounted for the remaining 20% of Air Group's
consolidated 1995 operating revenues.
In each year since 1973, Alaska has carried more passengers between
Alaska and the U.S. mainland than any other airline. Passenger traffic within
Alaska and between Alaska and the U.S. mainland accounted for 27% of Alaska's
total revenue passenger miles in 1995, while West Coast traffic accounted for
66% and the Mexico markets 7%. Based on passenger enplanements, Alaska's leading
airports are Seattle, Portland, Anchorage and Los Angeles. Based on revenues,
its leading nonstop routes were Seattle-Anchorage, Seattle-Los Angeles and
Seattle-San Francisco.
USE OF PROCEEDS
Unless otherwise indicated in the accompanying Prospectus Supplement,
the net proceeds to Air Group from the sale of the Common Stock offered hereby
will be added to the working capital of Air Group and will be available for
general corporate purposes, among which may be the repayment of outstanding
indebtedness and financing of capital expenditures by Alaska and Horizon,
including the acquisition of aircraft and related equipment.
DESCRIPTION OF COMMON STOCK
Air Group is authorized to issue 50,000,000 shares of Common Stock,
$1.00 par value and 5,000,000 shares of preferred stock.
Voting Rights. Each holder of Common Stock is entitled to one vote per
share on all matters submitted to a vote of such class. Holders of Common Stock
do not have cumulative rights. The Board of Directors is classified into three
classes, with approximately one-third of the Directors elected each year to
three-year terms. A vote of a
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<PAGE> 32
majority of the shares present at a meeting is required to elect each nominee as
a Director and to approve most other matters brought before the stockholders for
a vote, excluding certain extraordinary transactions.
Dividend Rights. Holders of Common Stock share ratably in dividends
that may be declared by the Board of Directors out of funds legally available
therefor.
Liquidation Rights. Upon any liquidation of Air Group, the holders of
Common Stock are entitled to share ratably in the net assets of Air Group
available for distribution on the Common Stock.
Other. The Common Stock has no preemptive or conversion rights and
there are no redemption provisions applicable thereto. The Common Stock is
listed on the New York Stock Exchange. The registrar and transfer agent for the
Common Stock is The First National Bank of Boston.
Potential Rights of Preferred Stock. Under Air Group's Certificate of
Incorporation, the Board of Directors has authority to issue up to 5,000,000
shares of preferred stock. Such shares would have such voting, dividend,
liquidation, conversion, redemption and other rights as may be determined by the
Board of Directors, subject to the provisions of the Certificate of
Incorporation. Shares of Common Stock would be subject to the preferences,
rights and powers of any such shares of preferred stock as set forth in Air
Group's Certificate of Incorporation and in the resolutions establishing one or
more series of preferred stock. No preferred stock was outstanding at the date
of this Prospectus.
Certain Other Provisions. Air Group's Certificate of Incorporation
contains certain provisions sometimes referred to as "anti-takeover" provisions.
In the event that Air Group at any time has a stockholder who is a beneficial
owner of more than 15% of the voting power of Air Group, these provisions would
require the affirmative vote of the holders of not less than 80% of the
outstanding shares of voting stock to approve a consolidation or merger of Air
Group with any other corporation, the conveyance to any corporation or other
person or any other disposition of all or substantially all of Air Group's
assets, or the disposition by Air Group of all or substantially all of the stock
or assets of any major subsidiary; provided, however, that this 80% voting
requirement does not apply to a transaction which is approved by 80% of the
disinterested members of the Board of Directors.
Air Group is party to a Rights Agreement designed to deter partial and
two-tier tender offers, stock accumulation programs and other coercive tactics
that might be used to gain control without giving the Board of Directors the
opportunity to negotiate on behalf of the stockholders. In accordance with the
Rights Agreement, one right is attached to each share of outstanding Common
Stock. A holder of a right may, under certain circumstances, purchase at a
discount from market value either shares of a special class of voting preferred
stock of Air Group or shares of capital stock of a corporate entity attempting
to acquire Air Group or surviving a merger or consolidation with Air Group.
PLAN OF DISTRIBUTION
Air Group may sell the Common Stock to one or more underwriters for
public offering and sale by them or may sell the Common Stock to investors or
other persons directly or through agents. Any such underwriter or agent involved
in the offer and sale of the Common Stock will be named in an applicable
Prospectus Supplement.
Underwriters may offer and sell the Common Stock at a fixed price or
prices, which may be changed, or at prices related to prevailing market prices
or at negotiated prices. Air Group also may, from time to time, authorize
underwriters acting as Air Group's agents to offer and sell the Common Stock
upon the terms and conditions as shall be set forth in any Prospectus
Supplement. In connection with the sale of Common Stock, underwriters may
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<PAGE> 33
be deemed to have received compensation from Air Group in the form of
underwriting discounts or commission and may also receive commissions from
purchasers of the Common Stock for whom they may act as agent. Underwriters may
sell the Common Stock to or through dealers, and such dealers may receive
compensation in the form of discounts, concessions or commissions from the
underwriters and/or commissions (which may be changed from time to time) from
the purchasers for whom they may act as agent.
Any underwriting compensation paid by Air Group to underwriters or
agents in connection with the offering of the Common Stock, and any discounts,
concessions or commissions allowed by underwriters to participating dealers,
will be set forth in an applicable Prospectus Supplement. Underwriters, dealers
and agents participating in the distribution of the Common Stock may be deemed
to be underwriters, and any discounts and commissions received by them and any
profit realized by them on resale of the Common Stock may be deemed to be
underwriting discounts and commissions under the Securities Act. Underwriters,
dealers and agents may be entitled, under agreements with Air Group, to
indemnification against and contribution toward certain civil liabilities,
including liabilities under the Securities Act, and to reimbursement by Air
Group for certain expenses.
Underwriters, dealers and agents may engage in transactions with, or
perform services for, Air Group and its subsidiaries in the ordinary course of
business.
LEGAL OPINIONS
Unless otherwise indicated in the applicable Prospectus Supplement, the
validity of the Common Stock offered hereby will be passed upon for Air Group by
Perkins Coie, Seattle, Washington.
EXPERTS
The financial statements and schedule of Air Group incorporated by
reference in this Prospectus and in the Registration Statement have been audited
by Arthur Andersen LLP, independent public accountants, as indicated in their
reports with respect thereto, and are incorporated herein in reliance upon the
authority of said firm as experts in accounting and auditing in giving said
reports.
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<PAGE> 34
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE> 35
SUBJECT TO COMPLETION, DATED MAY 30, 1996
PROSPECTUS
ALASKA AIRLINES, INC.
EQUIPMENT TRUST CERTIFICATES
------------
Up to $250,000,000 aggregate principal amount of Equipment Trust
Certificates (or such greater amount if Certificates are issued at an original
issue discount, as shall result in aggregate proceeds of $250,000,000) may be
offered for sale from time to time pursuant to this Prospectus and related
Prospectus Supplements (as hereinafter defined). Certificates may be issued in
one or more series in amounts, at prices and on terms to be determined at the
time of the offering. Certificates will be issued (a) on a nonrecourse basis by
one or more Owner Trustees (as hereinafter defined) pursuant to separate
leveraged lease transactions (the "Leased Aircraft Certificates") to finance or
refinance a portion of the equipment cost of aircraft, including engines (each,
a "Leased Aircraft" and collectively, the "Leased Aircraft"), which have been or
will be leased to Alaska Airlines, Inc. ("Alaska") or (b) with recourse to
Alaska (the "Owned Aircraft Certificates" and, together with any Leased Aircraft
Certificates, the "Certificates") to finance all or a portion of the equipment
cost of aircraft, including engines (each, an "Owned Aircraft" and collectively,
the "Owned Aircraft" and, together with the Leased Aircraft, the "Aircraft"),
which have been or will be purchased and owned by Alaska. Air Group will
unconditionally guarantee to the holders from time to time of any series of
Certificates that is not Investment Grade at the time of issuance (i) with
respect to Owned Aircraft Certificates, the full and prompt payment of
principal, premium, if any and interest thereon when and as the same shall
become due and payable, whether at maturity, upon redemption or otherwise and
(ii) with respect to Leased Aircraft Certificates, the full and prompt payment
of all amounts payable by Alaska under the related Lease when and as the same
shall become due and payable. See "Description of The Certificates Guarantees of
Certificates."
Certain specific terms of the particular Certificates in respect of
which this Prospectus is being delivered are set forth in the accompanying
Prospectus Supplement (the "Prospectus Supplement"), including, where
applicable, the specific designation, form, aggregate principal amount, initial
public offering price, maturity, premium, if any, the rate (which may be fixed
or variable), time and method of calculating payment of interest, if any,
mandatory or optional redemption by the applicable Owner Trustee or Alaska, the
Aircraft relating to such Certificates, the terms of the Guarantees by Air
Group, if any, the leveraged lease transactions or financing arrangements, as
the case may be, related thereto and other special terms relating to such
Certificates and the net proceeds from the offering of such Certificates. The
Certificates shall be issued in registered form only and may, if so specified in
the applicable Prospectus Supplement, be issued in accordance with a book-entry
system.
Certificates may be issued in respect of an Aircraft in one or more
series, each series having its own interest rate and final maturity date. The
Certificates issued with respect to each Aircraft will be secured by a security
interest in such Aircraft and, in the case of the Leased Aircraft, by a security
interest in the lease relating thereto, including the right to receive rentals
payable in respect of such Leased Aircraft by Alaska. Although the Leased
Aircraft Certificates will not be direct obligations of, or guaranteed by,
Alaska, the amounts unconditionally payable by Alaska for lease of Leased
Aircraft will be sufficient to pay in full when due all payments required to be
made on the corresponding Leased Aircraft Certificates.
------------
<PAGE> 36
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------
The Certificates may be sold to or through underwriters, through
dealers or agents or directly to purchasers. See "Plan of Distribution." The
accompanying Prospectus Supplement sets forth the names of any underwriters,
dealers or agents involved in the sale of the Certificates in respect of which
this Prospectus is being delivered and any applicable fee, commission or
discount arrangements with them. See "Plan of Distribution" for information
concerning secondary trading of the Certificates.
This Prospectus may not be used to consummate sales of Certificates
unless accompanied by a Prospectus Supplement.
------------
THE DATE OF THIS PROSPECTUS IS __________, 1996.
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<PAGE> 37
No dealer, salesperson or other individual has been authorized to give
any information or to make any representations not contained in this Prospectus
in connection with the offering covered by this Prospectus. If given or made,
such information or representations must not be relied upon as having been
authorized by Alaska or the Underwriter. This Prospectus does not constitute an
offer to sell, or a solicitation of an offer to buy, the Certificates in any
jurisdiction where, or to any person to whom, it is unlawful to make such offer
or solicitation. Neither the delivery of this Prospectus nor any sale made
hereunder shall, under any circumstances, create an implication that there has
not been any change in the facts set forth in this Prospectus or in the affairs
of Alaska since the date hereof.
AVAILABLE INFORMATION
Alaska is subject to the reporting requirements of the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and, in accordance therewith,
files reports and other information with the Securities and Exchange Commission
(the "Commission"). Such reports and other information may be inspected and
copied at the public reference facilities maintained by the Commission at Room
1024, 450 Fifth Street, N.W., Washington, D.C. 20549; 75 World Trade Center,
Suite 1300, New York, New York 10048; and Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661. Copies of such material may also be
obtained at prescribed rates from the Public Reference Section of the
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549.
So long as Alaska is subject to such periodic reporting requirements,
it will continue to furnish the information required thereby to the Commission
and will furnish copies of such reports and other information to the holders of
Certificates. Alaska's obligation to file periodic reports with the Commission
will be suspended if each class of Alaska's securities is held of record by
fewer than 300 holders at the beginning of any fiscal year of Alaska other than
a fiscal year in which a registration statement with respect to any such
securities becomes effective. Accordingly, in such case, Alaska may cease to
file reports with the Commission in respect of such fiscal year. In the event
Alaska ceases to file periodic reports with the Commission, Alaska is obligated
pursuant to the Indentures (as hereinafter defined) to distribute to the holders
of Certificates annual reports containing audited consolidated financial
statements and a report thereon by Alaska's independent public accountants and
quarterly reports for the first three quarters of each fiscal year containing
unaudited condensed financial information.
This Prospectus constitutes a part of registration statements on Form
S-3 (together with all amendments and exhibits, the "Registration Statements")
filed by Alaska and Alaska Air Group, Inc. ("Air Group") with the Commission
under the Securities Act of 1933, as amended (the "Securities Act"). This
Prospectus does not contain all of the information included in the Registration
Statements, certain parts of which are omitted in accordance with the rules and
regulations of the Commission. Statements contained herein concerning the
provisions of any document do not purport to be complete and, in each instance,
reference is made to the copy of such document filed as an exhibit to the
Registration Statements or otherwise filed with the Commission. Each such
statement is subject to and qualified in its entirety by such reference.
Reference is made to such Registration Statements and to the exhibits relating
thereto for further information with respect to Alaska and the Certificates
offered hereby.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents have been filed with the Commission pursuant to
the 1934 Act and are incorporated into this Prospectus by reference and made a
part hereof: Alaska's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995 and Alaska's Quarterly Report on Form 10-Q for the fiscal
quarter ended March 31, 1996.
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<PAGE> 38
All documents filed by Alaska pursuant to Section 13(a), 13(c), 14 or
15(d) of the 1934 Act subsequent to the date of this Prospectus and prior to the
termination of this offering shall be deemed to be incorporated by reference in
this Prospectus, and to be a part hereof from the date of filing of such
documents. Any statement incorporated by reference herein shall be deemed to be
modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any statement modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Prospectus. Alaska will provide without charge to each person to whom a copy of
this Prospectus is delivered, upon the written or oral request of such person, a
copy of any document incorporated by reference in this Prospectus (other than
exhibits to such documents unless such exhibits are specifically incorporated by
reference to such documents). Requests for such copies should be directed to the
office of the Corporate Secretary, Alaska Airlines, Inc., P.O. Box 68947,
Seattle, Washington 98168 (telephone (206) 433-3131).
THE COMPANY
Alaska is a wholly owned subsidiary of Air Group, a holding company.
Alaska accounted for approximately 80% of Air Group's consolidated 1995
operating revenues and 89% of its total assets at December 31, 1995. Alaska's
all jet fleet provides scheduled air transportation to 37 airports in six states
(Alaska, Washington, Oregon, California, Nevada and Arizona), three cities in
Mexico, four cities in Russia and one city in Canada. The principal executive
offices of Alaska and Air Group are located at 19300 Pacific Highway South,
Seattle, Washington 98188 (telephone (206) 433-3200).
In 1995 Alaska carried 10.1 million passengers. In each year since
1973, Alaska has carried more passengers between Alaska and the U.S. mainland
than any other airline. Passenger traffic within Alaska and between Alaska and
the U.S. mainland accounted for 27% of Alaska's total revenue passenger miles in
1995, while west coast traffic accounted for 66% and the Mexico markets 7%.
Based on passenger enplanements, Alaska's leading airports are Seattle,
Portland, Anchorage and Los Angeles. Based on revenues, the leading nonstop
routes were Seattle-Anchorage, Seattle-Los Angeles and Seattle-San Francisco.
Alaska's operating fleet at December 31, 1995 consisted of 24 owned and 50
operated jet aircraft with an average age of 6.6 years. During 1995, Alaska
entered into a marketing agreement with Northwest Airlines whereby certain
Alaska flights and certain Northwest flights are dual-designated in airline
computer reservation systems as Alaska Airlines and Northwest Airlines.
USE OF PROCEEDS
The proceeds from the sale of the Certificates offered pursuant to any
Prospectus Supplement will be used (a) with respect to any Leased Aircraft
Certificates, by the respective Owner Trustee or Owner Trustees to finance or
refinance the debt portion of and, in certain cases, to refinance some of the
equity portion of the equipment cost of the related Leased Aircraft as described
in the applicable Prospectus Supplement, or (b) with respect to any Owned
Aircraft Certificates, by Alaska to finance all or a portion of the aggregate
principal amount of debt to be issued, or the purchase of all or a portion of
the aggregate principal amount of the debt previously issued, by Alaska in
respect of the equipment cost of the related Owned Aircraft as described in the
applicable Prospectus Supplement.
With respect to each Leased Aircraft, the related Owner Participant
will have provided or will provide from sources other than the Leased Aircraft
Certificates a portion (as specified in the applicable Prospectus Supplement) of
the equipment cost of the related Leased Aircraft. No Owner Participant,
however, will be personally liable for any amount payable under the related
Leased Aircraft Indenture or the Leased Aircraft Certificates issued thereunder.
Simultaneously with the acquisition of each Leased Aircraft, the related Owner
Trustee leased or will
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<PAGE> 39
lease such Aircraft to Alaska pursuant to a separate lease agreement (each such
lease agreement being herein referred to as a "Lease").
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<PAGE> 40
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges
for Alaska for the periods indicated. Earnings represents earnings before
accounting change, income tax expense and fixed charges (excluding interest
capitalized). Fixed charges consist of interest and the portion of rental
expense deemed representative of the interest factor.
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992 1991
------------------------------------------------------------------------------------------------------
Quarter Ended March 31, Year Ended December 31,
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Ratio..................... (a) 1.46 1.45 (a) (a) 1.14
</TABLE>
- -----------
(a) For the quarter ended March 31, 1996, Alaska's earnings were inadequate
to cover fixed charges by $9.3 million. For the years ended December 31,
1993 and 1992, Alaska's earnings were inadequate to cover fixed charges
by $44.5 million, and $126.4 million, respectively.
DESCRIPTION OF THE CERTIFICATES
The Certificates offered pursuant to this Prospectus will be limited to
$250,000,000 aggregate principal amount (or such greater amount if Certificates
are issued at an original issue discount, as shall result in aggregate proceeds
of $250,000,000).
The Leased Aircraft Certificates will be issued under a separate
Supplement (each, a "Leased Aircraft Indenture Supplement") among Alaska, an
Indenture Trustee and an institution specified in the related Prospectus
Supplement acting, not in its individual capacity, but solely as owner trustee
(an "Owner Trustee") of a separate trust for the benefit of one or more
institutional investors (each, an "Owner Participant") to the Trust Indenture
and Security Agreement between the Indenture Trustee and Alaska with respect to
Leased Aircraft (the "Leased Aircraft Indenture"). Information regarding the
Indenture Trustee and Owner Trustee will be set forth in the applicable
Prospectus Supplement.
The Owned Aircraft Certificates will be issued under a separate
Supplement (each, an "Owned Aircraft Indenture Supplement," any Owned Aircraft
Indenture Supplement or Leased Aircraft Indenture Supplement being an "Indenture
Supplement") to the Trust Indenture and Security Agreement between the Indenture
Trustee, as trustee thereunder, and Alaska with respect to Owned Aircraft (the
"Owned Aircraft Indenture," any Owned Aircraft Indenture or Leased Aircraft
Indenture being an "Indenture"). A copy of each Indenture is filed as an exhibit
to the Registration Statement.
The statements made under this caption are summaries and do not purport
to be complete. The summaries relate to each of the Indentures and each of the
Indenture Supplements and the Certificates of each series, except to the extent,
if any, described in the applicable Prospectus Supplement. The summaries include
descriptions of material terms and are qualified in their entirety by reference
to all of the provisions of the Indentures. The Indenture Supplement relating to
each series of Certificates, and, with respect to Leased Aircraft Certificates,
the related Lease, Trust Agreement and Participation Agreement will be filed as
exhibits to a Current Report on Form 8-K, Quarterly Report on Form 10-Q or
Annual Report on Form 10-K to be filed by Alaska with the Commission following
the issuance of such series of Certificates. Where no distinction is made
between the Leased Aircraft Certificates and the Owned Aircraft Certificates or
between their respective Indentures, such summaries refer to any Certificates
and either Indenture.
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<PAGE> 41
GENERAL
Reference is made to the Prospectus Supplement that accompanies this
Prospectus for a description of the specific series of Certificates being
offered thereby, including: (1) the Aircraft in which a security interest is
being granted to secure payment of the Certificates of such series; (2) the
specific designation of such Certificates, including whether such Certificates
are serial or installment Certificates; (3) if the Certificates are serial
Certificates, the dates on which the principal of the Certificates of the series
shall be payable; (4) if the Certificates are installment certificates, the
dates on which each installment payment of principal of the Certificates shall
be payable and the percentage of principal of the Certificates payable on each
such date; (5) the rate or rates at which the Certificates shall bear interest
or the method of calculating such rate or rates, the date or dates from which
interest will accrue or the method by which such dates shall be determined and
the date or dates on which interest will be payable and the record date or dates
therefor; (6) the period or periods within which, the price or prices at which
and the terms and conditions upon which such Certificates may or must be
redeemed, in whole or in part, by Alaska; (7) the events of default, the
remedies exercisable upon the occurrence of such events of default and any
limitations on the exercise of such remedies with respect to such Certificates;
(8) the application, if any, of such means of defeasance as may be specified for
such Certificates; (9) if applicable, provisions related to the issuance of
Certificates in book entry form; (10) the terms of the Guarantees, if any; and
(11) any other special terms pertaining to such Certificates.
Additionally, with respect to any Prospectus Supplement that relates to
the offering of Leased Aircraft Certificates, such Prospectus Supplement will
include the following: (1) the names of the related Owner Trustees; (2) the
Leases in which an assignment is being granted to secure payment of the
Certificates of such series; (3) the period or periods within which, the price
or prices at which and the terms and conditions upon which such Certificates may
or must be redeemed, in whole or in part, by the Owner Trustee; (4) the extent,
if any, to which the provisions of the operative documents applicable to the
Certificates of the series may be amended by the parties thereto without the
consent of the holders of, or only upon the consent of the holders of a
specified percentage of the aggregate principal amount of, the Certificates of
such series; and (5) any other special terms pertaining to such Certificates.
With respect to each Leased Aircraft, the related Owner Trustee has
acquired or will acquire such Aircraft from Alaska, or the manufacturer of such
Aircraft, as the case may be, has granted or will grant a security interest in
such Aircraft to the Indenture Trustee as security for the payment of the
Certificates of the series related thereto, and has leased or will lease such
Aircraft to Alaska under the related Lease which was or will be assigned to the
Indenture Trustee. Pursuant to each Lease, Alaska will be obligated to make or
cause to be made rental and other payments to the related Indenture Trustee on
behalf of the related Owner Trustee in amounts that will be sufficient to make
payments of the principal, interest and premium, if any, required to be made in
respect of the series of Certificates issued with respect to such Aircraft when
and as due and payable.
The rental obligations of Alaska under each Lease and the obligations
of Alaska under the Owned Aircraft Indenture and the Owned Aircraft Certificates
and Air Group's Guarantees of such obligations, if any, will be general
obligations of Alaska. Except in certain circumstances involving Alaska's
purchase of a Leased Aircraft and the assumption of the Leased Aircraft
Certificates related thereto, the Leased Aircraft Certificates are not
obligations of, or guaranteed by, Alaska or Air Group.
Payments in respect of Certificates will be made at the principal
corporate trust office of the Indenture Trustee or at such other office of the
Indenture Trustee or another institution maintained for such purpose (the
"Paying Agent") as the Indenture Trustee shall provide for pursuant to the
Indenture or the applicable Indenture Supplement; payment of interest and
installments of principal, if any, on each installment payment date other than
at maturity, may, however, be made at the option of the Indenture Trustee or the
Paying Agent by check mailed to
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<PAGE> 42
the address of the person entitled thereto, as such address appears in the
Register. (Sections 2.04 and 2.05 of the Indentures.)
The Certificates will be issued in fully registered form only in
denominations as set forth in the applicable Prospectus Supplement. Certificates
may be surrendered for registration of transfer or exchange for Certificates of
the same series and maturity at the principal corporate trust office of the
Indenture Trustee with respect to such series or the office of the Registrar. No
service charge will be made for any registration of any transfer or exchange of
Certificates, but payment may be required of any tax or other governmental
charges that may be imposed in connection therewith. (Sections 2.04 and 2.09 of
the Indentures.)
SECURITY
The Leased Aircraft Certificates will be secured by (i) an assignment
by the related Owner Trustee to the Indenture Trustee of such Owner Trustee's
rights (except for certain rights, including those described below) under the
Lease with respect to such Aircraft, including the right to receive payments of
rent thereunder, (ii) a mortgage granted to the Indenture Trustee on such
Aircraft, subject to the rights of Alaska under such Lease, (iii) an assignment
to the Indenture Trustee of certain of such Owner Trustee's rights with respect
to such Aircraft under the purchase agreement between Alaska and the related
manufacturer, and (iv) if applicable, Air Group's Guarantee of Alaska's
obligations under the Lease. Under the terms of each Lease, Alaska's obligations
in respect of each Leased Aircraft will be those of a lessee under a "net
lease." Accordingly, Alaska will be obligated, among other things and at its
expense, to cause each Leased Aircraft to be duly registered, to pay all costs
of operating such Aircraft and to maintain, service, repair and overhaul (or
cause to be maintained, serviced, repaired and overhauled) such Aircraft.
The Owned Aircraft Certificates will be secured by a mortgage granted
to the Indenture Trustee of all of Alaska's right, title and interest in and to
such Owned Aircraft and an assignment to the Indenture Trustee of certain of
Alaska's rights with respect to such Aircraft under the purchase agreement
between Alaska and the related manufacturer. Under the terms of the Owned
Aircraft Indenture, Alaska will be obligated, among other things and at its
expense, to cause each Owned Aircraft to be duly registered, to pay all costs of
operating such Aircraft and to maintain, service, repair and overhaul (or cause
to be maintained, serviced, repaired and overhauled) such Aircraft.
Alaska will be required, except under certain circumstances, to keep
each Aircraft registered under the Federal Aviation Act of 1958, as amended (the
"Aviation Act"), and to record the Indenture and the Lease, if any, among other
documents, with respect to each Aircraft under the Aviation Act. Such
recordation of the Indenture, the Lease, if any, and other documents with
respect to each Aircraft will give the related Indenture Trustee a first
priority perfected security interest in the related Aircraft wherever it is
located in the United States or any of its territories and possessions; the
Convention on the International Recognition of Rights in Aircraft (the
"Convention") provides that such security will also be recognized, with certain
limited exceptions, in those jurisdictions that have ratified or adhere to the
Convention. Although Alaska has no current intention to do so, Alaska will have
the right, subject to certain conditions, at its own expense to register each
Aircraft in countries other than the United States. Unless otherwise specified
in the applicable Prospectus Supplement, prior to any such change in the
jurisdiction of registry, the related Indenture Trustee shall have received an
opinion of Alaska's counsel that, among other things, confirms the perfected
status of the lien of the related Indenture and, in the case of Leased Aircraft,
confirms the validity and enforceability of the related Lease in such
jurisdiction, in each case subject, in certain cases, to certain filings,
recordations or other actions. Each Aircraft may also be operated by Alaska or
under lease, sublease or interchange arrangements in countries that are not
parties to the Convention. The extent to which the related Indenture Trustee's
security interest would be recognized in an Aircraft located in a country that
is not a party to the Convention, and the extent to which such security interest
would be recognized in a jurisdiction adhering to the Convention if the Aircraft
is registered in a jurisdiction not a party to the Convention, is uncertain.
Moreover, in
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the case of an event of default under an Indenture, the ability of the related
Indenture Trustee to realize upon its security interest in an Aircraft could be
adversely affected as a legal or practical matter if such Aircraft were
registered or located outside the United States.
The Certificates are not cross-collateralized and consequently the
Certificates issued in respect of any one Aircraft will not be secured by any
other Aircraft or, in the case of Leased Aircraft Certificates, the Lease
related thereto. With respect to the Leased Aircraft, the assignment by the
related Owner Trustee to the Indenture Trustee of its rights under the related
Lease will exclude, among other things, rights of such Owner Trustee and the
related Owner Participant relating to indemnification by Alaska for certain
matters, insurance proceeds payable to such Owner Trustee in its individual
capacity and to such Owner Participant under liability insurance maintained by
Alaska pursuant to such Lease or by such Owner Trustee or such Owner
Participant, insurance proceeds payable to such Owner Trustee in its individual
capacity or to such Owner Participant under certain casualty insurance
maintained by such Owner Trustee or such Owner Participant pursuant to such
Lease, and any rights of such Owner Participant or such Owner Trustee to enforce
payment of the foregoing amounts and their respective rights to the proceeds of
the foregoing.
Unless otherwise specified in the applicable Prospectus Supplement,
Alaska will, at its expense, maintain or cause to be maintained all-risk
aircraft hull insurance covering each Aircraft, fire and extended coverage and,
to the extent available at reasonable cost, all-risk property damage insurance
covering engines and parts while temporarily removed from an Aircraft and not
replaced by similar components, at all times in an amount not less than, with
respect to any Leased Aircraft, the applicable stipulated loss value (which will
be an amount at least equal to the aggregate unpaid principal of, together with
all unpaid interest accrued on, the outstanding Leased Aircraft Certificates
related to such Aircraft) or, with respect to any Owned Aircraft, the aggregate
unpaid principal of, together with all unpaid interest accrued on, the
applicable Owned Aircraft Certificates. Unless otherwise specified in the
applicable Prospectus Supplement, during any period when an Aircraft is on the
ground and not in operation Alaska may carry or cause to be carried, in lieu of
the insurance required by the previous sentence, insurance otherwise conforming
with the provisions of said sentence except that the scope of the risks covered
and the type of insurance shall be the same as are from time to time applicable
to aircraft owned or leased by Alaska of the same type as such Aircraft
similarly on the ground and not in operation, in an amount at least equal to,
with respect to any Leased Aircraft, the applicable stipulated loss value or,
with respect to any Owned Aircraft, the aggregate unpaid principal of, together
with the accrued interest on, the applicable Owned Aircraft Certificates. All
policies covering loss of or damage to an Aircraft shall be made payable to the
applicable Indenture Trustee for any loss in excess of that certain amount
specified in the applicable Prospectus Supplement. Alaska may self-insure a
portion of these risks, but in no case will the self-insurance with respect to
all of the aircraft in Alaska's fleet (including the Aircraft) exceed the lesser
of 50% of the largest replacement value of any single aircraft in Alaska's fleet
or 11/2% of the average aggregate insurable value (during the preceding calendar
year) of all aircraft on which Alaska carries insurance. In addition, unless
otherwise specified in the applicable Prospectus Supplement, Alaska will, at its
expense, maintain or cause to be maintained comprehensive airline liability
(including, without limitation, passenger, contractual, bodily injury and
property damage liability) insurance (exclusive of manufacturer's product
liability insurance) and cargo liability insurance with respect to each Aircraft
(i) in amounts that are not less than the greater of the comprehensive airline
liability insurance as is from time to time applicable to aircraft owned and
operated by Alaska of the same type as such Aircraft, and an amount specified in
the applicable Prospectus Supplement, and (ii) of the types and covering the
same risks as are from time to time applicable to aircraft owned or operated by
Alaska of the same type as such Aircraft and which is maintained in effect with
insurers of recognized responsibility, provided that Alaska need not maintain
cargo liability insurance, or may maintain such insurance in an amount less than
that specified above for the respective Aircraft as long as the amount of cargo
liability insurance, if any, maintained with respect to such Aircraft is the
same as the cargo liability insurance, if any, maintained for other aircraft of
the same model as such Aircraft owned or operated by Alaska. Unless otherwise
specified in the applicable Prospectus Supplement, during any period
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when an Aircraft is on the ground and not in operation Alaska may carry or cause
to be carried, in lieu of the insurance required by the previous sentence,
insurance otherwise conforming with the provisions of said sentence except that
the amounts of coverage shall not be required to exceed the amounts of
comprehensive airline liability insurance, and the scope of risks covered and
type of insurance shall be the same, as are from time to time in effect with
respect to aircraft owned or leased by Alaska of the same type as such Aircraft
similarly on the ground and not in operation. Alaska may also self-insure a
portion of these risks subject to the same limitations described above for
insurance for risks of loss of or damage to the Aircraft. The applicable
Indenture Trustee, any applicable Owner Participant and any applicable Owner
Trustee, in its individual capacity and as owner of the Aircraft, and Alaska
will each be named as insured parties under all liability insurance policies
required with respect to the related Aircraft. In addition, the insurance
policies maintained under the Lease (with respect to any Leased Aircraft) or the
Indenture (with respect to any Owned Aircraft), as the case may be, will provide
that, in respect of the respective interests of the applicable Indenture
Trustee, any applicable Owner Participant, and any Owner Trustee, relating to
such Aircraft, the insurance shall not be invalidated by any action or inaction
of Alaska and shall insure the respective interests of such Indenture Trustee,
Owner Participant or Owner Trustee, as they appear, regardless of any breach or
violation of any warranty, declaration or condition contained in such policies
by Alaska.
Funds, if any, held from time to time by the Indenture Trustee, prior
to the distribution thereof, will be invested and reinvested by the Indenture
Trustee. Such investment and reinvestment will be at the direction of Alaska
(except, with respect to a Leased Aircraft, in the case of an event of default
under the applicable Lease or, with respect to an Owned Aircraft, in the case of
an event of default under the Owned Aircraft Indenture) in certain investments
described in the related Indenture. The net amount of any loss resulting from
such investments will be paid by Alaska. (Section 9.04(a) of the Indentures.)
Section 1110 of the Federal Bankruptcy Code (the "Bankruptcy Code")
provides that the right of lessors, conditional vendors and holders of security
interests (or, in certain circumstances, purchase money security interests) with
respect to "equipment" (as defined in Section 1110 of the Bankruptcy Code) to
take possession of such equipment in compliance with the provisions of a lease,
conditional sale contract or security agreement, as the case may be, is not
affected by (a) the automatic stay provision of the Bankruptcy Code, which
provision enjoins repossessions by creditors for the duration of the
reorganization period, (b) the provision of the Bankruptcy Code allowing the
trustee in reorganization to use property of the debtor during the
reorganization period, (c) Section 1129 of the Bankruptcy Code (which governs in
the confirmation of plans of reorganization in Chapter 11 cases) and (d) any
power of the bankruptcy court to enjoin a repossession. Section 1110 provides,
however, that the right of a lessor, conditional vendor or holder of a security
interest (or, in certain circumstances, purchase money security interests) to
take possession of an aircraft in an event of default may not be exercised for
60 days following the date of commencement of the reorganization proceedings
(unless specifically permitted by the bankruptcy court) and may not be exercised
at all if, within such 60-day period (or such longer period consented to by the
lessor, conditional vendor or holder of a security interest), the trustee in
reorganization agrees to perform the debtor's obligations that become due on or
after such date and cures all existing defaults (other than defaults resulting
solely from the financial condition, bankruptcy, insolvency or reorganization of
the debtor). "Equipment" is defined in Section 1110 of the Bankruptcy Code, in
part, as "an aircraft, aircraft engine, propeller, appliance, or spare part (as
defined in section 40102 of title 49 of the United States Code) that is subject
to a security interest granted by, leased to, or conditionally sold to a debtor
that is a citizen of the United States (as defined in section 40102 of title 49)
holding an air carrier operating certificate issued by the Secretary of
Transportation pursuant to chapter 447 of title 49 for aircraft capable of
carrying 10 or more individuals or 6,000 pounds or more of cargo."
The Bankruptcy Reform Act of 1994 amended Section 1110 by, among other
things, providing that the lessor under a lease of aircraft first placed in
service on or prior to the date of the enactment of that Act will be entitled to
the benefits of Section 1110 if the lessor and the lessee have expressed in the
applicable agreement or in a
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substantially contemporaneous writing that the applicable agreement is to be
treated as a lease for federal income tax purposes.
In connection with any issuance of Certificates under this Prospectus
and the applicable Prospectus Supplement, Alaska shall have received an opinion
from its General Counsel to the effect that (i) with respect to any Leased
Aircraft, the related Owner Trustee, as lessor under the related Lease, and the
related Indenture Trustee, as assignee of such Owner Trustee's rights under such
Lease pursuant to the related Indenture, should be entitled to the benefits of
Section 1110 of the Bankruptcy Code with respect to the Aircraft initially
delivered under such Lease and subjected to the related Indenture or (ii) with
respect to any Owned Aircraft, the related Indenture Trustee under the related
Indenture should be entitled to the benefits of Section 1110 of the Bankruptcy
Code with respect to the Aircraft initially subjected to the related Indenture.
Such opinions will not address the possible replacement of an Aircraft after an
Event of Loss in the future.
In the case of a Leased Aircraft, in the event of bankruptcy,
insolvency, receivership or like proceedings involving an Owner Participant, it
is possible that, notwithstanding that the applicable Leased Aircraft is owned
by the related Owner Trustee in trust, such Leased Aircraft and the related
Lease and Leased Aircraft Certificates might become part of such proceeding. In
such event, payments under such Lease or on such Leased Aircraft Certificates
might be interrupted and the ability of the related Indenture Trustee to
exercise its remedies under the related Indenture might be restricted, although
such Indenture Trustee would retain its status as a secured creditor in respect
of the related Lease and the related Aircraft.
PAYMENTS AND LIMITATION OF LIABILITY
Each Leased Aircraft will be leased separately by the related Owner
Trustee to Alaska for a term commencing on the delivery date thereof to such
Owner Trustee and expiring on a date not earlier than the latest maturity date
of the Leased Aircraft Certificates, unless previously terminated as permitted
by the terms of the related Lease. The basic rent and other payments under each
such Lease will be payable by Alaska in accordance with the terms specified in
the applicable Prospectus Supplement, and will be assigned by the related Owner
Trustee under the related Indenture to provide the funds necessary to pay
principal of, premium, if any, interest due from such Owner Trustee or the
Leased Aircraft Certificates issued under such Indenture. In certain cases, the
basic rent payments under a Lease may be adjusted, but each Lease will provide
that under no circumstances will rent payments by Alaska be less than the
scheduled payments on the related Leased Aircraft Certificates. The balance of
any basic rent payment under each Lease, after payment of amounts due on the
Leased Aircraft Certificates issued under the Indenture corresponding to such
Lease, will be paid over to the applicable Owner Participant. Alaska's
obligation to pay rent and to cause other payments to be made under each Lease
will be general obligations of Alaska.
With respect to the Leased Aircraft Certificates, except in certain
circumstances involving Alaska's purchase of a Leased Aircraft and the
assumption of the Leased Aircraft Certificates related thereto, the Leased
Aircraft Certificates will not be obligations of, or guaranteed by, Alaska or
Air Group. With respect to the Leased Aircraft Certificates, none of the Owner
Trustees, the Owner Participants or the Indenture Trustee shall be personally
liable to any holder of such Certificate for any amounts payable under such
Certificates or, except as provided in the Indentures relating thereto in the
case of the Owner Trustees and the Indenture Trustees, for any liability under
such Indentures. Except in the circumstances referred to above, all amounts
payable under the Leased Aircraft Certificates (other than payments made in
connection with an optional redemption or purchase by the related Owner Trustee
or the related Owner Participant) will be payable only from the assets subject
to the lien of the Leased Aircraft Indenture or the income and proceeds received
by the Indenture Trustee therefrom (including rent payable by Alaska and amounts
payable by Air Group pursuant to its Guarantee, if any, under the related
Lease). (Section 2.10 of the Leased Aircraft Indenture.)
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With respect to the Leased Aircraft Certificates, except as otherwise
provided in the Leased Aircraft Indenture, no Owner Trustee shall be personally
liable for any amount payable or for any statements, representations,
warranties, agreements or obligations made under such Indenture or under such
Leased Aircraft Certificates except for its own willful misconduct or gross
negligence. None of the Owner Participants shall have any duty or responsibility
under the Leased Aircraft Indenture or under such Leased Aircraft Certificates
to the Indenture Trustee or to any holder of any such Certificate. (Leased
Aircraft Indenture, Section 2.10 of the Leased Aircraft Indenture.)
Alaska's obligations under the Owned Aircraft Indenture and under the
Owned Aircraft Certificates will be general obligations of Alaska.
MERGER, CONSOLIDATION AND TRANSFER OF ASSETS
Alaska will be prohibited from consolidating with or merging into any
other corporation or transferring substantially all of its assets as an entirety
to any other corporation unless (i) the surviving successor or transferee
corporation shall (a) be a "citizen of the United States" as defined in the
Aviation Act, (b) be a United States certificated air carrier and (c) expressly
assume all of the obligations of Alaska contained in the Indentures, and, with
respect to the Leased Aircraft Certificates, the Participation Agreements and
the Leases, and any other operative documents; (ii) immediately after giving
effect to such transaction, no Indenture event of default (with respect to the
Owned Aircraft Certificates) or Lease event of default (with respect to the
Leased Aircraft Certificates) shall have occurred and be continuing; and (iii)
Alaska shall have delivered a certificate and an opinion or opinions of counsel
indicating that such transaction, in effect, complies with such conditions.
(Section 7.03 of the Indentures.)
The Indentures do not contain any covenants or provisions which may
afford holders of Certificates issued thereunder protection in the event of a
highly leveraged transaction, including transactions effected by management or
affiliates, which may or may not result in a change in control of Alaska. No
other instrument or agreement currently evidencing other indebtedness of Alaska
contains covenants or provisions affording holders of Debt protection in the
event of a change in control of Alaska.
EVENTS OF DEFAULT, NOTICE AND WAIVER
The applicable Prospectus Supplement will set forth the events of
default applicable to a Leased Aircraft or an Owned Aircraft. There are no
cross-default provisions in the Indentures. Therefore, events resulting in a
default with respect to one series of Certificates will not in itself result in
the occurrence of an event of default with respect to any other series of
Certificates.
Each Indenture provides that the Indenture Trustee thereunder shall,
after the occurrence of any event known to it to be an event of default with
respect to such series of Certificates, promptly send written notice thereof to
Alaska and, with respect to Leased Aircraft, the related Owner Trustee and the
related Owner Participant, and within 90 days after the occurrence thereof if
such default remains uncured, and notice thereof to the holders of outstanding
Certificates of such series, but such Indenture Trustee may withhold such
notice, except in the case of a default in the payment of the principal of,
premium, if any, or interest on any Certificates of such series, if it in good
faith determines that withholding such notice is in the interest of such
holders. (Section 9.05 of the Indentures.)
The holders of at least a majority in principal amount of outstanding
Certificates of the series to which an event of default relates, by notice to
the applicable Indenture Trustee, may on behalf of all of such holders waive any
existing event of default or default and its consequences except an event of
default or a default in the payment
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of the principal of, premium, if any, or interest on any such Certificates or a
default in respect of certain other matters. (Section 8.05 of the Indentures.)
REMEDIES
If an event of default with respect to a series of Certificates shall
occur and be continuing, the Indenture Trustee thereunder or the holders of not
less than 25% in unpaid principal amount of outstanding Certificates of such
series may declare the principal of all Certificates of such series immediately
due and payable. The holders of a majority in unpaid principal amount of all
outstanding Certificates of such series may annul any such declaration by such
Indenture Trustee or by the holders at any time prior to the sale of the related
Aircraft after such an event of default if (i) there has been deposited with
such Indenture Trustee an amount sufficient to pay all installments of principal
of, and premium, if any, on any such Certificates that have become due otherwise
than by such declaration of acceleration, and any interest thereon and interest
due or past due, if any, and certain expenses, (ii) such annulment will not
conflict with any judgment or decree and (iii) all other events of default and
defaults have been cured or waived. (Section 8.02 of the Indentures.)
Each Indenture provides that, if an event of default under such
Indenture has occurred and is continuing, the Indenture Trustee thereunder may
exercise certain rights or remedies available to it under applicable law,
including, with respect to Leased Aircraft (if an event of default under the
related Lease has occurred and is continuing) one or more of the remedies with
respect to the related Aircraft afforded to the applicable Owner Trustee by the
related Lease for events of default thereunder. The applicable Prospectus
Supplement will describe any limitation on the exercise of remedies by the
Indenture Trustee. (Section 8.03 of the Indentures.)
The holders of a majority in principal amount of outstanding
Certificates of each series may direct the time, method and place of conducting
any proceeding for any remedy available to the related Indenture Trustee with
respect to such series or of exercising any trust or power conferred on such
Indenture Trustee, but in such event such Indenture Trustee shall be entitled to
be indemnified by the holders of Certificates of such series before proceeding
so to act and such Indenture Trustee may not be held liable for any such action
taken in good faith. (Sections 8.06, 9.01 and 9.02 of the Indentures.)
The right of any holder of Certificates of any series to institute an
action for any remedy with respect to such Certificates (except the right to
enforce payment of the principal of, premium, if any, and interest on its
Certificates when due) is subject to certain conditions precedent, including a
request to the related Indenture Trustee by the holders of not less than 25% in
principal amount of outstanding Certificates of the applicable series to take
action, and an offer to such Indenture Trustee of satisfactory indemnification
against liabilities incurred by it in so doing. (Sections 8.07 and 8.08 of the
Indentures.)
If an event of default with respect to any series of Certificates
occurs and is continuing, any sums held or received by the Indenture Trustee
thereunder may be applied to reimburse such Indenture Trustee for any tax,
expense or other loss incurred by it and to pay any other amounts due such
Indenture Trustee prior to any payments to holders of such series. (Section 3.05
of the Indentures.)
With respect to a Leased Aircraft, in the event of insolvency
proceedings involving an Owner Participant, the related Aircraft and the related
Lease could become part of such insolvency proceedings. In such event, payments
under such Lease or on the related Certificates might be interrupted and the
ability of the Indenture Trustee to exercise its remedies under the applicable
Indenture might be restricted, although the Indenture Trustee would retain its
status as a secured creditor in respect of the Lease and the Aircraft.
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MODIFICATION OF AGREEMENTS
Without the consent of holders of a majority in principal amount of
outstanding Certificates of a series, the provisions of the Indentures may be
amended or modified (a) to cure any ambiguity, defect or inconsistency or to
make any change consistent with the provisions of the Indenture and related
supplement, provided that such change does not adversely affect the interests of
any holder of such series of Certificates in any material respect, (b) to
provide for a successor Indenture Trustee and, with respect to Leased Aircraft
Certificates, a successor Owner Trustee, (c) to establish the forms or terms of
Certificates of any series as permitted by the Indenture, (d) to facilitate the
defeasance and discharge or a series of Certificates, provided that such change
does not adversely affect the interests of the holders of such series of
Certificates or any other series of Certificates in any material respect, (e) to
convey, transfer, assign, mortgage or pledge any property to or with the
Indenture Trustee or to make any other provisions with respect to matters or
questions arising hereunder so long as such action shall not adversely affect
the interests of the holders of such series of Certificates, (f) to correct or
amplify the description of any property at any time subject to the lien of the
Indenture or better to assure, convey and confirm until the Indenture Trustee
any property subject to the lien of the Indenture, (g) to add to the covenants
of Alaska and, with respect to Leased Aircraft Certificates, the Owner Trustee,
or to surrender any rights or powers conferred upon, with respect to Owned
Aircraft Certificates, Alaska and, with respect to Leased Aircraft Certificates,
the related Owner Trustee or Owner Participant, (h) to comply with any
requirements of the Commission, (i) to add to the rights of the holders of such
series of Certificates, (j) with respect to Leased Aircraft Certificates, to
provide for the assumption by Alaska of the obligations of the related Owner
Trustee and (k) to include on the Certificates of any series any legend required
by law. (Section 12.01(a) of the Indentures.)
The Indenture also contain provisions permitting Alaska, the Indenture
Trustee and, with respect to Leased Aircraft Certificates, the related Owner
Trustee, with the consent of the holders of the Certificates of any series
aggregating not less than a majority interest of such series of Certificates, to
execute supplemental indentures adding any provisions to or changing or
eliminating any of the provisions of the Indentures, to the extent relating to
such series of Certificates, or modifying the rights of the Certificate holders
of such series, except that no such supplemental indenture may, without the
consent of the holder of each outstanding Certificate of a series affected
thereby, (a) reduce the principal amount, premium, if any, or any payment of
interest due on any Certificate of such series, (b) change the date on which any
principal, premium, if any, or interest is due or payable on any Certificate of
such series, (c) create any security interest with respect to the property
subject to the lien of the Indenture ranking prior to or on a parity with the
security interest created by the Indenture or deprive any holder of a
Certificate of such series of the lien of the Indenture upon the property
subject thereto, (d) reduce the percentage in principal amount of outstanding
Certificates of such series necessary to modify or amend any provision of such
Indenture or to waive compliance therewith, (e) modify any of the provisions
relating to the rights of holders in respect of the waiver of events or default
or receipt of payment, or (f) modify the obligation of Air Group to make
payments under the Guarantees, if any. (Section 12.02 of the Indentures.)
With respect to Leased Aircraft Certificates, certain provisions of the
Leases, the Participation Agreements and the Trust Agreements related thereto
may not be modified by the parties thereto without the consent of the holders of
all or a portion of the outstanding Certificates of the series related thereto
as is specified in the applicable Prospectus Supplement. (Section 12.06 of the
Leased Aircraft Indenture.)
DEFEASANCE OF THE INDENTURES AND THE CERTIFICATES IN CERTAIN CIRCUMSTANCES
Unless otherwise specified in the applicable Prospectus Supplement, the
applicable Indenture provides that the obligation of the Indenture Trustee and,
with respect to any series of Leased Aircraft Certificates, the Owner Trustee,
and, with respect to any series of Owned Aircraft Certificates, Alaska under the
applicable Indenture and Indenture Supplement with respect to such series shall
be deemed to have been discharged and paid in full (except
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for certain obligations, including the obligation to register the transfer or
exchange of Certificates, to replace stolen, lost, destroyed or mutilated
Certificates and to maintain paying agencies and hold money for payment in
trust) on the 91st day after the date of irrevocable deposit with the related
Indenture Trustee of money or certain United States government obligations
which, through the payment of principal and interest in respect thereof in
accordance with their terms, will provide money in an aggregate amount
sufficient to pay when due (including as a consequence of redemption in respect
of which notice is given on or prior to the date of such deposit) principal of,
premium, if any, and interest on all Certificates of such series issued
thereunder in accordance with the terms of such Indenture and the applicable
Indenture Supplement. Such discharge may occur only if, among other things,
Alaska has delivered to the Indenture Trustee an Opinion of Counsel to the
effect that holders of such Certificates will not recognize income, gain or loss
for federal income tax purposes as a result of such deposit, defeasance and
discharge and will be subject to federal income tax on the same amount and in
the same manner and at the same time as would have been the case if such
deposit, defeasance and discharge had not yet occurred. (Sections 2.01, 10.01
and 10.04 of the Indentures.)
Upon such defeasance, or upon payment in full of the principal of,
premium, if any, and interest on all Certificates in a series on the maturity
date of such Certificates or deposit with the applicable Indenture Trustee of
money sufficient therefor no earlier than one year prior to the date of such
maturity, the holders of such Certificates will have no beneficial interest in
or other rights with respect to the related Aircraft or other assets subject to
the lien of the Indenture and the related Indenture Supplement and such lien
shall terminate. (Section 10.01 of the Indentures.)
ASSUMPTION OF OBLIGATIONS BY ALASKA
Unless otherwise specified by the applicable Prospectus Supplement,
with respect to Leased Aircraft, upon the exercise by Alaska of any purchase
options it may have under the related Lease prior to the end of the term of such
Lease, Alaska may assume on a full recourse basis all of the obligations of the
Owner Trustee (other than its obligations in its individual capacity) under the
indenture with respect to such Aircraft, including the obligations to make
payments in respect of the related Leased Aircraft Certificates. In such event,
certain relevant provisions of the related Lease, including (among others)
provisions relating to maintenance, possession and use of the related Aircraft,
liens, insurance and events of default will be incorporated into such Indenture,
and the Leased Aircraft Certificates issued under such Indenture Supplement will
not be redeemed and will continue to be secured by such Aircraft. It is a
condition to such assumption that, if such Aircraft is registered under the laws
of the United States, an opinion of counsel be delivered at the time of such
assumption substantially to the effect that the Indenture Trustee should,
immediately following such assumption, be entitled to the benefits of Section
1110 of the Bankruptcy Code with respect to such Aircraft (including the engines
related thereto), but such opinion need not be delivered to the extent that the
benefits of such Section 1110 are not available to the Indenture Trustee with
respect to such Aircraft or any engine related thereto immediately prior to such
assumption. (Section 7.05 of the Leased Aircraft Indenture.)
GUARANTEES OF CERTIFICATES
Air Group will unconditionally guarantee to the holders from time to
time of any series of Certificates that is not Investment Grade at the time of
issuance (i) with respect to Owned Aircraft Certificates, the full and prompt
payment of principal, premium, if any and interest thereon when and as the same
shall become due and payable, whether at maturity, upon redemption or otherwise
and (ii) with respect to Leased Aircraft Certificates, the full and prompt
payment of all accounts payable by Alaska under the related Lease when and as
the same shall become due and payable. Any such Guarantee will be an unsecured
obligation of Air Group. A series of Certificates shall be "Investment Grade" if
so designated by at least one nationally recognized statistical rating
organization (as that term is used in Rule 15c03-1(c)(2)(vi)(F) under the 1934
Act).
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If a Guarantee is applicable to Certificates offered hereby, reference
is made to the related Supplemental Indenture and the accompanying Prospectus
Supplement for a description of the specific terms of such Guarantee, including
events of default relating thereto and covenants of Air Group.
The consolidated financial statements of Air Group are incorporated by
reference herein. See "Incorporation of Certain Documents by Reference." As
indicated by comparison of such consolidated financial statements with those of
Alaska, the total assets, revenues and shareholders' equity of Alaska comprise a
substantial portion of the consolidated total assets, revenues and shareholders'
equity of Air Group.
THE INDENTURE TRUSTEE
The Indenture Trustee shall not be liable for any action it takes or
omits to take in good faith which it believes to be authorized or within its
rights or powers. The Indenture Trustee shall be under no obligation to exercise
any of its rights or powers under such Indenture unless it receives indemnity
satisfactory to it for any loss, liability or expense. The Indentures provide
that the Indenture Trustee in its individual or any other capacity may acquire
and hold Certificates issued thereunder and, subject to certain conditions, may
otherwise deal with Alaska and, with respect to Leased Aircraft, with any Owner
Trustee with the same rights it would have if it were not the Indenture Trustee.
(Sections 9.01, 9.02 and 9.03 of the Indentures.)
The Indenture Trustee may resign with respect to the Certificates of
any series at any time, in which event Alaska or, with respect to any Leased
Aircraft Certificates, the related Owner Trustee, will be obligated to appoint a
successor Indenture Trustee. The holders of a majority in principal amount of
the outstanding Certificates of any series may remove the related Indenture
Trustee by giving at least 30 days' prior written notice to such Indenture
Trustee and Alaska and, with respect to any Leased Aircraft Certificates, the
related Owner Trustee, and may appoint a successor Indenture Trustee with the
consent of Alaska and, with respect to any Leased Aircraft Certificates, the
related Owner Trustee. If an Indenture Trustee ceases to be eligible to continue
as Indenture Trustee with respect to a series of Certificates or becomes
incapable of acting as Indenture Trustee or becomes insolvent, Alaska or, with
respect to any Leased Aircraft Certificates, the related Owner Trustee, may
remove such Indenture Trustee. Any resignation or removal of such Indenture
Trustee and appointment of a successor indenture trustee for a series of
Certificates does not become effective until acceptance of the appointment by
the successor indenture trustee. (Section 9.8 of the Indentures.) Pursuant to
such resignation and successor indenture trustee provisions, it is possible that
a different indenture trustee could be appointed to act as the successor
indenture trustee with respect to each series of Certificates. All references in
this Prospectus to the Indenture Trustee should be read to take into account the
possibility that each series of Certificates could have different successor
indenture trustees in the event of such a resignation or removal.
The Indentures provide that Alaska or, with respect to any Leased
Aircraft Certificates, the related Owner Trustee will pay the Indenture
Trustee's fees and expenses. (Section 9.07 of the Indentures.)
FEDERAL INCOME TAX CONSIDERATIONS
The following is a general discussion of the anticipated material
United States federal income tax consequences to the initial holders of the
Certificates of the purchase, ownership and disposition of the Certificates and
should be read in conjunction with any additional discussion of federal income
tax consequences included in the applicable Prospectus Supplement. The
discussion is based on laws, regulations, rulings and decisions, all as in
effect on the date of this Prospectus and all of which are subject to change or
different interpretations. The discussion below does not purport to address all
of the federal income tax consequences that may be applicable to particular
categories of investors, some of which (for example, insurance companies and
foreign investors) may be subject to special rules. The statements of law and
legal conclusions set forth herein are based upon the opinion of
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<PAGE> 51
Perkins Coie, counsel to Alaska. Investors should consult their own tax advisors
in determining the federal, state, local, foreign and any other tax consequences
to them of the purchase, ownership and disposition of the Certificates.
PAYMENT OF INTEREST
Subject to the discussion below under "Original Issue Discount,"
interest on a Certificate will generally be includible in income by a holder as
ordinary income at the time it is accrued or received in accordance with the
holder's method of accounting.
SALES OF CERTIFICATES
A holder that sells a Certificate should recognize gain or loss equal
to the difference between its adjusted tax basis in the Certificate and the
amount realized on the sale (except to the extent attributable to accrued and
unpaid interest, which should be taxable as ordinary income). Any such gain or
loss generally will be capital gain or loss if the Certificate was held as a
capital asset and will be long-term capital gain or loss if the Certificate was
held for more than one year. Net capital gain (the excess of net long-term
capital gain over net short-term capital loss) of individuals is, under certain
circumstances, taxed at lower rates than items of ordinary income.
ORIGINAL ISSUE DISCOUNT
Certificates may be issued with original issue discount ("OID"), which
may require the holders to include such OID in gross income in advance of
receipt or accrual of the stated interest on such Certificates. The Prospectus
Supplement will state whether the Certificates are issued with OID. Generally, a
holder of a debt instrument issued with OID that is not de minimis (i.e., is not
less than one-quarter of 1% of the redemption price at maturity multiplied by
the number of complete years to maturity) must include such OID in income for
federal income tax purposes as it accrues, in advance of the receipt of the cash
attributable to such income, under a method that takes into account the
compounding of interest.
BACKUP WITHHOLDING
Payments made on the Certificates, and proceeds from the sale of the
Certificates to or through certain brokers, may be subject to a "backup"
withholding tax of 31% unless the holder complies with certain reporting
procedures or is exempt from such requirements under Section 3406 of the Code.
Any such withheld amounts are allowed as a credit against the holder's federal
income tax.
INFORMATION REPORTING
Information reports will be made by the Indenture Trustee to the
Internal Revenue Service, and to holders of record that are not exempt from the
reporting requirements, annually or as otherwise required with respect to
interest paid (or OID accrued, if any) on the Certificates.
ERISA CONSIDERATIONS
Unless otherwise indicated in the applicable Prospectus Supplement, the
Certificates may, subject to certain legal restrictions, be purchased and held
by an employee benefit plan (a "Plan") subject to Title I of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or an individual
retirement account or an employee benefit plan subject to section 4975 of the
Code. A fiduciary of a Plan must determine that the purchase and holding of a
Certificate is consistent with its fiduciary duties under ERISA and does not
result in a non-exempt prohibited transaction as defined in section 406 of ERISA
or section 4975 of the Code. Employee benefit plans
-17-
<PAGE> 52
which are governmental plans (as defined in section 3(32) of ERISA) and certain
church plans (as defined in section 3(33) of ERISA) are not subject to Title I
of ERISA or section 4975 of the Code. The Certificates may, subject to certain
legal restrictions, be purchased and held by such plans.
PLAN OF DISTRIBUTION
The Certificates being offered hereby may be sold in any one or more of
the following ways from time to time: (i) through agents; (ii) to or through
underwriters; (iii) through dealers; and (iv) directly to other purchasers.
The distribution of the Certificates may be effected from time to time
in one or more transactions at a fixed price or prices, which may be changed, at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices.
Offers to purchase the Certificates may be solicited by agents
designated by Alaska from time to time. Any such agent involved in the offer or
sale of the Certificates in respect of which this Prospectus is delivered will
be named, and any commissions payable by Alaska to such agent will be set forth
in the applicable Prospectus Supplement. Unless otherwise indicated in such
Prospectus Supplement, any such agent will be acting on a best efforts basis for
the period of its appointment. Any such agent may be deemed to be an
underwriter, as that term is defined in the Securities Act, of the Certificates
so offered and sold.
If the Certificates are sold by means of an underwritten offering,
Alaska will execute an underwriting agreement with an underwriter or
underwriters at the time an agreement for such sale is reached, and the names of
the specific managing underwriter or underwriters, as well as any other
underwriters, and the terms of the transaction, including commissions, discounts
and any other compensation of the underwriters and dealers, if any, will be set
forth in the Prospectus Settlement which will be used by the underwriters to
make offers and sales of the Certificates in respect of which this Prospectus is
delivered to the public. If underwriters are utilized in the sale of the
Certificates in respect of which this Prospectus is delivered, the Certificates
will be acquired by the underwriters for their own account and may be resold
from time to time in one or more transactions, including negotiated
transactions, at fixed public offering prices or at varying prices determined by
the underwriters at the time of sale. The Certificates may be offered to the
public either through underwriting syndicates represented by managing
underwrites or directly by the managing underwriters. If any underwriter or
underwriters are utilized in the sale of the Certificates, unless otherwise
indicated in the Prospectus Supplement, the underwriting agreement will provide
that the obligations of the underwriters are subject to certain conditions
precedent and that the underwriters with respect to a sale of Certificates will
be obligated to purchase all such Certificates if any are purchased. Alaska does
not intend to apply for listing of the Certificates on a national securities
exchange. If the Certificates are sold by means of an underwritten offering, the
underwriters may make a market in the Certificates as permitted by applicable
laws and regulations. No underwriter would be obligated, however, to make a
market in the Certificates and any such market making could be discontinued at
any time at the sole discretion of such underwriter. Accordingly, no assurance
can be given as to the liquidity of, or trading markets for, the Certificates.
If a dealer is utilized in the sale of the Certificates in respect of
which this Prospectus is delivered, such Certificates will be sold to the dealer
as principal. The dealer may then resell such Certificates to the public at
varying prices to be determined by such dealer at the time of resale. Any such
dealer may be deemed to be an underwriter, as such term is defined in the
Securities Act, of the Certificates so offered and sold. The name of the dealer
and the terms of the transactions will be set forth in the Prospectus Supplement
relating thereto.
Offers to purchase the Certificates may be solicited directly and the
sale thereof may be made directly to institutional investors or others, who may
be deemed to be underwriters within the meaning of the Securities Act
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<PAGE> 53
with respect to any resale thereof. The terms of any such sales will be
described in the Prospectus Supplement relating thereto.
Agents, underwriters and dealers may be entitled under relevant
agreements to indemnification or contribution by Alaska against certain
liabilities, including liabilities under the Securities Act.
Agents, underwriters and dealers may engage in transactions with, or
perform services for, Air Group, Alaska and Air Group's other subsidiaries in
the ordinary course of business.
LEGAL OPINIONS
Unless otherwise indicated in the applicable Prospectus Supplement, the
validity of the Certificates offered hereby will be passed upon for Alaska by
Perkins Coie, Seattle, Washington. Unless otherwise indicated in the applicable
Prospectus Supplement, Perkins Coie will rely on the opinion of counsel for the
Owner Trustee for each series of Certificates as to certain matters relating to
the authorization, execution and delivery of such series of Certificates by, and
the valid and binding effect thereof on, such Owner Trustee.
EXPERTS
The financial statements and schedule of Alaska incorporated by
reference in this Prospectus and in the Registration Statement have been audited
by Arthur Andersen LLP, independent public accountants, as indicated in their
reports with respect thereto, and are incorporated herein in reliance upon the
authority of said firm as experts in accounting and auditing in giving said
reports.
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<PAGE> 54
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The estimated expenses in connection with the issuance and distribution
of the securities being registered, other than underwriting discounts and
commissions, are set forth in the following table.
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee............................... $ 62,845
Blue Sky fees and expenses........................................................ *
Printing and engraving expenses................................................... *
Legal fees and expenses........................................................... *
Rating agency fees................................................................ *
Accounting fees and expenses...................................................... *
Owner Trustee fees and expenses................................................... *
Indenture Trustee fees and expenses............................................... *
Miscellaneous..................................................................... *
----------
Total........................................................................ $ *
==========
</TABLE>
- -----------
* Information to be added by amendment.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the General Corporation Law of Delaware and Section
10.06.490 of the Alaska Corporations Code each provide that a corporation may
indemnify directors and officers as well as other employees and individuals
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by the person in connection with
specified actions or proceedings, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation--a
"derivative action"), if they acted in good faith and in a manner they
reasonably believed to be in or not opposed to the best interests of the
corporation and, with respect to any criminal action or proceeding, had no
reasonable cause to believe their conduct was unlawful. A similar standard is
applicable in the case of derivative actions, except that indemnification only
extends to expenses (including attorneys' fees) actually and reasonably incurred
by the person in connection with the defense or settlement of such action, and
the statutes require court approval before there can be any indemnification
where the person seeking indemnification has been found liable for negligence or
misconduct in the performance of the person's duty to the corporation. The
statutes provide that they are not exclusive of other indemnification that may
be granted by a corporation's bylaws, agreement, vote of shareholders or
disinterested directors or otherwise.
Article VIII of Air Group's By-Laws and Article VI of Alaska's Bylaws
require indemnification to the full extent permitted by the Delaware Corporation
Law and the Alaska Corporations Code, respectively. Subject to any restrictions
imposed by Delaware or Alaska law, respectively, the Bylaws of Air Group and
Alaska provide a right to indemnification for all expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by any person in connection with any actual or threatened action, suit
or proceeding by reason of the fact that such person is or was a director or
officer of Air Group or Alaska or is or was serving at the request of Air Group
or Alaska as a director or officer of another corporation. The Bylaws of Air
Group and Alaska also provide that each of them may, by action of its Board of
Directors, approve indemnification
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<PAGE> 55
of any other person whom they have the power to indemnify under the Delaware
Corporation Law and the Alaska Corporations Code, respectively.
Officers and directors of Air Group and Alaska are covered by insurance
(with certain exceptions and within certain limitations) which indemnifies them
against losses and liabilities arising from certain alleged "wrongful acts,"
including alleged errors or misstatements, or certain other alleged wrongful
acts or omissions constituting neglect or breach of duty.
The Underwriting Agreements, filed as Exhibits 1(a), 1(b), 1(c) and
1(d) hereto, contain provisions whereby the Underwriters agree to indemnify the
registrant, its directors and certain officers and certain other persons, and
are incorporated herein by reference.
ITEM 16. EXHIBITS
(a) The following Exhibits are filed as part of this Registration
Statement:
<TABLE>
<S> <C>
Exhibit 1(a) Form of Underwriting Agreement for Convertible Debt Securities of Air Group*
Exhibit 1(b) Form of Underwriting Agreement for Debt Securities of Alaska*
Exhibit 1(c) Form of Underwriting Agreement for Common Stock of Air Group*
Exhibit 1(d) Form of Underwriting Agreement for Equipment Trust Certificates of Alaska*
Exhibit 4(a)(1) Form of Convertible Senior Debt Securities Indenture for Air Group (incorporated by reference
from Exhibit 4(a)(1) to Amendment No. 1 to Air Group's and Alaska's Registration Statement
No. 33-52265 on Form S-3 filed on March 11, 1994)
Exhibit 4(a)(2) Form of Convertible Senior Debt Securities of Air Group (included in Exhibit 4(a)(1))
Exhibit 4(a)(3) Form of Convertible Subordinated Debt Securities Indenture for Air Group (incorporated by
reference from Exhibit 4(a)(3) to Amendment No. 1 to Air Group's and Alaska's Registration
Statement No. 33-52265 on Form S-3 filed on March 11, 1994)
Exhibit 4(a)(4) Form of Convertible Subordinated Debt Securities of Air Group (included in Exhibit 4(a)(3))
Exhibit 4(b)(1) Form of Debt Securities Indenture for Alaska (incorporated by reference from Exhibit 4(b)(1)
to Air Group's and Alaska's Registration Statement No. 33-52265 on Form S-3 filed on
February 14, 1994)
Exhibit 4(b)(2) Form of Debt Securities of Alaska (included in Exhibit 4(b)(1))*
Exhibit 4(c)(1) Form of Leased Aircraft Trust Indenture and Security Agreement between the Indenture Trustee
and Alaska relating to Equipment Trust Certificates of Alaska (incorporated by reference
from Exhibit 4(c)(1) to Amendment No. 1 to Air Group's and Alaska's Registration Statement
No. 33-52265 on Form S-3 filed on March 11, 1994)
Exhibit 4(c)(2) Form of Leased Aircraft Equipment Trust Certificate of Alaska (included in Exhibit 4(c)(1))
Exhibit 4(c)(3) Form of Owned Aircraft Trust Indenture and Security Agreement between the Indenture Trustee
and Alaska relating to Equipment Trust Certificates of Alaska (incorporated by reference
from Exhibit 4(c)(3) to Amendment No. 1 to Air Group's and Alaska's
</TABLE>
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<PAGE> 56
<TABLE>
<S> <C>
Registration Statement No. 33-52265 on Form S-3 filed on March 11, 1994)
Exhibit 4(c)(4) Form of Owned Aircraft Equipment Trust Certificate of Alaska (included in Exhibit 4(c)(3))
Exhibit 4(d) Certificate of Incorporation of Alaska Air Group, Inc., as amended to date (incorporated by reference from
Exhibit 4(d) to Air Group's and Alaska's Registration Statement No. 33-52265 on Form S-3 filed on
February 14, 1994)
Exhibit 4(e) Bylaws of Alaska Air Group, Inc., as amended to date (incorporated by reference to Exhibit 3.(ii) to Form
10-K of Alaska Air Group, Inc. for the year ended December 31, 1995)
Exhibit 4(f) Rights Agreement dated as of December 2, 1986 between Alaska Air Group, Inc. and The First National Bank of
Boston, as Rights Agent (incorporated by reference to Exhibit No. 1 to Form 8-A of Alaska Air Group,
Inc. filed December 12, 1986)
Exhibit 5(a) Opinion of Perkins Coie, counsel for Alaska
Exhibit 5(b) Form of Opinion of counsel for Owner Trustee*
Exhibit 8 Tax Opinion of Perkins Coie*
Exhibit 12(a) Computation of Ratio of Earnings to Fixed Charges of Air Group
Exhibit 12(b) Computation of Ratio of Earnings to Fixed Charges of Alaska
Exhibit 23(a) Consent of Perkins Coie (included in Exhibit 5(a))
Exhibit 23(b) Consent of counsel for Owner Trustee (included in Exhibit 5(b))*
Exhibit 23(d) Consent of Perkins Coie (included in Exhibit 8)*
Exhibit 23(e) Consent of Arthur Andersen LLP
Exhibit 23(f) Consent of Arthur Andersen LLP
Exhibit 24 Power of Attorney (included on signature pages to the Registration Statement)
Exhibit 25(a) Form T-1 Statement of Eligibility of Trustee under Convertible Debt Securities Indenture of Air Group*
Exhibit 25(b) Form T-1 Statement of Eligibility of Trustee under Debt Securities Indenture of Alaska*
Exhibit 25(c) Form T-1 Statement of Eligibility of Trustee under Trust Indenture and Security Agreement relating to
Equipment Trust Certificates of Alaska*
</TABLE>
- -----------
* To be filed by amendment.
ITEM 17. UNDERTAKINGS
A. The undersigned registrants hereby undertake:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement:
(a) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933, as amended (the "1933 Act");
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<PAGE> 57
(b) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or decrease
in volume of securities offered (if the total dollar value of securities offered
would not exceed that which was registered) and any deviation from the low or
high end of the estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than a 20% change
in the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement;
(c) To include any material information with respect
to the plan of distribution not previously disclosed in the registration
statement or any material change to such information in the registration
statement;
PROVIDED, HOWEVER, that paragraphs A(1)(a) and A(1)(b) do not apply if the
information required to be included in such post-effective amendment is
contained in a periodic report filed by the registrant pursuant to section 13 or
section 15(d) of the Securities Exchange Act of 1934, as amended (the "1934
Act"), and incorporated by reference in this registration statement.
(2) That, for the purpose of determining any liability under
the 1933 Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
B. The undersigned hereby undertake that, for purposes of determining
any liability under the 1933 Act, each filing of the registrant's annual report
pursuant to section 13(a) or section 15(d) of the 1934 Act (and, where
applicable, each filing of an employee benefits plan's annual report pursuant to
Section 15(d) of the 1934 Act) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
C. Insofar as indemnification for liabilities arising under the 1933
Act may be permitted to directors, officers and controlling persons of the
registrants pursuant to the foregoing provisions described under Item 15 above,
or otherwise, the registrants have been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the 1933 Act and is, therefore, unenforceable. In the event that
a claim for indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrants in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrants will, unless
in the opinion of their counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the 1933 Act
and will be governed by the final adjudication of such issue.
D. The undersigned Registrant hereby undertakes to file an application
for the purpose of determining the eligibility of the trustee to act under
subsection (a) of Section 310 of the Trust Indenture Act in accordance with the
rules and regulations prescribed by the Commission under Section 305(b)(2) of
the Trust Indenture Act.
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<PAGE> 58
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
Alaska Air Group, Inc. certifies that it has reasonable grounds to believe that
it meets all the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in Seattle, Washington, this 30th day of May, 1996.
ALASKA AIR GROUP, INC.
By: John F. Kelly
/s/ JOHN F. KELLY
------------------------------
John F. Kelly
Chairman of the Board, Chief Executive Officer and
President
Each person whose individual signature appears below hereby authorizes
and appoints John F. Kelly and Harry G. Lehr, and each of them, with full power
of substitution and full power to act without the other, as his or her true and
lawful attorney-in-fact and agent to act in his or her name, place and stead and
to execute in the name and on behalf of each person, individually and in each
capacity stated below, and to file, any and all amendments to this Registration
Statement, including any and all post-effective amendments, and any related Rule
462(b) Registration Statement and any amendment thereto.
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities indicated
below on this 30th day of May, 1996.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ JOHN F. KELLY Chairman of the Board,
--------------------------- Chief Executive Officer,
John F. Kelly President and Director
/s/ HARRY G. LEHR Senior Vice President/Finance
---------------------------
Harry G. Lehr
/s/ BRADLEY D. TILDEN Controller
---------------------------
Bradley D. Tilden
/s/ WILLIAM H. CLAPP Director
---------------------------
William H. Clapp
/s/ RONALD F. COSGRAVE Director
---------------------------
Ronald F. Cosgrave
</TABLE>
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<PAGE> 59
<TABLE>
<S> <C>
/s/ MARY JANE FATE Director
---------------------------
Mary Jane Fate
/s/ BRUCE R. KENNEDY Director
---------------------------
Bruce R. Kennedy
/s/ R. MARC LANGLAND Director
---------------------------
R. Marc Langland
/s/ BYRON I. MALLOTT Director
---------------------------
Byron I. Mallott
/s/ ROBERT L. PARKER, JR. Director
---------------------------
Robert L. Parker, Jr.
/s/ RICHARD A. WIEN Director
---------------------------
Richard A. Wien
</TABLE>
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<PAGE> 60
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
Alaska Airlines, Inc. certifies that it has reasonable grounds to believe that
it meets all the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in Seattle, Washington, this 30th day of May, 1996.
ALASKA AIRLINES, INC.
By: John F. Kelly
/s/ JOHN F. KELLY
----------------------------------
John F. Kelly
Chairman of the Board,
Chief Executive Officer and President
Each person whose individual signature appears below hereby authorizes
and appoints John F. Kelly and Harry G. Lehr, and each of them, with full power
of substitution and full power to act without the other, as his or her true and
lawful attorney-in-fact and agent to act in his or her name, place and stead and
to execute in the name and on behalf of each person, individually and in each
capacity stated below, and to file, any and all amendments to this Registration
Statement, including any and all post-effective amendments, and any related Rule
462(b) Registration Statement and any amendment thereto.
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities indicated
below on this 30th day of May, 1996.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ JOHN F. KELLY Chairman of the Board, President, Chief Executive Officer
----------------------------- and Director
John F. Kelly
/s/ HARRY G. LEHR Senior Vice President/Finance
-----------------------------
Harry G. Lehr
/s/ BRADLEY D. TILDEN Controller
-----------------------------
Bradley D. Tilden
/s/ WILLIAM H. CLAPP Director
-----------------------------
William H. Clapp
/s/ RONALD F. COSGRAVE Director
-----------------------------
Ronald F. Cosgrave
/s/ R. MARC LANGLAND Director
-----------------------------
R. Marc Langland
</TABLE>
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<PAGE> 61
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT
----------- -------
<S> <C>
Exhibit 1(a) Form of Underwriting Agreement for Convertible Debt Securities of Air Group*
Exhibit 1(b) Form of Underwriting Agreement for Debt Securities of Alaska*
Exhibit 1(c) Form of Underwriting Agreement for Common Stock of Air Group*
Exhibit 1(d) Form of Underwriting Agreement for Equipment Trust Certificates of Alaska*
Exhibit 4(a)(1) Form of Convertible Senior Debt Securities Indenture for Air Group
(incorporated by reference from Exhibit 4(a)(1) to Amendment No. 1 to
Air Group's and Alaska's Registration Statement No. 33-52265 on Form S-3
filed on March 11, 1994)
Exhibit 4(a)(2) Form of Convertible Senior Debt Securities of Air Group (included in Exhibit
4(a)(1))
Exhibit 4(a)(3) Form of Convertible Subordinated Debt Securities Indenture for Air Group
(incorporated by reference from Exhibit 4(a)(3) to Amendment No. 1 to
Air Group's and Alaska's Registration Statement No. 33-52265 on Form S-3
filed on March 11, 1994)
Exhibit 4(a)(4) Form of Convertible Subordinated Debt Securities of Air Group (included in
Exhibit 4(a)(3))
Exhibit 4(b)(1) Form of Debt Securities Indenture for Alaska (incorporated by reference from
Exhibit 4(b)(1) to Air Group's and Alaska's Registration Statement No.
33-52265 on Form S-3 filed on February 14, 1994)
Exhibit 4(b)(2) Form of Debt Securities of Alaska (included in Exhibit 4(b)(1))*
Exhibit 4(c)(1) Form of Leased Aircraft Trust Indenture and Security Agreement between the
Indenture Trustee and Alaska relating to Equipment Trust Certificates of
Alaska (incorporated by reference from Exhibit 4(c)(1) to Amendment No.
1 to Air Group's and Alaska's Registration Statement No. 33-52265 on
Form S-3 filed on March 11, 1994)
Exhibit 4(c)(2) Form of Leased Aircraft Equipment Trust Certificate of Alaska (included in
Exhibit 4(c)(1))
Exhibit 4(c)(3) Form of Owned Aircraft Trust Indenture and Security Agreement between the
Indenture Trustee and Alaska relating to Equipment Trust Certificates of
Alaska (incorporated by reference from Exhibit 4(c)(3) to Amendment No.
1 to Air Group's and Alaska's Registration Statement No. 33-52265 on
Form S-3 filed on March 11, 1994)
Exhibit 4(c)(4) Form of Owned Aircraft Equipment Trust Certificate of Alaska
</TABLE>
<PAGE> 62
<TABLE>
<S> <C>
(included in Exhibit 4(c)(3))
Exhibit 4(d) Certificate of Incorporation of Alaska Air Group, Inc., as amended to date (incorporated by reference from
Exhibit 4(d) to Air Group's and Alaska's Registration Statement No. 33-52265 on Form S-3 filed on
February 14, 1994)
Exhibit 4(e) Bylaws of Alaska Air Group, Inc., as amended to date (incorporated by reference to Exhibit 3.(ii) to Form
10-K of Alaska Air Group, Inc. for the year ended December 31, 1995)
Exhibit 4(f) Rights Agreement dated as of December 2, 1986 between Alaska Air Group, Inc. and The First National Bank
of Boston, as Rights Agent (Exhibit No. 1 to Form 8-A of Alaska Air Group, Inc. filed December 12,
1986)
Exhibit 5(a) Opinion of Perkins Coie, counsel for Alaska
Exhibit 5(b) Form of Opinion of counsel for Owner Trustee*
Exhibit 8 Tax Opinion of Perkins Coie*
Exhibit 12(a) Computation of Ratio of Earnings to Fixed Charges of Air Group
Exhibit 12(b) Computation of Ratio of Earnings to Fixed Charges of Alaska
Exhibit 23(a) Consent of Perkins Coie (included in Exhibit 5(a))*
Exhibit 23(b) Consent of counsel for Owner Trustee (included in Exhibit 5(b))*
Exhibit 23(d) Consent of Perkins Coie (included in Exhibit 8)*
Exhibit 23(e) Consent of Arthur Andersen LLP
Exhibit 23(f) Consent of Arthur Andersen LLP
Exhibit 24 Power of Attorney (included on signature page to the Registration Statement)
Exhibit 25(a) Form T-1 Statement of Eligibility of Trustee under Convertible Debt Securities Indenture of Air Group*
Exhibit 25(b) Form T-1 Statement of Eligibility of Trustee under Debt Securities Indenture of Alaska*
Exhibit 25(c) Form T-1 Statement of Eligibility of Trustee under Trust Indenture and Security Agreement relating to
Equipment Trust Certificates of Alaska*
</TABLE>
- -----------
* To be filed by amendment.
-2-
<PAGE> 1
Exhibit 5(a)
[PERKNS COIE LETTERHEAD]
May 30, 1996
Alaska Air Group, Inc.
19300 Pacific Highway South
Seattle, Washington 98188
Alaska Airlines, Inc.
19300 Pacific Highway South
Seattle, Washington 98188
RE: REGISTRATION OF $182,250,000 OF SECURITIES OF
ALASKA AIR GROUP, INC. AND ALASKA AIRLINES, INC.
Gentlemen and Ladies:
This opinion is furnished in connection with the registration under the
Securities Act of 1933, as amended (the "Act"), of $182,250,000 aggregate
offering amount of (i) convertible debt securities of Alaska Air Group, Inc., a
Delaware corporation ("Air Group"), (ii) debt securities of Alaska Airlines,
Inc., an Alaska corporation ("Alaska"), and associated guarantees of Air Group,
(iii) equipment trust certificates of Alaska and associated guarantees of Air
Group (collectively, the "Securities"), and (iv) common stock of Air Group (the
"Shares").
We have examined the Registration Statement on Form S-3 of Air Group
and Alaska with respect to the Securities and the Shares (the "Registration
Statement"), the indentures relating to the Securities (each an "Indenture"),
and such corporate records, certificates and other documents and such questions
of law as we have considered necessary or appropriate for the purposes of this
opinion.
Based on the foregoing, with respect to each series of the Securities,
we advise you that in our opinion, when the following events have occurred:
(a) The Registration Statement has become effective under the Act;
(b) All due corporate authorization by Air Group's Board of Directors
of the issuance and sale of the Securities and of the terms of
each series of Securities to be issued by Air Group has been
obtained;
<PAGE> 2
Alaska Air Group, Inc.
Alaska Airlines, Inc.
May 30, 1996
Page 2
(c) All due corporate authorization by Alaska's Board of Directors
of the issuance, sale and terms of each series of Securities
to be issued by Alaska has been obtained;
(d) The terms of the series of Securities and their issuance and
sale have been duly established in conformity with the
Indenture related thereto so as not to violate any applicable
law, agreement or instrument then binding on the issuer of
such series;
(e) The Securities of such series have been duly executed,
authenticated and delivered to the Trustee and authenticated
by the Trustee, all in accordance with the Indenture related
thereto; and
(f) The Securities of such series have been issued and sold as
contemplated in the Registration Statement and in accordance
with corporate and governmental authorities;
the Securities of such series will constitute in the hands of the holders
thereof binding obligations of Air Group or Alaska, whichever shall be the
issuer of such Securities.
Based upon the first two paragraphs of this opinion letter, with respect
to the Shares, we advise you that in our opinion, upon the happening of the
following events:
(a) due action by the Board of Directors of Air Group authorizing
the issuance and sale of the Shares;
(b) effectiveness of the Registration Statement; and
(c) due execution by Air Group and registration by its registrars
of the Shares and the sale thereof as contemplated by the
Registration Statement and in accordance with corporate and
governmental authorities;
the Shares will be duly authorized for issuance and, when issued, will be
validly issued, fully paid and nonassesable.
<PAGE> 3
Alaska Air Group, Inc.
Alaska Airlines, Inc.
May 30, 1996
Page 3
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to us under the heading "Legal
Opinions" in the related Prospectus for each of the Securities and the Shares.
In giving such consent, we do not thereby admit that we are in the category of
persons whose consent is required under Section 7 of the Act.
Very truly yours,
PERKINS COIE
DFM:njs
<PAGE> 1
EXHIBIT 12(a)
Alaska Air Group, Inc.
Calculation of Ratio of Earnings to Fixed Charges
(In thousands, except ratios)
<TABLE>
<CAPTION>
Three Months Ended March 31,
1996 1995
---- ----
<S> <C> <C>
Earnings:
Income before income tax expense ($13,508) ($29,937)
Less: Capitalized interest 0 0
Add:
Interest on indebtedness 11,063 13,329
Amortization of debt expense 386 268
Portion of rent under long-term
operating leases representative
of an interest factor 19,693 18,550
-------- --------
Total Earnings Available for
Fixed Charges $17,634 $ 2,210
======== ========
Fixed Charges:
Interest 11,063 13,329
Amortization of debt expense 386 268
Portion of rent under long-term
operating leases representative
of an interest factor 19,693 18,550
-------- --------
Total Fixed Charges $31,142 $32,147
======== ========
Ratio of Earnings to Fixed Charges 0.57 0.07
======== ========
Deficiency $13,508 $29,937
======== ========
CALCULATIONS
Amortization of debt expense:
AAG account 81-8410 179 167
AAGL account 81-8410 0 0
AS account 81-8410 207 101
QX account 9001 0 0
-------- --------
Total amortization of debt expense 386 268
======== ========
Aircraft rent 44,129 41,696
Landing fees and other rent 14,951 13,954
-------- --------
Total rents 59,080 55,650
One-third of total rents 19,693 18,550
======== ========
</TABLE>
<PAGE> 2
EXHIBIT 12(a)
Alaska Air Group, Inc.
Calculation of Ratio of Earnings to Fixed Charges
(In thousands, except ratios)
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Earnings:
Income (loss) before income tax expense
and accounting change $ 33,983 $ 40,961 ($45,812) ($125,706) $16,207
Less: Capitalized interest (208) (353) (446) (6,102) (8,301)
Add:
Interest on indebtedness 51,479 46,960 37,624 43,223 40,180
Amortization of debt expense 1,100 1,368 690 643 519
Portion of rent under long-term operating
leases representative of an interest
factor 67,295 65,618 60,136 49,889 41,327
-------- -------- -------- --------- -------
Earnings Available for Fixed Charges $153,649 $154,554 $52,192 ($38,053) $89,932
======== ======== ======== ========= =======
Fixed Charges:
Interest 51,479 46,960 37,624 43,223 40,180
Amortization of debt expense 1,100 1,368 690 643 519
Portion of rent under long-term operating
leases representative of an interest
factor 67,295 65,618 60,136 49,889 41,327
-------- -------- -------- --------- -------
Total Fixed Charges $119,874 $113,946 $98,450 $ 93,755 $82,026
======== ======== ======== ========= =======
Ratio of Earnings to Fixed Charges 1.28 1.36 0.53 (0.41) 1.10
======== ======== ======== ========= =======
Coverage deficiency -- -- $46,258 $ 131,808 --
======== ======== ======== ========= =======
</TABLE>
<PAGE> 1
Exhibit 12(b)
Alaska Airlines, Inc.
Calculation of Ratio of Earnings to Fixed Charges
(In thousands, except ratios)
<TABLE>
<CAPTION>
Three Months Ended March 31,
1996 1995
---- ----
<S> <C> <C>
Earnings:
Income before income tax expense ($9,323) ($22,823)
Less: Capitalized interest 0 0
Add:
Interest on indebtedness 8,918 10,524
Amortization of debt expense 207 101
Portion of rent under long-term
operating leases representative
of an interest factor 15,815 14,719
------- --------
Total Earnings Available for
Fixed Charges $15,617 $2,521
======= ========
Fixed Charges:
Interest 8,918 10,524
Amortization of debt expense 207 101
Portion of rent under long-term
operating leases representative
of an interest factor 15,815 14,719
------- --------
Total Fixed Charges $24,940 $25,344
======= ========
Ratio of Earnings to Fixed Charges 0.63 0.10
======= ========
Deficiency $9,323 $22,823
======= ========
CALCULATIONS
Amortization of debt expense:
AS account 81-8410 207 101
========================
Aircraft rent 35,557 33,255
Landing fees and other rent 11,889 10,901
------------------------
Total rents 47,446 44,156
One-third of total rents 15,815 14,719
========================
</TABLE>
<PAGE> 2
EXHIBIT 12(b)
Alaska Airlines, Inc.
Calculation of Ratio of Earnings to Fixed Charges
(In thousands, except ratios)
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
-------- -------- -------- --------- -------
<S> <C> <C> <C> <C> <C>
Earnings:
Income before income tax expense
and accounting change $ 43,930 $ 39,289 ($44,539) ($120,815) $16,588
Less: Capitalized interest -- -- -- (5,581) (7,449)
Add:
Interest on indebtedness 40,284 34,258 28,777 33,747 31,703
Amortization of debt expense 443 193 72 315 66
Portion of rent under long-term
operating leases representative
of an interest factor 54,169 53,564 49,719 40,185 32,884
-------- -------- -------- --------- -------
Total Earnings Available for
Fixed Charges $138,826 $127,304 $34,029 ($ 52,149) $73,792
======== ======== ======== ========= =======
Fixed Charges:
Interest 40,284 34,258 28,777 33,747 31,703
Amortization of debt expense 443 193 72 315 66
Portion of rent under long-term
operating leases representative
of an interest factor 54,169 53,564 49,719 40,185 32,884
-------- -------- -------- --------- -------
Total Fixed Charges $ 94,896 $ 88,015 $78,568 $ 74,247 $64,653
======== ======== ======== ========= =======
Ratio of Earnings to Fixed Charges 1.46 1.45 0.43 (0.70) 1.14
======== ======== ======== ========= =======
Deficiency $ 0 $ 0 $44,539 $126,396 --
======== ======== ======== ========= =======
</TABLE>
<PAGE> 1
Exhibit 23(e)
[ARTHUR ANDERSEN LLP LETTERHEAD]
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our reports dated January 25, 1996
included in Alaska Air Group's Form 10-K for the year ended December 31, 1995
and to all references to our Firm included in this registration statement.
/s/ Arthur Andersen LLP
Seattle, Washington
May 28, 1996
<PAGE> 1
Exhibit 23(f)
[ARTHUR ANDERSEN LLP LETTERHEAD]
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this registration statement of our reports dated January 25,
1996 included in Alaska Airlines' Form 10-K for the year ended December 31,
1995 and to all references to our Firm included in this registration statement.
/s/ Arthur Andersen LLP
Seattle, Washington
May 28, 1996
