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1 Page 1 of BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@ Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EicCJ3KXymzfDCIpmnaTLZvJYGPTGl0ujNRPgwsnHBoVc4hBYWoXfbXmxErPFny+ QBydoWBobbB7BrD1Nj0xWw== <SEC-DOCUMENT> txt : <SEC-HEADER> hdr.sgml : ACCESSION NUMBER: CONFORMED SUBMISSION TYPE: 424B2 PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: FILER: COMPANY DATA: COMPANY CONFORMED NAME: CONTINENTAL AIRLINES INC /DE/ CENTRAL INDEX KEY: STANDARD INDUSTRIAL CLASSIFICATION: AIR TRANSPORTATION, SCHEDULED [4512] IRS NUMBER: STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 424B2 SEC ACT: SEC FILE NUMBER: FILM NUMBER: BUSINESS ADDRESS: STREET 1: 1600 SMITH STREET STREET 2: DEPT HQSEO CITY: HOUSTON STATE: TX ZIP: BUSINESS PHONE: FORMER COMPANY: FORMER CONFORMED NAME: PEOPLE EXPRESS AIRLINES INC DATE OF NAME CHANGE: </SEC-HEADER> <DOCUMENT> <TYPE>424B2 <SEQUENCE>1 <DESCRIPTION>CONTINENTAL AIRLINES <TEXT> <PAGE> 1 Filed Pursuant to Rule 424(b)(2) Registration No PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED AUGUST 25, 1998 $741,885,000 [CONTINENTAL AIRLINES LOGO] PASS THROUGH TRUSTS PASS THROUGH CERTIFICATES, SERIES Five classes of the Continental Airlines Pass Through Trust Certificates, Series , will be issued in this offering: Class A-1, A-2, B, C-1 and C-2. A separate trust will be established for each class of certificates. The proceeds from the sale of certificates will initially be held in escrow. The trusts will use the escrowed funds to acquire equipment notes. The equipment notes will be issued to finance the acquisition by Continental Airlines of 21 new Boeing aircraft scheduled for delivery from July 1999 to December The aircraft will be leased or purchased by Continental. Payments on the equipment notes held in each trust will be passed through to the holders of certificates of such trust. The equipment notes issued for each aircraft will have a security interest in such aircraft. Interest on the equipment notes will be payable semiannually on each March 15 and September 15, beginning on September 15, Principal payments on the equipment notes held for the Class A-1, B and C-1 certificates are scheduled on March 15 and September 15 in certain years, beginning on March 15, The entire principal of the equipment notes held for the Class A-2 certificates will be scheduled for payment on September 15, The entire principal of the equipment notes held for the Class C-2 certificates will be scheduled for payment on September 15, The Class A-1 and A-2 certificates will rank equally in right of distributions and will rank senior to the other certificates. The Class B certificates will rank junior to the Class A-1 and A-2 certificates and will rank senior to the Class C-1 and C-2 certificates. The Class C-1 and C-2 certificates will rank equally and will rank junior to the other certificates.

2 Page 2 of 86 Bayerische Landesbank Girozentrale will provide a liquidity facility for each of the Class A-1, A-2, B, C-1 and C-2 certificates, in each case in an amount sufficient to make three semiannual interest payments. The certificates will not be listed on any national securities exchange. INVESTING IN THE CERTIFICATES INVOLVES RISKS. SEE "RISK FACTORS" ON PAGE S-19. <TABLE> <CAPTION> PASS THROUGH PRINCIPAL INTEREST FINAL EXPECTED PRICE TO CERTIFICATES AMOUNT RATE DISTRIBUTION DATE PUBLIC(1) <S> <C> <C> <C> <C> Class A-1... $304,842, % March 15, % Class A ,425, September 15, Class B ,077, March 15, Class C ,966, March 15, Class C ,575, September 15, </TABLE> (1) Plus accrued interest, if any, from the date of issuance. The underwriters will purchase all of the certificates if any are purchased. The aggregate proceeds from the sale of the certificates will be $741,885,000. Continental will pay the underwriters a commission of $6,676,965. Delivery of the certificates in book-entry form only will be made on or about June 17, Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus supplement or the accompanying prospectus is truthful or complete. Any representation to the contrary is a criminal offense. CREDIT SUISSE FIRST BOSTON GOLDMAN, SACHS & CO. Joint Bookrunners MORGAN STANLEY DEAN WITTER SALOMON SMITH BARNEY <PAGE> 2 The date of this prospectus supplement is June 3, PRESENTATION OF INFORMATION These offering materials consist of two documents: (a) this Prospectus Supplement, which describes the terms of the certificates that we are currently offering, and (b) the accompanying Prospectus, which provides general information about our pass through certificates, some of which may not apply to the certificates that we are currently offering. The information in this Prospectus Supplement replaces any inconsistent information included in the accompanying Prospectus. We have given certain capitalized terms specific meanings for purposes of this Prospectus Supplement. The "Index of Terms" attached as Appendix I to this Prospectus Supplement lists the page in this Prospectus Supplement on which we have defined each such term. At varying places in this Prospectus Supplement and the Prospectus, we refer you to other sections of such documents for additional information by indicating the caption heading of such other sections. The page on which each principal caption included in this Prospectus Supplement and the Prospectus can be found is listed in the Table of Contents below. All such cross references in this Prospectus Supplement are to captions contained in this Prospectus Supplement and not in the Prospectus, unless otherwise stated TABLE OF CONTENTS PROSPECTUS SUPPLEMENT <TABLE> <CAPTION> PAGE ---- <S> <C> PROSPECTUS SUPPLEMENT SUMMARY... S-5 Summary of Terms of Certificates... S-5 Equipment Notes and the Aircraft... S-6 Loan to Aircraft Value Ratios... S-7 Cash Flow Structure... S-8 The Offering... S-9 Summary Financial and Operating Data... S-16 RISK FACTORS... S-19 Risk Factors Relating to the Company... S-19 Risk Factors Relating to the Airline Industry... S-21 Risk Factors Relating to the Certificates and the Offering... S-22 USE OF PROCEEDS... S-24 THE COMPANY... S-25 Domestic Operations... S-25

3 Page 3 of 86 International Operations... S-26 DESCRIPTION OF THE CERTIFICATES... S-29 General... S-29 Subordination... S-30 Payments and Distributions... S-32 Pool Factors... S-34 Reports to Certificateholders... S-36 Indenture Defaults and Certain Rights Upon an Indenture Default... S-37 Purchase Rights of Certificateholders... S-39 PTC Event of Default... S-39 Merger, Consolidation and Transfer of Assets... S-40 Modifications of the Pass Through Trust Agreements and Certain Other Agreements... S-40 Obligation to Purchase Equipment Notes... S-43 Possible Issuance of Class D Certificates... S-46 Liquidation of Original Trusts... S-47 Termination of the Trusts... S-47 The Trustees... S-47 Book-Entry; Delivery and Form... S-47 DESCRIPTION OF THE DEPOSIT AGREEMENTS... S-49 General... S-49 </TABLE> <TABLE> <CAPTION> PAGE ---- <S> <C> Unused Deposits... S-49 Distribution Upon Occurrence of Triggering Event... S-50 Depositary... S-50 DESCRIPTION OF THE ESCROW AGREEMENTS... S-51 DESCRIPTION OF THE LIQUIDITY FACILITIES... S-52 General... S-52 Drawings... S-52 Reimbursement of Drawings... S-55 Liquidity Events of Default... S-56 Liquidity Provider... S-56 DESCRIPTION OF THE INTERCREDITOR AGREEMENT... S-57 Intercreditor Rights... S-57 Priority of Distributions... S-58 Voting of Equipment Notes... S-62 Addition of Trustee for Class D Certificates... S-62 The Subordination Agent... S-63 DESCRIPTION OF THE AIRCRAFT AND THE APPRAISALS... S-63 The Aircraft... S-63 The Appraisals... S-64 Deliveries of Aircraft... S-65 Substitute Aircraft... S-65 DESCRIPTION OF THE EQUIPMENT NOTES... S-66 General... S-66 Subordination... S-67 Principal and Interest Payments... S-67 Redemption... S-68 Security... S-69 Loan to Value Ratios of Equipment Notes... S-70 Limitation of Liability... S-73 Indenture Defaults, Notice and Waiver... S-74 Remedies... S-75 Modification of Indentures and Leases... S-78 Owner Participant's Right to Restructure... S-78 </TABLE> <PAGE> 3 S-2 <TABLE> <CAPTION> PAGE ---- <S> <C> Indemnification... S-78 The Leases and Certain Provisions of the Owned Aircraft Indentures... S-78 CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES... S-86 General... S-86 Tax Status of the Trusts... S-86 Taxation of Certificateholders Generally... S-87 Effect of Reallocation of Payments under the Intercreditor Agreement... S-88 Dissolution of Original Trusts and Formation of New Trusts... S-89 Sale or Other Disposition of the

4 Page 4 of 86 Certificates... S-89 Foreign Certificateholders... S-89 Backup Withholding... S-90 CERTAIN DELAWARE TAXES... S-90 </TABLE> <TABLE> <CAPTION> PAGE ---- <S> <C> CERTAIN ERISA CONSIDERATIONS... S-90 UNDERWRITING... S-93 NOTICE TO CANADIAN RESIDENTS... S-94 Resale Restrictions... S-94 Representations of Purchasers... S-94 Rights of Action (Ontario Purchasers)... S-94 Enforcement of Legal Rights... S-95 Notice to British Columbia Residents... S-95 Taxation and Eligibility for Investment... S-95 LEGAL MATTERS... S-95 EXPERTS... S-95 INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE... S-95 INDEX OF TERMS...Appendix I APPRAISAL LETTERS...Appendix II </TABLE> PROSPECTUS <TABLE> <CAPTION> PAGE ---- <S> <C> AVAILABLE INFORMATION... 2 INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE... 2 THE COMPANY... 3 USE OF PROCEEDS... 3 RATIO OF EARNINGS TO FIXED CHARGES... 4 GENERAL OUTLINE OF TRUST STRUCTURE... 4 DESCRIPTION OF THE CERTIFICATES... 5 General... 5 Book-Entry Registration... 6 Payments and Distributions... 8 Pool Factors... 9 Reports to Certificateholders... 9 Voting of Equipment Notes Events of Default and Certain Rights upon an Event of Default Merger, Consolidation and Transfer of Assets Modifications of the Basic Agreement Modification of Indenture and Related Agreements Cross-Subordination Issues Termination of the Trusts Delayed Purchase of Equipment Notes Liquidity Facility The Trustee DESCRIPTION OF THE EQUIPMENT NOTES </TABLE> <TABLE> <CAPTION> PAGE ---- <S> <C> General Principal and Interest Payments Redemption Security Ranking of Equipment Notes Payments and Limitation of Liability Defeasance of the Indentures and the Equipment Notes in Certain Circumstances Assumption of Obligations by Continental Liquidity Facility Intercreditor Issues CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES General Tax Status of the Trusts Taxation of Certificateholders Generally Effect of Subordination of Subordinated Certificateholders Original Issue Discount Sale of Other Disposition of the Certificates Foreign Certificateholders... 22

5 Page 5 of 86 Backup Withholding ERISA CONSIDERATIONS PLAN OF DISTRIBUTION LEGAL OPINIONS EXPERTS </TABLE> YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR TO WHICH WE HAVE REFERRED YOU. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT. THIS DOCUMENT MAY BE USED ONLY WHERE IT IS LEGAL TO SELL THESE SECURITIES. THE INFORMATION IN THIS DOCUMENT MAY BE ACCURATE ONLY ON THE DATE OF THIS DOCUMENT. <PAGE> 4 S-3 (This page intentionally left blank) <PAGE> 5 S-4 PROSPECTUS SUPPLEMENT SUMMARY This summary highlights selected information from this Prospectus Supplement and the accompanying Prospectus and may not contain all of the information that is important to you. For more complete information about the Certificates and Continental Airlines, you should read this entire Prospectus Supplement and the accompanying Prospectus, as well as the materials filed with the Securities and Exchange Commission that are considered to be part of this Prospectus Supplement. See "Incorporation of Certain Documents by Reference". SUMMARY OF TERMS OF CERTIFICATES <TABLE> <CAPTION> CLASS A-1 CLASS A-2 CLASS B CLASS C-1 CLASS C-2 CERTIFICATES CERTIFICATES CERTIFICATES CERTIFICATES CERTIFICATES <S> <C> <C> <C> <C> <C> Aggregate Face Amount... $304,842,000 $192,425,000 $111,077,000 $52,966,000 $80,575,000 Ratings: Moody's... Aa3 Aa3 A2 Baa1 Baa1 Standard & Poor's... AA+ AA+ AA- A- A- Initial Loan to Aircraft Value (cumulative)(1) % 40.27% 48.97% 59.22% 59.22% Expected Highest Loan to Aircraft Value (cumulative)(2) % 40.53% 50.18% 60.43% 60.43% Expected Principal Distribution Window (in years) Initial Average Life (in years from Issuance Date) Regular Distribution Dates... March 15 and March 15 and March 15 and March 15 and March 15 and September 15 September 15 September 15 September 15 September 15 Final Expected Regular Distribution Date... March 15, September 15, March 15, March 15, September 15, Final Maturity Date... September 15, March 15, September 15, September 15, March 15, Minimum Denomination... $1,000 $1,000 $1,000 $1,000 $1,000 Section 1110 Protection... Yes Yes Yes Yes Yes Liquidity Facility Coverage... 3 semiannual 3 semiannual 3 semiannual 3 semiannual 3 semiannual interest interest interest interest interest payments payments payments payments payments </TABLE> (1) These percentages are calculated as of March 15, 2000, the first Regular Distribution Date after all Aircraft are scheduled to have been delivered. In making such calculations, we have assumed that all Aircraft are delivered prior to such date, that the maximum principal amount of Equipment Notes is issued and that the aggregate appraised Aircraft value is $1,229,338,333 as of such date. The appraised value is only an estimate and reflects certain assumptions. See "Description of the Aircraft and the Appraisals -- The Appraisals". (2) See "-- Loan to Aircraft Value Ratios" in this Prospectus Supplement Summary. <PAGE> 6 S-5 EQUIPMENT NOTES AND THE AIRCRAFT The 21 Boeing aircraft to be financed pursuant to this offering will consist of four Boeing aircraft, thirteen Boeing aircraft, one Boeing aircraft and three Boeing aircraft. The Boeing and aircraft will be selected by Continental from among fifteen aircraft and two aircraft, respectively. All such aircraft are scheduled for delivery prior to the deadline for purposes of this offering. See "Description of the Aircraft and the Appraisals -- The Appraisals" for a description of the aircraft that may be financed with the proceeds of this offering. Set forth below is certain information about the Equipment Notes expected to be held in the Trusts and the aircraft expected to secure such

6 Page 6 of 86 Equipment Notes (assuming, for purposes of the chart below, that the Boeing and aircraft with the lowest appraised values are selected): <TABLE> <CAPTION> MAXIMUM PRINCIPAL AMOUNT OF EQUIPMENT APPRAISED AIRCRAFT TYPE(1) NOTES(2) VALUE(3) <S> <C> <C> Boeing $23,290,950 $ 38,473,333 Boeing ,336,100 38,516,667 Boeing ,381,250 38,563,333 Boeing ,381,250 38,563,333 Boeing ,844,400 47,097,667 Boeing ,902,450 47,252,000 Boeing ,902,450 47,252,000 Boeing ,902,450 47,252,000 Boeing ,902,450 47,252,000 Boeing ,902,450 47,252,000 Boeing ,902,450 47,252,000 Boeing ,960,500 47,308,667 Boeing ,960,500 47,308,667 Boeing ,960,500 47,308,667 Boeing ,018,550 47,365,333 Boeing ,018,550 47,365,333 Boeing ,018,550 47,365,333 Boeing ,364,600 59,480,000 Boeing ,585, ,510,000 Boeing ,759, ,510,000 Boeing ,926, ,090,000 </TABLE> (1) The delivery deadline for purposes of this offering is March 31, 2000 (or later under certain circumstances). See "Description of the Aircraft and the Appraisals -- Deliveries of Aircraft". Continental has the option to substitute other aircraft if the delivery of any Aircraft is expected to be delayed for more than 30 days after the month scheduled for delivery or beyond the delivery deadline. See "Description of the Aircraft and the Appraisals -- Substitute Aircraft". (2) The actual principal amount issued for an Aircraft may be less depending on the circumstances of the financing of such Aircraft. The aggregate principal amount of all of the Equipment Notes will not exceed the aggregate face amount of the Certificates. (3) The appraised value of each Aircraft set forth above is the lesser of the average and median values of such Aircraft as appraised by three independent appraisal and consulting firms, projected as of the scheduled delivery month of each Aircraft. Such appraisals are based upon varying assumptions and methodologies. An appraisal is only an estimate of value and should not be relied upon as a measure of realizable value. See "Risk Factors -- Risk Factors Relating to the Certificates and the Offering -- Appraisals and Realizable Value of Aircraft". <PAGE> 7 S-6 LOAN TO AIRCRAFT VALUE RATIOS The following table sets forth loan to Aircraft value ratios ("LTVs") for each Class of Certificates as of March 15, 2000 (the first Regular Distribution Date that occurs after all Aircraft are scheduled to have been delivered) and each September 15 Regular Distribution Date thereafter. The LTVs for any Class of Certificates for the period prior to March 15, 2000 are not meaningful, since during such period all of the Equipment Notes expected to be acquired by the Trusts and the related Aircraft will not be included in the calculation. The table should not be considered a forecast or prediction of expected or likely LTVs but simply a mathematical calculation based on one set of assumptions. See "Risk Factors -- Risk Factors Relating to the Certificates and the Offering -- Appraisals and Realizable Value of Aircraft". <TABLE> <CAPTION> ASSUMED OUTSTANDING BALANCE(2) LTV(3) AGGREGATE AIRCRAFT CLASS A-1 CLASS A-2 CLASS B CLASS C-1 CLASS C-2 CLASS A-1 DATE VALUE(1) CERTIFICATES CERTIFICATES CERTIFICATES CERTIFICATES CERTIFICATES CERTIFICATES <S> <C> <C> <C> <C> <C> <C> <C> March 15, $1,229,338,333 $302,607,936 $192,425,000 $107,027,426 $45,418,950 $80,575, % September 15, ,192,458, ,456, ,425, ,027,426 45,418,950 80,575, September 15, ,155,578, ,496, ,425, ,124,786 40,363,881 80,575, September 15, ,118,697, ,985, ,425, ,356,185 37,691,719 80,575, September 15, ,081,817, ,517, ,425, ,274,710 33,958,229 80,575, September 15, ,044,937, ,050, ,425, ,469,703 33,937, September 15, ,008,057, ,083, ,425,000 97,240,203 29,224, September 15, ,177, ,067, ,425,000 93,187,090 23,597, September 15, ,297, ,148, ,425,000 89,929,232 22,789, September 15, ,416, ,291, ,425,000 86,606,470 22,477,

7 Page 7 of 86 September 15, ,763, ,248, ,600,910 21,447, September 15, ,401, ,809, ,007,010 14,294, September 15, ,040, ,058, ,436, September 15, ,679, ,130, ,891, September 15, ,318, ,480, ,910, September 15, ,956, ,933, ,792, September 15, ,141, ,955, ,095, September 15, ,326, ,662, , September 15, ,511,680 86,181, , September 15, ,696,640 57,746, , September 15, ,323,567 22,262, , September 15, NA <CAPTION> LTV(3) CLASS A-2 CLASS B CLASS C-1 CLASS C-2 DATE CERTIFICATES CERTIFICATES CERTIFICATES CERTIFICATES <S> <C> <C> <C> <C> March 15, % 48.97% 59.22% 59.22% September 15, September 15, September 15, September 15, September 15, NA September 15, NA September 15, NA September 15, NA September 15, NA September 15, NA NA September 15, NA NA September 15, NA NA NA September 15, NA NA NA September 15, NA NA NA September 15, NA NA NA September 15, NA NA NA September 15, NA NA NA September 15, NA NA NA September 15, NA NA NA September 15, NA NA NA September 15, NA NA NA NA </TABLE> (1) We have assumed that the initial appraised value of each Aircraft, determined as described under "-- Equipment Notes and the Aircraft", declines by approximately 3% per year for the first fifteen years after the year of delivery of such Aircraft and by approximately 4% per year thereafter. (2) In calculating the outstanding balances, we have assumed that the Trusts will acquire the maximum principal amount of Equipment Notes for all Aircraft. (3) The LTVs for each Class of Certificates were obtained for each Regular Distribution Date by dividing (i) the expected outstanding balance of such Class together with the expected outstanding balance of all other Classes equal or senior in right of payment to such Class after giving effect to the distributions expected to be made on such date, by (ii) the assumed value of all of the Aircraft on such date based on the assumptions described above. The outstanding balances and LTVs may change if, among other things, the aggregate principal amount of the Equipment Notes acquired by the Trusts is less than the maximum permitted under the terms of this offering or the amortization of the Equipment Notes differs from the assumed amortization schedule calculated for purposes of this Prospectus Supplement. The above table was compiled on an aggregate basis. However, the Equipment Notes for an Aircraft will not have a security interest in any other Aircraft. This means that any excess proceeds realized from the sale of an Aircraft or other exercise of remedies will not be available to cover any shortfalls on the Equipment Notes relating to any other Aircraft. See "Description of the Equipment Notes -- Loan to Value Ratios of Equipment Notes" for examples of LTVs for the Equipment Notes issued in respect of individual Aircraft, which may be more relevant in a default situation than the aggregate values shown above. <PAGE> 8 S-7 CASH FLOW STRUCTURE Set forth below is a diagram illustrating the structure for the offering of the Certificates and certain cash flows. [Diagram omitted, which shows that Continental will pay to the Loan Trustee for Leased Aircraft and Owned Aircraft (a) the lease rental payments, which are assigned by the Owner Trustee, on Leased Aircraft and (b) the mortgage payments on Owned Aircraft. From such lease rental payments and mortgage payments, the Loan Trustee will make Equipment Note payments on the Series A-1 Equipment Notes, the Series A-2 Equipment Notes, the Series B Equipment Notes, the Series C-1 Equipment Notes and the Series C-2 Equipment Notes with respect to all Aircraft to the Subordination Agent. Excess rental payments will be paid by the Loan Trustee to the lessors for Leased Aircraft.

8 Page 8 of 86 From such Equipment Note payments, the Subordination Agent will pay principal, premium, if any, and interest distributions to the Class A-1 Trustee, the Class A-2 Trustee, the Class B Trustee, the Class C-1 Trustee and the Class C-2 Trustee, who will pay such principal, premium, if any, and interest distributions to the Class A-1 Certificateholders, the Class A-2 Certificateholders, the Class B Certificateholders, the Class C-1 Certificateholders and the Class C-2 Certificateholders, respectively. The Subordination Agent may also receive advances, if any, and pay reimbursements, if any, to the applicable Liquidity Provider. The Depositary will make interest payments on the Deposits to the Escrow Agent. From such interest payments, the Escrow Agent will make payments to the Class A-1 Certificateholders, the Class A-2 Certificateholders, the Class B Certificateholders, the Class C-1 Certificateholders and the Class C-2 Certificateholders.] (1) Each Aircraft leased to Continental will be subject to a separate Lease and a related Indenture; each Aircraft owned by Continental will be subject to a separate Indenture. (2) The proceeds of the offering of each Class of Certificates will initially be held in escrow and deposited with the Depositary. The Depositary will hold such funds as interest-bearing Deposits. Each Trust will withdraw funds from the Deposits relating to such Trust to purchase Equipment Notes from time to time as each Aircraft is financed. The scheduled payments of interest on the Equipment Notes and on the Deposits relating to a Trust, taken together, will be sufficient to pay accrued interest on the outstanding Certificates of such Trust. The Liquidity Facilities will not cover interest on the Deposits. <PAGE> 9 S-8 THE OFFERING Certificates Offered... - Class A-1 Certificates - Class A-2 Certificates - Class B Certificates - Class C-1 Certificates - Class C-2 Certificates Each Class of Certificates will represent a fractional undivided interest in a related Trust. Use of Proceeds... Subordination Agent, Trustee, Paying Agent and Loan Trustee... Escrow Agent... Depositary... Liquidity Provider... Trust Property... The proceeds from the sale of the Certificates of each Trust will initially be held in escrow and deposited with the Depositary. Each Trust will withdraw funds from the escrow relating to such Trust to acquire Equipment Notes. The Equipment Notes will be issued to finance the acquisition by Continental of 21 new Boeing aircraft scheduled for delivery from July 1999 to December Wilmington Trust Company First Security Bank, National Association Westdeutsche Landesbank Girozentrale, New York branch Bayerische Landesbank Girozentrale The property of each Trust will include: - Equipment Notes acquired by such Trust. - All monies receivable under the Liquidity Facility for such Trust. - Funds from time to time deposited with the Trustee in accounts relating to such Trust. Regular Distribution Dates... Record Dates... Distributions... March 15 and September 15, commencing on September 15, The fifteenth day preceding the related Distribution Date. The Trustee will distribute all payments of principal, premium (if any) and interest received on the Equipment Notes held in each Trust to the holders of the Certificates of such Trust, subject to the subordination provisions applicable to the Certificates. Scheduled payments of principal and interest

9 Page 9 of 86 made on the Equipment Notes will be distributed on the applicable Regular Distribution Dates. Payments of principal, premium (if any) and interest made on the Equipment Notes resulting from any early redemption or purchase of such Equipment Notes will be distributed on a special distribution date after not less than 15 days' notice to Certificateholders. <PAGE> 10 S-9 Subordination... Distributions on the Certificates will be made in the following order: - First, to the holders of the Class A-1 and Class A-2 Certificates. - Second, to the holders of the Class B Certificates. - Third, to the holders of the Class C-1 and Class C-2 Certificates. If Continental is in bankruptcy or certain other specified events have occurred but Continental is continuing to meet certain of its obligations, the subordination provisions applicable to the Certificates permit distributions to be made to junior Certificates prior to making distributions in full on the senior Certificates. Control of Loan Trustee... The holders of at least a majority of the outstanding principal amount of Equipment Notes issued under each Indenture will be entitled to direct the Loan Trustee under such Indenture in taking action as long as no Indenture Default is continuing thereunder. If an Indenture Default is continuing, subject to certain conditions, the "Controlling Party" will direct the Loan Trustees (including in exercising remedies, such as accelerating such Equipment Notes or foreclosing the lien on the Aircraft securing such Equipment Notes). The Controlling Party will be: - The Class A-1 Trustee or Class A-2 Trustee, whichever represents the Class with the larger principal amount of Certificates outstanding at the time that the Indenture Default occurs. - Upon payment of final distributions to the holders of such larger Class, the other of the Class A-1 Trustee or Class A-2 Trustee. - Upon payment of final distributions to the holders of Class A-1 and A-2 Certificates, the Class B Trustee. - Upon payment of final distributions to the holders of Class B Certificates, the Class C-1 Trustee or Class C-2 Trustee, whichever represents the Class with the larger principal amount of Certificates outstanding at such time. - Upon payment of final distributions to the holders of such larger Class, the other of the Class C-1 Trustee or Class C-2 Trustee. - Under certain circumstances, and notwithstanding the foregoing, the liquidity provider with the largest amount owed to it. In exercising remedies during the nine months after the earlier of (a) the acceleration of the Equipment Notes issued pursuant to any Indenture or (b) the bankruptcy of Continental, the Controlling Party may not sell such Equipment Notes or the Aircraft subject to the lien of such Indenture for less than <PAGE> 11 S-10 certain specified minimums or modify lease rental payments for such Aircraft below a specified threshold. Right to Buy Other Classes of

10 Page 10 of 86 Certificates... If Continental is in bankruptcy or certain other specified events have occurred, the Certificateholders may have the right to buy certain other Classes of Certificates on the following basis: - If the Class A-1 or Class A-2 Certificateholders are then represented by the Controlling Party, the Certificateholders of such other Class will have the right to purchase all of such Class of Certificates represented by the Controlling Party. - The Class B Certificateholders will have the right to purchase all of the Class A-1 and Class A-2 Certificates. - The Class C-1 and Class C-2 Certificateholders will have the right to purchase all of the Class A-1, Class A-2 and Class B Certificates. - If the Class C-1 or Class C-2 Certificateholders are then represented by the Controlling Party, the Certificateholders of such other Class will have the right to purchase all of such Class of Certificates represented by the Controlling Party. The purchase price in each case described above will be the outstanding balance of the applicable Class of Certificates plus accrued and unpaid interest. Liquidity Facilities... Under the Liquidity Facility for each Trust, the Liquidity Provider will, if necessary, make advances in an aggregate amount sufficient to pay interest on the applicable Certificates on up to three successive semiannual Regular Distribution Dates at the applicable interest rate for such Certificates. The Liquidity Facilities cannot be used to pay any other amount in respect of the Certificates and will not cover interest payable on amounts held in escrow as Deposits with the Depositary. Notwithstanding the subordination provisions applicable to the Certificates, the holders of the Certificates to be issued by each Trust will be entitled to receive and retain the proceeds of drawings under the Liquidity Facility for such Trust. Upon each drawing under any Liquidity Facility to pay interest on the Certificates, the Subordination Agent will reimburse the Liquidity Provider for the amount of such drawing. Such reimbursement obligation and all interest, fees and other amounts owing to the Liquidity Provider under each Liquidity Facility and certain other agreements will rank equally with comparable obligations relating to the other Liquidity Facilities and will rank senior to the Certificates in right of payment. Escrowed Funds... <PAGE> 12 Funds in escrow for the Certificateholders of each Trust will be held by the Depositary as Deposits relating to such Trust. Funds may be withdrawn by the Trustees from time to time to purchase Equipment Notes prior to the deadline established for purposes of this offering. On each Regular Distribution Date, the Depositary will pay interest accrued on the Deposits relating to S-11 such Trust at a rate per annum equal to the interest rate applicable to the Certificates issued by such Trust. The Deposits relating to each Trust and interest paid thereon will not be subject to the subordination provisions applicable to the Certificates. The Deposits cannot be used to pay any other amount in respect of the Certificates. Unused Escrowed Funds... All of the Deposits held in escrow may not be used to purchase Equipment Notes by the deadline established for purposes of this offering. This may occur because of delays in the delivery of Aircraft, variations in the terms of each Aircraft financing or other reasons. See "Description of the Certificates -- Obligation to Purchase

11 Page 11 of 86 Equipment Notes". If any funds remain as Deposits with respect to any Trust after such deadline, they will be withdrawn by the Escrow Agent for such Trust and distributed, with accrued and unpaid interest, to the Certificateholders of such Trust after at least 15 days' prior written notice. See "Description of the Deposit Agreements -- Unused Deposits". Obligation to Purchase Equipment Notes... <PAGE> 13 The Trustees will be obligated to purchase the Equipment Notes issued with respect to each Aircraft pursuant to the Note Purchase Agreement. Continental may enter into a leveraged lease financing or a secured debt financing with respect to each Aircraft pursuant to forms of financing agreements attached to the Note Purchase Agreement. However, the terms of the financing agreements entered into may differ from the forms of such agreements described in this Prospectus Supplement. In the case of a Leased Aircraft, this is because a third party -- the Owner Participant -- will provide a portion of the financing of the Aircraft and may request changes. In addition, Continental may structure a financing in ways other than contemplated by the Note Purchase Agreement, such as through a "cross-border" lease or a synthetic lease, which may require different terms in the financing agreements. Although such changes are permitted, under the Note Purchase Agreement, the terms of such financing agreements must (a) except in the case of a special structure described in the preceding sentence, contain the Mandatory Document Terms set forth in the Note Purchase Agreement and (b) not vary the Mandatory Economic Terms set forth in the Note Purchase Agreement. In addition, Continental must certify to the Trustees that any such modifications (a) do not materially and adversely affect the Certificateholders and (b) in the case of any such special structure, do not expose the Certificateholders to any material additional risks beyond those to which such persons would have been exposed absent such special structure. Continental must also obtain written confirmation from each Rating Agency that the use of financing agreements modified in any material respect from the forms attached to the Note Purchase Agreement will not result in a withdrawal, suspension or downgrading of the rating of any Class of Certificates. The Trustees will not be obligated to purchase Equipment Notes if, at the time of issuance, Continental is in bankruptcy or certain other specified S-12 events have occurred. See "Description of the Certificates -- Obligation to Purchase Equipment Notes". Equipment Notes (a) issuer... Leased Aircraft. If Continental leases an Aircraft, the related Equipment Notes will be issued by a financial institution, acting as Owner Trustee. The Owner Trustee will not be individually liable for such Equipment Notes. However, Continental's scheduled rental obligations under the related Lease will be in amounts sufficient to pay scheduled payments on such Equipment Notes. Owned Aircraft. If Continental purchases an Aircraft, the related Equipment Notes will be issued by Continental. (b) Interest... (c) Principal... The Equipment Notes held in each Trust will accrue interest at the rate per annum for the Certificates issued by such Trust set forth on the cover page of this Prospectus Supplement. Interest will be payable on March 15 and September 15 of each year, commencing on the first such date after issuance of such Equipment Notes. Interest is calculated on the basis of a 360-day year consisting of twelve 30-day months. Amortizing Notes. Principal payments on the Series A-1, Series B and Series C-1 Equipment Notes are scheduled on March 15 and September

12 Page 12 of in certain years, commencing on March 15, Bullet Maturity Notes. The entire principal amount of the Series A-2 Equipment Notes is scheduled to be paid on September 15, The entire principal amount of the Series C-2 Equipment Notes is scheduled to be paid on September 15, (d) Redemption and Purchase... Aircraft Event of Loss. If an Event of Loss occurs with respect to an Aircraft, all of the Equipment Notes issued with respect to such Aircraft will be redeemed, unless such Aircraft is replaced by Continental under the related financing agreements. The redemption price in such case will be the unpaid principal amount of such Equipment Notes, together with accrued interest, but without any premium. Optional Redemption. The issuer of the Equipment Notes with respect to an Aircraft may elect to redeem them prior to maturity. The redemption price in such case will be the unpaid principal amount of such Equipment Notes, together with accrued interest plus a Make-Whole Premium. See "Description of the Equipment Notes -- Redemption". Purchase by Owner. In the case of a Leased Aircraft, if a Lease Event of Default is continuing, the applicable Owner Trustee or Owner Participant may elect to purchase all of the Equipment Notes with respect to such Aircraft, subject to the terms of the applicable Leased Aircraft Indenture. The purchase price in such case will be the unpaid principal amount of such Equipment Notes, together with accrued <PAGE> 14 S-13 interest, but without any premium (provided that a Make-Whole Premium will be payable under certain circumstances specified in the Leased Aircraft Indenture). In the case of an Owned Aircraft, Continental will have no comparable right to purchase the Equipment Notes under such circumstances. (e) Security... The Equipment Notes issued with respect to each Aircraft will be secured by a security interest in such Aircraft and, in the case of each Leased Aircraft, in the related Owner Trustee's rights under the Lease with respect to such Aircraft (with certain limited exceptions). The Equipment Notes issued in respect of an Aircraft will not be secured by any other Aircraft or Leases. This means that any excess proceeds from the sale of an Aircraft or other exercise of remedies with respect to such Aircraft will not be available to cover any shortfall with respect to any other Aircraft. There will not be cross-default provisions in the Indentures or in the Leases. This means that if the Equipment Notes issued with respect to one or more Aircraft are in default and the Equipment Notes issued with respect to the remaining Aircraft are not in default, no remedies will be exercisable with respect to the remaining Aircraft. (f) Section 1110 Protection... Certain Federal Income Tax Consequences... Certain ERISA Considerations... Continental's outside counsel will provide its opinion to the Trustees that the benefits of Section 1110 of the U.S. Bankruptcy Code will be available with respect to the Equipment Notes. Each Certificate Owner generally should report on its federal income tax return its pro rata share of income from the relevant Deposits and income from the Equipment Notes and other property held by the relevant Trust. See "Certain U.S. Federal Income Tax Consequences". Each person who acquires a Certificate will be deemed to have represented that either: (a) no employee benefit plan assets have been used to

13 Page 13 of 86 purchase such Certificate or (b) the purchase and holding of such Certificate are exempt from the prohibited transaction restrictions of the Employee Retirement Income Security Act of 1974 and the Internal Revenue Code of 1986 pursuant to one or more prohibited transaction statutory or administrative exemptions. See "Certain ERISA Considerations". <PAGE> 15 Rating of the Certificates... <TABLE> <CAPTION> </TABLE> S-14 It is a condition to the issuance of the Certificates that the Certificates be rated by Moody's and Standard & Poor's not less than the ratings set forth below: STANDARD CERTIFICATES MOODY'S & POOR'S <S> <C> <C> Class A-1... Aa3 AA+ Class A-2... Aa3 AA+ Class B... A2 AA- Class C-1... Baa1 A- Class C-2... Baa1 A- A rating is not a recommendation to purchase, hold or sell Certificates, since such rating does not address market price or suitability for a particular investor. There can be no assurance that such ratings will not be lowered or withdrawn by a Rating Agency. <TABLE> <CAPTION> STANDARD MOODY'S & POOR'S <S> <C> <C> <C> Rating of the Depositary... Short Term... P-1 A-1+ Threshold Rating for the Liquidity Provider... </TABLE> Liquidity Provider Rating... <PAGE> 16 Short Term Class A-1 and Class A-2... P-1 A-1+ Class B... P-1 A-1+ Class C-1 and Class C-2... P-1 A-1 The Liquidity Provider meets the Threshold Rating requirement for the Class A-1, Class A-2, Class B, Class C-1 and Class C-2 Certificates. S-15 SUMMARY FINANCIAL AND OPERATING DATA The following tables summarize certain consolidated financial data and certain operating data with respect to Continental. The following selected consolidated financial data for the years ended December 31, 1998, 1997 and 1996 is derived from the audited consolidated financial statements of Continental incorporated by reference in this Prospectus Supplement and should be read in conjunction therewith. The consolidated financial data of Continental for the three months ended March 31, 1999 and 1998 is derived from the unaudited consolidated financial statements of Continental incorporated by reference in this Prospectus Supplement, which include all adjustments (consisting solely of normal recurring accruals) that Continental considers necessary for the fair presentation of the financial position and results of operations for these periods. Operating results for the three months ended March 31, 1999 are not necessarily indicative of the results that may be expected for the year ending December 31, Continental's selected consolidated financial data should be read in conjunction with, and are qualified in their entirety by reference to, Continental's consolidated financial statements, including the notes thereto. <TABLE> <CAPTION> THREE MONTHS ENDED MARCH 31, YEAR ENDED DECEMBER 31, (IN MILLIONS OF DOLLARS, EXCEPT OPERATING DATA, PER SHARE DATA AND RATIOS) <S> <C> <C> <C> <C> <C> FINANCIAL DATA -- OPERATIONS: Operating Revenue... $ 2,056 $ 1,854 $ 7,951 $ 7,213 $ 6,360 Operating Expenses... 1,896 1,704 7,250(1) 6,497 5,835(2) Operating Income Nonoperating Income (Expense), net... (12)(3) (13) (53) (76) (97)

14 Page 14 of Income before Income Taxes, Minority Interest, Extraordinary Charges and Cumulative Effect of Change in Accounting Principle (4) Net Income... $ 84 $ 81 $ 383 $ 385 $ 319 ======= ======= ======= ======= ======= Earnings per Common Share... $ 1.23(5) $ 1.38 $ 6.34 $ 6.65 $ 5.75 ======= ======= ======= ======= ======= Earnings per Common Share Assuming Dilution... $ 1.11(6) $ 1.06 $ 5.02 $ 4.99 $ 4.17 ======= ======= ======= ======= ======= Ratio of Earnings to Fixed Charges(7) x 1.83x 1.94x 2.07x 1.81x ======= ======= ======= ======= ======= OPERATING DATA(8): Revenue passenger miles (millions)(9)... 13,737 12,072 53,910 47,906 41,914 Available seat miles (millions)(10)... 19,225 17,523 74,727 67,576 61,515 Passenger load factor(11) % 68.9% 72.1% 70.9% 68.1% Breakeven passenger load factor(12)(13) % 60.6% 61.4% 60.0% 60.7% Passenger revenue per available seat mile (cents)(14) Operating cost per available seat mile (cents)(13)(15) Average yield per revenue passenger mile (cents)(16) Average length of aircraft flight (miles)... 1,083 1,015 1, </TABLE> <PAGE> 17 S-16 <TABLE> <CAPTION> MARCH 31, DECEMBER 31, (IN MILLIONS OF DOLLARS) <S> <C> <C> FINANCIAL DATA -- BALANCE SHEET: Assets: Cash and Cash Equivalents, including restricted cash and cash equivalents of $11 and $11, respectively(17)... $1,397 $1,399 Other Current Assets... 1, Total Property and Equipment, Net... 3,488 3,115 Routes, Gates and Slots, Net... 1,169 1,181 Other Assets, Net Total Assets... $7,605 $7,086 ====== ====== Liabilities and Stockholders' Equity: Current Liabilities... $2,501 $2,442 Long-Term Debt and Capital Leases... 2,810 2,480 Deferred Credits and Other Long-Term Liabilities Continental-Obligated Mandatorily Redeemable Preferred Securities of Subsidiary Trust Holding Solely Convertible Subordinated Debentures(18) Common Stockholders' Equity... 1,387 1, Total Liabilities and Stockholders' Equity... $7,605 $7,086 ====== ====== </TABLE> (1) Includes a $122 million fleet disposition/impairment loss resulting from Continental's decision to accelerate the retirement of certain jet and turboprop aircraft. (2) Includes a $128 million fleet disposition charge associated primarily with Continental's decision to accelerate the replacement of its DC-9-30, DC-10-10, , , and aircraft. (3) Includes a $20 million gain on the sale of a portion of the Company's indirect interest in Equant N.V. (4) Reflects income before income taxes and cumulative effect of a change in accounting principle. Continental adopted Statement of Position 98-5, "Reporting on the Costs of Start-Up Activities", in the first quarter of Statement of Position 98-5 amended Statement of Position 88-1, "Accounting for Developmental and Preoperating Costs, Purchases and Exchanges of Take-Off and Landing Slots, and Airframe Modifications" by requiring preoperating costs related to the integration of new types of aircraft to be expensed as incurred and requiring all unamortized start-up costs (e.g., pilot training costs related to induction of new aircraft) to be expensed upon adoption. This resulted in the Company recording a $6 million cumulative effect of a change in accounting principle, net of tax, in the first quarter of (5) Reflects earnings per common share after cumulative effect of a change in accounting principle. See Note (4) for a description of the change in accounting principle. Earnings per common share were $1.32 before

15 Page 15 of 86 cumulative effect of such change in accounting principle. (6) Reflects earnings per common share assuming dilution after cumulative effect of a change in accounting principle. See Note (4) for a description of the change in accounting principle. Earnings per common share assuming dilution were $1.19 before cumulative effect of such change in accounting principle. (7) For purposes of calculating this ratio, earnings consist of income before income taxes, minority interest, extraordinary charges and cumulative effect of a change in accounting principle plus interest expense (net of capitalized interest), the portion of rental expense representative of interest expense and amortization of previously capitalized interest. Fixed charges consist of interest expense and the portion of rental expense representative of interest expense. <PAGE> 18 S-17 (8) Includes operating data for CMI, but does not include operating data for Express's regional jet operations or turboprop operations. (9) The number of scheduled miles flown by revenue passengers. (10) The number of seats available for passengers multiplied by the number of scheduled miles those seats are flown. (11) Revenue passenger miles divided by available seat miles. (12) The percentage of seats that must be occupied by revenue passengers in order for the airline to break even on an income before income taxes basis, excluding nonrecurring charges, nonoperating items and other special items. (13) Excludes a $122 million fleet disposition/impairment loss in 1998 and a $128 million fleet disposition loss in See Notes (1) and (2) for description of the charges. (14) Passenger revenue divided by available seat miles. (15) Operating expenses divided by available seat miles. (16) The average revenue received for each mile a revenue passenger is carried. (17) Restricted cash and cash equivalents agreements relate primarily to workers' compensation claims and the terms of certain other agreements. (18) The sole assets of the Trust were convertible subordinated debentures. At December 31, 1998, the debentures had an aggregate principal amount of $115 million, bore interest at the rate of 8 1/2% per annum and were to mature on December 1, In November and December 1998, approximately $134 million of such securities were converted into 5,558,649 shares of Class B common stock, and in January 1999, the remainder of such securities were converted into 4,752,522 shares of Class B common stock. Accordingly, no debentures were outstanding at March 31, <PAGE> 19 S-18 RISK FACTORS RELATING TO THE COMPANY LEVERAGE AND LIQUIDITY RISK FACTORS Continental has a higher proportion of debt compared to its equity capital than some of its principal competitors. In addition, Continental's cash resources are less than some of its principal competitors. A majority of Continental's property and equipment is subject to liens securing indebtedness. Accordingly, Continental may be less able than some of its competitors to withstand a prolonged recession in the airline industry or respond as flexibly to changing economic and competitive conditions. As of March 31, 1999, Continental had: - $3.0 billion (including current maturities) of long-term debt and capital lease obligations. - $1.4 billion in cash and cash equivalents (excluding restricted cash and cash equivalents of $11 million). - $225 million available to be drawn under general lines of credit. Continental has substantial commitments for capital expenditures, including for the acquisition of new aircraft. As of June 1, 1999, Continental had agreed to acquire or lease a total of 112 Boeing jet aircraft through Continental also has options for an additional 121 aircraft (exercisable subject to certain conditions). The estimated aggregate cost of Continental's firm commitments for Boeing aircraft is approximately $5.3 billion. We currently plan to finance our new Boeing aircraft with a combination of enhanced pass through trust certificates, lease equity and other third party financing, subject to availability and market conditions. As of June 1, 1999, approximately $703 million in financing had been arranged for such future Boeing deliveries. In addition, Continental had commitments or letters of intent for backstop financing for approximately one-third of the anticipated remaining acquisition