UNITED STATES
                    SECURITIES AND EXCHANGE COMMISSION
                          Washington, D.C.  20549
                                                                           
                                 FORM 10-Q

(Mark One)

[X]         QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF
                    THE SECURITIES EXCHANGE ACT OF 1934

               FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1995

                                    OR

[ ]        TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                      SECURITIES EXCHANGE ACT OF 1934

          FOR THE TRANSITION PERIOD FROM __________ TO __________

                       Commission File Number 0-9781

                        CONTINENTAL AIRLINES, INC.
          (Exact name of registrant as specified in its charter)

          Delaware                                   74-2099724
  (State or other jurisdiction                    (I.R.S. Employer
of incorporation or organization)                Identification No.)

                            2929 Allen Parkway
                           Houston, Texas  77019
                  (Address of principal executive office)
                                (Zip Code)

                               713-834-5000
            (Registrant's telephone number including area code)

     Indicate by check mark whether registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.  Yes  X    No _____

     Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Sections 12, 13 or 15(d) of the
Securities Exchange Act of 1934 subsequent to the distribution of
securities under a plan confirmed by a court.  Yes  X    No _____
                              _______________

As of April 30, 1995, 6,301,056 shares of Class A common stock and
20,636,065 shares of Class B common stock were outstanding.



                      PART I - FINANCIAL INFORMATION


ITEM 1.  FINANCIAL STATEMENTS


<TABLE>
                        CONTINENTAL AIRLINES, INC.
                   CONSOLIDATED STATEMENTS OF OPERATIONS
             (In thousands of dollars, except per share data)

<CAPTION>
                                               Three Months   Three Months
                                                   Ended         Ended
                                                 March 31,      March 31,
                                                   1995           1994    
                                                (Unaudited)   (Unaudited)
<S>                                             <C>           <C>
Operating Revenues:
 Passenger. . . . . . . . . . . . . . . . . . .  $1,239,913    $1,205,463 
 Cargo, mail and other. . . . . . . . . . . . .     168,430       151,036 
                                                  1,408,343     1,356,499 

Operating Expenses:
 Wages, salaries and related costs. . . . . . .     366,088       372,814 
 Rentals and landing fees . . . . . . . . . . .     215,019       204,539 
 Aircraft fuel. . . . . . . . . . . . . . . . .     168,473       174,567 
 Commissions. . . . . . . . . . . . . . . . . .     119,172       121,229 
 Maintenance, materials and repairs . . . . . .      97,438       135,024 
 Depreciation and amortization. . . . . . . . .      63,904        61,848 
 Other. . . . . . . . . . . . . . . . . . . . .     350,735       341,677 
                                                  1,380,829     1,411,698 
Operating Income (Loss) . . . . . . . . . . . .      27,514       (55,199)

Nonoperating Income (Expense):
 Interest expense . . . . . . . . . . . . . . .     (53,367)      (62,483)
 Interest capitalized . . . . . . . . . . . . .       1,145         3,116 
 Interest income. . . . . . . . . . . . . . . .       5,564         5,379 
 Gain on disposition of property,
  equipment and other assets, net . . . . . . .         768         2,705 
 Other, net . . . . . . . . . . . . . . . . . .     (10,026)       (7,152)
                                                    (55,916)      (58,435)

Loss before Income Taxes and Minority Interest.     (28,402)     (113,634)
Income Tax Benefit. . . . . . . . . . . . . . .           -        42,847 
Loss before Minority Interest . . . . . . . . .     (28,402)      (70,787)
Minority Interest . . . . . . . . . . . . . . .      (1,754)         (795)
Net Loss. . . . . . . . . . . . . . . . . . . .     (30,156)      (71,582)
Preferred Dividend Requirements and
 Accretion to Liquidation Value . . . . . . . .      (1,514)       (1,364)
Loss Applicable to Common Shares. . . . . . . .  $  (31,670)   $  (72,946)

Primary and Fully Diluted Loss per
 Common Share . . . . . . . . . . . . . . . . .  $    (1.21)   $    (2.86)
</TABLE>






The accompanying Notes to Consolidated Financial Statements are an integral
part of these statements.



<TABLE>
                        CONTINENTAL AIRLINES, INC.
                        CONSOLIDATED BALANCE SHEETS
                         (In thousands of dollars)

<CAPTION>
                                               March 31,     December 31,
             ASSETS                              1995            1994    
                                              (Unaudited)
<S>                                           <C>            <C>
Current Assets:
 Cash and cash equivalents, including 
  restricted cash and cash equivalents of 
  $115,153 and $118,732, respectively . . . . $  416,767     $  396,298 
 Accounts receivable, net . . . . . . . . . .    446,110        375,621 
 Spare parts and supplies, net. . . . . . . .    140,988        141,781 
 Prepayments and other. . . . . . . . . . . .     75,064         76,260 
  Total current assets. . . . . . . . . . . .  1,078,929        989,960 

Property and Equipment:
 Owned property and equipment:
  Flight equipment. . . . . . . . . . . . . .  1,014,989      1,004,337 
  Other . . . . . . . . . . . . . . . . . . .    290,364        281,605 
                                               1,305,353      1,285,942 
  Less:  Accumulated depreciation . . . . . .    232,876        207,206 
                                               1,072,477      1,078,736 

 Purchase deposits for flight equipment . . .    107,732        166,052 

 Capital leases:
  Flight equipment. . . . . . . . . . . . . .    399,941        400,037 
  Other . . . . . . . . . . . . . . . . . . .     26,493         17,045 
                                                 426,434        417,082 
  Less:  Accumulated amortization . . . . . .     81,800         69,103 
                                                 344,634        347,979 
   Total property and equipment . . . . . . .  1,524,843      1,592,767 

Other Assets:
 Routes, gates and slots, net . . . . . . . .  1,576,469      1,591,140 
 Reorganization value in excess of amounts
  allocable to identifiable assets, net . . .    313,867        318,206 
 Other assets, net. . . . . . . . . . . . . .    111,112        109,109 

   Total other assets . . . . . . . . . . . .  2,001,448      2,018,455 

     Total Assets . . . . . . . . . . . . . . $4,605,220     $4,601,182 
</TABLE>











                                                   (continued on next page)



<TABLE>
                        CONTINENTAL AIRLINES, INC.
                        CONSOLIDATED BALANCE SHEETS
             (In thousands of dollars, except for share data)

<CAPTION>
                                                 March 31,    December 31,
LIABILITIES AND STOCKHOLDERS' EQUITY               1995           1994    
                                                (Unaudited)
<S>                                             <C>           <C>
Current Liabilities:
 Debt and capital lease obligations in default.  $  616,403    $  489,865 
 Current maturities of long-term debt . . . . .      88,897       126,186 
 Current maturities of capital leases . . . . .      24,638        25,788 
 Accounts payable . . . . . . . . . . . . . . .     604,514       629,939 
 Air traffic liability. . . . . . . . . . . . .     653,844       584,108 
 Accrued payroll and pensions . . . . . . . . .     168,059       178,648 
 Accrued other liabilities. . . . . . . . . . .     382,311       373,273 
  Total current liabilities . . . . . . . . . .   2,538,666     2,407,807 

Long-Term Debt. . . . . . . . . . . . . . . . .     939,957     1,038,165 

Capital Leases. . . . . . . . . . . . . . . . .     166,501       164,349 

Deferred Credits and Other Long-Term 
 Liabilities:
  Deferred income taxes . . . . . . . . . . . .      28,100        28,100 
  Deferred credit - operating leases. . . . . .     131,121       137,606 
  Accruals for aircraft retirements and
   excess facilities. . . . . . . . . . . . . .     391,298       391,947 
  Other . . . . . . . . . . . . . . . . . . . .     251,682       251,118 
   Total deferred credits and other
    long-term liabilities . . . . . . . . . . .     802,201       808,771 

Commitments and Contingencies

Minority Interest . . . . . . . . . . . . . . .      27,554        25,800 

Redeemable Preferred Stock (aggregate 
 redemption value - $57,420 and $55,966,
 respectively). . . . . . . . . . . . . . . . .      54,120        52,606 

Common Stockholders' Equity:
 Class A common stock - $.01 par, 50,000,000
  shares authorized; 6,301,056 shares
  issued and outstanding. . . . . . . . . . . .          63            63 
 Class B common stock - $.01 par, 100,000,000
  shares authorized; 20,521,581 and 20,403,512
  shares issued . . . . . . . . . . . . . . . .         205           204 
 Additional paid-in capital . . . . . . . . . .     777,764       778,382 
 Accumulated deficit. . . . . . . . . . . . . .    (682,047)     (651,891)
 Unvested portion of restricted stock . . . . .     (12,553)      (13,872)
 Additional minimum pension liability . . . . .      (6,549)       (6,549)
 Unrealized loss on marketable equity
  securities. . . . . . . . . . . . . . . . . .         (45)       (2,218)
 Treasury stock - 50,000 and 30,000 shares. . .        (617)         (435)
   Total common stockholders' equity. . . . . .      76,221       103,684 
    Total Liabilities and Stockholders' Equity.  $4,605,220    $4,601,182 
</TABLE>

The accompanying Notes to Consolidated Financial Statements are an integral
part of these statements.



<TABLE>
                        CONTINENTAL AIRLINES, INC.
              CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                         (In thousands of dollars)

<CAPTION>
                                               Three Months   Three Months
                                                   Ended         Ended
                                                 March 31,      March 31,
                                                   1995           1994    
                                                (Unaudited)   (Unaudited)
<S>                                             <C>           <C>
Net Cash Provided by Operating Activities . . .   $ 52,136      $ 11,169 

Cash Flows from Investing Activities:
 Proceeds from disposition of property,
  equipment and other assets. . . . . . . . . .      2,870         2,115 
 Capital expenditures . . . . . . . . . . . . .    (18,368)      (68,569)
 Purchase deposits refunded . . . . . . . . . .     29,613             - 
  Net cash provided (used) by investing 
   activities . . . . . . . . . . . . . . . . .     14,115       (66,454)

Cash Flows from Financing Activities:
 Proceeds from issuance of long-term debt, net.      5,694         9,713 
 Payments on long-term debt and capital lease
  obligations . . . . . . . . . . . . . . . . .    (52,620)      (52,348)
 Proceeds from issuance of common stock . . . .      1,144             - 
  Net cash used by financing activities . . . .    (45,782)      (42,635)

Net Increase (Decrease) in Cash and 
 Cash Equivalents . . . . . . . . . . . . . . .     20,469       (97,920)

Cash and Cash Equivalents-Beginning of Period .    396,298       721,038 

Cash and Cash Equivalents-End of Period . . . .   $416,767      $623,118 

Supplemental Cash Flow Information:
 Interest paid. . . . . . . . . . . . . . . . .   $ 29,794      $ 41,817 

Financing Activities Not Affecting Cash:
 Reclassification of accrued rent and interest
  to long-term debt . . . . . . . . . . . . . .   $  8,678      $ 13,526 
 Capital lease obligations incurred . . . . . .   $  8,415      $  1,209 
 Property and equipment acquired through the
  issuance of debt. . . . . . . . . . . . . . .   $      -      $  7,031 
 Financed purchase deposits for flight 
  equipment . . . . . . . . . . . . . . . . . .   $      -      $  8,509 
 Return of financed purchase deposits . . . . .   $ 10,028      $      - 
 Reclassification of accrued management fees
  to long-term debt . . . . . . . . . . . . . .   $ 21,304      $      - 
</TABLE>







The accompanying Notes to Consolidated Financial Statements are an integral
part of these statements.


                        CONTINENTAL AIRLINES, INC.

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                (UNAUDITED)


In the opinion of management, the unaudited financial statements included
herein contain all adjustments necessary to present fairly the financial
position, results of operations and cash flows for the periods indicated. 
Such adjustments are of a normal recurring nature.  Certain
reclassifications have been made to the prior year's financial statements
to conform to the 1995 presentation.  The accompanying consolidated
financial statements should be read in conjunction with the consolidated
financial statements and the notes thereto contained in the Annual Report
of Continental Airlines, Inc. (the "Company" or "Continental") on Form 10-K
for the year ended December 31, 1994.

NOTE 1 - LIQUIDITY

Continental is continuing negotiations with certain creditors and lessors
regarding the modification of contractual obligations.  Certain long-term
debt and capital lease obligations were in default or cross default as of
May 11, 1995.  In accordance with generally accepted accounting principles,
such defaulted obligations have been classified as current liabilities as
of March 31, 1995.  However, the Company does not believe it probable that
it will be required to fund such defaulted obligations in the next
12 months.  In addition, certain operating leases were in default or cross
default as of May 11, 1995.  The Company received a notice of lease
termination dated April 18, 1995 from one lessor relating to one A300
aircraft, and such lessor sued the Company and certain other persons on
May 2, 1995.  The notice of lease termination resulted in additional cross
defaults as of March 31, 1995.  See Item 2.  "Management's Discussion and
Analysis of Financial Condition and Results of Operations".

NOTE 2 - EARNINGS (LOSS) PER SHARE

Earnings (loss) per common share computations are based upon earnings
(loss) applicable to common shares and the average number of shares of
common stock and dilutive common stock equivalents (stock options, warrants
and restricted stock) outstanding.  The number of shares used in the
computations for the three months ended March 31, 1995 and March 31, 1994
was 26,330,102 and 25,522,568, respectively.  Preferred stock dividend
requirements (including additional dividends on unpaid dividends) and
accretion to redemption value on preferred stock increased the net loss for
this computation by approximately $1.5 million and $1.4 million for the
three months ended March 31, 1995 and 1994, respectively.

NOTE 3 - PREFERRED STOCK

As of March 31, 1995 and December 31, 1994, the Company had approximately
$10.3 million and $8.9 million, respectively, of dividends on its preferred
stock in arrears.  The Company has agreed with its principal lender to
cause dividends payable on such preferred stock during the period from
March 1, 1995 to February 28, 1997 to be paid only in additional shares of
such preferred stock.

NOTE 4 - INCOME TAXES

A provision (benefit) was not recorded for the three months ended March 31,
1995 due to the fact that utilization of the net operating loss for the
period is not assured.  The income tax benefit for the three months ended
March 31, 1994 is based on the estimated annual effective tax rate which
differs from the federal statutory rate of 35%, principally due to state
income taxes and certain nondeductible expenses.

NOTE 5 - COMMITMENTS AND CONTINGENCIES

Denver.  In 1992, the Company agreed to lease (i) 20 gates at the new
Denver International Airport ("DIA") for a period of five years from the
date DIA opened, (ii) four of such gates for an additional five years and
(iii) a substantial amount of operational space in connection with the
gates and for the terms set forth in the agreement.  During 1994, the
Company significantly reduced its Denver operations.  The City and County
of Denver (the "City") filed a complaint on February 22, 1995 against the
Company in the United States District Court for the District of Colorado
seeking a determination that the Company materially breached and repudiated
the lease and a March 1994 agreement to pay certain costs associated with
the delays in opening DIA.  In addition, the City sought a judgment
declaring the City's rights and the Company's obligations and the award of
an injunction that the Company perform such obligations.  The City also
sought attorneys fees and costs relating to its suit.

The Company, the City and certain other parties have entered into an
agreement ("Settlement") that was approved by the Denver City Council on
April 10, 1995.  The Settlement provides for the release of certain claims
and the settlement of certain litigation filed by the City against the
Company and reduces (i) the full term of the lease to five years, subject
to certain rights of renewal granted to Continental, (ii) the number of
gates leased from 20 to 10 and (iii) the amount of leased operational and
other space by approximately 70%.  The reduced gates and operational space
exceed Continental's current needs at the airport, and the Company is
negotiating with America West Airlines, Inc. and Frontier Airlines, Inc. to
sublease up to five of its remaining gates and certain operational space. 
The Company will attempt to sublease additional facilities and operational
space as well.  To the extent Continental is able to sublease any of its
gates and operational space, its costs under the lease will be reduced.  

The Settlement may still be challenged by certain parties, including by
other air carriers, and the Company cannot predict what the outcome of any
such challenge will be.  Certain air carriers have challenged the
Settlement, taking the position that less than the required number of
carriers have approved the changes to the airline rates and charges
methodology at DIA that result from the Settlement.  In the event the
Settlement of the suit is successfully challenged, the Company believes it
has defenses against the City, as well as claims against the City that
justify rescission of the lease or, if rescission were not awarded by the
court, a substantial reduction in the Company's obligations thereunder. 
Nevertheless, failure to implement the Settlement could reduce or eliminate
the Company's estimated savings at DIA.

NOTE 6 - SUBSEQUENT EVENT

Continental CRS Interests, Inc.  In 1991, System One Information
Management, Inc. ("System One"), a wholly owned subsidiary of the Company,
signed a 10-year systems management agreement with Electronic Data Systems
Corporation ("EDS").  The agreement provided for EDS to manage the data
processing and telecommunications facilities and services used by System
One.

Effective April 27, 1995, Continental and System One completed a series of
transactions whereby the existing systems management agreement between
System One and EDS was terminated and a substantial portion of the assets
(including the travel agent subscriber base and travel-related information
management products and services ("IMS") software) and certain liabilities
of System One were transferred to a newly formed limited liability company,
System One Information Management, L.L.C. ("LLC").  In connection with
these transactions, System One changed its name to Continental CRS
Interests, Inc. ("CRS Interests").   LLC is owned equally by CRS Interests,
a subsidiary of Continental, EDS and AMADEUS, a European computerized
reservation system ("CRS").  Substantially all of System One's remaining
assets (including the CRS software) and liabilities were transferred to
AMADEUS.  The transaction resulted in CRS Interests retaining a one-third
interest in LLC, receiving cash proceeds of approximately $40 million and
receiving a 12.4% equity interest in Amadeus.  LLC will market the AMADEUS
CRS and will continue to develop, market and distribute travel-related IMS. 
The Company anticipates that it will recognize a substantial gain relating
to the transaction in the second quarter.


I
TEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS.

An analysis of statistical information for Continental's jet operations is
as follows: 


<TABLE>
<CAPTION>
                                       Three Months Ended        Net
                                             March 31,        Increase/
                                        1995        1994      (Decrease)  
<S>                                    <C>         <C>        <C>
Revenue passengers (thousands). . . .   9,141       9,348       (2.2) %
Revenue passenger miles 
 (millions) (a) . . . . . . . . . . .   9,561       9,303        2.8  %
Available seat miles (millions) (b) .  16,003      15,284        4.7  %
Passenger load factor (c) . . . . . .    59.7%       60.9%      (1.2) pts.
Breakeven passenger load factor (d) .    58.2%       63.1%      (4.9) pts.
Passenger revenue per available
  seat mile (cents) (e) . . . . . . .    7.37        7.42       (0.7) %
Operating cost per available seat
  mile (cents) (f). . . . . . . . . .    7.90        8.38       (5.7) %
Average yield per revenue 
  passenger mile (cents) (g). . . . .   12.34       12.19        1.2  %
Average fare per revenue passenger. . $129.10     $121.33        6.4  %
Average length of aircraft
  flight (miles). . . . . . . . . . .     803         764        5.1  %
Average daily utilization of
  each aircraft (h) . . . . . . . . .    9:34        9:35       (0.2) %
Actual aircraft in fleet at end
 of period. . . . . . . . . . . . . .     324         319        1.6  %
</TABLE>

(a) The number of scheduled miles flown by revenue passengers.
(b) The number of seats available for passengers, multiplied by the number
    of scheduled miles those seats are flown.
(c) Revenue passenger miles divided by available seat miles.
(d) 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.
(e) Passenger revenues divided by available seat miles.
(f) Operating expenses divided by available seat miles.
(g) The average revenue received for each mile a revenue passenger is
    carried.
(h) The average block hours flown per day in revenue service per aircraft.

Due to the greater demand for air travel during the summer months, revenues
in the airline industry in the third quarter of the year are generally
significantly greater than revenues in the first quarter of the year and
moderately greater than revenues in the second and fourth quarters of the
year for the majority of air carriers.  Continental's results of operations
usually have reflected this seasonality, but have also been impacted by
numerous other factors that are not necessarily seasonal, including the
general state of the United States and Japanese economies and fare actions
taken by Continental and its competitors.

RESULTS OF OPERATIONS

The following discussion provides an analysis of the Company's results of
operations and reasons for material changes therein for the three-month
period ended March 31, 1995 as compared to the three-month period ended
March 31, 1994.

The Company recorded a consolidated net loss of $30.2 million for the three
months ended March 31, 1995 as compared to a consolidated net loss of
$71.6 million for the three months ended March 31, 1994.

Passenger revenues of $1.2 billion for the first three months of 1995
increased 2.9%, $34.5 million, as compared to the same period in 1994, due
primarily to a 1.2% increase in Continental's jet yield and a 2.8% increase
in jet revenue passenger miles.

Cargo, mail and other revenues increased 11.5%, $17.4 million, in the first
three months of 1995 compared to the same period in the prior year
principally as a result of increased fees for worldwide travel-related
services performed by System One.

Wages, salaries and related costs decreased 1.8%, $6.7 million, during the
first three months of 1995 compared to the same period in 1994 primarily
due to a decrease in the number of full-time equivalent employees from
approximately 40,300 as of March 31, 1994 to approximately 35,000 as of
March 31, 1995.  Such decrease was partially offset by the impact of wage
restorations resulting from an average 10.0% wage reduction implemented by
the Company in July 1992, which reduction was restored in equal increments
in December 1992, April 1993, April 1994 and July 1994.

Rentals and landing fees increased 5.1%, $10.5 million, for the first three
months of 1995 compared to the same period in 1994.  Rent expense increased
primarily as a result of the delivery of new Boeing 737 and 757 aircraft
during 1994 and early 1995.  Such increase was partially offset by
retirements and groundings of leased aircraft and reduced facility rentals
and landing fees resulting from downsizing operations.

Aircraft fuel expense decreased 3.5%, $6.1 million, in the first three
months of 1995 compared to the same period in 1994.  The average price per
gallon decreased 2.0%, from 53.67 cents in 1994 to 52.61 cents in 1995. 
The quantity of jet fuel used also decreased from 316.6 million gallons
used in 1994 to 312.4 million gallons used in 1995.

Maintenance, materials and repairs costs decreased 27.8%, $37.6 million,
during the first three months of 1995 compared to the same period in 1994
principally due to (i) the replacement of older aircraft with new aircraft,
(ii) the closure of maintenance facilities in Los Angeles and Denver and
(iii) the shift of scheduled maintenance work to outside suppliers who can
support the Company's flight operations at a lower cost and at locations
more convenient to its primary routes.

Other operating expense increased 2.7%, $9.1 million, in the first three
months of 1995 compared to the same period in 1994 primarily as a result of
increases in reservations and sales expense, aircraft servicing expense and
other miscellaneous expenses, partially offset by decreases in advertising
expense and catering expense.

Interest expense decreased 14.6%, $9.1 million, during the first three
months of 1995 compared to the same period in 1994 principally due to
principal reductions of long-term debt and capital lease obligations.

Interest capitalized decreased 63.3%, $2 million, in the first three months
of 1995 compared to the same period in 1994 primarily due to a decrease in
the average balance of purchase deposits for flight equipment.

Interest income remained relatively constant in the first three months of
1995 compared to the same period in 1994 principally due to an increase in
the average interest rate, offset by a decrease in the average balance of
cash and cash equivalents.

The Company's other nonoperating income (expense) in the first three months
of 1995 primarily included foreign exchange and other losses of $9.6
million (related to the Japanese yen and Mexican peso).  Other nonoperating
income (expense) in the first three months of 1994 included foreign
exchange and other losses of $4.9 million (related to Japanese yen-
denominated transactions) and charges totaling approximately $2.3 million
relating to the closing of certain airport stations.

LIQUIDITY AND CAPITAL COMMITMENTS

During the fourth quarter of 1994, the Company determined that a new
strategic plan, the Go Forward Plan, was needed to return the Company to
profitability and strengthen its balance sheet.  As part of the Company's
Go Forward Plan, in January 1995 the Company commenced a series of
initiatives designed to improve liquidity in 1995 and 1996.  The major
liquidity elements of this plan include (i) rescheduling principal
amortization under the Company's loan agreements with its primary secured
lenders (representing approximately $599.4 million of the Company's
outstanding long-term debt at December 31, 1994), (ii) restructuring the
Company's commitments to purchase new Boeing aircraft and related engines,
(iii) deferring or reducing cash requirements associated with certain
existing aircraft, (iv) reducing the Company's lease commitments at DIA and
(v) evaluating the potential disposition of non-core assets.  As discussed
below, under agreements in principle and binding agreements reached through
May 11, 1995, the Company has improved its liquidity by an estimated
$256 million in 1995 and $240 million in 1996.  This achieves roughly 82%
of the Go Forward Plan liquidity goal.

On March 31, 1995 the Company signed agreements with The Boeing Company
("Boeing") and certain engine manufacturers to defer substantially all
aircraft deliveries that had been scheduled for 1996 and 1997.  Five Boeing
767 aircraft that had been scheduled for delivery to Continental in 1995
have been sold to a third party.  They have been replaced by five Boeing
767's of which Continental will take delivery starting in 1998.  Options to
purchase additional aircraft have been canceled.  On March 30, 1995,
Continental amended its principal secured loan agreements with General
Electric Capital Corporation and affiliates (collectively, "GE Capital")
and General Electric Company (collectively, the "Lenders") to defer 1995
and 1996 principal payments, and amended certain of its operating lease
agreements with one of the Lenders to defer 1995 rental obligations. 
Continental agreed, among other things, to obtain concessions from certain
aircraft lessors.  Continuing deferrals of these principal and operating
lease payments will be suspended if specified portions of such concessions
are not obtained by May 31 and June 30, 1995 or if other covenants are not
complied with.  If the required concessions are obtained at a later date,
the deferrals will resume.  As discussed below, the Company has reached
agreements or agreements in principle with some of these lessors and
continues in negotiations with the remaining lessors.  The Company
anticipates that it will be successful in timely obtaining the required
concessions.  These agreements with Boeing, the engine manufacturers and
the Lenders will improve the Company's 1995 and 1996 liquidity by
approximately $167 million and $161 million, respectively. 

In connection with the Go Forward Plan, the Company is retiring from
service 24 less efficient widebody aircraft during 1995.  In February 1995,
the Company began paying market rentals, which are significantly less than
contractual rentals on these aircraft, and began ceasing all rental
payments as the aircraft are removed from service.  In addition,  in
February 1995, Continental reduced its rental payments on an additional 11
widebody aircraft leased at significantly above-market rates.  The Company
began negotiations in February 1995 with the relevant lessors of the 35
widebody aircraft to amend the lease repayment schedules and provide,
effective February 1, 1995, alternative compensation, which will include
debt securities convertible into equity, in lieu of current cash payments. 
As of May 11, 1995, the Company had entered into agreements or agreements
in principle with lessors of 26 of these aircraft that, when consummated,
are expected to improve the Company's liquidity by an estimated $69 million
and $59 million in 1995 and 1996, respectively.

On April 10, 1995, the Denver City Council approved an agreement among the
City, the Company and certain signatory airlines amending the Company's
lease of facilities at DIA by reducing the Company's lease term to five
years, reducing to 10 the number of gates (and reducing associated space)
leased by the Company and making certain changes in the rates and charges
under the lease.  The agreement also provides for the release of certain
claims and the settlement of certain litigation filed by the City against
the Company.  The agreement is expected to result in annual reduction in
costs to the Company of approximately $20 million over the life of the
lease.

As part of its plan to dispose of non-core assets, effective April 27,
1995, Continental and System One completed a series of transactions whereby
the existing systems management agreement between System One and EDS was
terminated and a substantial portion of the assets (including the travel
agent subscriber base and IMS software) and certain liabilities of System
One were transferred to a newly formed limited liability company (LLC).  In
connection with these transactions, System One changed its name to
Continental CRS Interests, Inc. ("CRS Interests").  LLC is owned equally by
CRS Interests, a subsidiary of Continental, EDS and AMADEUS, a European
CRS.  Substantially all of System One's remaining assets (including the CRS
software) and liabilities were transferred to AMADEUS.  The transaction
resulted in CRS Interests retaining a one-third interest in LLC, receiving
cash proceeds of approximately $40 million and receiving a 12.4% equity
interest in Amadeus.  LLC will market the AMADEUS CRS and will continue to
develop, market and distribute travel-related IMS.  The Company anticipates
that it will recognize a substantial gain relating to the transaction in
the second quarter.

Continental's failure to make required payments to the Lenders, the City
and certain aircraft lessors as described above constituted events of
default under the respective agreements with such parties.  The agreements
reached through May 11, 1995 with the Lenders, the City and two aircraft
lessors have cured defaults under their respective agreements.  As of
May 11, 1995, defaults under the remaining widebody aircraft leases were
continuing due to the nonpayment of rents, which could entitle the lessors
to pursue contractual remedies, including seeking to take possession of the
leased aircraft.  Additionally, the Company received a notice of lease
termination dated April 18, 1995 from one lessor relating to one A300
aircraft, and such lessor sued the Company and certain other persons on
May 2, 1995.  The notice of lease termination resulted in additional cross
defaults and accordingly, such defaulted debt and capital lease obligations
have been classified as current liabilities as of March 31, 1995 in
accordance with generally accepted accounting principles.  As of May 11,
1995, the Company is in negotiations with these remaining lessors and has
received proposals from lessors representing a majority of the Company's
agreements currently in default.  The Company believes it will be able to
successfully conclude the remaining negotiations and thus avoid any
material adverse effect on the Company.  

In addition, under "cross default" provisions, the payment defaults and the
notice of lease termination from a lessor of one A300 aircraft create
defaults under a significant number of Continental's other lease and debt
agreements, and the Company's obligations under the agreements subject to
such cross defaults are also eligible to be declared in default.  However,
in the opinion of the Company, it is unlikely that lessors or creditors
will exercise remedies under cross default provisions because (i) the
Company is making all required contractual payments under the applicable
agreements, (ii) the contractual payments on a substantial majority of
aircraft leases are at current market rates, (iii) taking possession of the
aircraft would cause the lessors or lenders to incur remarketing costs, and
(iv) exercise of remedies could expose lessors and lenders to "lender
liability" litigation.  Additionally, the Company has made substantial
progress in negotiations with lenders and lessors to cure the defaults and
expects to complete substantially all such negotiations by June 30, 1995. 
The Company does not believe that any events of default or cross default
that remain after June 30, 1995 will have a material adverse effect on the
Company.

As a result of a Federal Aviation Administration Airworthiness Directive,
which forced the partial grounding of the Company's ATR commuter fleet in
late 1994 and early 1995, the Company withheld January and February lease
payments totaling $7 million on those ATR aircraft leased by the
manufacturer.  The Company's non-payment of rentals may have resulted in an
event of default under the related lease agreements with ATR.  As of
May 11, 1995, the Company was engaged in discussions with ATR concerning
compensation, if any, to be received by the Company as a result of the
grounding, and the Company had received a proposal from ATR that, if
accepted, would cure the payment default.  In addition, the Company is in
default under the debt agreement relating to the financing of the Company's
Los Angeles International Airport ("LAX") maintenance facility.  At
March 31, 1995, the principal balance of the applicable obligation was
approximately $64 million, and at May 11, 1995, the Company was in
negotiations with the creditor.  As a result of the current status of the
ATR and LAX maintenance facility negotiations, the Company does not
anticipate that the foregoing matters will have a material adverse effect
on the Company.

The Company has no current plans to take other actions in the future that
would constitute additional events of default.  

As a result of the defaults and cross-defaults described above that were
continuing at May 11, 1995, approximately $616.4 million of the Company's
long-term debt and capital lease obligations were classified as debt and
capital lease obligations in default within current liabilities as of
March 31, 1995.  While the Company does not believe it is probable that it
will be required to fund such defaulted obligations in the next 12 months,
generally accepted accounting principles require that such defaulted
obligations be classified as current liabilities at March 31, 1995.  In
addition, certain operating leases with remaining aggregate rentals of
$2.6 billion as of March 31, 1995 were in default or cross default at
May 11, 1995.

Continental has firm commitments to take delivery of 22 new 737 and five
new 757 aircraft in 1995, one new 757 aircraft in 1996 and 43 new jet
aircraft during the years 1998 through 2002.  As of May 11, 1995, 12 new
737 and two new 757 aircraft had been delivered.  The estimated aggregate
cost of these aircraft is approximately $3.4 billion.  In December 1994,
Continental Express, Inc. ("Express"), a wholly owned subsidiary,
contracted with Beech Acceptance Corporation ("Beech") for the purchase and
financing of 25 Beech 1900-D aircraft at an estimated aggregate cost of
$104 million, excluding price escalations.  Deliveries of the Beech
aircraft are scheduled in 1995 and 1996.  As of December 31, 1994,
Continental had made deposits on jet and turboprop aircraft orders of
approximately $166.1 million, of which $29.6 million was refunded in
January 1995 and $22.6 million was refunded in April 1995 in connection
with the rescheduling of aircraft deliveries.  The Company currently
anticipates that the firm financing commitments available to it with
respect to its acquisition of new Boeing and Beech aircraft will be
sufficient to fund all deliveries scheduled during the years 1995 and 1996. 


Continental expects its 1995 capital expenditures, exclusive of aircraft,
to aggregate approximately $83 million primarily relating to aircraft
modifications, passenger terminal facility improvements and office,
maintenance, telecommunications and ground equipment.

As of March 31, 1995, the Company had approximately $416.8 million in cash
and cash equivalents as compared to $396.3 million as of December 31, 1994. 
Net cash provided by operating activities increased by approximately
$41 million during the three months ended March 31, 1995 compared to the
same period in the prior year principally due to earnings improvement.  In
addition, net cash provided by investing activities increased by
approximately $80.6 million primarily due to higher capital expenditures
during 1994 relating to purchase deposits on turboprop and jet aircraft and
expenditures for Continental Lite.

Continental does not have general lines of credit, and substantially all of
its assets, including the stock of its subsidiaries, are encumbered.

Approximately $115.2 million and $118.7 million of cash and cash
equivalents at March 31, 1995 and December 31, 1994, respectively, were
held in restricted arrangements relating primarily to workers' compensation
claims and in accordance with the terms of certain other agreements.  In
addition, Continental Micronesia, Inc. ("CMI"), a 91.0%-owned subsidiary,
is required by its loan agreement with GE Capital to maintain certain
minimum cash balances and net worth levels, which effectively restrict the
amount of cash available to Continental from CMI.  As of March 31, 1995,
CMI had a minimum cash balance requirement of $25 million.

Continental currently believes that its cash on hand, together with cash
expected to be generated from operations, cash anticipated to be generated
from disposition of non-strategic assets and available aircraft financing
will be sufficient to fund its operations, fleet commitments and expected
capital expenditures for fiscal 1995.



 
                       PART II - OTHER INFORMATION


ITEM 1. LEGAL PROCEEDINGS.

        None.


ITEM 2. CHANGES IN SECURITIES.

        The Company's loan agreements with GE Capital prohibit Continental
        from paying cash dividends to common stockholders through
        February 28, 1997 and thereafter only on preferred stock currently
        outstanding to Air Canada and GE Capital.


ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

        As more fully discussed in Item 2.  "Management's Discussion and
        Analysis of Financial Condition and Results of Operations -
        Liquidity and Capital Commitments", Continental is in default and
        cross-default on certain long-term debt and capital and operating
        lease obligations.


ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

        None.


ITEM 5. OTHER INFORMATION.

        None.


ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.

        (a)  Exhibits:

             3  By-laws of Continental, as amended to date -- filed
herewith.

        (b)  Reports on Form 8-K:

              (i)  Report dated January 26, 1995 reporting an Item 5. 
                   "Other Event".  No financial statements were filed with
                   the report, which announced a preliminary unaudited loss
                   for fiscal year 1994 and adoption of the Go Forward
                   Plan, the Company's new corporate strategy.

             (ii)  Report dated March 31, 1995 reporting an Item 5.  "Other
                   Event".  No financial statements were filed with the
                   report, which announced a postponement in the filing of
                   the Company's annual report on Form 10-K.



                                SIGNATURES


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

                                       CONTINENTAL AIRLINES, INC.          

                                                 (Registrant)





Date:  May 11, 1995                by: /s/ Daniel P. Garton                

                                       Daniel P. Garton
                                       Senior Vice President and
                                       Chief Financial Officer 
                                       (On behalf of Registrant)




Date:  May 11, 1995                by: /s/ Michael P. Bonds                

                                       Michael P. Bonds
                                       Staff Vice President and Controller
                                       (Principal Accounting Officer)




                             INDEX TO EXHIBITS
                                    OF
                        CONTINENTAL AIRLINES, INC.


3    By-laws of Continental, as amended to date -- filed herewith.






                                                            EXHIBIT 3












                                          BY-LAWS

                                            OF

                                CONTINENTAL AIRLINES, INC.



















Including all amendments through  April 27, 1995


                                     TABLE OF CONTENTS

                                                                           Page

ARTICLE I - Stockholders
  Section 1.1     Annual Meeting . . . . . . . . . . . . . . . . . . . . .   1
  Section 1.2     Special Meetings . . . . . . . . . . . . . . . . . . . .   1
  Section 1.3     Place of Meeting . . . . . . . . . . . . . . . . . . . .   1
  Section 1.4     Notice of Meetings . . . . . . . . . . . . . . . . . . .   2
  Section 1.5     Quorum . . . . . . . . . . . . . . . . . . . . . . . . .   2
  Section 1.6     Voting . . . . . . . . . . . . . . . . . . . . . . . . .   3
  Section 1.7     Presiding Officer and Secretary. . . . . . . . . . . . .   4
  Section 1.8     Proxies. . . . . . . . . . . . . . . . . . . . . . . . .   4
  Section 1.9     List of Stockholders . . . . . . . . . . . . . . . . . .   4
  Section 1.10    Notice of Stockholder Business and Nominations . . . . .   5
  Section 1.11    Inspectors of Elections; Opening and Closing 
                  the Polls. . . . . . . . . . . . . . . . . . . . . . . .   9

ARTICLE II - Directors
  Section 2.1     Powers and Duties of Directors . . . . . . . . . . . . .  10
  Section 2.2     Election; Term; Vacancies. . . . . . . . . . . . . . . .  11
  Section 2.3     Resignation. . . . . . . . . . . . . . . . . . . . . . .  12
  Section 2.4     Removal. . . . . . . . . . . . . . . . . . . . . . . . .  12
  Section 2.5     Meetings . . . . . . . . . . . . . . . . . . . . . . . .  12
  Section 2.6     Quorum and Voting. . . . . . . . . . . . . . . . . . . .  14
  Section 2.7     Written Consent of Directors in Lieu of a 
                  Meeting. . . . . . . . . . . . . . . . . . . . . . . . .  15
  Section 2.8     Compensation . . . . . . . . . . . . . . . . . . . . . .  15
  Section 2.9     Minutes of Meetings. . . . . . . . . . . . . . . . . . .  15

ARTICLE III - Committees of the Board of Directors
  Section 3.1     Creation . . . . . . . . . . . . . . . . . . . . . . . .  15
  Section 3.2     Committee Procedure. . . . . . . . . . . . . . . . . . .  16
  Section 3.3     Standing Committees. . . . . . . . . . . . . . . . . . .  17

ARTICLE IV - Officers, Agents and Employees
  Section 4.1     Appointment and Term of Office . . . . . . . . . . . . .  19
  Section 4.2     Resignation and Removal. . . . . . . . . . . . . . . . .  19
  Section 4.3     Compensation and Bond. . . . . . . . . . . . . . . . . .  20
  Section 4.4     Chairman of the Board. . . . . . . . . . . . . . . . . .  20
  Section
 4.5     Vice Chairman. . . . . . . . . . . . . . . . . . . . . .  20
  Section 4.6     Chief Executive Officer. . . . . . . . . . . . . . . . .  20
  Section 4.7     President. . . . . . . . . . . . . . . . . . . . . . . .  21
  Section 4.8     Chief Operating Officer. . . . . . . . . . . . . . . . .  21
  Section 4.9     Vice Presidents. . . . . . . . . . . . . . . . . . . . .  21
  Section 4.10    Treasurer. . . . . . . . . . . . . . . . . . . . . . . .  21
  Section 4.11    Secretary. . . . . . . . . . . . . . . . . . . . . . . .  22
  Section 4.12    Assistant Treasurers . . . . . . . . . . . . . . . . . .  22
  Section 4.13    Assistant Secretaries. . . . . . . . . . . . . . . . . .  23
  Section 4.14    Delegation of Duties . . . . . . . . . . . . . . . . . .  23
  Section 4.15    Loans to Officers and Employees; Guaranty of 
                  Obligations of Officers and Employees. . . . . . . . . .  23

ARTICLE V - Indemnification
  Section 5.1     Indemnification of Directors, Officers, Employees 
                  and Agents . . . . . . . . . . . . . . . . . . . . . . .  24

ARTICLE VI - Common Stock
  Section 6.1     Certificates . . . . . . . . . . . . . . . . . . . . . .  26
  Section 6.2     Transfers of Stock . . . . . . . . . . . . . . . . . . .  27
  Section 6.3     Lost, Stolen or Destroyed Certificates . . . . . . . . .  27
  Section 6.4     Stockholder Record Date. . . . . . . . . . . . . . . . .  27

ARTICLE VII - Ownership by Aliens
  Section 7.1     Foreign Stock Record . . . . . . . . . . . . . . . . . .  29
  Section 7.2     Maximum Percentage . . . . . . . . . . . . . . . . . . .  29
  Section 7.3     Recording of Shares. . . . . . . . . . . . . . . . . . .  30

ARTICLE VIII - General Provisions
  Section 8.1     Fiscal Year. . . . . . . . . . . . . . . . . . . . . . .  32
  Section 8.2     Dividends. . . . . . . . . . . . . . . . . . . . . . . .  32
  Section 8.3     Checks, Notes, Drafts, Etc.. . . . . . . . . . . . . . .  32
  Section 8.4     Corporate Seal . . . . . . . . . . . . . . . . . . . . .  32
  Section 8.5     Waiver of Notice . . . . . . . . . . . . . . . . . . . .  32

ARTICLE IX - Restated Certificate of Incorporation to Govern
  Section 9.1     Restated Certificate of Incorporation to 
                  Govern . . . . . . . . . . . . . . . . . . . . . . . . .  33


                                          BY-LAWS

                                            OF

                                CONTINENTAL AIRLINES, INC.

                   Incorporated under the Laws of the State of Delaware


                                         ARTICLE I

                                       Stockholders

  Section 1.1     Annual Meeting.  The annual meeting of stockholders of the
Corporation for the election of Directors and for the transaction of any
other proper business shall be held at such time and date in each year as
the Board of Directors may determine from time to time.  The annual meeting
in each year shall be held at such place within or without the State of
Delaware as may be fixed by the Board of Directors, or if not so fixed, at
the principal business office of the Corporation.
  Section 1.2     Special Meetings.  Subject to the rights of the holders of
any class or series of preferred stock of the Corporation, or any other
series or class of stock as set forth in the Restated Certificate of
Incorporation of the Corporation (the "Restated Certificate of
Incorporation") to elect additional Directors under specified
circumstances, special meetings of the stockholders may be called only by
(i) stockholders holding Common Stock constituting more than 50% of the
voting power of the outstanding shares of Common Stock, (ii) the Chief
Executive Officer or (iii) the Board of Directors.
  Section 1.3     Place of Meeting.  The Board of Directors may designate the
place of meeting for any meeting of the stockholders.  If no designation is
made by the Board of Directors, the place of meeting shall be the principal
executive offices of the Corporation.
  Section 1.4     Notice of Meetings.  Whenever stockholders are required or
permitted to take any action at a meeting, unless notice is waived in
writing by all stockholders entitled to vote at the meeting, a written
notice of the meeting shall be given which shall state the place, date and
hour of the meeting, and, in the case of a special meeting, the purpose for
which the meeting is called.
  Unless otherwise provided by law, and except as to any stockholder duly
waiving notice, the written notice of any meeting shall be given personally
or by mail, not less than ten nor more than 60 days before the date of the
meeting to each stockholder entitled to vote at such meeting.  If mailed,
notice shall be deemed given when deposited in the mail, postage prepaid,
directed to the stockholder at his or her address as it appears on the
records of the Corporation.
  When a meeting is adjourned to another time or place, notice need not be
given of the adjourned meeting if the time and place thereof are announced
at the meeting at which the adjournment is taken.  At the adjourned meeting
the Corporation may transact any business which might have been transacted
at the original meeting.  If, however, the adjournment is for more than 30
days, or if after the adjournment a new record date is fixed for the
adjourned meeting, a notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the meeting.
  Section 1.5     Quorum.  Except as otherwise provided by law, by the
Restated Certificate of Incorporation, or by these By-Laws in respect of
the vote required for a specified action, at any meeting of stockholders
the holders of a majority of the aggregate voting power of the outstanding
stock entitled to vote thereat, either present or represented by proxy,
shall constitute a quorum for the transaction of any business, but the
stockholders present, although less than a quorum, may adjourn the meeting
to another time or place and, except as provided in the last paragraph of
Section 1.4, notice need not be given of the adjourned meeting.
  Section 1.6     Voting.  Except as otherwise provided by the Restated
Certificate of Incorporation or these By-Laws, whenever Directors are to be
elected at a meeting, they shall be elected by a plurality of the votes
cast at the meeting by the holders of stock entitled to vote.  Whenever any
corporate action, other than the election of Directors, is to be taken by
vote of stockholders at a meeting, it shall be authorized by a majority of
the votes cast at the meeting by the holders of stock entitled to vote
thereon, except as otherwise required by law, by the Restated Certificate
of Incorporation or by these By-Laws.
  Except as otherwise provided by law, or by the Restated Certificate of
Incorporation or these By-Laws, each holder of record of stock of the
Corporation entitled to vote on any matter at any meeting of stockholders
shall be entitled to one vote for each share of such stock standing in the
name of such holder on the stock ledger of the Corporation on the record
date for the determination of the stockholders entitled to vote at the
meeting.
  Upon the demand of any stockholder entitled to vote, the vote for
Directors or the vote on any other matter at a meeting shall be by written
ballot, but otherwise the method of voting and the manner in which votes
are counted shall be discretionary with the presiding officer at the
meeting.
  Section 1.7     President Officer and Secretary.  At every meeting of
stockholders the Chairman of the Board, or any Vice Chairman of the Board,
or the Chief Executive Officer, as designated by the Board of Directors,
or, if none be present, or in the absence of any such designation, the
appointee of the meeting, shall preside.  The Secretary, or in his or her
absence an Assistant Secretary, or if none be present, the appointee of the
presiding officer of the meeting, shall act as secretary of the meeting.
  Section 1.8     Proxies.  Each stockholder entitled to vote at a meeting of
stockholders may authorize another person or persons to act for him or her
by proxy executed in writing by the stockholder or as otherwise permitted
by law, or by his or her duly authorized attorney-in-fact.  Such proxy must
be filed with the Secretary of the Corporation or his or her representative
at or before the time of the meeting.
  Section 1.9     List of Stockholders.  The officer who has charge of the
stock ledger of the Corporation shall prepare and make, at least ten days
before every meeting of stockholders, a complete list of the stockholders
entitled to vote at the meeting, arranged in alphabetical order, and
showing the address of each stockholder and the number of shares registered
in the name of each stockholder.  Such list shall be open to the
examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten days prior to
the meeting, either at a place within the city where the meeting is to be
held, which place shall be specified in the notice of the meeting, or, if
not so specified, at the place where the meeting is to be held.  The list
shall also be produced and kept at the time and place of the meeting during
the whole time thereof, and may be inspected by any stockholder who is
present.
  The stock ledger shall be the only evidence as to which stockholders are
the stockholders entitled to examine the stock ledger or the list required
by this Section 1.9, or to vote in person or by proxy at any meeting of
stockholders.
  Section 1.10    Notice of Stockholder Business and Nominations.
  (A)  Annual Meetings of Stockholders.  (1)  Subject to Section 2.2 of
these By-Laws, nominations of persons for election to the Board of
Directors of the Corporation and the proposal of business to be considered
by the stockholders may be made at an annual meeting of stockholders (a)
pursuant to the Corporation's notice of meeting delivered pursuant to
Section 1.4 of these By-Laws, (b) by or at the direction of the Board of
Directors or (c) by any stockholder of the Corporation who is entitled to
vote at the meeting, who complied with the notice procedures set forth in
clauses (2) and (3) of paragraph (A) of this Section 1.10 and who was a
stockholder of record at the time such notice is delivered to the Secretary
of the Corporation.
      (2)  For nominations or other business to be properly brought before
an annual meeting by a stockholder pursuant to clause (c) of paragraph (A)
(1) of this Section 1.10, the stockholder must have given timely notice
thereof in writing to the Secretary of the Corporation.  To be timely, a
stockholder's notice shall be delivered to the Secretary at the principal
executive offices of the Corporation not less than seventy days nor more
than ninety days prior to the first anniversary of the preceding year's
annual meeting; provided, however, that in the event that the date of the
annual meeting is advanced by more than twenty days, or delayed by more
than seventy days, from such anniversary date, and in the case of the
Corporation's first annual meeting to be held after the initial adoption of
these By-Laws, notice by the stockholder to be timely must be so delivered
not earlier than the ninetieth day prior to such annual meeting and not
later than the close of business on the later of the seventieth day prior
to such annual meeting or the tenth day following the day on which public
announcement of the date of such meeting is first made.  Such stockholder's
notice shall set forth (a) as to each person whom the stockholder proposes
to nominate for election or reelection as a Director all information
relating to such person that is required to be disclosed in solicitations
of proxies for election of Directors, or is otherwise required, in each
case pursuant to Regulation 14A under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), including such person's written consent to
being named in the proxy statement as a nominee and to serving as a
Director if elected; (b) as to any other business that the stockholder
proposes to bring before the meeting, a brief description of the business
desired to be brought before the meeting, the reasons for conducting such
business at the meeting and any material interest in such business of such
stockholder and the beneficial owner, if any, on whose behalf the proposal
is made; and (c) as to the stockholder giving the notice and the beneficial
owner, if any, on whose behalf the nomination or proposal is made (i) the
name and address of such stockholder, as they appear on the Corporation's
books, and of such beneficial owner and (ii) the class and number of shares
of the Corporation which are owned beneficially and of record by such
stockholder and such beneficial owner.
                  (3). . . . . . . . . . . . . . . . . . . . . . . . . . . 
Notwithstanding anything in the second sentence of paragraph (A) (2) of
this Section 1.10 to the contrary, in the event that the number of
Directors to be elected to the Board of Directors is increased and there is
no public announcement naming all of the nominees for Director or
specifying the size of the increased Board of Directors made by the
Corporation at least eighty days prior to the first anniversary of the
preceding year's annual meeting, a stockholder's notice required by this
Section 1.10 shall also be considered timely, but only with respect to
nominees for any new positions created by such increase, if it shall be
delivered to the Secretary at the principal executive offices of the
Corporation not later than the close of business on the tenth day following
the day on which such public announcement is first made by the Corporation.
  (B)  Special Meeting of Stockholders.  Only such business shall be
conducted at a special meeting of stockholders as shall have been brought
before the meeting pursuant to the Corporation's notice of meeting pursuant
to Section 1.4 of these By-Laws.  Subject to Section 2.2 of these By-Laws,
nominations of persons for election to the Board of Directors may be made
at a special meeting of stockholders at which Directors are to be elected
pursuant to the Corporation's notice of meeting (i) by or at the direction
of the Board of Directors or (ii) by any stockholder of the Corporation who
is entitled to vote at the meeting, who complies with the notice procedures
set forth in this Section 1.10 and who is a stockholder of record at the
time such notice is delivered to the Secretary of the Corporation. 
Nominations by stockholders of persons for election to the Board of
Directors may be made at such a special meeting of stockholders if the
stockholder's notice as required by paragraph (A) (2) of this Section 1.10
shall be delivered to the Secretary at the principal executive offices of
the Corporation not earlier than the ninetieth day prior to such special
meeting and not later than the close of business on the later of the
seventieth day prior to such special meeting or the tenth day following the
day on which public announcement is first made of the date of the special
meeting and of the nominees proposed by the Board of Directors to be
elected at such meeting.
  (C)  General.  (1)  Only persons who are nominated in accordance with the
procedures set forth in this Section 1.10 shall be eligible to serve as
Directors and only such business shall be conducted at a meeting of
stockholders as shall have been brought before the meeting in accordance
with the procedures set forth in this Section 1.10.  Except as otherwise
provided by law, the Restated Certificate of Incorporation or these By-
Laws, the chairman of the meeting shall have the power and duty to
determine whether a nomination or any business proposed to be brought
before the meeting was made in accordance with the procedures set forth in
this Section 1.10 and, if any proposed nomination or business is not in
compliance with this Section 1.10, to declare that such defective proposal
or nomination shall be disregarded.
      (2)  For purposes of this Section 1.10, "public announcement" shall
mean disclosure in a press release reported by the Dow Jones News Service,
Associated Press or comparable national news service or in a document
publicly filed by the Corporation with the Securities and Exchange
Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act.
                  (3)                                                      
Notwithstanding the foregoing provisions of this Section 1.10, a
stockholder shall also comply with all applicable requirements of the
Exchange Act and the rules and regulations thereunder with respect to the
matters set forth in this Section 1.10.  Nothing in this Section 1.10 shall
be deemed to affect any rights of stockholders to request inclusion of
proposals in the Corporation's proxy statement pursuant to Rule 14a-8 under
the Exchange Act.
  Section 1.11    Inspectors of Elections; Opening and Closing the Polls.  The
Board of Directors by resolution shall appoint one or more inspectors,
which inspector or inspectors may include individuals who serve the
Corporation in other capacities, including, without limitation, as
officers, employees, agents or representatives of the Corporation, to act
at the meeting and make a written report thereof.  One or more persons may
be designated as alternate inspectors to replace any inspector who fails to
act. If no inspector or alternate has been appointed to act, or if all
inspectors or alternates who have been appointed are unable to act, at the
meeting of stockholders, the Chairman of the meeting shall appoint one or
more inspectors to act at the meeting.  Each inspector, before discharging
his or her duties, shall take and sign an oath faithfully to execute the
duties of inspector with strict impartiality and according to the best of
his or her ability.  The inspectors shall have the duties prescribed by the
General Corporation Law of the State of Delaware (the "GCL").
  The chairman of the meeting shall fix and announce at the meeting the
time of the opening and the closing of the polls for each matter upon which
the stockholders will vote at a meeting.
                                        ARTICLE II
                                         Directors
  Section 2.1     Powers and Duties of Directors.  The business of the
Corporation shall be managed by or under the direction of the Board of
Directors, which may exercise all such powers of the Corporation and do all
such lawful acts and things as are not directed or required to be exercised
or done by the stockholders by the Restated Certificate of Incorporation,
by these By-Laws, or by law.  Except as otherwise permitted by or
consistent with Foreign Ownership Restrictions (as defined in the Restated
Certificate of Incorporation), at no time shall more than one-third of the
Directors in office be Aliens (as defined in the Restated Certificate of
Incorporation).  The Board of Directors shall have the principal role in
the formulation of short and long-term strategic, financial, and
organizational goals of the Corporation and shall oversee and supervise the
performance of corporate management in carrying out the directives of the
Board of Directors.  The Board shall adopt the Annual Capital Expenditure
Budget and the Annual Financial Plan, both as defined in Section 3.3(a),
for each fiscal year not later than the last day of the preceding fiscal
year or at such later time as shall be determined by the Board by
resolution adopted by the affirmative vote of that number of Directors as
is required pursuant to Article Fifth, Section 2(b) of the Restated
Certificate of Incorporation to approve an amendment of Articles II and III
of these By-Laws.  The Board of Directors shall not approve the entering
into, amending, supplementing, modifying, waiving of any provisions of,
waiving or enforcing of any rights under or terminating any contract (other
than in accordance with its terms) between the Corporation or any of its
wholly-owned subsidiaries and any air carrier, other than Air Canada or any
of its Affiliates, with respect to a code-sharing or marketing alliance
unless such action shall have been recommended to the Board by the
Operations Committee of the Board.
  Section 2.2     Election; Term; Vacancies.  The Directors shall hold office
until the next annual election and until their successors are elected and
qualified.  No Independent Director (as defined in the Restated Certificate
of Incorporation) shall be nominated by the Board of Directors or by the
Corporation to serve on the Board of Directors unless such Independent
Director shall be satisfactory to Air Partners.  The Directors shall be
elected annually by the stockholders in the manner specified by the
Restated Certificate of Incorporation and these By-Laws, except that if
there be a vacancy in the Board of Directors by reason of death,
resignation or otherwise, such vacancy may also be filled for the unexpired
term by a majority affirmative vote of the Board of Directors; provided,
that in the case of any AC Director or AP Director (as defined in Section
3.3) the vacancy shall be filled for the unexpired term by the remaining AC
Directors or AP Directors, as the case may be, by a majority affirmative
vote of such Directors; provided further, that in the event of a vacancy by
reason of death, resignation or otherwise of a Director elected by the
holders of Class C Common Stock or Class D Common Stock, such vacancy shall
be filled for the unexpired term by the holders of Class C Common Stock or
Class D Common Stock, as the case may be, voting separately as a class by a
majority affirmative vote thereof.
  Section 2.3     Resignation.  Any Director may resign at any time upon
written notice to the Corporation.  Any such resignation shall take effect
at the time specified therein or, if the time be not specified, upon
receipt thereof, and the acceptance of such resignation, unless required by
the terms thereof, shall not be necessary to make such resignation
effective.
  Section 2.4     Removal.  Any Director may be removed at any time, with or
without cause, by vote at a meeting or written consent of the holders of
stock entitled to vote on the election of such Director pursuant to the
Restated Certificate of Incorporation; provided, that until the Third
Annual Meeting, Creditors Designees (as those terms are defined in the
Restated Certificate of Incorporation) may only be removed for cause.
  Section 2.5     Meetings.
  (A)  Annual Meeting.  Immediately after each annual meeting of
stockholders, the duly elected Directors shall hold an inaugural meeting
for the purpose of organization, election of officers, development of an
annual calendar (the "Board Calendar"), and the transaction of other
business, at such place as shall be fixed by the person presiding at the
meeting of stockholders at which such Directors are elected.  The Board
Calendar shall specify, to the extent practicable, at which meeting the
Board of Directors will carry out various duties and reviews, and shall
include all topics the Board of Directors deems relevant to the management
of the Corporation, including, without limitation, strategic planning,
capital allocation, long-range goals, performance appraisal, and personnel
planning.  The Board Calendar will be distributed to all Directors promptly
after its approval by the Board of Directors.  The place and time of the
inaugural meeting of the Board may also be fixed by written consent of the
Directors.
  (B)  Regular Meetings.  Regular meetings of the Board of Directors shall
be held on such dates and at such times and places as shall be designated
from time to time by the Board of Directors; provided, that the Board shall
hold at least four (4) regular meetings in each year; provided further,
that regular meetings of the Board of Directors can be waived at the
request of the Chief Executive Officer if at least a majority of the
Directors agree in writing to such waiver at least seven days before the
date of the meeting to be so waived except that in any event the Board
shall hold at least four (4) regular meetings in each year prior to the
Third Annual Meeting (as defined in the Restated Certificate of
Incorporation).  The Secretary shall forward to each Director, at least
five days before any such regular meeting, a notice of the time and place
of the meeting, together with the reports and recommendations of any
committee of the Board of Directors required to deliver periodic reports
and the agenda for the meeting prepared by the Chief Executive Officer or
in lieu thereof a notice of waiver if the regular meeting has been waived.
  (C)  Special Meetings.  Special meetings of the Directors may be called
by the Chairman of the Board, any Vice Chairman, the Chief Executive
Officer or a majority of the Directors, at such time and place as shall be
specified in the notice or waiver thereof.  Notice of each special meeting,
including the time and place of the meeting and the agenda therefor, shall
be given by the Secretary or by the person calling the meeting to each
Director by causing the same to be delivered personally or by facsimile
transmission not later than the close of business on the second day next
preceding the day of the meeting.
  (D)  Location; Methods of Participation.  Meetings of the Board of
Directors, regular or special, may be held at any place within or without
the State of Delaware at such place as is indicated in the notice or waiver
of notice thereof.  Members of the Board of Directors, or of any committee
designated by the Board, may participate in a meeting of the Board of
Directors or such committee by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation in a meeting by such means
shall constitute presence in person at such meeting.
  Section 2.6     Quorum and Voting.  Two-thirds of the total number of
Directors (excluding those who must recuse themselves under the terms of
the Restated Certificate of Incorporation or these By-Laws, or by
law)("Recused Directors") shall constitute a quorum for the transaction of
business, but, if there be less than a quorum at any meeting of the Board
of Directors, a majority of the Directors present may adjourn the meeting
from time to time, and no further notice thereof need be given other than
announcement at the meeting which shall be so adjourned.  Except as
otherwise provided by law, by the Restated Certificate of Incorporation, or
by these By-Laws, the affirmative vote of a majority of the Directors
present at a meeting (excluding Recused Directors) at which a quorum is
present shall be the act of the Board of Directors.
  Section 2.7     Written Consent of Directors in Lieu of a Meeting.  Any
action required or permitted to be taken at any meeting of the Board of
Directors or of any committee thereof may be taken without a meeting if all
members of the Board or of such committee, as the case may be, consent
thereto in writing, and the writing or writings are filed with the minutes
of proceedings of the Board or committee.
  Section 2.8     Compensation.  Directors may receive compensation for
services to the Corporation in their capacities as Directors or otherwise
in such manner and in such amounts as may be fixed from time to time by the
Board of Directors.
  Section 2.9     Minutes of Meetings.  Minutes of proceedings of the Board of
Directors and each committee thereof shall be circulated to each member of
the Board of Directors or committee, as the case may be, within 20 days of
the date of the proceedings recorded by the minutes.
                                        ARTICLE III
                           Committees of the Board of Directors
  Section 3.1     Creation.  In addition to the committees established under
Section 3.3, the Board of Directors, by resolution or resolutions passed by
a majority of the Board of Directors (except as otherwise provided in the
Restated Certificate of Incorporation), may designate one or more
committees, each to consist of such number of Directors of the Corporation
as shall be specified in such resolution; provided, that for so long as
there shall be any AC Directors (as defined in Section 3.3) or AP Directors
(as defined in Section 3.3) any such committee shall include (if so
requested by any AP Director or AC Director, as the case may be), to the
extent consistent with applicable laws and regulations, such number of AC
Directors or AP Directors as shall not be greater than the number of
directors equal to the same percentage of the directors comprising such
committee as the percentage of the total number of AP Directors or AC
Directors, as the case may be, on the Entire Board (as defined in the
Restated Certificate of Incorporation); provided further, that for so long
as there shall be any AC Directors or AP Directors, any executive or other
similar committee of the Board with full power to take all actions which
may lawfully be taken by the Board, and any nominating committee of the
Board, shall consist, to the extent consistent with applicable laws and
regulations, only of a Director that is an officer of the Corporation (or
his or her designee), an AP Director and an AC Director.  Each such
committee shall have and may exercise such powers and duties as shall be
delegated to it by the Board, except that no such committee shall have the
power to (a) elect Directors, (b) alter, amend or repeal these By-Laws or
any resolution or resolutions of the Board relating to such committee, (c)
appoint any member of such committee, (d) declare any dividend or make any
other distribution to the stockholders of the Corporation, or (e) take any
other actions which may lawfully be taken only by the full Board of
Directors. In the event that the Board creates an audit or similar
committee prior to the Third Annual Meeting, at least one Creditors
Designee (as defined in the Restated Certificate of Incorporation) shall
serve on such committee until the Third Annual Meeting.
  Section 3.2     Committee Procedure.  Each committee of the Board of
Directors shall meet at the times stated by the Board in the resolution or
resolutions establishing such committee or on notice to all members given
by any member of such committee.  The Board by resolution or resolutions
shall establish the rules of procedure to be followed by each committee,
which shall include a requirement that such committee keep regular minutes
of its proceedings and deliver to the Secretary the same and other reports
and recommendations to be delivered to the Board of Directors in sufficient
time to be distributed to the Board of Directors in connection with the
regular meeting of the Board of Directors to which the committee is
scheduled to report, as indicated on the Board Calendar.  The affirmative
vote of a majority of the members of any such committee shall constitute
the act of such committee.
  Section 3.3     Standing Committees.
  (A)  Finance Committee.  There shall be a committee of the Board of
Directors, which shall be the Finance Committee, comprised of the Director
that is an officer of the Corporation (or a Director who is his or her
designee), a Director designated or elected by Air Canada (as defined in
the Restated Certificate of Incorporation) under the Shareholders Agreement
(as defined in the Restated Certificate of Incorporation), elected by the
holders of Class C Common Stock or elected by Directors to fill a vacancy
created by the departure of any of the foregoing Directors (an "AC
Director"), and a Director designated or elected by Air Partners (as
defined in the Restated Certificate of Incorporation) under the
Shareholders Agreement, elected by the holders of Class D Common Stock or
elected by Directors to fill a vacancy created by the departure of any of
the foregoing Directors (an "AP Director").  The Finance Committee shall
have the authority and responsibility for developing and recommending to
the Board of Directors, not later than thirty (30) days prior to the end of
each fiscal year of the Corporation, a detailed annual capital expenditure
budget (the "Annual Capital Expenditure Budget") and a detailed annual
financial plan (the "Annual Financial Plan") of the Corporation for the
next succeeding fiscal year of the Corporation.
  (B)  Operations Committee.  There shall be a committee of the Board of
Directors, which shall be the Operations Committee, comprised of the
Director that is an officer of the Corporation (or a Director who is his or
her designee), an AC Director and an AP Director.  The Operations Committee
shall have the authority and responsibility for considering and
recommending to the Board of Directors the entering into, amending,
supplementing. modifying, waiving of any provisions of, waiving or
enforcing of any rights under or terminating any contract (other than in
accordance with its terms) between the Corporation or any of its wholly-
owned subsidiaries and any air carrier, other than Air Canada or any of its
Affiliates, with respect to a code-sharing or marketing alliance, and shall
have authority and responsibility for considering and recommending to the
Board of Directors such other matters as may be designated from time to
time by the Board of Directors, which matters may at the discretion of the
Board include, without limitation, (a) material acquisitions and
dispositions, (b) material contracts, including contracts (other than
marketing and/or code sharing agreements) with airlines other than Air
Canada with respect to any acquisition or disposition of assets, any joint
venture, partnership or similar enterprise, and (c) commencement of
material litigation.
                                        ARTICLE IV
                              Officers, Agents and Employees
  Section 4.1     Appointment and Term of Office.  The officers of the
Corporation shall include a Chairman of the Board, a Chief Executive
Officer, a President, a Chief Operating Officer, a Secretary and a
Treasurer, and may also include one or more Vice Chairmen of the Board, one
or more Vice Presidents (who may be further classified by such descriptions
as "executive", "senior", "assistant", "staff" or otherwise, as the Board
of Directors shall determine), one or more Assistant Secretaries and one or
more Assistant Treasurers.  All such officers shall be appointed by the
Board of Directors.  Any number of such offices may be held by the same
person, but no officer shall execute, acknowledge or verify any instrument
in more than one capacity.  Except as may be prescribed otherwise by the
Board of Directors in a particular case, all such officers shall hold their
offices at the pleasure of the Board for an unlimited term and need not be
reappointed annually or at any other periodic interval.  The Board of
Directors may appoint, and may delegate power to appoint, such other
officers, agents and employees as it may deem necessary or proper, who
shall hold their offices or positions for such terms, have such authority
and perform such duties as may from time to time be determined by or
pursuant to authorization of the Board of Directors.
  Section 4.2     Resignation and Removal.  Any officer may resign at any time
upon written notice to the Corporation.  Any officer, agent or employee of
the Corporation may be removed by the Board of Directors with or without
cause at any time.  The Board of Directors may delegate such power of
removal as to officers, agents and employees not appointed by the Board of
Directors.  Such removal shall be without prejudice to a person's contract
rights, if any, but the appointment of any person as an officer, agent or
employee of the Corporation shall not of itself create contract rights.
  Section 4.3     Compensation and Bond.  The compensation of the officers of
the Corporation shall be fixed by the Board of Directors, but this power
may be delegated to any officer by the Board of Directors.  The Corporation
may secure the fidelity of any or all of its officers, agents or employees
by bond or otherwise.
  Section 4.4     Chairman of the Board.  The Chairman of the Board shall be
selected from the members of the Board of Directors and shall preside at
all meetings of the Board of Directors.  In addition, the Chairman of the
Board shall have such other powers and duties as may be delegated to him or
her by the Board of Directors.  The Chairman of the Board shall not be
deemed to be an officer of the Corporation for purposes of Article III of
these By-Laws unless be or she shall also be the Chief Executive Officer.
  Section 4.5     Vice Chairman.  Each Vice Chairman of the Board, in the
absence of the Chairman of the Board, shall have all powers herein
conferred upon the Chairman of the Board.  In addition, each Vice Chairman
shall have such other powers and duties as may be delegated to him or her
by the Board of Directors.
  Section 4.6     Chief Executive Officer.  The Chief Executive Officer shall
be the chief executive officer of the Corporation and, in the absence of
the Chairman of the Board and the Vice Chairman of the Board (or if there
be none), he or she shall preside at all meetings of the Board of
Directors.  The Chief Executive Officer shall prepare an agenda for each
annual and regular meeting of the Board of Directors, which agenda shall
include those topics scheduled to be addressed pursuant to the Board
Calendar.  He or she shall have general charge of the business affairs of
the Corporation.  He or she may employ and discharge employees and agents
of the Corporation, except such as shall be appointed by the Board of
Directors, and he or she may delegate these powers.  The Chief Executive
Officer may vote the stock or other securities of any other domestic or
foreign corporation of any type or kind which may at any time be owned by
the Corporation, may execute any stockholders' or other consents in respect
thereof and may in his or her discretion delegate such powers by executing
proxies, or otherwise, on behalf of the Corporation.  The Board of
Directors by resolution from time to time may confer like powers upon any
other person.
  Section 4.7     President.  The President shall have such powers and perform
such duties as the Board of Directors or the Chief Executive Officer may
from time to time prescribe.
  Section 4.8     Chief Operating Officer.  The Chief Operating Officer of the
Company shall have general charge of the operating affairs of the
Corporation, and shall have such other powers and duties as the Chief
Executive Officer or the Board of Directors shall delegate to him or her
from time to time.
  Section 4.9     Vice Presidents.  Each Vice President shall have such powers
and perform such duties as the Board of Directors or the Chief Executive
Officer may from time to time prescribe.
  Section 4.10    Treasurer.  The Treasurer shall have charge of all funds and
securities of the Corporation, may endorse the same for deposit or
collection when necessary and deposit the same to the credit of the
Corporation in such banks or depositaries as the Board of Directors may
authorize.  He or she may endorse all commercial documents requiring
endorsements for or on behalf of the Corporation and may sign all receipts
and vouchers for payments made to the Corporation.  He or she shall have
all such further powers and duties as generally are incident to the
position of Treasurer or as may be assigned to him or her by the Board of
Directors or the Chief Executive Officer.
  Section 4.11    Secretary.  The Secretary shall distribute all materials to
be distributed in connection with regular and special meetings of the Board
of Directions, record all the proceedings of the meetings of the
stockholders and Directors in a book to be kept for that purpose and shall
also record therein all action taken by written consent of the Directors,
and committees of the Board of Directors in lieu of a meeting.  He or she
shall attend to the giving and serving of all notices of the Corporation. 
He or she shall have custody of the seal of the Corporation and shall
attest the same by his or her signature whenever required.  He or she shall
have charge of the stock ledger and such other books and papers as the
Board of Directors may direct, but he or she may delegate responsibility
for maintaining the stock ledger to any transfer agent appointed by the
Board of Directors.  He or she shall have all such further powers and
duties as generally are incident to the position of Secretary or as may be
assigned to him or her by the Board of Directors or the Chief Executive
Officer.
  Section 4.12    Assistant Treasurers.  In the absence or inability to act of
the Treasurer, any Assistant Treasurer may perform all the duties and
exercise all the powers of the Treasurer.  The performance of any such duty
shall, in respect of any other person dealing with the Corporation, be
conclusive evidence of his or her power to act.  An Assistant Treasurer
shall also perform such other duties as the Treasurer or the Board of
Directors may assign to him or her.
  Section 4.13    Assistant Secretaries.  In the absence or inability to act
of the Secretary, any Assistant Secretary may perform all the duties and
exercise all the powers of the Secretary.  The performance of any such duty
shall, in respect of any other person dealing with the Corporation, be
conclusive evidence of his or her power to act.  An Assistant Secretary
shall also perform such other duties as the Secretary or the Board of
Directors may assign to him or her.
  Section 4.14    Delegation of Duties.  In case of the absence of any officer
of the Corporation, or for any other reason that the Board of Directors may
deem sufficient, the Board of Directors may confer for the time being the
powers or duties, or any of them, of such officer upon any other officer or
upon any Director.
  Section 4.15    Loans to Officers and Employees; Guaranty of Obligations of
Officers and Employees.  The Corporation may lend money to, or guarantee
any obligation of, or otherwise assist any officer or other employee of the
Corporation or any subsidiary, including any officer or employee who is a
Director of the Corporation or any subsidiary, whenever, in the judgment of
the Directors, such loan, guaranty or assistance may reasonably be expected
to benefit the Corporation.  The loan, guaranty or other assistance may be
with or without interest, and may be unsecured, or secured in such manner
as the Board of Directors shall approve, including, without limitation, a
pledge of shares of stock of the Corporation.
                                         ARTICLE V
                                      Indemnification
  Section 5.1     Indemnification of Directors, Officers, Employees and
Agents.  No Director of the Corporation shall be personally liable to the
Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a Director, except for liability (i) for any breach of
the Director's duty of loyalty to the corporation or its stockholders, (ii)
for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174 of the
General Corporation Law of the State of Delaware (the "GCL"), or (iv) for
any transaction from which the Director derived any improper personal
benefit.  If the GCL is amended to authorize corporate action further
eliminating or limiting the personal liability of Directors, then the
liability of Directors of the Corporation shall be eliminated or limited to
the full extent permitted by the GCL, as so amended.
  The Corporation shall indemnify to the full extent permitted by the laws
of the State of Delaware as from time to time in effect any person who was
or is a party or is threatened to be made a party to, or otherwise requires
representation by counsel in connection with, any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (whether or not an action by or in the
right of the Corporation), by reason of the fact that he or she is or was a
Director or officer of the Corporation, or, while serving as a Director or
officer of the Corporation, is or was serving at the request of the
Corporation as a Director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, or by
reason of any action alleged to have been taken or omitted in such
capacity.  The right to indemnification conferred by this Article V also
shall include the right of such persons to be paid in advance by the
Corporation for their expenses (including attorneys' fees) to the full
extent permitted by the laws of the State of Delaware, as from time to time
in effect.  The right to indemnification conferred on such persons by this
Article V shall be a contract right. 
  Unless otherwise determined by the Board of Directors, the Corporation
shall indemnify to the full extent permitted by the laws of the State of
Delaware as from time to time in effect any person who was or is a party or
is threatened to be made a party to, or otherwise requires representation
by counsel in connection with, any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or
investigative (whether or not an action by or in the right of the
Corporation), by reason of the fact that he or she is or was an employee
(other than an officer) or agent of the Corporation, or is or was serving
at the request of the Corporation as a Director, officer, employee or agent
of another corporation, partnership, joint venture, trust or other
enterprise, or by reason of any action alleged to have been taken or
omitted in such capacity.
  The rights and authority conferred in this Article V shall not be
exclusive of any other right which any person seeking indemnification or
advancement of expenses may have or hereafter acquire under any statute,
provision of the Restated Certificate of Incorporation or these By-Laws,
agreement, vote of stockholders or disinterested Directors or otherwise,
both as to action in his or her official capacity and as to action in
another capacity while holding such office and shall continue as to a
person who has ceased to be a Director, officer, employee or agent and
shall inure to the benefit of the heirs, executors and administrators of
such a person.  Neither the amendment or repeal of this Article V nor the
adoption of any provision of the Restated Certificate of Incorporation or
these By-Laws or of any statute inconsistent with this Article V shall
eliminate or reduce the effect of this Article V in respect of any acts or
omissions occurring prior to such amendment, repeal or adoption or an
inconsistent provision.
                                        ARTICLE VI
                                       Common Stock
  Section 6.1     Certificates.  Certificates for stock of the Corporation
shall be in such form as shall be approved by the Board of Directors and
shall be signed in the name of the Corporation by the Chairman or a Vice
Chairman of the Board, if any, or the Chief Executive Officer or the
President or a Vice President, and by the Treasurer or an Assistant
Treasurer, or the Secretary or an Assistant Secretary.  Such certificates
may be sealed with the seal of the Corporation or a facsimile thereof.  Any
of or all the signatures on a certificate may be a facsimile.  In case any
officer, transfer agent or registrar who has signed or whose facsimile
signature has been placed upon a certificate shall have ceased to be such
officer, transfer agent or registrar before such certificate is issued, it
may be issued by the Corporation with the same effect as if he or she were
such officer, transfer agent or registrar at the date of issue.
  Section 6.2     Transfers of Stock.  Upon surrender to any transfer agent of
the Corporation of a certificate for shares of the Corporation duly
endorsed or accompanied by proper evidence of succession, assignment or
authority to transfer, it shall be the duty of the Corporation, provided
such succession, assignment or transfer is not prohibited by the Restated
Certificate of Incorporation, these By-Laws, applicable law or contractual
prohibitions, to issue a new certificate to the person entitled thereto,
cancel the old certificate and record the transaction upon its books.
  Section 6.3     Lost, Stolen or Destroyed Certificates.  The Corporation may
issue a new stock certificate in the place of any certificate theretofore
issued by it, alleged to have been lost, stolen or destroyed, and the
Corporation may require the owner of the lost, stolen or destroyed
certificate or his or her legal representative to give the Corporation a
bond sufficient to indemnify it against any claim that may be made against
it on account of the alleged loss, theft or destruction of any such
certificate or the issuance of any such new certificate.  The Board of
Directors may require such owner to satisfy other reasonable requirements.
  Section 6.4     Stockholder Record Date.  In order that the Corporation may
determine the stockholders entitled to notice of or to vote at any meeting
of stockholders or any adjournment thereof, or to express consent to
corporate action in writing without a meeting, or entitled to receive
payment of any dividend or other distribution or allotment of any rights,
or entitled to exercise any rights in respect of any change, conversion or
exchange of stock, or for the purpose of any other lawful action, the Board
of Directors may fix, in advance, a record date, which shall not be more
than 60 nor less than ten days before the date of such meeting, nor more
than 60 days prior to any other action.  Only such stockholders as shall be
stockholders of record on the date so fixed shall be entitled to notice of,
and to vote at, such meeting and any adjournment thereof, or to give such
consent, or to receive payment of such dividend or other distribution, or
to exercise such rights in respect of any such change, conversion or
exchange of stock, or to participate in such action, as the case may be,
notwithstanding any transfer of any stock on the books of the Corporation
after any record date so fixed.
  If no record date is fixed by the Board of Directors, (a) the record date
for determining stockholders entitled to notice of or to vote at a meeting
of stockholders shall be at the close of business on the day next preceding
the date on which notice is given, or, if notice is waived by all
stockholders entitled to vote at the meeting, at the close of business on
the day next preceding the day on which the meeting is held and (b) the
record date for determining stockholders for any other purpose shall be at
the close of business on the day on which the Board of Directors adopts the
resolution relating thereto.
  A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the
meeting; provided, however, that the Board of Directors may fix a new
record date for the adjourned meeting.
                                        ARTICLE VII
                                    Ownership by Aliens
  Section 7.1     Foreign Stock Record.  There shall be maintained a separate
stock record, designated the "Foreign Stock Record," for the registration
of Voting Stock, as defined in Section 7.2, that is Beneficially Owned (as
defined in the Restated Certificate of Incorporation) by Aliens, as defined
in the Restated Certificate of Incorporation ("Alien Stock").  The
Beneficial Ownership by Aliens of Voting Stock shall be determined in
conformity with regulations prescribed by the Board of Directors.
  Section 7.2     Maximum Percentage.  At no time shall ownership of shares
representing more than the Maximum Percentage, as defined below, be
registered in the Foreign Stock Record.  As used herein, (a) "Maximum
Percentage" means the maximum percentage of voting power of Voting Stock,
as defined below, which may be voted by, or at the direction of, Aliens
without violating Foreign Ownership Restrictions or adversely affecting the
Corporation's operating certificates or authorities, and (b) "Voting Stock"
means all outstanding shares of capital stock of the Corporation issued
from time to time by the Corporation and Beneficially Owned by Aliens
which, but for the provisions of Section 1 of Article Sixth of the Restated
Certificate of Incorporation, by their terms may vote (at the time such
determination is made) for the election of directors of the Corporation,
except shares of Preferred Stock that are entitled to vote for the election
of directors solely as a result of the failure to pay dividends by the
Corporation or other breach of the terms of such Preferred Stock.
  Section 7.3     Recording of Shares.  If at any time there exist shares of
Voting Stock that are Alien Stock but that are not registered in the
Foreign Stock Record, the Beneficial Owner thereof may request, in writing,
the Corporation to register ownership of such shares on the Foreign Stock
Record and the Corporation shall comply with such request, subject to the
limitation set forth in Section 7.2.  The order in which Alien Stock shall
be registered on the Foreign Stock Record shall be chronological, based on
the date the Corporation received a written request to so register such
shares of Alien Stock; provided, that for so long as Air Canada is an
Alien, shares of Voting Stock held by Air Canada which were acquired
pursuant to the Investment Agreement, dated as of November 9, 1992, as
amended, among the Corporation, Air Canada and Air Partners (the
"Investment Agreement"), or pursuant to Air Canada's rights under the
Shareholders Agreement, or upon conversion or exchange of such securities,
or as a dividend or distribution in respect of such securities
(collectively, "AC Original Equity Securities") shall be registered on the
Foreign Ownership Record prior to, and to the exclusion of, any other
shares of Alien Stock whether or not any such other shares of Alien Stock
are registered on the Foreign Stock Record at the time that Air Canada
requests that shares of AC Original Equity Securities be so registered;
provided further, that for so long as any transferee of Air Partners is an
Alien, shares of Voting Stock held by such transferee which were originally
acquired by Air Partners pursuant to the Investment Agreement or upon
conversion or exchange of such securities, or as a dividend or distribution
in respect of such securities (collectively "AP Original Equity
Securities") shall be registered on the Foreign Ownership Record prior to,
and to the exclusion of, any other shares of Alien Stock (other than shares
of AC Original Equity Securities) whether or not any such other shares of
Alien Stock are registered on the Foreign Stock Record at the time that any
such transferee of Air Partners requests that shares of AP Original Equity
Securities be so registered.  If at any time the Corporation shall find
that the combined voting power of Voting Stock then registered in the
Foreign Stock Record exceeds the Maximum Percentage, there shall be removed
from the Foreign Stock Record the registration of such number of shares so
registered as is sufficient to reduce the combined voting power of the
shares so registered to an amount not in excess of the Maximum Percentage. 
The order in which such shares shall be removed shall be reverse
chronological order based upon the date the Corporation received a written
request to so register such shares of Alien Stock; provided, that for so
long as Air Canada is an Alien, shares of AC Original Equity Securities
shall not be removed from the Foreign Ownership Record (regardless of the
date on which such shares were registered thereon) until all other
outstanding shares of Alien Stock have been so removed; provided further,
that for so long as any transferee of Air Partners is an Alien, shares of
AP Original Equity Securities owned by such transferee shall not be removed
from the Foreign Ownership Record (regardless of the date on which such
shares were registered thereon) until all other outstanding shares of Alien
Stock (other than shares of AC Original Equity Securities) have been so
removed.
                                       ARTICLE VIII
                                    General Provisions
  Section 8.1     Fiscal Year.  The fiscal year of the Corporation shall begin
the first day of January and end on the last day of December of each year.
  Section 8.2     Dividends.  Dividends upon the capital stock may be declared
by the Board of Directors at any regular or special meeting and may be paid
in cash or in property or in shares of the capital stock.  Before paying
any dividend or making any distribution of profits, the Directors may set
apart out of any funds of the Corporation available for dividends a reserve
or reserves for any proper purpose and may alter or abolish any such
reserve or reserves.
  Section 8.3     Checks, Notes, Drafts, Etc.  Checks, notes, drafts,
acceptances, bills of exchange and other orders or obligations for the
payment of money shall be signed by such officer or officers or person or
persons as the Board of Directors or a duly authorized committee thereof,
the Chief Executive Officer or the Treasurer may from time to time
designate.
  Section 8.4     Corporate Seal.  The seal of the Corporation shall be
circular in form and shall bear, in addition to any other emblem or device
approved by the Board of Directors, the name of the Corporation, the year
of its incorporation and the words "Corporate Seal" and "Delaware."  The
seal may be used by causing it or a facsimile thereof to be impressed or
affixed or in any other manner reproduced.
  Section 8.5     Waiver of Notice.  Whenever notice is required to be given
by statute, or under any provision of the Restated Certificate of
Incorporation or these By-Laws, a written waiver thereof, signed by the
person entitled to notice, whether before or after the time stated therein,
shall be deemed equivalent to notice.  In the case of a stockholder, such
waiver of notice may be signed by such stockholder's attorney or proxy duly
appointed in writing.  Attendance of a person at a meeting shall constitute
a waiver of notice of such meeting, except when the person attends a
meeting for the express purpose of objecting at the beginning of the
meeting, to the transaction of any business because the meeting is not
lawfully called or convened.  Neither the business to be transacted at, nor
the purpose of, any regular or special meeting of the stockholders,
Directors or members of a committee of Directors need be specified in any
written waiver of notice.
                                        ARTICLE IX
                      Restated Certificate of Incorporation to Govern
  Section 9.1     Restated Certificate of Incorporation to
Govern.  Notwithstanding anything to the contrary herein, if any provisions
contained herein is inconsistent with or conflicts with a provision of the
Restated Certificate of Incorporation, such provision herein shall be
superseded by the inconsistent provision in the Restated Certificate of
Incorporation, to the extent necessary to give effect to such provision in
the Restated Certificate of Incorporation.