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 SEPTEMBER 30, 1994

                                     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  subject to the distribution of securities under a plan
confirmed by a court.  Yes  X    No _____
                               _______________

     As of November 4, 1994, 6,301,056 shares of Class A common stock and
20,353,512 shares of Class B common stock were outstanding.

<PAGE>

PART I - FINANCIAL INFORMATION


ITEM 1.  FINANCIAL STATEMENTS

<TABLE>
                 CONTINENTAL AIRLINES, INC. AND SUBSIDIARIES
                         CONSOLIDATED BALANCE SHEETS
                          (In thousands of dollars)
<CAPTION>
                                              September 30,     December 31,
             ASSETS                               1994              1993    
                                               (Unaudited)
<S>                                             <C>             <C>
Current Assets:
 Cash and cash equivalents, including 
  restricted cash and cash equivalents of 
  $110,008 and $102,439, respectively. . . . .  $ 501,155       $  721,038 
 Accounts receivable, net. . . . . . . . . . .    439,820          342,864 
 Spare parts and supplies, net . . . . . . . .    158,388          161,856 
 Prepayments and other . . . . . . . . . . . .     87,655           79,404 
  Total current assets . . . . . . . . . . . .  1,187,018        1,305,162 

Property and Equipment:
 Owned property and equipment:
  Flight equipment . . . . . . . . . . . . . .  1,022,205          951,881 
  Other. . . . . . . . . . . . . . . . . . . .    327,724          284,362 
                                                1,349,929        1,236,243 
  Less:  Accumulated depreciation. . . . . . .    153,690           69,022 
                                                1,196,239        1,167,221 

 Purchase deposits for flight equipment. . . .    181,001          166,984 

 Capital leases:
  Flight equipment . . . . . . . . . . . . . .    398,777          394,236 
  Other. . . . . . . . . . . . . . . . . . . .     12,239            2,142 
                                                  411,016          396,378 
  Less:  Accumulated amortization. . . . . . .     57,031           23,838 
                                                  353,985          372,540 
   Total property and equipment. . . . . . . .  1,731,225        1,706,745 

Other Assets:
 Routes, gates and slots, net. . . . . . . . .  1,628,745        1,672,759 
 Reorganization value in excess of amounts
  allocable to identifiable assets, net. . . .    322,545          335,565 
 Other assets, net . . . . . . . . . . . . . .    118,421           86,301 
   Total other assets. . . . . . . . . . . . .  2,069,711        2,094,625 

     Total Assets. . . . . . . . . . . . . . . $4,987,954       $5,106,532 
</TABLE>








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

<PAGE>

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

                                                September 30,   December 31,
LIABILITIES AND STOCKHOLDERS' EQUITY                1994            1993    
                                                 (Unaudited)
<S>                                               <C>            <C>
Current Liabilities:
 Current maturities of long-term debt. . . . . .  $  215,958     $  176,350 
 Current maturities of capital leases. . . . . .      45,456         40,556 
 Accounts payable. . . . . . . . . . . . . . . .     655,130        597,669 
 Air traffic liability . . . . . . . . . . . . .     673,279        590,994 
 Accrued payroll and pensions. . . . . . . . . .     187,905        167,859 
 Accrued other liabilities . . . . . . . . . . .     328,631        370,226 
  Total current liabilities. . . . . . . . . . .   2,106,359      1,943,654 

Long-Term Debt . . . . . . . . . . . . . . . . .   1,294,380      1,377,052 

Capital Leases . . . . . . . . . . . . . . . . .     378,423        405,387 

Deferred Credits and Other Long-Term 
 Liabilities:
  Deferred income taxes. . . . . . . . . . . . .      40,000         50,767 
  Deferred credit - operating leases . . . . . .     239,332        288,556 
  Other. . . . . . . . . . . . . . . . . . . . .     224,212        251,719 
   Total deferred credits and other
    long-term liabilities. . . . . . . . . . . .     503,544        591,042 

Commitments and Contingencies

Minority Interest. . . . . . . . . . . . . . . .      25,047         21,935 

Redeemable Preferred Stock (aggregate 
 redemption value - $54,543 and $50,497,
 respectively) . . . . . . . . . . . . . . . . .      51,125         46,916 

Common Stockholders' Equity:
  Class A common stock - $.01 par, 50,000,000
   shares authorized; 6,301,056 and 6,013,216
   shares issued and outstanding . . . . . . . .          63             60 
  Class B common stock - $.01 par, 100,000,000
   shares authorized; 20,353,512 and 19,509,352
   shares issued and outstanding . . . . . . . .         204            195 
  Additional paid-in capital . . . . . . . . . .     779,000        764,274 
  Accumulated deficit. . . . . . . . . . . . . .    (128,464)       (38,549)
  Unearned portion of restricted stock issued
   for future service. . . . . . . . . . . . . .     (16,293)             - 
  Additional minimum pension liability . . . . .      (5,434)        (5,434)
   Total common stockholders' equity . . . . . .     629,076        720,546 
    Total Liabilities and Stockholders' Equity .  $4,987,954     $5,106,532 
</TABLE>



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

<PAGE>

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

<CAPTION>
                                          Three Months       Three Months
                                             Ended              Ended
                                          September 30,     September 30, 
                                              1994              1993     
                                           (Unaudited)       (Unaudited)
<S>                                        <C>               <C>
Operating Revenues:
 Passenger . . . . . . . . . . . . . . .   $1,350,145        $1,399,965 
 Cargo, mail and other . . . . . . . . .      163,539           164,218 
                                            1,513,684         1,564,183 

Operating Expenses:
 Wages, salaries and related costs . . .      393,942           390,650 
 Aircraft fuel . . . . . . . . . . . . .      196,202           205,156 
 Rentals and landing fees. . . . . . . .      209,787           199,250 
 Commissions . . . . . . . . . . . . . .      107,442           156,016 
 Depreciation and amortization . . . . .       65,239            61,394 
 Other . . . . . . . . . . . . . . . . .      458,284           460,707 
                                            1,430,896         1,473,173 
Operating Income . . . . . . . . . . . .       82,788            91,010 

Nonoperating Income (Expense):
 Interest expense. . . . . . . . . . . .      (59,218)          (63,085)
 Interest capitalized. . . . . . . . . .        3,555             2,894 
 Interest income . . . . . . . . . . . .        5,851             5,516 
 Gain (Loss) on disposition of property,
  equipment and other assets, net. . . .         (110)            4,181 
 Other, net. . . . . . . . . . . . . . .         (112)          (16,565)
                                              (50,034)          (67,059)

Income before Income Taxes and 
 Minority Interest . . . . . . . . . . .       32,754            23,951 
Income Tax Provision . . . . . . . . . .            -           (11,341)
Income before Minority Interest. . . . .       32,754            12,610 
Minority Interest. . . . . . . . . . . .       (2,123)             (171)
Net Income . . . . . . . . . . . . . . .       30,631            12,439 
Preferred Dividend Requirements and
 Accretion to Liquidation Value. . . . .       (1,443)           (1,303)
Income Applicable to Common Shares . . .   $   29,188        $   11,136 

Primary and Fully Diluted Earnings
 per Common Share. . . . . . . . . . . .   $     1.03        $     0.53 
</TABLE>








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

<PAGE>

<TABLE>
                CONTINENTAL AIRLINES, INC. AND SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF OPERATIONS
              (In thousands of dollars, except per share data)
<CAPTION>
                            Reorganized     Reorganized       Predecessor
                              Company         Company           Company    
                                           Period from
                                          Reorganization
                            Nine Months   (April 28, 1993     Period from
                               Ended          through       January 1, 1993
                           September 30,   September 30,        through
                               1994            1993)        April 27, 1993 
                            (Unaudited)     (Unaudited)
<S>                          <C>            <C>              <C>
Operating Revenues:
 Passenger . . . . . . . .   $3,796,490     $2,275,439       $1,622,406 
 Cargo, mail and other . .      464,220        266,317          234,752 
                              4,260,710      2,541,756        1,857,158 

Operating Expenses:
 Wages, salaries and 
  related costs. . . . . .    1,143,749        653,641          501,901 
 Aircraft fuel . . . . . .      544,200        347,162          271,935 
 Rentals and landing fees.      608,961        328,063          273,977 
 Commissions . . . . . . .      338,151        247,919          175,283 
 Depreciation and
  amortization . . . . . .      190,371         98,953           76,795 
 Other . . . . . . . . . .    1,409,233        779,064          670,405 
                              4,234,665      2,454,802        1,970,296 
Operating Income (Loss). .       26,045         86,954         (113,138)

Nonoperating Income 
 (Expense):
 Interest expense. . . . .     (183,022)      (101,120)         (52,023)
 Interest capitalized. . .       10,244          4,558            1,759 
 Interest income . . . . .       16,733          9,050                - 
 Gain on disposition of
  property, equipment and
  other assets, net. . . .        1,845          4,230           31,250 
 Reorganization items:
  Professional fees 
   and other . . . . . . .            -              -         (823,086)
  Interest income. . . . .            -              -            4,535 
 Other, net. . . . . . . .       (5,798)       (15,789)         (25,742)
                               (159,998)       (99,071)        (863,307)

Loss before Income Taxes,
 Minority Interest and
 Extraordinary Item. . . .     (133,953)       (12,117)        (976,445)
Income Tax Benefit
 (Provision) . . . . . . .       47,150            398           (2,140)
Loss before Minority
 Interest and Extra-
 ordinary Item . . . . . .      (86,803)       (11,719)        (978,585)
Minority Interest. . . . .       (3,112)          (283)               - 
Loss before Extraordinary
 Item. . . . . . . . . . .      (89,915)       (12,002)        (978,585)
Extraordinary Item . . . .            -              -        3,618,723 
Net Income (Loss). . . . .      (89,915)       (12,002)       2,640,138 
Preferred Dividend 
 Requirements and
 Accretion to Liquidation
 Value . . . . . . . . . .       (4,209)        (2,163)               - 
Income (Loss) Applicable
 to Common Shares. . . . .   $  (94,124)    $  (14,165)      $2,640,138 

Primary and Fully Diluted
 Loss per Common Share . .   $    (3.69)    $    (0.81)      $   N.M.*  
</TABLE>

*N.M. - Not meaningful - Historical per share data for the Predecessor Company
        is not meaningful since the Company has been recapitalized and has
        adopted fresh start reporting as of April 27, 1993.

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

<PAGE>

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

<CAPTION>
                             Reorganized     Reorganized      Predecessor
                               Company         Company          Company    
                                            Period from
                                           Reorganization
                             Nine Months   (April 28, 1993    Period from
                                Ended          through      January 1, 1993
                            September 30,    September 30,      through
                                1994             1993)      April 27, 1993 
                             (Unaudited)     (Unaudited)
<S>                           <C>             <C>              <C>
Net Cash Provided by
 Operating Activities. . .    $ 69,266        $ 94,322         $ 73,629 
 
Cash Flows from Investing
 Activities:
 Investment in America
  West . . . . . . . . . .     (18,771)              -                - 
 Proceeds from disposition
  of property, equipment
  and other assets . . . .       2,480             153           36,123 
 Capital expenditures. . .    (123,081)       (179,168)         (67,425)
  Net cash used by
   investing activities. .    (139,372)       (179,015)         (31,302)

Cash Flows from Financing
 Activities:
 Proceeds from issuance
  of stock . . . . . . . .           -               -          122,004 
 Proceeds from issuance 
  of long-term debt, net .      30,395          45,937          308,536 
 Payments on long-term
  debt and capital lease
  obligations. . . . . . .    (180,172)        (69,965)        (106,296)
  Net cash provided
   (used) by financing 
   activities. . . . . . .    (149,777)        (24,028)         324,244 

Net Increase (Decrease) 
 in Cash and Cash
 Equivalents . . . . . . .    (219,883)       (108,721)         366,571 

Cash and Cash Equivalents-
 Beginning of Period . . .     721,038         766,140          399,569 

Cash and Cash Equivalents-
 End of Period . . . . . .    $501,155        $657,419         $766,140 
</TABLE>






                                                     (continued on next page)

<PAGE>

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

<CAPTION>
                             Reorganized     Reorganized      Predecessor
                               Company         Company          Company    
                                            Period from
                                           Reorganization
                             Nine Months   (April 28, 1993    Period from
                                Ended          through      January 1, 1993
                            September 30,    September 30,      through
                                1994             1993)      April 27, 1993 
                             (Unaudited)     (Unaudited)
<S>                           <C>             <C>              <C>
Supplemental Cash Flow
 Information:
 Interest paid . . . . . .    $146,175        $ 59,241         $ 30,926 

Financing Activities Not
 Affecting Cash:
 Reclassification of 
  accrued rent to long-
  term debt due to 
  renegotiated leases. . .    $  6,679        $ 42,488         $111,692 
 Capital lease 
  obligations incurred . .    $  9,546        $  8,635         $      - 
 Interest expense
  financed on renegoti-
  ated aircraft debt . . .    $ 17,942        $ 18,652         $  1,804 
 Property and equipment
  acquired through the
  issuance of debt . . . .    $  9,526        $      -         $      - 
 Financed flight 
  equipment purchase
  deposits . . . . . . . .    $ 18,422        $      -         $      - 
</TABLE>

 


















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

<PAGE>
                CONTINENTAL AIRLINES, INC. AND SUBSIDIARIES

                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 (UNAUDITED)


Continental Airlines, Inc. (the "Company", the "Reorganized Company" or
"Continental") is the successor to Continental Airlines Holdings, Inc. (together
with its subsidiaries, "Holdings" or the "Predecessor Company") and Continental
Airlines, Inc.  On December 3, 1990, Continental and Holdings and all their
wholly-owned domestic subsidiaries filed voluntary petitions to reorganize under
Chapter 11 of the federal bankruptcy code.  The Companies' consolidated Plan of
Reorganization was confirmed on April 16, 1993 and became effective on April 27,
1993 (the "Reorganization").  On such date, Holdings merged with and into
Continental.  System One Information Management, Inc. ("System One"), which had
been a subsidiary of Holdings, was reorganized as a subsidiary of Continental. 
Because consolidated Continental (as reorganized) includes System One and other
businesses that had been consolidated with Holdings prior to April 27, 1993 (but
not with pre-reorganization Continental), the discussion herein includes
references to Holdings' consolidated financial statements for periods prior to
April 27, 1993.  On April 27, 1993, Continental adopted fresh start reporting
in accordance with the American Institute of Certified Public Accountants'
Statement of Position 90-7 - "Financial Reporting by Entities in Reorganization
Under the Bankruptcy Code" ("SOP 90-7"), which resulted in adjustments to the
Company's common stockholders' equity and the carrying values of assets and
liabilities.  Accordingly, the Company's post-reorganization balance sheets and
statements of operations have not been prepared on a basis of accounting
consistent with the pre-reorganization balance sheet and statements of
operations.  For accounting purposes, the inception date for the Reorganized
Company is deemed to be April 28, 1993.  A vertical black line is shown in the
consolidated financial statements to separate Continental from the Predecessor
Company since the financial statements have not been prepared on a consistent
basis of accounting.

The Company has prepared the consolidated financial statements included herein
without audit, pursuant to the rules and regulations of the Securities and
Exchange Commission.  Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations.  In the opinion of management, the accompanying unaudited
consolidated financial statements contain all adjustments, consisting of normal
recurring accruals, necessary to present fairly the financial position of the
Company as of September 30, 1994 and the results of its operations and its cash
flows for the periods ended September 30, 1994 and April 27 and September 30,
1993.  Certain reclassifications have been made to the prior year's financial
statements to conform to the 1994 presentation.  The accompanying consolidated
financial statements should be read in conjunction with the consolidated
financial statements and the notes thereto contained in the Company's Annual
Report on Form 10-K for the year ended December 31, 1993.

NOTE 1 - EARNINGS (LOSS) PER SHARE

The earnings (loss) per common share computation is based upon the income (loss)
applicable to common shares and the average number of shares of common stock and
dilutive common stock equivalents (warrants, options and restricted stock)
outstanding.  The number of shares used in the computations for the three and
nine months ended September 30, 1994 was 28,988,888 and 25,522,568,
respectively.  Preferred stock dividend requirements (including  additional
dividends on unpaid dividends) and accretion to redemption value on preferred
stock decreased net income for this computation by approximately $1.4 million
for the three months ended September 30, 1994 and increased the net loss for
this computation by $4.2 million for the nine months ended September 30, 1994.

NOTE 2 - PREFERRED AND COMMON STOCK

The Company had approximately $7.4 million and $3.4 million of dividends on its
preferred stock in arrears as of September 30, 1994 and December 31, 1993,
respectively.

In January 1994, Air Canada converted 287,840 shares of Class B Common Stock
into an equal number of shares of Class A common stock to preserve its
percentage of total voting power.

See Note 7 - "Other - Compensation Plans" for a discussion of certain plans
pursuant to which additional shares of common stock may be issued.

NOTE 3 - PASSENGER REVENUES

In the third quarter of 1994, the Company recorded a $23.4 million favorable
adjustment as a result of a change in the Company's estimate of awards expected
to be redeemed for travel on Continental under its frequent flyer program.  In
the third quarter of 1993, the Company recorded a $75.0 million favorable
adjustment resulting from the completion of the Company's periodic evaluation
of its air traffic liability account.

NOTE 4 - NONOPERATING INCOME (EXPENSE)

In the third quarter of 1993, the Company recorded charges totaling
approximately $13.1 million related to Continental's termination of service to
Australia and New Zealand.

NOTE 5 - INCOME TAXES

The income tax benefit for the nine months ended September 30, 1994 differs from
the federal statutory rate principally due to state taxes and certain
nondeductible expenses.  A provision was not recorded for the three months ended
September 30, 1994 due to net operating losses that have not previously been
benefitted.  The income tax benefit for the period April 28, 1993 through
September 30, 1993 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.  The provision for income taxes for
the period January 1, 1993 through April 27, 1993 represents only state income
taxes.

NOTE 6 - CONTINGENCIES

The Company has undertaken a number of actions, and is continuing to analyze and
implement additional actions, intended to improve profitability.  Certain of
these actions may be expected to result in charges and write-offs, which may be
material.


<PAGE>
As announced on July 28, 1994, the Company reduced operations in Denver to 23
daily departures effective October 31, 1994.  As a result of this reduction of
operations in Denver, and the expected increase in costs associated with the
pending opening of a new Denver airport, the Company is pursuing several
alternatives which could reduce its exposure in Denver and is continuing to
evaluate the financial impact of the reduction of its Denver operations.

On November 7, 1994, the Company announced its decision to close its Western
U.S. scheduled maintenance facilities in Los Angeles and Denver, eliminating
approximately 1,640 maintenance positions.  Much of the Company's scheduled
maintenance needs will be performed by outside suppliers who can support the
Company's flight operations at locations more convenient to its primary routes
in the Eastern, Central and Southern regions of the United States.

The Company is considering eliminating or removing from service certain jet and
turboprop aircraft that management believes are not well suited to the Company's
current route structure and, in connection herewith, the Company has announced
that it plans to remove eight A300 aircraft from service effective January 10,
1995.

Until the Company completes its evaluation of alternatives with respect to each
such action (and, in the case of Denver, until the cost of the new airport has
been determined), the amounts of charges and write-offs that may be incurred
cannot be determined.

NOTE 7 - OTHER

Compensation Plans.  On March 4, 1994, the Board of Directors adopted the
Continental Airlines 1994 Employee Stock Purchase Plan (the "Stock Purchase
Plan") (to be effective July 1, 1994) and the Continental Airlines 1994
Incentive Equity Plan (the "Incentive Plan"), which plans were approved by the
stockholders of the Company at the annual stockholders' meeting on June 30,
1994.  

Under the Stock Purchase Plan, all full and part-time employees of the Company
who are on the United States payroll may purchase shares of Class B Common Stock
("Class B") at 85% of the lower of fair market value on the first or last
business day of a calendar quarter.  A maximum of 4,000,000 shares of Class B
are authorized for purchase.

Under the Incentive Plan, key officers and employees of the Company and its
subsidiaries may be selected by the Human Resources Committee of the Board of
Directors (the "Committee") to receive any or all of the following:  stock
options, restricted stock, long-term incentive awards and annual incentive
awards.  Subject to adjustment, as provided for in the Incentive Plan, the
number of shares of common stock that may be issued under the Incentive Plan
will not in the aggregate exceed 2,300,000 shares of Class B, which may be
originally issued or treasury shares or a combination thereof.  On March 4,
1994, the Board of Directors approved the grant of options to employees to
purchase approximately 1,900,000 shares of Class B with an exercise price of
$21.375 per share.  On July 1, 1994, each outside director of Continental
received an option to purchase 1,500 shares of Class B with an exercise price
of $13.25 per share.


<PAGE>
In addition, the Incentive Plan permits awards of restricted stock to
participants, subject to one or more restrictions, including a restriction
period and a purchase price, if any, to be paid by the participant, as
determined by the Committee.  The number of shares of common stock that may be
granted or sold as restricted stock under the Incentive Plan may not in the
aggregate exceed 300,000 shares of Class B.  As of September 30, 1994,
132,000 shares of restricted stock had been granted with no cost to the
participants.

In addition, the Board of Directors approved (a) a broad-based employee
compensation program including:  (i) a profit sharing program under which 15%
of the Company's pre-tax earnings (before unusual or nonrecurring items) will
be distributed each year to all employees on a pro rata basis according to base
salary, and (ii) a one-time grant of approximately one million shares of
restricted stock for substantially all employees at or below the Continental
Manager or equivalent position (the restricted stock vests over a four-year
period, has no exercise price and will result in the recognition of
approximately $16.1 million of compensation expense which is being amortized
over the vesting period) and (b) an executive cash bonus plan based upon Company
share price performance within a specified range over a period of years.

America West Airlines, Inc. ("America West").  As a limited partner in AmWest
Partners, L.P. ("AmWest"), Continental participated in the acquisition by AmWest
of 31.4% of the equity of reorganized America West in connection with America
West's emergence from bankruptcy effective August 25, 1994.  Continental
contributed approximately $18.8 million of a total of approximately $113 million
used by AmWest.  As a result of the transaction, Continental owns approximately
5.7% of the equity of reorganized America West.  Continental also entered into
a series of agreements with America West, such as agreements related to code
sharing and ground handling, which are expected to create substantial benefits
for both airlines.

Each investor participating in the acquisition did so on individual terms;
Continental and certain affiliates of Fidelity Management Trust Company invested
at the same per share price, but at a higher price (approximately $9.25 per
share as compared to approximately $6.75 per share) than the price being paid
by Air Partners, II, L.P. ("AP II") and TPG Partners, L.P., partnerships
controlled by Mr. David Bonderman, Chairman of the Board of Continental. 
However, as between Continental and AP II, Continental is entitled to receive
a 10% per year return on its investment before AP II receives any return and to
receive its invested capital back before AP II does.

Foreign Carrier Alliance.  In May 1994, Continental entered into a strategic
alliance with Alitalia Airlines to expand travel between the United States and
Italy, including a code sharing agreement.  The agreement has been approved by
both the Italian and United States governments.

Litigation.  On July 19, 1994, the United States Bankruptcy Court for the
District of Delaware (the "Bankruptcy Court") approved a comprehensive
settlement resolving claims filed by the Air Line Pilots Association ("ALPA")
and former Eastern Air Lines, Inc. ("Eastern") pilots which asserted that, among
other things, a de facto operational merger between Continental and Eastern
occurred and therefore the pilot seniority lists of Continental and Eastern
should be integrated.  Under the settlement, each pilot may elect to participate
by receiving (i) an allowed general unsecured claim with a face value of
approximately $100,000 against the debtor estates of Continental and Holdings
(the payment of which will be primarily in the form of Continental Class B
Common Stock which was issued for the benefit of creditors pursuant to the
provisions of Continental's Revised Second Amended Joint Plan of Reorganization)
and limited pass travel privileges or (ii) a future hiring preference at
Continental, half of the allowed general unsecured claim and limited pass travel
privileges.  The second option is available only to the 225 most senior pilots
so electing.  Individual pilots who have filed claims and elect not to
participate may continue to pursue their claims.  However, the agreement settles
all remaining claims between Continental and ALPA.  

On August 18, 1994, a dissident group of Eastern pilots, known as the "LPP
Claimants," sought leave from the Bankruptcy Court to file an untimely appeal
from the Order approving the Settlement.  That request was denied on
September 9, 1994, and the dissidents have appealed that denial to the United
States District Court.  Briefing on that appeal was concluded on November 10,
1994.  The Company believes that the likelihood that the LPP Claimants will be
successful is extremely remote.

Continental Express, Inc.  In May 1994, the Company's turboprop commuter airline
subsidiary, Continental Express, Inc. ("Express"), terminated substantially all
of its unprofitable Denver operations, which were taken over by GP Express
Airlines, Inc. ("GP Express"), an unaffiliated commuter airline operator. 
Express has implemented cost reduction programs, including substantial workforce
reductions.  Continental is considering a possible private placement by Express
of less than 20% of the common stock of Express.  The Express shares offered in
the private placement would not be registered under the Securities Act and would
not be offered or sold in the United States absent registration or an applicable
exemption from registration requirements.  The Company is also considering a
possible future distribution by Continental to its stockholders of all or part
of the stock of Express held by Continental.

<PAGE>

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
                                          September 30,        Increase/
                                        1994         1993      (Decrease)  
<S>                                   <C>          <C>          <C>
Revenue passengers (thousands) . . .  11,629       10,294       12.97 %
Revenue passenger miles 
 (millions) (a). . . . . . . . . . .  11,616       11,679       (0.54)%
Available seat miles (millions) (b).  17,259       17,572       (1.78)%
Passenger load factor (c). . . . . .    67.3%        66.5%       0.80 pts.
Breakeven passenger load factor (d).    64.7%        63.6%       1.10 pts.
Passenger revenue per available
  seat mile (cents) (e). . . . . . .    7.38         7.49       (1.47)%
Operating cost per available seat
  mile (cents) (f) . . . . . . . . .    7.56         7.64       (1.05)%
Average yield per revenue 
  passenger mile (cents) (g) . . . .   10.97        11.27       (2.66)%
Average fare per revenue passenger . $109.57      $127.84      (14.29)%
Average length of aircraft
  flight (miles) . . . . . . . . . .     707          877      (19.38)%
Average daily utilization of
  each aircraft (h). . . . . . . . .   10:10         9:54        2.69 %
</TABLE>


<TABLE>
<CAPTION>
                                         Nine Months Ended        Net
                                          September 30,        Increase/
                                        1994         1993      (Decrease)  
<S>                                   <C>          <C>          <C>
Revenue passengers (thousands) . . .  31,493       28,942        8.81 %
Revenue passenger miles 
 (millions) (a). . . . . . . . . . .  31,154       32,481       (4.09)%
Available seat miles (millions) (b).  48,632       51,248       (5.10)%
Passenger load factor (c). . . . . .    64.1%        63.4%       0.70 pts.
Breakeven passenger load factor (d).    65.1%        66.1%      (1.00)pts.
Passenger revenue per available
  seat mile (cents) (e). . . . . . .    7.36         7.14        3.08 %
Operating cost per available seat
  mile (cents) (f) . . . . . . . . .    7.92         7.94       (0.25)%
Average yield per revenue 
  passenger mile (cents) (g) . . . .   11.49        11.27        1.95 %
Average fare per revenue passenger . $113.64      $126.50      (10.17)%
Average length of aircraft
  flight (miles) . . . . . . . . . .     728          876      (16.89)%
Average daily utilization of
  each aircraft (h). . . . . . . . .    9:56         9:50        1.02 %
</TABLE>


<PAGE>
(a) "Revenue passenger miles" means the number of scheduled miles flown by
     revenue passengers.
(b)  "Available seat miles" means the number of seats available for passengers
     multiplied by the number of scheduled miles those seats are flown.
(c)  "Passenger load factor" means revenue passenger miles divided by available
     seat miles.
(d)  "Breakeven passenger load factor" means the percentage of seats which must
     be occupied by revenue passengers in order for the airline to breakeven on
     an income before income taxes basis, excluding nonrecurring, nonoperating
     gains/losses and other special items.
(e)  "Passenger revenue per available seat mile" means passenger revenue
     divided by available seat miles.
(f)  "Cost per available seat mile" means the total of operating expenses
     divided by available seat miles.
(g)  "Average yield per revenue passenger mile" means the average revenue
     received for each mile a revenue passenger is carried.
(h)  "Average daily utilization of each aircraft" means the average block hours
     flown per day in revenue service per aircraft.

The Company has undertaken a number of actions, and is continuing to analyze and
implement additional actions, intended to improve profitability.  Certain of
these actions may be expected to result in charges and write-offs, which may be
material.  See Note 6 of Notes to Consolidated Financial Statements.

Management has implemented strategies to improve the performance of Express,
which has experienced substantial losses in recent years.  In May 1994, Express
terminated substantially all of its unprofitable Denver operations, which were
taken over by GP Express.  The Company reached an agreement with GP Express for
GP Express to lease and/or sublease from the Company 15 Beechcraft 1900 aircraft
currently serving seven markets from Denver.  The agreement contemplates that
GP Express will continue service in the Denver market under the name Continental
Express pursuant to a code sharing agreement with the Company.  Express has
implemented cost reduction programs, including substantial work force
reductions.

During the third quarter of 1994, the Company significantly improved the
operating reliability of its low fare, short haul "Continental Lite" operations
over results for the second quarter.  However, Continental Lite as a whole was
not profitable in the third quarter, and management is continuing to implement
changes intended to achieve sustained profitability.  There can be no assurance
as to when or whether such profitability will be achieved.

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 and nine month
periods ended September 30, 1994 as compared to the three and nine month periods
ended September 30, 1993.  A discussion with respect to the three months ended
September 30, 1994 and 1993 has been provided only for material changes that are
not consistent with the discussion of the nine month periods.  The Company's
results of operations for the three and nine month periods ended September 30,
1994 have not been prepared on a basis of accounting consistent with its results
of operations for periods prior to April 28, 1993, due to the implementation of
fresh start reporting upon the Company's emergence from bankruptcy.


<PAGE>
The Company recorded consolidated net losses of $89.9 million for the nine
months ended September 30, 1994 as compared to consolidated net income of
$2.6 billion for the nine months ended September 30, 1993.  The Company's net
income in 1993 included $3.0 billion in fresh start adjustments primarily
related to the discharge of prepetition debt obligations.

The Company recorded consolidated net income of $30.6 million and $12.4 million
for the three months ended September 30, 1994 and 1993, respectively. 
Consolidated operating income totaled $82.8 million for the three months ended
September 30, 1994 as compared to consolidated operating income of $91.0 million
for the three months ended September 30, 1993.  The operations of Continental's
subsidiary, Continental Micronesia, Inc. ("CMI"), contributed significantly to
Continental's consolidated operating results for the third quarter of 1994. 
CMI's operating results have been favorably impacted by improved economic
conditions in Japan and recovery from an August 1993 earthquake in Guam.

Passenger revenues for the three and nine months ended September 30, 1994,
include a $23.4 million favorable adjustment as a result of the Company's
estimate of awards expected to be redeemed for travel on Continental under its
frequent flyer program.  Passenger revenues for the three and nine months ended
September 30, 1993, include a $75.0 million favorable adjustment resulting from
the completion of the Company's periodic evaluation of its air traffic liability
account.

Passenger revenues decreased 2.6% for the first nine months of 1994 as compared
to the same period in 1993 due primarily to a 5.1% decrease in available seat
miles and a 4.1% decrease in Continental's jet revenue passenger miles.  Such
decrease was partially offset by a 2.0% increase in jet yields.  Revenues in the
first nine months of 1994 were negatively impacted by the unusually poor weather
in the eastern United States in the first quarter of 1994 and a decrease in
available seat miles due to Continental's acceleration of its fleet
refurbishment program.

Cargo, mail and other revenues in the first nine months of 1994 decreased 7.4%
as compared to the first nine months of 1993 primarily as a result of
Continental's termination of service to Australia and New Zealand in October
1993, poor weather in the eastern United States during the first quarter of 1994
and a decrease in other revenue.  Cargo, mail and other revenues remained
relatively constant in the third quarter of 1994 as compared to the same period
in 1993.

Wages, salaries and related costs in the first nine months of 1994 decreased
1.0% as compared to the same period in 1993 due to a decrease in the number of
full-time equivalent employees partially offset by higher wage rates.  In July
1992, the Company implemented an average 10% wage reduction, which reduction was
restored in equal increments in December 1992, April 1993 and April 1994, with
the final restoration occurring in July 1994.  The number of full-time
equivalent employees decreased from approximately 40,650 as of September 30,
1993 to approximately 38,800 as of September 30, 1994.  As a percentage of total
operating costs,  the Company's labor costs were 27.0% for the first nine months
of 1994 as compared to approximately 26.1% for the first nine months of 1993.

Fuel expense decreased 12.1% in the first nine months of 1994 as compared to the
same period in 1993.  The quantity of jet fuel used decreased from
1,012.6 million gallons in the first nine months of 1993 to 1,003.8 million
gallons in the first nine months of 1994, and the average price per gallon
decreased from 59.94 cents to 52.74 cents.  Fuel costs were 12.9% and 14.0% of
total operating expenses in the first nine months of 1994 and 1993,
respectively.

Rentals and landing fees increased 1.1% in the first nine months of 1994 as
compared to the same period in 1993 and increased 5.3% in the third quarter of
1994 as compared to the same period in 1993.  Rent expense increased primarily
as a result of settlements reached in April 1993 with certain aircraft debt
holders (which resulted in the transfer to the debt holders and subsequent
leaseback of certain aircraft) and the delivery of new Boeing 737 and 757
aircraft during 1994.  Such increase was partially offset by retirements of
leased aircraft and the amortization of deferred credits recorded in connection
with the Company's adjustment of operating leases to fair market value as of
April 27, 1993.

Commissions expense decreased 20.1% in the first nine months of 1994 and 31.1%
in the three months ended September 30, 1994 as compared to the same periods in
1993 primarily due to a decrease in commissionable sales.

Depreciation and amortization expense increased 8.3% between the periods due
primarily to the amortization of intangibles (including Reorganization Value in
Excess of Amounts Allocable to Identifiable Assets) beginning April 28, 1993. 
Such increase was partially offset by a decrease in depreciation expense due to
a reduction in the number of owned aircraft as a result of settlements reached
in early 1993 with certain aircraft debt holders (which resulted in the transfer
to the debt holders and subsequent leaseback of certain aircraft).  In addition,
depreciation and amortization expense increased 6.3% in the third quarter of
1994 as compared to the same period in 1993 due primarily to an increase in
aircraft operated under capital leases (aircraft previously leased under
operating leases) and the amortization of incremental capitalized costs
associated with aircraft.

Other operating expenses decreased 2.8% in the first nine months of 1994 as
compared to the same period in 1993 primarily as a result of a decrease in
passenger services and maintenance, material and repair expenses partially
offset by an increase in other miscellaneous expenses.  Charges totaling
approximately $5.5 million were recorded in the first quarter of 1994 relating
to the redeployment of assets.

The Company's interest expense increased 19.5% for the first nine months of 1994
as compared to the same period in 1993 (from $153.1 million to $183.0 million)
due primarily to a net increase in debt on which the Company was required to
accrue interest.  As a result of its Chapter 11 filings, through April 1993, the
Company was not obligated to pay, and accordingly ceased accruing contractual
interest on its unsecured and undersecured obligations.  Interest expense
decreased 6.1% in the third quarter of 1994 as compared to the same period in
1993 due to the early repayment of debt.

Capitalized interest increased $3.9 million in the first nine months of 1994 as
compared to the same period in 1993 due primarily to an increase in the average
balance of purchase deposits for flight equipment during the first nine months
of 1994 as compared to the same period in 1993.


<PAGE>
Interest income increased 23.2% in the first nine months of 1994 as compared to
the same period in 1993 primarily due to an increase in the average balance of
cash and cash equivalents.  Interest income increased 6.1% in the third quarter
of 1994 compared to the same period in 1993 due to an increase in the average
interest rate.  Interest income earned on the Company's investments during the
period prior to April 28, 1993 was classified as a reorganization item in
accordance with SOP 90-7.

For the nine months ended September 30, 1994 and 1993, the Company recorded
gains relating primarily to Continental's disposition of property, equipment and
other assets of $1.8 million and $35.5 million, respectively.  In 1993, the
Company recorded a gain of $34.9 million related to System One's sale to
Electronic Data Systems Corporation of substantially all of the assets of its
Airline Services Division.

Reorganization items-professional fees and other in the first nine months of
1993 included professional fees of $58.6 million and accruals for rejected
aircraft agreements and other miscellaneous adjustments of $187.2 million.  In
addition, in the second quarter of 1993, fresh start adjustments totaling
$719.1 million were recorded relating to the adjustment of assets and
liabilities to fair market value as well as other miscellaneous fresh start
adjustments of approximately $76.8 million.  These fresh start adjustments were
partially offset by the write-off of deferred gains on sale/leaseback
transactions of $218.6 million.

The Company's other nonoperating income (expense) in the first nine months of
1994 primarily included foreign exchange and other losses of $9.0 million
(primarily related to Japanese yen-denominated transactions) and charges
totaling approximately $2.3 million relating to the closing of certain 
stations.  Other nonoperating income (expense) in the first nine months of 
1993 included foreign exchange losses (primarily related to Japanese yen, 
German mark and British pound-denominated transactions) of $11.4 million, 
charges totaling approximately $13.1 million related to the Company's 
termination of services to Australia and New Zealand and other expenses 
(primarily related to the abandonment of and relocation to airport facilities).

In 1993, the Company recorded an extraordinary gain of approximately
$3.6 billion resulting from the extinguishment of prepetition obligations,
including the write-off of a deferred credit related to Eastern of approximately
$1.1 billion.

LIQUIDITY AND CAPITAL RESOURCES

As of September 30, 1994, the Company had approximately $501.2 million in cash
and cash equivalents as compared to $721.0 million as of December 31, 1993. 
This decrease was a result of approximately $149.8 million of net cash used by
financing activities and $139.4 million of net cash used by investing activities
offset by $69.3 million of net cash provided by operating activities. 
Approximately $110.0 million and $102.4 million of cash and cash equivalents at
September 30, 1994 and December 31, 1993, respectively, were held in restricted
arrangements relating primarily to payments for workers' compensation claims and
in accordance with the terms of certain security agreements.


<PAGE>
Continental currently does not have general lines of credit or significant
unencumbered assets, and its access to additional sources of liquidity, in
particular debt financing, remains limited.  In addition, Continental's
principal note agreements require mandatory prepayments in the event of most
asset sales.  Continental's ability to improve its liquidity will depend, in
part, upon its ability to achieve improved financial results.

As of September 30, 1994, Continental has substantial capital commitments,
including firm commitments for substantial numbers of new aircraft (to be used
to replace existing aircraft) with a cost of approximately $3.2 billion; in
connection with such firm order aircraft, the Company has financing commitments,
subject to conditions, of over $1.5 billion.  The Company also has options to
acquire additional aircraft.  As of September 30, 1994, the Company had
acquired, under operating leases, 18 of the 737 aircraft and six of the
757 aircraft on firm order.  In January 1994, Continental exercised its options
with respect to two additional 737 aircraft.  In March 1994, the Company entered
into a separate agreement to acquire under long-term leases ten new
737 aircraft.  The first of these aircraft is scheduled to be delivered in the
last quarter of 1994 and the remainder in 1995.

The Company intends to seek additional financing for the aircraft deliveries
(which may include public debt financing and/or private financing) in the future
when and as appropriate.  The Company has filed a shelf registration relating
to the potential offering of secured and unsecured debt securities, including
convertible debt securities.

In addition to traditional sources of liquidity, the Company is evaluating the
desirability of disposing of one or more non-core assets or operations.

<PAGE>

 
                       PART II - OTHER INFORMATION


ITEM 1.  LEGAL PROCEEDINGS.

         See Note 7 - "Other - Litigation" of Notes to Consolidated Financial
         Statements.


ITEM 2.  CHANGES IN SECURITIES.

         None.


ITEM 3.  DEFAULTS UPON SENIOR SECURITIES.

         None.


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:

              10.1  Third Revised Investment Agreement dated April 21, 1994
                    between America West Airlines, Inc. and AmWest Partners,
                    L.P. - incorporated by reference to Exhibit 1 to the
                    August 25, 1994 Schedule 13D.

              10.2  Management Compensation Agreement between the Company and
                    Daniel Garton - filed herewith.

              10.3  Management Compensation Agreement between the Company and
                    John Luth - filed herewith.

              10.4  First Amendment to 1994 Employee Stock Purchase Plan -
                    filed herewith.

              10.5  Prospectus relating to 1994 Restricted Stock Grant, in
                    replacement of Exhibit 4.3 to the Company's Registration
                    Statement No. 33-81326 - filed herewith.

              11.1  Statement Regarding Computation of Per Share Earnings -
                    filed herewith.

              27.1  Financial Data Schedule - filed herewith.

         (b)  Reports on Form 8-K:

              None.
<PAGE>

             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:  November 14, 1994            by: /s/ Daniel P. Garton                 
                                        Daniel P. Garton
                                        Senior Vice President and
                                        Chief Financial Officer 
                                        (On behalf of Registrant)




Date:  November 14, 1994            by: /s/ Janice E. Bryant                 
                                        Janice E. Bryant
                                        Vice President and Controller
                                        (On behalf of Registrant)

<PAGE>
                        CONTINENTAL AIRLINES, INC.

                              INDEX TO EXHIBITS


     10.1  Third Revised Investment Agreement dated April 21, 1994 between
           America West Airlines, Inc. and AmWest Partners, L.P. - incorporated
           by reference to Exhibit 1 to the August 25, 1994 Schedule 13D.

     10.2  Management Compensation Agreement between the Company and Daniel
           Garton - filed herewith.

     10.3  Management Compensation Agreement between the Company and John Luth
           - filed herewith.

     10.4  First Amendment to 1994 Employee Stock Purchase Plan - filed
           herewith.

     10.5  Prospectus relating to 1994 Restricted Stock Grant, in replacement
           of Exhibit 4.3 to the Company's Registration Statement No. 33-81326
           - filed herewith.

     11.1  Statement Regarding Computation of Per Share Earnings - filed
           herewith.

     27.1  Financial Data Schedule - filed herewith.
     








                            EMPLOYMENT AGREEMENT


This EMPLOYMENT AGREEMENT dated as of May 20, 1993 is entered into by and
between CONTINENTAL AIRLINES, INC. (the "Company"), a Delaware corporation, and
DANIEL P. GARTON, (the "Executive").  The Company and the Executive are referred
to herein individually as a "Party" and collectively as the "Parties".

The Company wishes to assure itself of the continued services of the Executive,
and the Executive is willing to continue employment with the Company on a full-
time basis, and upon the other terms and conditions hereinafter provided.

In consideration of the mutual covenants contained herein, the Parties agree as
follows:

1.   Employment - The Company agrees to employ the Executive, and the Executive
agrees to remain in the employ of the Company under the terms and conditions
herein provided.

2.   Position - During his employment hereunder, the Executive agrees to serve
the Company and the Company shall employ the Executive in such capacity or
capacities as may be specified from time to time by the Board of Directors of
the Company, subject to the provisions of Section 5(a)(ii) hereof and that such
Executive shall not be required to work at a location other than one within the
contiguous 48 states of the United
 States of America.

3.   Term - The Executive's employment shall be one at will, to-wit:  either the
Executive or the Company shall have the right to terminate it at any time, with
or without cause, and without any liability or obligation of either Party to the
other except as may be expressly specified in this Agreement.

4.   Compensation - The Company will pay the Executive a base salary at an
initial annual rate of $350,000, payable in substantially equal semi-monthly
installments.  During his employment with the Company, the Executive's salary
shall be reviewed periodically in accordance with Company policy and such review
may result in an increase in said salary which such amount shall be substituted
for the specified amount set forth in this Section.

5.   Termination of Employment

     (a)  A "Termination of Employment" shall be defined as any one of the
following:  (i)  the termination of the Executive's employment by the Company
for any reason other than (A) willful misconduct or gross neglect of duty by the
Executive, (B) retirement under the ordinary retirement program of the Company,
(C) disability of the Executive resulting in compensated absence from his duties
to the Company on a full-time basis for over 180 days or (D) death of the
Executive; (ii)  the termination of the Executive's employment by the Executive
after providing the Company with ten business days' prior written notice that
the executive is terminating employment because of (A) a material reduction in
the responsibilities or title of the Executive or the corporate amenities to
which he was entitled immediately prior thereto or (B) a reduction of the
Executive's cash compensation by more than 10% below the highest annual salary
from time to time in effect for the Executive; provided, however, that no
Termination of Employment shall occur pursuant to the preceding clause (ii) if
the circumstances described in the preceding clauses (ii)(A) and (ii) (B) are
corrected prior to the expiration of ten business days from the date the
Executive provided notice to the Company of his intent to terminate employment.

     (b)  Upon a Termination of Employment, or upon the expiration of long term
disability insurance benefits (prior to the Executive's regular retirement date)
while Executive remains disabled, the Company will pay the Executive, (subject
to the provisions of Section 9 hereof) as severance pay or liquidated damages,
or both, a lump sum amount equal to (i) 200% of his then current Annual
Compensation from the Company; plus, (ii) that amount due to such Executive
under his previous Employment Agreement due to 1992 pay reduction in excess of
ten percent of Executive's stated compensation under such previous Employment
Agreement; plus, (iii) that cumulated amount of pay reductions permitted by
Section 5(f) hereof in excess of 10% of the Executive's annual base salary set
forth in Section 4 of this Agreement, from the date of this Agreement until the
date of Termination of Employment.  "Annual Compensation" shall mean: 
Annualized rate of pay as set forth in Section 4 hereof plus a Deemed Annual
Bonus.  "Deemed Annual Bonus" shall be 25% of the amount set forth in Section 4
hereof.

     (c)  Executive shall be under no obligation to mitigate damage to the
Company hereunder and no future earnings by Executive from any source shall be
payable to the Company or be subject to offset pursuant to this Agreement.

     (d)  For a period of two and one-half years following Termination of
Employment, the Executive shall continue in the Company's group insurance
programs, including long-term disability insurance (or be provided substantially
comparable benefits), provided he has not accepted other employment that
provides comparable benefits.  The Executive's entitlement to benefit
continuation pursuant to the Consolidated Omnibus Budget Reconciliation Act
shall commence at the end of such period.

     (e)  For two and one-half years following Termination of Employment, and
provided all annual pass cards in the possession of the Executive have been
surrendered to the Company, the Executive and his eligible family members shall
be entitled to pass privileges on Continental Airlines of the same type and
priority as the Executive received prior to the Termination of Employment,
subject to any changes in policy generally applicable to officers of Continental
Airlines still in the employ thereof.  Passes shall be issued upon individual
requests directly to the Continental Airlines pass bureau.

     (f)  The Company shall be entitled to continue pay reductions in effect on
the date of this Agreement for so long as, and to the extent that, such pay
reductions are in effect for the Company's work force in general.  Such
continuation of previous pay reductions shall not constitute a violation of
Section 5(a)(ii)(B) hereof.

6.   Indemnification - The Company shall indemnify the Executive against all
losses, including legal fees and expenses, arising from claims against the
Executive in connection with the Executive's good-faith execution of his
employment hereunder, to the fullest extent permitted by the Corporation Code
of the State of Delaware.


<PAGE>
7.  Tax Indemnity - The Company shall indemnify Executive on a fully grossed-up
after-tax basis against any tax liability (including, without limitation, excise
taxes incurred pursuant to IRC Section 4999) resulting from the payment of
severance or the provision of other benefits following Termination of Employment
pursuant to this Agreement, to the extent that Executive's tax payments are at
a higher percentage of total income than they would have been absent such
payment of severance or provision of benefits.

8.   Life Insurance - The Company shall maintain life insurance for the
Executive in the amount of the severance payable to Executive pursuant to
Section 5 hereof.  In the absence of such life insurance, the Company shall pay
Executive's beneficiary or beneficiaries an amount equal to such severance in
the event of the death of Executive while employed by the Company.  The Company
shall hold the Executive harmless from any tax liability accruing to Executive
as a result of the purchase of such insurance, and likewise shall hold
Executive's estate, heirs and assigns harmless from any tax liability accruing
because of the failure to maintain such insurance.

9.   Post-Termination Obligations - All payments and benefits due to the
Executive hereunder shall be subject to the Executive's compliance with the
following provisions during the applicability of this Agreement and for one full
year after the expiration of termination hereof:

     (a)  The Executive shall, upon reasonable notice, furnish such information
and proper assistance to the Company and its affiliates as may reasonably be
required in connection with any litigation in which it or any of its affiliates
is, or may become, a party.

     (b)  The Executive will not discuss with any other employee of the Company
or its affiliates the formation or operations of any business intended to
compete with the Company or its affiliates, or the possible future employment
of such other employee by any business.

     (c)  Any public statements made by the Executive concerning the Company or
its affiliates, officers, directors or employees shall be submitted for approval
in writing from the Company's public relations and legal departments.

     If the Executive fails to comply with the above obligations, the Company
may cease extending benefits to the Executive and may recover by appropriate
action instituted in any court of competent jurisdiction any severance payments
theretofore paid to the Executive.

10.  Consolidation, Merger, Sale of Assets - This Agreement shall be binding
upon and inure to the benefit of the Executive and the Company and its
successors and assigns, including without limitation any corporation with or
into which the company may be consolidated, merged or to which the Company sells
or transfers all or substantially all of its assets.


<PAGE>
11. Notices - Written notices required or furnished under this Agreement shall
be sent to the following addresses:

     to the Company:    Continental Airlines, Inc.
     
                        2929 Allen Parkway, Suite 2010
                        Houston, Texas  77019
                        Attention:  Corporate Secretary

     to the Executive:  3100 Cumberland Court
                        Colleyville, Texas  76034

Notices shall be effective on the first business day following receipt thereof. 
Notices sent by mail shall be deemed received on the date of delivery shown on
the return receipt.

12.  Amendments - This Agreement may not be amended or changed, orally or in
writing except by the written agreement of the Parties.

13.  Governing Law - This Agreement, and any dispute arising under or relating
to any provision of this Agreement shall be governed by and construed in
accordance with the laws of the State of Texas.

14.  Confidentiality - Except as provided by law, all information provided by
either Party to the other hereunder, including the terms and conditions of the
Agreement, shall be treated by the Party receiving such information as
confidential, and shall not be disclosed by such Party to any party without the
prior written consent of the Party from which the information was obtained. 
This obligation of confidentiality shall survive termination of this Agreement.

15.  Severability - If any one or more of the provisions contained in this
Agreement are held to be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby.

16.  Previous Agreements - This Agreement, once it becomes effective and
enforceable, will replace and supersede any and all previous employment
agreements, either written or verbal, between the Parties.  The Company will,
however, remain obligated to make the payment specified in Section 5(b)(ii)
hereof in the event of a Termination of Employment, and will remain obligated
on its commitment to indemnify the Executive pursuant to Executive's previous
employment agreement with the Company affirmed by order of the Delaware
Bankruptcy Court dated August 21, 1991.

17.  Captions - All Section titles or captions contained in this Agreement are
for convenience only and shall not be deemed as part of this Agreement.


<PAGE>
The parties hereto have executed this Agreement as of the date and year first
above written.

                                         CONTINENTAL AIRLINES, INC.
                                              (The Company)


                                         _________________________________






_______________________________
DANIEL P. GARTON ("Executive")





                            EMPLOYMENT AGREEMENT


This Employment Agreement dated as of August 1, 1990 is entered into by and
between Continental Airlines, Inc. (the "Company"), a Delaware corporation, and
John E. Luth (the "Executive" and, individually a "Party" and, collectively, the
"Parties").

The Company wishes to assure itself of the continued services of the Executive,
and the Executive is willing to continue employment with the Company on a full-
time basis, and upon the other terms and conditions hereinafter provided.

In consideration of the mutual covenants contained herein, the Parties agree as
follows:

1.   Employment - The Company agrees to employ the executive, and the Executive
agrees to remain in the employ of the Company under the terms and conditions
herein provided.

2.   Position - During his employment hereunder, the Executive agrees to serve
the Company and the Company shall employ the Executive in such capacity or
capacities as may be specified from time to time by the Board of Directors or
the Chief Executive Officer of the Company.

3.   Term - The Executive's employment shall be one at will, to-wit:  either the
Executive or the Company shall have the right to terminate it at any time, with
or without cause, and without any liability or obligation
 of either Party to the
other except as may be expressly specified in this Agreement.

4.   Compensation - The Company will pay the Executive a base salary at an
initial annual rate of $150,000, payable in substantially equal semi-monthly
installments.  During his employment with the Company, the Executive's salary
shall be reviewed periodically in accordance with Company policy and such review
may result in an increase in said salary.

5.   Termination of Employment

     (a)  A "Termination of Employment" shall be defined as any one of the
following:  (i)  the termination of the Executive's employment by the Company
for any reason other than (A) willful misconduct or gross neglect of duty by the
Executive, (B) retirement under the ordinary retirement program of the Company,
(C) disability of the Executive resulting in absence from his duties to the
Company on a full-time basis for over 180 days or (D) death of the Executive;
(ii)  a material reduction in the responsibilities or title of the Executive or
the corporate amenities to which he is entitled or (iii)  a reduction of the
Executive's cash compensation by more than 10% below the highest annual salary
from time to time in effect for the Executive.

     (b)  Following a Termination of Employment, the Company will pay the
Executive, subject to the provisions of Section 8 hereof and as severance pay
or liquidated damages, or both, for the "Severance Period" (as hereafter
defined) a supplemental monthly amount that, when combined with the Executive's
earnings from other employment or consulting, will result in the Executive
realizing gross aggregate monthly earnings equal to his regular monthly salary
in effect prior to the Termination of Employment.  The "Severance Period" shall
be a period of consecutive months immediately subsequent to such termination by
the Company, with the minimum number of months being twelve, with an additional
month for each two full years of service with the Company, or its affiliates,
up to maximum of eighteen months, and no more.  All remuneration or wages earned
during such period by the Executive, either as an employee, independent
contractor or consultant to any person or entity other than the Company or its
subsidiaries or affiliates, shall reduce the Company's obligations hereunder.

     (c)  During the Severance Period, the Executive shall continue in the
Company's group insurance program, including long-term disability insurance,
provided he has not accepted other employment that provides comparable 
benefits.  The Executive's entitlement to benefit continuation pursuant to 
the Consolidated Omnibus Budget Reconciliation Act shall commence at the end of 
the Severance Period.

     (d)  During the Severance Period, and provided all annual pass cards in the
possession of the Executive have been surrendered to the Company, the Executive
and his eligible family members shall be entitled to pass privileges on
Continental Airlines of the same type and priority as the Executive received
prior to the Termination of Employment, subject to any changes in policy
generally applicable to officers of Continental Airlines still in the employ
thereof.  Passes shall be issued upon individual requests directly to the
Continental Airlines pass bureau.

6.   Stock Options - All options to acquire the Common Stock of the Company that
were granted to the Executive prior to 1990 (including options that were issued
in exchange for other options that were originally granted prior to 1990) shall
become immediately exercisable upon Termination of Employment and shall be
exercisable for one year thereafter.  All options granted to the Executive
during 1990 and thereafter (other than those options referenced in the preceding
sentence) shall become and remain exercisable in accordance with the terms set
forth in the applicable letters granting such options.

7.   Indemnification - The Company shall continue to indemnify the Executive
against all losses, including legal fees and expenses, arising from claims
against the Executive in connection with the Executive's good-faith execution
of his employment hereunder, to the fullest extent permitted by the Corporation
Code of the State of Delaware.

8.   Post-Termination Obligations - All payments and benefits to the Executive
hereunder shall be subject to the Executive's compliance with the following
provisions during the applicability of this agreement and for one full year
after the expiration of termination hereof:

     (a)  The Executive shall, upon reasonable notice, furnish such information
and proper assistance to the Company and its affiliates as may reasonably be
required in connection with any litigation in which it or any of its affiliates
is, or may become, a party.

     (b)  The Executive will not discuss with any other employee of the Company
or its affiliates the formation or operations of any business intended to
compete with the Company or its affiliates, or the possible future employment
of such other employee by any business.


<PAGE>
    (c)  If the Executive's employment is terminated under this Agreement, the
Executive shall actively pursue other employment and shall promptly notify the
Company when he accepts other employment or engages in consulting activities,
or works as an independent contractor; and such notification shall indicate the
monthly earnings, the annual salary rate, the employer and other information
which would enable the Company to perform its obligations under this Agreement.

     (d)  Any public statements made by the Executive concerning the Company or
its affiliates, officers, directors or employees shall be submitted for approval
in writing from the Company's public relations and legal departments.

     (e)  If the Executive fails to comply with the above obligations, the
Company may cease making severance payments and extending benefits to the
Executive and may recover by appropriate action instituted in any court of
competent jurisdiction any severance payments theretofore paid to the Executive.

9.   Consolidation, Merger, Sale of Assets - This Agreement shall be binding
upon and inure to the benefit of the Executive and the Company and its
successors and assigns, including without limitation any corporation with or
into which the company may be consolidated, merged or to which the Company sells
or transfers all or substantially all of its assets.

10.  Notices - Written notices required or furnished under this Agreement shall
be sent to the following addresses:

     to the Company:    Continental Airlines, Inc.
                        2929 Allen Parkway
                        Houston, Texas  77019
                        Attention:  General Counsel

     to the Executive:  John E. Luth
                        1701 Hermann Drive, #1505
                        Houston, TX  77004

Notices shall be effective on the first business day following receipt thereof. 
Notices sent by mail shall be deemed received on the date of delivery shown on
the return receipt.

11.  Amendments - This Agreement may not be amended or changed, orally or in
writing except by the written agreement of the Parties.

12.  Governing Law - This Agreement, and any dispute arising under or relating
to any provision of this Agreement shall be governed by and construed in
accordance with the laws of the State of Texas.

13.  Confidentiality - All information provided by either Party to the other
hereunder, including the terms and conditions of the Agreement, shall be treated
by the Party receiving such information as confidential, and shall not be
disclosed by such Party to any party without the prior written consent of the
Party from which the information was obtained.  This obligation of
confidentiality shall survive termination of this Agreement.

14.  Severability - If any one or more of the provisions contained in this
Agreement are held to be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby.

<PAGE>
15. Previous Agreements - This agreement, once executed by the parties, will
replace and supersede any and all previous employment agreements, either written
or verbal, between the parties.

16.  Captions - All Section titles or captions contained in this Agreement are
for convenience only and shall not be deemed as part of this Agreement.

The parties hereto have executed this Agreement as of the date and year first
above written.

                                         CONTINENTAL AIRLINES, INC.



                                         _________________________________
                                         By:  Mickey P. Foret
                                              President




___________________________
       John E. Luth


                             FIRST AMENDMENT TO
                         CONTINENTAL AIRLINES, INC.
                      1994 EMPLOYEE STOCK PURCHASE PLAN

Reference is made to Continental Airlines, Inc. 1994 Employee Stock Purchase
Plan (the "Plan") approved by the stockholders of Continental Airlines, Inc. on
June 30, 1994 and effective July 1, 1994.  Terms not defined in this First
Amendment are used herein with the meanings provided in the Plan.

     1.  Paragraph 5(b) of the Plan is amended effective as of July 1, 1994, to
read in its entirety as follows:

         (b)  Payroll deductions for a Participant will commence with the first
     payroll check after the Participant's authorization for payroll deductions
     becomes effective, and will end with the last payroll check on or prior to
     December 31, 1996, unless sooner terminated by the Participant in
     accordance with Paragraph 6(c) or due to termination of employment in
     accordance with Paragraph 11, or unless the Participant is suspended from
     participation due to a withdrawal of payroll deductions in accordance with
     Paragraph 10.

     2.  A new Paragraph 7-A is added immediately after Paragraph 7 of the Plan,
effective as of July 1, 1994, to read in its entirety as follows:

         7-A.  Special Provisions for 1994.

         (a)  In addition to all other provisions of the Plan and
     notwithstanding
 any other provisions of the Plan to the contrary: 
     (i) each Employee who becomes a Participant and whose payroll deductions
     commence during the Calendar Quarter beginning on October 1, 1994 (the
     "1994 Fourth Quarter") will be entitled to elect, by filing an
     authorization form provided by the Employer, to double the amount of such
     Participant's payroll deductions during the 1994 Fourth Quarter; (ii) the
     additional amounts so deducted from such Participant's Base Pay as a
     result of such doubling of payroll deductions during the 1994 Fourth
     Quarter (the "Special Deductions") will be credited to such Participant's
     Account; (iii) such Participant will be deemed to have been granted an
     option to purchase, on the first day of the Calendar Quarter beginning
     July 1, 1994 (the "1994 Third Quarter"), as many full and fractional
     shares as may be purchased with the Special Deductions at the option price
     per share of Common Stock (the "Special Deductions Option Price") that is
     equal to the lower of:

              (x)  85% of the closing price of the Common Stock on the New York
         Stock Exchange, Inc. as reported by The Wall Street Journal in the New
         York Stock Exchange Composite Transactions on the first day of the
         1994 Third Quarter (or on the next regular business day on which
         shares of the Common Stock of the Company are traded in the event that
         no shares of the Common Stock have been traded on the first day of the
         1994 Third Quarter); or

              (y)  85% of the closing price of the Common Stock on the New York
         Stock Exchange, Inc. as reported by The Wall Street Journal in the New
         York Stock Exchange Composite Transactions on the last day of the 1994
         Third Quarter (or on the next regular business date on which shares of
         the Common Stock of the Company are traded in the event that no shares
         of the Common Stock have been traded on the last day of the 1994 Third
         Quarter);

     (iv) unless such Participant has elected to withdraw payroll deductions
     during the 1994 Fourth Quarter in accordance with Paragraph 10 or
     Paragraph 11(b) or such Participant  has terminated participation in the
     Plan under Paragraph 11(c), such Participant's option for the purchase of
     Common Stock with the Special Deductions will be deemed to have been
     exercised automatically on the last day of the 1994 Fourth Quarter for the
     purchase of the number of full and fractional shares of Common Stock which
     the Special Deductions will purchase at the Special Deductions Option
     Price; and (v) shares of Common Stock so purchased with Special Deductions
     will be subject to the same provisions and restrictions as all other
     shares purchased under the Plan.

         (b)  The Committee shall have plenary authority to implement the
     provisions of Paragraph 7-A and to determine by binding interpretation how
     to resolve any questions that may arise and any inconsistencies that may
     exist with any other provisions of the Plan or any instruments associated
     with the Plan.

         (c)  This Paragraph 7-A shall terminate and cease to be operative for
     all purposes immediately upon the application of the Special Deductions to
     purchase shares of Common Stock pursuant to the terms hereof.







_____________________________________________________________________________

                                       PROSPECTUS
_____________________________________________________________________________



                               CONTINENTAL AIRLINES, INC.



                           1994 Restricted Stock Grant Program
                            ________________________________



     This document constitutes part of a prospectus covering securities that
have been registered under the Securities Act of 1933.  The Prospectus
relates to the issuance of 1,000,000 shares of the Class B common stock, par
value $.01 per share (the "Common Stock"), of Continental Airlines, Inc., a
Delaware corporation, pursuant to a special one-time restricted stock grant
program (the "Restricted Stock Grant Program").

                            ________________________________



THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS.  ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.

                            ________________________________




                      The date of this Prospectus is July 8, 1994.



<PAGE>
                                   TABLE OF CONTENTS



AVAILABLE INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . .  3

THE COMPANY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  3

RESTRICTED STOCK GRANT PROGRAM . . . . . . . . . . . . . . . . . . . . . . .  4
     General Purpose; Eligibility. . . . . . . . . . . . . . . . . . . . . .  4
     Risk of Forfeiture; Vesting; Transferability. . . . . . . . . . . . . .  4
     Custody of Restricted Shares; Ownership Rights. . . . . . . . . . . . .  4
     Certain Terminations. . . . . . . . . . . . . . . . . . . . . . . . . .  5
     Reorganization of Company and Subsidiaries; Change in Control . . . . .  5
     Amendment and Termination . . . . . . . . . . . . . . . . . . . . . . .  6
     No Guarantee
 of Employment. . . . . . . . . . . . . . . . . . . . . . .  6
     Withholding of Taxes. . . . . . . . . . . . . . . . . . . . . . . . . .  6
     Federal Income Tax Consequences . . . . . . . . . . . . . . . . . . . .  6
     Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  7
     Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  7

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE. . . . . . . . . . . . . . .  7

LEGAL OPINION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  7

EXPERTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  8

<PAGE>
                                 AVAILABLE INFORMATION

     Continental Airlines, Inc. ("Continental" or the "Company") is subject
to the informational requirements of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and in accordance therewith files reports and
other information with the Securities and Exchange Commission (the
"Commission").  Reports and other information concerning the Company can be
inspected and reproduced at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549; at
its New York Regional Office, 7 World Trade Center, Suite 1300, New York,
New York 10048; at its Chicago Regional Office, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60611; and at the offices of the New York Stock
Exchange, Inc., 20 Broad Street, New York, New York 10005.  Copies of such
material can be obtained from the Public Reference Section of the Commission
at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates.  

     The Company is the successor to Continental Airlines Holdings, Inc.
("Holdings"), which merged with and into the Company on April 27, 1993. 
Holdings had also been subject to the informational requirements of the
Exchange Act.  

     The Company will furnish without charge to each person to whom a
Prospectus is delivered, upon written or oral request of such person, a copy
of any document that constitutes a part of this Prospectus at the time of
such request, and any or all of the information that has been incorporated by
reference in this Prospectus (other than exhibits).  Any request for such
information should be directed to the Secretary of the Company, at the
Company's headquarters:  2929 Allen Parkway, Houston, Texas 77019.

                                       THE COMPANY

     Continental Airlines, Inc., a Delaware corporation, is the issuer of the
stock to be issued pursuant to the options granted under the Plan.  The
address of its executive offices is 2929 Allen Parkway, Houston, Texas 77019,
and its phone number at that address is (713) 834-5000.

<PAGE>
RESTRICTED STOCK GRANT PROGRAM

General Purpose; Eligibility

     The purpose of the Restricted Stock Grant Program (the "Program") is to
make eligible employees stockholders and thereby to provide extra incentives
for eligible employees to focus on improved performance that could increase
the value of the Company's stock.  As explained in the Company's April 7,
1994 letter to employees, the Program provides for a one-time grant of
approximately one million shares ("Restricted Shares") of Class B common
stock, $.01 par value per share of the Company (the "Common Stock"),
approximately 4% of the ownership of the Company, to all full and part-time
domestic employees of the Company, Continental Express, System One and
Chelsea who were employed (as defined below) on both December 31, 1993 and
March 4, 1994 at the Continental Manager, or its equivalent position, or
below even if such persons are subsequently furloughed.  One-half of the
total Restricted Shares granted are allocated on an equivalent, fixed share
basis to each participant with the remaining one-half to be allocated in
direct relation to the percentage pay cut incurred by each participating
employee. 

Risk of Forfeiture; Vesting; Transferability

     The Restricted Shares will vest at a rate of 25% per year beginning
January 2, 1995 and each January 2 thereafter until 1998 (each January 2
being hereinafter referred to as a "Vesting Date").  (No fractional shares
will vest or be issued to any grantee under the Program; any such fractional
shares will be carried forward and credited towards vesting in future
periods.)  Except as described under "-- Certain Terminations", a grantee
must be employed by the Company or one of its subsidiaries as of each Vesting
Date in order to receive custody of such grantee's Restricted Shares that
will vest on that Vesting Date and a grantee who ceases to be employed by the
Company or one of its subsidiaries will immediately forfeit all unvested
Restricted Shares.  No right under the Program, contingent or otherwise,
other than with respect to Restricted Stock as to which restrictions have
lapsed, shall be (i) assignable, saleable or otherwise transferable by
grantees otherwise than by will or the laws of descent and distribution or
pursuant to a qualified domestic relations order, (ii) subject to any debts,
contracts, liabilities or torts of the grantee entitled to such right or
(iii) subject to any encumbrance, pledge or charge of any nature.  

Custody of Restricted Shares; Ownership Rights

     Grantees are entitled to all voting and other ownership rights in the
Restricted Shares as of the date of issuance of the Restricted Shares, but
the Restricted Shares will be physically held in trust or in escrow until
vested.  A certificate for Restricted Shares will be delivered to grantees as
soon as administratively practicable after January 2, 1998, subject to
earlier delivery of a certificate for Restricted Shares that have theretofore
become vested upon request by the grantee to the Company's stock transfer
agent and subject to satisfaction of such requirements and payment of such
administrative charges as the stock transfer agent may require.  The
Company's stock transfer agent is Society National Bank, Attention: Corporate
Trust Re-org Department, 01-20-P1, P. O. Box 6477, Cleveland, Ohio.


<PAGE>
    Until vested, Restricted Shares are not transferable in any manner.  Any
securities or other property (other than cash) distributed as dividends with
respect to Restricted Shares or which holders of Common Stock become entitled
to receive in respect of Common Stock shall be treated in the same manner and
shall be subject to the same restrictions (including vesting requirements) as
the underlying Restricted Shares on account of which such dividends are paid. 
Any cash dividends that the Company might pay on Common Stock would be
distributed to holders of Restricted Shares whether or not vested.

Certain Terminations

     In the event of a grantee's death, complete and total disability,
retirement or involuntary termination (except for gross misconduct, but
including "early outs" not involving gross misconduct), prior to a Vesting
Date, the remaining restrictions applicable to the Restricted Shares not
theretofore vested will be deemed to terminate, all such Restricted Shares
shall vest and be released from the trust or escrow under which they were
held, and certificates therefor shall be deliverable to such grantee or to
the person or persons to whom such grantee's rights to the Restricted Shares
pass by will or by applicable laws or descent and distribution, as the case
may be.  In the event a grantee voluntarily terminates employment or in the
event a grantee's employment is terminated involuntarily for gross
misconduct, prior to a Vesting Date, all Restricted Shares not theretofore
vested will be forfeited.  Gross misconduct means such misconduct,
dishonesty, disloyalty, disobedience or other action or inaction that might
reasonably be expected to injure the Company or any of its subsidiaries or
its or their business interests or reputation.  Grantees shall be deemed to
remain employed while on furlough or inactive status as determined by the
employer, and despite any transfer between the Company and a subsidiary.  The
Company's determination in good faith regarding whether a termination of
employment or gross misconduct has occurred shall be conclusive and
determinative.

Reorganization of Company and Subsidiaries

     The existence of the Program does not affect the right or power of the
Company or its stockholders or subsidiaries to make or authorize any or all
adjustments, recapitalizations, reorganizations or other changes in the
Company's capital structure or its business, or any merger or consolidation
of the Company or any issue of bonds, debentures, preferred or prior
preference stock ahead of or affecting the Restricted Shares or the rights
thereof, or the dissolution or liquidation of the Company, or any sale or
transfer of all or any part of its assets or business, or any other corporate
act or proceeding, whether of a similar character or otherwise.

Adjustment of Shares

     In the event of stock dividends, spin-offs of assets or other
extraordinary dividends, stock splits, combinations of shares,
recapitalizations, mergers, consolidations, reorganizations, liquidations,
issuances of rights or warrants and similar transactions or events affecting
the Restricted Shares ("Recapitalization Events"), all securities or other
property (other than cash) that holders of Common Stock are entitled to
receive in respect of Common Stock by reason of each successive
Recapitalization Event shall be treated in the same manner and shall be
subject to the same restrictions (including vesting requirements) as the
underlying Restricted Shares.
     

<PAGE>
Amendment and Termination

     The Company may not amend or terminate a grantee's rights to the
Restricted Shares without such grantee's consent.

No Guarantee of Employment

     The Restricted Shares do not confer upon grantees any right with respect
to continuance of employment or other service with the Company or any
subsidiary, nor do they interfere in any way with the right the Company or
any subsidiary would otherwise have to terminate a grantee's employment or
other service at any time.

Withholding of Taxes

     As grantees vest in their shares of Common Stock (each year), the stock
transfer agent will send them a Form 1099 containing important tax
information regarding income to be reported for the relevant tax year.  The
Company shall have the right to (i) make deductions from the number of
Restricted Shares otherwise deliverable to a grantee in an amount sufficient
to satisfy withholding of any federal, state or local taxes required by law,
or (ii) take such other action as may be necessary or appropriate to satisfy
any such tax withholding obligations.

Federal Income Tax Consequences

     The following is a brief summary of certain of the federal income tax
consequences resulting from receipt of Restricted Shares based on federal
income tax laws in effect on January 1, 1994.  This summary is not intended
to provide or supplement tax advice to individual grantees.  The summary
contains general statements based on current federal income tax statutes,
regulations and currently available interpretations thereof and thus cannot
encompass all factors which may affect the tax consequences to individual
grantees.  Grantees are advised to address specific inquiries to their
personal tax advisors with respect to any tax questions that may arise in
connection with the receipt or sale of the Restricted Shares, including any
state or foreign tax consequences and the effect, if any, of gift, estate,
and inheritance taxes.

     As a recipient of Restricted Shares, grantees generally will be subject
to tax at ordinary income rates on the fair market value of the Restricted
Shares at such time as the shares are vested (i.e., no longer subject to a
risk of forfeiture or restrictions on transfer for purposes of Section 83 of
the Internal Revenue Code of 1986, as amended (the "Code")).  However, if a
grantee elects under Section 83(b) of the Code within 30 days of the date of
transfer of the Restricted Shares, such grantee will have taxable ordinary
income on the date of transfer of the shares equal to the fair market value
of the shares (determined without regard to the risk of forfeiture or
restrictions on transfer).  If a Section 83(b) election has not been made,
any cash dividends received with respect to Restricted Shares that are
subject at that time to a risk of forfeiture or restrictions on transfer
generally will be treated as compensation that is taxable to such grantee as
ordinary income.


<PAGE>
    To the extent that a grantee recognizes ordinary income in the
circumstances described above, the Company or subsidiary for which such
grantee performs services will be entitled to a corresponding deduction
provided that, among other things, (i) the income meets the test of
reasonableness, is an ordinary and necessary business expense and is not an
"excess parachute payment" within the meaning of Section 280G of the Code,
and (ii) any applicable withholding obligations are satisfied.

     Neither the Company nor any subsidiary makes any commitment or guarantee
that any federal or state tax treatment will apply or be available to any
person eligible to receive the Restricted Shares.

Severability

     In the event that any provision of the Program as stated herein shall be
held illegal, invalid, or unenforceable for any reason, such provision shall
be fully severable, but shall not affect the remaining provisions of the
Program and the Program shall be construed and enforced as if the illegal,
invalid, or unenforceable provision had never been included herein.

Governing Law

     The Program shall be construed in accordance with the laws of the State
of Texas to the extent federal law does not supersede and preempt Texas law. 
Neither the Program nor the grant made pursuant thereto constitutes a
qualified plan described in Section 401(a) of the Internal Revenue Code of
1986, as amended, and neither is subject to the Employee Retirement Income
Security Act of 1974, as amended.


                     INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

     The following documents filed by the Company with the Commission are
incorporated by reference in this Prospectus and all documents filed by the
Company pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the date of this Prospectus and prior to
the termination of the offering of the shares of Common Stock offered hereby
shall be deemed to be incorporated by reference in this Prospectus and to be
a part hereof from the date of filing of such documents:  

     (a)  Annual Report on Form 10-K for the year ended December 31, 1993
(File No. 0-9781);

     (b)  All other reports filed pursuant to Section 13(a) or 15(d) of the
Exchange Act since the end of the fiscal year covered by the document
referred to in (a) above; and

     (c)  The description of the Company's Common Stock contained in the
registration statement pursuant to which the Company's shares of Common Stock
were registered under Section 12 of the Exchange Act, and any amendments or
reports filed for the purpose of updating such description.


                                      LEGAL OPINION

     The legality of the Common Stock offered hereby is being passed upon for
the Company by Mayor, Day, Caldwell & Keeton, L.L.P., 700 Louisiana, Suite
1900, Houston, Texas  77002.


                                         EXPERTS

     The consolidated financial statements and schedules of Continental
Airlines, Inc. at December 31, 1993 and for the period April 28, 1993 through
December 31, 1993, and the consolidated statements of operations, redeemable
and nonredeemable preferred stock and common stockholders' equity and cash
flows and schedules of Continental Airlines Holdings, Inc. for the period
January 1, 1993 to April 27, 1993, appearing in CAL's 1993 Form 10-K have
been audited by Ernst & Young, independent auditors, as set forth in their
reports thereon included therein and incorporated herein by reference.  Such
consolidated financial statements and schedules are incorporated by reference
in reliance upon such reports given upon the authority of such firm as
experts in accounting and auditing.

     The consolidated financial statements and schedules of Continental
Airlines Holdings, Inc. and its subsidiaries as of December 31, 1992, and for
each of the two years in the period ended December 31, 1992, incorporated by
reference in this Registration Statement have been audited by Arthur
Andersen & Co., independent public accountants, as indicated in their report
with respect thereto and are included herein in reliance upon the authority
of said firm as experts in accounting and auditing.  Reference is made to
said report, which includes an explanatory paragraph that describes several
uncertainties.




<TABLE>
                                                                 Exhibit 11.1

                         CONTINENTAL AIRLINES, INC.
        STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS (LOSS)
              (in thousands of dollars, except for share data)

<CAPTION>
                                     Three Months   Nine Months  Three Months
                                        Ended          Ended         Ended
                                     September 30, September 30, September 30,
                                         1994          1994          1993     
<S>                                    <C>          <C>           <C>
Primary and fully diluted:

Average shares outstanding-Class A .     6,301         6,301        6,013
Average shares outstanding-Class B .    19,253        19,253       11,423
                                        25,523        25,523       17,436

Add:  Assumed exercise of certain 
 Class A warrants using the 
 treasury stock method . . . . . . .       704             -          862

Add:  Assumed exercise of certain 
 Class B warrants using the 
 treasury stock method . . . . . . .     1,604             -        3,164

Add:  Assumed exercise of certain 
 Class B stock options using the 
 treasury stock method . . . . . . .        26             -            -

Add:  Assumed issuance of certain 
 Class B restricted stock using the 
 treasury stock method . . . . . . .     1,132             -            -

    Total adjusted shares. . . . . .    28,989        25,523       21,462

Net income (loss) applicable to 
 common shares . . . . . . . . . . .   $29,188      $(94,124)     $11,136

Add:  Interest savings (net of tax) 
 due to assumed reduction of 
 borrowings (1). . . . . . . . . . .       588             -          336

Adjusted net income (loss) 
 applicable to common shares . . . .   $29,776      $(94,124)     $11,472

Earnings (loss) per share amount . .   $  1.03      $  (3.69)     $  0.53
</TABLE>


(1)  Since the number of shares of common stock obtainable on exercise of
     outstanding warrants and options, in the
 aggregate, exceeds 20 percent of
     each class of common stock outstanding at the end of the period, the
     treasury stock method for determining the dilutive effect of the warrants
     and options assumes such excess proceeds were used to repurchase a portion
     of the Company's outstanding debt obligations.

NOTE:  Earnings (loss) per share data for the nine months ended September 30,
       1993 is not meaningful since the Company was recapitalized and adopted
       fresh start reporting as of April 27, 1993.



<TABLE> <S> <C>

<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AND STATEMENT OF OPERATIONS AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.  AMOUNTS SHOWN IN THOUSANDS
OF DOLLARS, EXCEPT FOR SHARE DATA.
</LEGEND>
       
<S>                             <C>
<PERIOD-TYPE>                   9-MOS
<FISCAL-YEAR-END>                          DEC-31-1994
<PERIOD-END>                               SEP-30-1994
<CASH>                                         501,155
<SECURITIES>                                         0
<RECEIVABLES>                                  439,820
<ALLOWANCES>                                         0
<INVENTORY>                                    158,388
<CURRENT-ASSETS>                             1,187,018
<PP&E>                                       1,731,225
<DEPRECIATION>                                       0
<TOTAL-ASSETS>                               4,987,954
<CURRENT-LIABILITIES>                        2,106,359
<BONDS>                                              0
<COMMON>                                           267
<PREFERRED-MANDATORY>                           51,125
<PREFERRED>                                          0
<OTHER-SE>                                     628,809
<TOTAL-LIABILITY-AND-EQUITY>                 4,987,954
<SALES>                                              0
<TOTAL-REVENUES>                             4,260,710
<CGS>                                                0
<TOTAL-COSTS>                                        0
<OTHER-EXPENSES>                             4,234,665
<LOSS-PROVISION>                                26,045
<INTEREST-EXPENSE>                           (183,022)
<INCOME-PRETAX>                              (133,953)
<INCOME-TAX>                                    47,150
<INCOME-CONTINUING>                           (89,915)
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                  (89,915)
<EPS-PRIMARY>                                   (3.69)
<EPS-DILUTED>                                   (3.69)
        

</TABLE>