<PAGE>   1
                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C.  20549

                                   FORM 10-K
(Mark One)
[X]            ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                      THE SECURITIES EXCHANGE ACT OF 1934
                  FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995

                                       OR

[ ]         TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                      THE SECURITIES EXCHANGE ACT OF 1934
          FOR THE TRANSITION PERIOD FROM __________ TO __________

                                     0-9781
                            (Commission File Number)

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


<TABLE>
<S>                                                                          <C>
                        Delaware                                                       74-2099724
(State or other jurisdiction of incorporation or organization)               (IRS Employer Identification No.)
</TABLE>

          2929 Allen Parkway, Suite 2010, Houston, Texas        77019
              (Address of principal executive office)        (Zip Code)

       Registrant's telephone number, including area code:  713-834-2950

          Securities registered pursuant to Section 12(b) of the Act:


<TABLE>
<CAPTION>
                                                             Name of Each Exchange
      Title of Each Class                                     on Which Registered
      -------------------                                     -------------------
      <S>                                                   <C>
      Class A Common Stock,                                 New York Stock Exchange, Inc.
      par value $.01 per share

      Class B Common Stock,                                 New York Stock Exchange, Inc.
      par value $.01 per share

                  Securities registered pursuant to Section 12(g) of the Act:
                                        None
</TABLE>


     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 if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [ ]

The aggregate market value of the voting stock held by non-affiliates of the
registrant was $784 million as of February 16, 1996.

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

                                _______________

As of February 16, 1996, 6,301,056 shares of Class A Common Stock and
21,484,074 shares of Class B Common Stock were outstanding.

                      DOCUMENTS INCORPORATED BY REFERENCE

                       Proxy Statement for Annual Meeting
             of Stockholders to be held on May 17, 1996:  PART III

<PAGE>   2

                                     PART I


ITEM 1.  BUSINESS.

Continental Airlines, Inc. (the "Company", "Continental" or the "Reorganized
Company") is a major United States air carrier engaged in the business of
transporting passengers, cargo and mail.  Continental is the fifth largest
United States airline (as measured by 1995 revenue passenger miles) and,
together with its wholly owned subsidiary, Continental Express, Inc.
("Express"), and its 91%-owned subsidiary, Continental Micronesia, Inc.
("CMI"), each a Delaware corporation, serves 175 airports worldwide.
Internationally, Continental flies to 58 destinations and offers additional
connecting service through alliances with foreign carriers.  Continental is one
of the leading airlines providing service to Mexico and Central America,
serving more destinations there than any other United States airline.  In
addition, Continental flies to three cities in South America, and is scheduled
to commence service between Newark and Lima, Peru in March 1996 and between
Newark and Quito, Ecuador (via Bogota, Colombia) in June 1996.  Through Guam
and Saipan, CMI provides extensive service in the western Pacific, including
service to more Japanese cities than any other Unites States carrier.

As used in this Form 10-K, the terms "Continental" and "Company" refer to
Continental Airlines, Inc. (or, as required by the context, its predecessor)
and, unless the context indicates otherwise, its subsidiaries.  This Form 10-K
may contain forward-looking statements.  In connection therewith, please see
the cautionary statements contained in Item 1.  "Business.  Risk Factors",
which identify important factors that could cause actual results to differ
materially from those in the forward-looking statements.

1993 REORGANIZATION

The Company reorganized under Chapter 11 of the federal bankruptcy code in
April 1993 (the "Reorganization"), having filed for protection in December
1990.  Continental's filing for reorganization was necessitated primarily by
declines in revenue resulting from a recessionary environment, extreme price
competition and significantly increased fuel prices resulting from the Persian
Gulf War.

Pursuant to the Reorganization, Continental Airlines Holdings, Inc. (together
with its subsidiaries, "Holdings" or the "Predecessor Company"), which had been
the Company's parent, merged into the Company.  The previously outstanding
publicly held equity interests in Holdings were canceled and new stock in the
Company was issued.  Also pursuant to the Reorganization, a majority of the
Company's equity was issued to Air Partners, L.P., a Texas limited partnership
("Air Partners"), and Air Canada, a Canadian corporation, in exchange for their
investments in the Company.  Additional shares of common stock were issued to
the Company's retirement plan, and a fixed number of shares of common stock was
issued to or for the benefit of prepetition creditors.  See Item 3.  "Legal
Proceedings.  Plan of Reorganization".

Pursuant to the Reorganization, System One Information Management, Inc.
("System One"), which had been a subsidiary of Holdings, was restructured as a
wholly owned subsidiary of Continental, two separate commuter airline
subsidiaries were restructured as Express and Continental's western Pacific
operations were restructured by establishing CMI.





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<PAGE>   3
1994 ROUTE RESTRUCTURING

During 1994, the Company significantly reduced operations in Denver, resulting
in the conversion of Denver from a hub to a spoke city.  In connection with the
reduction in Denver operations, a number of aircraft were redeployed to other
hubs and to non-hub flying.  Also in 1994, Continental rapidly expanded its
"Continental Lite" operations (a network of short-haul, no-frills, low-fare
flights) from 173 daily flights and 19 aircraft serving 14 cities in November
1993 to 1,000 daily flights and 114 aircraft serving 43 cities in September
1994.  The rapid growth of Continental Lite was supplied by redeploying a
substantial portion of Continental's capacity, including aircraft made
available by elimination of the Denver hub, and by deliveries of new aircraft
under the Company's agreement with The Boeing Company ("Boeing").  Continental
Lite experienced operational problems in connection with this rapid growth and
was not profitable in 1994.  At its peak, approximately 35% of Continental Lite
flying consisted of point-to-point, linear service not integrated with the
Company's hubs ("linear flying").  Linear flying proved to be significantly
unprofitable and was responsible for an estimated 70% of all Continental Lite
system losses in 1994.

1995-1996 BUSINESS STRATEGY

In November 1994, Gordon Bethune was appointed Chief Executive Officer of
Continental, and was joined shortly thereafter by Greg Brenneman as Chief
Operating Officer.  Continental has since been operated by a substantially new
management team consisting of executives with successful track records in the
areas of pricing, scheduling, distribution, human resources, operations,
airport services, law, accounting and finance.  This new management team
developed a strategic program to enhance Continental's domestic hub operations,
rationalize capacity, improve customer service and employee relations and
strengthen Continental's balance sheet and liquidity.  Continental has
implemented substantial elements of the new strategic program to date, and
management believes that these initiatives contributed significantly to the
Company's dramatically improved operating performance and net income of $224
million in 1995 after recording $31 million in employee profit sharing.  This
program, referred to as the Go Forward Plan, has four key components:  Fly to
Win, Fund the Future, Make Reliability a Reality and Working Together.  The
principal initiatives undertaken to carry out these components are outlined
below.

o  Route realignment.  Continental determined to build on the strength of its
   principal hub operations at Newark, Houston Intercontinental and Cleveland,
   while de-emphasizing linear service not integrated with the Company's hubs.
   Under the route realignment strategy, the Company significantly downsized
   and realigned its domestic route structure, withdrawing from unprofitable
   routes (principally linear Continental Lite flights) and refocusing on its
   hub operations.  Continental also significantly reorganized its flight
   schedules to eliminate cash-negative flying and improve hub connections and
   efficiency, and has continued to enhance its hub scheduling.  As a result of
   these initiatives and the capacity rationalization described below, domestic
   capacity (as measured by available seat miles, "ASMs") declined by 18.3%
   from 13.1 billion ASMs in the three months ended December 1994 to 10.7
   billion ASMs in the three months ended December 1995.





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<PAGE>   4
   In connection with its route realignment strategy, effective June 6, 1996,
   Continental will significantly reduce its operations in Greensboro, reducing
   daily departures from an average of 43 to 11.  All employees affected by the
   service change will be eligible to transfer elsewhere within the Continental
   system as flying is reallocated to Continental's Houston, Newark and
   Cleveland hubs.

o  Capacity rationalization.  Reflecting the revised systemwide route needs,
   management reduced overall capacity by retiring 24 less-efficient widebody
   aircraft from the Company's jet fleet.  Smaller, more efficient aircraft
   were substituted for the larger widebody aircraft, permitting closer
   alignment of aircraft size with market demand.  The cascade effect of these
   changes throughout Continental's fleet permitted aircraft substitutions on a
   large portion of Continental's routes.  Management believes that this
   initiative significantly contributed to Continental's passenger load factor
   improvement to 65.6% in 1995 from 63.1% in 1994.  Since April 1995,
   Continental's monthly load factor has generally equaled or exceeded the
   industry average.  Express has also benefitted from Continental's
   rationalization of capacity, as smaller markets formerly served by
   Continental's jets are now served by Express's turboprop aircraft, generally
   permitting operation with higher load factors and yields.  Continental's
   rationalization of capacity was accompanied by appropriate cost reductions,
   including reduction of average full-time equivalent employee headcount by
   17.9% from the three months ended December 31, 1994 to the three months
   ended December 31, 1995.

o  Improved pricing and yield management.  The Company has hired new executives
   experienced in pricing and revenue management and invested in
   state-of-the-art revenue management and pricing systems.  Management
   believes these investments, together with Continental's route realignment
   and capacity rationalization, have facilitated implementation of a
   higher-yield pricing structure.  The Company believes that further
   enhancements to its pricing and revenue management processes are possible.

o  Reliability and customer service.  Management has targeted improved customer
   service (as evidenced by standard measures such as on-time performance,
   mishandled bags and customer complaints) as a major priority.  In February
   1995, management implemented a variety of on-time performance initiatives,
   including a program of monthly bonuses of $65 per employee (up to the
   manager level) in each month that Continental's on-time performance finished
   in the top half of major United States carriers, as reported monthly by the
   Department of Transportation ("DOT").  Following implementation of the
   program, Continental ranked in the top half of major United States carriers
   for on-time performance in nine out of 11 months, scored first in this
   measure in three of these months, and ranked first among such carriers for
   the fourth quarter of 1995.  Continental had not previously scored first in
   monthly on-time performance since the DOT began compiling and publishing
   these statistics in 1987.  For 1996, bonuses of $65 will continue to be paid
   to such employees for each month that Continental ranks second or third
   among major United States carriers in on-time performance, and bonuses of
   $100 will be paid for each month that Continental ranks first.  Continental
   also ranked in the top half of the industry for the lowest number of
   mishandled bags per 1,000 enplanements in 10 out of 11 months since the
   implementation of the program and recorded the lowest mishandled bag ratio
   of all major carriers in August, September, October and November 1995.  As a
   result of these and other operational and customer service initiatives,
   DOT-reported customer complaints with respect to the Company have dropped





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<PAGE>   5
   substantially; for the months of November and December 1995, the DOT
   recorded 11 and 13 customer complaints, respectively, compared to 60 and 48
   complaints, respectively, in 1994.  Continental's goal for 1996 is to be
   ranked monthly in the top three in each of these DOT performance metrics.

o  Improved employee relations.  Management believes that Continental's
   employees are its greatest asset as well as the cornerstones of improved
   reliability and customer service.  New management has introduced a variety
   of programs to increase employee participation and foster a sense of shared
   community.  These initiatives include regularly scheduled visits to airports
   throughout the route system by the senior executives of the Company (each of
   whom is assigned an airport for this purpose) and monthly meetings open to
   all employees, as well as other periodic on-site visits by management
   designed to encourage employee participation and cooperation and provide
   accurate information.  Decision making and accountability have been pushed
   down to operating levels.  For example, early in 1995, the Company formed
   the Operational Performance Department, which gathers employee suggestions
   regarding operational inefficiencies and finds and implements solutions to
   operational issues.  In 1995, the Company successfully negotiated a
   collective bargaining agreement covering its Continental and CMI pilots,
   which was ratified by 93.0% of the affected pilots, and a separate agreement
   covering the pilots of Express.

o  Revenue enhancement.  In addition to the on-time performance and other
   programs noted above, management has acted in a number of areas to enhance
   Continental's attractiveness to business travelers and the travel agent
   community, including restoring certain benefits to its award-winning
   frequent flyer program, reinstating first class seating and travel agency
   incentive programs and enhancing meal services.  Efforts to improve the
   airline's image among business travelers also include significantly improved
   reliability, consistent exterior and interior plane designs, increased
   efforts to enhance the appearance of airline cabins and improvements to
   airport gate areas.  In addition to increasing revenue associated with its
   hub operations, these actions are intended to improve Continental's ability
   to increase its share of flow traffic.

o  Liquidity and financial initiatives.  The Company took the following steps
   in 1995 that improved liquidity by approximately $250 million and
   strengthened its financial position for the near and medium term:

   -   Continental renegotiated lease payments on 32 widebody aircraft to
       achieve a variety of cash concessions including reduced or deferred
       rental payments and lease terminations.  In connection with these
       arrangements, in addition to other payments and agreements, the Company
       issued $158 million in aggregate original principal amount of
       convertible secured debentures to certain aircraft lessors.  As of
       February 1, 1996, all such debentures had been repurchased or redeemed
       by the Company.

   -   The Company amended its principal secured loan agreements, certain lease
       agreements and certain promissory notes with General Electric Capital
       Corporation, General Electric Company and certain affiliates (any one or
       more of such entities, "GE") to defer 1995 and 1996 principal payments
       and certain 1995 lease payments.





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<PAGE>   6
   -   Delivery of substantially all aircraft previously scheduled for 1996 and
       1997 was rescheduled to 1998 and beyond, and options to purchase
       additional aircraft were canceled.  Five aircraft previously scheduled
       for delivery in 1995 were sold to a third party and replaced by aircraft
       to be delivered in 1998.

   -   The Company reached an agreement to reduce its commitment for gates and
       related space at the new Denver International Airport ("DIA"), resulting
       in expected annual savings of $20 million.

   These transactions reduced financing needs for 1996 and 1997 and are
   expected to improve the Company's 1996 liquidity by approximately $275
   million.

   The Company has also undertaken a variety of other activities intended to
   strengthen its longer-term financial position and enhance earnings:

   -   The Company consummated an offering of 8-1/2% convertible trust
       originated preferred securities ("TOPrS"), which are convertible into
       Class B common stock of Continental at a price of $48.36 per share.  A
       portion of the $242 million net proceeds of that offering was used to
       repurchase or redeem all of the Company's convertible secured debentures
       issued in connection with the lease renegotiations discussed above
       (which would otherwise have become convertible into Class B common stock
       in August 1996 at a price of $26 per share).  An additional portion of
       the net proceeds was used to repay obligations incurred to aircraft
       lessors and lenders in connection with those renegotiations.

   -   In the third quarter of 1995, the Company purchased from Air Canada
       warrants to purchase approximately 6.2 million shares of Continental's
       common stock with exercise prices of $15 and $30 per share for $14
       million in cash (including a $5 million fee paid to a lender) and a 
       $42 million one-year note (which note was repaid with a portion of the 
       net proceeds of the TOPrS offering).

   -   The Company recorded a $30 million after-tax gain in the second quarter
       of 1995 in connection with a series of transactions involving System One
       (described below), which increased liquidity by an additional $82
       million, consisting of $40 million of cash proceeds and $42 million of
       outstanding indebtedness extinguished.

   -   On January 31, 1996, the Company consummated the offering of $489
       million of enhanced pass-through certificates that refinanced the
       underlying debt associated with 18 leased aircraft and will reduce
       Continental's annual operating lease expense by more than $15 million
       for the affected aircraft.





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<PAGE>   7
DOMESTIC OPERATIONS

Continental operates its domestic route system primarily through its hubs at
Newark, Houston Intercontinental and Cleveland.  The Company's hub system
allows it to transport passengers between a large number of destinations with
substantially more frequent service than if each route were served directly.
The hub system also allows Continental to add service to a new destination from
a large number of cities using only one or a limited number of aircraft.
Management has recently reconfigured Continental's hubs to improve passenger
connections and operational efficiency.

Newark.  As of February 16, 1996, Continental operated 50% (191 departures) of
the average daily jet departures and, together with Express, accounted for 58%
(309 departures) of all average daily departures (jet and turboprop) from
Newark.  Considering the three major airports serving New York City (Newark,
LaGuardia and John F. Kennedy), the Company and Express accounted for 23% of
all daily departures, while the next largest carrier, USAir, Inc. ("USAir"),
and its commuter affiliate accounted for 15% of all daily departures.

Houston Intercontinental.  As of February 16, 1996, Continental operated 78%
(290 departures) of the average daily jet departures and, together with
Express, accounted for 81% (383 departures) of all average daily departures
from Houston's Intercontinental Airport.  Southwest Airlines Co. ("Southwest")
also has a significant share of the Houston market through Hobby Airport.
Considering both Intercontinental and Hobby Airports, Continental operated 55%
and Southwest operated 26% of the daily jet departures from Houston.

Cleveland.  As of February 16, 1996, Continental operated 53% (98 departures)
of the average daily jet departures and, together with Express, accounted for
58% (176 departures) of all average daily departures from Cleveland.  The next
largest carrier, USAir, and its commuter affiliate accounted for 9% of all
daily departures.

Continental Express.  Continental's jet service at each of its domestic hub
cities is coordinated with Express, which operates under the name "Continental
Express".  Express operates advanced, new-generation turboprop aircraft that
average approximately six years of age and seat 64 passengers or less.  As of
February 16, 1996, Express served 23 destinations from Newark and 21
destinations from each of Houston Intercontinental and Cleveland.  In addition,
commuter feed traffic is currently provided by other code-sharing partners to
14 destinations from Los Angeles, 9 from Greensboro and two from Denver.  In
general, Express flights are less than 200 miles in length and less than 90
minutes in duration.

Management believes Express's turboprop operations complement Continental's jet
operations by allowing more frequent service to small cities than could be
provided economically with conventional jet aircraft and by carrying traffic
that connects onto Continental's jets.  In many cases, Express (and
Continental) compete for such connecting traffic with commuter airlines owned
by or affiliated with other major airlines operating out of the same or other
cities.  In May 1994, 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.  GP Express, which
provides commuter feed in Greensboro and Denver, filed for reorganization under
Chapter 11 of the federal bankruptcy code in January 1996.  The loss of





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<PAGE>   8
feed from GP Express is not expected to materially adversely affect the
Company's operations at Greensboro or Denver.

America West Airlines, Inc. ("America West").  Continental has entered into a
series of agreements with America West, including agreements related to
code-sharing and ground handling, which have created substantial benefits for
both airlines.  These code-sharing agreements cover 80 city-pairs and allow
Continental to link additional destinations to its route network.  The sharing
of facilities and employees by Continental and America West in their respective
key markets has resulted in significant expense savings.

In connection with America West's emergence from bankruptcy in August 1994,
Continental paid $19 million for 4.1% of the equity interest and 17.1% of the
voting power (exclusive of warrants to purchase an additional 802,860 shares of
common stock) of the reorganized America West.  On February 21, 1996,
Continental sold 1.1 million shares of America West's common stock for net
proceeds of approximately $20 million in an underwritten public offering.
Continental has granted the underwriters of such offering the right to purchase
approximately 258,030 shares of America West's common stock for a 30-day period
to cover overallotments.  Assuming the exercise of such overallotment in full,
Continental will own approximately 1.0% of the equity interest and 7.9% of the
voting power of America West.

INTERNATIONAL OPERATIONS

International Operations.  Continental has extensive operations in the western
Pacific conducted by CMI and serves destinations throughout Europe, Mexico and
Central and South America.  As measured by 1995 ASMs, approximately 26.4% of
Continental's jet operations were dedicated to international traffic.  As of
February 16, 1996, the Company offered 49 weekly departures to five European
cities and marketed service to three other cities through code-sharing
agreements.  Continental is one of the leading airlines providing service to
Mexico and Central America, serving more destinations there than any other
United States airline.

The Company's Newark hub is a significant international gateway.  From Newark,
the Company serves London, Manchester, Paris, Frankfurt, Madrid and Montreal,
as well as Rome, Milan, Amsterdam and certain destinations in Canada through
code-sharing with other foreign carriers.  In addition, the Company has
non-stop service to two Mexican cities and six Caribbean destinations from
Newark.  The Company expects to begin service between Newark and Lima, Peru in
March 1996 and between Newark and Quito, Ecuador (via Bogota, Colombia) in June
1996.

The Company's hub at Houston Intercontinental is the focus of its operations in
Mexico and Central America.  Continental currently flies to 11 cities in
Mexico, every country in Central America and three cities in South America.  In
addition, Continental flies from its Houston Intercontinental hub to London and
Paris.

Continental Micronesia.  CMI is a United States-certificated international air
carrier engaged in the business of transporting passengers, cargo and mail in
the western Pacific, which is one of the fastest growing areas for air travel
in the world.  From its hub operations based in Guam and Saipan, CMI provides
service to seven cities in Japan, more than any other United States





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<PAGE>   9
carrier, and to other Pacific rim destinations, including Taiwan, the
Philippines, Hong Kong, South Korea and Indonesia.  CMI is the principal air
carrier in the Micronesian Islands, where it pioneered scheduled air service in
1968.  CMI's route system is linked to the United States market through
Honolulu, which CMI serves non-stop from both Tokyo and Guam.  CMI and
Continental also maintain a code-sharing agreement and coordinate schedules on
certain flights from the west coast of the United States to Honolulu, and from
Honolulu to Guam and Tokyo to facilitate travel from the United States into
CMI's route system.

The 9.0% minority interest in CMI is owned by United Micronesia Development
Association, Inc. ("UMDA"), a private company.  Under agreements entered into
in connection with the Reorganization, UMDA would have the right to increase
its ownership in CMI to just over 20% in the event any participating employer
in the Company's pension plans failed to make, or Continental failed to
adequately provide for, certain pension plan payments.  CMI also pays UMDA a
fee of one percent of CMI's gross revenue, as defined, which will continue
until January 1, 2012.  Prior to the establishment of CMI as part of the
Reorganization, Continental had conducted the western Pacific operations itself
under the name Continental/Air Micronesia and had paid UMDA the one percent
fee.

CMI borrowed $160 million from GE, which is secured by a first mortgage on
substantially all the assets of CMI.  Continental has guaranteed repayment of
the loan, and its guarantee is secured by a pledge of its stock in the parent
of CMI.

Foreign Carrier Alliances.  Over the last decade, major United States airlines
have developed and expanded alliances with foreign air carriers, generally
involving adjacent terminal operations, coordinated flights, code-sharing and
other joint marketing.  Continental is the sole major United States carrier to
operate a hub in the New York City area, by virtue of its Newark operation.
Consequently, management believes the Company is uniquely situated to attract
alliance partners from Europe, the Far East and South America and intends to
aggressively pursue such alliances in order to benefit from the high-yield flow
traffic that may be generated thereby.  Continental currently has code-sharing
agreements with Alitalia Airlines ("Alitalia"), Air Canada and Transavia
Airlines ("Transavia"), and joint marketing agreements with other airlines not
involving code-sharing, which management believes are important to
Continental's ability to compete as an international airline.  Alitalia and
Continental code-share between points in the United States and Italy, with
Alitalia placing its code on Continental flights to seven cities and
Continental placing its code on Alitalia flights to Rome and Milan.
Continental and Air Canada (and its subsidiaries) code-share on five
cross-border routes, where Continental places its code on 24 Air Canada flights
per day, and Air Canada places its code on four Continental flights per day.
Both Continental and Air Canada provide ground handling and other services for
each other in the United States, Canada and at other locations worldwide.  The
Company has recently entered into code-sharing agreements with CSA Czech
Airlines, China Airlines, the TACA Group (serving Central America and the
northern tier of South America) and World Airways (serving four cities in South
Africa, Israel and Ireland), which agreements will be implemented during the
first half of 1996.  The Company anticipates entering into other code-sharing
agreements during 1996.





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<PAGE>   10
CONTINENTAL CRS INTERESTS, INC.  ("CONTINENTAL CRS")

Continental and its System One subsidiary entered into a series of transactions
on April 27, 1995 whereby a substantial portion of System One's assets
(including the travel agent subscriber base and travel-related information
management products and services software), as well as certain liabilities of
System One, were transferred to a newly formed limited liability company,
System One Information Management, L.L.C. ("LLC").  LLC is owned equally by
Continental CRS (formerly System One, which remains a wholly owned subsidiary
of Continental), Electronic Data Systems Corporation ("EDS") and AMADEUS, a
European computerized reservation system ("CRS").  Substantially all of System
One's remaining assets (including the CRS software) and liabilities were
transferred to AMADEUS.  In addition to the one-third interest in LLC,
Continental CRS received cash proceeds of $40 million and an equity interest in
AMADEUS valued at $120 million, and outstanding indebtedness of $42 million of
System One owed to EDS was extinguished.  In connection with these
transactions, the Company recorded a pretax gain of $108 million, which amount
was included in Nonoperating Income (Expense) in the accompanying consolidated
statement of operations for the year ended December 31, 1995.  The related tax
provision totaled $78 million (which differs from the federal statutory rate
due to certain nondeductible expenses), for a net gain of $30 million.  System
One's revenue, included in Cargo, mail and other revenue, and related net
earnings were not material to the consolidated financial statements of
Continental.

EMPLOYEES

As of December 31, 1995, Continental had approximately 32,300 full-time
equivalent employees, including approximately 14,100 customer service agents,
reservations agents, ramp and other airport personnel, 5,600 flight attendants,
5,100 management and clerical employees, 4,400 pilots, 3,000 mechanics and 100
dispatchers.  Labor costs are a significant variable that can substantially
impact airline results.  In 1995, labor costs constituted 26.3% of the
Company's total operating expenses.  While there can be no assurance that
Continental's generally good labor relations and high labor productivity will
continue, Continental's management has established as a significant component
of its business strategy the preservation of good relations with the Company's
employees, approximately one-third of whom are represented by unions.

During 1995, the Company and its pilots (excluding Express pilots) entered into
a collective bargaining agreement with the Independent Association of
Continental Pilots ("IACP") that was ratified by the pilots and becomes
amendable in July 1997.  The new agreement provides for a $20 million cash
payment by the Company in 1995, a 2.5% longevity wage increase on July 1, 1995,
a $10 million cash payment on April 1, 1996, a 13.5% wage increase on July 1,
1996 and a 5.0% wage increase on June 30, 1997.  Under the agreement, the
pilots agreed to forego their participation in employee profit sharing for 1995
and 1996.

Express and its pilots entered into a collective bargaining agreement during
1995 with the IACP that was ratified by Express pilots and becomes amendable on
October 1, 1997.  The new agreement provides for a $2 million cash payment by
Express, 2.5% wage increases on July 1, 1996 and June 30, 1997, profitability
bonuses and participation in Continental's on-time performance bonus plan.





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<PAGE>   11
In 1995, the board of directors of the IACP voted to affiliate with the Air
Line Pilots Association ("ALPA"), reportedly based in part on then widespread
news reports of possible industry consolidation and a desire to place
Continental pilots in a stronger position to preserve seniority if Continental
were to be acquired by another airline.  Any such affiliation with ALPA (which
would be subject to, among other things, ratification by the members of the
IACP) is not expected to have a material adverse effect on the Company's
relations with its pilots.

Continental's collective bargaining agreement with its flight attendants,
represented by the International Association of Machinists and Aerospace
Workers ("IAM"), becomes amendable in June 1996.  The Company anticipates
commencing bargaining with the IAM in the near future regarding an amendment to
the collective bargaining agreement.  In November 1995, Continental and the IAM
successfully reached a four-year agreement with respect to the Express flight
attendants which becomes amendable in November 1999.  Approximately 85% of
CMI's flight attendants are also represented by the IAM (excluding all foreign
nationals), but are covered under a separate four-year contract that becomes
amendable in September 1996.

The Aircraft Mechanics Fraternal Association ("AMFA") has filed an application
with the National Mediation Board ("NMB") under the Railway Labor Act seeking
to represent the Company's mechanics and related employees for purposes of
collective bargaining.  The NMB has appointed a mediator to investigate the
application, and the Company has provided the NMB with a list of employees who
would be potential eligible voters if an election were held.  The Company
believes that the AMFA has failed to gather a sufficient number of
representation cards to require an election.  The NMB is currently
investigating this representation dispute.

CMI's mechanics and mechanic-related employees are represented by the
International Brotherhood of Teamsters ("IBT") under a collective bargaining
agreement signed in April 1994, which becomes amendable in March 1997.  The IBT
also represents CMI's agent classification employees located on Guam, whose
collective bargaining agreement was also signed in April 1994 and becomes
amendable in March 1997.  The IBT has also sought representation rights for
CMI's agent employees located on Saipan.  The NMB's certification of the IBT as
the bargaining representative for these employees was successfully challenged
by CMI in a suit brought in Saipan federal court in 1995.  The NMB has filed a
request for reconsideration.  Regardless of the final outcome of this
representation dispute, the Company does not anticipate any significant adverse
effect on its employee relations resulting from these events.

Continental's dispatchers are represented by the Transport Workers Union of
America, AFL-CIO ("TWUA") under a collective bargaining agreement signed in
1991.  The Company is currently in negotiations with the TWUA to amend the
existing agreement.  Express's dispatchers are also represented by the TWUA,
but are currently without a contract.  CMI's dispatchers are not represented by
a union.

The other employees of Continental, Express and CMI are not represented by
unions and are not covered by collective bargaining agreements.





                                       11

<PAGE>   12
MARKETING

As is the case with other carriers, most tickets for travel on Continental are
sold by travel agents.  Travel agents generally receive commissions measured by
the price of tickets sold.  Accordingly, airlines compete not only with respect
to the price of tickets sold but also with respect to the amount of commissions
paid.  Airlines often pay additional commissions in connection with special
revenue programs.  In February 1995, Delta Air Lines, Inc. ("Delta") placed a
$25 cap on travel agency commissions for one-way tickets priced over $250 and a
$50 cap on travel agency commissions for round-trip tickets priced over $500.
Other airlines, including Continental, have imposed similar commission caps.
Certain travel agencies sued such carriers, including Continental.  See Item 3.
"Legal Proceedings.  Antitrust Proceedings".

In September 1995, Continental announced the expansion of its electronic ticket
("E-Ticket") product, which is now available throughout the United States and,
for the first time, through select travel agents serving a limited number of
markets.  Continental launched E-Ticket, in cooperation with EDS and AT&T
Global Information Solutions, in April 1995.  E-Ticket reservations may be made
through Continental's reservation phone line, city ticket offices, airport
ticket counters, E-Ticket machines and (in certain markets) travel agents,
after which a one-page confirmation is automatically sent by facsimile or mail
to the customer.  Using an E-Ticket machine, E-Ticket customers arriving at the
airport may check in, receive boarding passes, select or change seat
assignments, input OnePass numbers, make simple flight changes and receive
luggage tags.  E-Ticket machines are similar to automatic teller machines and
allow passengers to avoid lines at ticket counters, thus improving overall
customer service at airports.  Continental plans to expand the E-ticket program
to select international destinations and to increase travel agency access by
the end of 1996.  The E-Ticket system is eventually expected to reduce
distribution costs and improve the accuracy and timeliness of certain of
Continental's reporting systems.

FREQUENT FLYER PROGRAM

Each major airline has established a frequent flyer program designed to
encourage travel on that carrier.  Continental sponsors a frequent flyer
program ("OnePass"), which allows passengers to earn mileage credits by flying
Continental and certain other carriers, including Air Canada, Transavia,
Alitalia and America West (each a "OnePass Partner"), and by using the services
of hotels, car rental firms and credit card companies participating in the
OnePass program.

Continental accrues the incremental cost associated with the earned flight
awards based on expected redemptions.  The incremental cost to transport a
passenger on a free trip includes the cost of incremental fuel, meals,
insurance and miscellaneous supplies and does not include any charge for
potential displacement of revenue passengers or costs for aircraft ownership,
maintenance, labor or overhead allocation.

Continental estimates that as of December 31, 1995 and 1994, the total
available awards under the OnePass program (based on accumulated mileage) were
2.4 million and 3.1 million roundtrips, respectively, after eliminating those
accounts below the minimum level.  Continental estimates that as of December
31, 1995 and 1994, 2.0 million and 2.2 million, respectively, of such awards
could be expected to be redeemed and, accordingly, Continental has recorded a





                                       12

<PAGE>   13
liability with respect to such awards.  The liability for expected redeemed
flight awards decreased from $42 million in 1994 to $35 million in 1995
primarily due to a change in the structure of the OnePass program that
increased the number of miles required for awards.  The difference between the
awards expected to be redeemed and the total awards available is an estimate,
based on historical data, of breakage for those customers who do not redeem all
or part of their mileage for travel awards or use their awards with a OnePass
Partner.

The number of awards used on Continental was approximately 525,000 and 590,000
roundtrips for the years 1995 and 1994, respectively.  Such awards represented
approximately 3.3% and 4.7% of Continental's total revenue passenger miles for
such years.  Due to the structure of the program and the low level of
redemptions as a percentage of total travel, Continental believes that
displacement of revenue passengers by passengers using flight awards has
historically been minimal.

INDUSTRY REGULATION AND AIRPORT ACCESS

Continental and its subsidiaries operate under certificates of public
convenience and necessity issued by the DOT.  Such certificates may be altered,
amended, modified or suspended by the DOT if the public convenience and
necessity so require, or may be revoked for intentional failure to comply with
the terms and conditions of a certificate.  The airlines are also regulated by
the Federal Aviation Administration ("FAA"), primarily in the areas of flight
operations, maintenance, ground facilities and other technical matters.
Pursuant to these regulations, Continental has established, and the FAA has
approved, a maintenance program for each type of aircraft operated by the
Company that provides for the ongoing maintenance of such aircraft, ranging
from frequent routine inspections to major overhauls.

Certain regulations require phase-out of certain aircraft and aging aircraft
modifications.  Such types of regulations can significantly increase costs and
affect a carrier's ability to compete.  In December 1995, the FAA promulgated
final rules requiring commuter carriers to operate under the same safety rules
and standards, and train their crew and dispatchers in accordance with the more
stringent requirements, as are currently applicable to carriers operating
larger aircraft.  The new rules are not expected to have a significant impact
on the operations of Express.

The DOT allows local airport authorities to implement procedures designed to
abate special noise problems, provided such procedures do not unreasonably
interfere with interstate or foreign commerce or the national transportation
system.  Certain airports, including the major airports at Boston, Washington,
D.C., Chicago, Los Angeles, San Diego, Orange County and San Francisco, have
established airport restrictions to limit noise, including restrictions on
aircraft types to be used and limits on the number of hourly or daily
operations or the time of such operations.  In some instances, these
restrictions have caused curtailments in services or increases in operating
costs and such restrictions could limit the ability of Continental to expand
its operations at the affected airports.  Local authorities at other airports
are considering adopting similar noise regulations.





                                       13

<PAGE>   14
Several airports have recently sought to increase substantially the rates
charged to airlines, and the ability of airlines to contest such increases has
been restricted by federal legislation, DOT regulations and judicial decisions.
In addition, legislation which became effective June 1, 1992 allows public
airports to impose passenger facility charges of up to $3 per departing or
connecting passenger at such airports.  With certain exceptions, these charges
are passed on to the customers.

The FAA has designated John F. Kennedy, LaGuardia, O'Hare and Washington
National airports as "high density traffic airports" and has limited the number
of departure and arrival slots at those airports.  Currently, slots at the high
density traffic airports may be voluntarily sold or transferred between the
carriers.  The DOT has in the past reallocated slots to other carriers and
reserves the right to withdraw slots.  Various amendments to the slot system,
proposed from time to time by the FAA, members of Congress and others, could,
if adopted, significantly affect operations at the high density traffic
airports or expand slot controls to other airports.  Certain of such proposals
could restrict the number of flights, limit the ownership transferability of
slots, increase the risk of slot withdrawals, result in defaults under the
Company's secured note agreements with GE or require charges to the Company's
financial statements.  Continental cannot predict whether any of these
proposals will be adopted.

The availability of international routes to United States carriers is regulated
by treaties and related agreements between the United States and foreign
governments.  The United States has in the past generally followed the practice
of encouraging foreign governments to accept multiple carrier designation on
foreign routes, although certain countries have sought to limit the number of
carriers.  Foreign route authorities may become less valuable to the extent
that the United States and other countries adopt "open skies" policies
liberalizing entry on international routes.  Continental cannot predict what
laws and regulations will be adopted or their impact, but the impact may be
significant.

Many aspects of Continental's operations are subject to increasingly stringent
federal, state and local laws protecting the environment.  Future regulatory
developments could affect operations and increase operating costs in the
airline industry, including for the Company.

RISK FACTORS

Continental's History of Operating Losses.  Although Continental recorded net
income of $224 million for the year ended December 31, 1995, it had experienced
significant operating losses in the previous eight years.  In the long term,
Continental's viability depends on its ability to sustain profitable results of
operations.

Leverage and Liquidity.  Continental has successfully negotiated a variety of
agreements to increase its liquidity during 1995 and 1996.  Nevertheless,
Continental remains more leveraged and has significantly less liquidity than
certain of its competitors, several of whom have  available lines of credit
and/or significant unencumbered assets.  Accordingly, Continental may be less
able than certain of its competitors to withstand a prolonged recession in the
airline industry.





                                       14

<PAGE>   15
As of December 31, 1995, Continental and its consolidated subsidiaries had
approximately $1.9 billion (including current maturities) of long-term
indebtedness and capital lease obligations, and had approximately $615 million
of minority interest, preferred securities of trust, redeemable preferred stock
and common stockholders' equity.  Common stockholders' equity reflects the
adjustment of the Company's balance sheet and the recording of assets and
liabilities at fair market value as of April 27, 1993 in accordance with fresh
start reporting.

During the first and second quarters of 1995, in connection with negotiations
with various lenders and lessors, Continental ceased or reduced contractually
required payments under various agreements, which produced a significant number
of events of default under debt, capital lease and operating lease agreements.
Through agreements reached with the various lenders and lessors, Continental
has cured all of these events of default.  The last such agreement was put in
place during the fourth quarter of 1995.  See Item 7.  "Management's Discussion
and Analysis of Financial Condition and Results of Operations.  Liquidity and
Capital Commitments".

As of December 31, 1995, Continental had approximately $747 million of cash and
cash equivalents, including restricted cash and cash equivalents of $144
million.  Continental does not have general lines of credit and has no
significant unencumbered assets.  Continental's ability to maintain and improve
its liquidity and its long-term viability will depend upon its ability to
sustain profitable results of operations.

Continental has firm commitments to take delivery of three new 737 and two new
757 aircraft through early 1996 and 43 new jet aircraft during the years 1998
through 2002.  The estimated aggregate cost of these aircraft is $2.7 billion.
In connection with the rescheduling of jet aircraft deliveries, $72 million of
purchase deposits was returned to the Company in 1995.  In December 1994,
Express contracted with Beech Acceptance Corporation ("Beech") for the purchase
and financing of 25 Beech 1900-D aircraft at an estimated aggregate cost of
$104 million, excluding price escalations.  As of December 31, 1995, 13 Beech
1900-D aircraft had been delivered, of which eight had entered service by that
date and five will enter service in the first quarter of 1996.  The remaining
12 aircraft are scheduled to be delivered in 1996.  The Company currently
anticipates that the firm financing commitments available to it with respect to
its acquisition of new aircraft from Boeing and Beech will be sufficient to
fund all deliveries scheduled during 1996.  Furthermore, the Company currently
anticipates that it will have remaining financing commitments from aircraft
manufacturers of $575 million for jet aircraft deliveries beyond 1996.  The
Company believes that further financing will be needed to satisfy the remaining
amount of such capital commitments.  There can be no assurance that sufficient
financing will be available for all aircraft and other capital expenditures not
covered by firm financing commitments.

For 1996, Continental expects to incur cash expenditures under operating leases
of approximately $586 million, compared with $521 million for 1995, relating to
aircraft and approximately $235 million relating to facilities and other
rentals.  In addition, Continental has capital requirements relating to
compliance with regulations that are discussed below.

Continental and CMI have secured borrowings from GE which as of December 31,
1995 aggregated $634 million.  CMI's secured loans contain significant
financial covenants, including requirements to maintain a minimum cash balance
and consolidated net worth, restrictions on





                                       15

<PAGE>   16
unsecured borrowings and mandatory prepayments on the sale of most assets.
These financial covenants limit the ability of CMI to pay dividends to
Continental.  In addition, Continental's secured loans require Continental to,
among other things, maintain a minimum monthly operating cash flow and
cumulative operating cash flow, a minimum monthly cash balance and a minimum
ratio of operating cash flow to fixed charges.  Continental also is prohibited
generally from paying cash dividends on its capital stock, from purchasing or
prepaying indebtedness and from incurring additional secured indebtedness.  In
addition, to the extent Continental's actual quarterly average cash balances
exceed certain forecasts, a portion of such excess cash is required to be used
to prepay certain loan obligations to GE.

Aircraft Fuel.  Since fuel costs constitute a significant portion of
Continental's operating costs (approximately 12.5% for the year ended December
31, 1995), significant changes in fuel costs would materially affect the
Company's operating results.  Fuel prices continue to be susceptible to
international events, and the Company cannot predict near or longer- term fuel
prices.  In the event of a fuel supply shortage resulting from a disruption of
oil imports or otherwise, higher fuel prices or curtailment of scheduled
service could result.

In August 1993, the United States increased taxes on domestic fuel, including
aircraft fuel, by 4.3 cents per gallon.  Airlines were exempt from this tax
increase until October 1, 1995, and proposed legislation in Congress would
reinstate the exemption through September 30, 1997, subject to termination of
the exemption on September 30, 1996 if certain aviation trust fund taxes are
not extended.  These aviation trust fund taxes expired on December 31, 1995 and
have not, as of February 16, 1996, been extended.  There can be no assurance
that the continuation of this exemption will be enacted, or if enacted, the
terms on which and the period for which the exemption will be effective.
Continental has begun making its regular semi-monthly deposits based on the
increased fuel tax.  Non-extension of the fuel tax exemption would increase the
annual operating expenses of Continental and Express by $36 million based on
projected domestic fuel consumption levels during 1996.

Certain Tax Matters.  In connection with the Reorganization and the recording
of assets and liabilities at fair market value under 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"), the
Company recorded a deferred tax liability at April 27, 1993, net of the amount
of the Company's estimated realizable net operating loss carryforwards as
required by Statement of Financial Accounting Standards No. 109 - "Accounting
for Income Taxes".  Realization of a substantial portion of the Company's net
operating loss carryforwards will require the completion during the five-year
period following the Reorganization of transactions resulting in recognition of
built-in gains for federal income tax purposes.  The Company has consummated
one such transaction (as described under Item 1.  "Business.  Continental CRS
Interests, Inc."), which had the effect of realizing approximately 40% of the
built-in gains required to be realized over the five- year period, and
currently intends to consummate one or more additional transactions.  If the
Company were to determine in the future that not all such transactions will be
completed, an adjustment to the net deferred tax liability of up to $116
million would be charged to income in the period such determination was made.





                                       16

<PAGE>   17
CMI.  CMI's operating profit margins have consistently been greater than the
Company's margins overall.  In addition to its non-stop service between
Honolulu and Tokyo, CMI's operations focus on the neighboring islands of Guam
and Saipan, resort destinations that cater primarily to Japanese travelers.
Because the majority of CMI's traffic originates in Japan, its results of
operations are substantially affected by the Japanese economy and changes in
the value of the yen as compared to the dollar.  Appreciation of the yen
against the dollar during 1993 and 1994 increased CMI's profitability and a
decline of the yen against the dollar may be expected to decrease it.  To
reduce the potential negative impact on CMI's earnings, CMI, from time to time,
purchases average rate options as a hedge against its net yen revenue position.
Any significant and sustained decrease in traffic from Japan could materially
adversely affect Continental's consolidated profitability.

Industry Conditions and Competition.  The airline industry is highly
competitive and susceptible to price discounting.  The Company has in the past
both responded to discounting actions taken by other carriers and initiated
significant discounting actions (such as Continental Lite) itself.
Continental's competitors include carriers with substantially greater financial
resources, as well as smaller carriers with lower cost structures.  Airline
profit levels are highly sensitive to, and during recent years have been
severely impacted by, changes in fuel costs, fare levels (or "average yield")
and passenger demand.  Passenger demand and yields have been adversely affected
by, among other things, the general state of the economy, international events
and actions taken by carriers with respect to fares.  From 1990 to 1993, these
factors contributed to the domestic airline industry incurring unprecedented
losses.  Although fare levels have increased recently, significant
industry-wide discounts could be reimplemented at any time, and the
introduction of broadly available, deeply discounted fares by a major United
States airline would likely result in lower yields for the entire industry and
could have a material adverse effect on the Company's operating results.

The airline industry has consolidated in past years as a result of mergers and
liquidations and may further consolidate in the future.  Among other effects,
such consolidation has allowed certain of Continental's major competitors to
expand (in particular) their international operations and increase their market
strength.  Furthermore, the emergence in recent years of several new carriers,
typically with low cost structures, has further increased the competitive
pressures on the major United States airlines.  In many cases, the new entrants
have initiated or triggered price discounting.  Aircraft, skilled labor and
gates at most airports continue to be readily available to start-up carriers.
Although management believes that Continental is better able than some of its
major competitors to compete with fares offered by start-up carriers because of
its lower cost structure, competition with new carriers or other low cost
competitors on Continental's routes could negatively impact Continental's
operating results.





                                       17

<PAGE>   18
Regulatory Matters.  In the last several years, the FAA has issued a number of
maintenance directives and other regulations relating to, among other things,
retirement of older aircraft, collision avoidance systems, airborne windshear
avoidance systems, noise abatement, commuter aircraft safety and increased
inspections and maintenance procedures to be conducted on older aircraft.  The
Company expects to continue incurring expenses for the purpose of complying
with the FAA's noise and aging aircraft regulations.  In addition, several
airports have recently sought to increase substantially the rates charged to
airlines, and the ability of airlines to contest such increases has been
restricted by federal legislation, DOT regulations and judicial decisions.  See
I
tem 1.  "Business.  Industry Regulation and Airport Access".

Additional laws and regulations have been proposed from time to time that could
significantly increase the cost of airline operations by imposing additional
requirements or restrictions on operations.  Laws and regulations have also
been considered that would prohibit or restrict the ownership and/or transfer
of airline routes or takeoff and landing slots.  Also, the availability of
international routes to United States carriers is regulated by treaties and
related agreements between the United States and foreign governments that are
amendable.  Continental cannot predict what laws and regulations may be adopted
or their impact, but there can be no assurance that laws or regulations
currently enacted or enacted in the future will not adversely affect the
Company.





                                       18

<PAGE>   19

ITEM 2.  PROPERTIES.

FLIGHT EQUIPMENT

As shown in the following table, Continental's (including CMI's) jet aircraft
fleet consisted of 309 jets at December 31, 1995.


<TABLE>
<CAPTION>
                                                                             Seats
                                Total                                     in Standard          Average Age
  Type                         Aircraft       Owned         Leased       Configuration          (In Years)  
  ----                         --------       -----         ------       -------------         -------------
<S>                               <C>            <C>           <C>              <C>                 <C>
Four Engine

747-200*                            2             -              2              392                 23.5

Three Engine

DC-10-10                            6             -              6              287                 23.2
DC-10-30                           13             -             13              242                 18.4
727-200*                           46             2             44              149                 19.2

Two Engine

737-500                            34             -             34              104                  1.2
737-300                            65            10             55              128                  8.4
737-200*                           17             9              8              100                 26.5
737-100*                           13            13              -               95                 27.3
757-200                            15             -             15              183                  1.1
MD-80                              67            10             57              141                 11.0
DC-9-30*                           31             3             28              103                 23.9
                                  ---           ---            ---                                  ----

                                  309            47            262                                  13.6
                                  ===           ===            ===                                  ====
</TABLE>


*Stage II (noise level) aircraft.

All of the aircraft and engines owned by Continental are subject to mortgages.

As part of the Company's capacity rationalization program, during 1995,
Continental removed from service 21 A300 aircraft, three 747 aircraft and 19
727 aircraft.  All such aircraft, other than five A300 aircraft and one 747
aircraft, have been returned to their respective lessors.  The aircraft removed
from service are not included in the above table.  See Item 7.  "Management's
Discussion and Analysis of Financial Condition and Results of Operations.
Results of Operations".

The FAA has adopted rules pursuant to the Airport Noise and Capacity Act of
1990 that require a scheduled phase out of Stage II aircraft during the 1990's.
As a result of Continental's acquisition of a number of new aircraft and the
retirement of older Stage II aircraft in recent





                                       19

<PAGE>   20
years, 64.7% of Continental's current jet fleet was composed of Stage III
aircraft at December 31, 1995.  The Company plans to either retire or install
hush kits on the remainder of its Stage II jet fleet (excluding those aircraft
operated by CMI) prior to the year 2000 in order to comply with such rules.

Continental has firm commitments to take delivery of three new 737 and two new
757 aircraft through early 1996 and 43 new jet aircraft during the years 1998
through 2002.  The estimated aggregate cost of these aircraft is $2.7 billion.
The Company currently anticipates that it will have remaining financing
commitments from aircraft manufacturers of $575 million for jet aircraft
deliveries beyond 1996.  In addition, the Company recently purchased one
DC-10-30 aircraft and entered into an operating lease for another DC-10-30
aircraft that are expected to be placed into service by the end of the second
quarter of 1996.

As of December 31, 1995, Express operated a fleet of 81 aircraft, as follows:


<TABLE>
<CAPTION>
                                                                               Seats
                                  Total                                     in Standard          Average Age
  Type                           Aircraft       Owned         Leased       Configuration          (In Years)  
  ----                           --------       -----         ------       -------------         -------------
<S>                                  <C>         <C>           <C>               <C>                 <C>
ATR-72                                3           3             -                64                  1.4
ATR-42                               38           3            35                46                  6.4
EMB 120                              32          22            10                30                  6.5
Beech 1900-D                          8           8             -                19                  0.1
                                    ---         ---           ---                                   ----

                                     81          36            45                                    5.6
                                    ===         ===           ===                                   ====
</TABLE>


In December 1994, Express contracted with Beech for the purchase and financing
of 25 Beech 1900-D aircraft at an estimated aggregate cost of $104 million,
excluding price escalations.  As of December 31, 1995, 13 Beech 1900-D aircraft
had been delivered, of which eight had entered service by that date and five
will enter service in the first quarter of 1996.  The remaining 12 aircraft are
scheduled to be delivered in 1996.  In the fourth quarter of 1995, Express
disposed of three ATR-42 aircraft and acquired one ATR-72 aircraft.  In
addition, one ATR-42 aircraft owned by the Company is currently leased to an
unrelated third party and is not included in the table above.  The Company is
exploring the possibility of acquiring regional jets for operation by Express.
As of February 16, 1996, no decision with respect to any such acquisition had
been made.  See Item 7.  "Management's Discussion and Analysis of Financial
Condition and Results of Operations.  Liquidity and Capital Commitments" for
information regarding capital commitments and financing relating to aircraft.

FACILITIES

The Company's principal facilities are located at Newark, Houston
Intercontinental, Cleveland and Guam/Saipan.  All these facilities, as well as
substantially all of Continental's other facilities, are leased on a long-term,
net rental basis, with the lessee responsible for maintenance, taxes, insurance
and other facility-related expenses and services.  In certain locations,
Continental owns hangars and other facilities on land leased on a long-term
basis, which facilities will become the property of the lessor on termination
of the lease.  At each of its three





                                       20

<PAGE>   21
domestic hub cities and most other locations, Continental's passenger and
baggage handling space is leased directly from the airport authority on varying
terms dependent on prevailing practice at each airport.

Denver's Stapleton Airport closed on February 28, 1995 in connection with the
opening of DIA.  In 1992, the Company agreed to lease (i) 20 gates at DIA for a
period of five years from the date DIA opened, (ii) four of such gates for an
additional five years and (iii) a substantial amount of operational space in
connection with the gates.  On April 10, 1995, the Company reached an agreement
with the City and certain other parties to amend its lease by reducing the
Company's lease term to five years, reducing to 10 the number of gates (and
reducing associated space) leased by the Company and making certain changes in
the rates and charges under the lease.  The agreement cured defaults under the
lease, and also provided for the release of certain claims and the settlement
of certain litigation filed by the City against the Company.  See Item 3.
"Legal Proceedings.  Denver International Airport" and Item 7.  "Management's
Discussion and Analysis of Financial Condition and Results of Operations.
Liquidity and Capital Commitments".

In November 1994, the Company announced its decision to close its western
United States scheduled maintenance facilities in Los Angeles and Denver,
eliminating approximately 1,640 maintenance positions.  Much of the Company's
scheduled maintenance needs are now performed by outside suppliers who can
support the Company's flight operations at locations more convenient to its
primary domestic routes in the eastern, central and southern regions of the
United States.  The Company continues to evaluate its maintenance needs.

The Company has cargo facilities at Los Angeles International Airport.
Negotiations are in progress with another carrier to sublease space at these
facilities.

CMI operates a hub on the islands of Guam and Saipan.  The Guam Airport
Authority has undertaken a major airport terminal expansion that is expected to
be substantially complete by late 1996.  This expansion will increase the
number of gates available at the Guam Airport from six to 17 (of which CMI will
have preferential access to 11) and is currently anticipated to increase the
cost of CMI's operations in Guam by more than $15 million a year.

Continental also maintains administrative offices, airport and terminal
facilities, training facilities and other facilities related to the airline
business in the cities it serves.

As of December 31, 1995, Continental remains contingently liable on $202
million of long-term lease obligations of USAir related to the East End
Terminal at LaGuardia.  In the event USAir defaults on these obligations,
Continental might be required to cure the default,  at which time it would have
the right to reoccupy the terminal.





                                       21

<PAGE>   22

ITEM 3.  LEGAL PROCEEDINGS.

PLAN OF REORGANIZATION

The Company's Plan of Reorganization, which became effective on April 27, 1993,
provides for the full payment of all allowed administrative and priority
claims.  Pursuant to the Plan of Reorganization, holders of allowed general
unsecured claims are entitled to participate in a distribution of 1,900,000
shares of Class A common stock, 5,042,368 shares of Class B common stock and
$6,523,952 of cash and have no further claim against the Company.  The Plan of
Reorganization provided for this distribution to be issued initially in trust
to a distribution agent and thereafter for distributions to be made from the
trust from time to time as disputed claims are resolved.  The distribution
agent must reserve from each partial distribution of stock or cash to allow a
complete pro rata distribution to be made to each holder of a disputed claim in
the event such claim is eventually allowed, unless the United States Bankruptcy
Court for the District of Delaware (the "Bankruptcy Court") establishes a lower
reserve or estimates the claim at a lesser amount for purposes of distribution.
As of December 31, 1995, there remained 306,743 shares of Class A common stock,
804,390 shares of Class B common stock, and $1 million of cash available for
distribution.  The stock and cash set aside for distribution to prepetition
unsecured creditors was fixed in the Plan of Reorganization and will not change
as claims are allowed.  However, as set forth below, a limited number of
proceedings are still pending in which prepetition creditors seek to impose
additional obligations on the Company.

BANKRUPTCY APPEALS

Several parties appealed the Bankruptcy Court's April 16, 1993 order confirming
the Plan of Reorganization.

On December 3, 1990, the Company owned 77 aircraft and 81 spare engines (in
four collateral pools) securing debt evidenced by equipment trust certificates.
The trustees for the four collateral pools moved in the Bankruptcy Court for
"adequate protection" payments under Sections 361 and 363 of the federal
bankruptcy code for the Company's retention and use of the aircraft and engines
after December 3, 1990, including postpetition claims for the alleged decline
in market value of the aircraft and engines after December 3, 1990 and claims
for deterioration in the condition of the aircraft and engines in the same
period.  The Bankruptcy Court rejected the adequate protection claims that
alleged market value decline.  Prior to April 16, 1993, the Company settled all
of the adequate protection claims of the trustees, except for a claim of $117
million for alleged market value decline of 29 aircraft and 81 spare engines in
the fourth collateral pool.  On April 16, 1993, the Bankruptcy Court rejected
the market value decline claims of the trustees for the fourth collateral pool
in their entirety and incorporated those findings into its order confirming the
Plan of Reorganization.  The trustees for the fourth collateral pool appealed
from these orders, but failed to obtain a stay pending appeal.  The Company
opposed these appeals on the merits and sought dismissal of the appeals on the
grounds they were made moot by the substantial consummation of the Plan of
Reorganization.  The United States District Court for the District of Delaware
(the "District Court") dismissed the appeals as moot, and the trustees appealed
to the Third Circuit Court of Appeals (the "Third Circuit") seeking review of
the District Court's mootness determination and the Bankruptcy Court's finding
on the merits.  The Third Circuit affirmed the District Court's dismissal in





                                       22

<PAGE>   23
February 1996.  Although the trustees have applied for a rehearing and may 
appeal the Third Circuit's decision, the Company does not believe that the 
foregoing matter will have a material adverse effect on the Company.

On July 19, 1994, the Bankruptcy Court approved a comprehensive settlement
resolving certain claims filed by ALPA and former pilots of Eastern Air Lines,
Inc. ("Eastern").  A group of separately represented Eastern pilots (the "LPP
Claimants") filed an appeal from an order disallowing the integration of the
Eastern pilots seniority list with the Company pilots seniority list.  The
Company filed a motion to dismiss as moot the appeals brought by the LPP
Claimants, on the grounds that only ALPA had standing with regard to this
proceeding and ALPA had previously withdrawn a similar appeal.  On November 29,
1995, the District Court issued an opinion denying the LPP Claimants' appeal,
and stating that even if the LPP Claimants could establish the merits of their
claims, they would be entitled only to recovery of prepetition unsecured
bankruptcy claims.  The District Court also held that the LPP Claimants may
pursue an arbitration hearing to attempt to establish the validity of their
claims and the amount, if any, of the bankruptcy claims generated thereby.
Both the LPP Claimants and a group of approximately 200 ex-Eastern pilots
referred to as the Eastern Pilots' Merger Committee have appealed the District
Court's decision.  The Company is opposing these appeals both procedurally and
on their merits.  In addition, the Third Circuit has, on its own, questioned
the Committee's standing to appeal.  The Company does not believe that the
foregoing matter will have a material adverse effect on the Company.

ANTITRUST PROCEEDINGS

In February 1995, Delta imposed dollar limits on the base commissions it would
pay to travel agents on domestic airline tickets.  Shortly thereafter, other
airlines, including the Company, imposed similar dollar limits on their
respective commissions.  In February and March of 1995, the Company and six
other major United States airlines were sued in a number of putative class
actions, which have been consolidated as In re Airline Travel Agents Antitrust
Litigation in the United States District Court for the District of Minnesota
(the "Court"), in which various travel agents allege that the Company and the
other defendants combined and conspired in unreasonable restraint of trade and
commerce in violation of applicable antitrust laws.  The plaintiffs also allege
that the defendant airlines unlawfully fixed, lowered, maintained and
stabilized the commissions paid to United States travel agents.  Plaintiffs
seek injunctive relief, treble damages, attorneys fees and related costs.  On
August 23, 1995, the Court denied plaintiffs' motion for a preliminary
injunction and denied defendants' motion for summary judgment.  On September
12, 1995, defendants filed a motion to certify an interlocutory appeal to the
Eighth Circuit Court of Appeals regarding the standard of review for summary
judgment to be applied by the Court in a conspiracy case under the antitrust
laws.  Such motion was denied on September 27, 1995.  Discovery is ongoing.
The Company and the other defendant airlines are vigorously defending this
lawsuit.  The Company does not believe that the foregoing matter will have a
material adverse effect on the Company.





                                       23

<PAGE>   24
DENVER INTERNATIONAL AIRPORT

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

The Company, the City and certain other parties entered into an agreement (the
"DIA Settlement") that was approved by the Denver City Council on April 10,
1995.  The DIA Settlement provided for the release of certain claims and the
settlement of certain litigation filed by the City against the Company and
reduced (i) the full term of the lease to five years, subject to certain rights
of renewal granted to the Company, (ii) the number of gates leased from 20 to
10, and (iii) the amount of leased operational and other space by approximately
70%.  The reduced number of gates and operational space exceed the Company's
current needs at the airport.  The Company is finalizing the sublease of four
gates and certain operational space to another carrier, and is negotiating a
sublease of one additional gate and certain operational space with a different
carrier.  The Company will attempt to sublease additional facilities and
operational space as well.  To the extent the Company is able to sublease
additional gates and operational space, its costs under the lease will be
reduced.

Another air carrier filed a complaint with the DOT alleging that the DIA
Settlement had increased its rates and charges at DIA and that such carrier had
not approved the changes to its rates and charges.  The DOT dismissed the air
carrier's complaint.  The DIA Settlement could still be challenged by certain
parties, including other air carriers, and the Company cannot predict what the
outcome of any such challenge would be.  If the DIA Settlement were
successfully challenged, the Company believes it has defenses against the City,
as well as claims against the City that would justify rescission of the lease
or, if rescission were not awarded by the court, a substantial reduction in the
Company's obligations thereunder.  Although the Company believes that such a
challenge is unlikely at this time, a successful challenge to the DIA
Settlement could reduce or eliminate the Company's estimated savings at DIA.

ENVIRONMENTAL PROCEEDINGS

Under the federal Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended (commonly known as "Superfund") and similar
state environment cleanup laws, generators of waste disposed of at designated
sites may under certain circumstances be subject to joint and several liability
for investigation and remediation costs.  The Company (including its
predecessors) has been identified as a potentially responsible party at four
federal and two state sites that are undergoing or have undergone investigation
or remediation.  The Company believes that, although applicable case law is
evolving and some cases may be interpreted to the contrary, some or all of any
liability claims associated with these sites were





                                       24

<PAGE>   25
discharged by confirmation of the Company's Plan of Reorganization, principally
because the Company's exposure is based on alleged offsite disposal known as of
the date of confirmation.  Even if any such claims were not discharged, on the
basis of currently available information, the Company believes that its
potential liability for its allocable share of the cost to remedy each site (to
the extent the Company is found to have liability) is not, in the aggregate,
material; however, the Company has not been designated a "de minimis"
contributor at any of such sites.

The Company is also involved in other environmental matters, including the
investigation and/or remediation of environmental conditions at properties used
or previously used by the Company.  Although the Company is not currently
subject to any environmental cleanup orders imposed by regulatory authorities,
it is undertaking voluntary investigation or remediation at certain properties
in consultation with such authorities.  The full nature and extent of any
contamination at these properties and the parties responsible for such
contamination have not been determined, but based on currently available
information the Company does not believe that any environmental liability
associated with such properties will have a material adverse effect on the
Company.

GENERAL

Various other claims and lawsuits against the Company are pending that are of
the type generally consistent with the Company's business.  The Company cannot
at this time reasonably estimate the possible loss or range of loss that could
be experienced if any of the claims were successful.  Typically, such claims
and lawsuits are covered in whole or in part by insurance.  The Company does
not believe that the foregoing matters will have a material adverse effect on
the Company.


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

Not applicable.





                                       25

<PAGE>   26

                                    PART II


ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

Continental's common stock trades on the New York Stock Exchange.  The table
below shows the high and low sales prices for the Company's Class A common
stock and Class B common stock as reported on the New York Stock Exchange
during 1994 and 1995.


<TABLE>
<CAPTION>
                                             Class A Common Stock              Class B Common Stock
                                           -------------------------         -------------------------
                                             High              Low             High              Low  
                                           --------          -------         --------          -------
<S>      <C>                                <C>                <C>            <C>                <C>
1994     First Quarter  . . . . . . . . .   30-3/4             18-3/4         27-1/4             16-7/8
         Second Quarter . . . . . . . . .   21                 13-1/2         19-3/4             11-1/4
         Third Quarter  . . . . . . . . .   22-1/4             14             21-1/2             13
         Fourth Quarter . . . . . . . . .   18-1/2              8-1/8         18-1/8              7-1/2

1995     First Quarter  . . . . . . . . .   12-1/8              7             12-1/4              6-1/2
         Second Quarter . . . . . . . . .   25-3/4             10-3/8         25-3/4             10-5/8
         Third Quarter  . . . . . . . . .   39-3/4             23-1/8         40-1/8             23-3/8
         Fourth Quarter . . . . . . . . .   46-7/8             34-3/8         47-1/2             34-3/4
</TABLE>


As of February 16, 1996, there were approximately 4,232 and 6,205 holders of
record of Continental's Class A and Class B common stock, respectively.

Certain of the Company's credit agreements currently prohibit the Company from
paying cash dividends to its common stockholders.  The Company has not paid any
cash dividends on its common stock.  Because the Company believes that it is
important to retain earnings to strengthen the Company's balance sheet and
liquidity, the Company has no current intention of paying dividends on its
common stock.

The Company's certificate of incorporation provides that no shares of capital
stock may be voted by or at the direction of persons who are not United States
citizens unless such shares are registered on a separate stock record.  The
Company's bylaws further provide that no shares will be registered on such
separate stock record if the amount so registered would exceed United States
foreign ownership restrictions.  United States law currently requires that no
more than 25.0% of the voting stock of the Company (or any other domestic
airline) may be owned directly or indirectly by persons who are not citizens of
the United States.  Because Air Canada owns 23.6% of the voting power of the
Company's common stock and shares of common stock owned by Air Canada have
priority in registration on the foreign stock record over shares held by other
foreign holders, the number of shares that may be voted by other foreign
holders is very limited.





                                       26

<PAGE>   27

ITEM 6.  SELECTED FINANCIAL DATA.

The following table sets forth certain consolidated financial data of (i) the
Reorganized Company at December 31, 1995, 1994 and 1993 and for the years ended
December 31, 1995 and 1994 and the period April 28, 1993 through December 31,
1993 and (ii) the Predecessor Company, for the period January 1, 1993 through
April 27, 1993 and as of and for the two years ended December 31, 1992 (in
millions, except per share data).

Because the Reorganized Company includes System One (see Item 1.  "Business.
Continental CRS Interests, Inc.") and other businesses that had been
consolidated with Holdings prior to April 28, 1993 (but not with
pre-reorganized Continental), the discussion herein generally refers to
Holdings' consolidated financial statements for periods prior to April 28,
1993.  As a result of the adoption of fresh start reporting in accordance with
SOP 90-7, upon consummation of the Plan of Reorganization on April 27, 1993,
the consolidated financial statements of the Predecessor Company and the
Reorganized Company have not been prepared on a consistent basis of accounting
and are separated by a vertical black line.





                                       27

<PAGE>   28

<TABLE>
<CAPTION>
                                        Reorganized Company (1)(2)(3)                   Predecessor Company (1)(2)        
                                     -------------------------------------         -------------------------------------
                                                                April 28,            January 1,        Year Ended
                                     Year Ended December 31,  1993 through         1993 through        December 31, 
                                     -----------------------   December 31,          April 27,      --------------------
                                      1995            1994         1993                 1993          1992        1991   
                                     -------         ------     ----------         ------------     --------   ---------
<S>                                  <C>            <C>          <C>                   <C>          <C>          <C>
Operating revenue . . . . . . . .    $5,825         $5,670       $3,910               $1,857        $5,459       $5,451

Operating income (loss) . . . . .       385            (11)          95                 (114)         (106)        (219)

Income (loss) before
  extraordinary gain  . . . . . .       224           (613)         (39)                (979)         (125)        (306)

Net income (loss) . . . . . . . .       224           (613)         (39)               2,640          (125)        (306)

Earnings (loss) per common
  and common equivalent
  share:
   Before extraordinary gain  . .      7.20         (23.76)       (2.33)                   *         (2.70)       (6.74)
   Net income (loss)  . . . . . .      7.20         (23.76)       (2.33)                   *         (2.70)       (6.74)

Earnings (loss) per common
  share assuming full
  dilution:
   Before extraordinary gain  . .      6.29         (23.76)       (2.33)                   *         (2.70)       (6.74)
   Net income (loss)  . . . . . .      6.29         (23.76)       (2.33)                   *         (2.70)       (6.74)
</TABLE>



                                                        (continued on next page)





                                       28

<PAGE>   29

<TABLE>
<CAPTION>
                                                               Reorganized Company (1)(2)              Predecessor Company (2) 
                                                        ----------------------------------------       -------------------------
                                                                      December 31,                           December 31,
                                                        ----------------------------------------       -------------------------
                                                          1995              1994          1993           1992             1991
                                                        --------           -------      --------       --------        ---------
<S>                                                      <C>                <C>          <C>              <C>           <C>
Total assets  . . . . . . . . . . . . . . . . . .        $4,821             $4,601       $5,099           $3,253        $3,523

Debt and capital lease obligations
  in default (4)  . . . . . . . . . . . . . . . .             -                490            -                -             -

Estimated liabilities subject to
  Chapter 11 reorganization
  proceedings . . . . . . . . . . . . . . . . . .             -                  -            -            3,907         4,212

Long-term debt and capital lease
  obligations . . . . . . . . . . . . . . . . . .         1,658              1,202        1,775              228            81

Minority interest . . . . . . . . . . . . . . . .            27                 26           22                -             -

Continental-obligated mandatorily
  redeemable preferred securities of
  Trust . . . . . . . . . . . . . . . . . . . . .           242                  -            -                -             -

Redeemable preferred stock  . . . . . . . . . . .            41                 53           47              102           102
</TABLE>


*Not meaningful.

(1)      See Item 7.  "Management's Discussion and Analysis of Financial
         Condition and Results of Operations.  Results of Operations" for a
         discussion of significant transactions in 1995, 1994 and 1993.  1994
         results include a provision of $447 million associated with the
         planned early retirement of certain aircraft and closed or
         underutilized airport and maintenance facilities and other assets.
(2)      Certain reclassifications have been made in prior years' financial
         statements to conform to the 1995 presentation.
(3)      No cash dividends were paid on common stock during the periods shown.
(4)      See Item 7.  "Management's Discussion and Analysis of Financial
         Condition and Results of Operations.  Liquidity and Capital
         Commitments" for a discussion of long-term debt and capital lease
         obligations in default at December 31, 1994.





                                       29

<PAGE>   30

ITEM 7.        MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
               CONDITION AND RESULTS OF OPERATIONS.

Continental Airlines, Inc. (the "Company", "Continental" or the "Reorganized
Company") is the successor to Continental Airlines Holdings, Inc. (together
with its subsidiaries, "Holdings" or the "Predecessor Company") and the pre-
reorganized 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.  Because consolidated Continental
(as reorganized) includes businesses that had been consolidated with Holdings
for periods through April 27, 1993 (but not with pre-reorganized Continental),
the discussion herein generally refers to Holdings' consolidated financial
statements for periods through April 27, 1993.

On April 27, 1993, in connection with the Reorganization, the Company 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").  The fresh
start reporting common equity value of the Company was determined by the
Company, with the assistance of its financial advisors, to be approximately
$615 million based, in part, on assumptions as to future results of operations.
The carrying value of the Company's assets does not reflect historical cost but
rather reflects current values determined by the Company as of April 27, 1993
(including values for intangible assets such as routes, gates and slots of
approximately $1.7 billion).  The difference between (i) the equity valuation
of the Company plus the estimated fair market value of the Company's
liabilities and (ii) the estimated fair market value of its identifiable assets
was allocated to reorganization value in excess of amounts allocable to
identifiable assets.  Due to the significant adjustments relating to the
Reorganization and the adoption of fresh start reporting, the pre-reorganized
consolidated financial statements are not comparable to the post-reorganized
consolidated financial statements of the Company.  A vertical black line is
shown in the consolidated financial statements presented herein to separate
Continental's post-reorganized consolidated financial statements from the
pre-reorganized consolidated financial statements of Holdings since they have
not been prepared on a consistent basis of accounting.  The fresh start
reporting adjustments, primarily related to the adjustment of the Company's
assets and liabilities to fair market values, have also affected the Company's
statements of operations.  The more significant adjustments related to
increased amortization expense relating to routes, gates and slots and
reorganization value in excess of amounts allocable to identifiable assets,
reduced aircraft rent expense and increased interest expense.

The following discussion may contain forward-looking statements.  In connection
therewith, please see the cautionary statements contained in Item 1.
"Business.  Risk Factors", which identify important factors that could cause
actual results to differ materially from those in the forward-looking
statements.





                                       30

<PAGE>   31
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 years ended
December 31, 1995.  The Company's results of operations for the periods
subsequent to April 27, 1993 have not been prepared on a basis of accounting
consistent with the Predecessor Company's 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.  Financial information for 1993 is
derived by combining the results of operations of the Company for the period
April 28, 1993 through December 31, 1993 with those of Holdings for the period
January 1, 1993 through April 27, 1993.

Comparison of 1995 to 1994.  Continental's financial and operating performance
improved dramatically in 1995, reflecting among other things implementation of
the Company's new strategic program to enhance the fundamentals of its
operations, rationalize capacity (including the elimination of "Continental
Lite" operations - a network of short-haul, no-frills, low-fare flights),
improve customer service and employee relations and strengthen Continental's
balance sheet and liquidity.  The Company recorded consolidated net income of
$224 million for the year ended December 31, 1995, after recording $31 million
in employee profit sharing, as compared to a consolidated net loss of $613
million for the year ended December 31, 1994.  The Company's net income in 1995
included a $30 million net after tax gain on the System One Information
Management, Inc. ("System One") transactions.  During the fourth quarter of
1994, the Company recorded a provision of $447 million, which included $278
million associated primarily with the planned early retirement of certain
aircraft and $169 million relating to closed or underutilized airport and
maintenance facilities and other assets.

During 1995, the Company implemented its route realignment and capacity
rationalization initiatives, which reduced capacity by 7.4% from 1994, while
traffic declined only 3.8%, producing a 2.5 percentage point increase in load
factor to 65.6%.  This higher load factor, combined with a 9.4% increase in the
average yield per revenue passenger mile, contributed to a 5.3% increase in
passenger revenue to $5.3 billion despite the decreased capacity.

Cargo, mail and other revenue decreased 17.5%, $111 million, from 1994 to 1995,
principally as a result of the System One transactions, which were effective
April 27, 1995.

Wages, salaries and related costs decreased 6.5%, $100 million, from 1994 to
1995, primarily due to a reduction in the average number of full-time
equivalent employees from approximately 40,400 for the year ended December 31,
1994 to approximately 33,700 for the year ended December 31, 1995.  Such
decrease was partially offset by a $20 million cash payment to pilots upon
ratification of a new collective bargaining agreement, employee profit sharing
and other incentive programs, including the payment of bonuses for
Continental's on-time performance.  Wage rates were impacted by longevity pay
increases for substantially all employee groups, effective July 1, 1995.  In
addition, wage restorations relating to an average 10.0% wage reduction
implemented by the Company in July 1992 also increased wage rates.  Wage
reductions were restored in equal increments in December 1992, April 1993,
April 1994 and July 1994.





                                       31

<PAGE>   32
Aircraft fuel expense decreased 8.1%, $60 million, from 1994 to 1995.  The
quantity of jet fuel used dropped 7.7% from 1.3 billion gallons in 1994 to 1.2
billion gallons in 1995, principally reflecting capacity reductions and
increased stage lengths.  Such decrease was partially offset by a 2.8% increase
in the average price per gallon from 53.5 cents in 1994 to 55.0 cents in 1995.

Aircraft rentals increased 14.8%, $64 million, from 1994 to 1995, primarily as
a result of the delivery of new 737 and 757 aircraft from The Boeing Company
("Boeing") during late 1994 and throughout 1995.  Such increase was partially
offset by retirements and groundings of certain leased aircraft.

Commission expense increased 11.4%, $50 million, from 1994 to 1995, primarily
due to increased passenger revenue and higher average effective commission
rates associated with the Company's targeted travel initiatives and the
elimination of noncommissionable Continental Lite fares.

Maintenance, materials and repairs costs decreased 13.3%, $66 million, from
1994 to 1995, principally due to the replacement of older aircraft with new
aircraft, a reduction in the fleet size and the volume and timing of overhauls
as part of the Company's ongoing maintenance program.  Such decreases were
partially offset by the shift of scheduled maintenance work to outside
suppliers, which results in the entire cost of maintenance work performed by
outside suppliers being included in maintenance, materials and repairs costs,
whereas when Continental performs its own maintenance work, a portion of such
cost is classified as wages, salaries and related costs.

Other rentals and landing fees decreased by 9.2%, $36 million, from 1994 to
1995, principally due to reduced facility rentals and landing fees resulting
from downsizing operations.

Other operating expense decreased 6.3%, $88 million, from 1994 to 1995,
primarily as a result of the System One transactions, which were effective
April 27, 1995, coupled with decreases in advertising expense, aircraft
servicing expense and catering expense.  Such decreases were partially offset
by increases in reservations and sales expense and other miscellaneous expense.

Interest expense decreased 11.6%, $28 million, from 1994 to 1995, primarily due
to (i) the reduced accretion of deferred credits recorded in connection with
the Company's adjustment of operating leases to fair market value as of April
27, 1993 and (ii) principal reductions of long-term debt and capital lease
obligations.  Such decrease was partially offset by accrued interest on the
convertible secured debentures.

Interest capitalized decreased 64.7%, $11 million, from 1994 to 1995,
principally due to a decrease in the average balance of purchase deposits for
flight equipment.

Interest income increased 34.8%, $8 million, from 1994 to 1995, primarily due
to an increase in the average interest rate earned on investments coupled with
an increase in the average balance of cash and cash equivalents.





                                       32

<PAGE>   33
The Company recorded a pretax gain of $108 million related to the System One
transactions in Nonoperating Income (Expense) in the accompanying consolidated
statement of operations.  The tax provision related to these transactions
totaled $78 million (which differs from the federal statutory rate due to
certain nondeductible expenses), for a net gain of $30 million.

In 1995, the bankruptcy court approved a settlement resolving certain claims
filed by the Company for the return of certain aircraft purchase deposits.  As
a result of the settlement, the Company recorded a $12 million gain in 1995,
which was classified in Other, net in the accompanying consolidated statement
of operations.  These gains were partially offset by an additional provision of
$14 million for underutilized airport facilities and other assets (primarily
associated with Denver International Airport, "DIA") and a $5 million pretax
charge related to the purchase of warrants held by Air Canada.  The Company's
Other, net in 1994 included gains of $10 million relating primarily to a gain
on the sale of 10 aircraft from Beech Acceptance Corporation ("Beech") and five
spare engines, offset by foreign exchange losses of $5 million (primarily
related to Japanese yen-denominated transactions).  In addition, during the
fourth quarter of 1994, the Company recorded a provision of $447 million, which
included $278 million associated primarily with the planned early retirement of
certain aircraft and $169 million relating to closed or underutilized airport
and maintenance facilities and other assets.

Comparison of 1994 to 1993.  The Company recorded a consolidated loss of $613
million for the year ended December 31, 1994 as compared to a consolidated loss
before extraordinary gain of $1 billion for the year ended December 31, 1993.
The Company's net loss in 1994 included a provision of $447 million associated
with the planned early retirement of certain aircraft and closed or
underutilized airport and maintenance facilities and other assets.  The
Company's net income in 1993 included an extraordinary gain of $3.6 billion
primarily related to the discharge of prepetition debt obligations in
connection with the Reorganization.

Passenger revenue of $5 billion in 1994 decreased 1.5%, $79 million, from 1993
due primarily to a 1.7% decrease in Continental's jet revenue passenger miles
resulting from a 1.7% decrease in available seat miles.  Such decrease was
partially offset by a 0.8% increase in jet yields.  Fourth quarter results for
Continental Express, Inc. ("Express"), a wholly owned subsidiary of the
Company, in 1994 were adversely affected by an Airworthiness Directive issued
by the Federal Aviation Administration ("FAA"), which prohibited all airlines,
including Express, from flying  ATR-42 and ATR-72 aircraft during certain
atmospheric conditions.

Cargo, mail and other revenue decreased by 2.8%, $18 million, from 1993 to
1994, primarily as a result of Continental's termination of service to
Australia and New Zealand in October 1993 and poor weather in the eastern
United States in the first quarter of 1994.

Wages, salaries and related costs increased 2.0%, $30 million, from 1993 to
1994, due to higher wage rates, partially offset by a decrease in the average
number of full-time equivalent employees.  In July 1992, the Company
implemented an average 10.0% 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 average full-time equivalent
employees decreased from approximately 41,300 in 1993 to approximately 40,400
in 1994.





                                       33

<PAGE>   34
Aircraft fuel expense decreased 8.7%, $71 million, from 1993 to 1994, primarily
due to a 9.8% reduction in the average price per gallon from 59.3 cents in 1993
to 53.5 cents in 1994.  Such decrease was partially offset by a 7.7% increase
in the quantity of jet fuel used from 1.3 billion gallons in 1993 to 1.4
billion gallons in 1994, principally due to an increase in the frequency of
take-offs and landings associated with Continental Lite operations.

Aircraft rentals increased 4.3%, $18 million, from 1993 to 1994, primarily as a
result of the delivery of new Boeing 737 and 757 aircraft during 1994.  Such
increase was partially offset by retirements of leased aircraft and the full
year impact in 1994 of 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.

Commission expense decreased 20.6%, $114 million, from 1993 to 1994, primarily
due to a decrease in commissionable sales and a reduction in the aggregate
average commission rate.

Maintenance, materials and repairs costs decreased 9.5%, $52 million, from 1993
to 1994, primarily due to increased operational efficiencies and the retirement
of older aircraft.

Other rentals and landing fees increased 3.7%, $14 million, from 1993 to 1994.
Such increase was primarily due to increased landing fees resulting from
reduced segment lengths associated with Continental Lite operations.

Depreciation and amortization expense increased 7.9%, $19 million, from 1993 to
1994, due primarily to (i) an increase in aircraft operated under capital
leases during the fourth quarter of 1993, (ii) the amortization of incremental
capitalized costs associated with aircraft, and (iii) the annualized impact of
fresh start adjustments relating to aircraft, routes, gates and slots and
reorganization value in excess of amounts allocable to identifiable assets.

Other operating expense increased 3.8%, $51 million, from 1993 to 1994,
primarily as a result of increases in reservations and sales expense,
advertising expense and other miscellaneous expense, partially offset by a
decrease in catering expense.

The Company's interest expense increased 11.1%, $24 million, from 1993 to 1994,
due primarily to a net increase in debt on which the Company was required to
accrue interest.  As a result of its Chapter 11 filing, through April 1993, the
Company was not obligated to pay, and accordingly ceased accruing, contractual
interest on its unsecured and undersecured obligations.

Interest capitalized increased 70.0%, $7 million, from 1993 to 1994, due
primarily to an increase in 1994 in the average balance during the year of
purchase deposits for flight equipment.

Interest income increased 27.8%, $5 million, from 1993 to 1994, primarily due
to an increase in the average balance of cash and cash equivalents coupled with
an increase in the average interest rate.  Interest income earned on the
Company's investments during the period prior to April 28, 1993 was netted
against reorganization items in accordance with SOP 90-7.





                                       34

<PAGE>   35
Reorganization items, net, in 1993 included professional fees of $59 million,
accruals for rejected aircraft agreements of $153 million and other
miscellaneous adjustments of $34 million.  In addition, in the second quarter
of 1993, fresh start adjustments totaling $719 million were recorded relating
to the adjustment of assets and liabilities to fair market value as well as
other miscellaneous fresh start adjustments of $77 million.  These fresh start
adjustments were partially offset by the write-off of deferred gains on
sale/leaseback transactions of $219 million and interest income of $4 million.

The Company's Other, net in 1994 included gains of $10 million relating
primarily to a gain on the sale of 10 Beech aircraft and five spare engines,
offset by foreign exchange losses of $5 million (primarily related to Japanese
yen-denominated transactions).  In addition, during the fourth quarter of
1994, the Company recorded a provision of $447 million, which included $278
million associated primarily with the planned early retirement of certain
aircraft and $169 million relating to closed or underutilized airport and
maintenance facilities and other assets.  Other, net in 1993 included a gain of
$35 million related to System One's sale to Electronic Data Systems Corporation
("EDS") of substantially all of the assets of its Airline Services Division of
a subsidiary offset by foreign exchange losses (primarily related to Japanese
yen, German mark and British pound denominated transactions), charges totaling
$13 million related to the Company's termination of services to Australia and
New Zealand and other expense primarily related to the abandonment of airport
facilities.

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





                                       35

<PAGE>   36
CERTAIN STATISTICAL INFORMATION

An analysis of statistical information for Continental's jet operations for
each of the three years in the period ended December 31, 1995 is as follows:


<TABLE>
<CAPTION>
                                                Net Increase/                 Net Increase/
                                                  (Decrease)                    (Decrease)
                                      1995        1995-1994         1994        1994-1993          1993  
                                    --------    -------------     --------    -------------      --------
<S>                                   <C>          <C>              <C>           <C>              <C>
Revenue passenger
  miles (millions) (1)  . . . .        40,023       (3.8)%           41,588        (1.7)%           42,324
Available seat miles
  (millions) (2)  . . . . . . .        61,006       (7.4)%           65,861        (1.7)%           67,011
Block hours
  (thousands) (3) . . . . . . .         1,095       (4.6)%            1,148         1.1 %            1,135
Passenger load
  factor (4)  . . . . . . . . .          65.6%       2.5  pts.         63.1%       (0.1) pts.         63.2%
Breakeven passenger
  load factor (5) . . . . . . .          60.8%      (2.1) pts.         62.9%       (0.4) pts.         63.3%
Passenger revenue per
  available seat mile
  (cents) (6) . . . . . . . . .          8.20       13.6 %             7.22         0.7 %             7.17
Total revenue per
  available seat
  miles (cents) (7) . . . . . .          9.02       13.5 %             7.95         0.1 %             7.94
Operating cost per
  available seat mile
  (cents) (8) (11)  . . . . . .          8.36        6.4 %             7.86        (0.5)%             7.90
Operating cost per
  block hour (11) . . . . . . .        $4,655        3.3 %           $4,506        (3.4)%           $4,665
Average yield per
  revenue passenger
  mile (cents) (9)  . . . . . .         12.51        9.4 %            11.44         0.8 %            11.35
Average fare per
  revenue passenger . . . . . .       $133.21       18.2 %          $112.71        (9.3)%          $124.32
Revenue passengers
  (thousands) . . . . . . . . .        37,575      (11.0)%           42,202         9.3 %           38,628
Average length of
  aircraft flight (miles) . . .           836       15.0 %              727       (15.1)%              856
Average daily utilization
  of each aircraft
  (hours) (10)  . . . . . . . .          9:32       (4.2)%             9:57         2.2 %             9:44
Actual aircraft in fleet
  at end of period  . . . . . .           309       (6.4)%              330         4.4 %              316 
- ---------------                                                                                            
</TABLE>


 (1)      The number of scheduled miles flown by revenue passengers.





                                       36

<PAGE>   37
 (2)      The number of seats available for passengers multiplied by the number
          of scheduled miles those seats are flown.
 (3)      The number of hours an aircraft is operated in revenue service from
          gate to gate.  
 (4)      Revenue passenger miles divided by available seat miles.  
 (5)      The percentage of seats that must be occupied by revenue passengers 
          in order for the airline to break even on
          an income before income taxes basis, excluding nonrecurring charges,
          nonoperating items and other special items.
 (6)      Passenger revenue divided by available seat miles.
 (7)      Total revenue divided by available seat miles.
 (8)      Operating expenses divided by available seat miles.  Operating cost
          for the year ended December 31, 1993 included $37 million of
          nonrecurring items related to the Reorganization.
 (9)      The average revenue received for each mile a revenue passenger is
          carried.
(10)      The average block hours flown per day in revenue service per
          aircraft.
(11)      Operating cost and breakeven passenger load factor data for periods
          prior to April 28, 1993 are not comparable with data after April 27,
          1993.

LIQUIDITY AND CAPITAL COMMITMENTS

As part of the Company's Go Forward Plan, in January 1995, the Company
commenced a series of initiatives designed to improve liquidity in 1995 and
1996.  The major liquidity elements of this plan included (i) rescheduling
principal amortization under the Company's loan agreements with its primary
secured lenders (representing $599 million of the Company's outstanding
long-term debt at December 31, 1994), (ii) restructuring the Company's
commitments to purchase new Boeing aircraft and related engines, (iii)
deferring or reducing cash requirements associated with certain existing
aircraft, (iv) reducing the Company's lease commitments at DIA and (v)
evaluating the potential disposition of non-core assets.  As discussed below,
by implementing the liquidity elements of the Company's Go Forward Plan,
Continental improved its 1995 liquidity by approximately $250 million and
expects to improve its 1996 liquidity by approximately $275 million.

As of December 31, 1995, Continental and its consolidated subsidiaries had
approximately $1.9 billion (including current maturities) of long-term
indebtedness and capital lease obligations, and had approximately $615 million
of minority interest, preferred securities of trust, redeemable preferred stock
and common stockholders' equity.  As of February 1, 1996, the Company had
redeemed or repurchased the remaining outstanding convertible secured
debentures issued in connection with its renegotiation of aircraft leases.  If
the convertible secured debentures had been redeemed or repurchased as of
December 31, 1995, the ratio of long-term debt and capital lease obligations
(including current maturities) to common stockholders' equity, redeemable
preferred stock and preferred securities of trust would have been 3.0.  As of
December 31, 1994, the ratio of long-term debt and capital lease obligations
(including current maturities and debt in default) to common stockholders'
equity and redeemable preferred stock was 10.9.  Common stockholders' equity
reflects the adjustment of the Company's balance sheet and the recording of
assets and liabilities at fair market value as of April 27, 1993 in accordance
with SOP 90-7.





                                       37

<PAGE>   38
On March 31, 1995, the Company signed agreements with Boeing and certain engine
manufacturers to defer substantially all aircraft deliveries that had been
scheduled for 1996 and 1997.  Five Boeing 767 aircraft that had been scheduled
for delivery to Continental in 1995 were sold to a third party.  They were
replaced by five Boeing 767 aircraft to be delivered starting in 1998.  Options
to purchase additional aircraft were canceled.  Furthermore, on March 30, 1995
Continental amended its principal secured loan agreements with General Electric
Capital Corporation, General Electric Company and certain affiliates (any one
or more of such entities,  "GE") to defer 1995 and 1996 principal payments and
amended certain of its operating lease agreements with GE to defer 1995 rental
obligations.  In connection with the GE loan and lease agreement amendments,
Continental agreed, among other things, to obtain concessions from certain
aircraft lessors, all of which were subsequently obtained.

The Company retired from service 24 less-efficient widebody aircraft during
1995.  In February 1995, the Company began paying market rentals, which were
significantly less than contractual rentals on these aircraft, and began
ceasing all rental payments as the aircraft were removed from service.  In
addition, in the first quarter of 1995, Continental reduced its rental payments
on an additional 11 widebody aircraft leased at significantly above-market
rates.  These actions caused a significant number of defaults and cross
defaults in various long-term debt and capital lease and operating lease
agreements.  The Company began negotiations in February 1995 with the lessors
of (or lenders with respect to) these 35 widebody aircraft to amend the payment
schedules and provide alternative compensation, including, in certain cases,
convertible secured debentures in lieu of current cash payments.  The Company
reached resolutions covering all 35 widebody aircraft, thereby curing defaults
under the related agreements and the resulting cross defaults.  The last such
resolution was achieved during the fourth quarter of 1995.  In connection with
these resolutions, Continental issued convertible secured debentures in an
aggregate original principal amount of $158 million, entered into certain
agreements including restructured leases and made certain payments to lessors
and lenders.  As of February 1, 1996, all such debentures (including
payment-in-kind interest) had been repurchased or redeemed by the Company.

The Company had been in default under its lease of facilities at DIA.  On April
10, 1995, the Denver City Council approved an agreement among the City and
County of Denver, the Company and certain signatory airlines amending the
Company's lease by reducing the Company's lease term to five years, reducing to
10 the number of gates (and reducing associated space) leased by the Company
and making certain changes in the rates and charges under the lease.  The
agreement cured the default, and also provided for the release of certain
claims and the settlement of certain litigation filed by the City against the
Company.

The Company had also been in default under the debt agreement relating to the
financing of the Company's Los Angeles International Airport ("LAX")
maintenance facility.  On September 29, 1995, the Company consummated a
restructuring of such indebtedness, which involved the issuance of $65 million
in principal amount (including payment-in-kind interest of $2 million) of
unsecured indebtedness payable in installments between 1997 and 2000, in
exchange for all of the indebtedness and accrued but unpaid interest thereon
formerly secured by the Company's LAX maintenance facility and related
equipment.  This restructuring cured the defaults under the indebtedness and
related cross defaults.





                                       38

<PAGE>   39
As a result of an FAA Airworthiness Directive which forced the partial
grounding of the Company's ATR commuter fleet in late 1994 and early 1995, the
Company withheld lease payments totaling $8 million on those ATR aircraft
leased from the manufacturer.  In 1995, the Company settled its claims with
ATR.

Continental and its System One subsidiary entered into a series of transactions
on April 27, 1995 whereby a substantial portion of System One's assets
(including the travel agent subscriber base and travel-related information
management products and services software), as well as certain liabilities of
System One, were transferred to a newly formed limited liability company,
System One Information Management, L.L.C. ("LLC").  LLC is owned equally by
Continental CRS Interests, Inc. ("Continental CRS") (formerly System One, which
remains a wholly owned subsidiary of Continental), EDS and AMADEUS, a European
computerized reservation system ("CRS").  Substantially all of System One's
remaining assets (including the CRS software) and liabilities were transferred
to AMADEUS.  In addition to the one-third interest in LLC, Continental CRS
received cash proceeds of $40 million and an equity interest in AMADEUS valued
at $120 million, and outstanding indebtedness of $42 million of System One owed
to EDS was extinguished.  In connection with these transactions, the Company
recorded a pretax gain of $108 million, which amount was included in
Nonoperating Income (Expense) in the accompanying consolidated statement of
operations for the year ended December 31, 1995.  The related tax provision
totaled $78 million (which differs from the federal statutory rate due to
certain nondeductible expenses), for a net gain of $30 million.  System One's
revenue, included in Cargo, mail and other revenue, and related net earnings
were not material to the consolidated financial statements of Continental.

On September 29, 1995, Continental issued a secured promissory note (the
"Redemption Loan") with a principal amount of $21 million to GE in exchange for
its 202,784 shares of Series A 8% Cumulative Preferred Stock, together with
accumulated dividends thereon (representing all of the outstanding Series A 8%
Cumulative Preferred Stock).  The Redemption Loan bears interest at 8.0% per
annum from September 29, 1995 through March 31, 1996 and 9.86% per annum
thereafter.

The Company has also undertaken a variety of other activities intended to
strengthen its longer-term financing position and enhance earnings.  First, the
Company consummated an offering of 8-1/2% convertible trust originated
preferred securities ("TOPrS"), which are convertible into Class B common stock
of Continental at a price of $48.36 per share.  A portion of the $242 million
net proceeds of that offering was used to repurchase or redeem all of the
Company's convertible secured debentures issued in connection with the lease
renegotiations discussed above (which would otherwise have become convertible
into Class B common stock in August 1996 at a price of $26 per share).  An
additional portion of the net proceeds was used to repay obligations incurred
to aircraft lessors and lenders in connection with those renegotiations.
Second, in the third quarter of 1995, the Company purchased from Air Canada
warrants to purchase approximately 6.2 million shares of Continental's common
stock with exercise prices of $15 and $30 per share for $14 million in cash
(including a $5 million fee paid to a lender) and a $42 million one-year note 
(which note was repaid with a portion of the net proceeds of the TOPrS 
offering).  Third, the Company recorded a $30 million after-tax gain in the 
second quarter of 1995 in connection with the System One transactions, which 
increased liquidity by an additional $82 million, consisting of $40 million of 
cash proceeds and $42 million of outstanding indebtedness





                                       39

<PAGE>   40
extinguished.  Finally, on January 31, 1996, the Company consummated the
offering of $489 million of enhanced pass- through certificates that refinanced
the underlying debt associated with 18 leased aircraft and will reduce
Continental's annual operating lease expense by more than $15 million for the
affected aircraft.

The Company had, as of December 31, 1995, deferred tax assets aggregating $1.4
billion, including $860 million of net operating loss carryforwards ("NOLs").
The Company recorded a valuation allowance of $782 million against such assets
as of December 31, 1995.  Realization of a substantial portion of the Company's
remaining NOLs will require the completion by April 27, 1998 of transactions
resulting in recognition of built-in gains for federal income tax purposes.
Although the Company has consummated one such transaction involving System One,
as previously discussed, and currently intends to consummate one or more
additional transactions, in the event the Company were to determine in the
future that not all such transactions will be completed, an adjustment to the
net deferred tax liability of up to $116 million would be charged to income in
the period such determination was made.

As a result of NOLs, the Company does not currently expect to pay United States
federal income taxes (other than alternative minimum tax) prior to 1998.
Additionally, for financial reporting purposes in 1995, the Company has
utilized NOLs for which a tax benefit had not previously been recorded to
offset tax expense.  As of December 31, 1995, the Company had approximately
$200 million of such unbenefitted NOLs.  To the extent the Company's aggregate
taxable income after December 31, 1995 for financial statement purposes exceeds
such amount, it will record tax expense for financial statement purposes.
Section 382 of the Internal Revenue Code imposes limitations on a corporation's
ability to utilize NOLs if it experiences a more than 50% ownership change over
a three-year period.  No assurance can be given that future transactions,
whether within or outside the control of the Company, would not cause such a
change in ownership, thereby substantially restricting the use of NOLs in
future periods for both federal income tax and financial reporting purposes.

Continental has firm commitments to take delivery of three new 737 and two new
757 aircraft through early 1996 and 43 new jet aircraft during the years 1998
through 2002.  The estimated aggregate cost of these aircraft is $2.7 billion.
In connection with the rescheduling of jet aircraft deliveries, $72 million of
purchase deposits was returned to the Company in 1995.  In December 1994,
Express contracted with Beech for the purchase and financing of 25 Beech 1900-D
aircraft at an estimated aggregate cost of $104 million, excluding price
escalations.  As of December 31, 1995, 13 Beech 1900-D aircraft had been
delivered, of which eight had entered service by that date and five will enter
service in the first quarter of 1996.  The remaining 12 aircraft are scheduled
to be delivered in 1996.  The Company currently anticipates that the firm
financing commitments available to it with respect to its acquisition of new
aircraft from Boeing and Beech will be sufficient to fund all deliveries
scheduled during 1996.  Furthermore, the Company currently anticipates that it
will have remaining financing commitments from aircraft manufacturers of $575
million for jet aircraft deliveries beyond 1996.  The Company believes that
further financing will be needed to satisfy the remaining amount of such
capital commitments.  There can be no assurance that sufficient financing will
be available for all aircraft and other capital expenditures not covered by
firm financing commitments.





                                       40

<PAGE>   41
In addition, the Company recently purchased one DC-10-30 aircraft and entered
into an operating lease for another DC-10- 30 aircraft that are expected to be
placed into service by the end of the second quarter of 1996.

Continental expects its cash outlays for 1996 capital expenditures, exclusive
of aircraft acquisitions, to aggregate $120 million primarily relating to
mainframe, software application and automation infrastructure projects,
aircraft modifications and mandatory maintenance projects, passenger terminal
facility improvements and office, maintenance, telecommunications and ground
equipment.  Continental's capital expenditures during 1995 and 1994 aggregated
$41 million and $208 million, respectively, exclusive of aircraft acquisitions.

As of December 31, 1995, the Company had $747 million in cash and cash
equivalents, compared to $396 million as of December 31, 1994.  As of February
1, 1996, the Company had redeemed or repurchased the remaining outstanding
convertible secured debentures that had been issued in connection with its
renegotiation of aircraft leases, using $125 million in cash.  Net cash
provided by operating activities increased $306 million during 1995 compared to
1994, principally due to earnings improvement.  In addition, net cash provided
by investing activities increased $196 million, primarily as a result of (i)
cash proceeds received from the System One transactions in 1995, (ii) an
increase in purchase deposits returned in 1995 due to canceled aircraft
options, delivery deferrals or delivery of aircraft, (iii) higher capital
expenditures during 1994 relating to purchase deposits on jet and turboprop
aircraft and (iv) expenditures in 1994 relating to the Company's discontinued
Continental Lite operations and Continental's investment in America West
Airlines, Inc.  Net cash used by financing activities in 1995 compared to 1994
decreased $174 million, primarily due to cash proceeds received from the TOPrS
offering offset by an increase in payments on long-term debt and capital lease
obligations.

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

Approximately $144 million and $119 million of cash and cash equivalents at
December 31, 1995 and 1994, respectively, were held in restricted arrangements
relating primarily to payments for workers' compensation claims and in
accordance with the terms of certain other agreements.  Continental and
Continental Micronesia, Inc. ("CMI"), a 91%-owned subsidiary of the Company,
have secured borrowings from GE which as of December 31, 1995 aggregated $634
million.  CMI's secured loans contain significant financial covenants,
including requirements to maintain a minimum cash balance and consolidated net
worth, restrictions on unsecured borrowings and mandatory prepayments on the
sale of most assets.  These financial covenants limit the ability of CMI to pay
dividends to Continental.  As of December 31, 1995, CMI had a minimum cash
balance requirement of $29 million.  In addition, certain of Continental's
secured loans require the Company to, among other things, maintain a minimum
monthly operating cash flow and cumulative operating cash flow, a minimum
monthly cash balance and a minimum ratio of operating cash flow to fixed
charges.  Continental also is prohibited generally from paying cash dividends
in respect of its capital stock, from purchasing or prepaying indebtedness and
from incurring additional secured indebtedness.  In addition, to the extent
Continental's actual quarterly average cash balances exceed certain forecasts,
a portion of such excess cash is required to be used to prepay certain loan
obligations to GE.





                                       41

<PAGE>   42
The Company has entered into petroleum option contracts to protect against a
sharp increase in jet fuel prices, and CMI has entered into average rate option
contracts to hedge a portion of its Japanese yen-denominated ticket sales
against a significant depreciation in the value of the yen versus the United
States dollar.  The petroleum option contracts generally cover the Company's
forecasted jet fuel needs for the next three to six months, and the average
rate option contracts cover a portion of CMI's yen-denominated ticket sales for
the next six to 10 months.  At December 31, 1995 and 1994, the Company had
petroleum option contracts outstanding with an aggregate contract value of $175
million and $140 million, respectively, and at December 31, 1995, CMI had an
average rate option contract outstanding with a contract value of $185 million.
At December 31, 1995 and 1994, the fair value of the option contracts was
immaterial.  The Company and CMI are exposed to credit loss in the event of
nonperformance by the counterparties on the option contracts; however,
management does not anticipate nonperformance by these counterparties.  The
amount of such exposure is generally the unrealized gains, if any, on such
option contracts.

Management believes that the Company's costs are likely to be affected in 1996
by, among other factors, (i) increased wages, salaries and benefits, (ii)
higher aircraft rental expense as new aircraft are delivered, (iii) changes in
the costs of materials and services (in particular, the cost of fuel, which can
fluctuate significantly in response to global market conditions), (iv) changes
in governmental regulations and taxes affecting air transportation and the
costs charged for airport access, (v) changes in the Company's fleet and
related capacity and (vi) the Company's continuing efforts to reduce costs
throughout its operations.

NEW ACCOUNTING STANDARDS

In March 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 121 - "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed of" ("SFAS 121"),
which requires impairment losses to be recorded on long-lived assets used in
operations when indicators of impairment are present and the undiscounted cash
flows estimated to be generated by those assets are less than the related
assets' carrying amount.  The impairment loss is measured by comparing the fair
value of the asset to its carrying amount.  SFAS 121 also addresses the
accounting for long-lived assets that are expected to be disposed of.  The
Company will adopt SFAS 121 in the first quarter of 1996.  Due to the
significant number of operating assets the Company maintains and the extensive
number of estimates that must be made to assess the impact of SFAS 121, the
financial statement impact has not yet been determined.

In October 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 123 - "Accounting for Stock-Based
Compensation" ("SFAS 123").  Under the provisions of SFAS 123, companies can
elect to account for stock-based compensation plans using a fair value based
method or continue measuring compensation expense for those plans using the
intrinsic value method prescribed by Accounting Principles Board Opinion No. 25
- - "Accounting for Stock Issued to Employees" ("APB 25").  SFAS 123 requires
that companies electing to continue using the intrinsic value method must make
proforma disclosures of net income and earnings per share as if the fair value
based method had been applied.  The Company's required adoption date for SFAS
123 is January 1, 1996.  The Company anticipates that it will continue to
account for stock-based compensation using APB 25; therefore, SFAS 123 is not
expected to have an impact on the Company's results of operations or financial
position.





                                       42

<PAGE>   43



I
TEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

Index to Consolidated Financial Statements


<TABLE>
<CAPTION>
                                                                            Page No.
                                                                            --------
<S>                                                                             <C>
Report of Independent Auditors                                                   F-2
                                                               
Consolidated Statements of Operations for each of the          
   Three Years in the Period Ended December 31, 1995                             F-3
                                                               
Consolidated Balance Sheets as of December 31, 1995 and 1994                     F-5
                                                               
Consolidated Statements of Cash Flows for each of the          
   Three Years in the Period Ended December 31, 1995                             F-7
                                                               
Consolidated Statements of Redeemable and Nonredeemable        
   Preferred Stock and Common Stockholders' Equity             
   (Deficit) for each of the Three Years in the Period         
   Ended December 31, 1995                                                      F-10
                                                               
Notes to Consolidated Financial Statements                                      F-13

</TABLE>
                                                       





                                     F-1

<PAGE>   44

                         REPORT OF INDEPENDENT AUDITORS


The Board of Directors and Stockholders
Continental Airlines, Inc.

We have audited the accompanying consolidated balance sheets of Continental
Airlines, Inc. (the "Company") as of December 31, 1995 and 1994, and the
related consolidated statements of operations, redeemable and non-redeemable
preferred stock and common stockholders' equity and cash flows for each of the
two years in the period ended December 31, 1995 and for the period April 28,
1993 through December 31, 1993.  We have also audited the accompanying
consolidated statements of operations, redeemable and nonredeemable preferred
stock and common stockholders' equity and cash flows for the period from
January 1, 1993 through April 27, 1993 of Continental Airlines Holdings, Inc.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.

We conducted our audits in accordance with generally accepted auditing
standards.  Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement.  An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements.  An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation.  We believe that our audits provide a reasonable basis
for our opinion.

As discussed in Note 2 to the consolidated financial statements, the Company's
consolidated Plan of Reorganization was confirmed by the bankruptcy court on
April 16, 1993 and became effective April 27, 1993.  As a result, Continental
Airlines Holdings, Inc. (the "Predecessor Company") merged with and into the
Company (the "Reorganized Company") effective April 27, 1993.  The Company also
adopted fresh start reporting effective April 27, 1993 and, as a result, the
consolidated financial information for the period after April 27, 1993 is
presented on a different basis of accounting than for the period before April
28, 1993 and, therefore, is not comparable.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of the
Company at December 31, 1995 and 1994, the consolidated results of its
operations and its cash flows for each of the two years in the period ended
December 31, 1995 and the period from April 28, 1993 to December 31, 1993 and
the consolidated results of operations and cash flows of Continental Airlines
Holdings, Inc., for the period from January 1, 1993 through April 27, 1993, in
conformity with generally accepted accounting principles.


                                                               ERNST & YOUNG LLP

Houston, Texas
February 12, 1996






                                     F-2

<PAGE>   45
                           CONTINENTAL AIRLINES, INC.
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                (In millions of dollars, except per share data)


<TABLE>
<CAPTION>
                                                                                                     Predecessor
                                                          Reorganized Company                          Company   
                                             ------------------------------------------------        ------------       
                                                                                 Period from                       
                                                                               Reorganization        Period from  
                                                                                 (April 28,           January 1,  
                                              Year Ended December 31,           1993 through         1993 through 
                                             ------------------------           December 31,           April 27,   
                                              1995              1994                1993)                1993     
                                             ------            ------          --------------        ------------
<S>                                          <C>               <C>                  <C>               <C>
Operating Revenue:
  Passenger . . . . . . . . . . . . . . .    $5,302            $5,036               $3,493            $ 1,622
  Cargo, mail and other . . . . . . . . .       523               634                  417                235
                                             ------            ------               ------            -------
                                              5,825             5,670                3,910              1,857
                                             ------            ------               ------            -------
Operating Expenses:
  Wages, salaries and related costs . . .     1,432             1,532                1,000                502
  Aircraft fuel . . . . . . . . . . . . .       681               741                  540                272
  Aircraft rentals  . . . . . . . . . . .       497               433                  261                154
  Commissions   . . . . . . . . . . . . .       489               439                  378                175
  Maintenance, materials and repairs  . .       429               495                  363                184
  Other rentals and landing fees  . . . .       356               392                  258                120
  Depreciation and amortization   . . . .       253               258                  162                 77
  Other   . . . . . . . . . . . . . . . .     1,303             1,391                  853                487
                                             ------            ------               ------            -------
                                              5,440             5,681                3,815              1,971
                                             ------            ------               ------            -------

Operating Income (Loss) . . . . . . . . .       385               (11)                  95               (114)
                                             ------            ------               ------            -------
Nonoperating Income (Expense):
  Interest expense  . . . . . . . . . . .      (213)             (241)                (165)               (52)
  Interest capitalized  . . . . . . . . .         6                17                    8                  2
  Interest income . . . . . . . . . . . .        31                23                   14                  -
  Gain on System One transactions . . . .       108                 -                    -                  -
  Reorganization items, net . . . . . . .         -                 -                    -               (818)
  Other, net  . . . . . . . . . . . . . .        (7)             (439)                  (4)                 5
                                             ------            ------               ------            -------
                                                (75)             (640)                (147)              (863)
                                             ------            ------               ------            -------

Income (Loss) before Income
  Taxes, Minority Interest and  
  Extraordinary Gain  . . . . . . . . . .       310              (651)                 (52)              (977)

Income Tax (Provision) Benefit  . . . . .       (78)               42                   13                 (2)
                                             ------            ------               ------            -------
</TABLE>


                                                        (continued on next page)

                                     F-3

<PAGE>   46
                           CONTINENTAL AIRLINES, INC.
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                (In millions of dollars, except per share data)


<TABLE>
<CAPTION>
                                                                                                      Predecessor
                                                          Reorganized Company                           Company   
                                             -------------------------------------------------        ------------       
                                                                                  Period from                       
                                                                                Reorganization        Period from  
                                                                                  (April 28,           January 1,  
                                              Year Ended December 31,            1993 through         1993 through 
                                             -------------------------           December 31,           April 27,   
                                              1995               1994                1993)                1993     
                                             ------             ------          --------------        ------------
<S>                                          <C>                <C>                 <C>                <C>
Income (Loss) before Minority
  Interest and Extraordinary Gain . . . .   $  232              $  (609)            $ (39)             $ (979)

Minority Interest . . . . . . . . . . . .       (6)                  (4)                -                   -

Distributions on Preferred
  Securities of Trust . . . . . . . . . .       (2)                   -                 -                   -
                                            ------              -------            ------              ------
Income (Loss) before
  Extraordinary Gain  . . . . . . . . . .      224                 (613)              (39)               (979)

Extraordinary Gain  . . . . . . . . . . .        -                    -                 -               3,619
                                            ------              -------            ------              ------
 
Net Income (Loss) . . . . . . . . . . . .      224                 (613)              (39)              2,640

Preferred Dividend Requirements and
  Accretion to Liquidation Value  . . . .       (9)                  (6)               (3)                  -
                                            ------              -------            ------              ------
Income (Loss) Applicable to
  Common Shares . . . . . . . . . . . . .   $  215              $  (619)           $  (42)             $2,640
                                            ======              =======            ======              ======
Earnings (Loss) per Common
  and Common Equivalent Share . . . . . .   $ 7.20              $(23.76)           $(2.33)             $N.M.*
                                            ======              =======            ======              ======
Earnings (Loss) per Common Share
  Assuming Full Dilution    . . . . . . .   $ 6.29              $(23.76)           $(2.33)             $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.



                                     F-4


<PAGE>   47
                           CONTINENTAL AIRLINES, INC.
                          CONSOLIDATED BALANCE SHEETS
                (In millions of dollars, except for share data)


<TABLE>
<CAPTION>
                                                                              December 31,       December 31,
             ASSETS                                                               1995               1994
                                                                              ------------       ------------
<S>                                                                             <C>                 <C>
Current Assets:
   Cash and cash equivalents, including restricted cash
    and cash equivalents of $144 and $119, respectively . . . . . . . . .     $  747              $  396
   Accounts receivable, net of allowance for doubtful
    receivables of $44 and $38, respectively  . . . . . . . . . . . . . .        351                 376
   Spare parts and supplies, net of allowance for
    obsolescence of $36 and $36, respectively . . . . . . . . . . . . . .        127                 142
   Prepayments and other  . . . . . . . . . . . . . . . . . . . . . . . .         90                  76
                                                                              ------              ------
      Total current assets  . . . . . . . . . . . . . . . . . . . . . . .      1,315                 990
                                                                              ------              ------

Property and Equipment:
   Owned property and equipment:
    Flight equipment  . . . . . . . . . . . . . . . . . . . . . . . . . .      1,107               1,004
    Other  . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . .        288                 282
                                                                              ------              ------
                                                                               1,395               1,286
    Less:  Accumulated depreciation . . . . . . . . . . . . . . . . . . .      1,110               1,079
                                                                              ------              ------
                                                                               1,110               1,079
                                                                              ------              ------

   Purchase deposits for flight equipment . . . . . . . . . . . . . . . .         48                 166
                                                                              ------              ------

   Capital leases:
    Flight equipment  . . . . . . . . . . . . . . . . . . . . . . . . . .        394                 400
    Other   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         28                  17
                                                                              ------              ------
                                                                                 422                 417
    Less:  Accumulated amortization . . . . . . . . . . . . . . . . . . .        119                  69
                                                                              ------              ------
                                                                                 303                 348
                                                                              ------              ------
     Total property and equipment . . . . . . . . . . . . . . . . . . . .      1,461               1,593
                                                                              ------              ------
Other Assets:
   Routes, gates and slots, net of accumulated amortization
    of $154 and $97, respectively . . . . . . . . . . . . . . . . . . . .      1,531               1,591
   Reorganization value in excess of amounts allocable to
    identifiable assets, net of accumulated amortization of $46
    and $31, respectively   . . . . . . . . . . . . . . . . . . . . . . .        251                 318
                                                                                      
   Investments  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        163                  17
   Other assets, net  . . . . . . . . . . . . . . . . . . . . . . . . . .        100                  92
                                                                              ------              ------
   Total other assets   . . . . . . . . . . . . . . . . . . . . . . . . .      2,045               2,018
                                                                              ------              ------
                                                                                      
    Total Assets  . . . . . . . . . . . . . . . . . . . . . . . . . . . .     $4,821              $4,601
                                                                              ======              ======
</TABLE>


                                                        (continued on next page)

<PAGE>   48
                           CONTINENTAL AIRLINES, INC.
                          CONSOLIDATED BALANCE SHEETS
                (In millions of dollars, except for share data)


<TABLE>
<CAPTION>
                                                                               December 31,         December 31,
LIABILITIES AND STOCKHOLDERS' EQUITY                                              1995                 1994      
                                                                               ------------         ------------
<S>                                                                             <C>                   <C>
Current Liabilities:
   Debt and capital lease obligations in default  . . . . . . . . . . . . . .   $      -              $   490
   Current maturities of long-term debt . . . . . . . . . . . . . . . . . . .        163                  126
   Current maturities of capital leases . . . . . . . . . . . . . . . . . . .         58                   26
   Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        617                  630
   Air traffic liability  . . . . . . . . . . . . . . . . . . . . . . . . . .        579                  584
   Accrued payroll and pensions . . . . . . . . . . . . . . . . . . . . . . .        181                  179
   Accrued other liabilities  . . . . . . . . . . . . . . . . . . . . . . . .        386                  373
                                                                                --------              -------
    Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . .      1,984                2,408
                                                                                --------              -------

Long-Term Debt  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      1,352                1,038
                                                                                --------              -------

Capital Leases  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        306                  164
                                                                                --------              -------

Deferred Credits and Other Long-Term Liabilities:
   Deferred income taxes  . . . . . . . . . . . . . . . . . . . . . . . . . .         46                   28
   Deferred credit - aircraft operating leases  . . . . . . . . . . . . . . .         97                  138
   Accruals for aircraft retirements and excess facilities  . . . . . . . . .        175                  392
   Other  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        246                  251
                                                                                --------              -------
    Total deferred credits and other long-term liabilities  . . . . . . . . .        564                  809
                                                                                --------              -------

Commitments and Contingencies

Minority Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         27                   26
                                                                                --------              -------

Continental-Obligated Mandatorily Redeemable Preferred
   Securities of Trust  . . . . . . . . . . . . . . . . . . . . . . . . . . .        242                    -
                                                                                --------              -------

Redeemable Preferred Stock (aggregate redemption value -
   $41 and $56, respectively) . . . . . . . . . . . . . . . . . . . . . . . .         41                   53
                                                                                --------              -------

Common Stockholders' Equity:
   Class A common stock - $.01 par, 50,000,000 shares
    authorized; 6,301,056 shares issued and outstanding at
    December 31, 1995 and 1994  . . . . . . . . . . . . . . . . . . . . . . .          -                    -
   Class B common stock - $.01 par, 100,000,000 shares
    authorized; 21,428,274 shares issued and outstanding at
    December 31, 1995; 20,403,512 shares issued and
    20,373,512 shares outstanding at December 31, 1994  . . . . . . . . . . .          -                    -
   Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . .        733                  778
   Accumulated deficit  . . . . . . . . . . . . . . . . . . . . . . . . . . .       (428)                (652)
   Unvested portion of restricted stock . . . . . . . . . . . . . . . . . . .        (10)                 (14)
   Additional minimum pension liability . . . . . . . . . . . . . . . . . . .         (8)                  (7)
   Unrealized gain (loss) on marketable equity securities . . . . . . . . . .         18                   (2)
   Treasury stock - 30,000 shares in 1994 . . . . . . . . . . . . . . . . . .          -                    -
                                                                                --------              -------
    Total common stockholders' equity   . . . . . . . . . . . . . . . . . . .        305                  103
                                                                                --------              -------
    Total Liabilities and Stockholders' Equity  . . . . . . . . . . . . . . .   $  4,821              $ 4,601
                                                                                ========              =======
</TABLE>


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

                                      F-6

<PAGE>   49
                           CONTINENTAL AIRLINES, INC.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (In millions of dollars)



<TABLE>
<CAPTION>
                                                                                                    Predecessor
                                                          Reorganized Company                         Company   
                                                --------------------------------------------       -------------
                                                                               Period from                         
                                                                              Reorganization        Period from    
                                                                                (April 28,           January 1,    
                                                Year Ended December 31,        1993 through         1993 through   
                                               -------------------------       December 31,           April 27,     
                                                 1995              1994           1993)                 1993     
                                               -------            ------     ----------------      -------------
<S>                                              <C>              <C>           <C>                <C>

Cash Flows From Operating
   Activities:
   Net income (loss)  . . . . . . . . . .        $224             $(613)        $(39)              $2,640
   Adjustments to reconcile net income                                                                   
    (loss) to net cash provided by
    operating activities:
     Depreciation and amortization  . . .         253               258          162                   77
     Provision for aircraft and
      facilities  . . . . . . . . . . . .          14               447            -                    -
     Extraordinary credit - gain on
      discharge of debt, net                        -                 -            -               (3,619)
     Reorganization items, net                      -               779 
     Gain on System One transactions             (108)                -            -                    -
     Other, net . . . . . . . . . . . . .         103               (52)         (38)                 (20)
     Changes in operating assets and
      liabilities:  
      (Increase) decrease in accounts
       receivable . . . . . . . . . . . .         (21)              (64)         113                 (133)
      (Increase) decrease in spare                                                     
       parts and supplies . . . . . . . .          (8)              (10)           3                    -
      (Increase) decrease in                                                           
       prepayments and other assets . . .         (59)              (12)          14                   34
      Increase in accounts payable  . . .          48                89           15                   75 
      Increase (decrease) in air                                                       
       traffic liability  . . . . . . . .          (5)               (7)         (96)                 110
      Increase (decrease) in accrued                                                   
       liabilities, deferred credits                                                   
       and other  . . . . . . . . . . . .         (92)                7          (69)                 130
                                                 ----             -----         ----               ------
    Net cash provided by operating                                                     
     activities . . . . . . . . . . . . .         349                43           65                   73
                                                 ----             -----         ----               ------
</TABLE>
                                                   


                                                    (continued on next page)



                                      F-7

<PAGE>   50
                           CONTINENTAL AIRLINES, INC.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (In millions of dollars)

<TABLE>
<CAPTION>
                                                                                                  Predecessor
                                                          Reorganized Company                      Company
                                           -----------------------------------------------       ------------
                                                                             Period from
                                                                            Reorganization       Period from
                                                                              (April 28,          January 1,
                                              Year Ended December 31,        1993 through        1993 through
                                           -----------------------------      December 31,         April 27,
                                              1995               1994            1993)                1993     
                                           ----------         ----------   ----------------      ------------
<S>                                        <C>                   <C>           <C>                    <C>
Cash Flows from Investing Activities:
   Proceeds from disposition of
    property, equipment and
    other assets  . . . . . . . . . . . .  $  60                 $  29         $   4                  $  36 
                                                                                                                    
   Capital expenditures, net of
    returned purchase deposits  . . . . .    (82)                 (227)         (236)                   (67)
   Purchase deposits refunded in
    connection with aircraft delivered. .     97                    96             -                      - 
   Investment in America West . . . . . .      -                   (19)            -                      -
                                           -----                 -----         -----                  -----
   Net cash provided (used)
    by investing activities . . . . . . .     75                  (121)         (232)                   (31)
                                           -----                 -----         -----                  -----
Cash Flows from Financing Activities:
   Net proceeds from issuance of
    long-term debt. . . . . . . . . . . .      9                    33            90                    308
   Payments on long-term debt and
    capital lease obligations . . . . . .   (323)                 (280)         (121)                  (106)
   Net proceeds from issuance of
    preferred and common stock                13                     -           153                    122
   Net proceeds from issuance of
    preferred securities of trust . . . .    242                     -             -                      -
   Purchase of warrants . . . . . . . . .    (14)                    -             -                      -
                                           -----                 -----         -----                  -----
   Net cash provided (used) by
    financing activities  . . . . . . . .    (73)                 (247)         (247)                   324
                                           -----                 -----         -----                  -----
Net Increase (Decrease) in
   Cash and Cash Equivalents  . . . . . .    351                  (325)          (45)                   366

Cash and Cash Equivalents
   Beginning of Period  . . . . . . . . .    396                   721           766                    400
                                           -----                 -----         -----                  -----

Cash and Cash Equivalents
   End of Period  . . . . . . . . . . . .  $ 747                 $ 396         $ 721                  $ 766
                                           =====                 =====         =====                  =====
</TABLE>


                                                        (continued on next page)




                                     F-8

<PAGE>   51
                           CONTINENTAL AIRLINES, INC.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (In millions of dollars)

<TABLE>
<CAPTION>
                                                                                                    Predecessor
                                                         Reorganized Company                          Company   
                                         ---------------------------------------------------        ------------
                                                                               Period from
                                                                              Reorganization        Period from
                                                                                (April 28,           January 1,
                                              Year Ended December 31,          1993 through         1993 through
                                         ---------------------------------     December 31,           April 27,
                                              1995               1994             1993)                 1993     
                                         --------------     --------------   ----------------       ------------
<S>                                        <C>                  <C>                <C>                   <C>
Supplemental Cash Flows Information:
    Interest paid . . . . . . . . . . . .  $ 179                 $ 202             $  93                 $  31 
    Income taxes paid . . . . . . . . . .  $  11                 $   -             $   -                 $   - 

Financing and Investing Activities                                                                             
   Not Affecting Cash:                                                                                         
                                                                                                               
   Reclassification of accrued rent,                                                                           
    capital leases and interest to                                                                             
    long-term debt  . . . . . . . . . . .  $  65                 $  28             $  73                 $ 113 
                                                                                                               
   Capitalization of operating leases                                                                          
    due to renegotiated terms . . . . . .  $   -                 $   -             $ 137                 $   - 
                                                                                                               
   Property and equipment acquired                                                                             
    through the issuance of debt  . . . .  $  92                 $  10             $   2                 $   - 
                                                                                                               
   Investment in AMADEUS                                                                                       
    acquired in connection with                                                                                
    System One transactions . . . . . . .  $ 120                 $   -             $   -                 $   - 
                                                                                                               
   Reduction of debt in connection                                                                             
    with System One transactions  . . . .  $  42                 $   -             $   -                 $   - 
                                                                                                               
   Issuance of debt in connection                                                                              
    with purchase of Air Canada                                                                                
    warrants. . . . . . . . . . . . . . .  $  42                 $   -             $   -                 $   - 
                                                                                                               
   Issuance of convertible secured                                                                             
    debentures in connection with                                                                              
    the aircraft settlements  . . . . . .  $ 158                 $   -             $   -                 $   - 
                                                                                                               
   Exchange of preferred stock                                                                                 
    for long-term debt  . . . . . . . . .  $  21                 $   -             $   -                 $   - 
</TABLE>


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




                                      F-9

<PAGE>   52
                           CONTINENTAL AIRLINES, INC.
            CONSOLIDATED STATEMENTS OF REDEEMABLE AND NONREDEEMABLE
           PREFERRED STOCK AND COMMON STOCKHOLDERS' EQUITY (DEFICIT)
                            (In millions of dollars)

<TABLE>
<CAPTION>
                                                                                         Additional
                                                                        Preferred         Paid-In        Accumulated
                                                                          Stock           Capital          Deficit       Other  
                                                                        ---------        ----------      -----------     -----
<S>                                                                         <C>            <C>            <C>            <C>
Balance, December 31, 1992  . . . . . . . . . . . . . . . . . . . . .       $102           $1,095         $(4,949)       $(12)

Net Income (January 1, 1993 - April 27, 1993) . . . . . . . . . . . .          -                -           2,640           -
Reorganization Items: 
  Fresh Start Adjustments . . . . . . . . . . . . . . . . . . . . . .          -                -           2,309          12
  Cancelation of Stock  . . . . . . . . . . . . . . . . . . . . . . .       (102)          (1,095)              -           -
  Issuance of Stock in Connection with Emergence from Bankruptcy  . .         43              615               -           -
                                                                            ----           ------         -------        ----
Balance, April 27, 1993 . . . . . . . . . . . . . . . . . . . . . . .         43              615               -           -

Net Loss (April 28, 1993 - December 31, 1993) . . . . . . . . . . . .          -                -             (39)          -
Issuance of Stock in Connection with Public Offering  . . . . . . . .          -              153               -           -
Accumulated Unpaid Dividends:
  8% Cumulative Redeemable Preferred Stock  . . . . . . . . . . . ..           1               (1)              -           -
  12% Cumulative Redeemable Preferred Stock . . . . . . . . . . . . .          3               (3)              -           -
Additional Minimum Pension Liability  . . . . . . . . . . . . . . . .          -                -               -          (6)
                                                                            ----           ------         -------        ----
Balance, December 31, 1993  . . . . . . . . . . . . . . . . . . . . .         47              764             (39)         (6)

Net Loss  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          -                -            (613)          -
Restricted Stock Grant to Employees . . . . . . . . . . . . . . . . .          -               20               -         (20)
Amortization of Restricted Stock Grants . . . . . . . . . . . . . . .          -                -               -           6
Accumulated Unpaid Dividends:
  8% Cumulative Redeemable Preferred Stock  . . . . . . . . . . . . .          2               (2)              -           -
  12% Cumulative Redeemable Preferred Stock . . . . . . . . . . . . .          4               (4)              -           -
Additional Minimum Pension Liability  . . . . . . . . . . . . . . . .          -                -               -          (1)
Unrealized Loss on Marketable Equity Securities . . . . . . . . . . .          -                -               -          (2)
                                                                            ----           ------         -------        ----
Balance, December 31, 1994  . . . . . . . . . . . . . . . . . . . . .         53              778            (652)        (23)
</TABLE>

                                                        (continued on next page)




                                     F-10

<PAGE>   53
                           CONTINENTAL AIRLINES, INC.
            CONSOLIDATED STATEMENTS OF REDEEMABLE AND NONREDEEMABLE
           PREFERRED STOCK AND COMMON STOCKHOLDERS' EQUITY (DEFICIT)
                            (In millions of dollars)



<TABLE>
<CAPTION>
                                                                                    Additional
                                                                  Preferred          Paid-In       Accumulated
                                                                    Stock            Capital         Deficit       Other  
                                                                  ---------         ----------     -----------     -----
<S>                                                                  <C>               <C>            <C>        <C>
Net Income  . . . . . . . . . . . . . . . . . . . . . . . . . .      $  -              $   -           $  224      $  -
Purchase of Warrants  . . . . . . . . . . . . . . . . . . . . .         -                (51)               -         -
Accumulated Dividends:
  8% Cumulative Redeemable Preferred Stock  . . . . . . . . . .         2                 (2)               -         -
  12% Cumulative Redeemable Preferred Stock . . . . . . . . . .         2                 (2)               -         -
  Series A 12% Cumulative Preferred Stock . . . . . . . . . . .         2                 (2)               -         -
Issuance of Note in Exchange for Series A 8% Cumulative
  Preferred Stock . . . . . . . . . . . . . . . . . . . . . . .       (18)                (3)               -         -
Additional Minimum Pension Liability  . . . . . . . . . . . . .         -                  -                -        (1)
Unrealized Gain on Marketable Equity Securities . . . . . . . .         -                  -                -        20
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         -                 15                -         4
                                                                     ----              -----           ------      ----
Balance, December 31, 1995  . . . . . . . . . . . . . . . . . .      $ 41              $ 733           $ (428)     $  -
                                                                     ====              =====           ======      ====
</TABLE>





                                     F-11

<PAGE>   54
                           CONTINENTAL AIRLINES, INC.
            CONSOLIDATED STATEMENTS OF REDEEMABLE AND NONREDEEMABLE
                PREFERRED STOCK AND COMMON STOCKHOLDERS' EQUITY
                               NUMBER OF SHARES


<TABLE>
<CAPTION>
                                                       Redeemable   Nonredeemable     Class A    Class B
                                                        Preferred     Preferred       Common     Common    Other Common  Treasury
                                                         Stock          Stock          Stock      Stock       Stock       Stock
                                                       ----------   -------------     --------   --------  -----------   -------- 
<S>                                                       <C>          <C>            <C>        <C>        <C>          <C>
Balance, December 31, 1992  . . . . . . . . . . . . . .   30,139      53,464,921             -            -   47,001,212   597,539

Conversion of 6-3/4% Nonredeemable
  Preferred to Common . . . . . . . . . . . . . . . . .        -          (2,550)            -            -        1,700         -
Reorganization Items:
  Cancelation of Stock  . . . . . . . . . . . . . . . .  (30,139)    (53,462,371)            -            -  (47,002,912) (597,539)
  Issuance of Stock in Connection
   with Emergence from Bankruptcy   . . . . . . . . . .  471,000               -     6,013,216   11,422,773            -         -
                                                        --------     -----------     ---------   ----------  -----------   -------  
Balance, April 27, 1993 . . . . . . . . . . . . . . . .  471,000               -     6,013,216   11,422,773            -         -

Issuance of Stock in Connection
  with Public Offering  . . . . . . . . . . . . . . . .        -               -             -    8,086,579            -         -
                                                        --------     -----------     ---------   ----------  -----------   -------  
Balance, December 31, 1993  . . . . . . . . . . . . . .  471,000               -     6,013,216   19,509,352            -         -

Conversion of Class B to Class A Common Stock
  by Air Canada . . . . . . . . . . . . . . . . . . . .        -               -       287,840     (287,840)           -         -
Restricted Stock Grant to Employees . . . . . . . . . .        -               -             -    1,182,000            -         
                                                                                                                
Forfeiture of Restricted Class B Common Stock . . . . .        -               -             -      (30,000)           -    30,000
                                                        --------     -----------     ---------   ----------  -----------   -------  
Balance, December 31, 1994  . . . . . . . . . . . . . .  471,000               -     6,301,056   20,373,512            -    30,000

Cancelation of 8% and 12% Cumulative Redeemable
  Preferred Stock . . . . . . . . . . . . . . . . . . . (471,000)              -             -            -            -         -
Issuance of Series A 8% and 12% Cumulative
  Preferred Stock . . . . . . . . . . . . . . . . . . .  589,142               -             -            -            -         -
Issuance of Note in Exchange for
  Series A 8% Cumulative Preferred Stock  . . . . . . . (202,784)              -             -            -            -         -
Forfeiture of Restricted Class B Common Stock . . . . .        -               -             -      (27,500)           -    27,500
Reissuance of Treasury Stock  . . . . . . . . . . . . .        -               -             -            -            -   (57,500)
Other . . . . . . . . . . . . . . . . . . . . . . . . .   11,590               -             -    1,082,262            -         -
                                                        --------     -----------     ---------   ----------  -----------   -------  
Balance, December 31, 1995  . . . . . . . . . . . . . .  397,948               -     6,301,056   21,428,274            -         -
                                                        ========     ===========     =========   ==========  ===========   =======  
</TABLE>





                                      F-12

<PAGE>   55
                           CONTINENTAL AIRLINES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Continental Airlines, Inc. (the "Company", "Continental" or the "Reorganized
Company") is a major United States air carrier engaged in the business of
transporting passengers, cargo and mail.  Continental is the fifth largest
United States airline (as measured by 1995 revenue passenger miles) and,
together with its wholly owned subsidiary, Continental Express, Inc.
("Express"), and its 91%-owned subsidiary, Continental Micronesia, Inc.
("CMI"), each a Delaware corporation, serves 175 airports worldwide.
Internationally, Continental flies to 58 destinations and offers additional
connecting service through alliances with foreign carriers.  Continental is one
of the leading airlines providing service to Mexico and Central America,
serving more destinations there than any other United States airline.  In
addition, Continental flies to three cities in South America, and is scheduled
to commence service between Newark and Lima, Peru in March 1996 and between
Newark and Quito, Ecuador (via Bogota, Colombia) in June 1996.  Through Guam
and Saipan, CMI provides extensive service in the western Pacific, including
service to more Japanese cities than any other United States carrier.

As used in these Notes to Consolidated Financial Statements, the terms
"Continental" and "Company" refer to Continental Airlines, Inc. (or, as
required by the context, its predecessor) and, unless the context indicates
otherwise, its subsidiaries.

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a)      Principles of Consolidation -

         The consolidated financial statements of the Company include the
         accounts of Continental and its operating subsidiaries, Express,  CMI
         and prior to April 27, 1995, System One Information Management, Inc.
         ("System One").  See Note 11.  All significant intercompany
         transactions have been eliminated in consolidation.

         The minority interest holder of CMI has rights to acquire the minimum
         number of additional shares of CMI necessary to cause Continental's
         equity interest to decline below 80.0% if certain events relating to
         the defined benefit plans of Continental occur.  The consolidated
         financial statements of the Company's predecessor include the accounts
         of Continental Airlines Holdings, Inc. (together with its operating
         subsidiaries, "Holdings" or the "Predecessor Company") and the
         pre-reorganized Company.

(b)      Use of Estimates -

         The preparation of financial statements in conformity with generally
         accepted accounting principles requires management to make estimates
         and assumptions that affect the amounts reported in the financial
         statements and accompanying notes.  Actual results could differ from
         those estimates.




                                      F-13

<PAGE>   56
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(c)      Cash and Cash Equivalents -

         Cash and cash equivalents consist of cash and short-term, highly
         liquid investments which are readily convertible into cash and have
         original maturities of three months or less.  Approximately $144
         million and $119 million of cash and cash equivalents at December 31,
         1995 and December 31, 1994, respectively, were held in restricted
         arrangements relating primarily to payments for workers' compensation
         claims and in accordance with the terms of certain other agreements.

(d)      Spare Parts and Supplies -

         Flight equipment expendable parts and supplies were recorded at fair
         market values (which approximated average cost) as of April 27, 1993;
         subsequent purchases are valued at average cost.  An allowance for
         obsolescence for flight equipment expendable parts and supplies is
         accrued to allocate the costs of these assets, less an estimated
         residual value, over the estimated useful lives of the related
         aircraft and engines.

(e)      Property and Equipment -

         Property and equipment were recorded at fair market values as of April
         27, 1993; subsequent purchases are valued at cost and are depreciated
         to estimated residual values over their estimated useful lives using
         the straight-line method.  Estimated useful lives for such assets are
         25 years from the date of manufacture for all owned jet and commuter
         aircraft; nine to 21 years, depending on the lease period, for
         aircraft acquired under long-term capital leases; and two to 25 years
         for other property and equipment, including airport facility
         improvements.

(f)      Intangible Assets -

         Routes are amortized on a straight-line basis over 40 years, gates
         over the stated term of the related lease and slots over 20 years.
         Routes, gates and slots are comprised of the following (in millions):


<TABLE>
<CAPTION>
                                                Balance at                 Accumulated Amortization
                                            December 31, 1995                at December 31, 1995   
                                            -----------------              -------------------------
         <S>                                        <C>                               <C>
         Routes . . . . . . .                       $  941                            $ 66
         Gates  . . . . . . .                          447                              65
         Slots  . . . . . . .                          143                              23
                                                    ------                            ----
                                                    $1,531                            $154
                                                    ======                            ====
</TABLE>


         Reorganization value in excess of amounts allocable to identifiable
         assets is amortized on a straight-line basis over 20 years.  The
         carrying values of intangible assets are reviewed if the facts and
         circumstances suggest they may be impaired.  If this review indicates
         that the Company's intangible assets will not be recoverable, as
         determined based on the




                                      F-14

<PAGE>   57
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

         undiscounted cash flows over the remaining amortization periods, the
         Company's carrying values of the intangible assets are reduced by the
         estimated shortfall of cash flows.

(g)      Air Traffic Liability -

         Passenger revenue is recognized when transportation is provided rather
         than when a ticket is sold.  The amount of passenger ticket sales not
         yet recognized as revenue is reflected in the accompanying
         consolidated balance sheets as air traffic liability.  The Company
         performs periodic evaluations of this estimated liability, and any
         adjustments resulting therefrom, which can be significant, are
         included in results of operations for the periods in which the
         evaluations are completed.  In the third quarter of 1993, the Company
         recorded an adjustment to increase passenger revenue by $75 million as
         a result of the completion of a periodic evaluation.

         Continental sponsors a frequent flyer program ("OnePass") and records
         an estimated liability for the incremental cost associated with
         providing the related free transportation at the time a free travel
         award is earned.  The liability is adjusted periodically based on
         awards earned, awards redeemed and changes in the OnePass program.

(h)      Passenger Traffic Commissions -

         Passenger traffic commissions are recognized as expense when the
         transportation is provided and the related revenue is recognized.  The
         amount of passenger traffic commissions not yet recognized as expense
         is included in Prepayments and other in the accompanying consolidated
         balance sheets.

(i)      Deferred Income Taxes -

         Deferred income taxes are provided under the liability method and
         reflect the net tax effects of temporary differences between the
         financial reporting carrying amounts of assets and liabilities and the
         income tax amounts.

(j)      Deferred Credit - Aircraft Operating Leases -

         Aircraft operating leases were adjusted to fair market values at April
         27, 1993.  The net present value of the difference between the stated
         lease rates and the fair market rates has been recorded as a deferred
         credit in the accompanying consolidated balance sheets.  The deferred
         credit is increased through charges to interest expense and decreased
         on a straight-line basis as a reduction in rent expense over the
         applicable lease periods, generally one to 15 years.




                                      F-15

<PAGE>   58
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(k)      Maintenance and Repair Costs -

         Maintenance and repair costs for owned and leased flight equipment,
         including the overhaul of aircraft components, are charged to
         operating expense as incurred.

(l)      Option Contracts -

         The Company purchases foreign currency average rate option contracts
         that effectively enable it to sell Japanese yen expected to be
         received from yen-denominated sales at specified dollar amounts.  The
         option contracts have only nominal intrinsic value at the time of
         purchase.  These contracts are designated and effective as hedges of
         probable monthly yen-denominated sales transactions, which otherwise
         would expose the Company to foreign currency risk.  These option
         contracts are marked to market with realized and unrealized gains, if
         any, deferred and recognized in earnings as an adjustment to sales
         when the future sales occur (the deferral method).

         Similarly, the Company purchases petroleum call option contracts to
         protect against a sharp increase in jet fuel prices.  These contracts
         are also designated and effective as hedges of probable fuel
         purchases.  These contracts are marked to market with realized and
         unrealized gains, if any, deferred and recognized in earnings as an
         adjustment to fuel expense when the fuel is purchased (the deferral
         method).

(m)      Earnings (Loss) per Share -

         Earnings (loss) per common share computations are based upon earnings
         (loss) applicable to common shares and the average number of shares of
         common stock and common stock equivalents (stock options, warrants and
         restricted stock) and potentially dilutive securities (convertible
         secured debentures and convertible trust originated preferred
         securities) outstanding.  The number of shares used in the primary and
         fully diluted earnings per share computations for the year ended
         December 31, 1995 was 32,043,427 and 35,569,149, respectively.  The
         number of shares used in both the primary and fully diluted loss per
         share computations for the year ended December 31, 1994 was
         26,056,897.  The number of shares used in both the primary and fully
         diluted loss per share computations for the period April 28, 1993
         through December 31, 1993 was 18,022,918.  Preferred stock dividend
         requirements, including additional dividends on unpaid dividends,
         accretion to redemption value and the accelerated accretion on the
         redeemed Series A 8% Cumulative Preferred Stock ("Series A 8%
         Preferred") caused by the exchange thereof for debt of the Company on
         September 29, 1995 (see Note 7) decreased net income for this
         computation by $9 million for the year ended December 31, 1995 and
         increased net loss for this computation by $6 million for the year
         ended December 31, 1994 and $3 million for the period April 28, 1993
         through December 31, 1993.




                                      F-16

<PAGE>   59
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(n)      New Accounting Standards -

         In March 1995, the Financial Accounting Standards Board issued
         Statement of Financial Accounting Standards No.  121 - "Accounting for
         the Impairment of Long-Lived Assets and for Long-Lived Assets to be
         Disposed of" ("SFAS 121"), which requires impairment losses to be
         recorded on long-lived assets used in operations when indicators of
         impairment are present and the undiscounted cash flows estimated to be
         generated by those assets are less than the related assets' carrying
         amount.  The impairment loss is measured by comparing the fair value
         of the asset to its carrying amount.  SFAS 121 also addresses the
         accounting for long-lived assets that are expected to be disposed of.
         The Company will adopt SFAS 121 in the first quarter of 1996.  Due to
         the significant number of operating assets the Company maintains and
         the extensive number of estimates that must be made to assess the
         impact of SFAS 121, the financial statement impact has not yet been
         determined.

         In October 1995, the Financial Accounting Standards Board issued
         Statement of Financial Accounting Standards No. 123 - "Accounting for
         Stock-Based Compensation" ("SFAS 123").  Under the provisions of SFAS
         123, companies can elect to account for stock-based compensation plans
         using a fair value based method or continue measuring compensation
         expense for those plans using the intrinsic value method prescribed by
         Accounting Principles Board Opinion No. 25 - "Accounting for Stock
         Issued to Employees" ("APB 25").  SFAS 123 requires that companies
         electing to continue using the intrinsic value method must make
         proforma disclosures of net income and earnings per share as if the
         fair value based method had been applied.  The Company's required
         adoption date for SFAS 123 is January 1, 1996.  The Company
         anticipates that it will continue to account for stock-based
         compensation using APB 25; therefore, SFAS 123 is not expected to have
         an impact on the Company's results of operations or financial
         position.

(o)      Reclassifications -

         Certain reclassifications have been made in the prior years' financial
         statements to conform to the current year presentation.

NOTE 2 - PREDECESSOR COMPANY CHAPTER 11 REORGANIZATION

On December 3, 1990, the Predecessor Company and all its wholly owned domestic
subsidiaries filed voluntary petitions to reorganize under Chapter 11 of the
federal bankruptcy code.  The Company's consolidated Plan of Reorganization was
confirmed on April 16, 1993 and became effective on April 27, 1993 (the
"Reorganization").  Therefore, on April 27, 1993, the Company 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 value
of assets and liabilities.  For accounting purposes, the inception date for the
Reorganized Company is deemed to be April 28, 1993.




                                      F-17

<PAGE>   60
NOTE 2 - PREDECESSOR COMPANY CHAPTER 11 REORGANIZATION (CONTINUED)

Accordingly, the Company's post-reorganization consolidated financial
statements have not been prepared on a consistent basis of accounting with the
pre-reorganization consolidated financial statements for the period January 1,
1993 through April 27, 1993.  A vertical black line is shown in the
consolidated financial statements to separate the Company from the Predecessor
Company since they have not been prepared on a consistent basis of accounting.

Nonoperating reorganization items recorded by the Predecessor Company for the
period January 1, 1993 through April 27, 1993 consisted of the following (in
millions):


<TABLE>
<S>                                                                       <C>
Reorganization Costs:                                               
  Professional fees . . . . . . . . . . . . . . . . . . . . . . . .       $ 59
  Interest income . . . . . . . . . . . . . . . . . . . . . . . . .         (4)
  Rejected aircraft agreements  . . . . . . . . . . . . . . . . . .        153
  Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         34
Revaluation of Assets and Liabilities:                              
  Fair market value adjustments . . . . . . . . . . . . . . . . . .        719
  Write-off of deferred gains on sale/leaseback transactions  . . .       (219)
  Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         76
                                                                          ----
                                                                          $818
                                                                          ====
</TABLE>


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




                                      F-18

<PAGE>   61
NOTE 3 - LONG-TERM DEBT

Long-term debt as of December 31 is summarized as follows (in millions of
dollars):


<TABLE>
<CAPTION>
                                                                                          1995        1994  
                                                                                        --------    --------
<S>                                                                                        <C>         <C>
Secured
- -------
Notes payable, interest rates of 8.0% to 9.86%, payable
  through 2003  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    $  546      $  581
Notes payable, interest rates of 5.84% to 18.38% (imputed interest
  rates approximate stated interest rates), payable through 2005  . . . . . . . . . . .       193         293
Notes payable, interest rates of 6.0% to 12.25% (imputed interest
  rates of 7.86% to 9.9%), payable through 2008 . . . . . . . . . . . . . . . . . . . .       262         307
Floating rate notes, interest rates of prime plus 0.5% to 0.75% and
  LIBOR plus 0.75% to 4.0% and Eurodollar plus 0.75%, payable
  through 2005  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       178         120
Series A convertible debentures, interest rate of 6.0%, payable
  through 2002 (fully redeemed as of February 1, 1996)  . . . . . . . . . . . . . . . .       124           -
Notes payable, interest rates of 7.15% to 7.5% payable through 1998
  and floating rates thereafter of LIBOR plus 2%, payable
  through 2009  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        75           -
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         7           6

Unsecured
- ---------
Notes payable, interest rates of 6.94% to 12% (imputed interest
  rates 10.22% to 21.8%), payable through 2005  . . . . . . . . . . . . . . . . . . . .       122         112
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         8          10
                                                                                           ------      ------
                                                                                            1,515       1,429
Less:  debt in default  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         -         265
Less:  current maturities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       163         126
                                                                                           ------      ------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    $1,352      $1,038
                                                                                           ======      ======
</TABLE>


As of December 31, 1995 and 1994, the prime, LIBOR and Eurodollar rates
associated with Continental's indebtedness approximated 8.5% and 8.5%, 5.6% and
6.5%, and 5.8% and 6.3%, respectively.

Substantially all of Continental's assets are subject to agreements securing
indebtedness of Continental.

The Company retired from service 24 less-efficient widebody aircraft during
1995.  In February 1995, the Company began paying market rentals, which were
significantly less than contractual rentals on these aircraft, and began
ceasing all rental payments as the aircraft were removed from service.  In
addition, in the first quarter of 1995, Continental reduced its rental payments
on an additional 11 widebody aircraft leased at significantly above-market
rates.  These actions caused a significant number of defaults and cross
defaults in various long-term debt and capital lease and operating lease
agreements.  The Company began negotiations in February 1995 with the lessors
of (or lenders with respect to) these 35 widebody aircraft to amend the payment




                                      F-19

<PAGE>   62
NOTE 3 - LONG-TERM DEBT (CONTINUED)

schedules and provide alternative compensation, including, in certain cases,
convertible secured debentures in lieu of current cash payments.  The Company
reached resolutions covering all 35 widebody aircraft, thereby curing defaults
under the related agreements and the resulting cross defaults.

In connection with these resolutions, Continental issued $133 million of its
Series A 6% Convertible Secured Debentures ("Series A Debentures") and $25
million of its Series B 8% Convertible Secured Debentures ("Series B
Debentures") (together, the "Convertible Secured Debentures").  The Company
repurchased all of its Series B Debentures on December 29, 1995 for $31 million
(including a redemption premium of $4 million and payment-in-kind interest of
$2 million).  The Series A Debentures may be called for redemption at any time
by Continental at par.  On December 22, 1995, Continental repurchased $16
million of the Series A Debentures (including payment-in-kind interest of $1
million).  These debentures were repurchased with a portion of the proceeds
from the issuance of 8-1/2% convertible trust originated preferred securities.
See Note 6.  As of February 1, 1996, the Company had redeemed or repurchased
the remaining Series A Debentures for $125 million (including payment-in-kind
interest of $7 million).

Continental and CMI have secured borrowings from General Electric Capital
Corporation, General Electric Company and certain affiliates (any one or more
of such entities, "GE") which as of December 31, 1995 aggregated $634 million.
CMI's secured loans contain significant financial covenants, including
requirements to maintain a minimum cash balance and consolidated net worth,
restrictions on unsecured borrowings and mandatory prepayments on the sale of
most assets.  These financial covenants limit the ability of CMI to pay
dividends to Continental.  As of December 31, 1995, CMI had a minimum cash
balance requirement of $29 million, net assets of $301 million and was
restricted from paying dividends in excess of $79 million.  In addition,
Continental's secured loans require Continental to, among other things,
maintain a minimum monthly operating cash flow and cumulative operating cash
flow, a minimum monthly cash balance and a minimum ratio of operating cash flow
to fixed charges.  Continental also is prohibited generally from paying cash
dividends on its capital stock, from purchasing or prepaying indebtedness and
from incurring additional secured indebtedness.  In addition, to the extent
Continental's actual quarterly average cash balances exceed certain forecasts,
a portion of such excess cash is required to be used to prepay certain loan
obligations to GE.

Maturities of long-term debt due over the next five years are as follows (in
millions):


<TABLE>
<CAPTION>
Year ended December 31,
         <S>                                                                        <C>
         1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         $163
         1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          222
         1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          187
         1999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          198
         2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          191
</TABLE>





                                      F-20

<PAGE>   63
NOTE 3 - LONG-TERM DEBT (CONTINUED)

Not included in the above table are the Convertible Secured Debentures, with a
principal balance at December 31, 1995 of $124 million, which had been redeemed
or repurchased as of February 1, 1996.

NOTE 4 - LEASES

Continental leases certain aircraft and other assets under long-term lease
arrangements.  Other leased assets include real property, airport and terminal
facilities, sales offices, maintenance facilities, training centers and general
offices.  Most leases also include renewal options and some aircraft leases
include purchase options.

At December 31, 1995, the scheduled future minimum lease payments under capital
leases and the scheduled future minimum lease rental payments required under
aircraft and engine operating leases that have initial or remaining
noncancelable lease terms in excess of one year are as follows (in millions):


<TABLE>
<CAPTION>
                                                                                  Capital           Operating
                                                                                   Leases            Leases  
                                                                                  -------           ---------
<S>                                                                                 <C>                <C>
Year ended December 31,
         1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       $ 96               $  547
         1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         91                  511
         1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         82                  465
         1999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         77                  439
         2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         63                  424
         Later years  . . . . . . . . . . . . . . . . . . . . . . . . . . . .         95                2,850
                                                                                    ----               ------

Total minimum lease payments  . . . . . . . . . . . . . . . . . . . . . . . .        504               $5,236
                                                                                                       ======
Less:  amount representing interest . . . . . . . . . . . . . . . . . . . . .        140
                                                                                     ---
Present value of capital leases . . . . . . . . . . . . . . . . . . . . . . .        364
Less:  current maturities of capital leases . . . . . . . . . . . . . . . . .         58
                                                                                    ----
Long-term capital leases  . . . . . . . . . . . . . . . . . . . . . . . . . .       $306
                                                                                    ====
</TABLE>


Not included in the above operating lease table is $229 million in annual
minimum lease payments relating to non- aircraft leases, principally airport
and terminal facilities and related equipment.

At December 31, 1994, various capital lease and operating lease agreements
totaling $225 million and $1.4 billion, respectively, were in default and cross
default.  The Company reached resolutions curing defaults under the related
agreements and the resulting cross defaults.  See Note 3.

The Company's total rental expense for all operating leases, net of sublease
rentals, was $720 million, $675 million and $666 million in 1995, 1994 and
1993, respectively.




                                      F-21

<PAGE>   64
NOTE 5 - FINANCIAL INSTRUMENTS

(a)      Cash equivalents -

         Cash equivalents consist primarily of commercial paper with maturities
         of three months or less and approximate fair value due to the short
         maturity of three months or less.

(b)      Investment in Equity Securities -

         Continental's investment in America West Airlines, Inc. ("America
         West") is classified as available-for-sale and carried at an aggregate
         market value of $37 million and $17 million at December 31, 1995 and
         1994, respectively.  Included in stockholders' equity at December 31,
         1995 and 1994 is a net unrealized gain of $18 million and a net
         unrealized loss of $2 million, respectively.

         Since a readily determinable market value does not exist for the
         Company's investment in AMADEUS (see Note 11), the investment is
         carried at cost in the accompanying consolidated balance sheet.

(c)      Option Contracts -

         The Company has entered into petroleum option contracts to protect
         against a sharp increase in jet fuel prices, and CMI has entered into
         average rate option contracts to hedge a portion of its Japanese
         yen-denominated ticket sales against a significant depreciation in the
         value of the yen versus the United States dollar.  The petroleum
         option contracts generally cover the Company's forecasted jet fuel
         needs for the next three to six months, and the average rate option
         contracts cover a portion of CMI's yen-denominated ticket sales for
         the next six to 10 months.  At December 31, 1995 and 1994, the Company
         had petroleum option contracts outstanding with an aggregate contract
         value of $175 million and $140 million, respectively, and at December
         31, 1995, CMI had an average rate option contract outstanding with a
         contract value of $185 million.  At December 31, 1995 and 1994, the
         fair value of the option contracts was immaterial.  Option hedging
         activities did not have a material impact on the consolidated
         statement of operations.

         The Company and CMI are exposed to credit loss in the event of
         nonperformance by the counterparties on the option contracts; however,
         management does not anticipate nonperformance by these counterparties.
         The amount of such exposure is generally the unrealized gains, if any,
         on such option contracts.

(d)      Debt and Preferred Securities -

         The fair value of the Company's debt with a carrying value of $1.35
         billion and $1.34 billion as of December 31, 1995 and 1994,
         respectively, estimated based on the discounted amount of future cash
         flows using the current incremental rate of borrowing for a similar
         liability or quoted market prices, approximates $1.38 billion and
         $1.29 billion, respectively.  The fair value of the remaining debt
         (with a carrying value




                                      F-22

<PAGE>   65
NOTE 5 - FINANCIAL INSTRUMENTS (Continued)

         of $171 million and $84 million, respectively, and primarily relating
         to aircraft modification notes and various loans with immaterial
         balances) was not practicable to estimate due to the large number and
         small dollar amounts of these notes.

         The fair value of Continental's 8-1/2% convertible trust originated
         preferred securities approximates its carrying value.

NOTE 6 - PREFERRED SECURITIES OF TRUST

In the fourth quarter of 1995, Continental Airlines Finance Trust, a Delaware
statutory business trust (the "Trust") with respect to which the Company owns
all of the common trust securities, completed a private placement of 4,997,000
8- 1/2% Convertible Trust Originated Preferred Securities ("TOPrS").  The TOPrS
have a liquidation value of $50 per preferred security and are convertible at
any time at the option of the holder into shares of Continental's Class B
Common Stock ("Class B") at a conversion rate of 1.034 shares of Class B for
each preferred security (equivalent to $48.36 per share of Class B), subject to
adjustment in certain circumstances.  Distributions on the preferred securities
are payable by the Trust at the annual rate of 8-1/2% of the liquidation value
of $50 per preferred security and are included in Distributions on Preferred
Securities of Trust in the accompanying consolidated statement of operations.
The proceeds of the private placement, which totaled $242 million (net of $8
million of underwriting commissions and expense) are included in
Continental-Obligated Mandatorily Redeemable Preferred Securities of Trust in
the accompanying consolidated balance sheet.  Continental Airlines, Inc. has
fully and unconditionally guaranteed, on a subordinated basis (the
"Guarantee"), payment of (i) the distributions on the TOPrS, (ii) the amount
payable upon redemption of the TOPrS, and (iii) the liquidation amount of the
TOPrS.  The Guarantee will apply to payment of distributions, redemptions and
liquidations if and only to the extent the Trust has funds sufficient to make
such payments.

The Trust invested the proceeds of the offering in 8-1/2% Convertible
Subordinated Deferrable Interest Debentures ("Convertible Subordinated
Debentures") due 2020 issued by the Company.  The Convertible Subordinated
Debentures are redeemable by Continental, in whole or in part, on or after
December 1, 1998 at designated redemption prices.  If Continental redeems the
Convertible Subordinated Debentures, the Trust must redeem the TOPrS on a pro
rata basis having an aggregate liquidation value equal to the aggregate
principal amount of the Convertible Subordinated Debentures redeemed.
Otherwise, the TOPrS will be redeemed upon maturity of the Convertible
Subordinated Debentures, unless previously converted.  The Convertible
Subordinated Debentures represent substantially all the assets of the Trust.
The Convertible Subordinated Debentures and related income statement effects
are eliminated in the Company's consolidated financial statements.



                                      F-23

<PAGE>   66
NOTE 7 - REDEEMABLE PREFERRED AND COMMON STOCK

Continental's Restated Certificate of Incorporation ("Certificate of
Incorporation") authorizes the issuance of 10 million shares of preferred
stock, 50 million shares each of Class A Common Stock ("Class A"), Class C
Common Stock ("Class C") and Class D Common Stock ("Class D") and 100 million
shares of Class B.

REDEEMABLE PREFERRED STOCK

Redeemable preferred stock consists of the following (in millions, except for
share amounts):


<TABLE>
<CAPTION>
                                                                     December 31,          December 31,
                                                                         1995                  1994     
                                                                    ---------------       ---------------
<S>                                                                        <C>                   <C>
Series A 12% Cumulative Preferred
  Stock, 1,000,000 shares authorized,
  397,948 shares issued and outstanding in 1995 . . . . . . . . . .        $41                   $ -
12% Cumulative Redeemable Preferred Stock,
  1,000,000 shares authorized,
  300,000 shares issued and outstanding in 1994 . . . . . . . . . .          -                    37
8% Cumulative Redeemable Preferred Stock,
  171,000 shares authorized, issued and
  outstanding in 1994 . . . . . . . . . . . . . . . . . . . . . . .          -                    16
                                                                           ---                   ---
                                                                           $41                   $53
                                                                           ===                   ===
</TABLE>


Effective June 30, 1995 and in exchange for the 171,000 shares of 8% Cumulative
Redeemable Preferred Stock outstanding as of June 30, 1995 and all of the
accrued and unpaid dividends accumulated thereon as of such date, the Company
issued 202,784 shares of its new Series A 8% Preferred.  On September 29, 1995,
Continental issued a secured promissory note (the "Redemption Loan") with a
principal amount of $21 million to GE in exchange for its 202,784 shares of
Series A 8% Preferred, together with accumulated dividends thereon
(representing all of the outstanding Series A 8% Preferred).  As a result of
this transaction, the Company recorded a $3 million charge against additional
paid-in capital related to the unamortized accretion of the difference between
the Series A 8% Preferred redemption value and its fair market value at the
date of issuance.  The Redemption Loan bears interest at 8.0% per annum from
September 29, 1995 through March 31, 1996 and 9.86% per annum thereafter.

Effective June 30, 1995 and in exchange for the 300,000 shares of 12%
Cumulative Redeemable Preferred Stock outstanding as of June 30, 1995 and all
of the accrued and unpaid dividends accumulated thereon as of such date, the
Company issued 386,358 shares of its new Series A 12% Cumulative Preferred
Stock ("Series A 12% Preferred") to an affiliate of Air Canada.  Holders of
Series A 12% Preferred are entitled to receive, when and if declared by the
Board of Directors, cumulative dividends payable quarterly in additional shares
of such preferred stock for dividends accumulating through December 31, 1996,
and thereafter in cash at an annual rate of $12 per share.  To the extent net
income, as defined, for any calendar quarter is less than the amount of
dividends due on all outstanding shares of Series A 12% Preferred for such
quarter, the Board may declare dividends payable in additional shares of Series
A 12% Preferred in lieu




                                      F-24

<PAGE>   67
NOTE 7 - REDEEMABLE PREFERRED AND COMMON STOCK (CONTINUED)

of cash.  At any time, the Company may redeem, in whole or in part, on a pro
rata basis among the stockholders, any outstanding shares of Series A 12%
Preferred, and all outstanding shares are mandatorily redeemable on April 27,
2003 out of legally available funds.  The redemption price is $100 per share
plus accrued unpaid dividends.  The Series A 12% Preferred is not convertible
into shares of common stock and has no voting rights, except under limited
circumstances.  During 1995, the Board of Directors declared and issued 11,590
additional shares of Series A 12% Preferred in lieu of cash dividends.

COMMON STOCK

Continental has two classes of common stock outstanding, Class A and Class B.
Holders of shares of Class A and Class B are entitled to receive dividends when
and if declared by the Board.  Each share of Class A is entitled to 10 votes
per share and each share of Class B is entitled to one vote per share.

In connection with the Reorganization (see Note 2), a majority of the Company's
equity was issued to Air Partners, L.P., a Texas limited partnership ("Air
Partners"), and Air Canada, a Canadian corporation, in exchange for their
investments in the Company.

Pursuant to a stockholders' agreement, Air Canada and Air Partners have agreed
to vote their shares for the election of six directors nominated by Air Canada,
six directors nominated by Air Partners and six directors not affiliated with
Air Partners or Air Canada.  Air Canada may at any time convert shares of Class
A into an equal number of shares of Class B and, so long as such exchange would
comply with foreign ownership restrictions, may exchange up to 1,078,944 of its
shares of Class B for an equal number of shares of Class A.  Except for these
special conversion and exchange rights of Air Canada, Class B is not
convertible into or exchangeable for Class A and Class A is not convertible
into or exchangeable for Class B.  Also, Air Canada has the limited right, in
certain circumstances, to convert its Class A into Class C, and Air Partners
has the limited right, in certain circumstances, to convert its Class A into
Class D.  No person may hold or own Class C or Class D stock, respectively,
other than Air Canada and certain of its affiliates or Air Partners and certain
of its affiliates.  The Class C and Class D common stock, if issued, would
preserve the rights of each of Air Canada and Air Partners, respectively, to
elect six directors to the Company's Board of Directors in certain
circumstances, including a sale by the other party of its stock.

On December 14, 1993, the Company sold 8,086,579 shares of Class B in an
underwritten public offering realizing net proceeds of $153 million.  In
January 1994, Air Canada converted 287,840 shares of Class B into an equal
number shares of Class A to preserve its percentage of total voting power.  In
July 1994, 1,007,000 shares of restricted Class B were granted and issued to
substantially all employees at or below the manager or equivalent level and
182,000 shares of restricted Class B were granted and issued to key officers.
See Note 8.  As of December 31, 1995, Air Canada held 18.0% of the equity
interest and 23.6% of the voting power and Air Partners held 19.8% of the
equity interest and 35.7% of the voting power of the Company.  Had Air Partners
exercised all of its outstanding warrants, as of December 31, 1995, Air Canada
would have held 15.3% of the equity interest and 19.4% of the voting power and




                                      F-25

<PAGE>   68
NOTE 7 - REDEEMABLE PREFERRED AND COMMON STOCK (CONTINUED)

Air Partners would have held 31.8% of the equity interest and 47.3% of the
voting power of the Company.

Air Partners and Air Canada have the right to purchase additional shares of the
Company's Class B pursuant to antidilution rights granted to them under the
Certificate of Incorporation.  During 1995, Air Partners purchased from the
Company an aggregate of 482,773 shares of Class B with respect to such
antidilution rights.  See Note 13.

WARRANTS

As of December 31, 1995, the Company has outstanding 4,902,366 Class A Warrants
and Class B Warrants (collectively, the "Warrants"), all of which are held by
Air Partners.  Each Warrant entitles the holder to purchase one share of Class 
A or Class B.  The Warrants are exercisable as follows: (i) 3,706,667 Warrants 
(1,149,067 Class A Warrants and 2,557,600 Class B Warrants) have an initial 
exercise price of $15 per share, and (ii) 1,195,699 Warrants (370,667 Class A 
Warrants and 825,032 Class B Warrants) have an initial exercise price of $30 
per share.  The Warrants expire on April 27, 1998.

On September 29, 1995, Continental purchased 6,217,635 warrants held by Air
Canada to purchase an aggregate of 1,367,880 shares of Continental's Class A
and 4,849,755 shares of Class B for an aggregate purchase price of $56 million
(including a waiver fee of $5 million paid to a major creditor of the Company).
The 6,217,635 warrants purchased had exercise prices of $15.00 per share (as to
3,706,667 shares) and $30.00 per share (as to 2,510,968 shares).

NOTE 8 - STOCK PLANS AND AWARDS

Under the Company's 1994 Employee Stock Purchase Plan (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 at 85.0% of the lower of fair
market value on the first or last business day of a calendar quarter.  Subject
to adjustment, a maximum of 4,000,000 shares of Class B are authorized for
purchase under the Stock Purchase Plan.  During 1995, 259,214 shares of Class B
were issued at prices ranging from $8.61 to $21.25 in connection with the Stock
Purchase Plan.

Under the Continental Airlines, Inc. 1994 Incentive Equity Plan, as amended
(the "Incentive Plan"), key officers and employees of the Company and its
subsidiaries may receive stock options and/or restricted stock.  The Incentive
Plan also provides for each outside director to receive on the day following
the annual stockholders' meeting options to purchase 1,500 shares of Class B.
The number of shares of Class B that may be issued under the Incentive Plan
will not in the aggregate exceed 3,000,000 in accordance with the Incentive
Plan.  In 1995, the Incentive Plan was amended to provide for the exchange and
repricing of substantially all the outstanding stock options for new options
bearing a shorter exercise term and generally exercisable at a price lower than
that of the canceled options, subject to certain conditions.  The exercise
price for the repriced options equals the market value per share on the date of
grant ($16.00).  As a result of the repricing, stock options generally vest
over a period of three years.




                                      F-26

<PAGE>   69
NOTE 8 - STOCK PLANS AND AWARDS (CONTINUED)

The following table summarizes stock option transactions pursuant to the
Company's Incentive Plan for the years ended December 31, 1995 and 1994:


<TABLE>
<CAPTION>
                                                                               1995                1994    
                                                                            ----------           ---------
<S>                                                                         <C>                  <C>
Outstanding at Beginning of Year  . . . . . . . . . . . . . . . . . .        1,846,000                   -

Granted*  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        2,036,500           2,111,000

Exercised (prices ranging from $13.25 to $21.375
   per share)   . . . . . . . . . . . . . . . . . . . . . . . . . . .         (180,275)                  -

Canceled  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       (1,322,375)           (265,000)
                                                                            ----------           --------- 

Outstanding at End of Year (prices ranging from $7.75
   to $44.375 per share)  . . . . . . . . . . . . . . . . . . . . . .        2,379,850           1,846,000
                                                                            ==========           =========

Options exercisable at end of year  . . . . . . . . . . . . . . . . .          539,350             123,875
</TABLE>


*  The option price for all stock options is equal to 100% of the fair market
   value at the date of grant.

As shown in the above table, options granted during 1995 include the grant of
repriced options; options canceled during 1995 include the cancelation of the
higher priced options.

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.  In
connection with the plan, 400,000 shares have been authorized for issuance as
restricted stock.  As of December 31, 1995 and 1994, 277,500 shares and 152,000
shares, respectively, were outstanding at no cost to the participant.
Additionally, on March 4, 1994, the Board approved a one-time grant of
1,007,000 shares of restricted stock to substantially all employees at or below
the manager level.  These shares were issued at no cost to the employees and
vest over a four-year period.  Unvested shares of restricted stock are subject
to certain transfer restrictions and forfeiture under certain circumstances.
The unvested portion of restricted stock, representing the fair market value of
the stock on the date of award, is being amortized to wages, salaries and
related costs over the vesting period.

During 1995 and 1994, 27,500 and 30,000 shares, respectively, were forfeited
and returned to treasury stock.  All of the shares returned to treasury stock
were reissued in 1995.




                                      F-27

<PAGE>   70
NOTE 9 - EMPLOYEE BENEFIT PLANS

The Company has noncontributory defined benefit pension and defined
contribution (including 401(k) savings) plans.  Substantially all domestic
employees of the Company are covered by one or more of these plans.  The
benefits under the active defined benefit pension plan are based on years of
service and an employee's final average compensation.  For the years ended
December 31, 1995, 1994 and 1993, total pension expense for the defined benefit
plans was $40 million, $51 million and $52 million, respectively.  Total
expense for the defined contribution plans was $6 million, $1 million and
$300,000 for each of 1995, 1994 and 1993, respectively.

Net periodic pension cost of the Company's defined benefit plans for 1995, 1994
and 1993 included the following components (in millions):


<TABLE>
<CAPTION>
                                                                          Period from           Period from
                                                                           April 28,             January 1,
                                                                          1993 through          1993 through
                                                                          December 31,           April 27,
                                                 1995        1994              1993                 1993     
                                                ------      ------       ---------------       --------------
<S>                                               <C>         <C>                <C>                 <C>
Service cost - benefits earned
  during the year . . . . . . . . . . . . . .     $30         $39                $26                 $14
Interest cost on projected
  benefit obligations . . . . . . . . . . . .      40          39                 23                   9
Loss (return) on plan assets  . . . . . . . .     (79)         14                (16)                (10)
Net amortization and deferral . . . . . . . .      49         (41)                 1                   5
                                                  ---         ---                ---                 ---
  Net periodic pension costs  . . . . . . . .     $40         $51                $34                 $18
                                                  ===         ===                ===                 ===
</TABLE>





                                      F-28

<PAGE>   71
NOTE 9 - EMPLOYEE BENEFIT PLANS (CONTINUED)

The following table sets forth the defined benefit plans' funded status amounts
as of December 31, 1995 and 1994 (in millions):


<TABLE>
<CAPTION>
                                                     1995                                    1994              
                                       ---------------------------------     -------------------------------
                                        Accumulated          Assets           Accumulated         Assets
                                          Benefits           Exceed             Benefits          Exceed
                                           Exceed         Accumulated            Exceed         Accumulated
                                           Assets           Benefits             Assets           Benefits  
                                       --------------     --------------     ---------------   -------------
<S>                                           <C>              <C>                 <C>                <C>
Actuarial present value of
  benefit obligations:
   Vested . . . . . . . . . . . . . .         $359             $ 73                $257               $ 66
   Non-vested . . . . . . . . . . . .           20                1                  16                  1
                                              ----             ----                ----               ----
Accumulated benefit
  obligations . . . . . . . . . . . .          379               74                 273                 67
Effect of projected future
  salary increases  . . . . . . . . .          149                -                  99                  -
                                              ----             ----                ----               ----
Projected benefit obligation  . . . .          528               74                 372                 67
Plan assets at fair value . . . . . .          303               89                 210                 76
                                              ----             ----                ----               ----
Projected benefit obligation
  in excess of (less than)
  plan assets . . . . . . . . . . . .          225              (15)                162                 (9)
Unrecognized net gain (loss). . . . .          (41)              (3)                 40                 (7)
Additional minimum liability  . . . .            8                -                   7                  -
                                              ----             ----                ----               ----
   Accrued (prepaid) pension
   liability  . . . . . . . . . . . .         $192             $(18)               $209               $(16)
                                              ====             ====                ====               ==== 
</TABLE>


In accordance with Statement of Financial Accounting Standards No. 87 -
"Employers' Accounting for Pensions", an additional minimum pension liability
for certain plans, representing the excess of accumulated benefits over plan
assets and accrued pension costs, was recognized at December 31, 1995 and 1994.
A corresponding amount was recognized as a separate reduction to stockholders'
equity.

Plan assets consist primarily of equity securities (including 128,621 shares of
Continental's Class B), long-term debt securities and short-term investments.

The weighted average discount rate used in determining the actuarial present
value of the projected benefit obligation was 7.25%, 8.75% and 7.50% for 1995,
1994 and 1993, respectively.  The expected long-term rate of return on assets
(which is used to calculate the Company's return on pension assets for the
current year) was 9.25% for each of 1995, 1994 and 1993.  The weighted average
rate of salary increases was 6.3%, 6.3% and 5.3% for 1995, 1994 and 1993,
respectively.  The unrecognized net gain (loss) is amortized on a straight-line
basis over the average remaining service period of employees expected to
receive a plan benefit.




                                      F-29

<PAGE>   72
NOTE 9 - EMPLOYEE BENEFIT PLANS (CONTINUED)

Continental's policy is to fund the noncontributory defined benefit pension
plans in accordance with Internal Revenue Service ("IRS") requirements as
modified, to the extent applicable, by agreements with the IRS.

The Company also has a profit sharing program under which an award pool
consisting of 15.0% of the Company's annual pre- tax earnings, subject to
certain adjustments, is distributed each year to substantially all employees on
a pro rata basis according to base salary.  The award pool for the year ended
December 31, 1995 was $31 million.

NOTE 10 - INCOME TAXES

The reconciliations of income tax computed at the United States federal
statutory tax rates to income tax benefit for the years ended December 31, 1995
and 1994 and the period April 28, 1993 through December 31, 1993 are as follows
(in millions):


<TABLE>
<CAPTION>
                                                     Amount                               Percent             
                                         -------------------------------     ---------------------------------
                                           1995        1994       1993         1995        1994        1993   
                                         --------    --------    -------     ---------    --------    --------
<S>                                         <C>        <C>        <C>          <C>        <C>         <C>
Income tax provision (benefit) at
  United States statutory rates . . . .     $109       $(228)     $(18)         35.0 %     (35.0)%    (35.0)%
State income tax (benefit)
  provision . . . . . . . . . . . . . .        5         (20)       (3)          1.6        (3.0)      (4.9)
Reorganization value in excess
  of amounts allocable to
  identifiable assets . . . . . . . . .       20           6         5           6.5        0 .9        9.4
Meals and entertainment
  disallowance  . . . . . . . . . . . .        6           7         1           1.9        1 .0        2.7
Impact of change in federal
  tax rates . . . . . . . . . . . . . .        -           -         2           -          -           2.9
Net operating loss not
  benefitted/(benefitted) . . . . . . .      (62)        193         -         (20.0)       29.6        -  
                                            ----       -----      ----         -----       -----     ------
Income tax provision (benefit),
  net . . . . . . . . . . . . . . . . .     $ 78       $ (42)     $(13)         25.0 %      (6.5)%    (24.9)%
                                            ====       =====      ====         =====       =====     ======  
</TABLE>


The significant component of the provision (benefit) for income taxes for the
year ended December 31, 1995 and 1994 and the period April 28, 1993 through
December 31, 1993 was a deferred tax provision (benefit) of $71 million, $(42)
million and $(13) million, respectively.  The provision for income taxes for
the period ended December 31, 1995 also reflects a current tax provision in the
amount of $7 million as the Company is in an alternative minimum tax position.




                                      F-30

<PAGE>   73
NOTE 10 - INCOME TAXES (CONTINUED)

The provision for income taxes of the Predecessor Company for the period from
January 1 through April 27, 1993 was $2 million.  The provision for income
taxes of the Predecessor Company represents only state income taxes.  Due to
losses generated, there is no provision for federal income taxes for the period
from January 1, 1993 through April 27, 1993.

The provision for income taxes for the period from April 28, 1993 through
December 31, 1993 reflects an increase of $2 million which is related to the
increase in the corporate tax rate from 34.0% to 35.0% enacted by the Revenue
Reconciliation Act of 1993.

Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the related amounts used for income tax purposes.  Significant
components of the Company's deferred tax liabilities and assets as of December
31, 1995 and 1994 are as follows (in millions):


<TABLE>
<CAPTION>
                                                                                1995               1994   
                                                                              ---------          ---------
<S>                                                                            <C>                 <C>
Spare parts and supplies, fixed assets and intangibles  . . . . . . . . .       $  674              $  668
Deferred gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           62                  85
Other, net  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           26                   9
                                                                                ------              ------

Gross deferred tax liabilities  . . . . . . . . . . . . . . . . . . . . .          762                 762
                                                                                ------              ------

Capital and safe harbor lease activity  . . . . . . . . . . . . . . . . .          (10)                (24)
Accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . .         (472)               (343)
Revaluation of leases . . . . . . . . . . . . . . . . . . . . . . . . . .          (35)                (80)
Net operating loss carryforwards  . . . . . . . . . . . . . . . . . . . .         (859)             (1,069)
Investment tax credit carryforwards . . . . . . . . . . . . . . . . . . .          (45)                (45)
Minimum tax credit carryforward . . . . . . . . . . . . . . . . . . . . .           (7)                  -
                                                                                ------              ------

Gross deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . .       (1,428)             (1,561)
                                                                                ------              ------

Deferred tax assets valuation allowance . . . . . . . . . . . . . . . . .          782                 844
                                                                                ------              ------

Net deferred tax liability  . . . . . . . . . . . . . . . . . . . . . . .          116                  45

Less:  current deferred tax liability . . . . . . . . . . . . . . . . . .           70                  17
                                                                                ------              ------

Non-current deferred tax liability  . . . . . . . . . . . . . . . . . . .      $    46             $    28
                                                                               =======             =======
</TABLE>


At December 31, 1995, the Company has net operating loss carryforwards ("NOLs")
of $2.5 billion for income tax purposes that will expire from 1995 through 2009
and investment tax credit carryforwards of $45 million that will expire through
2001.  As a result of the change in ownership of the Company on April 27, 1993,
the ultimate utilization of the Company's net operating losses and investment
tax credits could be limited.




                                      F-31

<PAGE>   74
NOTE 10 - INCOME TAXES (CONTINUED)

For financial reporting purposes, a valuation allowance of $782 million has
been recognized to offset the deferred tax assets related to a portion of the
NOLs.  The Company has considered prudent and feasible tax planning strategies
in assessing the need for the valuation allowance.  The Company has assumed
$116 million of benefit attributable to such tax planning strategies.  The
Company has consummated one such transaction, which had the effect of realizing
approximately 40% of the built-in gains required to be realized, and currently
intends to consummate one or more additional transactions.  In the event the
Company were to determine in the future that any such tax planning strategies
would not be implemented, an adjustment to the net deferred tax liability of up
to $116 million would be charged to income in the period such determination was
made.  In the event the Company recognizes additional tax benefits related to
NOLs and investment tax credit carryforwards attributable to the Predecessor
Company, those benefits would be applied to reduce Reorganization value in
excess of amounts allocable to identifiable assets and other intangibles to
zero, and thereafter as an addition to paid-in capital.

The deferred tax valuation allowance decreased from $844 million at December
31, 1994 to $782 million at December 31, 1995.  This decrease is related to the
realization of deferred tax assets associated with net operating losses that
had not previously been benefitted.

Approximately $545 million of the Company's net operating losses can only be
used to offset the separate parent company taxable income of Continental
Airlines, Inc.  Approximately  $18 million of the Company's investment tax
credits can only be used to offset the separate parent company tax liability of
Continental Airlines, Inc.




                                      F-32

<PAGE>   75
NOTE 11 - NON-OPERATING INCOME (EXPENSE)

During the fourth quarter of 1994, the Company recorded a provision of $447
million associated with (i) the planned early retirement of certain aircraft
($278 million) and (ii) closed or underutilized airport and maintenance
facilities and other assets ($169 million).  This provision was included in
Other, net in the accompanying consolidated statement of operations.
Approximately $123 million of the provision represented a non-cash charge
associated with a write-down of certain assets (principally inventory and
flight equipment) to expected net realizable value.  The total provision
represented a net charge after taking into consideration $119 million of
credits primarily related to the write-off of operating lease deferred credits
associated with the aircraft to be retired.  At December 31, 1994, the Company
had total remaining accruals for such aircraft retirements and excess
facilities of approximately $443 million, of which approximately $51 million
was included in Accrued other liabilities in the accompanying consolidated
balance sheet.  The following represents the activity within these accruals
during the year ended December 31, 1995:


<TABLE>
<S>                                                                                             <C>
Total accruals at December 31, 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . .       $ 443
Issuance of the Convertible Secured Debentures  . . . . . . . . . . . . . . . . . . . . .        (158)
Cash payments:
  Return conditions on grounded aircraft  . . . . . . . . . . . . . . . . . . . . . . . .         (35)
  Other aircraft related  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         (24)
  Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         (20)
Increase in accrual for underutilized facilities  . . . . . . . . . . . . . . . . . . . .          14
                                                                                                -----
Accrual at December 31, 1995  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         220
Portion included in accrued other liabilities . . . . . . . . . . . . . . . . . . . . . .         (45)
                                                                                                ----- 
Accrual for aircraft retirement and excess facilities
  at December 31, 1995  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       $ 175
                                                                                                =====
</TABLE>


The remaining accruals relate primarily to anticipated cash outlays associated
with (i) the closure of the Los Angeles maintenance facilities, (ii)
underutilized airport facilities (primarily associated with Denver
International Airport), and (iii) the remaining liability associated with the
grounded aircraft.  The Company has assumed certain sublease rental income for
these closed and under- utilized facilities and grounded aircraft in
determining the accrual at December 31, 1995.  However, should actual sublease
rental income be different from the Company's estimates, the actual charge
could be different from the amount estimated.

The remaining accrual represents cash outlays to be incurred over the remaining
lease terms (from one to 15 years).  The Company expects to finance the cash
outlays primarily with internally generated funds.

During the year ended December 31, 1995, the Company increased the accrual for
underutilized airport facilities by $14 million and recorded a $5 million fee
in connection with the Air Canada warrant redemption, partially offset by a
gain of $12 million relating to a bankruptcy court approved settlement for the
return of certain aircraft purchase deposits.  Such amounts were included in
Other, net in the accompanying consolidated statement of operations.




                                      F-33

<PAGE>   76
NOTE 11 - NONOPERATING INCOME (EXPENSE) (CONTINUED)

Continental and its System One subsidiary entered into a series of transactions
on April 27, 1995 whereby a substantial portion of System One's assets
(including the travel agent subscriber base and travel-related information
management products and services software), as well as certain liabilities of
System One, were transferred to a newly formed limited liability company,
System One Information Management, L.L.C. ("LLC").  LLC is owned equally by
Continental CRS Interests, Inc. ("Continental CRS") (formerly System One, which
remains a wholly owned subsidiary of Continental), Electronic Data Systems
Corporation ("EDS") and AMADEUS, a European computerized reservation system
("CRS").  Substantially all of System One's remaining assets (including the CRS
software) and liabilities were transferred to AMADEUS.  In addition to the
one-third interest in LLC, Continental CRS received cash proceeds of $40
million and an equity interest in AMADEUS valued at $120 million, and
outstanding indebtedness of $42 million of System One owed to EDS was
extinguished.  In connection with these transactions, the Company recorded a
pretax gain of $108 million, which amount was included in Nonoperating Income
(Expense) in the accompanying consolidated statement of operations for the year
ended December 31, 1995.  The related tax provision totaled $78 million (which
differs from the federal statutory rate due to certain nondeductible expenses),
for a net gain of $30 million.  System One's revenue, included in Cargo, mail
and other revenue, and related net earnings were not material to the
consolidated financial statements of Continental.

NOTE 12 - COMMITMENTS AND CONTINGENCIES

Capital Commitments

Continental has firm commitments to take delivery of three new 737 and two new
757 aircraft through early 1996 and 43 new jet aircraft during the years 1998
through 2002.  The estimated aggregate cost of these aircraft is $2.7 billion.
In connection with the rescheduling of jet aircraft deliveries, $72 million of
purchase deposits was returned to the Company in 1995.  In December 1994,
Express contracted with Beech Acceptance Corporation ("Beech") for the purchase
and financing of 25 Beech 1900-D aircraft at an estimated aggregate cost of
$104 million, excluding price escalations.  As of December 31, 1995, 13 Beech
1900-D aircraft had been delivered, of which eight had entered service by that
date and five will enter service in the first quarter of 1996.  The remaining
12 aircraft are scheduled to be delivered in 1996.  The Company currently
anticipates that the firm financing commitments available to it with respect to
its acquisition of new aircraft from The Boeing Company ("Boeing") and Beech
will be sufficient to fund all deliveries scheduled during 1996.  Furthermore,
the Company currently anticipates that it will have remaining financing
commitments from aircraft manufacturers of $575 million for jet aircraft
deliveries beyond 1996.  The Company believes that further financing will be
needed to satisfy the remaining amount of such capital commitments.  There can
be no assurance that sufficient financing will be available for all aircraft
and other capital expenditures not covered by firm financing commitments.

In addition, the Company recently purchased one DC-10-30 aircraft and entered
into an operating lease for another DC-10-30 aircraft that are expected to be
placed into service by the end of the second quarter of 1996.




                                      F-34

<PAGE>   77
NOTE 12 - COMMITMENTS AND CONTINGENCIES (CONTINUED)


Continental expects its cash outlays for 1996 capital expenditures, exclusive
of aircraft acquisitions, to aggregate $120 million primarily relating to
mainframe, software application and automation infrastructure projects,
aircraft modifications and mandatory maintenance projects, passenger terminal
facility improvements and office, maintenance, telecommunications and ground
equipment.

As of December 31, 1995, Continental remains contingently liable on $202
million of long-term lease obligations of USAir, Inc. ("USAir") related to the
East End Terminal at LaGuardia.  In the event USAir defaults on these
obligations, Continental might be required to cure the default, at which time
it would have the right to reoccupy the terminal.

Legal Proceedings

The Company and certain of its subsidiaries are defendants in various lawsuits,
including suits relating to certain environmental and anti-trust claims, the
Reorganization and proceedings arising in the normal course of business.  While
the outcome of these lawsuits and proceedings cannot be predicted with
certainty and could have a material adverse effect on the Company's financial
position, results of operations and cash flows, it is the opinion of
management, after consulting with counsel, that the ultimate disposition of
such suits will not have a material adverse effect on the Company's financial
position, results of operations or cash flows.

NOTE 13 - RELATED PARTY TRANSACTIONS

The following is a summary of significant related party transactions which have
occurred during 1995, 1994 and the period April 28, 1993 through December 31,
1993 other than those discussed elsewhere in the Notes to Consolidated
Financial Statements.

CMI and United Micronesia Development Association, Inc. ("UMDA"), the minority
stockholder of CMI, have a services agreement whereby UMDA is paid a fee of
1.0% of CMI's gross revenue, as defined, which will continue until January 1,
2012.  For the years ended December 31, 1995 and 1994 and the period April 28,
1993 through December 31, 1993, these fees totaled $6 million, $5 million and
$4 million, respectively.  As of December 31, 1995 and 1994, the Company had a
payable of $7 million maturing in 2011 to UMDA.  Annual payments aggregating $1
million per year are applied to reduce the 1.0% fee.

In connection with Air Canada's investment in the Company, Air Canada, Air
Partners and the Company agreed to identify and pursue opportunities to achieve
cost savings, revenue enhancement or other synergies from areas of joint
operation between the Company and Air Canada.  The Company and Air Canada have
entered into a series of synergies agreements, primarily in the areas of
aircraft maintenance and commercial and marketing alliances (including
agreements regarding coordination of connecting flights).  The Company believes
that the synergies agreements allocate potential benefits to the Company and
Air Canada in a manner that is equitable and commercially reasonable, and
contain terms at least as favorable to the Company as could be obtained from
unrelated parties.  As a result of these agreements, Continental paid Air
Canada $38 million, $29 million and $9 million for the years ended December 31,
1995,




                                      F-35

<PAGE>   78
NOTE 13 - RELATED PARTY TRANSACTIONS (CONTINUED)

1994 and from the period April 28, 1993 through December 31, 1993,
respectively, and Air Canada paid Continental $16 million, $13 million and $5
million in 1995, 1994 and for the period April 28, 1993 through December 31,
1993, respectively, primarily relating to aircraft maintenance.  Continental
also reimbursed Air Canada and Air Partners in 1993 for fees incurred in
connection with their investment in Continental of $7 million and $11 million,
respectively.

As a limited partner in AmWest Partners, L.P. ("AmWest"), the Company
participated in the acquisition by AmWest of a portion of the equity of
reorganized America West in connection with America West's emergence from
bankruptcy, effective August 25, 1994.  Each investor participating in the
acquisition did so on individual terms; the Company and certain other parties
invested at the same per share price, but at a higher price (approximately
$9.36 per share as compared to approximately $7.01 per share) than the price
paid by Air Partners, II, L.P., TPG Partners, L.P. and TPG Parallel I, L.P.
(collectively, the "TPG entities"), partnerships controlled by David Bonderman,
Chairman of the Board of the Company.  However, as between the Company and the
TPG entities, the Company is entitled to receive a 10.0% per year return on its
investment before the TPG entities receive any return and to recoup its
invested capital  before the TPG entities recoup their capital.

The Company and America West entered into a series of agreements during 1994
related to code-sharing and ground handling that have created substantial
benefits for both airlines.  The services provided are considered normal to the
daily operations of both airlines.  As a result of these agreements,
Continental paid America West $11 million and $1 million in 1995 and 1994,
respectively and America West paid Continental $14 million and $ 2 million in
1995 and 1994, respectively.

On July 27, 1995 and August 10, 1995, Air Partners purchased from the Company
an aggregate of 154,113 and 328,660 shares of Class B common stock,
respectively, at purchase prices of $15.86 per share (with respect to a total
of 355,330 shares) and $13.40 per share (with respect to a total of 127,443
shares).  Of the total, 158,320 shares were purchased pursuant to the exercise
of antidilution rights granted to Air Partners under the Certificate of
Incorporation and the remaining 324,453 shares were purchased pursuant to the
exercise of antidilution rights granted to Air Canada under the Certificate of
Incorporation (which rights were purchased by Air Partners immediately prior to
their exercise on August 10, 1995).




                                      F-36

<PAGE>   79
NOTE 14 - FOREIGN OPERATIONS

Continental conducts operations to various foreign countries.  Operating
revenue from foreign operations are as follows (in millions):


<TABLE>
<CAPTION>
                                                              Year Ended December 31,     
                                                       ----------------------------------------
                                                        1995             1994             1993 
                                                       ------           ------           ------
<S>                                                    <C>              <C>              <C>
Pacific                                                $  742           $  678           $  630
Atlantic                                                  390              400              384
Latin America                                             311              310              278
                                                       ------           ------           ------

                                                       $1,443           $1,388           $1,292
                                                       ======           ======           ======
</TABLE>





                                      F-37

<PAGE>   80
NOTE 15 - QUARTERLY FINANCIAL DATA (UNAUDITED)

Unaudited summarized financial data by quarter for 1995 and 1994 is as follows
(in millions, except per share data):


<TABLE>
<CAPTION>
                                                                                              Three Months Ended  
                                                                               -----------------------------------------------
                                                                               March 31   June 30   September 30   December 31
                                                                               --------   -------   ------------   -----------
<S>                                                                              <C>      <C>         <C>            <C>
1995
  Operating revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . .      $1,409   $1,478      $1,515         $1,423
  Operating income  . . . . . . . . . . . . . . . . . . . . . . . . . . . .          29      109         153             94
  Nonoperating income (expense), net  . . . . . . . . . . . . . . . . . . .         (57)      72         (40)           (50)
  Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . .         (30)     102         111             41
  Earnings (loss) per common and common
   equivalent share (a)   . . . . . . . . . . . . . . . . . . . . . . . . .       (1.21)    3.02        3.09           1.27
  Earnings (loss) per common share assuming
   full dilution (a)  . . . . . . . . . . . . . . . . . . . . . . . . . . .       (1.21)    2.99        2.68           1.10

1994
  Operating revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . .      $1,356   $1,391      $1,514         $1,409
  Operating income (loss) . . . . . . . . . . . . . . . . . . . . . . . . .         (56)      (1)         83            (37)
  Nonoperating income (expense), net  . . . . . . . . . . . . . . . . . . .         (58)     (52)        (50)          (480)
  Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . .         (72)     (49)         31           (523)
  Primary and fully diluted earnings (loss)
   per common share (a)   . . . . . . . . . . . . . . . . . . . . . . . . .       (2.86)   (1.97)       1.03         (19.66)
</TABLE>



(a)      The sum of the four quarterly earnings (loss) per share amounts does
         not agree with the earnings (loss) per share as calculated for the
         full year due to the fact that the full year calculation uses a
         weighted average number of shares based on the sum of the four
         quarterly weighted average shares divided by four quarters.




                                      F-38

<PAGE>   81
NOTE 15 - QUARTERLY FINANCIAL DATA (UNAUDITED) (CONTINUED)

During the second quarter of 1995, the Company recorded a pretax gain of $108
million and an after-tax gain of $30 million in connection with a series of
transactions with System One.  See Note 11.

During the third quarter of 1994, the Company recorded a favorable adjustment
of $23 million as a result of the Company's estimate of awards expected to be
redeemed for travel on Continental under its frequent flyer program.

During the fourth quarter of 1994, a provision of $447 million associated with
the planned early retirement of certain aircraft and closed or underutilized
airport and maintenance facilities and other assets was recorded for costs
associated with grounding aircraft, reducing operations at certain airport
facilities and modifying certain airport facilities and modifying certain
aircraft and facilities lease agreements.




                                      F-39

<PAGE>   82


I
TEM 9.       CHANGES IN AND DISAGREEMENTS ON ACCOUNTING AND FINANCIAL
              DISCLOSURE.

There were no changes in or disagreements on any matters of accounting
principles or financial statement disclosure between the Company and its
independent public accountants during the registrant's two most recent fiscal
years or any subsequent interim period.





                                      43

<PAGE>   83

                                    PART III



ITEM 10.       DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

Incorporated herein by reference from the Company's definitive proxy statement
for the annual meeting of stockholders to be held on May 17, 1996.


ITEM 11.       EXECUTIVE COMPENSATION.

Incorporated herein by reference from the Company's definitive proxy statement
for the annual meeting of stockholders to be held on May 17, 1996.


ITEM 12.       SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
               MANAGEMENT.

Incorporated herein by reference from the Company's definitive proxy statement
for the annual meeting of stockholders to be held on May 17, 1996.


ITEM 13.       CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

Incorporated herein by reference from the Company's definitive proxy statement
for the annual meeting of stockholders to be held on May 17, 1996.




                                      44

<PAGE>   84

                                    PART IV


ITEM 14.       EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
               FORM 8-K.

(a)      The following financial statements are included in Item 8. "Financial
         Statements and Supplementary Data":

         Report of Independent Auditors
         Consolidated Statements of Operations for each of the Three Years in
           the Period Ended December 31, 1995
         Consolidated Balance Sheets as of December 31, 1995 and 1994
         Consolidated Statements of Cash Flows for each of the Three Years in
           the Period Ended December 31, 1995
         Consolidated Statements of Redeemable and Nonredeemable Preferred
           Stock and Common Stockholders' Equity (Deficit) for each of the
           Three Years in the Period Ended December 31, 1995

         Notes to Consolidated Financial Statements

(b)      Financial Statement Schedules:

         Report of Independent Auditors
 
        Schedule I     -  Condensed Financial Information of Registrant
                           (Parent Company Only) 
         Schedule II    -  Valuation and Qualifying Accounts

         All other schedules have been omitted because they are inapplicable,
         not required, or the information is included elsewhere in the
         consolidated financial statements or notes thereto.

(c)      Reports on Form 8-K.

         (i)     Report dated November 28, 1995 reporting an Item 5.  "Other
                 Event".  No financial statements were filed with the report,
                 which announced the consummation of the private placement of
                 $225 million of 8-1/2% convertible trust originated preferred
                 securities of a special purpose finance trust.

(d)      See accompanying Index to Exhibits.




                                      45

<PAGE>   85




                         REPORT OF INDEPENDENT AUDITORS


We have audited the consolidated financial statements of Continental Airlines,
Inc. (the "Company") as of December 31, 1995 and 1994, and for the years then
ended and the period from 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 for the period from
January 1, 1993 through April 27, 1993 for Continental Airlines Holdings, Inc.,
and have issued our report thereon dated February 12, 1996 (included elsewhere
in this Form 10-K).  Our audits also included the financial statement schedules
for these related periods listed in Item 14(b) of this Form 10-K.  These
schedules are the responsibility of the Company's management.  Our
responsibility is to express an opinion based on our audits.

In our opinion, the financial statement schedules referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly in all material respects the information set forth therein.





                                         ERNST & YOUNG LLP


Houston, Texas
February 12, 1996





                                      46

<PAGE>   86
                           CONTINENTAL AIRLINES, INC.
                             (Parent Company Only)
           SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
                    CONDENSED STATEMENT OF OPERATIONS (a)(b)
                            (In millions of dollars)


<TABLE>
<CAPTION>
                                                                        Year ended                           
                                                                        December 31,           April 28, 1993
                                                                   ----------------------          through   
                                                                     1995          1994      December 31, 1993
                                                                   --------      --------    -----------------
<S>                                                                   <C>           <C>              <C>
Operating Revenues:
  Passenger . . . . . . . . . . . . . . . . . . . . . . . . . . .     $4,354        $4,211           $2,954
  Cargo, mail and other . . . . . . . . . . . . . . . . . . . . .        419           411              298
                                                                      -----         ------           ------
                                                                       4,773         4,622            3,252
                                                                      ------        ------           ------
Operating Expenses:
  Wages, salaries and related costs . . . . . . . . . . . . . . .      1,252         1,347              874
  Aircraft fuel . . . . . . . . . . . . . . . . . . . . . . . . .        567           642              469
  Aircraft rentals  . . . . . . . . . . . . . . . . . . . . . . .        471           419              257
  Commissions . . . . . . . . . . . . . . . . . . . . . . . . . .        397           353              301
  Maintenance, materials and repairs  . . . . . . . . . . . . . .        304           366              273
  Other rentals and landing fees  . . . . . . . . . . . . . . . .        294           328              209
  Depreciation and amortization . . . . . . . . . . . . . . . . .        215           211              133
  Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      1,035         1,040              625
                                                                      ------        ------           ------
                                                                       4,535         4,706            3,141
                                                                      ------        ------           ------
Operating Income (Loss) . . . . . . . . . . . . . . . . . . . . .        238           (84)             111
                                                                      ------        ------           ------

Nonoperating Income (Expense):
  Interest expense  . . . . . . . . . . . . . . . . . . . . . . .       (185)         (210)            (145)
  Interest capitalized  . . . . . . . . . . . . . . . . . . . . .          6            17                8
  Interest income . . . . . . . . . . . . . . . . . . . . . . . .         27            20               16
  Interest income from subsidiaries . . . . . . . . . . . . . . .         11            12                5
  Other, net  . . . . . . . . . . . . . . . . . . . . . . . . . .         (4)         (426)              (7)
                                                                      ------        ------           ------ 
                                                                        (145)         (587)            (123)
                                                                      ------        ------           ------ 
Income (Loss) before Equity in Net Income (Loss)
  of Subsidiaries, Income Taxes and Minority Interest . . . . . .         93          (671)             (12)

Income Tax Benefit (Provision)  . . . . . . . . . . . . . . . . .         37            73               (1)

Equity in Net Income (Loss) of Subsidiaries . . . . . . . . . . .         96           (15)             (26)

Distributions on Preferred Securities of Trust  . . . . . . . . .         (2)            -                -
                                                                      ------        ------           ------

Net Income (Loss) . . . . . . . . . . . . . . . . . . . . . . . .     $  224        $ (613)          $  (39)
                                                                      ======        ======           ====== 

</TABLE>


These Statements should be read in conjunction with the Consolidated Financial
Statements and Notes thereto and Notes to Schedule I.



                                      47

<PAGE>   87
                           CONTINENTAL AIRLINES, INC.
                             (Parent Company Only)
           SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
                         CONDENSED BALANCE SHEET (a)(b)
                (In millions of dollars, except for share data)

<TABLE>
<CAPTION>

                                                                               December 31,         December 31,
             ASSETS                                                                 1995                 1994      
                                                                               ------------         ------------
<S>                                                                                 <C>                 <C>
Current Assets:
  Cash and cash equivalents, including restricted cash and cash
    equivalents of $144 and $119, respectively  . . . . . . . . . . . . . .         $  675              $  326
  Accounts receivable, net  . . . . . . . . . . . . . . . . . . . . . . . .            282                 282
  Accounts receivable from subsidiaries, net  . . . . . . . . . . . . . . .             18                  64
  Notes receivable from subsidiaries  . . . . . . . . . . . . . . . . . . .             79                  98
  Spare parts and supplies, net . . . . . . . . . . . . . . . . . . . . . .            107                 120
  Prepayments and other . . . . . . . . . . . . . . . . . . . . . . . . . .             85                  70
                                                                                    ------              ------
    Total current assets  . . . . . . . . . . . . . . . . . . . . . . . . .          1,246                 960
                                                                                    ------              ------

Property and Equipment:
  Owned property and equipment, net of accumulated
    depreciation of $263 and $180, respectively . . . . . . . . . . . . . .            984               1,017

  Purchase deposits for flight equipment  . . . . . . . . . . . . . . . . .             47                 166

  Capital leases, net of accumulated amortization
    of $102 and $58, respectively . . . . . . . . . . . . . . . . . . . . .            272                 311
                                                                                    ------              ------

      Total property and equipment  . . . . . . . . . . . . . . . . . . . .          1,303               1,494
                                                                                    ------              ------

Other Assets:
  Routes, gates and slots, net of accumulated amortization
    of $116 and $73, respectively . . . . . . . . . . . . . . . . . . . . .          1,005               1,051
  Reorganization value in excess of amounts allocable to
    identifiable assets, net of accumulated amortization
    of $35 and $23, respectively  . . . . . . . . . . . . . . . . . . . . .            196                 208
  Investment in subsidiaries (g)  . . . . . . . . . . . . . . . . . . . . .            276                 261
  Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             37                  17
  Other assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . .             90                  49
                                                                                    ------              ------
      Total other assets  . . . . . . . . . . . . . . . . . . . . . . . . .          1,604               1,586
                                                                                    ------              ------

        Total Assets  . . . . . . . . . . . . . . . . . . . . . . . . . . .         $4,153              $4,040
                                                                                    ======              ======

</TABLE>




These Statements should be read in conjunction with the Consolidated Financial
Statements and Notes thereto and Notes to Schedule I.



                                      48

<PAGE>   88
                           CONTINENTAL AIRLINES, INC.
                             (Parent Company Only)
           SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
                         CONDENSED BALANCE SHEET (a)(b)
                (In millions of dollars, except for share data)


<TABLE>
<CAPTION>
                                                                              December 31,         December 31,
LIABILITIES AND STOCKHOLDERS' EQUITY                                              1995                 1994      
                                                                             ---------------      ---------------
<S>                                                                              <C>                   <C>
Current Liabilities:
  Debt and capital lease obligations in default . . . . . . . . . . . . . . .    $     -               $  490
  Current maturities of long-term debt (c)  . . . . . . . . . . . . . . . . .        156                  108
  Current maturities of capital leases  . . . . . . . . . . . . . . . . . . .         50                   18
  Accounts payable  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        564                  548
  Air traffic liability . . . . . . . . . . . . . . . . . . . . . . . . . . .        541                  552
  Accrued other liabilities . . . . . . . . . . . . . . . . . . . . . . . . .        537                  493
                                                                                 -------               ------
      Total current liabilities . . . . . . . . . . . . . . . . . . . . . . .      1,848                2,209
                                                                                 -------               ------

Long-Term Debt (c)  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      1,118                  860
                                                                                 -------               ------
Capital Leases  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        269                  120
                                                                                 -------               ------
Deferred Credits and Other Long-Term Liabilities  . . . . . . . . . . . . . .        330                  695
                                                                                 -------               ------

Commitments and Contingencies (d)

Continental-Obligated Mandatorily Redeemable Preferred Securities
  of Trust (e)  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        242                    -
                                                                                 -------               ------

Redeemable Preferred Stock (aggregate liquidation
  value - $41 and $56, respectively) (f)  . . . . . . . . . . . . . . . . . .         41                   53
                                                                                 -------               ------

Common Stockholders' Equity:
  Class A common stock - $.01 par, 50,000,000 shares authorized;
    6,301,056 shares issued and outstanding at December 31, 1995
    and 1994, respectively (f)  . . . . . . . . . . . . . . . . . . . . . . .          -                    -
  Class B common stock - $.01 par, 100,000,000 shares authorized;
  21,428,274 shares issued and outstanding at December 31, 1995;
    20,403,512 shares issued and 20,373,512 shares outstanding at
    December 31, 1994, (f)  . . . . . . . . . . . . . . . . . . . . . . . . .          -                    -
  Additional paid-in capital  . . . . . . . . . . . . . . . . . . . . . . . .        733                  778
  Accumulated deficit . . . . . . . . . . . . . . . . . . . . . . . . . . . .       (428)                (652)
  Unvested portion of restricted stock  . . . . . . . . . . . . . . . . . . .        (10)                 (14)
  Additional minimum pension liability  . . . . . . . . . . . . . . . . . . .         (8)                  (7)
  Unrealized gain (loss) on marketable equity securities  . . . . . . . . . .         18                   (2)
  Treasury stock - 30,000 shares in 1994  . . . . . . . . . . . . . . . . . .          -                    -
                                                                                 -------               ------
    Total common stockholders' equity . . . . . . . . . . . . . . . . . . . .        305                  103
                                                                                 -------               ------
       Total Liabilities and Stockholders' Equity . . . . . . . . . . . . . .    $ 4,153               $4,040
                                                                                 =======               ======
</TABLE>


These Statements should be read in conjunction with the Consolidated Financial
Statements and Notes thereto and Notes to Schedule I.




                                      49

<PAGE>   89
                           CONTINENTAL AIRLINES, INC.
                             (Parent Company Only)
           SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
                         STATEMENT OF CASH FLOWS (a)(b)
                            (In millions of dollars)



<TABLE>
<CAPTION>
                                                                           Year ended             
                                                                           December 31,         April 28, 1993
                                                                     ----------------------          through   
                                                                       1995          1994      December 31, 1993
                                                                     --------      --------    -----------------
<S>                                                                     <C>           <C>              <C>
Net cash provided (used) by operating activities  . . . . . . . .       $351          $(39)            $ 63
                                                                        ----          ----             ----

Cash Flows from Investing Activities:
    Proceeds from disposition of property, equipment
      and other assets  . . . . . . . . . . . . . . . . . . . . .         20            28                -
    Capital expenditures, net of returned purchase deposits . . .        (68)         (196)            (217)
    Purchase deposits refunded in connection with
       aircraft delivered . . . . . . . . . . . . . . . . . . . .         97            96                -
    Investment in America West  . . . . . . . . . . . . . . . . .          -           (19)               -
                                                                        ----          ----             ----
    Net cash provided (used) by investing activities  . . . . . .         49           (91)            (217)
                                                                        ----          ----             ----

Cash Flows from Financing Activities:
    Net proceeds from issuance of long-term debt  . . . . . . . .          7            31               90
    Payments on long-term debt and capital
      lease obligations . . . . . . . . . . . . . . . . . . . . .       (299)         (256)            (109)
    Net proceeds from issuance of preferred and
      common stock  . . . . . . . . . . . . . . . . . . . . . . .         13             -              153
    Net proceeds from issuance of preferred
      securities of trust . . . . . . . . . . . . . . . . . . . .        242             -                -
    Purchase of warrants  . . . . . . . . . . . . . . . . . . . .        (14)            -                -
                                                                        ----          ----             ----
    Net cash provided (used) by financing activities  . . . . . .        (51)         (225)             134
                                                                        ----          ----             ----

Net Increase (Decrease) in Cash and Cash
   Equivalents  . . . . . . . . . . . . . . . . . . . . . . . . .        349          (355)             (20)
Cash and Cash Equivalents -
  Beginning of Period . . . . . . . . . . . . . . . . . . . . . .        326           681              701
                                                                        ----          ----             ----

Cash and Cash Equivalents -
  End of Period . . . . . . . . . . . . . . . . . . . . . . . . .       $675          $326             $681
                                                                        ====          ====             ====

Supplemental Cash Flows Information:
  Interest paid . . . . . . . . . . . . . . . . . . . . . . . . .       $156          $179             $ 80
  Income taxes paid . . . . . . . . . . . . . . . . . . . . . . .          7             -                -
</TABLE>


                                                        (continued on next page)





                                      50

<PAGE>   90
                           CONTINENTAL AIRLINES, INC.
                             (Parent Company Only)
           SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
                         STATEMENT OF CASH FLOWS (a)(b)
                            (In millions of dollars)



<TABLE>
<CAPTION>
                                                                         Year ended           
                                                                         December 31,          April 28, 1993 
                                                                     -------------------          through     
                                                                       1995          1994      December 31, 1993
                                                                     --------      --------    -----------------
<S>                                                                    <C>           <C>              <C>
Financing and Investing Activities
  Not Affecting Cash:

    Reclassification of accrued rent,
      capital leases and interest to
      long-term debt  . . . . . . . . . . . . . . . . . . . . . .      $  65         $  26             $ 73

    Capitalization of operating leases
      due to renegotiated terms . . . . . . . . . . . . . . . . .      $   -         $   -             $137

    Property and equipment acquired
      through the issuance of debt  . . . . . . . . . . . . . . .      $  15         $  10             $  2

    Issuance of debt in connection with
      purchase of Air Canada warrants . . . . . . . . . . . . . .      $  42         $   -             $  -

    Issuance of convertible secured
      debentures in connection with
      the aircraft settlements  . . . . . . . . . . . . . . . . .      $ 158         $   -             $  -

    Exchange of preferred stock for
      long-term debt  . . . . . . . . . . . . . . . . . . . . . .      $  21         $   -             $  -

</TABLE>






These Statements should be read in conjunction with the Consolidated Financial
Statements and Notes thereto and Notes to Schedule I.



                                      
                                      51

<PAGE>   91
                              NOTES TO SCHEDULE I


(a)      See Note 2 to Notes to Consolidated Financial Statements for a
         discussion of Continental Airlines, Inc. (the "Company" or
         "Continental") and Predecessor Company's emergence from bankruptcy.

(b)      The Condensed Financial Information of Registrant includes the
         accounts of Continental and its wholly owned subsidiaries, Rubicon
         Indemnity, Ltd., ("Rubicon") and Continental Airlines Finance Trust
         (the "Trust").  Rubicon was formed for workers' compensation purposes.
         The Trust was formed for the issuance of preferred securities.  These
         subsidiaries have been included in Schedule I to properly reflect the
         parent company's workers' compensation liability and redeemable
         preferred securities.

(c)      Continental's long-term debt (parent company only) was recorded at
         fair market value at April 27, 1993.  Long- term debt as of December
         31, 1995 and 1994 is summarized as follows (in millions):


<TABLE>
<CAPTION>
                                                                                            1995        1994  
                                                                                          --------    --------

<S>                                                                                        <C>         <C>
Secured
- -------

  Notes payable, interest rates of 8.0% to 9.86%,
   payable through 2003   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    $  392      $  421
  Notes payable, interest rates of 5.84% to 18.38% (imputed interest
   rates approximate stated interest rates), payable through 2005   . . . . . . . . . .       187         259
  Notes payable, interest rates of 6.0% to 12.25% (imputed interest
   rates of 7.86% to 9.9%), payable through 2008  . . . . . . . . . . . . . . . . . . .       262         307
  Floating rate notes, interest rates of prime plus 0.5% to 0.75%,
   LIBOR plus 0.75% to 4.0% and Eurodollar plus 0.75%, payable
    through 2007  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       173         120
  Series A debentures, interest rate of 6%, payable through 2002  . . . . . . . . . . .       124           -
  Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         7           6

  Unsecured
  ---------
   Notes payable, interest rates of 6.94% to 12% (imputed interest
     rates of 10.22% to 21.8%), payable through 2005  . . . . . . . . . . . . . . . . .       122         112
   Other  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         7           8
                                                                                           ------      ------
                                                                                            1,274       1,233
   Less:  debt in default   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         -         265
   Less:  current maturities  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       156         108
                                                                                           ------      ------
    Total  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $1,118      $  860
                                                                                           ======      ======

</TABLE>




                                      52

<PAGE>   92
                        NOTES TO SCHEDULE I (continued)


         Long-term debt maturities due over the next five years are as follows
(in millions):


<TABLE>
         <S>                                                                                 <C>
         Year ending December 31,
                 1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          $156
                 1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           197
                 1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           162
                 1999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           171
                 2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           162
</TABLE>


         Not included in the above table are the Convertible Secured
         Debentures, with a principal balance at December 31, 1995 of $124
         million, which were redeemed or repurchased as of February 1, 1996.

(d)      See Note 12 of Notes to Consolidated Financial Statements.

(e)      See Note 6 of Notes to Consolidated Financial Statements.

(f)      See Note 7 of Notes to Consolidated Financial Statements.

(g)      The Company received $81 million in dividends from wholly owned
         subsidiaries in 1995.

(h)      The Company has not paid dividends on its common stock.

On April 27, 1993, Continental adopted fresh start reporting in accordance with
SOP 90-7, which resulted in adjustments to the Company's common stockholders'
equity and the carrying values of assets and liabilities.  Accordingly, the
Parent Company Only post-reorganization balance sheets and statements of
operations have not been prepared on a consistent basis of accounting with the
Parent Company Only pre-reorganization balance sheet and statements of
operations.  See Note 2 of Notes to Consolidated Financial Statements.



                                      
                                      53

<PAGE>   93
                        NOTES TO SCHEDULE I (continued)


                      CONTINENTAL AIRLINES HOLDINGS, INC.
                             (Parent Company Only)
           SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
                     CONDENSED STATEMENT OF OPERATIONS (a)
                            (In millions of dollars)


<TABLE>
<CAPTION>
                                                                             Predecessor Company    
                                                                         -----------------------------
                                                                         Period from January 1, 1993
                                                                             through April 27, 1993   
                                                                         -----------------------------
<S>                                                                                  <C>
Operating Revenues (lease revenue and management
  fees from subsidiaries) (a) . . . . . . . . . . . . . . . . . . . . .              $    33
                                                                                     -------

Operating Expenses:
  Wages, salaries and related costs . . . . . . . . . . . . . . . . . .                    1
  Rentals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                   15
  Depreciation and amortization . . . . . . . . . . . . . . . . . . . .                    5
  Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                    1
                                                                                     -------
                                                                                          22
                                                                                     -------
Operating Income  . . . . . . . . . . . . . . . . . . . . . . . . . . .                   11
                                                                                     -------
Nonoperating Income (Expense):
  Interest expense  . . . . . . . . . . . . . . . . . . . . . . . . . .                   (5)
  Other, net  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                 (133)
                                                                                     -------
   Total nonoperating expense, net  . . . . . . . . . . . . . . . . . .                 (138)
                                                                                     -------
Loss Before Equity in Net Loss of Subsidiaries
  and Extraordinary Gain  . . . . . . . . . . . . . . . . . . . . . . .                 (127)

Equity in Net Loss of Subsidiaries  . . . . . . . . . . . . . . . . . .                  837
                                                                                     -------

Income Before Extraordinary Gain  . . . . . . . . . . . . . . . . . . .                  710

Extraordinary Gain  . . . . . . . . . . . . . . . . . . . . . . . . . .                1,930
                                                                                     -------

Net Income  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              $ 2,640
                                                                                     =======

</TABLE>





These Statements should be read in conjunction with the Consolidated Financial
Statements and Notes thereto and Notes to Schedule I.


                                      

                                      54

<PAGE>   94
                        NOTES TO SCHEDULE I (continued)


                      CONTINENTAL AIRLINES HOLDINGS, INC.
                             (Parent Company Only)
           SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
                          STATEMENTS OF CASH FLOWS (a)
                            (In millions of dollars)



<TABLE>
<CAPTION>
                                                                             Predecessor Company    
                                                                         -----------------------------
                                                                         Period from January 1, 1993
                                                                             through April 27, 1993   
                                                                         -----------------------------
<S>                                                                                   <C>
Net cash provided by operating activities . . . . . . . . . . . . . . .               $    -
                                                                                      ------

Cash Flows from Investing Activities:
  Proceeds from disposition of property and equipment . . . . . . . . .                    -
  Capital expenditures  . . . . . . . . . . . . . . . . . . . . . . . .                    -
                                                                                      ------
   Net cash provided by investing activities  . . . . . . . . . . . . .                    -
                                                                                      ------

Cash Flows from Financing Activities:
  Proceeds from issuance of long-term debt, net . . . . . . . . . . . .                    -
  Payments on long-term debt and capital lease obligations  . . . . . .                    -
                                                                                      ------

Net cash used by financing activities . . . . . . . . . . . . . . . . .                    -
                                                                                      ------

Net Increase in Cash and Cash Equivalents . . . . . . . . . . . . . . .                    -

Cash and Cash Equivalents -
  Beginning of Period . . . . . . . . . . . . . . . . . . . . . . . . .                    9
                                                                                      ------

Cash and Cash Equivalents -
  End of Period . . . . . . . . . . . . . . . . . . . . . . . . . . . .               $    9
                                                                                      ======

</TABLE>





These Statements should be read in conjunction with the Consolidated Financial
Statements and Notes thereto and Notes to Schedule I.



                                      
                                      55

<PAGE>   95
                        NOTES TO SCHEDULE I (continued)


(a)      The Condensed Financial Information of Registrant includes the
         accounts of Continental Airlines Holdings, Inc.  ("Holdings") and
         certain special purpose subsidiaries, primarily formed to provide fuel
         purchasing services to Holdings' airline subsidiaries and to finance
         aircraft leased to Continental.













                                      56

<PAGE>   96
                  CONTINENTAL AIRLINES, INC. AND SUBSIDIARIES

                SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

             For the Years Ended December 31, 1995, 1994, and 1993
                            (In millions of dollars)






<TABLE>
<CAPTION>
                                                                  Allowance
                                                                 for Doubtful           Allowance for
                                                                  Receivables           Obsolescence 
                                                                 -------------          -------------
   <S>                                                                  <C>                    <C>
   Balance, December 31, 1992   . . . . . . . . . . . . . . . .         $49                    $80

     Additions charged to expense   . . . . . . . . . . . . . .          19                     10
     Deductions from reserve  . . . . . . . . . . . . . . . . .         (32)                    (2)
     Other  . . . . . . . . . . . . . . . . . . . . . . . . . .          (1)                   (83) (a)
                                                                        ---                    ---     

   Balance, December 31, 1993   . . . . . . . . . . . . . . . .          35                      5

     Additions charged to expense   . . . . . . . . . . . . . .          25                     32
     Deductions from reserve  . . . . . . . . . . . . . . . . .         (21)                    (1)
     Other  . . . . . . . . . . . . . . . . . . . . . . . . . .          (1)                     -
                                                                        ---                    ---

   Balance, December 31, 1994   . . . . . . . . . . . . . . . .          38                     36

     Additions charged to expense   . . . . . . . . . . . . . .          24                     12
     Deductions from reserve  . . . . . . . . . . . . . . . . .         (15)                   (12)
     Other  . . . . . . . . . . . . . . . . . . . . . . . . . .          (3)                     -
                                                                        ---                    ---

   Balance, December 31, 1995   . . . . . . . . . . . . . . . .         $44                    $36
                                                                        ===                    ===

</TABLE>


(a)      Primarily represents fresh start adjustments in accordance with SOP
          90-7.




                                      57

<PAGE>   97

                                   SIGNATURES


Pursuant to the requirements of Section 13 or 15(d) 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.


                                        By   /s/ LAWRENCE W. KELLNER         
                                             ---------------------------------
                                             Lawrence W. Kellner 
                                             Senior Vice President and Chief 
                                             Financial Officer (On behalf of
                                             Registrant)
                                             
Date:  February 23, 1996

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the registrant in
the capacities and on the dates indicated.


<TABLE>
<CAPTION>
                       Signature                                Capacity                         Date          
          -------------------------------------      -----------------------------      -----------------------
<S>       <C>                                        <C>                                <C>
  (i)     Principal Executive Officer:

          /s/ GORDON M. BETHUNE                      President,                         February 23, 1996
          -----------------------------------        Chief Executive Officer
          Gordon M. Bethune                          and Director           

 (ii)     Principal Financial Officer:

          /s/ LAWRENCE W. KELLNER                    Senior Vice President              February 23, 1996
          -----------------------------------        and Chief Financial
          Lawrence W. Kellner                        Officer            
                                                                        

(iii)     Principal Accounting Officer:


          /s/ MICHAEL P. BONDS                       Staff Vice President               February 23, 1996
          -----------------------------------        and Controller
          Michael P.  Bonds                          

</TABLE>




                                      58

<PAGE>   98

<TABLE>
 <S>      <C>                                        <C>                                <C>
 (iv)     A Majority of the Directors:

          THOMAS J. BARRACK, JR.*                    Director                           February 23, 1996
          -----------------------------------
          Thomas J. Barrack, Jr.

          DAVID BONDERMAN*                           Director and                       February 23, 1996
          -----------------------------------        Chairman of the Board
          David Bonderman                                                 

          /s/ GREGORY D. BRENNEMAN                   Director and                       February 23, 1996
          -----------------------------------        Chief Operating Officer
          Gregory D. Brenneman                                              

          JOEL H. COWAN*                             Director                           February 23, 1996
          -----------------------------------
          Joel H. Cowan

          PATRICK FOLEY*                             Director                           February 23, 1996
          -----------------------------------
          Patrick Foley

          ROWLAND C. FRAZEE*                         Director                           February 23, 1996
          -----------------------------------
          Rowland C. Frazee

          HOLLIS L. HARRIS*                          Director                           February 23, 1996
          -----------------------------------
          Hollis L. Harris

          DEAN C. KEHLER*                            Director                           February 23, 1996
          -----------------------------------
          Dean C. Kehler

          ROBERT L. LUMPKINS*                        Director                           February 23, 1996
          -----------------------------------
          Robert L. Lumpkins

          DOUGLAS McCORKINDALE*                      Director                           February 23, 1996
          -----------------------------------
          Douglas McCorkindale

          DAVID E. MITCHELL, O.C.*                   Director                           February 23, 1996
          -----------------------------------
          David E. Mitchell, O.C.

          RICHARD W. POGUE*                          Director                           February 23, 1996
          -----------------------------------
          Richard W. Pogue
          
          WILLIAM S. PRICE III*                      Director                           February 23, 1996
          -----------------------------------
          William Price III
          
          DONALD L. STURM*                           Director                           February 23, 1996
          -----------------------------------
          Donald L. Sturm

</TABLE>



                                      59

<PAGE>   99

<TABLE>
          <S>                                        <C>                                <C>
          CLAUDE I. TAYLOR, O.C.*                    Director                           February 23, 1996
          -----------------------------------
          Claude I. Taylor, O.C.
          
          KAREN HASTIE WILLIAMS*                     Director                           February 23, 1996
          -----------------------------------
          Karen Hastie Williams
          
          CHARLES A. YAMARONE*                       Director                           February 23, 1996
          -----------------------------------
          Charles A. Yamarone

</TABLE>


*By       /s/ LAWRENCE W. KELLNER
          -----------------------------------
          Lawrence W. Kellner
          Attorney-in-Fact
          February 23, 1996




                                      60

<PAGE>   100

                               INDEX TO EXHIBITS
                                       OF
                           CONTINENTAL AIRLINES, INC.


2.1              Revised Third Amended Disclosure Statement Pursuant to Section
                 1125 of the Bankruptcy Code with Respect to Debtors' Revised
                 Second Amended Joint Plan of Reorganization Under Chapter 11
                 of the United States Bankruptcy Code, as filed with the
                 Bankruptcy Court on January 13, 1993 -- incorporated by
                 reference from Exhibit 2.1 to Continental's Annual Report on
                 Form 10-K for the year ended December 31, 1992 (File no.
                 0-09781) (the "1992 10-K").

2.2              Modification of Debtors' Revised Second Amended Joint Plan of
                 Reorganization dated March 12, 1993 -- incorporated by
                 reference to Exhibit 2.2 to Continental's Current Report on
                 Form 8-K, dated April 16, 1993 (the "April 8-K").

2.3              Second Modification of Debtors' Revised Second Amended Joint
                 Plan of Reorganization, dated April 8, 1993 -- incorporated by
                 reference to Exhibit 2.3 to the April 8-K.

2.4              Third Modification of Debtors' Revised Second Amended Joint
                 Plan of Reorganization, dated April 15, 1993 -- incorporated
                 by reference to Exhibit 2.4 to the April 8-K.

2.5              Confirmation Order, dated April 16, 1993 -- incorporated by
                 reference to Exhibit 2.5 to the April 8-K.

3.1              Restated Certificate of Incorporation of Continental --
                 incorporated by reference to Exhibit 4.1 to the April 8-K.

3.2              By-laws of Continental, as amended to date -- incorporated by
                 reference to Exhibit 3.1 to Continental's Quarterly Report on
                 Form 10-Q for the quarter ended September 30, 1995 (the "1995
                 Third Quarter 10-Q").

4.1              Specimen Class A Common Stock Certificate of the Company. (3)

4.1(a)           Specimen Class B Common Stock Certificate of the Company --
                 incorporated by reference to Exhibit 4.1 to Continental's Form
                 S-1 Registration Statement (No. 33-68870) (the "1993 S-1").

4.2              Certificate of Designations of Series A 12% Cumulative
                 Preferred Stock -- incorporated by reference to Exhibit 4.3 to
                 Continental's Quarterly Report on Form 10-Q for the quarter
                 ended June 30, 1995 ("the 1995 Second Quarter 10-Q").






<PAGE>   101
4.3              Subscription and Stockholders' Agreement -- incorporated by
                 reference to Exhibit 4.5 to the April 8-K.

4.4              Registration Rights Agreement dated as of April 27, 1993,
                 among Continental, Air Partners and Air Canada -- incorporated
                 by reference to Exhibit 4.6 to the April 8-K.

4.5              Warrant Agreement dated as of April 27, 1993, between
                 Continental and Continental as warrant agent -- incorporated
                 by reference to Exhibit 4.7 to the April 8-K.

4.6              Loan Agreement dated as of April 27, 1993, among Continental
                 Micronesia, Air Micronesia, Inc. and GE Capital --
                 incorporated by reference to Exhibit 4.8 to the April 8-K.

4.6(a)           Waiver, Consent and Amendment to CMI Loan Agreement, dated as
                 of March 30, 1995, among CMI, Air Micronesia, Inc. and GE
                 Capital -- incorporated by reference to Exhibit 4.8(a) to
                 Continental's Annual Report on Form 10-K for the year ended
                 December 31, 1994 (File no. 0-09781) (the "1994 10-K"). (2)

4.7              Loan Agreements dated as of April 27, 1993, between ASATT
                 Corp. and Continental -- incorporated by reference to Exhibit
                 4.9 to the April 8-K.

4.7(a)           Waiver, Consent and Amendment to Series B-1 Loan Agreement,
                 dated as of March 30, 1995, between Continental and Global
                 Project and Structured Finance Corporation (successor by
                 merger to ASATT Corp.) -- incorporated by reference to Exhibit
                 4.9(a) to the 1994 10-K. (2)

4.7(b)           Waiver, Consent and Amendment to Series B-2 Loan Agreement,
                 dated as of March 30, 1995, between Continental and Global
                 Project and Structured Finance Corporation (successor by
                 merger to ASATT Corp.) -- incorporated by reference to Exhibit
                 4.9(b) to the 1994 10-K. (2)

4.7(c)           Amendment No. 2 to Series B-1 Loan Agreement, dated as of
                 September 29, 1995, between Continental and Global Project and
                 Structured Finance Corporation. (3)

4.7(d)           Amendment No. 2 to Series B-2 Loan Agreement, dated as of
                 September 29, 1995, between Continental and Global Project and
                 Structured Finance Corporation. (2)(3)

4.7(e)           Amendment No. 3 to Series B-1 Loan Agreement, dated as of
                 December 22, 1995, between Continental and Global Project and
                 Structured Finance Corporation. (2)(3)





<PAGE>   102
4.7(f)           Amendment No. 3 to Series B-2 Loan Agreement, dated as of
                 December 22, 1995, between Continental and Global Project and
                 Structured Finance Corporation. (2)(3)

4.8              Loan Agreement dated as of April 27, 1993, between Continental
                 and General Electric Company, individually and as agent --
                 incorporated by reference to Exhibit 4.10 to the 1993 S-1.

4.8(a)           First Amendment to Loan Agreement, dated as of August 12,
                 1993, between Continental and General Electric Company,
                 individually and as agent. (3)

4.8(b)           Waiver, Consent and Amendment to Consolidation Loan Agreement,
                 dated as of March 30, 1995, between Continental and General
                 Electric Company, individually and as agent -- incorporated by
                 reference to Exhibit 4.10(a) to the 1994 10-K. (2)

4.8(c)           Amendment No. 2 to Consolidation Loan Agreement, dated as of
                 December 22, 1995, between Continental and General Electric
                 Company, individually and as agent. (3)

4.9              Master Restructuring Agreement, dated as of March 30, 1995,
                 between Continental and GE Capital -- incorporated by
                 reference to Exhibit 4.11 to the 1994 10-K. (2)

4.9(a)           Waiver Consent and Amendment, dated as of September 29, 1995,
                 between Continental and GE Capital. (3)

4.9(b)           Amendment to Master Restructuring Agreement, dated as of
                 December 22, 1995, between Continental and GE Capital. (3)

4.10             Continental hereby agrees to furnish to the Commission, upon
                 request, copies of certain instruments defining the rights of
                 holders of long-term debt of the kind described in Item
                 601(b)(4)(iii)(A) of Regulation S-K.

10.1             Litigation Settlement Agreement, dated as of August 31, 1992,
                 among the Pension Benefit Guaranty Corporation and, jointly
                 and severally, each of the debtors (as defined)  --
                 incorporated by reference to Exhibit 10.10 to the 1992 10-K.

10.2             Agreement of Lease dated as of January 11, 1985, between the
                 Port Authority of New York and New Jersey and People Express
                 Airlines, Inc., regarding Terminal C (the "Terminal C Lease")
                 -- incorporated by reference to Exhibit 10.61 to the Annual
                 Report on Form 10-K (File No. 0-9781) of People Express
                 Airlines, Inc. for the year ended December 31, 1984.






<PAGE>   103
10.2(a)          Supplemental Agreements Nos. 1 through 6 to the Terminal C
                 Lease -- incorporated by reference to Exhibit 10.3 to
                 Continental's Annual Report on Form 10-K (File No. 1-8475) for
                 the year ended December 31, 1987 ("the 1987 10-K").

10.2(b)          Supplemental Agreement No. 7 to the Terminal C Lease --
                 incorporated by reference to Exhibit 10.4 to Continental's
                 Annual Report on Form 10-K (File No. 1-8475) for the year
                 ended December 31, 1988.

10.2(c)          Supplemental Agreements No. 8 through 11 to the Terminal C
                 Lease -- incorporated by reference to Exhibit 10.10 to the
                 1993 S-1.

10.2(d)          Supplemental agreements No. 12 through 15 to the Terminal C
                 Lease. (3)

10.3             Assignment of Lease with Assumption and Consent dated as of
                 August 15, 1987, among the Port Authority of New York and New
                 Jersey, People Express Airlines, Inc. and Continental  --
                 incorporated by reference to Exhibit 10.2 to the 1987 10-K.

10.4*            Amended and restated employment agreement between the Company
                 and Gordon M. Bethune. (3)

10.5*            Amended and restated employment agreement between the Company
                 and Gregory D. Brenneman. (3)

10.6*            Amended and restated employment agreement between the Company
                 and Lawrence W. Kellner. (3)

10.7*            Amended and restated employment agreement between the Company
                 and Barry P. Simon. (3)

10.8*            Amended and restated employment agreement between the Company
                 and C. D. McLean. (3)

10.9*            Continental Airlines, Inc. 1994 Incentive Equity Plan --
                 incorporated by reference to Exhibit 4.3 to the Company's Form
                 S-8 Registration Statement (No. 33-81324).

10.9(a)*         First Amendment to Continental Airlines, Inc. 1994 Incentive
                 Equity Plan -- incorporated by reference to Exhibit 10.1 to
                 the 1995 Third Quarter 10-Q.

10.10            Purchase Agreement No. 1782, including exhibits and side
                 letters thereto, between the Company and Boeing, effective
                 April 27, 1993, relating to the purchase of Boeing 737-524
                 aircraft -- incorporated by reference to Exhibit 10.1 to
                 Continental's Quarterly Report on Form 10-Q for the quarter
                 ended June 30, 1993 (the "1993 Second Quarter 10-Q"). (1)






<PAGE>   104
10.10(a)         Supplemental Agreement No. 6 to Purchase Agreement No. 1782
                 between the Company and Boeing, dated March 31, 1995, relating
                 to the purchase of Boeing 737-524 aircraft  --  incorporated
                 by reference to Exhibit 10.11(a)  to the 1994 10-K. (1)

10.11            Purchase Agreement No. 1783, including exhibits and side
                 letters thereto, between the Company and Boeing, effective
                 April 27, 1993, relating to the purchase of Boeing 757-224
                 aircraft -- incorporated by reference to Exhibit 10.2 to the
                 1993 Second Quarter 10-Q. (1)

10.11(a)         Supplemental Agreement No. 4 to Purchase Agreement No. 1783
                 between the Company and Boeing, dated March 31, 1995, relating
                 to the purchase of Boeing 757-224 aircraft  --  incorporated
                 by reference to Exhibit 10.12(a)  to the 1994 10-K. (1)

10.12            Purchase Agreement No. 1784, including exhibits and side
                 letters thereto, between the Company and Boeing, effective
                 April 27, 1993, relating to the purchase of Boeing 767-324ER
                 aircraft -- incorporated by reference to Exhibit 10.3 to the
                 1993 Second Quarter 10-Q. (1)

10.12(a)         Supplemental Agreement No. 3 to Purchase Agreement No. 1784
                 between the Company and Boeing, dated March 31, 1995, relating
                 to the purchase of Boeing 767-324ER aircraft -- incorporated
                 by reference to Exhibit 10.13(a) to the 1994 10-K. (1)

10.13            Purchase Agreement No. 1785, including exhibits and side
                 letters thereto, between the Company and Boeing, effective
                 April 27, 1993, relating to the purchase of Boeing 777-224
                 aircraft -- incorporated by reference to Exhibit 10.4 to the
                 1993 Second Quarter 10-Q. (1)

10.13(a)         Supplemental Agreement No. 3 to Purchase Agreement No. 1785
                 between the Company and Boeing, dated March 31, 1995, relating
                 to the purchase of Boeing 777-224 aircraft  --  incorporated
                 by reference to Exhibit 10.14(a) to the 1994 10-K. (1)

10.14            Lease Agreement dated as of May 1992 between the City and
                 County of Denver, Colorado and Continental regarding Denver
                 International Airport  --  incorporated by reference to
                 Exhibit 10.17 to the 1993 S-1.

10.14(a)         Supplemental Lease Agreement, including an exhibit thereto,
                 dated as of April 3, 1995 between the City and County of
                 Denver, Colorado and Continental and United Air Lines, Inc.
                 regarding Denver International Airport -- incorporated by
                 reference to Exhibit 10.15(a) to the 1994 10-K.

10.15            Stock Subscription Warrant of Continental Micronesia granted
                 to United  Micronesia Development Association, Inc. --
                 incorporated by reference to Exhibit 10.18 to the 1993 S-1.





<PAGE>   105
10.16            Lease Agreement, as amended and supplemented, between the
                 Company and the City of Houston, Texas regarding Terminal C of
                 Houston Intercontinental Airport -- incorporated by reference
                 to Exhibit 10.5 to Continental's Quarterly Report on Form 10-Q
                 for the quarter ended September 30, 1993 (the "1993 Third
                 Quarter 10-Q").

10.17            Agreement and Lease dated as of May 1987, as supplemented,
                 between the City of Cleveland, Ohio and Continental regarding
                 Cleveland Hopkins International Airport -- incorporated by
                 reference to Exhibit 10.6 to the 1993 Third Quarter 10-Q.

10.18            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 Continental's
                 Schedule 13D relating to America West Airlines, Inc. filed on
                 August 25, 1994.

10.19*           Form of Letter Agreement relating to certain flight benefits
                 between the Company and each of its nonemployee directors.
                 (3)

11.1             Statement Regarding Computation of Per Share Earnings. (3)

21.1             List of Subsidiaries of Continental. (3)

23.1             Consent of Ernst & Young LLP. (3)

24.1             Powers of attorney executed by certain directors and officers
                 of Continental. (3)

27.1             Financial Data Schedule. (3)

__________

*These exhibits relate to management contracts or compensatory plans or
 arrangements.

(1)      The Commission has granted confidential treatment for a portion of
         this agreement.  
(2)      The Company has applied to the Commission for confidential treatment 
         of a portion of this exhibit.  
(3)      Filed herewith.





<PAGE>   106


<TABLE>
                                                                          Exhibit 4.1

   <S>                                                       <C>
   INCORPORATED UNDER THE                                      CLASS A COMMON STOCK  
LAWS OF THE STATE OF DELAWARE                                PAR VALUE $.01 PER SHARE


<S>                                               <C>
THIS CERTIFICATE IS TRANSFERABLE                           CUSIP 210795  20  9       
IN DALLAS, TEXAS; CLEVELAND, OHIO                 SEE REVERSE FOR CERTAIN DEFINITIONS
AND NEW YORK, NEW YORK


                              CONTINENTAL AIRLINES, INC.

This certifies that:




is the owner of

          FULLY PAID AND NON-ASSESSABLE SHARES OF THE CLASS A COMMON STOCK OF
<S>
Continental Airlines, Inc. (hereafter and on the back hereof called the "Corporation")
transferable on the books of the Corporation by the holder hereof in person or by its
duly authorized attorney upon distribution of this certificate properly endorsed.  This
certificate and the shares represented hereby are issued and shall be sold subject to
the provisions of the loans of the State of Delaware and to all of the provisions of the
Restated Certificate of Incorporation and the By-Laws of the Corporation, as amended
from time to time (copies of which are on file at the office of the Transfer Agent), to
all of which the holder of this certificate by acceptance hereof asserts.  This
certificate is not valid unless countersigned and registered by the Transfer Agent and
Registrar.
                                                                                              [SEAL]
Witness the facsimile seal of the Corporation and the facsimile signature of the
Corporation's duly authorized officers.
            <S>                            <C>
                 /s/ Gordon Bethune        Dated:
                      PRESIDENT AND                COUNTERSIGNED AND REGISTERED:
            CHIEF EXECUTIVE OFFICER                   KeyCorp Shareholder Services, Inc.
                                                                       TRANSFER AGENT
              <S>                                                      AND REGISTRAR
              /s/ Jeffery A. Smisek                              <C>
                          SECRETARY                              AUTHORIZED SIGNATURE
</TABLE>


                        Continental Airlines, Inc.

     The Corporation will furnish without charge to each stockholder who so
requests, a statement of the powers, designations, preferences and relative,
participating, optional or other special rights of each class of stock or
series thereof and the qualifications, limitations or restrictions of such
preferences and/or rights.

     The rights of persons who are not "Citizens of the United States" (as
defined in 49 U.S.C. 1301(16), as now in effect or as hereafter amended) to
vote the securities represented by this certificate are subject to certain
restrictions contained in the Restated Certificate of Incorporation and By-
Laws of the Corporation, copies of which are on file at the principal
executive offices of the Corporation.

     The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:

     TEN COM - as tenants in common     UNIF GIFT MIN ACT - ______ 
     TEN ENT - as tenants by the                            (Cust)
               entireties                                  Custodian _______
     JT TEN  - as joint tenants with                                  (Minor)
               right of survivorship                      under Uniform Gifts
               and now as tenants in                      to Minors Act
               common                                     __________________
                                                               (State)

 Additional abbreviations may also be used through not in the above list.

     For value received, ____________________ hereby sell, assign and
transfer unto _____________________________________________ (PLEASE INSERT
SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE)

___________________________________________________________________________
                PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS 
                   INCLUDING POSTAL ZIP CODE OF ASSIGNEE

__________________________________ Shares of the stock represented by the
within Certificate, and do hereby irrevocably constitute and appoint
__________________________________ Attorney to transfer the said stock on the
books of the within-named Corporation with full power of substitution in the
premises.

Dated ____________________________

     NOTICE:  THE SIGNATURE(S) TO THIS ASSIGNMENT MUST CORRESPOND WITH THE
     NAME(S) AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR
     WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER.

                              X  ________________________________
                                           (SIGNATURE)
                              X  ________________________________
                                           (SIGNATURE)

                              THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN
                              "ELIGIBLE GUARANTOR INSTITUTION" AS DEFINED IN
                              RULE 19Ad-15 UNDER THE SECURITIES EXCHANGE ACT
                              OF 1934, AS AMENDED.
                              SIGNATURE(S) GUARANTEED BY:


<PAGE>   107

                                                             Exhibit 4.7(c)

                            AMENDMENT NO. 2 TO
                         SERIES B-1 LOAN AGREEMENT


           AMENDMENT NO. 2 TO SERIES B-1 LOAN AGREEMENT, dated as of
September 29, 1995 (this "Amendment"), between CONTINENTAL AIRLINES, INC.,
a Delaware corporation ("Borrower"), and GLOBAL PROJECT & STRUCTURED
FINANCE CORPORATION (successor by merger to ASATT Corp.) ("Lender").


                           W I T N E S S E T H :

          WHEREAS, Borrower and Lender are parties to that certain Loan
Agreement, dated as of April 27, 1993, as amended by that certain Waiver,
Consent and Amendment to Series B-1 Loan Agreement, dated as of March 30,
1995 (such Loan Agreement, as amended and as it may be hereafter amended,
supplemented or otherwise modified from time to time, being hereinafter
referred to as the "Loan Agreement", and capitalized terms defined therein
and not otherwise defined herein being used herein as therein defined);

          WHEREAS, Borrower, together with Continental Express, Inc., GE
Capital, General Electric Company and Lender, are parties to that certain
Waiver and Consent and that certain Waiver, Consent and Amendment, each
dated as of the date hereof (collectively, the "Waivers");

          WHEREAS, Borrower has advised Lender that Borrower wishes to
amend certain provisions of the Loan Agreement in connection with the
transactions contemplated by the Waivers, and Borrower has requested that
Lender agree to various amendments to certain provisions of the Loan
Agreement in connection therewith; and
 
          WHEREAS, Lender has agreed to amend certain provisions of the
Loan Agreement upon the terms and subject to the conditions provided
herein;

          NOW, THEREFORE, in consideration of the premises, covenants and
agreements contained herein, the parties hereto hereby agree as follows:

          SECTION 1.  Amendments to Loan Agreement.  Section 1 of the Loan
Agreement is hereby amended by amending and restating the definition of
B-1/B-2 Termination Date as follows:

               "B-1/B-2 Termination Date" shall mean the date on
          which the B-1 Loan, the B-2 Loan and the Redemption
          Loan (as defined in the Other Tranche Agreement) and
          all accrued interest thereon shall have been completely
          discharged and no other Obligations (as such term is
          defined herein) and no other Obligations (as such term
          is defined in the Other Tranche Agreement) shall then
          be due and payable.

          SECTION 2.  Effective Date.  This Amendment shall become
effective upon the delivery of the fully executed Redemption Note by
Borrower to Lender.

          SECTION 3.  Miscellaneous.  (a)  Upon the effectiveness of this
Amendment, on and after the date hereof, each reference in the Loan
Agreement to "this Agreement," "hereunder," "hereof," "herein," or words of
like import, shall mean and be a reference to the Loan Agreement as amended
hereby.  Upon the effectiveness of this Amendment, on and after the date
hereof, each reference in each of the Loan Documents to "the B-1 Loan
Agreement," "thereunder," "thereof," "therein," or words of like import
referring to the Loan Agreement, shall mean and be a reference to the Loan
Agreement as amended hereby.

          (b)  Except as specifically amended herein, the Loan Agreement
and all of the other Loan Documents shall remain in full force and effect
and are hereby ratified and confirmed.  Without limiting the generality of
the foregoing, Borrower hereby confirms that all of its obligations under
the Collateral Documents shall continue and shall remain in full force and
effect.

          (c)  The execution, delivery and effectiveness of this Amendment
shall not, except as expressly provided herein, operate as a waiver of any
right, power or remedy of any Lender under any of the Loan Documents, nor
constitute a waiver of any provision of any of the Loan Documents.

          (d)  This Amendment may be executed in any number of separate
counterparts, each of which shall, collectively and separately, constitute
one agreement.

          (e)  The Section Titles contained in this Amendment are and shall
be without substantive meaning or content of any kind whatsoever and are
not part of the agreement among the parties hereto.

          (f)  Except as otherwise expressly provided in any of the Loan
Documents, in all respects, including all matters of construction, validity
and performance, this Amendment shall be governed by, and construed and
enforced in accordance with, the laws of the State of New York, without
regard to the principles thereof regarding conflicts of law, and any
applicable laws of the United States.  Each Lender and Borrower agree to
submit to personal jurisdiction and, to the extent permitted by applicable
law, to waive any objection as to venue in the County of New York, State of
New York.  To the extent permitted by applicable law, service of process on
Borrower or any Lender in any action arising out of or relating to this
Amendment shall be effective if mailed to such party at the address listed
Section 11.11 of the Loan Agreement.  Nothing herein shall preclude any
Lender or Borrower from bringing suit or taking other legal action in any
other jurisdiction.

          (g)  To the extent permitted by applicable law, the parties
hereto waive all right to trial by jury in any action or proceeding to
enforce or defend any rights under this Amendment.

          IN WITNESS WHEREOF, the parties hereto have caused this Amendment
to be executed by their respective officers thereunto duly authorized, as
of the date first above written.

                              CONTINENTAL AIRLINES, INC.



                              By:                                          
                                 Jeffrey A. Smisek
                                 Senior Vice President



                              GLOBAL PROJECT & STRUCTURED
                                     FINANCE CORPORATION



                              By:                                          
                              Name:  Eric M. Dull
                              Title: Vice President
 


CONSENTED TO, AGREED AND
ACKNOWLEDGED:

CONTINENTAL EXPRESS, INC.
as Guarantor



By:                           
Name:  Jeffrey A. Smisek
Title: Senior Vice President



<PAGE>   108

                                                             Exhibit 4.7(d)

EXPURGATED                                             CONFIDENTIAL
                                                       TREATMENT
                                                       REQUESTED BY
                                                       CONTINENTAL
                                                       AIRLINES, INC. 

                            AMENDMENT NO. 2 TO
                         SERIES B-2 LOAN AGREEMENT


           AMENDMENT NO. 2 TO SERIES B-2 LOAN AGREEMENT, dated as of
September 29, 1995 (this "Amendment"), between CONTINENTAL AIRLINES, INC.,
a Delaware corporation ("Borrower"), and GLOBAL PROJECT & STRUCTURED
FINANCE CORPORATION (successor by merger to ASATT Corp.) ("Lender").


                           W I T N E S S E T H :

          WHEREAS, Borrower and Lender are parties to that certain Loan
Agreement, dated as of April 27, 1993, as amended by that certain Waiver,
Consent and Amendment to Series B-2 Loan Agreement, dated as of March 30,
1995 (such Loan Agreement, as amended and as it may be hereafter amended,
supplemented or otherwise modified from time to time, being hereinafter
referred to as the "Loan Agreement", and capitalized terms defined therein
and not otherwise defined herein being used herein as therein defined);

          WHEREAS, Borrower, together with Continental Express, Inc., GE
Capital, General Electric Company and Lender, are parties to that certain
Waiver and Consent and that certain Waiver, Consent and Amendment, each
dated as of the date hereof (the "Waivers");

          WHEREAS, Borrower, Lender and GE Capital have entered into that
certain letter agreement, dated as of the date hereof (the "Exchange
Agreement"), in connection with the redemption of certain preferred stock
of Borrower held by GE Capital;

          WHEREAS, Borrower has advised Lender that Borrower wishes to
amend certain provisions of the Loan Agreement in connection with the
transactions contemplated by the Waivers, and Borrower has requested that
Lender agree to various amendments to certain provisions of the Loan
Agreement in connection therewith; and
 
          WHEREAS, Lender has agreed to amend certain provisions of the
Loan Agreement upon the terms and subject to the conditions provided
herein;

          NOW, THEREFORE, in consideration of the premises, covenants and
agreements contained herein, the parties hereto hereby agree as follows:

          SECTION 1.  Amendments to Loan Agreement.  The Loan Agreement is
hereby amended as follows:

          (a)  Section 1 is hereby amended as follows:

                i)  by amending and restating the definition of
     B-1/B-2 Termination Date as follows:

               "B-1/B-2 Termination Date" shall mean the date on
          which the B-1 Loan and the Loan and all accrued
          interest thereon shall have been completely discharged
          and no other Obligations (as such term is defined
          herein) and no other Obligations (as such term is
          defined in the Other Tranche Agreement) shall then be
          due and payable.

               ii)  by amending and restating the definition of B-2
     Deferred Amount as follows:

               "B-2 Deferred Amount" shall mean the aggregate
          amount of all principal payments deferred in accordance
          with the terms of Section 1 of the Waiver, Consent and
          Amendment and all principal payments deferred in
          respect of the Redemption Note, as set forth in
          Schedule 2.1A hereto; such amount shall include the
          amounts deferred under both the B-2 Note and the
          Redemption Note.

              iii)  by amending and restating the definition of Lender
     as follows:

               "Lender" shall mean (i) prior to the initial
          issuance of the B-2 Note, ASATT Corp. and, thereafter,
          (ii) each holder, from time to time, of any of the
          Notes.

               iv)  by amending and restating the definition of Loan
     as follows:

               "Loan" shall mean the B-2 Loan and the Redemption
          Loan, collectively.

                v)  by amending and restating the definition of Loan
     Documents as follows:

               "Loan Documents" shall mean this Agreement, the
          B-2 Note, the Redemption Note, the Collateral
          Documents, the Relevant Guaranties, the Relevant
          Collateral Agency Agreements, and all other agreements,
          instruments, documents and certificates, including,
          without limitation, pledges, powers of attorney,
          consents, assignments, contracts, notices and all other
          written matter, executed after the Closing Date by or
          on behalf of any Loan Party, or any employee of any
          Loan Party, and delivered to Lender, pursuant to the
          terms of this Agreement and any amendments,
          modifications or supplements hereto or waivers hereof.

               vi)  by amending and restating the definition of
     Required Lenders as follows:

               "Required Lenders" shall mean, as of any date, the
          holders of interests in the Notes evidencing at least
          66 2/3% of the aggregate unpaid principal amount of the
          Obligations.

              vii)  by inserting the following new definitions in
     proper alphabetical order:

               "B-2 Note" shall have the meaning assigned to it
          in Section 2.1(a) hereof.  

               "Exchange Agreement" shall have the meaning
          assigned to it in the recitals to Amendment No. 2 to
          the Series B-2 Loan Agreement, dated as of September
          29, 1995, between Borrower and Lender.

               "Notes" shall mean the B-2 Note and the Redemption
          Note and Note shall mean either the B-2 Note or the
          Redemption Note.

               "Redemption Date" shall mean September 29, 1995.

               "Redemption Loan" shall mean have the meaning
          assigned to it in Section 2.1(d) hereof.

               "Redemption Note" shall mean have the meaning
          assigned to it in Section 2.1(d) hereof. 

               (viii) by deleting the definition of "Note" appearing
     therein.  

          (b)  Section 2.1 is hereby amended by deleting subsection (a)
thereof in its entirety and substituting the following new subsection (a)
in lieu therefor:

               (a)  Upon and subject to the terms and conditions
          hereof, Lender agrees, on or before the Commitment
          Termination Date, to make the B-2 Loan to Borrower in a
          principal amount equal to $100,000,000.  The B-2 Loan
          shall be evidenced by one or more promissory notes to
          be executed and delivered by Borrower on the Closing
          Date, in substantially the form attached hereto as
          Exhibit I (the "B-2 Note").

          (c)  Section 2.1 is hereby amended by deleting subsection (c)
thereof in its entirety and substituting the following new subsection (c)
in lieu therefor:

               (c)  [CONFIDENTIAL MATERIAL OMITTED AND FILED
                    SEPARATELY WITH THE SECURITIES AND EXCHANGE
                    COMMISSION PURSUANT TO A REQUEST FOR
                    CONFIDENTIAL TREATMENT]

          (d)  A new Section 2.1(d) is hereby added to Section 2.1 which
shall read as follows:

               (d)  [CONFIDENTIAL MATERIAL OMITTED AND FILED
                    SEPARATELY WITH THE SECURITIES AND EXCHANGE
                    COMMISSION PURSUANT TO A REQUEST FOR
                    CONFIDENTIAL TREATMENT]

          (e)  Section 2.2 is hereby amended by deleting subsection (e)
thereof in its entirety and substituting the following new subsection (e)
in lieu therefor:

               (e)  Each prepayment made pursuant to subsection
          (a) hereof shall be applied first, ratably to the
          scheduled payments of the outstanding amounts set forth
          in the column titled Deferred Principal Payment on
          Schedules 2.1 and 2.1A hereto and then, to the
          scheduled payments of the outstanding amounts set forth
          in the column titled Principal Payment on Schedules 2.1
          and 2.1A hereto in the inverse order of maturity
          (apportioned ratably between amounts due on the same
          date).  Notwithstanding anything to the contrary
          contained herein, the B-2 Deferred Amount may be
          prepaid in whole or in part without any prepayment
          penalty.

          (f)  Section 2.4 is hereby amended by deleting it in its entirety
and substituting the following in lieu therefor:

               2.4  Use of Proceeds.    Borrower shall apply the
          proceeds of the B-2 Loan as set forth in Recital A of
          this Agreement and shall apply the proceeds of the
          Redemption Loan as contemplated by the Exchange
          Agreement.  

          (g)  A new Section 2.6(e) is hereby added to Section 2.6 which
shall read as follows:

               (e)  Notwithstanding anything to the contrary set
          forth in this Section 2.6, with respect to the
          Redemption Note, during each Payment Period, interest
          shall accrue on each day during such Payment Period on
          the amounts set forth in the columns titled Principal
          Balance and Deferred Principal Balance on Schedule 2.1A
          hereof (as reduced by any prepayments made during such
          Payment Period) opposite the Interest Payment Date that
          is the first day of such Payment Period at a rate per
          annum equal to 8% in respect of the period from the
          Redemption Date through March 31, 1996, and thereafter
          at the Stated Rate.  

          (h)  Section 2.7 is hereby amended by adding the following
sentence after the first sentence thereof:

          [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
          SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
          CONFIDENTIAL TREATMENT]

          (i)  Section 2.7 is hereby amended by deleting the term "Note"
therein in each place it is used therein and replacing it with the term
"B-2 Note".

          (j)  Sections 2.12, 9.1(p), 9.3 and 10.1(b) are hereby amended by
deleting the term "Note" therein in each place it is used therein and
replacing it with the term "Notes".

          (k)  The definition of Closing Date and Sections 2.1(b) and 2.7
are hereby amended by deleting the term "Loan" therein in each place it is
used therein and replacing it with the term "B-2 Loan".

          (l)  Section 10.1 is hereby amended by deleting subsection (a)
thereof in its entirety and substituting the following new subsection (a)
in lieu therefor:
 
               (a)  The Loan Documents constitute the complete
          agreement between the parties with respect to the
          subject matter hereof.  The Loan Documents supersede
          any and all discussions, negotiations, understandings
          or agreements, written or oral, express or implied with
          respect thereto, which are merged herein and superseded
          hereby.  Borrower may not sell, assign or transfer any
          of the Loan Documents or any portion thereof,
          including, without limitation, Borrower's rights,
          title, interests, remedies, powers and duties hereunder
          or thereunder.  [CONFIDENTIAL MATERIAL OMITTED AND
          FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
          COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
          TREATMENT]

          (m)  A new Exhibit I-2 is hereby added to the Loan Agreement in
the form attached to this Amendment as Exhibit A.

          (n)  A new Schedule 2.1A is hereby added to the Loan Agreement in
the form attached to this Amendment as Exhibit B.

          SECTION 2.  Effective Date.  This Amendment shall become
effective upon the delivery of the fully executed Redemption Note by
Borrower to Lender.

          SECTION 3.  Miscellaneous.  (a)  Upon the effectiveness of this
Amendment, on and after the date hereof, each reference in the Loan
Agreement to "this Agreement," "hereunder," "hereof," "herein," or words of
like import, shall mean and be a reference to the Loan Agreement as amended
hereby.  Upon the effectiveness of this Amendment, on and after the date
hereof, each reference in each of the Loan Documents to "the B-2 Loan
Agreement," "thereunder," "thereof," "therein," or words of like import
referring to the Loan Agreement, shall mean and be a reference to the Loan
Agreement as amended hereby.

          (b)  Except as specifically amended herein, the Loan Agreement
and all of the other Loan Documents shall remain in full force and effect
and are hereby ratified and confirmed.  Without limiting the generality of
the foregoing, Borrower hereby confirms that all of its obligations under
the Collateral Documents shall continue and shall remain in full force and
effect.

          (c)  The execution, delivery and effectiveness of this Amendment
shall not, except as expressly provided herein, operate as a waiver of any
right, power or remedy of Lender or Agent under any of the Loan Documents,
nor constitute a waiver of any provision of any of the Loan Documents.

          (d)  This Amendment may be executed in any number of separate
counterparts, each of which shall, collectively and separately, constitute
one agreement.

          (e)  The Section Titles contained in this Amendment are and shall
be without substantive meaning or content of any kind whatsoever and are
not part of the agreement among the parties hereto.

          (f)  Except as otherwise expressly provided in any of the Loan
Documents, in all respects, including all matters of construction, validity
and performance, this Amendment shall be governed by, and construed and
enforced in accordance with, the laws of the State of New York, without
regard to the principles thereof regarding conflicts of law, and any
applicable laws of the United States.  Agent, each Lender and Borrower
agree to submit to personal jurisdiction and, to the extent permitted by
applicable law, to waive any objection as to venue in the County of New
York, State of New York.  To the extent permitted by applicable law,
service of process on Borrower, Agent or any Lender in any action arising
out of or relating to this Amendment shall be effective if mailed to such
party at the address listed Section 11.11 of the Loan Agreement.  Nothing
herein shall preclude Agent, Lender or Borrower from bringing suit or
taking other legal action in any other jurisdiction.

          (g)  To the extent permitted by applicable law, the parties
hereto waive all right to trial by jury in any action or proceeding to
enforce or defend any rights under this Amendment.

          IN WITNESS WHEREOF, the parties hereto have caused this Amendment
to be executed by their respective officers thereunto duly authorized, as
of the date first above written.

                                   CONTINENTAL AIRLINES, INC.



                                   By:                                     
                                   Name:                                   
                                   Title:                                  



                                   GLOBAL PROJECT & STRUCTURED
                                     FINANCE CORPORATION



                                   By:                                     
                                   Name:  Eric M. Dull
                                   Title: Vice President
 


CONSENTED TO, AGREED AND
ACKNOWLEDGED:

CONTINENTAL EXPRESS, INC.
as Guarantor

By:                           
Name:                         
Title:                        


                                                       EXHIBIT B

                                                       Schedule 2.1A to
                                                       the Loan Agreement


          [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
          SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
          CONFIDENTIAL TREATMENT]



<PAGE>   109

                                                   Exhibit 4.7(e)

EXPURGATED                                        CONFIDENTIAL
                                                  TREATMENT
                                                  REQUESTED BY
                                                  CONTINENTAL
                                                  AIRLINES, INC. 

                       AMENDMENT NO. 3 TO
                    SERIES B-1 LOAN AGREEMENT


           AMENDMENT NO. 3 TO SERIES B-1 LOAN AGREEMENT, dated as
of December 22, 1995 (this "Amendment"), between CONTINENTAL
AIRLINES, INC., a Delaware corporation ("Borrower") and GLOBAL
PROJECT & STRUCTURED FINANCE CORPORATION (successor by merger to
ASATT Corp.) ("Lender").


                      W I T N E S S E T H :

          WHEREAS, Borrower and Lender are parties to that
certain Loan Agreement, dated as of April 27, 1993 (such
agreement, as modified to date and as further amended,
supplemented or otherwise modified hereby and from time to time
hereafter, being hereinafter referred to as the "Loan Agreement",
and capitalized terms used herein and not otherwise defined
having the meaning assigned to them in the Loan Agreement as
therein defined); 

          [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY
          WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
          A REQUEST FOR CONFIDENTIAL TREATMENT]

          WHEREAS, the execution and delivery of this Amendment
is a condition precedent to certain of the transactions
contemplated by the Purchase Agreements; and

          WHEREAS, Lender has agreed so to amend certain
provisions of the Loan Agreement upon the terms and subject to
the conditions provided herein;

          NOW, THEREFORE, in consideration of the premises,
covenants and agreements contained herein, the parties hereto
hereby agree as follows:

          SECTION 1.  Amendments to Loan Agreement.  (a) Section
2.3 of the Loan Agreement is hereby amended by deleting
subsection (f) thereof in its entirety and substituting the
following new subsection (f) in lieu thereof:

               (f)  [CONFIDENTIAL MATERIAL OMITTED AND FILED
                    SEPARATELY WITH THE SECURITIES AND EXCHANGE
                    COMMISSION PURSUANT TO A REQUEST FOR
                    CONFIDENTIAL TREATMENT]

          (b)  Section 1 of the Loan Agreement is hereby amended
by inserting the following new definition in the proper
alphabetical order:

               "Modification Notes" means the notes issued to any
          GE Party (as defined in the Restructuring Agreement)
          evidencing the Modification Financing.

          (c)  Section 8.2 of the Loan Agreement is hereby
amended and restated in its entirety as follows:

               8.2  Repayment of Loan and Other Tranch Loan. 
          [Intentionally Deleted.]

          SECTION 2.  Effective Date.   This Amendment shall
become effective upon execution and delivery hereof.

          SECTION 3.  Miscellaneous.  (a)  Upon the effectiveness
of this Amendment, on and after the date hereof, each reference
in the Loan Agreement and the other Loan Documents to "this
Agreement," "hereunder," "hereof," "herein," or words of like
import, shall mean and be a reference to the Loan Agreement as
amended hereby.

          (b)  Except as specifically amended herein, the Loan
Agreement and all of the other Loan Documents shall remain in
full force and effect and are hereby ratified and confirmed. 
Without limiting the generality of the foregoing, Borrower hereby
confirms that all of its obligations under the Collateral
Documents shall continue and shall remain in full force and
effect.

          (c)  The execution, delivery and effectiveness of this
Amendment shall not, except as expressly provided herein, operate
as a waiver of any right, power or remedy of Lender or Agent
under any of the Loan Documents, nor constitute a waiver of any
provision of any of the Loan Documents.

          (d)  This Amendment may be executed in any number of
separate counterparts, each of which shall, collectively and
separately, constitute one agreement.

          (e)  The Section Titles contained in this Amendment are
and shall be without substantive meaning or content of any kind
whatsoever and are not part of the agreement among the parties
hereto.

          (f)  Except as otherwise expressly provided in any of
the Loan Documents, in all respects, including all matters of
construction, validity and performance, this Amendment shall be
governed by, and construed and enforced in accordance with, the
laws of the State of New York, without regard to the principles
thereof regarding conflicts of law, and any applicable laws of
the United States.  Agent, each Lender and Borrower agree to
submit to personal jurisdiction and, to the extent permitted by
applicable law, to waive any objection as to venue in the County
of New York, State of New York.  To the extent permitted by
applicable law, service of process on Borrower, Agent or any
Lender in any action arising out of or relating to this Amendment
shall be effective if mailed to such party at the address listed
Section 10.11 of the Loan Agreement.  Nothing herein shall
preclude Agent, Lender or Borrower from bringing suit or taking
other legal action in any other jurisdiction.

          (g)  To the extent permitted by applicable law, the
parties hereto waive all right to trial by jury in any action or
proceeding to enforce or defend any rights under this Amendment.

          IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed by their respective officers thereunto
duly authorized, as of the date first above written.


                              CONTINENTAL AIRLINES, INC.



                                                                 
                              Gerald Laderman                    
                              Vice President



                              GLOBAL PROJECT & STRUCTURED FINANCE
                                 CORPORATION



                                                                 
                              Eric M. Dull
                              Vice President




<PAGE>   110

                                                             Exhibit 4.7(f)

EXPURGATED                                             CONFIDENTIAL
                                                       TREATMENT
                                                       REQUESTED BY
                                                       CONTINENTAL
                                                       AIRLINES, INC. 

                            AMENDMENT NO. 3 TO
                         SERIES B-2 LOAN AGREEMENT


           AMENDMENT NO. 3 TO SERIES B-2 LOAN AGREEMENT, dated as of
December 22, 1995 (this "Amendment"), between CONTINENTAL AIRLINES, INC., a
Delaware corporation ("Borrower") and GLOBAL PROJECT & STRUCTURED FINANCE
CORPORATION (successor by merger to ASATT Corp.) ("Lender").


                           W I T N E S S E T H :

          WHEREAS, Borrower and Lender are parties to that certain Loan
Agreement, dated as of April 27, 1993 (such agreement, as modified to date
and as further amended, supplemented or otherwise modified hereby and from
time to time hereafter, being hereinafter referred to as the "Loan
Agreement", and capitalized terms used and not otherwise defined having the
meanings assigned to them in the Loan Agreement); 

          [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
          SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
          CONFIDENTIAL TREATMENT]

          WHEREAS, the execution and delivery of this Amendment is a
condition precedent to certain of the transactions contemplated by the
Purchase Agreements; and

          WHEREAS, Lender has agreed so to amend certain provisions of the
Loan Agreement upon the terms and subject to the conditions provided
herein;

          NOW, THEREFORE, in consideration of the premises, covenants and
agreements contained herein, the parties hereto hereby agree as follows:

          SECTION 1.  Amendments to Loan Agreement.  (a) Section 2.3 of the
Loan Agreement is hereby amended by deleting subsection (f) thereof in its
entirety and substituting the following new subsection (f) in lieu thereof:

               (f)  [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY
                    WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
                    A REQUEST FOR CONFIDENTIAL TREATMENT]

          (b)  Section 1 of the Loan Agreement is hereby amended by
inserting the following new definition in the proper alphabetical order:

               "Modification Notes" means the notes issued to any GE Party
          (as defined in the Restructuring Agreement) evidencing the
          Modification Financing.

          (c)  Section 8.2 of the Loan Agreement is hereby amended and
restated in its entirety as follows:

               8.2 Repayment of Loan and Other Tranch Loan.  [Intentionally
          Deleted.]

          SECTION 2.  Effective Date.   This Amendment shall become
effective upon execution and delivery hereof.

          SECTION 3.  Miscellaneous.  (a)  Upon the effectiveness of this
Amendment, on and after the date hereof, each reference in the Loan
Agreement and the other Loan Documents to "this Agreement," "hereunder,"
"hereof," "herein," or words of like import, shall mean and be a reference
to the Loan Agreement as amended hereby.

          (b)  Except as specifically amended herein, the Loan Agreement
and all of the other Loan Documents shall remain in full force and effect
and are hereby ratified and confirmed.  Without limiting the generality of
the foregoing, Borrower hereby confirms that all of its obligations under
the Collateral Documents shall continue and shall remain in full force and
effect.

          (c)  The execution, delivery and effectiveness of this Amendment
shall not, except as expressly provided herein, operate as a waiver of any
right, power or remedy of Lender or Agent under any of the Loan Documents,
nor constitute a waiver of any provision of any of the Loan Documents.

          (d)  This Amendment may be executed in any number of separate
counterparts, each of which shall, collectively and separately, constitute
one agreement.

          (e)  The Section Titles contained in this Amendment are and shall
be without substantive meaning or content of any kind whatsoever and are
not part of the agreement among the parties hereto.

          (f)  Except as otherwise expressly provided in any of the Loan
Documents, in all respects, including all matters of construction, validity
and performance, this Amendment shall be governed by, and construed and
enforced in accordance with, the laws of the State of New York, without
regard to the principles thereof regarding conflicts of law, and any
applicable laws of the United States.  Agent, each Lender and Borrower
agree to submit to personal jurisdiction and, to the extent permitted by
applicable law, to waive any objection as to venue in the County of New
York, State of New York.  To the extent permitted by applicable law,
service of process on Borrower, Agent or any Lender in any action arising
out of or relating to this Amendment shall be effective if mailed to such
party at the address listed Section 10.11 of the Loan Agreement.  Nothing
herein shall preclude Agent, Lender or Borrower from bringing suit or
taking other legal action in any other jurisdiction.

          (g)  To the extent permitted by applicable law, the parties
hereto waive all right to trial by jury in any action or proceeding to
enforce or defend any rights under this Amendment.

          IN WITNESS WHEREOF, the parties hereto have caused this Amendment
to be executed by their respective officers thereunto duly authorized, as
of the date first above written.


                                   CONTINENTAL AIRLINES, INC.



                                                                           
                                   Gerald Laderman
                                   Vice President



                                   GLOBAL PROJECT & STRUCTURED FINANCE
                                      CORPORATION



                                                                           
                                   Eric M. Dull
                                   Vice President




<PAGE>   111

                                                             Exhibit 4.8(a)


                     FIRST AMENDMENT TO LOAN AGREEMENT


          FIRST AMENDMENT dated as of August 12, 1993 (this "First
Amendment") among Continental Airlines, Inc., a Delaware corporation
("Borrower"), and General Electric Company, a New York corporation (in its
individual capacity, "GE"), on its own behalf and as agent (in such capacity,
the "Agent") for the Holders (as defined in the Loan Agreement (as defined
below)), to the Loan Agreement dated as of April 27, 1993 among Borrower and
GE, on its own behalf and as Agent (the "Original Loan Agreement" and, as
amended, the "Loan Agreement"), and as Consolidation Collateral Agent,
Collateral Agent and Mortgagee (as such terms are defined in the Loan
Agreement).  Capitalized terms used herein but not otherwise defined herein
shall have the meaning ascribed thereto in the Loan Agreement.

          WHEREAS, the parties hereto have previously entered into the
Original Loan Agreement; and

          WHEREAS, simultaneously with entering into this First Amendment,
the Borrower, as grantor, and GE, as Collateral Agent, are entering into an
amendment to the Consolidation Security Agreement in the form attached hereto
as Exhibit A (the "First Amendment to Consolidation Security Agreement")
pursuant to which, among other things, additional collateral shall be granted
by Borrower to GE, as Collateral Agent, to secure the Secured Obligations (as
defined in the Consolidation Security Agreement); and

          WHEREAS, simultaneously with entering into this First Amendment,
the Borrower, as grantor, and GE, as Mortgagee, are entering into an
amendment to the Mortgage in the form attached hereto as Exhibit B (the
"First Amendment to Mortgage") pursuant to which additional collateral shall
be granted by Borrower to GE, as Mortgagee, to secure the Secured Obligations
(as defined in the Mortgage); and

          WHEREAS, pursuant to Section 6.16 of the Original Loan Agreement,
Borrower has agreed that at any time either or both of the Simulator Liens
are no longer in effect, Borrower shall, among other things, grant, as
security for the Obligations, a Lien on the Simulator so released in favor of
Consolidation Collateral Agent; and

          WHEREAS, a Simulator Lien is no longer in effect as to a certain
Simulator; and

          WHEREAS, the Borrower has requested certain consents and waivers
under the Loan Agreement and the Consolidation Security Agreement; and

          WHEREAS, in order to give effect to the foregoing, the parties
hereto desire to amend certain provisions of the Loan Agreement and GE,
individually and as Agent, Consolidation Collateral Agent, Collateral Agent
and Mortgagee desires to grant the consents and waivers requested by the
Borrower; 

          NOW, THEREFORE, for good and valuable consideration, the receipt
and adequacy of which is hereby acknowledged, the parties hereto agree as
follows:

          Section 1.  Definitions.

          Section 1 of the Loan Agreement is hereby amended as follows:

            (i)  The definition of "Collateral" is amended by inserting after
          the word "Documents" in the last line thereof, the following: ",
          and shall include all Primary Collateral".

           (ii)  The definition of "Mortgage" is amended by inserting after
          the words "Exhibit M" in the third line thereof, the following:  ",
          including all amendments, modifications and supplements thereto,".

          (iii)  Clause (f) of the definition of "Primary Collateral" is
          amended and restated in its entirety as follows:

                 "(f)  The six flight simulators described below, together
               with all other properties and rights related thereto, as more
               fully specified in the Consolidation Security Agreement:

Aircraft Type                   Manufacturer (Date)       Location

McDonnell Douglas DC-9-30       Link/GMI (2/1/83)         Houston
Boeing B727-200                 Link (1/1/88)             Houston
Boeing B727-200                 Link (1/1/83)             Houston
Boeing B737-200                 Conductron (1/1/85)       Houston
Boeing B737-200                 Rediffusion (1/1/88)      Santa Monica
Airbus A300B4                   Thomson-CSF (1/12/78)     Miami;"

           (iv)  The definition of "Security Agreement" is amended by
          inserting after the word "hereunder" in the last line thereof, the
          following:  ", including all amendments, modifications and
          supplements thereto".

            (v)  the definition of "Simulator Liens" is amended and restated
          in its entirety as follows:

               " "Simulator Liens" shall mean the Lien currently existing in
               favor of American General Corporation on the Simulators.".

           (vi)  The definition of "Simulators" is amended and restated in
          its entirety as follows:

               " "Simulators" shall mean the Link flight simulator for DC10-
               10/30 aircraft located in Los Angeles.".

          Section 2.  Release of Lien on Simulators.

          Section 6.16 of the Loan Agreement is hereby amended by deleting
the words "either or both of" in the second line thereof.

          Section 3.  Simulator Liens.

          Section 7.15 of the Loan Agreement is hereby amended by inserting
before the word "Borrower" in the first line thereof, the following:  "Except
as contemplated by Section 6.16 hereof, until the execution and delivery by
the Borrower of the security agreement referred to in Section 6.16 hereof,".

          Section 4.  Miscellaneous Amendments.

          (a)  Schedule 4.24 of the Loan Agreement is hereby amended and
restated in its entirety by replacing such schedule with Section 4.24
attached hereto.

          (b)  Section 6.10(c)(ii) of the Loan Agreement is hereby amended by
deleting "Schedule 4.23" in the second and fourth lines thereof, and
inserting, in lieu thereof, "Schedule 4.24".

          Section 5.  Conditions Precedent; Effectiveness.  This First
Amendment shall become effective as of the date (the "Commencement Date") the
following conditions have been satisfied (or waived by Agent):

          (a)  Documents.  Borrower shall have delivered, or shall have
caused to be delivered, to Agent each of the following:

          (i)  This First Amendment, duly executed by Borrower, the First
          Amendment to Consolidation Security Agreement, duly executed by
          Borrower, and the First Amendment to Mortgage, duly executed by
          Borrower, together with:

               (x)  executed copies of proper financing statements (Form UCC-
          1 or UCC-3) or equivalent documents, to be duly filed under the
          Uniform Commercial Code of each jurisdiction (other than in the
          States of Maryland and Tennessee) as may be necessary or, in the
          reasonable opinion of Agent, desirable to perfect in the United
          States the security interests created by the First Amendment to
          Consolidation Security Agreement and the First Amendment to
          Mortgage;

               (y)  evidence of the completion of all recordings and filings
          of the First Amendment to Consolidation Security Agreement and the
          First Amendment to Mortgage as may be necessary or, in the
          reasonable opinion of Agent, desirable to perfect in the United
          States the Liens created by the First Amendment to Consolidation
          Security Agreement and the First Amendment to Mortgage; and

               (z)  evidence that all other actions necessary or, in the
          reasonable opinion of Agent, desirable to perfect in the United
          States and protect the security interests created by the First
          Amendment to Consolidation Security Agreement and the First
          Amendment to Mortgage have been taken (other than the filing of UCC
          financing statements).

          (b)  Representations and Warranties.  After giving effect to this
First Amendment and the transactions contemplated in this First Amendment,
all the representations and warranties of Borrower in Article 4 of the Loan
Agreement and in any other Loan Document (other than representations and
warranties which expressly speak as of a different date) and in Section 6
hereof shall be true and correct in all material respects on and as of the
Commencement Date.

          (c)  Event of Default; Default.  On the Commencement Date, after
giving effect to this First Amendment, no Event of Default or Default shall
have occurred and be continuing or would result from the transactions
contemplated hereby.

          Section 6.  Representations and Warranties.

          Borrower hereby represents and warrants the following:

          (a)  This First Amendment constitutes a legal, valid and binding
obligation of the Borrower, enforceable against the Borrower in accordance
with its terms.

          (b)  Borrower is or, to the extent that this First Amendment states
that the Collateral is to be acquired after the date hereof, will be, the
owner of the Collateral having good and, except as marketability may be
affected by Primary Collateral Permitted Encumbrances or the Borrower's lack
of possession of any certificate of title for any Titled Ground Equipment,
marketable title thereto.  Borrower has no place of business, offices where
its books of account and records are kept, or places where the Collateral is
used, stored or located, except as set forth on Schedule 4.24 annexed to the
Original Loan Agreement, as amended hereby, or as disclosed by Borrower in
writing after the date hereof.  The Liens which are being granted by the
First Amendment to Consolidation Security Agreement and the First Amendment
to Mortgage create, as of the date thereof, valid and, upon the completion of
the filings and recordings described in Section 5(a)(i) hereof, perfected,
first-priority Liens on the Collateral covered thereby, and subject to no
other Lien except as provided for in the Consolidation Security Agreement, as
amended by the First Amendment to Consolidation Security Agreement or the
Mortgage, as amended by the First Amendment to Mortgage, and except for
Primary Collateral Permitted Encumbrances.

          Section 7.  Consent and Waiver.  GE, individually and as Agent,
Consolidation Collateral Agent, Collateral Agent and Mortgagee, hereby (a)
acknowledges the changes to (i) Schedule 4.24 to the Loan Agreement pursuant
hereto, (ii) the locations of certain of the Flight Simulators pursuant to
(and as defined in) the First Amendment to Consolidation Security Agreement
and (iii) Schedule I to the Consolidation Security Agreement pursuant to the
First Amendment to Consolidation Security Agreement, (b) consents to the
possession by First Air, Inc. ("First Air") of the B737-200 flight simulator
pursuant to the terms and conditions of the 737-200 Simulator Use Agreement
made in March, 1991 between the Borrower and First Air, as amended by
Amendment Number 1 thereto and (c) waives any Default or Event of Default
that may have occurred as a result of any of the foregoing changes or
possession (including, but not limited to, the failure of the Borrower to
provide notice of any thereof).  This consent and waiver shall not be deemed
to constitute a consent or waiver of any Default or Event of Default other
than those specifically set forth herein, and is not a consent to or waiver
of any other breach or noncompliance now or hereafter existing under the
terms of the Loan Agreement (as amended hereby and from time to time), the
Consolidation Security Agreement (as amended by the First Amendment to
Consolidation Security Agreement and as amended from time to time) or the
Mortgage Agreement (as amended by the First Amendment to Mortgage and as
amended from time to time), which terms are hereby ratified and confirmed and
shall continue in full force and effect.  Execution of this First Amendment
does not require GE, individually or as Agent, Consolidation Collateral
Agent, Collateral Agent or Mortgagee to execute a similar consent or waiver
for a similar circumstance or on a future occasion, and all rights and
remedies in respect of any other or further breach or non-compliance are
fully reserved.

          Section 8.  Reference to and Effect on the Loan Agreement.

          (a)  Upon the effectiveness of this First Amendment, each reference
in the Loan Agreement to "this Agreement", "hereunder", "hereof", "herein" or
words of like import shall mean and be a reference to the Loan Agreement, as
amended hereby, and each reference to the Loan Agreement in any other
document, instrument or agreement executed and/or delivered in connection
with the Loan Agreement shall mean and be a reference to the Loan Agreement,
as amended hereby.

          (b)  Except as specifically amended hereby, the Loan Agreement
shall remain in full force and effect and is hereby ratified and confirmed.

          (c)  Except as specifically provided herein or in the First
Amendment to Consolidation Security Agreement, the execution, delivery and
effectiveness of this First Amendment shall not operate as a waiver of any
right, power or remedy of GE or Agent under the Loan Agreement or any of the
other Loan Documents, nor constitute a waiver of any provision contained
therein.

          Section 9.  Execution in Counterparts.  This First Amendment may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed to be an original and all of which taken together shall constitute but
one and the same instrument.

          Section 10.  Headings.  Section headings in this First Amendment
are included herein for convenience of reference only and shall not
constitute a part of this First Amendment for any other purpose.

          Section 11.  Severability.  In case any provision in or obligation
under this First Amendment shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.

          Section 12.  GOVERNING LAW.  EXCEPT AS OTHERWISE EXPRESSLY PROVIDED
IN ANY OF THE LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS FIRST AMENDMENT AND THE
OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND PERFORMED IN SUCH STATE, WITHOUT REGARD TO THE PRINCIPLES
THEREOF REGARDING CONFLICTS OF LAW, AND ANY APPLICABLE LAWS OF THE U.S.
AGENT, COLLATERAL AGENT AND BORROWER AGREE TO SUBMIT TO PERSONAL JURISDICTION
AND TO WAIVE ANY OBJECTION AS TO VENUE IN THE COUNTY OF NEW YORK, STATE OF
NEW YORK.  SERVICE OF PROCESS ON BORROWER, AGENT OR COLLATERAL AGENT IN ANY
ACTION ARISING OUT OF OR RELATING TO ANY OF THE LOAN DOCUMENTS SHALL BE
EFFECTIVE IF MAILED TO SUCH PARTY AT THE ADDRESS LISTED IN SECTION 10.11 OF
THE LOAN AGREEMENT.  NOTHING HEREIN SHALL PRECLUDE AGENT, COLLATERAL AGENT OR
BORROWER FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER
JURISDICTION.

          IN WITNESS WHEREOF, this First Amendment has been duly executed as
of the date first written above.

                                   CONTINENTAL AIRLINES, INC.



                                   By:  ___________________________________
                                        Name:
                                        Title:

                                   GENERAL ELECTRIC COMPANY
                                   Individually and in its capacity as
                                   Agent, Consolidation Collateral Agent,
                                   Collateral Agent and Mortgagee


                                   By:  ___________________________________
                                        Name:
                                        Title:



<PAGE>   112

                                                             Exhibit 4.8(c)

                            AMENDMENT NO. 2 TO
                       CONSOLIDATION LOAN AGREEMENT


          AMENDMENT NO. 2 TO CONSOLIDATION LOAN AGREEMENT, dated as of
December 22, 1995 (this "Amendment"), between CONTINENTAL AIRLINES, INC., a
Delaware corporation ("Borrower"), and GENERAL ELECTRIC COMPANY, a New York
corporation (in its individual capacity, "GE") on its own behalf and as
agent for the Holders (as defined in the Loan Agreement referred to below)
(in such capacity, "Agent").


                           W I T N E S S E T H :

          WHEREAS, Borrower, GE and Agent are parties to that certain Loan
Agreement, dated as of April 27, 1993 (such Loan Agreement, as modified to
date and as further amended, supplemented or otherwise modified hereby and
from time to time hereafter, being hereinafter referred to as the "Loan
Agreement", and capitalized terms used herein and not otherwise defined
having the meanings assigned to them in the Loan Agreement);

          WHEREAS, Borrower, GE and Agent have agreed to amend certain
provisions of the Loan Agreement upon the terms and subject to the
conditions provided herein;

          NOW, THEREFORE, in consideration of the premises, covenants and
agreements contained herein, the parties hereto hereby agree as follows:

          SECTION 1.  Amendments to Loan Agreement.  The Loan Agreement is
hereby amended as follows:

          (a)  Section 2.4(a) is hereby amended and restated in its
entirety to provide as follows:

               (a)  [Intentionally Deleted.]


          (b)  Section 5.1(j) is hereby amended and restated in its
entirety to provide as follows:

               (j)  [Intentionally Deleted.]

          (c)  Section 6.15 is hereby amended and restated in its entirety
to provide as follows:

               6.15 Annual Appraisal.  Borrower will provide to Agent an
          Appraisal of the Fair Market Value of the then-existing
          Collateral prepared, at Borrower's expense, by an Independent
          Appraiser not later than thirty days before each anniversary of
          the Collateral Reset Date.

          (d)  Section 6.17 is hereby amended and restated in its entirety
to provide as follows:

               6.17  Release of Collateral.  [Intentionally Deleted.]

          (e)  Section 9.1(p) is hereby amended and restated in its
entirety to provide the following:

               (p)  Borrower shall fail to provide Agent with the Appraisal
          required pursuant to Section 6.15 hereof and such failure shall
          remain unremedied for a period ending 90 days after the Borrower
          shall have received written notice of such failure from Agent. 
          Notwithstanding anything to the contrary in this Agreement,
          Section 9.1(c) hereof does not apply to Borrower's obligation to
          provide an Appraisal pursuant to Section 6.15 hereof.

          SECTION 2.  Effective Date.  This Amendment shall become
effective upon execution and delivery hereof.

          SECTION 3.  Miscellaneous.  (a)  Upon the effectiveness of this
Amendment, on and after the date hereof, each reference in the Loan
Agreement and the other Loan Documents to "this Agreement," "hereunder,"
"hereof," "herein," or words of like import, shall mean and be a reference
to the Loan Agreement as amended hereby.

          (b)  Except as specifically amended herein, the Loan Agreement
and all of the other Loan Documents shall remain in full force and effect
and are hereby ratified and confirmed.  Without limiting the generality of
the foregoing, Borrower hereby confirms that all of its obligations under
the Collateral Documents shall continue and shall remain in full force and
effect.

          (c)  The execution, delivery and effectiveness of this Amendment
shall not, except as expressly provided herein, operate as a waiver of any
right, power or remedy of Holders or Agent under any of the Loan Documents,
nor constitute a waiver of any provision of any of the Loan Documents.

          (d)  This Amendment may be executed in any number of separate
counterparts, each of which shall, collectively and separately, constitute
one agreement.

          (e)  The Section titles contained in this Amendment are and shall
be without substantive meaning or content of any kind whatsoever and are
not part of the agreement among the parties hereto.

          (f)  Except as otherwise expressly provided in any of the Loan
Documents, in all respects, including all matters of construction, validity
and performance, this Amendment shall be governed by, and construed and
enforced in accordance with, the laws of the State of New York, without
regard to the principles thereof regarding conflicts of law, and any
applicable laws of the United States.  Agent and Borrower agree to submit
to personal jurisdiction, to the extent permitted by law, and to waive any
objection as to venue in the County of New York, State of New York.  To the
extent permitted by law, service of process on Borrower or Agent in any
action arising out of or relating to this Amendment shall be effective if
mailed to such party at the address listed Section 10.11 of the Loan
Agreement.  Nothing herein shall preclude Agent or Borrower from bringing
suit or taking other legal action in any other jurisdiction.

          (g)  To the extent permitted by law, the parties hereto waive all
right to trial by jury in any action or proceeding to enforce or defend any
rights under this Amendment.


          IN WITNESS WHEREOF, the parties hereto have caused this Amendment
to be executed by their respective officers thereunto duly authorized, as
of the date first above written.


                                   CONTINENTAL AIRLINES, INC.



                                                                           
                                   Gerald Laderman
                                   Vice President



                                   GENERAL ELECTRIC COMPANY,
                                      Individually and as Agent



                                   By:                                     
                                   Name:                                   
                                   Title:                                  




<PAGE>   113

                                                              Exhibit 4.9(a)

EXPURGATED                                                    CONFIDENTIAL
                                                              TREATMENT
                                                              REQUESTED BY
                                                              CONTINENTAL
                                                              AIRLINES, INC. 

                             WAIVER, CONSENT AND AMENDMENT

           This WAIVER, CONSENT AND AMENDMENT, dated as of September 29, 1995
(this "Waiver"), is among Continental Airlines, Inc., a Delaware corporation
("Continental"), Continental Express, Inc., a Delaware corporation, General
Electric Capital Corporation, a New York corporation ("GE Capital"), General
Electric Company, a New York corporation ("GE"), and Global Project &
Structured Finance Corporation, a Delaware corporation and successor by
merger to ASATT Corp. ("GPSF").

           WHEREAS, Continental and GPSF are parties to that certain Series B-
1 Loan Agreement, dated as of April 27, 1993, as amended (the "B-1 Loan
Agreement"), and that certain Series B-2 Loan Agreement, dated as of April
27, 1993, as amended (the "B-2 Loan Agreement");

           WHEREAS, Continental and GE are parties to that certain
Consolidation Loan Agreement, dated as of April 27, 1993, as amended (the
"Consolidation Loan Agreement");

           WHEREAS, the parties hereto are parties to that certain Master
Restructuring Agreement, dated as of March 30, 1995 (the "Restructuring
Agreement"), pursuant to which Continental sought to restructure certain of
its operations and obligations and requested that the GE Parties refrain from
taking certain actions in connection with certain breached obligations;

           WHEREAS, capitalized terms used herein without definition shall
have the meanings assigned to them in the Restructuring Agreement or the B-1
Loan Agreement, as applicable;

           WHEREAS, Continental intends to issue for cash consideration shares
of a new series of convertible preferred stock (the "New Preferred Stock");

           WHEREAS, the B-1 Loan Agreement, the B-2 Loan Agreement, the
Consolidation Loan Agreement and the Restructuring Agreement (collectively,
the "Loan Documents") require that a portion of the proceeds of any equity
offering by Continental be applied to the prepayment of the loans made
thereunder (the "GE Loans");

           WHEREAS, the Loan Documents also prohibit the purchase, redemption
or prepayment by Continental of any Indebtedness other than the GE Loans and
other Indebtedness owing to a GE Party;

           WHEREAS, Continental desires to apply the net proceeds of the
issuance of the New Preferred Stock to the prepayment of certain indebtedness
of Continental other than the GE Loans and for other corporate purposes
without prepaying the GE Loans, except as provided in paragraph 1 below;

           WHEREAS, the Loan Documents would prohibit the payment of cash
dividends in respect of the New Preferred Stock;

           WHEREAS, Continental desires to declare and pay cash dividends in
respect of the New Preferred Stock;

           WHEREAS, GE Capital desires to exchange the shares of Series A 8%
Cumulative Preferred Stock of Continental (the "8% Preferred Stock") held by
GE Capital for new debt securities of Continental (the "New Debt
Securities"), on the terms and conditions set forth in the letter agreement
(the "Preferred Exchange Agreement") attached hereto as Annex I (the
"Preferred Stock Exchange"); and

           WHEREAS, Continental and the GE Parties wish to amend the
Restructuring Agreement to make certain amendments thereto.

           NOW, THEREFORE, based upon the foregoing, and for other good and 
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:

           1.  [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
               SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
               CONFIDENTIAL TREATMENT]

           2.  GE Capital, as the holder of all outstanding shares of the 8%
Preferred Stock, hereby consents to the issuance by Continental of the New
Preferred Stock.

           3.  [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
               SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
               CONFIDENTIAL TREATMENT]

           4.  [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
               SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
               CONFIDENTIAL TREATMENT]

           5.  Continental and GE Capital shall consummate the transactions
contemplated by the Preferred Stock Exchange in accordance with the terms and
conditions of the Preferred Exchange Agreement. 

           6.  Each of the GE Parties hereby waives compliance by Continental
with the covenants contained in Sections 7.3 and 7.11 of Schedule 7.01 to the
Restructuring Agreement, Section 2.3 of each of the B-1 Loan Agreement and
the B-2 Loan Agreement and Section 2.4 of the Consolidation Loan Agreement,
in each case, to the extent necessary to permit the Preferred Stock Exchange.

           7.  [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
               SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
               CONFIDENTIAL TREATMENT]

           8.  [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
               SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
               CONFIDENTIAL TREATMENT]

           9.  [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
               SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
               CONFIDENTIAL TREATMENT]



          10.  Schedule 7.01 to the Restructuring Agreement shall be further
amended by amending and restating Section 2.3, Section 7.18 and Section 8.2
contained therein as follows:

          Section 2.3  Mandatory Prepayment.  [CONFIDENTIAL MATERIAL OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT]

          Section 7.18  Information.  [CONFIDENTIAL MATERIAL OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]

          Section 8.2  Repayment of Loan and Other Tranche Loan.  [CONFIDENTIAL
MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

          11.  Each of the definitions of each of the following terms contained
in Article I of the Restructuring Agreement shall be amended by adding the
following text before the period at the end of such definition: "and any
amendments, modifications or supplements thereto and shall refer to such
agreement as the same may be in effect at the time such reference becomes
operative".  The terms to be amended by this addition are:  "Aircraft Lease,"
"Boeing Contract," "B-1 Loan Agreement," "B-2 Loan Agreement," "CMI Loan
Agreement," "Consolidation Loan Agreement," "Continental AMI Pledge
Agreement" and "Continental Express Pledge Agreement."

          12.  Except as specifically amended or waived herein, the B-1 Loan
Agreement, the B-2 Loan Agreement, the Consolidation Loan Agreement, the
Restructuring Agreement, the other Restructuring Documents and the other Loan
Documents (as defined in each of the B-1 Loan Agreement, the B-2 Loan
Agreement and the Consolidation Loan Agreement) shall remain in full force
and effect and are hereby ratified and confirmed, as amended.  Without
limiting the generality of the foregoing, Continental hereby confirms that 
all of its obligations under the B-1 Loan Agreement, the B-2 Loan Agreement,
the Consolidation Loan Agreement, the Restructuring Agreement, the other
Restructuring Documents and the other Loan Documents (as defined in each of
the B-1 Loan Agreement, the B-2 Loan Agreement and the Consolidation Loan
Agreement) shall continue and shall remain in full force and effect, as
amended.

          13.  The execution, delivery and effectiveness of this Waiver shall
not, except as expressly provided herein, operate as a waiver of any right,
power or remedy of any GE Party under the Restructuring Agreement, any of the
Restructuring Documents or any of the other Loan Documents (as defined in
each of the B-1 Loan Agreement, the B-2 Loan Agreement and the Consolidation
Loan Agreement). 

          14.  This Waiver shall become effective when executed by each of the
parties hereto.  This Waiver may be executed in any number of separate
counterparts, each of which shall, collectively and separately, constitute
one agreement.

          15.  Except as otherwise expressly provided in any of the
Restructuring Documents, in all respects, including all matters of
construction, validity and performance, this Waiver shall be governed by, and
construed and enforced in accordance with, the laws of the State of New York,
without regard to the principles thereof regarding conflicts of law, and any
applicable laws of the United States.

                             *             *             *


               IN WITNESS WHEREOF, the parties hereto have caused this Waiver
to be executed by their respective officers thereunto duly authorized, as of
the date first above written.

                                  CONTINENTAL AIRLINES, INC.


                                  By:______________________________
                                  Name:  Jeffery A. Smisek
                                  Title:   Senior Vice President

                                  CONTINENTAL EXPRESS, INC.


                                  By:______________________________
                                  Name:   Jeffery A. Smisek
                                  Title:  Senior Vice President

                                  GENERAL ELECTRIC CAPITAL CORPORATION


                                  By:______________________________
                                  Name:   Eric M. Dull
                                  Title:  Attorney-in-Fact

                                  GENERAL ELECTRIC COMPANY


                                  By:______________________________
                                  Name:  Mark D. Powers
                                  Title: Director, Marketing & Information
                                         Customer Sales Finance

                                  GLOBAL PROJECT & STRUCTURED
                                    FINANCE CORPORATION


                                  By:______________________________
                                  Name:  Eric M. Dull
                                  Title: Vice President


<PAGE>   114

                                                             Exhibit 4.9(b)

EXPURGATED                                             CONFIDENTIAL
                                                       TREATMENT
                                                       REQUESTED BY
                                                       CONTINENTAL
                                                       AIRLINES, INC. 

                AMENDMENT TO MASTER RESTRUCTURING AGREEMENT


          This AMENDMENT TO MASTER RESTRUCTURING AGREEMENT, dated as of
December 22, 1995 (this "Amendment"), is among CONTINENTAL AIRLINES, INC.,
a Delaware corporation ("Continental"), CONTINENTAL EXPRESS, INC., a
Delaware corporation ("Express"), GENERAL ELECTRIC CAPITAL CORPORATION, a
New York corporation ("GE Capital"), GENERAL ELECTRIC COMPANY, a New York
corporation ("GE"), and GLOBAL PROJECT & STRUCTURED FINANCE CORPORATION
(formerly Transportation and Industrial Funding Corporation), a Delaware
corporation ("GPSF").

          WHEREAS, the parties hereto are parties to that certain Master
Restructuring Agreement, dated as of March 30, 1995 (such agreement as
modified to date and as further amended, supplemented or otherwise modified
hereby from time to time hereafter, being hereinafter referred to as the
"Restructuring Agreement"), pursuant to which Continental sought to
restructure certain actions in connection with certain breached
obligations;

          [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
          SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
          CONFIDENTIAL TREATMENT]

          WHEREAS, the execution and delivery of this Amendment is a
condition precedent to certain of the transactions contemplated by the
Purchase Agreements; and

          WHEREAS, the parties hereto have agreed so to amend certain
provisions of the Restructuring Agreement upon the terms and subject to the
conditions provided herein;

          NOW, THEREFORE, in consideration of the premises, covenants and
agreements contained herein, the parties hereto hereby agree as follows:

          SECTION 1.  Amendment to Restructuring Agreement.  The
Restructuring Agreement is hereby amended as follows:

          (a)  Section 1.02 of the Restructuring Agreement is amended by
inserting the following new definition in the proper alphabetical order:

               "Liquidation Value" shall have the meaning specified in the
          Consolidation Loan Agreement.

          (b)  Section 8.2 of Schedule 7.01 to the Restructuring Agreement
is hereby amended and restated as follows:

          Section 8.2    [Intentionally Deleted].  

          (c)  A new Section 7.03 to the Restructuring Agreement is
inserted as follows:

               7.03 [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY
          WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST
          FOR CONFIDENTIAL TREATMENT]

          (d)  A new Section 7.04 to the Restructuring Agreement is hereby
inserted as follows:

               7.04 [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY
          WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST
          FOR CONFIDENTIAL TREATMENT]

          (e)  A new Section 7.05 to the Restructuring Agreement is hereby
inserted as follows:

               7.05 [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY
          WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST
          FOR CONFIDENTIAL TREATMENT]

          (f)  A new Section 7.06 to the Restructuring Agreement is hereby
inserted as follows:

               7.06 [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY
          WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST
          FOR CONFIDENTIAL TREATMENT]

          SECTION 2.  Effective Date.   This Amendment shall become
effective upon execution and delivery hereof.

          SECTION 3.  Miscellaneous.  (a)  Upon the effectiveness of this
Amendment, on and after the date hereof, each reference in the
Restructuring Agreement and the other Restructuring Documents to "this
Agreement," "hereunder," "hereof," "herein," or words of like import, shall
mean and be a reference to the Restructuring Agreement as amended hereby.

          (b)  Except as specifically amended herein, the Restructuring
Agreement and all of the other Restructuring Documents shall remain in full
force and effect and are hereby ratified and confirmed.

          (c)  The execution, delivery and effectiveness of this Amendment
shall not, except as expressly provided herein, operate as a waiver of any
right, power or remedy of any party under any of the Restructuring
Documents, nor constitute a waiver of any provision of any of the
Restructuring Documents.

          (d)  This Amendment may be executed in any number of separate
counterparts, each of which shall, collectively and separately, constitute
one agreement.

          (e)  The Section Titles contained in this Amendment are and shall
be without substantive meaning or content of any kind whatsoever and are
not part of the agreement among the parties hereto.

          (f)  Except as otherwise expressly provided in any of the
Restructuring Documents, in all respects, including all matters of
construction, validity and performance, this Amendment shall be governed
by, and construed and enforced in accordance with, the laws of the State of
New York, without regard to the principles thereof regarding conflicts of
law, and any applicable laws of the United States.  Each party hereto
agrees to submit to personal jurisdiction and, to the extent permitted by
applicable law, to waive any objection as to venue in the County of New
York, State of New York.  To the extent permitted by applicable law,
service of process on each party hereto in any action arising out of or
relating to this Amendment shall be effective if mailed to such party at
the address listed Section 11.11 of the Restructuring Agreement.  Nothing
herein shall preclude any party hereto from bringing suit or taking other
legal action in any other jurisdiction.

          (g)  To the extent permitted by applicable law, the parties
hereto waive all right to trial by jury in any action or proceeding to
enforce or defend any rights under this Amendment.

          IN WITNESS WHEREOF, the parties hereto have caused this Amendment
to be executed by their respective officers thereunto duly authorized, as
of the date first above written.


                                   CONTINENTAL AIRLINES, INC.


                                                                           
                                   By:  Gerald Laderman
                                        Vice President


                                   CONTINENTAL EXPRESS, INC.


                                   By:                                     
                                   Name:                                   
                                   Title:                                  


                                   GENERAL ELECTRIC CAPITAL CORPORATION


                                   By:                                     
                                   Name:                                   
                                   Title:                                  


                                   GENERAL ELECTRIC COMPANY


                                   By:                                     
                                   Name:                                   
                                   Title:                                  


                                   GLOBAL PROJECT & STRUCTURED FINANCE
                                        CORPORATION


                                                                           
                                   By:  Eric M. Dull
                                        Vice President




<PAGE>   115

                                                            EXHIBIT 10.2(d)


             THIS SUPPLEMENTAL AGREEMENT SHALL NOT BE BINDING 
              UPON THE PORT AUTHORITY UNTIL DULY EXECUTED BY
               AN EXECUTIVE OFFICER THEREOF AND DELIVERED TO
               THE LESSEE BY AN AUTHORIZED REPRESENTATIVE OF
                             THE PORT AUTHORITY


                                        Newark International Airport
                                        Lease No. ANA-170
                                        Supplement No. 12


                          SUPPLEMENTAL AGREEMENT


     THIS AGREEMENT dated June 21, 1993 by and between THE PORT AUTHORITY OF
NEW YORK AND NEW JERSEY (hereinafter called "the Port Authority") and
CONTINENTAL AIRLINES, INC., a corporation of the State of Delaware, having an
office and place of business at Suite 1401, P.O. Box 4607, Houston, Texas
77210-4067, (hereinafter called "the Lessee"),

     WITNESSETH, That:

     WHEREAS, the Port Authority and People Express Airlines, Inc.
(hereinafter called "People Express") as of January 11, 1985 entered into an
agreement of lease (which agreement of lease as heretofore supplemented and
amended is hereinafter called the "Lease"), covering certain premises, rights
and privileges at and in respect to Newark International Airport (hereinafter
called "the Airport") as therein set forth; and

     WHEREAS, the Lease was thereafter assigned by said People Express to the
Lessee pursuant to an Assignment of Lease with Assumption and Consent
Agreement entered into among the Port Authority, the Lessee and People
Express and dated August 15, 1987; and 

     WHEREAS, the Lessee is the successor by merger to Continental Airlines,
Inc., a Delaware Corporation; and

     WHEREAS, the Port Authority and the Lessee desire to extend the
periodical tenancy of the Area C-3 portion of the premises under the Lease
and to amend the Lease in certain other respects as hereinafter provided; 

     WHEREAS, a certain Stipulation between the parties hereto has been
submitted for approval to the United States Bankruptcy Court for the District
of Delaware ("the Bankruptcy Court") covering the Lessee's, as part of the
confirmation of its reorganization plan in its Chapter 11 bankruptcy
proceedings and as debtor and debtor in possession, assumption of the Lease,
pursuant to the applicable provisions of United States Bankruptcy Code as set
forth in and subject to the terms and conditions of said Stipulation (said
Stipulation being hereinafter referred to as the "Stipulation");

     NOW, THEREFORE, the Port Authority and the Lessee, for and in
consideration of the covenants and mutual agreements hereinafter contained,
hereby agree to amend the Lease, effective as of May 1, 1993, as follows:

     1.  The term of the letting of Area C-3 under the Lease is hereby
extended to July 31, 1993 and month-to-month thereafter as a periodical
tenancy unless sooner terminated, subject to the terms and conditions of the
Lease, as hereby amended, and at the rentals set forth in the Lease; but in
no event shall such periodical tenancy continue beyond December 31, 1993.

     2.  (a)  The Lessee agrees, at its sole cost and expense, to perform all
work necessary to design and construct the following:

              (i)  design and construction of a two-level annex building
     consisting of approximately 28,000 square feet to be located in the
     northwest corner of the Area D portion of Area C-3, with said annex
     building to be connected to the Terminal C building by a fully enclosed
     pedestrian walkway;

             (ii)  modifications and replacements to existing ticketing areas
     in the Terminal C building;

            (iii)  removal of existing pedestrian passenger loading bridge
     described in Paragraph 4 hereof and installation, as replacement
     therefor, of the new apron drive loading bridge described in Paragraph
     4 hereof; and

             (iv)  all appropriate, necessary and required work for paving of
     unpaved portions of the aircraft maneuvering areas at Area C-3 to
     accommodate small commuter aircraft movement and parking and to allow
     for wide-body jet aircraft in the vicinity of the Area C-3 passenger
     loading bridges; 

     All of the foregoing shall be in accordance with a Construction
Application or Construction Applications and plans and specifications to be
submitted by the Lessee for approval by the Port Authority.  All of the
foregoing design and construction work is hereinafter referred to as the
"Area C-3 Work."

     All of the Area C-3 Work shall be constructed by the Lessee on the
premises (specifically, the Area C-3 portion of the premises) and off the
premises where necessary and where construted on the premises shall be and
become a part of the premises under the Lease.

         (b)  Prior to the commencement of the Area C-3 Work, the Lessee
shall submit to the Port Authority for the Port Authority's approval complete
plans and specifications (including a conceptual plan) therefor.  The Port
Authority may refuse to grant approval with respect to the Area C-3 Work if,
in its opinion, any of the proposed Area C-3 Work as set forth in said plans
and specifications (all of which shall be in such detail as may reasonably
permit the Port Authority to make a determination as to whether the
requirements hereinafter referred to are met) shall:

              (i)  Be unsafe, unsound, hazardous or improper for the use and
     occupancy for which it is designed, or

             (ii)  Not comply with the Port Authority's requirements for
     harmony of external architecture of similar existing or future
     improvements at the Airport, or

            (iii)  Not comply with the Port Authority's requirements with
     respect to external and interior building materials and finishes of
     similar existing or future improvements at the Airport, or

             (iv)  Not provide for sufficient clearances for taxiways,
     runways and apron areas, or

              (v)  Be designed for use for purposes other than those
     authorized under the Lease, or

             (vi)  Set forth ground elevations or heights other than those
     prescribed by the Port authority, or

            (vii)  Not provide adequate and proper circulation areas, or

           (viii)  Not be at locations or not be oriented in accordance with
     the Lessee's approved conceptual plan, or

             (ix)  Not comply with the provisions of the Basic Lease,
     including without limiting the generality thereof, those provisions of
     the Basic Lease providing that the Port Authority will conform to the
     enactments, ordinances, resolutions and regulations of the City of
     Newark and its various departments, boards and bureaus in regard to the
     construction and maintenance of buildings and structures and in regard
     to health and fire protection which would be applicable if the Port
     Authority were a private corporation to the extent that the Port
     Authority finds it practicable so to do, or

              (x)  Permit aircraft to overhang the boundary of the premises,
     except when entering or leaving the premises, or

             (xi)  Be in violation or contravention of any other provisions
     and terms of this Lease, or

            (xii)  Not comply with all applicable governmental laws,
     ordinances, enactments, resolutions, rules and orders, or

           (xiii)  Not comply with all applicable requirements of the
     National Board of Fire Underwriters and the Fire Insurance Rating
     Organization of New Jersey, or

            (xiv)  Not comply with the Port Authority's requirements with
     respect to landscaping, or,

             (xv)  Not comply with the Port Authority's requirements and
     standards with respect to noise, air pollution, water pollution or other
     types of pollution. 

         (c)  All of the Area C-3 Work shall be done in accordance with the
following terms and conditions:

              (i)  The Lessee hereby assumes the risk of loss or damage to
     all of the Area C-3 Work prior to the completion thereof and the risk of
     loss or damage to all property of the Port Authority arising out of or
     in connection with the performance of the Area C-3 Work.  In the event
     of such loss or damage, the Lessee shall forthwith repair, replace and
     make good the Area C-3 Work and the property of the Port Authority
     without cost or expense to the Port Authority.  The Lessee shall itself
     and shall also require its contractors to indemnify and hold harmless
     the Port Authority, its Commissioners, officers, agents and employees
     from and against all claims and demands, just or unjust, of third
     persons (including employees, officers, and agents of the Port
     Authority) arising or alleged to arise out of the performance of the
     Area C-3 Work and for all expenses incurred by it and by them in the
     defense, settlement or satisfaction thereof, including without
     limitation thereto, claims and demands for death, for personal injury or
     for property damage, direct or consequential, whether they arise from
     the acts or omission of the Lessee, of any contractors of the Lessee, of
     the Port Authority, or of third persons, or from acts of God or of the
     public enemy, or otherwise, (including claims of the City of Newark
     against the Port Authority pursuant to the provisions of the Basic Lease
     whereby the Port Authority has agreed to indemnify the City against
     claims), excepting only claims and demands which result solely from
     affirmative willful acts done by the Port Authority, its commissioners,
     officers, agents and employees with respect to the Area C-3 Work.

              If so directed, the Lessee shall at its own expense defend any
     suit based upon any such claim or demand (even if such suit, claim or
     demand is groundless, false or fraudulent), and in handling such it
     shall not, without obtaining express advance written permission from the
     General Counsel of the Port Authority, raise any defense involving in
     any way the jurisdiction of the tribunal, the immunity of the Port
     Authority, its Commissioners, officers, agents or employees, the
     governmental nature of the Port Authority, or the provisions of any
     statutes respecting suits against the Port Authority.

             (ii)  Prior to engaging or retaining an architect or architects
     for the Area C-3 Work, the name or names of said architect or architects
     shall be submitted to the Port Authority for its approval.  The Port
     Authority shall have the right to disapprove any substitute or other
     architect who may be unacceptable to it.  All Area C-3 Work shall be
     done in accordance with plans and specifications to be submitted to and
     approved by the Port Authority prior to the commencement of the Area C-3
     Work, and until such approval has been obtained the Lessee shall
     continue to resubmit plans and specifications as required.  Upon
     approval of such plans and specifications by the Port Authority, the
     Lessee shall proceed diligently at its sole cost and expense, to perform
     the Area C-3 Work.  All Area C-3 Work, including workmanship and
     materials, shall be of first class quality.  The Lessee shall re-do,
     replace or construct at its own cost and expense, any Area C-3 Work not
     done in accordance with the approved plans and specifications, the
     provisions of this Paragraph 2 or any further requirements of the Port
     Authority under the Lease as hereby amended.  The Lessee shall complete
     the Area C-3 Work no later than September 30, 1993.

            (iii)  The Lessee shall submit to the Port Authority for its
     approval the names of the contractors to whom the Lessee proposes to
     award the Area C-3 Work contracts.  The Port Authority shall have the
     right to disapprove any contractor who may be unacceptable to it.  The
     Lessee shall include in all such contracts such provisions and
     conditions as may be reasonably required by the Port Authority.  Without
     limiting the generality of the foregoing all of the Lessee's
     construction contracts shall provide as follows:  "If (i) the Contractor
     fails to perform any of his obligations under the Contract, including
     his obligation to the Lessee to pay any claims lawfully made against him
     by any materialman, subcontractor or workman or other third person which
     arises out of or in connection with the performance of the Contract or
     (ii) any claim (just or unjust) which arises out of or in connection
     with the Contract is made against the Lessee or (iii) any subcontractor
     under the Contract fails to pay any claims, lawfully made against him by
     any materialman, subcontractor, workman or other third persons which
     arises out of or in connection with the Contract or if in the Lessee's
     opinion any of the aforesaid contingencies is likely to arise, then the
     Lessee shall have the right, in its discretion, to withhold out of any
     payment (final or otherwise and even though such payments have already
     been certified as due) such sums as the Lessee may deem ample to protect
     it against delay or loss or to assume the payment of just claims of
     third persons, and to apply such sums in such manner as the Lessee may
     deem proper to secure such protection or satisfy such claims.  All sums
     so applied shall be deducted from the Contractor's compensation. 
     Omission by the Lessee to withhold out of any payment, final or
     otherwise a sum for any of the above contingencies, even though such
     contingency has occurred at the time of such payment, shall not be
     deemed to indicate that the Lessee does not intend to exercise its right
     with respect to such contingency.  Neither the above provisions for
     rights of the Lessee to withhold and apply monies nor any exercise, or
     attempted exercise of, or omission to exercise such rights by the Lessee
     shall create any obligation of any kind to such materialmen,
     subcontractors, workmen or other third persons.  Until actual payment is
     made to the Contractor, his right to any amount to be paid under the
     Contract (even though such amount has already been certified as due)
     shall be subordinate to the rights of the Lessee under this provision."

             (iv)  The lessee shall file with the Port Authority a copy of
     its construction contracts with its contractors prior to the start of
     the construction work.

              (v)  The Lessee shall furnish or require its architect to
     furnish a full time resident engineer during the construction period. 
     The Lessee shall require certification by a licensed engineer of all
     pile driving data and of all controlled concrete work and such other
     certifications as may be requested by the Port Authority from time to
     time.

             (vi)  The Lessee agrees to be solely responsible for any plans
     and specifications used by it and for any loss or damages resulting from
     the use thereof, notwithstanding that the same have been approved by the
     Port Authority and notwithstanding the incorporation therein of Port
     Authority recommendations or requirements.  Notwithstanding the
     requirement for approval by the Port Authority of the contracts to be
     entered into by the Lessee or the incorporation therein of Port
     Authority requirements or recommendations and notwithstanding any rights
     the Port Authority may have reserved to itself hereunder, the Port
     Authority shall have no liabilities or obligations of any kind to any
     contractors engaged by the Lessee or for any other matter in connection
     therewith and the Lessee hereby releases and discharges the Port
     Authority, its Commissioners, officers, representatives and employees of
     and from any and all liability, claim for damages or losses of any kind,
     whether legal or equitable, or from any action or cause of action
     arising or alleged to arise out of the performance of any construction
     work pursuant to the contracts between the Lessee and its contractors. 
     Any warranties contained in any construction contract entered into by
     the Lessee for the performance of the Area C-3 Work hereunder shall be
     for the benefit of the Port Authority as well as the Lessee, and the
     contract shall so provide.

            (vii)  The Port Authority shall have the right, through its duly
     designated representatives, to inspect the Area C-3 Work and the plans
     and specifications thereof, at any and all reasonable times during the
     progress thereof and from time to time, in its discretion, to take
     samples and perform testing on any part of the Area C-3 Work.

           (viii)  The Lessee agrees that it shall deliver to the Port
     Authority two (2) sets of "as built" microfilm drawings of the Area C-3
     Work mounted on aperture cards, all of which shall conform to the
     specifications of the Port Authority (the receipt of a copy of said
     specifications prior to the execution hereof being hereby acknowledged
     by the Lessee), and the Lessee shall during the term of this Lease keep
     said drawings current showing thereon any changes or modification which
     may be made.  No changes or modifications shall be made without prior
     Port Authority consent.

             (ix)  The Lessee shall, if requested by the Port Authority, take
     all reasonable measures to prevent erosion of the soil and the blowing
     of sand during the performance of the Area C-3 Work, including but not
     limited to the fencing of the premises or portions thereof or other
     areas and the covering of open areas with asphaltic emulsion or similar
     materials as the Port Authority may direct.

              (x)  Title to any soil, dirt, sand or other matter (hereinafter
     in this item (x) collectively called "the matter") excavated by the
     Lessee during the course of the Area C-3 Work shall vest in the Port
     Authority and the matter shall be delivered by the Lessee at its expense
     to any location on the Airport as may be designated by the Port
     Authority.  The entire proceeds, if any, of the sale or other
     disposition of the matter shall belong to the Port Authority. 
     Notwithstanding the foregoing the Port Authority may elect by prior
     written notice to the Lessee to waive title to all or portions of the
     matter in which event the Lessee at its expense shall dispose of the
     same without further instruction from the Port Authority.

             (xi)  The Lessee shall pay or cause to be paid all claims
     lawfully made against it by its contractors, subcontractors, materialmen
     and workmen, and all claims lawfully made against it by other third
     persons arising out of or in connection with or because of the
     performance of the construction work, and shall cause its contractors
     and subcontractors to pay all such claims lawfully made against them,
     provided, however that nothing herein contained shall be construed to
     limit the right of the Lessee to contest any claim of a contractor,
     subcontractor, materialman, workman and/or other person and no such
     claim shall be considered to be an obligation of the Lessee within the
     meaning of this Section unless and until the same shall have been
     finally adjudicated.  The Lessee shall use its best efforts to resolve
     any such claims and shall keep the Port Authority fully informed of its
     actions with respect thereto.  Nothing herein contained shall be deemed
     to constitute consent to the creation of any liens or claims against the
     premises or to create any rights in said third persons against the Port
     Authority.

            (xii)  Effective as of the date of delivery to the Port Authority
     by the Lessee of a copy of Supplement No. 12 to the Lease fully executed
     on behalf of the Lessee, the Lessee in its own name as insured and
     including the Port Authority as an additional insured shall procure and
     maintain Comprehensive General Liability insurance, including but not
     limited to premises-operations, products-completed operations,
     explosion, collapse and underground property damages, personal injury
     and independent contractors, with a broad form property damage
     endorsement and with a contractual liability endorsement covering the
     obligations assumed by the Lessee pursuant to subparagraphs (c) (i) and
     (vi) of this Paragraph 2, and Comprehensive Automobile Liability
     insurance covering owned, non-owned and hired vehicles.

              The said Comprehensive General Liability insurance shall have
     a limit of not less than $25,000,000 combined single limit per
     occurrence for bodily injury and property damage liability, and said
     Comprehensive Automobile Liability insurance shall have a limit of not
     less than $25,000,000 combined single limit per bodily injury and
     property damage liability.

              The foregoing policies shall be in addition to all policies of
     insurance otherwise required by the Lease or the Lessee may provide such
     insurance by requiring each contractor engaged by it for the Area C-3
     Work to procure and maintain such insurance including such contractual
     liability endorsement, said insurance, whether procured by the Lessee or
     by a contractor engaged by it as aforesaid, not to contain any care,
     custody or control exclusions, and not to contain any exclusion for
     bodily injury to or sickness, disease or death of any employee of the
     Lessee or of any of its contractors which would conflict with or in any
     way impair coverage under the contractual liability endorsement.  The
     said policy or policies of insurance shall also provide or contain an
     endorsement providing that the protection afforded the Lessee thereunder
     with respect to any claim or action against the Lessee by a third person
     shall pertain and apply with like effect with respect to any claim or
     action against the Lessee by the Port Authority, but such endorsement
     shall not limit, vary or affect the protections afforded the Port
     Authority thereunder as an additional insured.

              The Lessee shall also procure and maintain in effect, or cause
     to be procured and maintained in effect, Worker's Compensation Insurance
     and Employers' Liability Insurance in accordance with and as required by
     law.  The insurance required hereunder shall be maintained in effect
     during the performance of the Area C-3 Work and shall be in compliance
     with and subject to the provisions of paragraph (c) of Section 18 of the
     Lease.

              The lessee shall also procure and maintain Builder's Risk (All
     Risk) Completed Value Insurance covering the Area C-3 Work during the
     performance thereof including material delivered to the site but not
     attached to the realty.  Such insurance shall be in compliance with and
     subject to the applicable provisions set forth herein and shall name the
     Port Authority, the City of Newark, the Lessee and its contractors and
     subcontractors as additional insureds and such policy shall provide that
     the loss shall be adjusted with and payable to the Lessee.  Such
     proceeds shall be used by the Lessee for the repair, replacement or
     rebuilding of the Area C-3 Work and any excess shall be paid over to the
     Port Authority.

              The policies or certificates representing insurance covered by
     this subparagraph (xii) shall be delivered by the Lessee to the Port
     Authority at least thirty (30) days prior to the commencement of the
     Area C-3 Work, and each policy or certificate delivered shall bear the
     endorsement of or be accompanied by evidence of payment of the premium
     thereof and, also, a valid provision obligating the insurance company to
     furnish the Port Authority and the City of Newark thirty (30) days'
     advance notice of the cancellation, termination, change or modification
     of the insurance evidenced by said policy or certificate.  Renewal
     policies or certificates shall be delivered to the Port Authority at
     least thirty (30) days before the expiration of the insurance which such
     policies are to renew.

              The insurance covered by this subparagraph (xii) shall be
     written by companies approved by the Port Authority, the Port Authority
     covenanting and agreeing not to withhold its approval unreasonably.  If
     at any time any of the insurance policies shall be or become
     unsatisfactory to the Port Authority as to the form or substance or if
     any of the carriers issuing such policies shall be or become
     unsatisfactory to the Port Authority, the Lessee shall promptly obtain
     a new and satisfactory policy in replacement, the Port Authority
     covenanting and agreeing not to act unreasonably hereunder.  If at any
     time the Port Authority so requests, a certified copy of each of the
     said policies shall be delivered to the Port Authority.

           (xiii)  The Lessee shall be under no obligation to reimburse the
     Port Authority for expenses incurred by the Port Authority in connection
     with its normal review and approval of the original plans and
     specifications submitted by the Lessee pursuant to this Paragraph 2. 
     The Lessee however agrees to pay to the Port Authority upon its demand
     the expenses incurred by the Port Authority in connection with any
     additional review for approval of any changes, modifications or
     revisions of the original plans and specifications which may be proposed
     by the Lessee for the Port Authority's approval.  The expenses of the
     Port Authority for any such additional review and approval shall be
     computed on the basis of direct payroll time expended in connection
     therewith plus 100%.  Wherever in this Lease reference is made to
     "direct payroll time", costs computed thereunder shall include a prorata
     share of the cost to the Port Authority of providing employee benefits,
     including, but not limited to, pensions, hospitalization, medical and
     life insurance, vacations and holidays.  Such computations shall be in
     accordance with the Port Authority's accounting principles as
     consistently applied prior to the execution of this Lease.

            (xiv)  The Lessee shall prior to the commencement of construction
     and at all times during construction submit to the Port Authority all
     engineering studies with respect to construction and samples of
     construction materials as may be reasonably required at any time and
     from time to time by the Port Authority.

             (xv)  The Lessee shall at the time of submitting the conceptual
     plan to the Port Authority as provided in subparagraph (b) of this
     Paragraph 2 of the Lease submit to the Port Authority its forecasts of
     the number of people who will be working at various times during the
     term of the Lease at the premises, the expected utility demands of Area
     C-3, noise profiles and such other information as the Port Authority may
     require.  The Lessee shall continue to submit its latest forecasts and
     such other information as may be required as aforesaid as the Port
     Authority shall from time to time and at any time request.

            (xvi)  The Lessee shall execute and submit for the Port
     Authority's approval a Construction Application or Applications in the
     form prescribed by the Port Authority covering the Area C-3 Work or
     portions thereof.  The Lessee shall comply with all the terms and
     provisions of the approved Construction Applications.  In the event of
     any inconsistency between the terms of any Construction Application and
     the terms of the Lease, the terms of the Lease shall prevail and
     control.

           (xvii)  Nothing contained in the Lease (as hereby amended) shall
     grant or be deemed to grant to any contractor, architect, supplier,
     subcontractor or any other person engaged by the Lessee or any of its
     contractors in the performance of any part of the Area C-3 Work any
     right of action or claim against the Port Authority, its Commissioners,
     officers, agents and employees with respect to any work any of them may
     do in connection with the Area C-3 Work.  Nothing contained herein shall
     create or be deemed to create any relationship between the Port
     Authority and any such contractor, architect, supplier, subcontractor or
     any other person engaged by the Lessee or any of its contractors in the
     performance of any part of the Area C-3 Work and the Port Authority
     shall not be responsible to any of the foregoing for any payments due or
     alleged to be due thereto for any work performed or materials purchased
     in connection with the Area C-3 Work.

           (xiii)  Without limiting any of the terms and conditions of this
     Lease, the Lessee understands and agrees that it shall put into effect
     prior to the commencement of any Area C-3 Work an affirmative action
     program and Minority Business Enterprise (MBE) program and Women-owned
     Business Enterprise (WBE) program in accordance with the provisions of
     Schedule E-1, attached hereto and hereby made a part of the Lease.  The
     provisions of said Schedule E-1 of the Lease shall be applicable to the
     Lessee's contractor or contractors and subcontractors at any tier of
     construction as well as to the Lessee and the Lessee shall include the
     provisions of said Schedule E-1 within all of its construction contracts
     so as to make said provisions and undertakings the direct obligation of
     the construction contractor or contractors and subcontractors at any
     tier of construction.  The Lessee shall and shall require its said
     contractor, contractors and subcontractors to furnish to the Port
     Authority such data, including but not limited to compliance reports
     relating to the operation and implementation of the affirmative action,
     MBE and WBE programs called for hereunder as the Port Authority may
     request at any time and from time to time regarding the affirmative
     action, minority business enterprises and women-owned business
     enterprises programs of the Lessee and its contractor, contractors, and
     subcontractors at any tier of construction, and the Lessee shall and
     shall also require that its contractor, contractors and subcontractors
     at any tier of construction make an put into effect such modifications
     and additions thereto as may be directed by the Port Authority pursuant
     to the provisions hereof and said Schedule E-1 to effectuate the goals
     of affirmative action and minority business enterprise and women-owned
     business enterprise programs.

              In addition to and without limiting any terms and provisions of
     this Lease, the Lessee shall provide in its contracts and all
     subcontracts covering the Area C-3 Work, or any portion thereof, that:

                (aa) The contractor shall not discriminate against employees
     or applicants for employment because of race, creed, color, national
     origin, sex, age, disability or marital status, and shall undertake or
     continue existing programs of affirmative action to ensure that minority
     group persons are afforded equal employment opportunity without
     discrimination.  Such programs shall include, but not be limited to,
     recruitment, employment, job assignment, promotion, upgrading, demotion,
     transfer, layoff, termination, rates of pay or other forms of
     compensation, and selections for training or retraining, including
     apprenticeships and on-the-job training;

                (bb) At the request of either the Port Authority or the
     Lessee, the contractor shall request such employment agency, labor
     union, or authorized representative of workers with which it has a
     collective bargaining or other lease or understanding and which is
     involved in the performance of the contract with the Lessee to furnish
     a written statement that such employment agency, labor union or
     representative shall not discriminate because of race, creed, color,
     national origin, sex age, disability or marital status and that such
     union or representative will cooperate in the implementation of the
     contractor's obligations hereunder;

                (cc) The contractor will state, in all solicitations or
     advertisements for employees placed by or on behalf of the contractor in
     the performance of the contract, that all qualified applicants will be
     afforded equal employment opportunity without discrimination because of
     race, creed, color, national origin, sex, age, disability or marital
     status;

                (dd) The contractor will include the provisions of
     subparagraphs (aa) through (cc) of this paragraph in every subcontract
     or purchase order in such a manner that such provisions will be binding
     upon each subcontractor or vendor as to its work in connection with the
     contract;

                (ee) "Contractor" as used herein shall include each
     contractor and subcontractor at any tier of construction.

         (b)  The Lessee may wish to commence construction of portions of the
Area C-3 Work prior to the approval by the Port Authority of its plans and
specifications pursuant to paragraph (b) hereof, and if it does it shall
submit a written request to the Port Authority setting forth the work it
proposes then to do.  The Port Authority shall have full and complete
discretion as to whether or not to permit the Lessee to proceed with said
work.  If the Port Authority has no objection to the Lessee's proceeding with
the work, it shall do so by writing a letter to the Lessee to such effect. 
If the Lessee performs the work covered by said letter, it agrees all such
work shall be performed subject to and in accordance with all of the
provisions of the approval letter and subject to and in accordance with the
following terms and conditions:

              (i)  The performance by the Lessee of the work covered by any
     request as aforesaid will be at its sole risk and if for any reason the
     plans and specifications for the Area C-3 Work are not approved by the
     Port Authority or if the approval thereof calls for modifications or
     changes in the work undertaken by the Lessee under any approval granted
     by the Port Authority pursuant to this subparagraph (d), the Lessee
     will, as directed by the Port Authority, at its sole cost and expense,
     either restore the area affected to the condition existing prior to the
     commencement of any such work or make such modifications and changes in
     any such work as may be required by the Port Authority.

             (ii)  Nothing contained in any approval hereunder shall
     constitute a determination or indication by the Port Authority that the
     Lessee has complied with the applicable governmental laws, ordinances,
     enactments, resolutions, rules and orders, including but not limited to
     those of the City of Newark, which may pertain to the work to be
     performed.

            (iii)  The approved work will be performed in accordance with and
     subject to the terms, indemnities and provisions hereof covering the
     Area C-3 Work and with the terms and conditions of any Construction
     Application which the Port Authority may request the Lessee to submit
     even though such Construction Application may not have, at the time of
     the approval under this subparagraph (d), been approved by the Port
     Authority.

             (iv)  No work under any such approval shall affect or limit the
     obligations of the Lessee under all prior approvals with respect to its
     construction of the Area C-3 Work.

              (v)  The Lessee shall comply with all requirements,
     stipulations and provisions as may be set forth in the letter of
     approval.

             (vi)  In the event that the Lessee shall at any time during the
     construction of any portion of the Area C-3 Work under the approval
     granted by the Port Authority pursuant to this paragraph (d) fail in the
     opinion of the General Manager of New Jersey Airports of the Port
     Authority, to comply with all of the provisions of this Lease with
     respect to the Area C-3 Work, the Construction Application or the
     approval letter covering the same or be, in the opinion of the said
     General Manager of New Jersey Airports in breach of any of the
     provisions of this Lease, the Construction Application or the approval
     letter covering the same, the Port Authority shall have the right,
     acting through said General Manager of New Jersey Airports to cause the
     Lessee to cease all or such part of the Area C-3 Work as is being
     performed in violation of this Lease, the Construction Application or
     the approval letter.  Upon such written direction from the General
     Manager of New Jersey Airports the Lessee shall promptly cease
     construction of the portion of the Area C-3 Work specified.  The Lessee
     shall thereupon submit to the Port Authority for its written approval
     the Lessee's proposal for making modifications, corrections or changes
     in or to the Area C-3 Work that has been or is to be performed so that
     the same will comply with the provisions of this Lease, the Construction
     Application and the approval letter covering the Area C-3 Work.  The
     Lessee shall not commence construction of the portion of the Area C-3
     Expansion Work that has been halted until such written approval has been
     received.

            (vii)  It is hereby expressly understood and agreed that, in the
     event the Port Authority assigns a field engineer to the Area C-3 Work,
     such field engineer has no authority to approve any plans and
     specifications of the Lessee with respect to the Area C-3 Work, to
     approve the construction by the Lessee of any portion of the Area C-3
     Work or to agree to any variation by the Lessee from compliance with the
     terms of this Lease, or the Construction Application or the approval
     letter with respect to the Area C-3 Work.  Notwithstanding the
     foregoing, should the field engineer or the General Manager of New
     Jersey Airports give any directions or approvals with respect to the
     Lessee's performance of any portion of the Area C-3 Work which are
     contrary to the provisions of this Lease, the Construction Application
     or the approval letter, said directions or approvals shall not affect
     the obligations of the Lessee as set forth herein nor release or relieve
     the Lessee from the strict compliance therewith.  It is hereby further
     understood and agreed that the Port Authority has no duty or obligation
     of any kind whatsoever to inspect or police the performance of the Area
     C-3 Work by the Lessee and the rights granted to the Port Authority
     hereunder shall not create or be deemed to create such a duty or
     obligation.  Accordingly, the fact that the General Manager of New
     Jersey Airports has not exercised the Port Authority's right to require
     the Lessee to cease its construction of all or any part of the Area C-3
     Work shall not be or be deemed to be a Lease or acknowledgment on the
     part of the Port Authority that the Lessee has in fact performed such
     portion of the Area C-3 Work in accordance with the terms of the Lease,
     the Construction Application or the approval letter nor shall such fact
     be or be deemed to be a waiver by the Port Authority from the
     requirement of strict compliance by the Lessee with the provisions of
     the Lease, the Construction Application and the approval letter with
     respect to the Area C-3 Work. 

           (viii)  Without limiting the discretion of the Port Authority
     hereunder, the Port Authority hereby specifically advises the Lessee
     that even if the Port Authority hereafter in the exercise of its
     discretion wishes to grant approvals under this subparagraph (d), it may
     be unable to do so, so as to permit the Lessee to continue work without
     interruption following its completion of the work covered by any prior
     approval hereunder.  The Lessee hereby acknowledges that if it commences
     work pursuant to this paragraph (d) it shall do so with full knowledge
     that there may not be continuity by it in the performance of its Area C-
     3 Work under the procedures of this paragraph (d).

             (ix)  No prior approval of any work in connection with the Area
     C-3 Work shall create or be deemed to create any obligation on the part
     of the Port Authority to permit subsequent work to be performed in
     connection with the Area C-3 Work prior to the approval by the Port
     Authority of the Lessee's complete plans and specifications thereof.  It
     is understood that no such prior approval shall release or relieve the
     Lessee from its obligation to submit complete plans and specifications
     for the Area C-3 Work and to obtain the Port Authority's approval of the
     same as set forth in paragraph (b) hereof.  It is further understood
     that in the event the Lessee elects not to continue to seek further
     approval letters pursuant to this paragraph (c), the obligations of the
     Lessee to restore the area and to make modifications and changes as set
     forth above in this subparagraph (d) shall be suspended until the
     Lesssee's submission of its complete plans and specifications in
     accordance with paragraph (b) hereof.

         (e)  The Lessee will give the Port Authority fifteen (15) days'
notice prior to the commencement of construction.  The Port Authority will
assign to the Area C-3 Work a full time field engineer or engineers.  The
Lessee shall pay to the Port Authority for the services of said engineer or
engineers, the sum of Four Hundred Forty Dollars and No Cents ($440.00) for
each day the engineer or engineers are so assigned.  Nothing contained herein
shall affect any of the provisions of paragraph (h) hereof or the rights of
the Port Authority hereunder.  This agreement for the services of said field
engineer may be revoked at any time by either party on thirty (30) days'
written notice to the other, but if revoked by the Lessee it shall continue
during the period construction under any partial approvals pursuant to
paragraph (d) hereof is performed.

         (f)  (i)  The Area C-3 Work shall be constructed in such a manner
      that there will be at all times a minimum of air pollution, water
      pollution or any other type of pollution and a minimum of noise
      emanating from, arising out of or resulting from the operation, use or
      maintenance of any portion thereof by the Lessee and from the
      operations of the Lessee under this Paragraph 2.  Accordingly, and in
      addition to all other obligations imposed on the Lessee under this
      Lease, and without diminishing, limiting, modifying or affecting any of
      the same, the Lessee shall be obligated to construct as part of the
      Area C-3 Work hereunder such structures, fences, equipment, devises and
      other facilities as may be necessary or appropriate to accomplish the
      foregoing and each of the foregoing shall be and become a part of the
      premises it affects and all of the foregoing shall be covered under the
      plans and specifications of the Lessee submitted under subparagraph (b)
      of this Paragraph 2 and shall be part of the Area C-3 Work hereunder.

             (ii)  Notwithstanding the provision of subparagraph (i) above
     and in addition thereto, the Port Authority hereby reserves the right
     from time to time and at any time during the term of the Lease to
     require the Lessee, subsequent to the completion of the Area C-3 Work,
     to design and construct at its sole cost and expense such further
     reasonable structures, fences, equipment, devices and other facilities
     as may be necessary or appropriate to accomplish the objectives as set
     forth in the first sentence of said subparagraph (i).  All locations,
     the manner, type and method of construction and the size of any of the
     foregoing shall be determined by the Port Authority.  The Lessee shall
     submit for Port Authority approval its plans and specifications covering
     the required work and upon receiving such approval shall proceed
     diligently to construct the same.  All other provisions of this
     Paragraph 2 with respect to the Area C-3 Work shall apply and pertain
     with like effect to any work which the Lessee is obligated to perform
     pursuant to this subparagraph (ii) and upon completion of each portion
     of such work it shall be and become a part of the premises.  The
     obligations assumed by the Lessee under this paragraph (f) are a special
     inducement and consideration to the Port Authority in granting the
     extension hereunder of the letting with respect to Area C-3 to the
     Lessee.

         (g)  Title to all the Area C-3 Work which is located within the
territorial limits of the City of Newark shall vest in the city of Newark as
the same or any part thereof is erected, constructed or installed, and shall
be or become a part of the premises if located within the premises.  Title to
each part of the Area C-3 Work, if any, which is located within the
territorial limits of the City of Elizabeth shall vest in the Port Authority
as the same or any part thereof is erected, constructed or installed, and
shall be and become part of the premises if located within the premises.

         (h)  (i)  When the Area C-3 Work is substantially completed and
      ready for use the Lessee shall advise the Port Authority to such effect
      and shall deliver to the Port Authority a certificate signed by an
      authorized officer of the Lessee and also by the Lessee's architect or
      engineer certifying that the Area C-3 Work has been constructed
      strictly in accordance with the approved plans and specifications and
      the provisions of this Lease and in compliance with all applicable
      laws, ordinances and governmental rules, regulations and orders. 
      Thereafter, the Area C-3 Work will be inspected by the Port Authority
      and if the same has been completed as certified by the Lessee, a
      certificate to such effect shall be delivered to the Lessee, subject to
      the condition that all risks thereafter with respect to the
      construction and installation of the same and any liability therefor
      for negligence or other reason shall be borne by the Lessee.  The
      Lessee shall not use or permit the use of the Area C-3 Work or any
      portion thereof for the purposes set forth in the Lease until such
      certificate is received from the Port Authority.

             (ii)  The term "the Area C-3 Work Completion Date" for the
     purposes of this Lease shall mean the date appearing on the certificate
     issued by the Port Authority pursuant to subparagraph (i) of this
     paragraph (h).

            (iii)  In addition and without affecting the obligations of the
     Lessee under the preceding subparagraph, when an integral and material
     portion of the Area C-3 Work is substantially completed or is properly
     usable the Lessee may advise the Port Authority to such effect and may
     deliver to the Port Authority a certificate signed by an authorized
     officer of the Lessee and signed by the Lessee's architect or engineer
     certifying that such portion of the Area C-3 Work has been constructed
     strictly in accordance with the approved plans and specifications and
     the provisions of this Lease and in compliance with all applicable laws,
     ordinances and governmental rules, regulations and orders, and
     specifying that such portion of the Area C-3 Work can be properly used
     even though the Area C-3 Work has not been completed and that the Lessee
     desires such use.  The Port Authority may in its sole discretion deliver
     a certificate to the Lessee with respect to each such portion of the
     Area C-3 Work permitting the Lessee to use such portion thereof for the
     purposes set forth in the Lease.  In such event the Lessee may use such
     portion subject to the condition that all risks thereafter with respect
     to the construction and installation of the same and any liability
     therefor for negligence or other reason shall be borne by the Lessee,
     and subject to the risks as set forth in subparagraph (d) hereof in the
     event that the Port Authority shall not have then approved the complete
     plans and specifications for the Area C-3 Work.  Moreover, at any time
     prior to the issuance of the certificate required in subparagraph (i)
     above for the Area C-3 Work, the Lessee shall promptly upon receipt of
     a written notice from the Port Authority cease its use of such portion
     of the Area C-3 Work which it had been using pursuant to permission
     granted in this subparagraph (iii).

         (i)  The Lessee understands that there may be communications and
utility lines and conduits presently located on or under the premises which
do not, and may not in the future, serve the premises.  The Lessee agrees at
its sole cost and expense, if directed by the Port Authority so to do, to
relocate and reinstall such communications and utility lines and conduits on
the premises or off the premises as directed by the Port Authority and to
restore all affected areas (such work being hereinafter collectively called
"the relocation work").  The Lessee shall perform the relocation work subject
to and in accordance with all the terms and provisions of this Paragraph 2
and the relocation work shall be and become a part of the Area C-3 Work; it
being understood, however, that the relocation work shall not be or become a
part of the premises hereunder.

         (j)  The Lessee acknowledges that it intends to continue to use and
occupy all of the premises during the period of time it is performing the
Area C-3 Work hereunder.  The Lessee further acknowledges that this would
involve among other things inconvenience, noise, dust, interference and
disturbance to the Lessee in its use and occupancy of the premises as well as
to its patrons, invitees and employees and possibly other risks as well.  The
Lessee hereby expressly assumes all of the foregoing risks and agrees that
there will be no reduction or abatement of any the rentals, fees or charges
payable by the Lessee under the Lease on account of its performance of the
Area C-3 Work and that the performance of the Area C-3 Work shall not
constitute an eviction or constructive eviction of the Lessee nor be grounds
for any abatement of rents, fees or charges payable by the Lessee under the
Lease nor give rise to or be the basis of any claim or demand by the Lessee
against the Port Authority, its Commissioners, officers, employees or agents
for damages, consequential or otherwise, under the Lease.

     3.  In addition to and without limiting any of the terms or provisions
of the Lease, as hereby amended, the Lessee shall, at its sole cost and
expense, if requested by the Port Authority (which request the Port Authority
may make at its sole option and discretion), remove all of the Area C-3 Work
(or the portions thereof specified by the Port Authority in its request) and
shall restore the premises to the condition existing prior to the
commencement of the Area C-3 Work.

     4.  (a)  With respect to the passenger loading bridges for which Port
Authority construction advances were made pursuant to Sections 2 and 6 of the
Lease (hereinafter sometimes referred to as the "Section 2 loading bridges"),
it is hereby recognized that the Lessee has advised the Port Authority that,
based on a change in the operating plan for the premises including greater
utilization of wide-bodied aircraft, certain additional modifications and
removal work, as part of the Area C-3 Work defined in Paragraph  2 hereof,
are required consisting of (i) the removal from the premises of one (1) of
the Section 2 passenger loading bridges and the transfer of the title thereof
to the Lessee; said loading bridge being described as a fixed pedestal
loading bridge for narrow body aircraft and being identified as a loading
bridge in Schedule 1 attached to Supplement No. 4 of the Lease and also
identified by serial number WS500R-32; and (ii) the installation in the
premises of a new passenger loading bridge (as hereinafter described) and the
transfer of the title thereof to the Port Authority.  The new loading bridge
to be installed by the Lessee, as part of the Area C-3 Work defined in
Paragraph 2 hereof, is identified by description as a new jet apron drive
loading bridge for a wide-bodied aircraft gate position newly manufactured
and installed under a contract between the Lessee and Pneumo Abex Corporation
by its Jetway Systems Division 1805 West 2550 South Ogden, Utah with an
estimated value of Two Hundred Thousand Dollars and No Cents ($200,000.00)
exclusive of delivery and installation costs, and is identified by number as
Loading Bridge model number A3-58/100-125R and by original serial number
OG37489 and is herein referred to as the "Jetway loading bridge A3-58/100-
125R".  It is specifically understood and agreed that the Lessee shall at its
sole cost and expense perform, as part of the Area C-3 Work defined in
Paragraph 2 hereof, all work necessary, required or appropriate in connection
with all of the foregoing removal and installation work subject to the terms
and conditions of the Lease, including without limitation Paragraph 2 hereof,
provided, however, that none of the foregoing shall be or become part of the
cost of the construction work (as defined in Section 6 of the Lease) or part
of the Construction Advance Amount (as defined in Section 6 of the Lease). 
It is further expressly understood and agreed that the parties intend, based
on the Lessee's representation and warranty set forth in subparagraph (c)
below, that the said Jetway Loading Bridge A3-58/100-125R shall be deemed a
replacement and substitution for the above said loading bridge No. WS500R-32
and that such replacement and substitution shall not result in any
recomputation, adjustment or reduction of any construction advance, or the
Construction Advance Amount or the Base Annual Rental.

         (b)  It is expressly understood and agreed that, from and after the
effective date of this Supplement No. 12 to the Lease, all references to the
42 passenger loading bridges in the Lease shall be deemed to mean the 42
passenger loading bridges as reduced in number and modified pursuant to the
provisions of Paragraph 4 of the Supplement No. 7 to the Lease, Paragraph
No. 9 of Supplement No. 8 to the Lease and as modified by the provisions of
this Paragraph 4 hereof.  Without limiting the generality of the foregoing,
it is further expressly understood and agreed that the terms, provisions,
covenants, conditions, representations and warranties set forth in and called
for under paragraph (o) of Section 6 of the Lease (as set forth in Supplement
No. 4 of the Lease) shall apply, and the Lessee hereby makes the same
covenants, representations and warranties to the Port Authority, with like
force and effect to Jetway Loading Bridge A3-58/100-125R; and it is further
hereby understood and agreed that with respect to Jetway Loading Bridge A3-
58/100-125R the words "the Lessee's contractor", as used in Section 6 of the
Lease shall mean Pneumo Abex Corporation by its Jetway Systems Division 1805
West 2550 South Ogden, Utah provided, however, that the provisions of
subparagraph (1) (a) (ii) of said paragraph (o) shall not be applicable.

         (c)  The Lessee, further, hereby expressly warrants and represents
to the Port Authority that Jetway Loading Bridge A3-58/100-125R is of equal
or greater fair market value to that of the said loading bridge No. WS500R-
32.

     5.  The Lessee expressly understands and agrees that the Area C-3 Work
(as defined in Paragraph 2 above) shall be performed at the Lessee's sole
risk, cost and expense and that neither the Supplement nor anything contained
herein nor the performance by the Lessee of the Area C-3 Work or any portions
thereof, nor any action taken by the Port Authority hereunder shall grant or
be deemed to grant to the Lessee any right or claim to an extension of the
term of the Lease and the letting thereunder, including without limitation
the term of the letting of Area C-3, or to constitute any approval of or
commitment by or agreement of the Port Authority to any such extension.

     6.  (a)  Paragraph 4 (b) of Supplement No. 8 of the Lease if hereby
amended as follows:

              The words "(as set forth in Paragraph 2 hereof)" appearing in
      the second and third lines thereof shall be deemed amended to read: 
      "(as set forth in Paragraph 1 of Supplement No. 12 of the Lease)".

         (b)  References in Paragraphs 6 (a) and 6 (b) of Supplement No. 8 of
the Lease to "the expiration date of the letting of Area C-3" shall be deemed
to mean the expiration date of the letting of the periodical tenancy of Area
C-3 as set forth in Paragraph 1 of this Supplement No. 12 of the Lease.

     7.  In addition to and without limiting any term or provision of
Section 66 of the Lease or any other term or provision of the Lease, it is
hereby understood and agreed that the Lessee shall no later than sixty (60)
days after its execution of this Supplemental Agreement submit to the Port
Authority for its review and approval in accordance with Sections 66 and 73
of the Lease, a revised updated comprehensive consumer services plan covering
the consumer services to be provided in Area C-3 after the completion of the
Area C-3 Work (as defined in Paragraph 2 hereof).

     8.  It is expressly recognized that while the Stipulation (as
hereinbefore defined) has been submitted to the United States Bankruptcy
Court, the Stipulation may not have been fully approved by the Bankruptcy
Court as of the date of the execution of this Supplemental Agreement by the
parties hereto, and, accordingly, it is expressly understood and agreed that
neither this Supplemental Agreement nor anything contained herein nor the
execution hereof by either party hereto shall or shall be deemed to waive,
alter or prejudice any of the rights or remedies of either party hereto under
the Lease or at law or equity or otherwise, or with respect to or under the
Stipulation, if as and when the same may be approved by the Bankruptcy Court.

     9.  The Lessee represents and warrants that no broker has been concerned
in the negotiation of this Supplemental Agreement and that there is no broker
who is or may be entitled to be paid a commission in connection therewith. 
The Lessee shall indemnify and save harmless the Port Authority of and from
any and all claims for commission or brokerage made by any and all persons,
firms or corporations whatsoever for services in connection with the
negotiation and execution of this Supplemental Agreement.

    10.  Except as hereinbefore provided, all the terms covenants and
conditions of the Lease shall be and remain in full force and effect.

    11.  No Commissioner, director, officer, agent or employee of either
party shall be charged personally or held contractually liable by or to the
other party under any term or condition of this Agreement, or because of its
execution or attempted execution or because of any breach or attempted or
alleged breach thereof.  The Lessee agrees that no representations or
warranties with respect to this Agreement shall be binding upon the Port
Authority unless expressed in writing herein.

    12.  This Supplemental Agreement and the Lease which it amends constitute
the entire agreement between the Lessee and the Port Authority on the subject
matter, and may not be modified, discharged or extended except by instrument
in writing duly executed on behalf of both the Port Authority and the Lessee.



     IN WITNESS WHEREOF, the Port Authority and the Lessee have executed
these presents as of the date first above written.

ATTEST:                            THE PORT AUTHORITY OF NEW YORK
                                                  AND NEW JERSEY

 /s/                               By /s/ Gerald P. FitzGerald          
Assistant Secretary                
                                   (Title)  Deputy Director of Aviation 
                                                       (Seal)

ATTEST:                            CONTINENTAL AIRLINES, INC.

/s/ E. A. Hessler                  By   /s/ Sam E. Ashmore              
Vice President &
Corporate Secretary                (Title)    Sr. Vice President            
                                                 (Corporate Seal)
<PAGE>
SCHEDULE E-1


                                  PART I

Affirmative Action Guidelines - Equal Employment Opportunity

     I.  As a matter of policy the Port Authority hereby requires the Lessee
and the Lessee shall require the Contractor, as hereinafter defined, to
comply with the provisions set forth hereinafter.  The provisions set forth
in this Part I are similar to the conditions for bidding on federal
government contracts adopted by the Office of Federal Contract Compliance and
effective May 8, 1978.

         The Lessee as well as each bidder, contractor subcontractor of the
Lessee and each subcontractor of a contractor at any tier of construction
(herein collectively referred to as "the Contractor" must fully comply with
the following conditions set forth in this Schedule as to each construction
trade to be used on the construction work or any portion thereof (said
conditions being herein called "Bid Conditions").  The Lessee hereby commits
itself to the goals for minority and female utilization set forth below and
all other requirements, terms and conditions of the Bid Conditions.  The
Lessee shall likewise require the Contractor to commit itself to the said
goals for minority and female utilization set forth below and all other
requirements, terms and conditions of the Bid Conditions by submitting a
properly signed bid.

    II.  The Lessee and the Contractor shall each appoint an executive of its
company to assume the responsibility for the implementation of the
requirements, terms and conditions of the following Bid Conditions:

         (a)  The goals for minority and female participation, expressed in
percentage terms for the Contractor's aggregate workforce in each trade on
all construction work are as follows:

              (1)  Minority participation:
                     Minority, except laborers          30%
                     Minority, laborers                 40%
              (2)  Female participation:
                     Female, except laborers           6.9%
                     Female, laborers                  6.9%

         These goals are applicable to all the Contractor's construction work
performed in and for the premises.

         The Contractor's specific affirmative action obligations required
herein of minority and female employment and training must be substantially
uniform throughout the length of the contract, and in each trade, and the
Contractor shall make good faith efforts to employ minorities and women
evenly on each of its projects.  The transfer of minority or female employees
or trainees from contractor to contractor or from project to project for the
sole purpose of meeting the Contractor's goals shall be a violation of the
contract.  Compliance with the goals will be measured against the total work
hours performed.

         (b)  The Contractor shall provide written notification to the Lessee
and the Lessee shall provide written notification to the Manager of the
Office of Business and Job Opportunity of the Port Authority within 10
working days of award of any construction subcontract in excess of $10,000 at
any tier for construction work.  The notification shall list the name,
address and telephone number of the subcontractor; employer identification
number; estimated starting and completion dates of the subcontract; and the
geographical area in which the subcontract is to be performed. 

         (c)  As used in these specifications:

              (1)  "Employer identification number" means the Federal Social
         Security number used on the Employer's Quarterly Federal Tax Return,
         U.S. Treasury Department Form 941:

              (2)  "Minority" includes:

                   (i)  Black (all persons having origins in any of the
                        Black African racial groups not of Hispanic origin);

                  (ii)  Hispanic (all persons of Mexican, Puerto Rican,
                        Dominican, Cuban, Central or South American culture
                        or origin, regardless of race);

                 (iii)  Asian and Pacific Islander (all persons having
                        origins in any of the original peoples of the Far
                        East, Southeast Asia, the Indian Subcontinent, or
                        the Pacific Islands); and

                  (iv)  American Indian or Alaskan Native (all persons
                        having origins in any of the original peoples of
                        North America and maintaining identifiable tribal
                        affiliations through membership and participation or
                        county identification).

         (d)  Whenever the Contractor, or any subcontractor at any tier,
subcontracts a portion of the construction work involving any construction
trade, it shall physically include in each subcontract in excess of $10,000
those provisions which include the applicable goals for minority and female
participation.

         (e)  The Contractor shall implement the specific affirmative action
standards provided in subparagraphs (1) through (16) of Paragraph (h) hereof. 
The goals set forth above are expressed as percentages of the total hours of
employment and training of minority and female utilization the Contractor
should reasonably be able to achieve in each construction trade in which it
has employees in the premises.  The Contractor is expected to make
substantially uniform progress toward its goals in each craft during the
period specified.

         (f)  Neither the provisions of any collective bargaining agreement,
nor the failure by a union with whom the Contractor has a collective
bargaining agreement, to refer either minorities or women shall excuse the
Contractor's obligations hereunder.

         (g)  In order for the nonworking training hours of apprentices and
trainees to be counted in meeting the goals, such apprentices and trainees
must be employed by the Contractor during the training period, and the
Contractor must have made a commitment to employ the apprentices and trainees
at the completion of their training subject to the availability of employment
opportunities.  Trainees must be trained pursuant to training programs
approved by the U.S. Department of Labor.

         (h)  The Contractor shall take specific affirmative actions to
ensure equal employment opportunity ("EEO").  The evaluation of the
Contractor's compliance with these provisions shall be based upon its good
faith efforts to achieve maximum results from its actions.  The Contractor
shall document these efforts fully, and shall implement affirmative action
steps at least as extensive as the following:

              (1)  Ensure and maintain a working environment free of
         harassment, intimidation, and coercion at all sites, and in all
         facilities at which the Contractor's employees are assigned to work. 
         The Contractor, where possible, will assign two or more women to
         each phase of the construction project.  The Contractor, shall
         specifically ensure that all foremen, superintendents, and other
         supervisory personnel at the premises are aware of and carry out the
         Contractor's obligation to maintain such a working environment, with
         specific attention to minority or female individuals working at the
         premises.

              (2)  Establish and maintain a current list of minority and
         female recruitment sources, provide written notification to minority
         and female recruitment sources and to county organizations when the
         Contractor or its unions have employment opportunities available,
         and maintain a record of the organizations' responses.

              (3)  Maintain a current file of the names, addresses and
         telephone numbers of each minority and female off-the-street
         applicant and minority or female referral from a union, a
         recruitment source or community organization and of what action was
         taken with respect to each such individual.  If such individual was
         sent to the union hiring hall for referral and was not referred back
         to the Contractor by the union or, if referred, not employed by the
         Contractor, this shall be documented in the file with the reason
         therefor, along with whatever additional actions the Contractor may
         have taken.

              (4)  Provide immediate written notification to the Lessee when
         the union or unions with which the Contractor has a collective
         bargaining agreement has not referred to the Contractor a minority
         person or woman sent by the Contractor, or when the Contractor has
         other information that the union referral process has impeded the
         Contractor's efforts to meet its obligations.

              (5)  Develop on-the-job training opportunities and/or
         participate in training programs for the area which expressly
         include upgrading programs and apprenticeship and training programs
         relevant to the Contractor's employment needs, especially those
         programs funded or approved by the Department of Labor.  The
         Contractor shall Provide notice of these programs to the sources
         compiled under subparagraph (2) above.

              (6)  Disseminate the Contractor's EEO policy by providing
         notice of the policy to unions and training programs and requesting
         their cooperation in assisting the Contractor in meeting its EEO
         obligations; by including it in any policy manual and collective
         bargaining agreement; by publicizing it in the Contractor's
         newspaper, annual report, etc.; by specific review of the policy
         with all management Personnel and with all minority and female
         employees at least once a year; and by posting the Contractor's EEO
         policy on bulletin boards accessible to all employees at each
         location where construction work is performed.

              (7)  Review, at least every six months the Contractor's EEO
         policy and affirmative action obligations hereunder with all
         employees having any responsibility for hiring, assignment, layoff,
         termination or other employment decisions including specific review
         of these items with on-premises supervisory personnel such as
         Superintendents General Foremen, etc., prior to the initiation of
         construction work at the premises.  A written record shall be made
         and maintained identifying the time and place of these meetings,
         persons attending, subject matter discussed, and disposition of the
         subject matter.

              (8)  Disseminate the Contractor's EEO policy externally by
         including it in any advertising in the news media, specifically
         including minority and female news media, and providing written
         notification to and discussing the Contractors EEO policy with other
         contractors and subcontractors with whom the Contractor does or
         anticipates doing business.

              (9)  Direct its recruitment efforts, both oral and written, to
         minority, female and community organizations, to schools with
         minority and female students and to minority and female recruitment
         and training organizations and to State-certified minority referral
         agencies serving the Contractor's recruitment area and employment
         needs.  Not later than one month prior to the date for the
         acceptance of applications for apprenticeship or other training by
         any recruitment source, the Contractor shall send written
         notification to organizations such as the above, describing the
         openings, screening procedures, and tests to be used in the
         selection process.

             (10)  Encourage present minority and female employees to recruit
         other minority persons and women and, where reasonable, provide
         after school, summer and vacation employment to minority and female
         youth both on the premises and in other areas of a Contractor's
         workforce.

             (11)  Tests and other selection requirements shall comply with
         41 CFR Part 60-3.

             (12)  Conduct, at least every six months, an inventory and
         evaluation at least of all minority and female personnel for
         promotional opportunities and encourage these employees to seek or
         to prepare for, through appropriate training, etc., such
         opportunities.

             (13)  Ensure that seniority practices, job classifications, work
         assignments and other personnel practices, do not have a
         discriminatory effect by continually monitoring all personnel and
         employment related activities to ensure that the EEO policy and the
         Contractor's obligations hereunder are being carried out.

             (14)  Ensure that all facilities and company activities are
         nonsegregated except that separate or single-user toilet and
         necessary changing facilities shall be provided to assure privacy
         between the sexes.

             (15)  Document and maintain a record of all solicitations of
         offers for subcontracts from minority and female construction
         contractors and suppliers, including circulation of solicitations to
         minority and female contractor associations and other business
         associations.

             (16)  Conduct a review, at least every six months, of all
         supervisor's adherence to and performance under the Contractor's EEO
         policies and affirmative action obligations.

         (i)  Contractors are encouraged to participate in voluntary
associations which assist in fulfilling one or more of their affirmative
action obligations (subparagraphs (1)-(16) of Paragraph (h) above).  The
efforts of a contractor association, joint contractor-union, contractor-
community, or other similar group of which the Contractor is a member and
participant, may be asserted as fulfilling any one or more of its obligations
under Paragraph (h) hereof provided that:  the Contractor actively
participates in the group, makes good faith efforts to assure that the group
has a positive impact on the employment of minorities and women in the
industry, ensures that the concrete benefits of the program are reflected in
the Contractor's minority and female workforce participation, makes good
faith efforts to meet its individual goals and timetables, and can provide
access to documentation which demonstrates the effectiveness of actions taken
on behalf of the Contractor.  The obligation to comply, however, is the
Contractor's and failure of such a group to fulfill an obligation shall not
be a defense for the Contractor's non-compliance.

         (j)  A single goal for minorities and a separate single goal for
women have been established.  The contractor, however, is required to provide
equal employment opportunity and to take affirmative action for all minority
groups, both male and female, and all women, both minority and nonminority. 
Consequently, the Contractor may be in violation hereof if a particular group
is employed in a substantially disparate manner (for example, even though the
Contractor has achieved its goals for women generally, the Contractor may be
in violation hereof if a specific minority group of women is under-utilized).

         (k)  The Contractor shall not use the goals and timetables or
affirmative action standards to discriminate against any person because of
race, color, religion, sex or national origin.

         (l)  The Contractor shall not enter into any subcontract with any
person or firm debarred from Government contracts pursuant to Executive Order
11246.

         (m)  The Contractor shall carry out such sanctions and penalties for
violation of this clause including suspension, termination and cancellation
of existing subcontracts as may be imposed or ordered by the Lessee.  Any
Contractor who fails to carry out such sanctions and penalties shall be in
violation hereof.

         (n)  The Contractor, in fulfilling its obligations hereunder shall
implement specific affirmative action steps, at least as extensive as those
standards prescribed in paragraph (h) hereof so as to achieve maximum results
from its efforts to ensure equal employment opportunity.  If the Contractor
fails to comply with the requirements of these provisions, the Lessee shall
proceed accordingly.

         (o)  The Contractor shall designate a responsible official to
monitor all employment related activity to ensure that the company EEO policy
is being carried out, to submit reports relating to the provisions hereof as
may be required and to keep records.  Records shall at least include for each
employee the name, address, telephone numbers, construction trade, union
affiliation if any, employee identification number when assigned, social
security number, race, sex, status (e.g.  mechanic, apprentice, trainee,
helper, or laborer), dates of changes in status, hours worked per week in the
indicated trade, rate of pay, and location at which the work was performed. 
Records shall be maintained in an easily understandable and retrievable form;
however, to the degree that existing records satisfy this requirement,
contractors shall not be required to maintain separate records.

         (p)  Nothing herein provided shall be construed as a limitation upon
the application of any laws which establish different standards of compliance
or upon the application of requirements for the hiring of local or other area
residents (e.g., those under the Public Works Employment Act of 1977 and the
Community Development Block Grant Program).

         (q)  Without limiting any other or provision under the Lease, the
Contractor shall cooperate with all federal, state or local agencies
established for the purpose of implementing affirmative action compliance
programs and shall comply with all procedures and guidelines established or
which may be established by the Port Authority.



                                  PART II

Minority Business Enterprises/Women-Owned Business Enterprises

As a matter of policy the Port Authority requires the Lessee and the Lessee
shall itself and shall require the general contractor of other construction
supervisor and each of the Lessee's contractors to use every good faith
effort to provide for meaningful participation by Minority Business
Enterprises (MBEs) and Women-owned Business Enterprises (WBEs) in the
construction work, pursuant to the provisions hereof and in accordance with
the Lease.  For purposes hereof, Minority Business Enterprise (MBE) shall
mean any business enterprise which is at least fifty-one percentum owned by
or in the case of a publicly owned business, at least fifty-one percentum of
the stock of which is owned by citizens or permanent resident aliens who are
minorities and such ownership is real, substantial and continuing.  For the
purposes hereof, Women-owned Business Enterprise (WBE) shall mean any
business enterprise which is at least fifty-one percentum owned by, or in the
case of a publicly owned business, at least fifty-one percentum of the stock
of which is owned by women and such ownership is real, substantial and
continuing.  A minority shall be as defined in paragraph II(c) of Part I of
this Schedule E-1.  "Meaningful participation" shall mean that at least
seventeen percent (17%) of the total dollar value of the construction
contracts (including subcontracts) covering the construction work are for the
participation of Minority Business Enterprises and Women-owned Business
Enterprises, of which at lease twelve percent (12%) of the total dollar value
of the construction contracts (including subcontracts) are for the
participation of Minority Business Enterprises.  Good faith efforts to
include meaningful participation by MBEs and WBEs shall include at least the
following:

         (a)  Dividing the Work to be subcontracted into smaller portions
              where feasible.

         (b)  Actively and affirmatively soliciting bids for subcontracts
              from MBEs and WBEs, including circulation of solicitations to
              minority and female contractor associations.  The Contractor
              shall maintain records detailing the efforts made to provide
              for meaningful MBE and WBE participation in the Work, including
              the names and addresses of all MBEs and WBEs contacted and, if
              any such MBE or WBE is not selected as a joint venturer or
              subcontractor, the reason for such decision.

         (c)  Making plans and specifications for prospective construction
              work available to MBEs and WBEs in sufficient time for review.

         (d)  Utilizing the list of eligible MBEs and WBE maintained by the
              Port Authority or seeking minorities and women from other
              sources for the purpose of soliciting bids for subcontractors.

         (e)  Encouraging the formation of joint ventures, partnerships or
              other similar arrangements among subcontractors, where
              appropriate, to insure that the Lessee and Contractor will meet
              their obligations hereunder.

         (f)  Insuring that provision is made to provide progress payments to
              MBEs and WBEs in a timely basis.

         (g)  Not requiring bonds from and/or providing bonds and insurance
              for MBEs and WBEs, where appropriate.


                                             /s/                           
                                             For the Port Authority

                                 Initialled:

                                             /s/ SEA                       
                                             For the Lessee

<PAGE>
FORM XLD - Ack., N.J.  51380

STATE OF NEW YORK      
                       )
COUNTY OF NEW YORK     ) ss.
                       )
     On this 21 day of September, 1993, before me, the subscriber, a notary
public of New York, personally appeared Gerald P. Fitzgerald the Deputy of
Aviation of The Port Authority of New Yorka dn New Jersey, who I am satisfied
is the person who has signed the within instrument; and, I having first made
known to him the contents thereof, he did acknowledge that he signed, sealed
with the corporate seal and delivered the same as such officer aforesaid and
the within instrument is the voluntary act and deed of such corporation made
by virtue of the authority of its Board of Commissioners.

                                                  /s/ Jacqueline White      
                                                   (notarial seal and stamp)

STATE OF TEXAS
                       )
COUNTY OF HARRIS       ) ss.
                       )
     On this 21st day of June, 1993, before me, the subscriber, a notary
public of Texas personally appeared Sam E. Ashmore, the Senior Vice-President
of CONTINENTAL AIRLINES, INC., who I am satisfied is the person who has
signed the within instrument; and, I having first made known to him the
contents thereof, he did acknowledge that he signed, sealed with the
corporate seal and delivered the same as such officer aforesaid and the
within instrument is the voluntary act and deed of such corporation made by
virtue of the authority of its Board of Directors.

                                                    Kathryn K. Gutterman    
                                                   (notarial seal and stamp)

STATE OF
                       )
COUNTY OF              ) ss.
                       )

On this   day of         , 1993, before me, the subscriber, a President of  
      , who I am satisfied is the person who has signed the within
instrument; and, I having first made known to him the contents thereof, he
did acknowledge that he signed, sealed and delivered the same as his
voluntary act and deed for the uses and purposes therein expressed.

                                                                            
                                                   (notarial seal and stamp)





             THIS SUPPLEMENTAL AGREEMENT SHALL NOT BE BINDING 
              UPON THE PORT AUTHORITY UNTIL DULY EXECUTED BY
               AN EXECUTIVE OFFICER THEREOF AND DELIVERED TO
               THE LESSEE BY AN AUTHORIZED REPRESENTATIVE OF
                             THE PORT AUTHORITY


                                        Newark International Airport
                                        Lease No. ANA-170  
                                        Supplement No. 13


                          SUPPLEMENTAL AGREEMENT


     THIS AGREEMENT dated February 1, 1994 by and between THE PORT AUTHORITY
OF NEW YORK AND NEW JERSEY (hereinafter called "the Port Authority") and
CONTINENTAL AIRLINES, INC., a corporation of the State of Delaware, having an
office and place of business at Suite 1401, P.O. Box 4607, Houston, Texas
77210-4067, (hereinafter called "the Lessee"),

     WITNESSETH, That:

     WHEREAS, the Port Authority and People Express Airlines, Inc.
(hereinafter called "People Express") as of January 11, 1985 entered into an
agreement of lease (which agreement of lease as heretofore supplemented and
amended is hereinafter called the "Lease"), covering certain premises, rights
and privileges at and in respect to Newark International Airport (hereinafter
called "the Airport") as therein set forth; and

     WHEREAS, the Lease was thereafter assigned by said People Express to the
Lessee pursuant to an Assignment of Lease with Assumption and Consent
Agreement entered into among the Port Authority, the Lessee and People
Express and dated August 15, 1987; and 

     WHEREAS, the Port Authority and the Lessee desire to extend the letting
of the Area C-3 portion of the premises under the Lease and to amend the
Lease in certain other respects as hereinafter provided; 

     WHEREAS, a certain Stipulation between the parties hereto has been
submitted for approval of the United States Bankruptcy Court for the District
of Delaware ("the Bankruptcy Court") covering the Lessee's assumption of the
Lease as part of the confirmation of its reorganization plan in its Chapter
11 bankruptcy proceedings and as debtor and debtor in possession pursuant to
the applicable provisions of United States Bankruptcy Code as set forth in
and subject to the terms and conditions of said Stipulation (said Stipulation
being hereinafter referred to as the "Stipulation");

     WHEREAS, the Stipulation and the Lessee's assumption of the Lease has
been approved by the Bankruptcy Court by an Order thereof dated the 1st day
of October, 1993;

     NOW, THEREFORE, the Port Authority and the Lessee, for and in
consideration of the covenants and mutual agreements hereinafter contained,
hereby agree to amend the Lease, effective as of October 2, 1993 (except as
otherwise provided with respect to Paragraphs 1 and 2 below) as follows:

     1.  Effective as of June 2, 1989, subparagraph (b) of Paragraph 2 of
Supplement No. 9 of the Lease shall be deemed corrected and amended to read
as follows:

              "(b)  Paragraph III of Schedule A to the Lease, as amended by
Paragraph 3 (b) (v) of Supplement No. 8 to the Lease, is hereby further
amended by deleting the figure stated as '1.799%' in the last line thereof
(as set forth in said paragraph 3 (b) (v) of Supplement No. 8) and by
substituting in lieu thereof the figure '2.033%'."

     2.  Effective as of June 1, 1992:
         (a)  Subparagraph (a) (ii) of Paragraph 3 of Supplement No. 8 of the
Lease, as previously amended and set forth in Supplement No. 11 of the Lease,
shall be deemed corrected and amended to read as follows:

              "(ii)  For the portion of the term of the letting of Area C-3
         commencing on June 1, 1992 and continuing to and including the
         expiration date of the letting of Area C-3 an Area C-3 Annual Rental
         for Area C-3 at the annual rate of Five Million Seven Hundred
         Thirty-seven Thousand Eighty Dollars and No Cents ($5,737,080.00)
         subject to adjustment as provided in subparagraph (b) hereof.  The
         aforesaid Area C-3 Annual Rental of Five Million Seven Hundred
         Thirty-Seven Thousand Eighty Dollars and No Cents ($5,737,080.00) is
         made up of two factors, one a constant factor in the amount of Four
         Million Six Hundred Thirty-four Thousand Seven Hundred Five Dollars
         and No Cents ($4,634,705.00) and the other a variable factor in the
         amount of One Million One Hundred Two Thousand Three Hundred
         Seventy-five Dollars and No Cents ($1,102,375.00).  The variable
         factor aforesaid represents the Airport Services portion of the Area
         C-3 Annual Rental and such variable factor of the Area C-3 Annual
         Rental is herein referred to as the Airport Services Factor and is
         subject to adjustment as provided in subparagraph (b) hereof."

         (b)  The sixteenth through the eighteenth lines of the last sentence
of Paragraph III of Schedule A of the Lease as set forth in Paragraph 2 (c)
(ii) of Supplement No. 11 of the Lease shall be deemed corrected and amended
to read as follows:

              "is being made; for the calendar year 1992 adjustment, it is
              hereby agreed said denominator shall be 1.999%."

         (c)  The first sentence of the first paragraph of subparagraph (e)
(2) of Paragraph 3 of Supplement No. 8 of the Lease, as previously amended
and set forth in Paragraph 2 (d) (i) of Supplement No. 11 of the Lease, shall
be deemed corrected and amended to read as follows:

              "In addition, the Airport Services Factor of the Area C-3
         Annual Rental shall be reduced for each calendar day or major
         fraction thereof the abatement remains in effect, for each square
         foot of land the use of which is denied the Lessee at the daily rate
         of $0.0021585 subject to adjustment as provided herein."

         (d)  The second paragraph of said subparagraph (e) (2) of Paragraph
3 of Supplement No. 8 of the Lease as previously amended and as set forth in
Paragraph 2 (d) (ii) of Supplement No. 11 of the Lease shall be deemed
corrected and amended to read as follows:

              "The aforesaid abatement rate of $0.0021585 per diem
         (hereinafter called 'the variable rate') is based upon the variable
         factor in the amount of One Million One Hundred Two Thousand Three
         Hundred Seventy-Five Dollars and No Cents ($1,102,375.00) per annum
         which is the tentative Airport Services Factor for 1992 (also
         subject to the adjustment under paragraph b (hereof).  After the
         close of the calendar year 1992 and after the close of each calendar
         year thereafter, the Port Authority will adjust the variable rate,
         upwards or downwards, as provided in Schedule A.  The resultant
         variable rate shall constitute the final variable rate for the
         calendar year for which the adjustment is being made.  It shall also
         constitute the tentative variable rate for the calendar year in
         which such rate is calculated and for the following year until the
         next succeeding final variable rate is calculated."

         (e)  Subparagraph (a) of Paragraph 5 of Supplement No. 11 of the
Lease shall be deemed corrected and amended to read as follows:

                   "(a)  The Lessee agrees to pay the Port Authority a rental
              for Area C-3 (the 'Area C-3 Monthly Rental') at the rate of
              Four Hundred Seventy-Eight Thousand Ninety Dollars and No Cents
              ($478,090.00) per month, subject to adjustment of the Airport
              Services Factor as provided in subparagraph (b) below, payable
              by the Lessee in advance on January 1, 1993 and on the first
              day of each and every month thereafter during the periodical
              tenancy until the expiration or earlier termination of the
              periodical tenancy hereunder.  The aforesaid Area C-3 Monthly
              Rental of Four Hundred Seventy-Eight Thousand Ninety Dollars
              and No Cents ($478,090.00) is made up of two factors, one a
              constant factor in the amount of Three Hundred Eighty-six
              Thousand Two Hundred Twenty-Five Dollars and Forty-two Cents
              ($386,225.42) and the other a variable factor in the amount of
              Ninety-one Thousand and Eight Hundred Sixty-four Dollars and
              Fifty-eight cents ($91,864.58).  The variable factor aforesaid
              represents the Airport Services Factor of the Area C-3 Monthly
              Rental and is subject to adjustment in accordance with
              Schedule A of the Lease, as amended."

     3.  The term of the letting of Area C-3 under the Lease is hereby
extended to December 31, 1998 unless sooner terminated, subject to the terms
and conditions of the Lease, as hereby amended, and the Lessee shall pay to
the Port Authority as the annual rental for Area C-3, during the said
extension of the term of the letting thereof, the Area C-3 Annual Rental in
accordance with, and as set forth in, Paragraph 3 of Supplement No. 8 of the
Lease, as said Paragraph 3 has been amended by Paragraph 2 of Supplement
No. 10 of the Lease and further amended by Paragraph 2 of Supplement No. 11
of the Lease, and as the same is herein further amended by this Supplemental
Agreement.

     4.  (a)  Paragraph 4 (b) of Supplement No. 8 of the Lease is hereby
amended as follows:

              The words "the expiration date of the letting of Area C-3 (as
set forth in Paragraph 2 hereof)" appearing in the second and third lines
thereof shall be deemed amended to read:  "the expiration date of the letting
of Area C-3 (as set forth in Paragraph 3 of Supplement No. 13 of the Lease)".

         (b)  References in Paragraphs 6 (a) and 6 (b) of Supplement No. 8 of
the Lease and in subparagraph (a) (ii) of Paragraph 3 of Supplement No. 8 of
the Lease, as set forth in Supplement No. 10 of the Lease and as amended by
Paragraph 2 of Supplement No. 11 of the Lease and by Paragraph 2 above, to
the "expiration date of the letting of Area C-3" shall be deemed to read and
mean the expiration date of the letting of Area C-3  as set forth in
Paragraph 3 of this Supplement No. 13 of the Lease.

     5.  Paragraph 5 of Supplement No. 8 of the Lease, as previously amended,
is hereby further amended to read as follows:

              "5.  (a)  Without limiting any other rights of termination of
         the Port Authority under the Lease, it is hereby understood and
         agreed between the Lessee and the Port Authority that the Port
         Authority shall have the right at any time and from time to time,
         without cause, upon thirty (30) days' prior written notice to the
         Lessee, to terminate the Lease and the letting thereunder with
         respect to all or a portion or portions of that part of Area C-3 as
         shown in cross-hatch and in diagonal hatch on the sketch attached
         hereto, hereby made a part hereof and marked 'Exhibit DY'.  The said
         portions of the premises are herein in this Paragraph collectively
         called 'the Terminated Portion'.  It is understood that the Port
         Authority shall exercise its right to terminate hereunder only in
         the event that the Terminated Portion is needed for any of the
         following reasons:  (i) in connection with the facilitation of
         aeronautical requirements of the Airport or (ii) because of the need
         to accommodate the operational characteristics of new aircraft or
         new versions of existing aircraft, or (iii) the requirements of the
         Federal Aviation Administration or any other governmental agency or
         governmental body having jurisdiction, or (iv) changes with respect
         to the Public Aircraft Facilities made in accordance with Section 51
         of the Lease; or (v) in connection with the plans of the Port
         Authority for the redevelopment of the Airport.

              (b)  Effective as of the date and time (hereinafter in this
         Paragraph called 'the Effective Date') stated in the notice
         aforesaid from the Port Authority to the Lessee specified in
         paragraph (a) hereof, the Lessee has terminated and does by these
         presents terminate its rights in the Terminated Portion and the term
         of years with respect thereto under the Lease, and all the rights,
         rights of renewal, licenses, privileges and options of the Lessee
         granted by the Lease all to the intent that the same may be wholly
         merged, extinguished and determined on the Effective Date with the
         same force and effect as if said term were fixed to expire on the
         Effective Date.

TO HAVE AND TO HOLD the same to the Port Authority its successors and assigns
forever.

              (c)  The Lessee hereby covenants on behalf of itself, its
         successors and assigns that it has not done anything whereby the
         Terminated Portion or the Lessee's leasehold therein has been or
         shall be encumbered as of the Effective Date in any way and that the
         Lessee is and will remain until the Effective Date the sole and
         absolute owner of the leasehold estate in the Terminated Portion. 
         All promises, covenants, agreements and obligations of the Lessee
         with respect to the Terminated Portion, which under the provisions
         of the Lease would have matured upon the date originally fixed in
         the Lease for the expiration of the term thereof, or upon the
         termination of the Lease prior to the said date, or within a stated
         period after expiration or termination shall, notwithstanding such
         provisions, mature upon the Effective Date.  The Lessee has released
         and discharged and does by these presents release and discharge the
         Port Authority from any and all obligations on the part of the Port
         Authority to be performed under the lease with respect to the
         Terminated Portion.  The Port Authority does by these presents
         release and discharge the Lessee from any and all obligations on the
         part of the Lessee to be performed under the Lease with respect to
         the Terminated Portion for that portion of the term subsequent to
         the Effective Date it being understood that nothing herein contained
         shall release, relieve or discharge the Lessee from any liability
         for rentals or for other charges that may be due or become due to
         the Port Authority for any period prior to the Effective Date or for
         breach of any obligation on the Lessee's part to be performed under
         the Lease for or during such period or periods or maturing pursuant
         to this paragraph.

              (d)  The Lessee hereby agrees to terminate its occupancy of the
         Terminated Portion and to deliver actual, physical possession of the
         Terminated Portion to the Port Authority, on or before the Effective
         Date, in the condition required by the Lease upon surrender.  The
         Lessee further agrees that it shall remove from the Terminated
         Portion, prior to the Effective Date, all equipment, inventories,
         removable fixtures and other personal property of the Lessee, for
         which the Lessee is responsible.  With respect to any such property
         not so removed, the Port Authority may at its option, as agent for
         the Lessee and at the risk and expense of the Lessee remove such
         property to a public warehouse or may retain the same in its own
         possession and in either event, after the expiration of thirty (30)
         days, may sell or consent to the sale of the same at a public
         auction; the proceeds of any such sale shall be applied first to the
         expense of removal, sale and storage, and second to any sums owed by
         the Lessee to the Port Authority; any balance remaining shall be
         paid to the Lessee.  The Lessee shall pay to the Port Authority any
         excess of the total cost of removal, storage and sale over the
         proceeds of sale.

         The Lessee hereby acknowledges that each and every term, provision
         and condition of the Lease shall continue to apply to the premises
         remaining after the termination of the Terminated Portion.

              (e)  From and after the Effective Date as defined the Lessee
         shall be entitled to an abatement of the Area C-3 Annual Rental in
         accordance with and pursuant to the Lease, as amended."

     6.  (a)  The Port Authority and the Lessee have heretofore entered into
a letter agreement dated March 26, 1992 and bearing Port Authority
identification number ANA-635 which letter agreement, as amended by a
supplemental letter agreement dated February 2, 1993, (hereinafter referred
to as the "Letter Agreement") covered the performance of certain work by the
Lessee in the premises hereunder, therein described as the "Lessee Work" and
also the performance by the Port Authority in the premises hereunder of
certain work therein described as "Port Authority Work".  A portion of the
said Port Authority Work consisted of certain "office relocation work" as
more fully described and set forth in Paragraph 25 (a) of the Letter
Agreement.  The Port Authority and the Lessee hereby recognize and agree that
the Lessee subsequently to the date of the Letter Agreement agreed to perform
the Office Relocation Work as herein-below defined, and the Port Authority
and the Lessee hereby agree that the Port Authority shall reimburse to the
Lessee the "Cost of the Office Relocation Work" (as hereinafter defined) in
accordance with the following subparagraphs of this Paragraph 6.

         (b)  (1)  "Office Relocation Work" shall mean that portion of the
work originally set forth as part of the Port Authority Work under, and as
described in, Paragraph 25 (a) (ii) of the Letter Agreement, and for which
the Lessee submitted Alteration Application No. NC-75, as and to the extent
such Application, including its plans and specifications, were approved by
the Port Authority, and subject to any and all conditions set forth therein.

              (2)  The term "Cost of the Office Relocation Work" shall mean
the sum of the following actually paid by the Lessee to the extent that the
inclusion of the same is permitted by generally accepted accounting
principles consistently applied:

                    (i)  the amount actually paid or incurred by the Lessee
              to its independent contractor(s) for work actually performed
              and labor and materials actually furnished in connection with
              the Office Relocation Work.

                   (ii)  amounts actually paid by the Lessee in connection
              with the Office Relocation Work for engineering, architectural,
              professional and consulting services and supervision of
              construction and all related expenses for the Office Relocation
              Work; provided, however, that payments under this item (ii)
              shall not exceed ten percent (10%) of the amounts paid under
              item (i) above.

         (c)  (i)  The Lessee, knowing that the Port Authority is relying on
the truth and validity of the Lessee's representations and warranties and to
induce the Port Authority to make the reimbursement payment to the Lessee as
called for under this Paragraph, hereby expressly covenants, represents and
warrants to the Port Authority that the Lessee has, prior to the execution of
this Agreement, paid the Cost of the Office Relocation Work and has submitted
to the Port Authority, subject to Port Authority review and audit,
reproduction copies or duplicate originals of invoices of the Lessee's
contractor(s) (including all entities mentioned in (i) and (ii) of
subparagraph (b) (2) above) covering the Office Relocation Work, which the
Lessee has submitted to the Port Authority for reimbursement under this
Paragraph 6, that the Lessee has heretofore paid in full the amount of such
invoices, and for each and all such invoices that the Lessee has also
submitted to the Port Authority for its review and audit an acknowledgement
by the Lessee's contractor(s) (including all entities mentioned in (i) and
(ii) of subparagraph (b) (2) above) of the receipt by it or them of the
amounts of such invoices, and all certifications by the Lessee that all such
invoices are for amounts, payments and expenses for the Cost of the Office
Relocation Work, which the Lessee has submitted to the Port Authority for
reimbursement under this Paragraph 6; and the Lessee also hereby further
covenants, represents and warrants to the Port Authority that the Lessee has
performed the Office Relocation Work in accordance with and in full
compliance with the terms and provisions of the aforesaid Alteration
Application and the plans and specifications forming a part thereof and all
obligations thereunder and all requirements of the Port Authority given in
connection therewith including without limitation all requirements of
applicable laws, ordinances and governmental rules, regulations and orders.

             (ii)  The Lessee hereby certifies that it has completed the
Office Relocation Work and that it has paid the entire and complete Cost of
the Office Relocation Work and that there are no outstanding liens,
mortgages, conditional bills of sale or claims of any kind whatsoever with
respect to the Office Relocation Work in accordance with the aforesaid
Alteration Application covering the same, and with all requirements of the
Port Authority.  The Lessee acknowledges that title to all of the Office
Relocation Work has vested in the City of Newark with respect to all or such
parts thereof located within the territorial limits of the City of Newark,
and in the Port Authority with respect to all or each part thereof located
within the territorial limits of the City of Elizabeth; and all such Work
shall at the completion thereof be deemed to have become part of the premises
under the Lease.

            (iii)  The Lessee shall indemnify and hold harmless the Port
Authority, its Commissioners, officers, agents and employees from and against
all claims and demands, just or unjust of third persons (including employees,
agents and officers of the Port Authority) arising or alleged to arise out of
or in connection with the Office Relocation Work and the performance thereof
and for all expenses incurred by it and by them in the defense, settlement or
satisfaction thereof, including without limitation thereto, claims and
demands for death, for personal injury or for property damage, direct or
consequential, whether they arise from the acts or omissions of the Lessee,
of any contractors of the Lessee, of the Port Authority, or of third persons,
or from acts of God or of the public enemy, or otherwise, excepting only
claims and demands which result solely from affirmative, wilful acts done by
the Port Authority, its Commissioners, officers, agents and employees
subsequent to the commencement of the Office Relocation work.

     If so directed, the Lessee shall at its own expense defend any suit
based upon any such claim or demand (even if such suit, claim or demand is
groundless, false or fraudulent), and in handling such it shall not, without
obtaining express advance written permission from the General Counsel of the
Port Authority, raise any defense involving in any way the jurisdiction of
the tribunal over the person of the Port Authority, the immunity of the Port
Authority, its Commissioners, officers, agents, representatives employees,
the governmental nature of the Port Authority, or the provisions of any
statutes respecting suits against the Port Authority.

             (iv)  Nothing contained herein shall grant or be deemed to grant
to any contractor, engineer, architect, supplier, subcontractor or any other
person engaged by the Lessee or any of its contractors in the performance of
any part of the Office Relocation Work, any right or action or claim against
the Port Authority, its Commissioners, officers, agents and employees with
respect to work any of them may have done in connection the Office Relocation
Work.  Nothing contained herein shall create or be deemed to create any
relationship between the Port Authority and such contractors, engineers,
architects, subcontractors or any other persons engaged by the Lessee or any
of its contractors in the performance of any part of the Office Relocation
Work and the Port Authority shall not be responsible to any of the foregoing
for any payments due or alleged to be due thereto for any work performed or
materials furnished in connection the Office Relocation Work.

         (d)  (1)  Subject to the limitation set forth in paragraph (e)
below, the Port Authority, based upon and in reliance on the covenants,
certifications, representations, warranties, indemnities and inducement of
the Lessee, as set forth above, agrees to reimburse to the Lessee, but not
earlier than thirty (30) days after the Port Authority's execution of this
Agreement, in a single rental credit applied against the rentals due under
this Lease the amounts of the paid invoices of the Lessee heretofore paid by
the Lessee and submitted by the Lessee as set forth in subparagraph (c) above
as and for the Cost of the Office Relocation Work that the Lessee has
submitted to the Port Authority for reimbursement under this Paragraph 6, but
only to the extent that the same meet the criteria specified in subparagraph
(b) (2) above.

              (2)  It is understood and agreed that at the election of the
Port Authority the rental credit shall not extend or include any one or more
items of the cost of the Office Relocation Work with respect to which the
Port Authority's inspection, review or audit does not substantiate the
contents of any such item or items submitted by the Lessee to establish the
Cost of the Office Relocation Work as called for under subparagraph (c)
above, but the Port Authority shall have no obligation to conduct any such
inspection, review or audit at the time set forth for the Port Authority's
payment under subparagraph (1) above.

         (e)  (1)  The entire obligation of the Port Authority under this
Agreement to reimburse the Lessee for the Cost of the Office Relocation Work
shall be limited in amount to a total of Two Hundred Forty Thousand Dollars
and No Cents ($240,000.00) to be paid to the Lessee in the form of a single
rental credit against the Lessee's rental obligations under the Lease as set
forth in subparagraph (d) above, pursuant and subject to all the terms,
provisions, covenants and conditions hereof.

              (2)  Without limiting any right or remedy of the Port Authority
under this Agreement, the Lease or otherwise, whether in law or in equity,
the Port Authority shall have the right by its agents, employees and
representatives to audit and inspect during regular business hours the books
and records and other data of the Lessee relating to the Office Relocation
Work and the Cost of the Office Relocation Work; it being especially
understood and agreed that the Port Authority shall not be bound by any prior
audit, review or inspection conducted by it.  The Lessee agrees to keep said
books, records and other data within the Port of New York District.  The
Lessee shall not be required to maintain such books, records and other data
for more than five (5) years after the date of the rental credit under
subparagraph (d) hereof.

     7.  The Lessee represents and warrants that no broker has been concerned
in the negotiation of this Supplemental Agreement and that there is no broker
who is or may be entitled to be paid a commission in connection therewith. 
The Lessee shall indemnify and save harmless the Port Authority of and from
any and all claims for commission or brokerage made by any and all persons,
firms or corporations whatsoever for services in connection with the
negotiation and execution of this Supplemental Agreement.

     8.  Except as hereinbefore provided, all the terms covenants and
conditions of the Lease shall be and remain in full force and effect.

     9.  No Commissioner, director, officer, agent or employee of either
party shall be charged personally or held contractually liable by or to the
other party under any term or condition of this Agreement, or because of its
execution or attempted execution or because of any breach or attempted or
alleged breach thereof.  The Lessee agrees that no representations or
warranties with respect to this Agreement shall be binding upon the Port
Authority unless expressed in writing herein.

    10.  This Supplemental Agreement and the Lease which it amends constitute
the entire agreement between the Lessee and the Port Authority on the subject
matter, and may not be modified, discharged or extended except by instrument
in writing duly executed on behalf of both the Port Authority and the Lessee.


<PAGE>
    IN WITNESS WHEREOF, the parties hereto have executed these presents as
of the day and year first above written.

ATTEST:                            THE PORT AUTHORITY OF NEW YORK
                                                  AND NEW JERSEY

/s/                                By /s/ Gerald P. FitzGerald          
     Secretary                     
                                   (Title)  Deputy Director of Aviation 
                                                       (Seal)

ATTEST:                            CONTINENTAL AIRLINES, INC.

/s/ E. A. Hessler                  By  Sam E. Ashmore                   
     Secretary
                                   (Title)  Sr. Vice President              
                                                 (Corporate Seal)

<PAGE>
CSL-61273; - Ack. N.J.; Corp. & Corp.

STATE OF NEW YORK      
                       )
COUNTY OF NEW YORK     ) SS.
                       )
     On this 3 day of June, 1994, before me, the subscriber, a notary public
of New York, personally appeared Gerald P. FitzGerald the Deputy Director of
Avaition of The Port Authority of New Yorka dn New Jersey, who I am satisfied
is the person who has signed the within instrument; and, I having first made
known to him the contents thereof, he did acknowledge that he signed, sealed
with the corporate seal and delivered the same as such officer aforesaid and
the within instrument is the voluntary act and deed of such corporation made
by virtue of the authority of its Board of Commissioners.

                                                 /s/ Jacqueline White       
                                                   (notarial seal and stamp)

STATE OF TEXAS
                       )
COUNTY OF HARRIS       ) SS.
                       )
     On this 11th day of April, 1994, before me, the subscriber, a notary
public of Texas personally appeared Sam E. Ashmore, the Sr. Vice-President of
CONTINENTAL AIRLINES, INC., who I am satisfied is the person who has signed
the within instrument; and, I having first made known to him the contents
thereof, he did acknowledge that he signed, sealed with the corporate seal
and delivered the same as such officer aforesaid and the within instrument is
the voluntary act and deed of such corporation made by virtue of the
authority of its Board of Directors.

                                                 /s/ Kathleen M. Plumley    
                                                   (notarial seal and stamp)

STATE OF TEXAS
                       )
COUNTY OF HARRIS       ) SS.
                       )

On this 12th day of April, 1994, before me, the subscriber, a Notary Public
and Corporate Secretary personally appeared E. A. Hessler the Vice President
of CONTINENTAL AIRLINES who I am satisfied is the person who has signed the
within instrument; and, I having first made known to him the contents
thereof, he did acknowledge that he signed, sealed with the corporate seal
and delivered the same as such officer aforesaid and the within instrument is
the voluntary act and deed of such corporation made by virtue of the
authority of its Board of Directors.

                                                 /s/ Mae Belle Zycha        
                                                   (notarial seal and stamp)








                   THIS SUPPLEMENT SHALL NOT BE BINDING 
                    UPON THE PORT AUTHORITY UNTIL DULY 
                 EXECUTED BY AN EXECUTIVE OFFICER THEREOF 
                     AND DELIVERED TO THE LESSEE BY AN 
              AUTHORIZED REPRESENTATIVE OF THE PORT AUTHORITY


                                        Port Authority Lease No. ANA-170
                                        Supplement No. 14
                                        Port Authority Facility - 
                                        Newark International 
                                        Airport


                          SUPPLEMENTAL AGREEMENT


     THIS SUPPLEMENTAL AGREEMENT made as of February 1, 1994 by and between
THE PORT AUTHORITY OF NEW YORK AND NEW JERSEY (hereinafter called "the Port
Authority") and CONTINENTAL AIRLINES, INC., (hereinafter called "the
Lessee"),

     WITNESSETH, That:

     WHEREAS, the Port Authority and the Lessee are parties to entered into
an agreement of lease dated January 11, 1985 (which agreement of lease, as
the same has been heretofore supplemented and amended, is hereinafter called
"the Lease"), covering certain premises, rights and privileges at and in
respect to Newark International Airport (hereinafter called "the Airport") as
therein set forth; and

     WHEREAS, the parties desire to amend the Lease in certain respects: 

     NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements hereinafter set forth, it is hereby agreed effective as of
February 1, 1994, as follows:

     1.  (a)  Exhibit Z attached to the Lease is hereby amended as follows: 
Paragraph 9 thereof (as set forth on pages 3 and 4 of said Exhibit Z) shall
be deemed amended to read as set forth in the exhibit attached hereto, hereby
made a part thereof and marked "Exhibit Z-Paragraph 9," which shall be and
form a part of Exhibit Z of the Lease as if therein set forth in full.

         (b)  It is expressly recognized that the aforesaid amendment to
Exhibit Z of the Lease is based on the specific request of the Lessee as
reflected by the amendment of the fuel service agreement between the Lessee
and the Port Authority's independent contractor (sometimes called the
"Operator"), which amendment is attached hereto and marked as "Exhibit A",
and, further, without limiting any other term or provision of the Lease or of
Exhibit Z, that the contents of Exhibit Z, as hereby amended, form a part of
the said fuel service agreement between the Port Authority's independent
contractor and the Lessee, and, further, that neither Exhibit Z as hereby
amended nor anything contained therein shall limit, modify or alter any
rights and remedies or obligations of the Port Authority or the Lessee under
the Lease or constitute the Port Authority as a party to the said agreement
between the Operator and the Lessee.  It is further specifically understood
and agreed that neither said Exhibit Z, as hereby amended, nor anything
contained therein shall be deemed to impose any liability or responsibility
of any type whatsoever on the part of the Port Authority for any failure of
the Operator to perform or for any improper performance by the Operator of
any of its obligations under the said agreement between the Operator and the
Lessee.

     2.  (a)  It is specifically recognized that, pursuant to the terms of
the Lease, Exhibit Z may be changed, modified or amended (including the
amendment herein provided) upon agreement of the Port Authority and a
majority of the "Airline Lessees" as defined in the Lease, and that
accordingly, this Supplemental Agreement shall be deemed effective upon (i)
the execution hereof by the Lessee and the Port Authority and (ii) upon the
execution of an agreement substantially similar to this Agreement by each of
the airlines constituting said majority of "Airline Lessees".

         (b)  It is also hereby specifically recognized and agreed that the
said amendment to Exhibit Z of the Lease will be incorporated into the fuel
storage permit of each fuel storage permittee at the Airport by an
appropriate supplement or endorsement thereto, and that neither the failure
or refusal of any such fuel storage permittee to execute said supplement or
endorsement shall affect the effectiveness of the amendment to Exhibit Z
hereunder.

     3.  Except as hereinbefore provided, all the terms, covenants and
conditions of the Lease shall be and remain in full force and effect.

     4.  No Commissioner, director, officer, agent or employee of either
party shall be charged personally or held contractually liable by or to the
other party under any term or provision of this Agreement or because of its
or their execution or attempted execution or because of any breach or
attempted or alleged breach thereof.  The Lessee agrees that no
representations or warranties with respect to this Agreement shall be binding
upon the Port Authority unless expressed in writing herein.

     5.  This Supplemental Agreement, together with the Lease (to which it is
supplementary) constitutes the entire agreement between the Port Authority
and the Lessee on the subject matter, and may not be changed, modified,
discharged or extended except by instrument in writing duly executed on
behalf of the Port Authority and the Lessee.  The Lessee agrees that no
representations or warranties shall be binding upon the Port Authority unless
in writing in the Lease or in this Supplemental Agreement.

     IN WITNESS WHEREOF, the parties hereto have executed these presents as
of the day and year first above written.

ATTEST:                            THE PORT AUTHORITY OF NEW YORK
                                                  AND NEW JERSEY

/s/                                By /s/ Gerald P. Fitzgerald          
     Secretary                     
                                   (Title)  Deputy Director of Aviation 
                                                       (Seal)

ATTEST:                            CONTINENTAL AIRLINES, INC.

/s/ E. A. Hessler                  By /s/ Sam E. Ashmore                
Vice President &
Corporate Secretary                (Title)  Senior Vice President           
                                                 (Corporate Seal)

<PAGE>
                        "Exhibit Z - Paragraph 9"

EXHIBIT 1

                               8-Point Test

The "8-Point Test" shall consist of the following:

    Test                                     Specification

1.  Color, Saybolt, min.                     Report

2.  API Gravity at 60 degrees F              37 degrees - 51 degrees

3.  Flash Point, TCC, min.                   100 degrees - 150 degrees F

4.  Copper Strip Corrosion, max.             No. 1
    (2h at 212 degrees F)

5.  Freeze Point, ASTM D2386 max.            Jet A   - 40 degrees C
                                             Jet A-1 - 47 degrees C

6.  Water Tolerance:
       Separatin Rating, max.                2
       Interface rating, max.                1(b)
       ML, change                            Report

7.  Distillation:
       10% Evaporated, max. Temp.            400 degree F
       50% Evaporated, max. Temp.            Report
       90% Evaporated, max. Temp.            Report
       Final Boiling Point, max. Temp.       572 degrees F
       Residue, max. %                       1.5%
       Loss, max. %                          1.5%

8.  Water Separometer Index,                 85
    Modified Min.                            



                                              /s/ J.B.                     
                                             For the Port Authority

                                 Initialled:

                                              /s/ S.E.A.                   
                                             For the Lessee


<PAGE>
                          CONTINENTAL AIRLINES
                       3115 Allen Parkway, Suite 250
                           Houston, Texas  77019
                              (713) 620-7350



January 25, 1994



Mr. Bruce R. Pashley
Ogden Aviation Service Company
of New Jersey
Marine Air Terminal
Building 7 South
LaGuardia Airport
Flushing, New York  11371

RE:  Revised 8-Point Test

Dear Sirs,

This is to confirm the following agreement among the undersigned (the
"Airline"), Ogden Aviation Service Company of New Jersey,Inc. ("Ogden") and
the other airline members of the EWR Airline Fuel Committee:

1.  From and after the effective date of this agreement, the 8-point test set
    forth in the Exhibit attached hereto shall be the "8-point test" applied
    by Ogden's independent testing laboratory as required under the fueling
    standards, specifications and delivery procedures set forth in Article 2
    and Exhibit 1 of each of the fuel service agreements between Ogden and
    each EWR Fuel Storage Permittee.

2.  This agreement shall become effective as of the day on which:

    (A)  Each of the other airline members of the EWR Airline Fuel Committee
         shall have delivered to Ogden an executed agreement to the same
         effect as this agreement and Ogden shall have executed each such
         agreement and this agreement, and
    (B)  The Port Authority of New York and New Jersey shall have provided to
         Ogden evidence of its approval for the use herein contemplated of
         the 8-point test set forth in the attached Exhibit which approval
         may be in the form of a notice from the Port Authority to Ogden
         indicating that the Port Authority and the required number of Master
         Airline Leases as specified in the Newark Master Airline Leases have
         agreed to the changes in the 8-Point Test.
<PAGE>
January 25, 1994
Page 2


3.  Promptly after the effective date of this agreement, Ogden shall notify
    each Fuel Storage Permittee and provide to each a copy of the 8-point
    test set forth in the attached Exhibit, and the 8-point test referred in
    each Ogden service agreement shall thereupon be deemed amended to conform
    to the 8-point test set forth in the attached Exhibit without further
    amendment to any such documents.

If Ogden agrees to the foregoing, please so indicate in the place provided
below and on the enclosed duplicate copy hereof, and return the executed
duplicate to the undersigned.

                                        Agreed:
                                        Continental Airlines, Inc.



                                        By:  /s/ V. Gregory Hartford

                                        Its:  Vice-President

Agreed this 27th day of
January, 1994
Ogden Aviation Service Company
of New Jersey, Inc.

By:  /s/ John W. Bauknecht

Its:  Vice-President
<PAGE>
                                             Exhibit 1



                               8-Point Test

The "8-Point Test" shall consist of the following:

    Test                                     Specification

1.  Color, Saybolt, min.                     Report

2.  API Gravity at 60 degrees F              37 degrees - 51 degrees

3.  Flash Point, TCC, min.                   100 degrees - 150 degrees F

4.  Copper Strip Corrosion, max.             No. 1
    (2h at 212 degrees F)

5.  Freeze Point, ASTM D2386 max.            Jet A   - 40 degrees C
                                             Jet A-1 - 47 degrees C

6.  Water Tolerance:
       Separatin Rating, max.                2
       Interface rating, max.                1(b)
       ML, change                            Report

7.  Distillation:
       10% Evaporated, max. Temp.            400 degrees
       50% Evaporated, max. Temp.            Report
       90% Evaporated, max. Temp.            Report
       Final Boiling Point, max. Temp.       572 degrees F
       Residue, max. %                       1.5
       Loss, max. %                          1.5

8.  Water Separometer Index,                 85
    Modified Min.                            


<PAGE>
CSL-61273; - Ack. N.J.; Corp. & Corp.

STATE OF NEW JERSEY    
                       )
COUNTY OF              ) SS.
                       )
     On this 20 day of September, 1994, before me, the subscriber, a notary
public of New York, personally appeared Gerald P. Fitzgerald the Deputy
Director of Aviation of The Port Authority of New York and New Jersey, who I
am satisfied is the person who has signed the within instrument; and, I
having first made known to him the contents thereof, he did acknowledge that
he signed, sealed with the corporate seal and delivered the same as such
officer aforesaid and the within instrument is the voluntary act and deed of
such corporation made by virtue of the authority of its Board of
Commissioners.

                                                  /s/ Jacqueline White      
                                                   (notarial seal and stamp)

STATE OF TEXAS
                       )
COUNTY OF HARRIS       ) SS.
                       )
     On this 12th day of April, 1994, before me, the subscriber, a Notary
Public of Texas personally appeared Sam E. Ashmore, the Sr. Vice-President of
CONTINENTAL AIRLINES, INC., who I am satisfied is the person who has signed
the within instrument; and, I having first made known to him the contents
thereof, he did acknowledge that he signed, sealed with the corporate seal
and delivered the same as such officer aforesaid and the within instrument is
the voluntary act and deed of such corporation made by virtue of the
authority of its Board of Directors.

                                                  /s/  Kathleen M. Plumley  
                                                   (notarial seal and stamp)

STATE OF
                       )
COUNTY OF              ) SS.
                       )

On this   day of         , 1994, before me, the subscriber, a               
   personally appeared                  the President of          who I am
satisfied is the person who has signed the within instrument; and, I having
first made known to him the contents thereof, he did acknowledge that he
signed, sealed with the corporate seal and delivered the same as such officer
aforesaid and the within instrument is the voluntary act and deed of such
corporation made by virtue of the authority of its Board of Directors.

                                                                            
                                                   (notarial seal and stamp)






                 THIS SUPPLEMENT SHALL NOT BE BINDING UPON
                 THE PORT AUTHORITY UNTIL DULY EXECUTED BY
                AN EXECUTIVE OFFICER THEREOF AND DELIVERED
               TO THE LESSEE BY AN AUTHORIZED REPRESENTATIVE
                           OF THE PORT AUTHORITY


                                        Port Authority Lease No. ANA-170
                                          Supplement No. 15
                                        Facility:  Newark International
                                                     Airport


                          SUPPLEMENTAL AGREEMENT


     THIS SUPPLEMENTAL AGREEMENT, dated as of March 20, 1995, by and between
THE PORT AUTHORITY OF NEW YORK AND NEW JERSEY (hereinafter called "the Port
Authority"), and CONTINENTAL AIRLINES, INC. (hereinafter called "the
Lessee");

     WITNESSETH, That

     WHEREAS, the Port Authority and People Express Airlines, Inc.
(hereinafter called "People Express") as of January 11, 1985 entered into an
agreement of lease (which agreement of lease as heretofore supplemented and
amended is hereinafter called the "Lease"), covering certain premises, rights
and privileges at and in respect to Newark International Airport (hereinafter
called "the Airport") as therein set forth; and

     WHEREAS, the Lease was thereafter assigned by said People Express to the
Lessee pursuant to an Assignment of Lease with Assumption and Consent
Agreement entered into among the Port Authority, the Lessee and People
Express and dated August 15, 1987; and 

     WHEREAS, a certain Stipulation between the parties hereto was submitted
for approval of the United States Bankruptcy Court for the District of
Delaware ("the Bankruptcy Court") covering the Lessee's assumption of the
Lease as part of the confirmation of its reorganization plan in its
Chapter 11 bankruptcy proceedings and as debtor and debtor in possession
pursuant to the applicable provisions of United States Bankruptcy Code as set
forth in and subject to the terms and conditions of said Stipulation (said
Stipulation being hereinafter referred to as the "Stipulation"); and 

     WHEREAS, the Stipulation and the Lessee's assumption of the Lease was
approved by the Bankruptcy Court by an Order thereof dated the lst day of
October, 1993; and 

     WHEREAS, the parties desire to extend the term of the letting of Area 
C-3 under the Lease, and to amend the Lease in certain other respects as
hereinafter set forth;

     NOW, THEREFORE, the Port Authority and the Lessee hereby agree,
effective as of January 1, 1995 unless otherwise stated, as follows:

     1.  (a)  The parties hereby acknowledge that the Port Authority is
performing a certain construction project (hereinafter collectively called
the "Monorail Construction Work") at the Airport consisting generally of the
construction of a monorail system, including monorail stations, guideways and
supports, maintenance control facilities, monorail vehicles, and all other
associated construction work, facilities and equipment necessary for the
installation or operation of such monorail system for the transportation of
airline passengers and their baggage, and others; all of the foregoing being
hereinafter sometimes collectively called the "Monorail System."

         (b)  (1)  For purposes of this Supplemental Agreement, the term
"Monorail Construction Costs" shall mean the total costs in connection with
the Monorail Construction Work, as determined under subparagraph (a) (1) of
Section II of Schedule M attached to the Lease by Paragraph 2 hereof.

              (2)  For purposes of the calculations under this Paragraph 1,
"PFC Funds" shall mean revenues derived from fees (hereinafter called
"Passenger Facility Charges") charged air passengers at the Airport, a
portion of which revenues shall be applied to the Monorail Construction Costs
in accordance with Port Authority applications therefor as approved by the
Federal Aviation Administration and the provisions of Section II of
Schedule M as added to the Lease by Paragraph 2 of this Supplemental
Agreement, the amount of which PFC Funds to be so applied being limited in
amount to a total of One Hundred Million Dollars and No Cents
($100,000,000.00).

              (3)  "Monorail Fee Commencement Date" shall mean the date which
the Port Authority shall have certified to be the date as of which the
Monorail Construction Work has been substantially completed and the Monorail
System is operational.

              (4)  (i)  "The Monorail Factor" shall mean the sum of (1) the
quotient obtained by dividing (x) the sum of the products derived by
multiplying the average of the annual capital investment recovery rates
calculated for six-month periods, commencing on January 1, 1991, of the "25-
Bond Revenue Index" appearing in each of the issues of "The Bond Buyer"
published during the period from January 1, 1991 to June 30, 1991 and each
six-month period thereafter up to the last six-month period immediately prior
to the Monorail Fee Commencement Date by the respective incremental costs as
set forth in items A, B and C of subparagraph (a) (1) of Section II of
Schedule M of the Lease paid or incurred during each of the six-month periods
by (y) the total of the incremental costs as set forth in items A, B and C of
subparagraph (a) (1) of Section II of Schedule M of the Lease paid or
incurred during the period from January 1, 1991 up to the Monorail Fee
Commencement Date, plus (2) one hundred fifty (150) basis points.

                   (ii)  The "Additional Monorail Factor" shall mean the
annual average capital investment recovery rates of the "25-Bond Revenue
Index" appearing in the last issue of "The Bond Buyer" published during the
calendar year for which the said average will be applied, plus one hundred
fifty (150) basis points.

                   (iii)  In the event that "The Bond Buyer" or its "25-Bond
Revenue Index" shall be discontinued prior to the date on which the Port
Authority determines the Monorail Factor or the Additional Monorail Factor,
then the Port Authority shall by notice to the Lessee present a comparable
substitute for such Index for all subsequent six-month and annual periods, as
aforesaid.  The determination of the Port Authority as to such substitute
shall be final.    

              (5)  The "Initial Monorail Construction Costs Payment Period"
shall mean the period commencing on the Monorail Fee Commencement Date and
ending on the day immediately preceding the twenty-fifth (25th) anniversary
of the Monorail Fee Commencement Date.

              (6)  The "Additional Monorail Construction Costs Payment
Period" shall mean any period commencing on the date on which the Port
Authority shall have certified that the construction of any future capital
improvement or replacement for the Monorail System has been substantially
completed and is operational and ending on the final day of the useful life
of such future capital improvement or replacement in accordance with Port
Authority accounting practice.

              (7)  "Maximum Weight for Take-off" when used with reference to
aircraft shall mean the maximum gross weight which such aircraft may lawfully
have at the time of leaving the ground at any airport in the United States
(under the most favorable conditions which may exist at such airport and
without regard to special limiting factors arising out of the particular
time, place or circumstances of the particular take-off, such as runway
length, air temperature, or the like).  The foregoing represents the uniform
practice applied to all Aircraft Operators having agreements with the Port
Authority with respect to the payment of the Monorail Fee under the
provisions in any particular agreement.  If such maximum gross weight is not
fixed by or pursuant to law, then said phrase shall mean the actual gross
weight at take-off.

              (8)  The term "Passenger Aircraft," as used herein, shall mean
all aircraft operated at the Airport except aircraft, configured to carry
only cargo and air crew, government aircraft, and general aviation aircraft.

         (c)  Effective as of the Monorail Commencement Date, the Lessee
shall pay to the Port Authority the Monorail Fee established by the Port
Authority from time to time in accordance with the Provisions of Schedule M,
set forth in Paragraph 2 hereof, for each and every take-off of each and
every Passenger Aircraft, as defined in subparagraph (b) of this Paragraph 1,
operated by the Lessee.  The said Monorail Fee shall be a fee per thousand
pounds of total Maximum Weight for Take-off, as defined in said subparagraph
(b).

         (d)  Commencing no later than the 20th day of the month following
the month during which the Monorail Fee Commencement Date occurs and no later
than the 20th day of each and every month thereafter, including the month
following the expiration or earlier termination of the Lease, when the Lessee
furnishes to the Port Authority a statement duly certified by an authorized
officer of the Lessee certifying the number of take-offs by type of aircraft
operated by the Lessee during the preceding calendar month, it shall also
separately state take-offs by Passenger Aircraft.  The Lessee shall pay to
the Port Authority at the time it is obligated to furnish to the Port
Authority the foregoing statement the Monorail Fee determined in accordance
with Schedule M and payable by the Lessee for its Passenger Aircraft
operations during the preceding calendar month computed on the basis of said
operations.  The Monorail Fee payable by the Lessee hereunder shall be in
addition to any and all other rents, charges and fees imposed upon and
payable by the Lessee under the Lease.  The Monorail Fee shall be payable by
the Lessee whether or not the Lessee uses the Monorail System or any or all
of the Public Aircraft Facilities in addition to the runways.

         (e)  Without limiting any of the foregoing provisions of this
Paragraph or any of the provisions of Schedule M, commencing on the effective
date hereof and from time to time thereafter and during each calendar year,
but no more frequently than quarterly, the Port Authority may notify the
Lessee whether and to what extent the payments due to the Port Authority
resulting from the tentative Monorail Fee established pursuant to Schedule M
will be likely to exceed or be less than the payments which would result from
the estimated finalized Monorail Fee as described in Paragraph II of
Schedule M for such year for the period during such year as designated by the
Port Authority's notice.  If such notice is given the Lessee shall pay a new
tentative Monorail Fee established by the Port Authority and set forth in
said notice until the same is further adjusted in accordance with this
subparagraph or Schedule M.

     2.  There shall be added the the Lease, as "Schedule M," the following:

                               "SCHEDULE M"

       I.  Commencing upon the date (hereinafter called the 'Monorail Fee
Commencement Date') which the Port Authority shall have certified to be the
date as of which the construction of the Monorail System at Newark
International Airport (hereinafter called the 'Airport') has been
substantially completed and is operational and continuing thereafter for the
balance of the term of the Lease, the Lessee shall pay to the Port Authority
a Monorail Fee for each and every take-off of each and every Passenger
Aircraft, as defined in Paragraph 1 of Supplement No. 15 of the Lease,
operated by the Lessee.  For the period from the Monorail Fee Commencement
Date through the 31st day of December of the year in which the said Monorail
Fee Commencement Date occurs (which period is hereinafter referred to as 'the
Initial Schedule M Period'), the Lessee shall pay for each and every such
take-off, a tentative Monorail Fee at the rate of $0.94 per thousand pounds
of Maximum Weight for Take-off, as defined in Paragraph 1 of Supplement
No. 15 of the Lease.  It is understood that the Monorail Fee for the Initial
Schedule M Period set forth above is tentative only and is subject to final
determination as hereinafter provided.

      II.  Initial Construction Factor:

           (a)  (1)  On or after the Monorail Fee Commencement Date the Port
Authority shall determine the portion of the total construction costs (the
'Monorail Construction Costs') paid or incurred by the Port Authority in
connection with the Monorail Construction Work, which shall be the total of
the following:  

           A.   Construction Costs:

                (1)  payments to independent contractors, vendors and
                     suppliers;
                (2)  premiums or charges for Performance Bonds;
                (3)  insurance premiums or charges;
                (4)  direct payroll and expenses of Port Authority employees
                     and agents engaged in performance or supervision of the
                     work, charged in accordance with Port Authority
                     accounting practice.

           B.   Engineering Services:

                (1)  payments to independent consultants and engineering
                     firms;
                (2)  direct payroll and expenses of Port Authority staff
                     arising in connection with the work, charged in
                     accordance with Port Authority accounting practice.

           C.   Other direct costs charged in accordance with Port Authority
                accounting practice.

           D.   Liquidated overhead in lieu of the Port Authority's
                administration and overhead costs in the amount of ten
                percent (10%) of the sum of all other elements of cost
                included in the Port Authority's net total cost (including
                Financial Expenses in 'E' below).

           E.   Financial Expenses on the foregoing computed in accordance
                with Port Authority accounting practice.

                (2)  The Port Authority shall deduct from the Monorail
                     Construction Costs determined in subparagraph (1) above
                     the amount of PFC Funds available to be applied to the
                     Monorail System project, the remainder being hereinafter
                     referred to as the 'Initial Net Capital Investment.'

           (b)  The Port Authority shall determine an amount (the said amount
                being hereinafter referred to as the "Initial Construction
                Factor') equal to even monthly payments derived by
                multiplying the Initial Net Capital Investment by a monthly
                multiplier derived in accordance herewith from time to time
                by the application of the following formula:

                                     1

                                                               = Monthly
                                                                 Multiplier

                      1              -            1
                                                              

                      i                      i  (1 + i)t =                  



Where i equals the Monorail Factor divided by twelve.

Where t (a power) equals 300.                                    

     III.  Annual Operating Cost Factor

           (a) The Port Authority shall determine the total of the actual
cost of direct labor, materials, insurance, payments to contractors and
suppliers, utility purchases and other costs for operation, maintenance,
repairs and replacements charged on an expensed basis directly to the
Monorail System actually incurred or accrued, including any such costs
incurred or accrued prior to the Monorail Fee Commencement Date, during the
Initial Schedule M Period (hereinafter collectively called the 'Operating
Costs').  Whether an item hereunder is expensed or capitalized will be
governed by Port Authority accounting practices.

           (b) The Port Authority shall determine the total amount of rental
or fees actually received by the Port Authority from rental car permittees
specifically for and in connection with the portion of the Monorail
Construction Costs and Operating Costs said permittees are obligated under
their respective permits to pay the Port Authority (hereinafter called the
'Rental Car Credit').  The term 'Bus Service Credit' shall mean the amount of
Five Hundred Thousand Dollars and No Cents ($500,000.00) and, together with
the Rental Car Credit, shall be hereinafter collectively called 'the
Credits').  The Port Authority shall subtract the Credits from the Operating
Costs and multiply the remainder by one hundred and fifteen percent (115%),
the product thereof being hereinafter called the "Annual Operating Cost
Factor."  The sum of the Initial Construction Factor and the Annual Operating
Cost Factor constitutes the 'Total Capital and Operating Costs' as of the
last day of the Initial Schedule M period.

      IV.  Additional Construction Factor

           (a) The Port Authority may in its discretion purchase an item or
perform a project involving capital improvements and replacements other than
the Monorail Construction Work in connection with the Monorail System and, in
the event it does so, the Port Authority shall determine the portion of the
Monorail Construction Costs paid or incurred by the Port Authority in
connection therewith from and after the Monorail Fee Commencement Date up to
and including December 31st of the calendar year during which the Monorail
Fee Commencement Date occurs, or such subsequent calendar year during which
such capital item or project is purchased or performed in connection with the
Monorail System, which shall be the total of the elements of costs set forth
in subparagraph (a) (1) of Section II hereof, said portion being hereinafter
called the 'Additional Capital Investment.'

           (b) The Port Authority shall determine an amount (the said amount
being hereinafter referred to as the 'Additional Construction Component' and,
together with all other Additional Construction Components determined during
the said calendar year, being hereinafter collectively called the 'Additional
Construction Factor') equal to even monthly payments, payable over the useful
life of the capital item or project for which it was made in accordance with
Port authority accounting practice commencing on the date on which the Port
Authority shall have certified that the purchase or construction of such
capital item or project has been substantially completed and is operational
and ending on the final date of the useful life of such capital item or
project, derived by multiplying the Additional Capital Investment made during
such calendar year by a monthly multiplier derived in accordance herewith
from time to time by the application of the following formula:


                                     1

                                                               = Monthly
                                                                 Multiplier

                      1              -            1
                                                              

                      i                      i  (1 + i)t =                  



Where i equals the Additional Monorail Factor divided by twelve.

Where t (a power) equals the useful life of such capital item or project in
accordance with Port Authority accounting practice expressed in number of
months.

       V.  Annual Monorail Cost

           The sum of the Initial Construction Factor, the Annual Operating
Cost Factor, and the Additional Construction Factor, as the case may be, for
the Initial Schedule M period or each subsequent calendar year is hereinafter
called the 'Annual Monorail Cost.'

      VI.  Total Maximum Weight for Take-off

           The Port Authority shall determine the Total Maximum Weight for
Take-off of all Passenger Aircraft using the Airport during the Initial
Schedule M period and close of each calendar year.

     VII.  Monorail Fee Determination

           After the close of the Initial Schedule M Period and after the
close of each calendar year thereafter, the Port Authority shall determine
the Monorail Fee for the Initial Schedule M Period, or other calendar year,
as the case may be, as follows:

           (a) The Port Authority shall determine the final Monorail Fee for
the Initial Schedule M Period, or other calendar year for which the
determination is being made, by dividing the Annual Monorail Cost by the
Total Maximum Weight for Take-off (in thousands of pounds) determined in
Section VI above.  The result shall constitute the Monorail Fee for the
Initial Schedule M Period or other calendar year for which the determination
is being made.  It shall also constitute the tentative Monorail Fee for the
calendar year following the year for which the determination is being made,
and such Monorail Fee shall be expressed in cents per thousand pounds of
Total Maximum Weight for Take-off to the nearest ten thousands of a cent. 
The Monorail Fee shall be multiplied by the Total Maximum Weight for Take-off
(in thousands of pounds) of all Passenger Aircraft operated by the Lessee
which took off from the Airport during the Initial Schedule M Period or other
calendar year for which the determination is being made and during the
calendar months which have elapsed since the close of the Initial Schedule M
Period or other calendar year.  The resultant product shall constitute the
Monorail Fee due and payable by the Lessee to the Port Authority for the
Initial Schedule M Period, or for the calendar year for which the
determination was made, and for the months which have elapsed since the close
of the Initial Period or such other calendar year.  The Lessee shall continue
to make payments based on the new tentative Monorail Fee until the succeeding
Monorail Fee is determined. 

           (b) Any deficiency due to the Port Authority from the Lessee for
the Initial Schedule M Period or for any calendar year thereafter resulting
from the determination of any Monorail Fee as aforesaid shall be paid to the
Port Authority by the Lessee within thirty (30) days after demand therefor
and any excess payments made by the Lessee determined on the basis of a
determination of any Monorail Fee shall be credited against future Monorail
Fees, such credit to be made within thirty (30) days following the
determination of the Monorail Fee.  The determination of the Monorail Fee
shall be made for the Initial Schedule M Period, and for such calendar year
thereafter, by no later than April 30th of the following calendar year."

       3.  (a)  (1)  In addition to the premises heretofore let to the Lessee
under the Lease, the letting as to which shall continue in full force and
effect, the Port Authority hereby lets to the Lessee and the Lessee hereby
hires and takes from the Port Authority the following:

                     The portions of the Monorail Station, including the 
        platform (up to but not including the platform doors to the monorail
        cars), stairway, escalators, and elevators providing access to the
        Monorail Station, serving Passenger Terminal Building C, which
        portions are shown in diagonal hatching and stipple on the drawings
        attached hereto, hereby made a part hereof and marked "Exhibit M
        (Sheet 1 of 2)" and "Exhibit M (Sheet 2 of 2)", respectively,
        together with the fixtures, improvements and other property, if any,
        of the Port Authority located or to be located therein or thereon, to
        be and become part of the premises under the Lease, as hereby
        amended, and are designated herein as and herein collectively called
        "Area M", let to the Lessee, subject to and in accordance with all
        the terms, provisions and covenants of the Lease as hereby amended
        for and during all the residue and remainder the term of the letting
        under the Lease as set forth in Section 4 (b) of the Lease.  The
        parties acknowledge and agree that the ares added to the premises
        pursuant to this paragraph constitute non-residential real property.

           (2)  Area M shall be used as a station of the Monorail System for
the accommodation of employees, patrons, passengers, business visitors and
guests of the Port Authority and the Lessee.  Area M may also be used by
other persons and the public generally.

           (3)  There shall be no additional rental payable by the Lessee in
connection with the use of Area M nor shall there be any abatement of rental
in the event the Lessee shall lose the use of all or a portion of Area M.

                (b)  If the Port Authority shall not give possession of
Area M described in subparagraph (a) above on the effective date hereof by
reason or failure or refusal of any occupant thereof to deliver possession
thereof to the Port Authority or by reason of any cause or condition beyond
the control of the Port Authority, the Port Authority shall not be subject to
any liability for the failure to give possession on said date.  No such
failure to give possession on the date hereinabove specified shall in any
wise affect the validity of this Agreement or the obligations of the Lessee
hereunder, nor shall the same be construed in any wise to extend the term
beyond the date stated in Section 4 (b) of the Lease.  Tender shall be made
by notice given at least (5) days prior to the effective date of the tender.

           (c)  The Lessee acknowledges that it has not relied upon any
representation or statement of the Port Authority or its Commissioners,
officers, employees and agents as to the suitability of the areas added to
the premises pursuant to this Paragraph for the operations permitted thereon
by the Lease and agrees to take the said areas and to use the same in their
"as is" condition at the time of the commencement of the letting hereunder
subject to the Port Authority's right to perform and complete the Monorail
Construction Work as defined in Paragraph 1 of Supplement No. 15 of the
Lease.  Without limiting any of the obligations of the Lessee under the
Lease, the Lessee agrees that no portion of the premises under the Lease will
be used initially or at any time during the letting thereof which is in a
condition unsafe or improper for the conduct of the Lessee's operations under
the Lease, as hereby amended, so that there is a possibility of injury or
damage to life or property.

       4.  There shall be added at the end of subparagraph (3) of paragraph
(b) of Section 15 of the Lease the following sentence: 

           "As to Area M of the premises, the foregoing obligations shall not
apply to the roof and exterior structure of Area M."

       5.  (a)  The parties hereby acknowledge that the Port Authority is
performing a certain landside access construction project at the Airport
consisting generally of the following portions: a)  the construction of
certain roadway improvements at the Airport's principal roadway entrance; b) 
the construction of an inbound ramp connecting the I-78 Connector to Brewster
Road and a corresponding ramp to facilitate outbound movements of traffic; c) 
the construction of roads to connect Monorail Stations "D2" and "E" to
adjacent Airport roads, and drop-off/pick-up facilities at said Stations; d) 
an expansion of the Central Terminal Area Complex recirculation road; and e) 
other roadway improvements related thereto; all of the foregoing portions
being hereinafter collectively called the "Phase 1A Roadway Work."

           (b)  (1)  For purposes of this Supplemental Agreement, the term
"Phase 1A Costs" shall mean the total costs in connection with all portions
of the Phase 1A Roadway Work, as determined under subparagraph (a) (1) of
Section II of Schedule M attached to the Lease by Paragraph 2 hereof as such
costs are incurred in the performance of each portion of the Phase 1A Roadway
Work.

                (2)  "Phase 1A Charge Commencement Date" shall mean the date
on which the Port Authority shall have certified that the construction of any
portion of the Phase 1A Roadways has been substantially completed, provided,
however, if any such date shall occur on other than the first day of a
calendar month, the Phase 1A Charge Commencement Date shall mean the first
(1st) day of the first (1st) full calendar month immediately following the
month during which the said date occurs.

                (3)  (i)  "The Phase 1A Factor" shall mean the sum of (1) the
respective averages of the annual capital investment recovery rates of the
"25-Bond Revenue Index" appearing in the respective last issues of "The Bond
Buyer" published during each of the respective calendar years commencing on
January 1, 1992 for which each such average will be applied, plus (2) one
hundred fifty (150) basis points.

                    (ii)  In the event that "The Bond Buyer" or its "25-Bond
Revenue Index" shall be discontinued prior to the date on which the Port
Authority determines the Phase 1A Factor, then the Port Authority shall by
notice to the Lessee propose a comparable substitute for such Index for all
subsequent periods as aforesaid.  The determination of the Port Authority as
to such substitute shall be final.

                (4) The "Phase 1A Charge Period" or "Phase 1A Charge Periods"
shall mean the period or periods, as the case may be, commencing on the
applicable Phase 1A Charge Commencement Date and ending on the day
immediately preceding the twenty-fifth (25th) anniversary of said Phase 1A
Charge Commencement Date.

                (5) For purposes of the calculations under this Paragraph 5,
"PFC Funds" shall mean revenues derived from fees (herein called "Passenger
Facility Charges") charged air passengers at the Airport, a portion of which
revenues shall be applied to the Phase 1A Costs in accordance with Port
Authority applications therefor as approved by the Federal Aviation
Administration and the provisions of Section II of Schedule M as added to the
Lease by Paragraph 2 of this Supplemental Agreement, the amount of which PFC
Funds to be so applied being limited in amount to a total of Fifty Million
Dollars and No Cents ($50,000,000.00).

           (c)  (1) For any period from the applicable Phase 1A Commencement
Date through the 31st day of December of the year in which the said date
occurs (all such periods, for purposes of this Paragraph 5, being hereinafter
referred to individually as a "Phase 1A Period"), the Port Authority shall
establish and the Lessee shall pay a Phase 1A Charge, as follows:

                     (i)  The Port Authority shall determine the portion of
the total Phase 1A Costs paid or incurred by the Port Authority up to and
including the day immediately preceding the said Phase 1A Commencement Date,
each such portion being hereinafter referred to as the "Phase 1A Investment".

                    (ii)  The Port Authority shall deduct from the first and
each subsequent Phase 1A Investment determined in subparagraph (i) above the
amount of PFC Funds available to be applied to the Phase 1A Costs until the
amount of available PFC Funds is exhausted, the remainder and each such
portion thereafter being hereinafter referred to as the "Net Phase 1A
Investment".

                   (iii)  The Port Authority shall estimate an amount (each
such amount being hereinafter referred to as the "Annual Phase 1A Capital
Cost") equal to even monthly payments derived by multiplying the applicable
Net Phase 1A Investment by a monthly multiplier derived in accordance
herewith from time to time by the application of the following formula:


                                     1

                                                               = Monthly
                                                                 Multiplier

                      1              -            1
                                                              

                      i                      i  (1 + i)t =                  



Where i equals the Phase 1A Factor (as estimated by the Port Authority)
divided by twelve.

Where t (a power) equals 300.

                    (iv)  The Port Authority shall determine the Total
Developed Land Square Feet on the Airport, as defined in Section 72 of the
Lease, for the calendar year immediately preceding the applicable Phase 1A
Commencement Date and shall divide the applicable Annual Phase 1A Capital
Cost by said Total, the quotient thereof being hereinafter referred to as the
"Phase 1A Charge Per Acre".

                     (v)  The Port Authority shall determine the total
developed land area at the Airport occupied by (i) all of the Lessee's
premises hereunder (excluding Area C-3 thereof) and (ii) the portion of the
Lessee's premises hereunder constituting Area C-3, all as determined in
making the calculations under Paragraph II of Schedule A attached to the
Lease, as of the last day of the applicable Phase 1A Period; the portions of
said total under the foregoing clause (i) being hereinafter referred to as
the "Lessee's C-1 and C-2 Terminal Acreage" and the portion of said total
under the foregoing clause (ii) being hereinafter referred to as the
"Lessee's C-3 Terminal Acreage".

                    (vi)  The Port Authority shall multiply the applicable
Lessee's C-1 and C-2 Terminal Acreage by the applicable Phase 1A Charge Per
Acre, and the Port Authority shall also multiply the applicable Lessee's C-3
Terminal Acreage by the applicable Phase 1A Charge Per Acre, the sum of the
two resulting products thereof being herein referred to as the "Phase 1A
Charge".

                (2)  At the time the Port Authority advises the Lessee of the
final Airport Services Factor for the calendar year during which any
respective Phase 1A Period occurs, the Port Authority shall also advise the
Lessee of the applicable Phase 1A Charge, which shall be the amount due and
payable by the Lessee to the Port Authority for each calendar month during
the applicable Phase 1A Period and for each and every month in the calendar
year during which the Phase 1A Charge is calculated.  The Lessee shall pay
the accumulated total thereof for each month of the applicable Phase 1A
Period and for the months that have elapsed since the end of the applicable
Phase 1A Period at the time it pays the tentative Airport Services Factor for
the calendar month following the month during which the applicable Phase 1A
charge is calculated.  The Lessee shall continue to make payments based on
the said Phase 1A Charge until the same is further adjusted based upon actual
costs incurred in the performance of the Phase 1A Roadway Work, as provided
in subparagraph (3) hereof.

                (3)  After the close of calendar year 1995 and after the
close of each calendar year thereafter up to and including the calendar year
during which the Phase 1A Roadway Work is completed (it being understood
that, in the event the Phase 1A Roadway Work is not completed by December 31,
1998, the Lessee shall have no right, nor shall the Port Authority have any
obligation to extend or to offer, to extend the term of the letting hereunder
beyond March 31, 2013), the Port Authority will adjust, if necessary, the
applicable Phase 1A Charge, as follows:

                     (i)  The Port Authority shall determine the portion of
the total Phase 1A Costs paid or incurred by the Port Authority during the
calendar year for which the adjustment is being made for any portion of the
Phase 1A Roadway Work certified as complete and operational, each such
portion being hereinafter referred to as the "Final Phase 1A Investment".

                    (ii)  The Port Authority shall determine an amount (each
such amount being hereinafter referred to as the "Final Annual Capital Cost")
equal to even monthly payments derived by multiplying the applicable Final
Phase 1A Investment by a monthly multiplier derived in accordance herewith
from time to time by the application of the following formula:


                                     1

                                                               = Monthly
                                                                 Multiplier

                      1              -            1
                                                              

                      i                      i  (1 + i)t =                  



Where i equals the Phase 1A Factor (as determined by the Port Authority)
divided by twelve.

Where t (a power) equals 300.                                    

                   (iii)  The Port Authority shall determine the final Phase
1A Charge Per Acre in the manner set forth in item (iv) of subparagraph (c)
(1) hereof.

                    (iv)  The Port Authority shall determine the final
Lessee's C-1 and C-2 Terminal Acreage and the final Lessee's Terminal C-3
Acreage in the manner set forth in item (v) of subparagraph (c) (1) hereof.

                     (v)  The Port Authority shall determine the final Phase
1A Charge in the manner set forth in item (vi) of subparagraph (c) (1)
hereof.

                (4)  At the time the Port Authority advises the Lessee of the
final Airport Services Factor for the calendar year for which the said
determination is being made, the Port Authority shall also advise the Lessee
of the final Phase 1A Charge, which shall be the amount due and payable by
the Lessee to the Port Authority for each calendar month during the calendar
year for which the said determination is being made and for each and every
month thereafter during the remainder of the Phase 1A Charge Period.  The
Lessee shall pay the said Phase 1A Charge at the time it pays the tentative
Airport Services Factor for the calendar month following the month during
which the said Phase 1A Charge is calculated and shall continue to make
payments based on the said Phase 1A Charge at the time it pays each Airport
Services Factor during the remainder of the Phase 1A Charge Period.

                (5)  In the event that the Port Authority shall determine
that it expended in the cost of any portion of the Phase 1A Roadway Work
amounts as set forth in subparagraph (b) (1) hereof which total more or which
total less than the applicable Phase 1A Costs in effect on the day
immediately preceding the applicable Phase 1A Charge Commencement Date up to
the time of such determination or at any time after the determination of any
final Phase 1A Charge then, (x) if more was expended, upon demand of the Port
Authority, the Lessee shall pay to the Port Authority an amount equal to the
difference between the amounts expended by the Port Authority as so
determined by the Port Authority and, (y) if less was expended, the Port
Authority shall credit to the Lessee an amount equal to the difference
between the amounts expended by the Port Authority as so determined by the
Port Authority and, in each case, the aforesaid Phase 1A Costs or such final
Phase 1A Charge, as the case may be, in effect on the day immediately
preceding the applicable Phase 1A Charge Commencement Date or the day
immediately preceding the end of the calendar year for which such final Phase
1A Charge is calculated, and, effective from and after such date of such
payment or credit, the applicable Phase 1A Costs for purposes of subparagraph
(c) hereof shall be increased or decreased, as the case may be, by the amount
of such payment or credit and the applicable Phase 1A Charge payable by the
Lessee adjusted appropriately hereunder.

                (6)  Any deficiency in the amounts due to the Port Authority
from the Lessee for any calendar year resulting from the adjustment of any
Phase 1A Charge shall be paid to the Port Authority by the Lessee within
thirty (30) days after demand therefor and any excess payments made by the
Lessee determined on the basis of an adjusted Phase 1A Charge shall be
credited against future rentals, such credit to be made within thirty (30)
days following the adjustment of the applicable Phase 1A Charge, as the case
may be.

       6.  There shall be added immediately after Paragraph VIII of
Schedule A attached to the Lease a new Paragraph IX reading as follows:

           "IX.  The Port Authority and the Lessee hereby agree that the
Monorail Construction Costs, as defined in Paragraph 1 of Supplement No. 15
of the Lease, and the Phase 1A Costs, as defined in Paragraph 5 of Supplement
No. 15 of the Lease, shall not be included in any calculation under this
Schedule A.  All costs for construction, repair, maintenance, modification
and operation of the Monorail System and the Phase 1A Roadways not included
in the Monorail Construction Costs or the Phase 1A Costs, respectively, shall
be included hereunder."

       7.  Schedule B attached to the Lease, as heretofore amended, shall be
deemed further amended further amended as follows:

           (a)  The seventh (7th) line of Paragraph I thereof shall be
amended to read as follows:

                "Non-exclusive Areas for heating, domestic use and air
                conditioning, and, from and after January 1, 1995, in
                connection with the Phase 1A Roadway Work, as defined in
                Supplement No. 15 of the Lease."

           (b)  There shall be added immediately after subparagraph 4 of
Paragraph I thereof, as subparagraph 5, the following:

                "5.  Phase 1A CH&RP Charge:

           (a)  In connection with the Phase 1A roadway Work, as defined in
Supplement No. 15 of the Lease, and in addition to the charges above, the
Lessee shall pay a Phase 1A CH&RP Charge determined as follows:  after the
close of calendar year 1994, the Port Authority shall establish an Initial
Phase 1A CH&RP Charge by multiplying the Initial Fee Per Acre, as determined
in Paragraph 5 of Supplement No. 15 of the Lease, by the total developed land
area at the Airport occupied by the Central Heating and Refrigeration Plant
during the calendar year for which the adjustment is being made and the
resulting product shall be divided by three (3) which result thereof shall be
divided by twelve (12) and the result thereof being herein referred to as the
'Initial Phase 1A CR&RP Charge.'

           (b)  At the time the Port Authority advises the Lessee of the
final Charges hereunder for the calendar year during which the Initial Period
occurs, the Port Authority shall also advise the Lessee of the Initial Phase
1A CH&RP Charge, which shall be the amount due and payable by the Lessee to
the Port Authority for each calendar month during the Initial Period and for
each and every month in the calendar year during which the Initial Phase 1A
CH&RP Charge is calculated.  The Lessee shall pay the accumulated total
thereof for each month of the Initial Period and for the months that have
elapsed since the end of the Initial Period at the time it pays the tentative
Charges hereunder for the calendar month following the month during which the
Initial Phase 1A CH&RP Charge is calculated.  The Lessee shall continue to
make payments based on the said Initial Phase 1A CH&RP Charge until the same
is further adjusted."

           (c)  There shall be added immediately after Paragraph IV thereof,
as Paragraph IVa, the following:

    "IVa.  (a)  After the close of calendar year 1994 and after the close of
each calendar year thereafter up to and including the calendar year during
which the Phase 1A Roadway Work is completed (it being understood that, in
the event the Phase 1A Roadway Work is not completed by December 31, 1998,
the Lessee shall have no right nor shall the Port Authority have any
obligation to extend or to offer to extend the term of the letting hereunder
beyond March 31, 2013), the Port authority will adjust the Initial Phase 1A
CH&RP Charge specified above, upwards or downwards, as follows:  after the
close of calendar year 1995 and after the close of each calendar year
thereafter up to and including the calendar year during which the Phase 1A
Roadway Work is completed, the Port Authority shall establish a New Phase 1A
CH&RP Charge by multiplying the New Fee Per Acre, as determined in
Paragraph 5 of Supplement No. 15 of the Lease, by the total developed land
area at the Airport occupied by the Central Heating and Refrigeration Plant
during the calendar year for which the adjustment is being made and the
resulting product shall be divided by three (3) which result thereof shall be
divided by twelve (12), and the product thereof being herein referred to as
the 'New Phase 1A CH&RP Charge'.

           (b)  At the time the Port Authority advises the Lessee of the
final Charges hereunder for calendar year 1994 or such other calendar for
which the adjustment is being made, the Port Authority shall also advise the
Lessee of the New Phase 1A CH&RP Charge, which shall be the amount due and
payable by the Lessee to the Port Authority for each calendar month during
calendar year 1995 or such other calendar year and for each and every month
thereafter during the remainder of the Phase 1A Charge Period.  The Lessee
shall pay the New Phase 1A CH&RP Charge at the time it pays the tentative
Charges for the calendar month following the month during which the New Phase
1A CH&RP Charge is calculated and shall continue to make payments based on
the said New Phase 1A CH&RP charge at the time it pays each Charge hereunder
during the remainder of the Phase 1A Charge Period.

           (c)  Any deficiency in the amounts due to the Port Authority from
the Lessee for any calendar year resulting from the adjustment of the Initial
or New Phase 1A CH&RP Charge shall be paid to the Port Authority by the
Lessee within thirty (30) days after demand therefor and any excess payments
made by the Lessee determined on the basis of an adjusted Initial or New
Phase 1A CH&RP Charge shall be credited against future Charges hereunder,
such credit to be made within thirty (30) days following the adjustment of
the Initial or New Phase 1A CH&RP Charge, as the case may be."

       8.  Schedule C attached to the Lease, as heretofore amended, shall be
deemed further amended as follows:

           (a)  The fifth (5th), sixth (6th) and seventh (7th) lines of
Paragraph I thereof shall be amended to read as follows:

        "(hereinafter called the 'Airport') and continuing thereafter
        throughout the term of the letting under the Agreement, the Lessee
        shall pay to the Port Authority a flight fee for each and every take-
        off made by any aircraft operated by the Lessee.  In connection with
        the Phase 1A Roadway Work as defined in Supplement No. 15 of the
        Lease, there shall be included in the aforesaid flight fee an Initial
        Phase 1A Charge Factor subject to adjustment as hereinafter provided. 
        For. . ."

           (b)  There shall be added immediately after subparagraph B of
Paragraph II thereof, as subparagraph BB, the following:

        "BB.  Initial Phase 1A Charge Factor:

           In connection with the Phase 1A Roadway Work and in addition to
the P.A.F. Charge Factor and the Airport Services Charge Factor above, the
Lessee shall pay an Initial Phase 1A Charge Factor determined as follows: 
after the close of calendar year 1994, the Port Authority shall establish an
Initial Phase 1A Charge Factor by multiplying the Initial Fee Per Acre, as
determined in Paragraph 5 of Supplement No. 15 of the Lease, by the total
developed land area at the Airport occupied by the Public Aircraft Facilities
during the calendar year for which the adjustment is being made and the
resulting product shall be divided by the total Maximum Weight for Take-off
of all aircraft, as determined under subparagraph A (2) of Section II hereof,
at the Airport during the calendar year for which the adjustment is being
made, and the quotient thereof shall be multiplied by one thousand (1000),
the resulting product thereof being herein referred to as the 'Initial Phase
1A Charge Factor'."

           (c)  There shall be added immediately after subparagraph BB
thereof, as subparagraph BBB, the following:

        "BBB.  New Phase 1A Charge Factor

           After the close of calendar year 1994 and after the close of each
calendar year thereafter up to and including the calendar year during which
the Phase 1A Roadway Work is substantially completed (it being understood
that, in the event the Phase 1A Roadway Work is not completed by December 31,
1998, the Lessee shall have no right nor shall the Port Authority have any
obligation to extend or to offer to extend the term of the letting hereunder
beyond March 31, 2013), the Port Authority will adjust the Initial Phase 1A
Charge Factor specified above and any New Phase 1A Charge Factor, as
hereinafter defined, as the case may be, upwards or downwards, as follows: 
after the close of calendar year 1994 and after the close of each calendar
year thereafter up to and including the calendar year during which the Phase
1A Roadway Work is completed, the Port Authority shall establish a New Phase
1A Charge Factor by multiplying the New Fee Per Acre, as determined in
Paragraph 5 of Supplement No. 15 of the Lease, by the total developed land
area at the Airport occupied by the Public Aircraft Facilities during the
calendar year for which the adjustment is being made and the resulting
product shall be divided by the total Maximum Weight for Take-Off of all
aircraft, as determined under subparagraph A(2) of Section I hereof, 
operated at the Airport during the calendar year for which the adjustment is
being made, and the quotient thereof shall be multiplied by one thousand
(1000), the resulting product thereof being, in each case, herein referred to
as the 'New Phase 1A Charge Factor'."

           (d)  The first (1st) line of subparagraph (C) thereof shall be
amended to read as follows:

                "The final P.A.F. Charge Factor, the final airport Services
                Charge Factor and the Initial or New Phase 1A Charge Factor,
                as the case may be, as determined above..."


       9.  Schedule D attached to the Lease, as heretofore amended shall be
deemed further amended as follows:

           (a)  The sixth (6th), seventh (7th) and eight (8th) lines of
Paragraph I thereof shall be amended to read as follows:

           "and continuing thereafter throughout the term of the letting
           under the Agreement the Lessee shall pay to the Port Authority a
           gallonage fee for each gallon of fuel delivered to aircraft
           operated by the Lessee.  The Lessee, as an additional component of
           said gallonage fee and in connection with the Phase 1A Roadway
           Work, as defined in Supplement No. 15 to the Lease shall pay an
           initial Phase 1A Charge Component and a New Phase 1A Charge
           Component as hereinafter determined.  The Lessee either itself, if
           it is a fuel storage...."

           (b)  There shall be added immediately after subparagraph B of
Paragraph II thereof, as subparagraph BB, the following:

           "BB. Initial Phase 1A Charge Component:

           In connection with the Phase 1A Roadway Work and in addition to
the System Charge Component and the Airport Services Charge Component above,
the Lessee shall pay an Initial Phase 1A Charge Component determined as
follows:  after the close of calendar year 1994, the Port Authority shall
establish an Initial Phase 1A Charge Component by multiplying the Initial Fee
Per Acre, as determined in Paragraph 5 of Supplement No. 15 of the Lease, by
the total developed land area at the Airport occupied by the Fuel System
during the calendar year for which the adjustment is being made and the
resulting product shall be divided by the actual number of gallons of fuel
delivered through the Fuel System to all aircraft, as determined under
subparagraph A (2) of Section II hereof, operated at the Airport during the
calendar year for which the adjustment is being made, the quotient thereof
being herein referred to as the 'Initial Phase 1A Charge Component'."

           (c)  There shall be added immediately after subparagraph BB of
Paragraph II thereof, as subparagraph BBB, the following:

           "BBB.  New Phase 1A Charge Component:

           After the close of calendar year 1994 and after the close of each
calendar year thereafter up to and including the calendar year during which
the Phase 1A Roadway Work is substantially completed (it being understood
that, in the event the Phase 1A Roadway Work is not completed by December 31,
1998, the Lessee shall have no right nor shall the Port Authority have any
obligation to extend or to offer to extend the term of the letting hereunder
beyond March 31, 2013), the Port Authority will adjust the Initial Phase 1A
Charge Component specified above and any New Phase 1A Charge Component, as
hereinafter defined, as the case may be, upwards or downwards, as follows: 
after the close of calendar year 1994 and after the close of each calendar
year thereafter up to and including the calendar year during which the Phase
1A Roadway Work is completed, the Port Authority shall establish a New Phase
1A Charge Component by multiplying the New Fee Per Acre, as determined in
Paragraph 5 of Supplement 15 of the Lease, by the total developed land area
at the Airport occupied by the Fuel system during the calendar year for which
the adjustment is being made and the resulting product shall be divided by
the actual number of gallons of fuel delivered through the Fuel System to all
aircraft, as determined under subparagraph A (2) of Section II hereof,
operated at the Airport during the calendar year for which the adjustment is
being made, the quotient thereof being herein referred to as the 'New Phase
1A Charge Component'."

           (d)  The first (1st) line of subparagraph (C) thereof shall be
amended to read as follows:

           "The final System Charge Component, the final Airport Services
           Charge Component and the Initial or New Phase 1A Charge Component,
           as the case may be, as determined above shall be...."

      10.  There shall be added to the Lease immediately after Section 92
thereof the following "Section 92A":

"Section 92A.  Airline Service Standards

      Subject to and without limiting or affecting any other term or
provision of this Lease, the Lessee agrees to provide service at the premises
for the benefit of the traveling public in a manner consistent with generally
accepted airline industry standards for airport terminals and will cooperate
with the Port Authority and other airlines serving the traveling public at
the Airport in maintaining these standards through organized airport service
improvement groups.  The foregoing provision shall be binding as well on
sublessees and others using the premises."

      11.  Effective as of December 31, 1998, the term of the letting of the
Area C-3 portion of the premises under the Lease is hereby extended for the
period ending on March 31, 2013, unless sooner terminated, at the rentals in
accordance with Paragraphs 12 and 13 below and upon all the terms, covenants,
provisions and conditions of the Lease, as hereby amended.

      12.  Area C-3 Annual Rentals:  For the period commencing on January 1,
1999 to and including December 31, 2003, in addition to all other rentals,
fees and charges under the Lease, the Lessee shall pay to the Port Authority
rental for Area C-3 during the extension set forth in Paragraph 11 hereof as
follows:

           For Area C-3 rental at an annual rate consisting of a Facility
Factor, as hereinafter defined, in the amount of Seven Million Seven Hundred
Nine Thousand Eight Hundred Forty-Five Dollars and No Cents ($7,709.845.00)
plus the Airport Services Factor, as the same shall then have been adjusted
in accordance with Schedule A attached to the Lease, as herein amended, based
upon a 1993 final Airport Services Factor in the amount of One Million Two
Hundred Sixty-seven Thousand Four Hundred Twenty-eight Dollars and No Cents
($1,267,428.00), which annual rate is subject to adjustment from time to time
as provided in Paragraph 13 hereof and Schedule A of the Lease, as herein
amended, ("Area C-3 Annual Rental").  The Lessee shall pay the rental for
Area C-3, as the same shall then have been determined based upon the
aforesaid adjustments, monthly in advance on January 1, 1999 and on the first
day of each and every succeeding month in equal installments until such time
as the aforesaid annual rate has been further adjusted in accordance with
Paragraph 13 hereof and Schedule A of the Lease, as herein amended, which
adjusted annual rate shall remain in effect until the next adjustment and the
monthly installments payable after each such adjustment shall be equal to
one-twelfth (1/12th) of said annual rate as so adjusted.

      13.  (a)  For the aforesaid period from January 1, 1999 to and
including December 31, 2003, the Area C-3 annual rentals payable under
Paragraph 12 hereof is made up of two factors, one, a variable factor herein
called the "Facility Factor", presently represents Seven Million Seven
Hundred Nine Thousand Eight Hundred Forty-five Dollars and No Cents
($7,709,845.00) of the aforesaid annual rentals and the other, a variable
factor herein called the "Airport Services Factor", represents the Airport
Services Factor under the Lease, as the same shall have then been adjusted in
accordance with Schedule A, as herein amended, based upon a total 1993 final
Airport Services Factor in the amount of One Million Two Hundred Sixty-seven
Thousand Four Hundred Twenty-Eight Dollars and No Cents ($1,267,428.00), of
the total aforesaid annual rentals.

           (b)  On January 1, 2004 and on each succeeding fifth (5th)
anniversary of said date, the Facility Factor of the Area C-3 annual rentals
payable by the Lessee under Paragraph 12 hereof shall be increased to the
product resulting from multiplying the Facility Factor in effect on
December 31, 2003 and on each succeeding fifth (5th) anniversary of said
date, as the case may be, by a percentage equal to 121.6653%.
Accordingly,

                     (i)  for the period from January 1, 2004 to and
including December 31, 2008, the Facility Factor of the Area C-3 annual
rentals payable under Paragraph 12 hereof, shall represent Nine Million Three
Hundred Eighty Thousand Two Hundred Six Dollars and Five Cents
($9,380,206.05); and

                    (ii)  for the period from January 1, 2009 to and
including March 31, 2013, the Facility Factor of the Area C-3 annual rentals
payable under Paragraph 12 hereof shall represent Eleven Million Four Hundred
Twelve Thousand Four Hundred Fifty-five Dollars and Eighty-three Cents
($11,412,455.83).   

           (c)  After December 31, 1998 and after the close of each calendar
year thereafter, the Port Authority will continue to adjust the Airport
Services Factor of the Area C-3 annual rentals payable by the Lessee under
Paragraph 12 hereof, such adjustment to be made as provided in Schedule A, as
herein amended.


           (d)  The Lessee shall pay the total Area C-3 annual rentals
payable by the Lessee under Paragraph 12 hereof, as the same have been
adjusted in accordance with subparagraphs (b) and (c) of this Paragraph 13,
monthly in advance on January 1, 2004 and on the first day of each and every
succeeding month in equal installments until such time as the said total Area
C-3 annual rentals have been further adjusted in accordance with this
Paragraph 13 and Schedule A, as herein amended, which adjusted total annual
rentals shall remain in effect until the next adjustment and the monthly
installments payable after each such adjustment shall be equal to one-twelfth
(1/12th) of said total annual rentals as so adjusted.

           (e)  In the event the term of the letting of Area C-3 shall expire
on a day other than the last day of a month, the monthly installment of
rentals for Area C-3 for said month shall be the monthly installment prorated
on a daily basis using the actual number of days in the said month.

           (f)  The Lessee understands and agrees that, while the term of
Area C-3 of the premises under the Lease as extended hereunder shall expire
on March 31, 2013 the final Airport Services Factor for the year 2013 will
not be determined for some months after such expiration and that the Lessee's
obligation to pay any deficiency in the Area C-3 rental for the year 2014 or
the Port Authority's obligation to pay a refund in said rentals resulting
from the determination of the final Airport Services Factor for the year 2013
shall survive such expiration of the Lease and shall remain in full force and
effect until such deficiency or refund, if any, is paid.  The Lessee hereby
specifically acknowledges that neither the survival of the obligation with
respect to any such deficiency or refund nor any other provision of this
Supplemental Agreement shall grant or shall be deemed to grant any rights
whatsoever to the Lessee to have the term of the letting under the Lease, or
any portion of the Premises thereunder, extended for the period beyond
March 31, 2013 or affect in any way the Port Authority's right to terminate
the Lease, or any portion of the premises thereunder, as provided therein.

      14.  Effective as of January 1, 1999, Schedule A attached to the Lease,
as the same has been heretofore amended, shall be deemed further amended as
follows:

           (a)  The second sentence of the first (1st) paragraph thereof (as
set forth in Paragraph 3 (b) (2) (i) of Supplement No. 8 of the Lease) shall
be deemed amended to read as follows:

                "The Lessee shall pay the rentals for Area C-3 at the rates
                and times stated in Paragraphs 12 and 13 of Supplement No. 15
                of the Lease until the said rates are adjusted as hereinafter
                provided".

           (b)  The last six lines of said first paragraph of Schedule A as
the same are set forth in Paragraph 3 (b) (2) (ii) of Supplement No. 8 of the
Lease shall be deemed amended to read as follows:

                "further, after the close of calendar year 1998 and after the
                close of each calendar year thereafter, the Port Authority
                will adjust the Airport Services Factor of the Area C-3
                Annual Rental presently set forth in subparagraph 13 (a) of
                Supplement No. 15 of the Lease, upwards or downwards, as
                follows:"

      15.  Effective January 1, 1999, subparagraph (e) (1) of Paragraph 3 of
Supplement No. 8 of the Lease shall be deemed amended to read as follows:

                "(e) (1)  Effective from and after January 1, 1999, in the
event the Lessee shall at any time by the provisions of this Agreement become
entitled to an abatement of the Area C-3 Annual Rental, the Facility Factor
of the Area C-3 Annual Rental for each square foot of floor space of Area C-3
shall be reduced for each calendar day or major fraction thereof the
abatement remains in effect, the use of which is denied the Lessee, by the
following amounts:  (it being understood that there shall be no abatement of
Area C-3 Annual Rental under the Lease for any portion of Area C-3 or for any
portion of the term except as specifically provided in this Agreement):

                     (i)  for each square foot of floor space of Area C-3 at
                          the following daily rate:

                    (aa)  for the portion of the term of the letting of Area
                          C-3 set forth in Paragraph 13 (a) of Supplement
                          No. 15 of the Lease (January 1, 1999 to and
                          including December 31, 2003) at the daily rate of
                          .....$0.1095890.

                    (bb)  for the portion of the term of the letting of Area
                          C-3 set forth in Paragraph 13 (b) (i) of
                          Supplement No. 15 of the Lease (January 1, 2004 to
                          and including December 31, 2008) at the daily rate
                          of ..........$0.1333318.

                    (cc)  for the portion of the term of the letting of Area
                          C-3 set forth in Paragraph 13 (b) (ii) of
                          Supplement No. 15 of the Lease (January 1, 2009 to
                          March 31, 2013) at the daily rate of
                          ......$0.1622186.

                    (ii)  with respect to the Area D portion of Area C-3 (as
described in Paragraph 1 (a) (vi) of Supplement No. 8 of the Lease):  Any
such abatement shall be made on an equitable basis giving effect to the
amount and character of the said Area D portion of Area C-3 the use of which
is denied to the Lessee as compared with the entire Area C-3.

     For the purpose of this Agreement, the measurement of interior building
space in Area C-3 shall be computed (i) from the inside surface of outer
walls of the structure of which Area C-3 forms a part;  (ii) from the center
of partitions separating Area C-3 from areas occupied from or used by
others."

      16.  Section 53 of the Lease entitled "Payment of Flight Fees" shall be
deemed amended as follows:

           (a)  The date appearing on the third (3rd) line of paragraph (a)
(1) thereof as "December 31, 1998" shall be deemed amended to read "March 31,
2013".

           (b)  Subparagraph (2) of paragraph (a) thereof shall be deemed
amended to read as follows:

           "(2) It is recognized that the flight fee provisions contained in
                Schedule C are effective through the expiration date of the
                lettering hereunder (March 31, 2013)."

      17.  Section 56 of the Lease entitled "Fuel Gallonage Fees" shall be
deemed amended as follows:

           (a)  The date appearing as "December 31, 1998" on the second (2nd)
line of paragraph (a) thereof shall be deemed amended to read "March 13,
2013".

           (b)  The second subparagraph of paragraph (a) thereof shall be
deemed amended to read as follows:

                "It is recognized that the fuel gallonage fee provisions
                contained in Schedule D are effective through the expiration
                of the letting hereunder (March 31, 2013)."

      18.  It is understood, acknowledged and agreed that the right of the
Port Authority to terminate the Lease and the letting thereunder with respect
to all or portions of Area C-3 as specified in, provided under, and as stated
in Paragraph 5 of Supplement No. 11 of the Lease shall continue to apply with
full force and effect in accordance with the terms thereof throughout the
term of Area C-3 as such term is extended by Paragraph 11 hereof.

      19.  The Lessee represents and warrants that no broker has been
concerned in the negotiation of this Supplemental Agreement and that there is
no broker who is or may be entitled to be paid a commission in connection
therewith.  The Lessee shall indemnify and save harmless the Port Authority
of and from any and all claims for commission or brokerage made by any and
all persons, firms or corporations whatsoever for services in connection with
the negotiation and execution of this Supplemental Agreement.

      20.  Neither the Commissioners of the Port Authority nor any of them,
nor any officer, agent or employee thereof, shall be charged personally by
the Lessee with any liability, or held liable to it under any term or
provision of this Supplemental Agreement, or because of its execution or
attempted execution or because of any breach thereof.

      21.  As hereby amended, all of the terms, covenants, provisions,
conditions and agreements of the Lease shall be and remain in full force and
effect.

      22.  This Supplemental Agreement and the Lease which it amends
constitute the entire agreement between the Port Authority and the Lessee on
the subject matter, and may not be changed, modified, discharged or extended
except by instrument in writing duly executed on behalf of both the Port
Authority and the Lessee.  The Lessee agrees that no representations or
warranties shall be binding upon the Port Authority unless expressed in
writing in the Lease or this Supplemental Agreement.

     IN WITNESS WHEREOF, the Port Authority and the Lessee have executed
these presents as of the date first above written.

ATTEST:                            THE PORT AUTHORITY OF NEW YORK
                                                  AND NEW JERSEY

/s/ Lysa C. Med                    By /s/ Gerald P. Fitzgerald          
     Secretary                     
                                   (Title)   Director of Aviation       
                                                       (Seal)

ATTEST:                            CONTINENTAL AIRLINES, INC.

/s/                                By /s/ Holden Shannon                

                                   (Title)   Staff Vice President           
                                                 (Corporate Seal)


<PAGE>
CSL-61273; - Ack. N.J.; Corp. & Corp.

STATE OF NEW YORK      
                       )
COUNTY OF NEW YORK     ) SS.
                       )
     On this       day of        , 1995, before me, the subscriber, a notary
public of New York, personally appeared          the           of The Port
Authority of New York and New Jersey, who I am satisfied is the person who
has signed the within instrument; and, I having first made known to him the
contents thereof, he did acknowledge that he signed, sealed with the
corporate seal and delivered the same as such officer aforesaid and the
within instrument is the voluntary act and deed of such corporation made by
virtue of the authority of its Board of Commissioners.

                                                                            
                                                   (notarial seal and stamp)

STATE OF TEXAS
                       )
COUNTY OF HARRIS       ) SS.
                       )
     On this 13th day of September, 1995, before me, the subscriber, a notary
public of Texas personally appeared Holden Shannon, the Staff Vice-President
of CONTINENTAL AIRLINES, INC., who I am satisfied is the person who has
signed the within instrument; and, I having first made known to him the
contents thereof, he did acknowledge that he signed, sealed with the
corporate seal and delivered the same as such officer aforesaid and the
within instrument is the voluntary act and deed of such corporation made by
virtue of the authority of its Board of Directors.

                                                    /s/ Sandra Y. Massalo   
                                                   (notarial seal and stamp)

STATE OF
                       )
COUNTY OF              ) SS.
                       )

On this   day of         , 1995, before me, the subscriber, a President of  
      , who I am satisfied is the person who has signed the within
instrument; and, I having first made known to him the contents thereof, he
did acknowledge that he signed, sealed with the corporate seal and delivered
the same as such officer aforesaid and the within instrument is the voluntary
act and deed of such corporation made by virtue of the authority of its Board
of Directors.

                                                                            
                                                   (notarial seal and stamp)




<PAGE>   116

                                                               Exhibit 10.4



                 AMENDED AND RESTATED EMPLOYMENT AGREEMENT


     THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT ("Agreement") is made by
and between CONTINENTAL AIRLINES, INC., a Delaware corporation ("Company"),
and GORDON M. BETHUNE ("Executive").

                           W I T N E S S E T H:

     WHEREAS, Company and Executive are parties to that certain Employment
Agreement dated as of June 5, 1995 (the "Current Agreement"); and

     WHEREAS, the Human Resources Committee of the Board of Directors, at its
November 2, 1995 meeting, authorized the amendment of the employment
agreement of Executive with respect to certain matters; and

     WHEREAS, in connection therewith, the parties desire to amend the
Current Agreement and restate it, as so amended, in its entirety as this
Agreement;  

     NOW, THEREFORE, for and in consideration of the mutual promises,
covenants and obligations contained herein, Company and Executive agree as
follows:


ARTICLE I.:  EMPLOYMENT AND DUTIES

     1A.  Employment; Effective Date.  Company agrees to employ Executive and
Executive agrees to be employed by Company, beginning as of the Effective
Date (as hereinafter defined) and continuing for the period of time set forth
in Article 2 of this Agreement, subject to the terms and conditions of this
Agreement.  For purposes of this Agreement, the "Effective Date" shall be
June 6, 1995.  

     1B.  Positions.  From and after the Effective Date, Company shall employ
Executive in the positions of President and Chief Executive Officer of
Company, or in such other positions as the parties mutually may agree, and
shall, for the full term of Executive's employment hereunder, cause Executive
to be nominated for election as a director of Company and use its best
efforts to secure such election.

     1C.  Duties and Services.  Executive agrees to serve in the positions
referred to in paragraph 1.2 and, if elected, as a director of Company and to
perform diligently and to the best of his abilities the duties and services
appertaining to such offices as set forth in the Bylaws of Company in effect
on the Effective Date, as well as such additional duties and services
appropriate to such offices which the parties mutually may agree upon from
time to time.


ARTICLE II.:  TERM AND TERMINATION OF EMPLOYMENT

     2A.  Term.  Unless sooner terminated pursuant to other provisions
hereof, Company agrees to employ Executive for a three-year period beginning
on the Effective Date.  Said term of employment shall be extended
automatically for an additional successive three-year period as of the third
anniversary of the Effective Date and as of the last day of each successive
three-year period of time thereafter that this Agreement is in effect;
provided, however, that if, prior to the date which is six months before the
last day of any such three-year term of employment, either party shall give
written notice to the other that no such automatic extension shall occur,
then Executive's employment shall terminate on the last day of the three-year
term of employment during which such notice is given.

     2B.  Company's Right to Terminate.  Notwithstanding the provisions of
paragraph 2.1, Company, acting pursuant to an express resolution of the Board
of Directors of Company (the "Board of Directors"),  shall have the right to
terminate Executive's employment under this Agreement at any time for any of
the following reasons: 

          1.   upon Executive's death;

          2.   upon Executive's becoming incapacitated for a period of at
     least 180 days by accident, sickness or other circumstance which renders
     him mentally or physically incapable of performing the material duties
     and services required of him hereunder on a full-time basis during such
     period;

          3.   for cause, which for purposes of this Agreement shall mean
     Executive's gross negligence or willful misconduct in the performance of
     the material duties and services required of him pursuant to this
     Agreement;

          4.   for Executive's material breach of any provision of this
     Agreement which, if correctable, remains uncorrected for 30 days
     following written notice to Executive by Company of such breach; or

          5.   for any other reason whatsoever, in the sole discretion of the
     Board of Directors.

     2C.  Executive's Right to Terminate.  Notwithstanding the provisions of
paragraph 2.1, Executive shall have the right to terminate his employment
under this Agreement at any time for any of the following reasons:

          1.   the assignment to Executive by the Board of Directors or other
     officers or representatives of Company of duties materially inconsistent
     with the duties associated with the positions described in paragraph 1.2
     as such duties are constituted as of the Effective Date;

          2.   a material diminution in the nature or scope of Executive's
     authority, responsibilities, or titles from those applicable to him as
     of the Effective Date; 

          3.   the occurrence of material acts or conduct on the part of
     Company or its officers or representatives which prevent Executive from
     performing his duties and responsibilities pursuant to this Agreement; 

          4.   Company requiring Executive to be permanently based anywhere
     outside a major urban center in Texas;

          5.   the taking of any action by Company that would materially
     adversely affect the corporate amenities enjoyed by Executive on the
     Effective Date; 

          6.   a material breach by Company of any provision of this
     Agreement which, if correctable, remains uncorrected for 30 days
     following written notice of such breach by Executive to Company; or

          7.   for any other reason whatsoever, in the sole discretion of
     Executive. 

     2D.  Notice of Termination.  If Company or Executive desires to
terminate Executive's employment hereunder at any time prior to expiration of
the term of employment as provided in paragraph 2.1, it or he shall do so by
giving written notice to the other party that it or he has elected to
terminate Executive's employment hereunder and stating the effective date and
reason for such termination, provided that no such action shall alter or
amend any other provisions hereof or rights arising hereunder.


ARTICLE III.:  COMPENSATION AND BENEFITS

     3A.  Base Salary.  During the period of this Agreement, Executive shall
receive a minimum annual base salary equal to the greater of (i) $550,000.00
or (ii) such amount as the parties mutually may agree upon from time to time. 
Executive's annual base salary shall be paid in equal installments in
accordance with Company's standard policy regarding payment of compensation
to executives but no less frequently than semimonthly.

     3B.  Bonus Programs.  Executive shall participate in each cash bonus
program maintained by Company on and after the Effective Date (including,
without limitation, any such program maintained for the year during which the
Effective Date occurs) at a level which is not less than the maximum
participation level made available to any Company executive (determined
without regard to period of service or other criteria that might otherwise be
necessary to entitle Executive to such level of participation).

     3C.  Life Insurance.  During the period of this Agreement, Company shall
maintain one or more policies of life insurance on the life of Executive
providing an aggregate death benefit in an amount not less than the
Termination Payment (as such term is defined in paragraph 4.7).  Executive
shall have the right to designate the beneficiary or beneficiaries of the
death benefit payable pursuant to such policy or policies up to an aggregate
death benefit in an amount equal to the Termination Payment.  To the extent
that Company's purchase of, or payment of premiums with respect to, such
policy or policies results in compensation income to Executive, Company shall
pay to Executive an additional payment (the "Policy Payment") in an amount
such that after payment by Executive of all taxes imposed on Executive with
respect to the Policy Payment, Executive retains an amount of the Policy
Payment equal to the taxes imposed upon Executive with respect to such
purchase or the payment of such premiums.  If for any reason Company fails to
maintain the full amount of life insurance coverage required pursuant to the
preceding provisions of this paragraph 3.3, Company shall, in the event of
the death of Executive while employed by Company, pay Executive's designated
beneficiary or beneficiaries an amount equal to the sum of (1) the difference
between the Termination Payment and any death benefit payable to Executive's
designated beneficiary or beneficiaries under the policy or policies
maintained by Company and (2) such additional amount as shall be required to
hold Executive's estate, heirs, and such beneficiary or beneficiaries
harmless from any additional tax liability resulting from the failure by
Company to maintain the full amount of such required coverage.

     3D.  Vacation and Sick Leave.  During each year of his employment,
Executive shall be entitled to vacation and sick leave benefits equal to the
maximum available to any Company executive, determined without regard to the
period of service that might otherwise be necessary to entitle Executive to
such vacation or sick leave under standard Company policy. 

     3E.  Supplemental Executive Retirement Plan.

          1.   Company agrees to pay Executive the deferred compensation
benefits set forth in this paragraph 3.5 as a supplemental retirement plan
(the "Plan").  The base retirement benefit under the Plan (the "Base
Benefit") shall be in the form of an annual straight life annuity in an
amount equal to the product of (a) 1.6% times (b) the number of Executive's
credited years of service (as defined below) under the Plan times (c) the
Executive's final average compensation (as defined below).  For purposes
hereof, Executive's credited years of service under the Plan shall be equal
to the number of Executive's years of benefit service with Company,
calculated as set forth in the Continental Airlines Retirement Plan beginning
at January 1, 1995; provided, however, that if Executive is paid the
Termination Payment under this Agreement, Executive shall be further credited
with three (3) additional years of service under the Plan.  For purposes
hereof, Executive's final average compensation shall be equal to the greater
of (1) $550,000 or (2) the average of the five highest annual cash
compensation amounts paid to Executive by Company during the consecutive ten
calendar years immediately preceding his termination of employment at
retirement or otherwise.  For purposes hereof, cash compensation shall
include base salary plus cash bonuses other than any cash bonus paid on or
prior to March 31, 1995.  All benefits under the Plan shall be payable in
equal monthly installments beginning on the first day of the month following
the Retirement Date.  For purposes hereof, "Retirement Date" is defined as
the later of (A) the date on which Executive attains (or in the event of his
earlier death, would have attained) age 65 or (B) the date of his retirement
from employment with Company.  If Executive is not married on the Retirement
Date, benefits under the Plan will be paid to Executive during his lifetime
in the form of the Base Benefit.  If Executive is married on the Retirement
Date, benefits under the Plan will be paid in the form of a joint and
survivor annuity that is actuarially equivalent (as defined below) to the
Base Benefit, with Executive's spouse as of the Retirement Date being
entitled during her lifetime after Executive's death to a benefit (the
"Survivor's Benefit") equal to 50% of the benefit payable to Executive during
their joint lifetimes.  In the event of Executive's death prior to the
Retirement Date, his surviving spouse, if he is married on the date of his
death, will receive beginning on the Retirement Date an amount equal to the
Survivor's Benefit calculated as if Executive had retired with a joint and
survivor annuity on the date before his date of death.  The amount of any
benefits payable to Executive and/or his spouse under the Continental
Airlines Retirement Plan shall be offset against benefits due under the Plan. 
Executive shall be vested immediately with respect to benefits due under the
Plan.  If Executive's employment with Company terminates for any reason prior
to  February 14, 1999, Company shall provide further benefits under the Plan
to ensure that Executive is treated for all purposes as if he were fully
vested under the Continental Airlines Retirement Plan.

          2.   Executive understands that he must rely upon the general
credit of Company for payment of benefits under the Plan.  Company has not
and will not in the future set aside assets for security or enter into any
other arrangement which will cause the obligation created to be other than a
general corporate obligation of Company or will cause Executive to be more
than a general creditor of Company.

          3.   For purposes of the Plan, the terms "actuarial equivalent," or
"actuarially equivalent" when used with respect to a specified benefit shall
mean the amount of benefit of a different type or payable at a different age
that can be provided at the same cost as such specified benefit, as computed
by the Actuary.  The actuarial assumptions used to determine equivalencies
between different forms of annuities under the Plan shall be the 1984 Unisex
Pensioners Mortality 50% male, 50% female calculation (with males set back
one year and females set back five years), with interest at an annual rate of
7%.  The term "Actuary" shall mean the individual actuary or actuarial firm
selected by Company to service its pension plans generally or if no such
individual or firm has been selected, an individual actuary or actuarial firm
appointed by Company and reasonably satisfactory to Executive and/or his
spouse.

          4.   Company shall indemnify Executive on a fully grossed-up,
after-tax basis for any Medicare payroll taxes (plus any income taxes on such
indemnity payments) incurred by Executive in connection with the accrual
and/or payment of benefits under the Plan.
     
     3F.  Additional Disability Benefit.  If Executive shall begin to receive
long-term disability insurance benefits pursuant to a plan maintained by
Company and if such benefits cease prior to Executive's attainment of age 65
and while Executive remains disabled, then Company shall immediately pay
Executive upon the cessation of such benefits a lump-sum, cash payment in an
amount equal to the Termination Payment.  If Executive receives payment of a
Termination Payment pursuant to the provisions of Article 4, then the
provisions of this paragraph 3.6 shall terminate.  If Executive shall be
disabled at the time his employment with Company terminates and if Executive
shall not be entitled to the payment of a Termination Payment pursuant to the
provisions of Article 4 upon such termination, then Executive's right to
receive the payment upon the occurrence of the circumstances described in
this paragraph 3.6 shall be deemed to have accrued as of the date of such
termination and shall survive the termination of this Agreement.

     3G.  Other Perquisites.  During his employment hereunder, Executive
shall be afforded the following benefits as incidences of his employment:  

          1.   Automobile - Company has leased an automobile for Executive's
     use pursuant to a lease agreement dated July 11, 1994 with Chase Auto
     Leasing Corp., and Company will continue its performance thereof and its
     current practices with respect thereto during the term of this
     Agreement.  Company agrees to take such actions as may be necessary to
     permit Executive, at his option, to acquire title to the automobile at
     the completion of the lease term by Executive paying the residual
     payment then owing under the lease.  

          2.   Business and Entertainment Expenses - Subject to Company's
     standard policies and procedures with respect to expense reimbursement
     as applied to its executive employees generally, Company shall reimburse
     Executive for, or pay on behalf of Executive, reasonable and appropriate
     expenses incurred by Executive for business related purposes, including
     dues and fees to industry and professional organizations, costs of
     entertainment and business development, and costs reasonably incurred as
     a result of Executive's spouse accompanying Executive on business
     travel.

          3.   Parking - Company shall provide at no expense to Executive a
     parking place convenient to Executive's office and a parking place at
     Intercontinental Airport in Houston, Texas.

          4.   Other Company Benefits - Executive and, to the extent
     applicable, Executive's family, dependents and beneficiaries, shall be
     allowed to participate in all benefits, plans and programs, including
     improvements or modifications of the same, which are now, or may
     hereafter be, available to similarly-situated Company employees.  Such
     benefits, plans and programs may include, without limitation, profit
     sharing plan, thrift plan, annual physical examinations, health
     insurance or health care plan, life insurance, disability insurance,
     pension plan, pass privileges on Continental Airlines, Flight Benefits
     and the like.  Company shall not, however, by reason of this paragraph
     be obligated to institute, maintain, or refrain from changing, amending
     or discontinuing, any such benefit plan or program, so long as such
     changes are similarly applicable to executive employees generally.  


ARTICLE IV.:  EFFECT OF TERMINATION ON COMPENSATION

     4A.  By Expiration.  If Executive's employment hereunder shall terminate
upon expiration of the term provided in paragraph 2.1 hereof, then all
compensation and all benefits to Executive hereunder shall terminate
contemporaneously with termination of his employment, except that the
benefits described in paragraph 3.5 shall continue to be payable, Executive
shall be provided Flight Benefits (as such term is defined in paragraph 4.7)
for the remainder of Executive's lifetime, and, if such termination shall
result from Company's delivery of the written notice described in paragraph
2.1, then Company shall (i) cause all options and shares of restricted stock
awarded to Executive, including, without limitation, any such awards under
Company's 1994 Incentive Equity Plan, as amended (the "Incentive Plan"), and
other Awards (as defined in the Incentive Plan) made to Executive under the
Incentive Plan, to vest immediately upon such termination, (ii) pay Executive
on or before the effective date of such termination a lump-sum, cash payment
in an amount equal to the Termination Payment, (iii) provide Executive with
Outplacement Services (as such term is defined in paragraph 4.7), and (iv)
provide Executive and his eligible dependents with Continuation Coverage (as
such term is defined in paragraph 4.7) for a period of three years beginning
on the effective date of such termination.  

     4B.  By Company.  If Executive's employment hereunder shall be
terminated by Company prior to expiration of the term provided in paragraph
2.1 hereof then, upon such termination, regardless of the reason therefor,
all compensation and all benefits to Executive hereunder shall terminate
contemporaneously with the termination of such employment, except that the
benefits described in paragraph 3.5 shall continue to be payable, Executive
shall be provided Flight Benefits for the remainder of Executive's lifetime,
and:

          1.   if such termination shall be for any reason other than those
     encompassed by paragraphs 2.2(i), (ii), (iii) or (iv), then Company
     shall provide Executive with the payments and benefits described in
     clauses (i) through (iv) of paragraph 4.1; and

          2.   if such termination shall be for a reason encompassed by
     paragraphs 2.2(i) or (ii), then Company shall (1) cause all options and
     shares of restricted stock awarded to Executive, including, without
     limitation, any such awards under the Incentive Plan,  and other Awards
     (as defined in the Incentive Plan) made to Executive under the Incentive
     Plan, to vest immediately upon such termination, and (2) provide
     Executive (or his designated beneficiary or beneficiaries) with the
     benefits contemplated under paragraph 3.3 or paragraph 3.6, as
     applicable.

     4C.  By Executive.  If Executive's employment hereunder shall be
terminated by Executive prior to expiration of the term provided in paragraph
2.1 hereof then, upon such termination, regardless of the reason therefor,
all compensation and benefits to Executive hereunder shall terminate
contemporaneously with the termination of such employment, except that the
benefits described in paragraph 3.5 shall continue to be payable, Executive
shall be provided Flight Benefits for the remainder of Executive's lifetime
and, if such termination shall be pursuant to paragraphs 2.3(i), (ii), (iii),
(iv), (v), or (vi) or for any reason whatsoever following the occurrence of
a Change in Control (as such term is defined in the Incentive Plan (as
amended by the First Amendment thereto) in effect as of the date of this
Agreement), then Company shall provide Executive with the payments and
benefits described in clauses (i) through (iv) of paragraph 4.1.  If
Executive's employment hereunder shall be terminated by Executive prior to
January 12, 1996 for any reason (other than those encompassed by paragraphs
2.3(i), (ii), (iii), (iv), (v), or (vi)) and if a Change in Control has not
occurred prior to such termination, then Executive shall promptly refund to
Company $750,000 (which amount represents 50% of the cash bonus paid to
Executive by Company on July 12, 1994).

     4D.  Certain Additional Payments by Company.  Notwithstanding anything
to the contrary in this Agreement, if any payment, distribution or provision
of a benefit by Company to or for the benefit of Executive, whether paid or
payable, distributed or distributable or provided or to be provided pursuant
to the terms of this Agreement or otherwise (a "Payment"), would be subject
to an excise or other special additional tax that would not have been imposed
absent such Payment (including, without limitation, any excise tax imposed by
Section 4999 of the Internal Revenue Code of 1986, as amended), or any
interest or penalties with respect to such excise or other additional tax
(such excise or other additional tax, together with any such interest or
penalties, are hereinafter collectively referred to as the "Excise Tax"),
Company shall pay to Executive an additional payment (a "Gross-up Payment")
in an amount such that after payment by Executive of all taxes (including any
interest or penalties imposed with respect to such taxes), including any
income taxes and Excise Taxes imposed on any Gross-up Payment, Executive
retains an amount of the Gross-up Payment (taking into account any similar
gross-up payments to Executive under the Incentive Plan) equal to the Excise
Tax imposed upon the Payments.  Company and Executive shall make an initial
determination as to whether a Gross-up Payment is required and the amount of
any such Gross-up Payment.  Executive shall notify Company in writing of any
claim by the Internal Revenue Service which, if successful, would require
Company to make a Gross-up Payment (or a Gross-up Payment in excess of that,
if any, initially determined by Company and Executive) within ten business
days after the receipt of such claim.  Company shall notify Executive in
writing at least ten business days prior to the due date of any response
required with respect to such claim if it plans to contest the claim.  If
Company decides to contest such claim, Executive shall cooperate fully with
Company in such action; provided, however, Company shall bear and pay
directly or indirectly all costs and expenses (including additional interest
and penalties) incurred in connection with such action and shall indemnify
and hold Executive harmless, on an after-tax basis, for any Excise Tax or
income tax, including interest and penalties with respect thereto, imposed as
a result of Company's action.  If, as a result of Company's action with
respect to a claim, Executive receives a refund of any amount paid by Company
with respect to such claim, Executive shall promptly pay such refund to
Company.  If Company fails to timely notify Executive whether it will contest
such claim or Company determines not to contest such claim, then Company
shall immediately pay to Executive the portion of such claim, if any, which
it has not previously paid to Executive.

     4E.  Payment Obligations Absolute.  Company's obligation to pay
Executive the amounts and to make the arrangements provided in this Article 4
shall be absolute and unconditional and shall not be affected by any cir-
cumstances, including, without limitation, any set-off, counterclaim,
recoupment, defense or other right which Company (including its subsidiaries
and affiliates) may have against him or anyone else.  All amounts payable by
Company shall be paid without notice or demand.  Executive shall not be
obligated to seek other employment in mitigation of the amounts payable or
arrangements made under any provision of this Article 4, and, except as
provided in paragraph 4.7 with respect to Continuation Coverage, the obtain-
ing of any such other employment (or the engagement in any endeavor as an
independent contractor, sole proprietor, partner, or joint venturer) shall in
no event effect any reduction of Company's obligations to make (or cause to
be made) the payments and arrangements required to be made under this
Article 4.

     4F.  Liquidated Damages.  In light of the difficulties in estimating the
damages upon  termination of this Agreement, Company and Executive hereby
agree that the payments and benefits, if any, to be received by Executive
pursuant to this Article 4 shall be received by Executive as liquidated
damages.  Payment of the Termination Payment pursuant to paragraphs 4.1, 4.2,
or 4.3 shall be in lieu of any severance benefit Executive may be entitled to
under any severance plan or policy maintained by Company.

     4G.  Certain Definitions and Additional Terms.  As used herein, the
following capitalized terms shall have the meanings assigned below:

          1.   "Continuation Coverage" shall mean the continued coverage of
     Executive and his eligible dependents under Company's welfare benefit
     plans available to executives of Company who have not terminated
     employment (or the provision of equivalent benefits), including, without
     limitation, medical, health, dental, life insurance, disability, vision
     care, accidental death and dismemberment, and prescription drug, at no
     greater cost to Executive than that applicable to a similarly situated
     Company executive who has not terminated employment; provided, however,
     that (1) subject to clause (2) below, the coverage under a particular
     welfare benefit plan (or the receipt of equivalent benefits) shall
     terminate upon Executive's receipt of comparable benefits from a
     subsequent employer and (2) if Executive (and/or his eligible
     dependents) would have been entitled to retiree coverage under a
     particular welfare benefit plan had he voluntarily retired on the date
     of his termination of employment, then such coverage shall be continued
     as provided in such plan upon the expiration of the period Continuation
     Coverage is to be provided pursuant to this Article 4.  Notwithstanding
     any provision in this Article 4 to the contrary, Executive's entitlement
     to any benefit continuation pursuant to Section 601 et. seq. of the
     Employee Retirement Income Security Act of 1974, as amended, shall
     commence at the end of the period of, and shall not be reduced by the
     provision of, any applicable Continuation Coverage;

          (ii) "Flight Benefits" shall mean flight benefits on each airline
     operated by the Company or any of its affiliates or any successor or
     successors thereto (the "CO system"), consisting of the highest priority
     space available flight passes for Executive and his eligible family
     members (as such eligibility is in effect on the date hereof), a UATP
     card (or, in the event of discontinuance of the UATP program, a similar
     charge card permitting the purchase of air travel through direct billing
     to the Company or any of its affiliates or any successor or successors
     thereto (a "Similar Card")) in Executive's name for charging flights (in
     any fare class) on the CO system for Executive, Executive's spouse,
     Executive's family and significant others as determined by Executive, a
     Gold Elite OnePass Card (or similar highest category successor frequent
     flyer card) in Executive's name for use on the CO system, a membership
     for Executive and Executive's spouse in the Company's President's Club
     (or any successor program maintained in the CO system) and reimbursement
     (while an officer of the Company) of up to $10,000 annually for U.S.
     federal, state or local income taxes on imputed income resulting from
     such flights (such imputed income to be calculated during the term of
     such Flight Benefits at the lowest published fare (i.e., 21 day advance
     purchase coach fare or other lowest available fare) for the applicable
     flight on the date of such flight, regardless of the actual fare class
     booked or flown, or as otherwise required by law);

          (iii)     "Outplacement Services" shall mean outplacement services,
     at Company's cost and for a period of twelve months beginning on the
     date of Executive's termination of employment, to be rendered by an
     agency selected by Executive and approved by the Board of Directors
     (with such approval not to be unreasonably withheld); and

          (iv) "Termination Payment" shall mean an amount equal to three
     times the sum of (1) Executive's annual base salary pursuant to
     paragraph 3.1 in effect immediately prior to Executive's termination of
     employment and (2) a deemed annual bonus which shall be equal to 25% of
     the amount described in clause (1) of this paragraph 4.7(iv).

Executive agrees that, after receipt of an invoice or other accounting
statement therefor, he will promptly (and in any event within 45 days after
receipt of such invoice or other accounting statement) reimburse the Company
for all charges on Executive's UATP card (or Similar Card) which are not for
flights on the CO system and which are not otherwise reimbursable to
Executive under the provisions of paragraph 3.7(ii) hereof.  Executive agrees
that the credit availability under Executive's UATP card (or Similar Card)
may be suspended if Executive does not timely reimburse the Company as
described in the foregoing sentence; provided, that, immediately upon the
Company's receipt of Executive's reimbursement in full, the credit
availability under Executive's UATP card (or Similar Card) will be restored. 
 The sole cost to Executive of flights on the CO system pursuant to use of
Executive's Flight Benefits will be the imputed income with respect to
flights on the CO system charged on Executive's UATP card (or Similar Card),
calculated throughout the term of Executive's Flight Benefits at the lowest
published fare (i.e., 21 day advance purchase coach fare or other lowest
available fare) for the applicable flight on the date of such flight,
regardless of the actual fare class booked or flown, or as otherwise required
by law, and reported to Executive as required by applicable law.   With
respect to any period with respect to which the Company is obligated to
provide up to $10,000 of reimbursement for income taxes as described in
paragraph 4.7(ii) above, Executive will provide to the Company, upon request,
a calculation or other evidence of Executive's marginal tax rate sufficient
to permit the Company to calculate accurately the amount to be so reimbursed
to Executive,  and Executive understands that the Company will not make any
gross-up payment to Executive with respect to the income attributable to such
reimbursement. Executive agrees that he will not resell or permit to be
resold any tickets issued on the CO system in connection with the Flight
Benefits. Executive shall be issued a UATP card (or Similar Card), a Gold
Elite OnePass Card (or similar highest category successor frequent flyer
card), a membership card in the Company's Presidents Club (or any successor
program maintained in the CO system) for Executive and Executive's spouse, an
appropriate flight pass identification card and an Employee Travel Card, each
valid at all times during the term of Executive's Flight Benefits.    



ARTICLE V.:  MISCELLANEOUS

     5A.  Interest and Indemnification.  If any payment to Executive provided
for in this Agreement is not made by Company when due, Company shall pay to
Executive interest on the amount payable from the date that such payment
should have been made until such payment is made, which interest shall be
calculated at 3% plus the prime or base rate of interest announced by Texas
Commerce Bank N.A. (or any successor thereto) at its principal office in
Houston, Texas (but not in excess of the highest lawful rate), and such
interest rate shall change when and as any such change in such prime or base
rate shall be announced by such bank.  If Executive shall obtain any money
judgment or otherwise prevail with respect to any litigation brought by
Executive or Company to enforce or interpret any provision contained herein,
Company, to the fullest extent permitted by applicable law, hereby
indemnifies Executive for his reasonable attorneys' fees and disbursements
incurred in such litigation and hereby agrees (i) to pay in full all such
fees and disbursements and (ii) to pay prejudgment interest on any money
judgment obtained by Executive from the earliest date that payment to him
should have been made under this Agreement until such judgment shall have
been paid in full, which interest shall be calculated at the rate set forth
in the preceding sentence.

     5B.  Notices.  For purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be deemed to
have been duly given when personally delivered or when mailed by United
States registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:

     If to Company to  :      Continental Airlines, Inc.
                              2929 Allen Parkway, Suite 2010
                              Houston, Texas  77019
                              Attention:  General Counsel

     If to Executive to :     Mr. Gordon M. Bethune


or to such other address as either party may furnish to the other in writing
in accordance herewith, except that notices of changes of address shall be
effective only upon receipt.

     5C.  Applicable Law.  This contract is entered into under, and shall be
governed for all purposes by, the laws of the State of Texas.

     5D.  No Waiver.  No failure by either party hereto at any time to give
notice of any breach by the other party of, or to require compliance with,
any condition or provision of this Agreement shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.

     5E.  Severability.  If a court of competent jurisdiction determines that
any provision of this Agreement is invalid or unenforceable, then the
invalidity or unenforceability of that provision shall not affect the
validity or enforceability of any other provision of this Agreement, and all
other provisions shall remain in full force and effect.

     5F.  Counterparts.  This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of
which together will constitute one and the same Agreement.

     5G.  Withholding of Taxes and Other Employee Deductions.  Company may
withhold from any benefits and payments made pursuant to this Agreement all
federal, state, city and other taxes as may be required pursuant to any law
or governmental regulation or ruling and all other normal employee deductions
made with respect to Company's employees generally.

     5H.  Headings.  The paragraph headings have been inserted for purposes
of convenience and shall not be used for interpretive purposes.

     5I.  Gender and Plurals.  Wherever the context so requires, the
masculine gender includes the feminine or neuter, and the singular number
includes the plural and conversely. 
 
     5J.  Successors.  This Agreement shall be binding upon and inure to the
benefit of Company and any successor of the Company, including without
limitation any  person, association, or entity which may hereafter acquire or
succeed to all or substantially all of the business or assets of Company by
any means whether direct or indirect, by purchase, merger, consolidation, or
otherwise.  Except as provided in the preceding sentence, this Agreement, and
the rights and obligations of the parties hereunder, are personal and neither
this Agreement, nor any right, benefit or obligation of either party hereto,
shall be subject to voluntary or involuntary assignment, alienation or
transfer, whether by operation of law or otherwise, without the prior written
consent of the other party.

     5K.  Term.  This Agreement has a term co-extensive with the term of
employment as set forth in paragraph 2.1.  Termination shall not affect any
right or obligation of any party which is accrued or vested prior to or upon
such termination.

     5L.  Entire Agreement. Except as provided in (i) the benefits, plans,
and programs referenced in paragraph 3.7(iv), (ii) any signed written
agreement heretofore or contemporaneously executed by Company and Executive
with respect to Awards (as defined in the Incentive Plan) under the Incentive
Plan, or (iii) any signed written agreement hereafter executed by Company and
Executive, this Agreement constitutes the entire agreement of the parties
with regard to the subject matter hereof, and contains all the covenants,
promises, representations, warranties and agreements between the parties with
respect to employment of Executive by Company.  Without limiting the scope of
the preceding sentence, all prior understandings and agreements among the
parties hereto relating to the subject matter hereof (including, without
limitation, that certain Second Amended and Restated Employment Compensation
Agreement by and between Company and Executive dated as of January 10, 1995)
are hereby null and void and of no further force and effect.  Any
modification of this Agreement shall be effective only if it is in writing
and signed by the party to be charged.

     5.13 Deemed Resignations.  Any termination of Executive's employment
shall constitute an automatic resignation of Executive as an officer of
Company and each affiliate of Company, and an automatic resignation of
Executive from the Board of Directors and from the board of directors of any
affiliate of Company.


     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the 15th day of November, 1995. 


                              CONTINENTAL AIRLINES, INC.



                              By:                                          
                                   Name:  Jeffery A. Smisek   
                                   Title:    Senior Vice President 

                              "EXECUTIVE"



                                                                           
                              GORDON M. BETHUNE



<PAGE>   117

                                                               Exhibit 10.5



                 AMENDED AND RESTATED EMPLOYMENT AGREEMENT


     THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT ("Agreement") is made by
and between CONTINENTAL AIRLINES, INC., a Delaware corporation ("Company"),
and GREGORY D. BRENNEMAN ("Executive").

                           W I T N E S S E T H:

     WHEREAS, Company and Executive are parties to that certain Employment
Agreement dated as of June 5, 1995 (the "Current Agreement"); and

     WHEREAS, the Human Resources Committee of the Board of Directors, at its
November 2, 1995 meeting, authorized the amendment of the employment
agreements of officers of the Company, selected on a performance basis by the
Chief Executive Officer of the Company, with respect to certain matters; and

     WHEREAS, Executive has been so selected by the Chief Executive Officer;
and

     WHEREAS, in connection therewith, the parties desire to amend the
Current Agreement and restate it, as so amended, in its entirety as this
Agreement;  


     NOW, THEREFORE, for and in consideration of the mutual promises,
covenants and obligations contained herein, Company and Executive agree as
follows:


ARTICLE I.:  EMPLOYMENT AND DUTIES

     1A.  Employment; Effective Date.  Company agrees to employ Executive and
Executive agrees to be employed by Company, beginning as of the Effective
Date (as hereinafter defined) and continuing for the period of time set forth
in Article 2 of this Agreement, subject to the terms and conditions of this
Agreement.  For purposes of this Agreement, the "Effective Date" shall be
June 6, 1995.

     1B.  Position.  From and after the Effective Date, Company shall employ
Executive in the position of Chief Operating Officer of Company (and
Executive shall be a member of the Office of the Chairman), or in such other
position or positions as the parties mutually may agree.  At the first
regularly scheduled meeting of Company's stockholders that occurs after the
Effective Date and for the remaining term of Executive's employment
hereunder, Company shall cause Executive to be nominated for election as a
director of Company and use its best efforts to secure such election.

     1C.  Duties and Services.  Executive agrees to serve in the position
referred to in paragraph 1.2 and, if elected, as a director of Company and to
perform diligently and to the best of his abilities the duties and services
appertaining to such office as set forth in the Bylaws of Company in effect
on the Effective Date, as well as such additional duties and services
appropriate to such office which the parties mutually may agree upon from
time to time.


ARTICLE II.:  TERM AND TERMINATION OF EMPLOYMENT

     2A.  Term.  Unless sooner terminated pursuant to other provisions
hereof, Company agrees to employ Executive for a three-year period beginning
on the Effective Date.  Said term of employment shall be extended
automatically for an additional successive three-year period as of the third
anniversary of the Effective Date and as of the last day of each successive
three-year period of time thereafter that this Agreement is in effect;
provided, however, that if, prior to the date which is six months before the
last day of any such three-year term of employment, either party shall give
written notice to the other that no such automatic extension shall occur,
then Executive's employment shall terminate on the last day of the three-year
term of employment during which such notice is given.

     2B.  Company's Right to Terminate.  Notwithstanding the provisions of
paragraph 2.1, Company, acting pursuant to an express resolution of the Board
of Directors of Company (the "Board of Directors"),  shall have the right to
terminate Executive's employment under this Agreement at any time for any of
the following reasons: 

          1.   upon Executive's death;

          2.   upon Executive's becoming incapacitated for a period of at
     least 180 days by accident, sickness or other circumstance which renders
     him mentally or physically incapable of performing the material duties
     and services required of him hereunder on a full-time basis during such
     period;

          3.   for cause, which for purposes of this Agreement shall mean
     Executive's gross negligence or willful misconduct in the performance of
     the material duties and services required of him pursuant to this
     Agreement;

          4.   for Executive's material breach of any provision of this
     Agreement which, if correctable, remains uncorrected for 30 days
     following written notice to Executive by Company of such breach; or

          5.   for any other reason whatsoever, in the sole discretion of the
     Board of Directors.

     2C.  Executive's Right to Terminate.  Notwithstanding the provisions of
paragraph 2.1, Executive shall have the right to terminate his employment
under this Agreement at any time for any of the following reasons:

          1.   the assignment to Executive by the Board of Directors or other
     officers or representatives of Company of duties materially inconsistent
     with the duties associated with the position described in paragraph 1.2
     as such duties are constituted as of the Effective Date;

          2.   a material diminution in the nature or scope of Executive's
     authority, responsibilities, or title from those applicable to him as of
     the Effective Date; 

          3.   the occurrence of material acts or conduct on the part of
     Company or its officers or representatives which prevent Executive from
     performing his duties and responsibilities pursuant to this Agreement; 

          4.   Company requiring Executive to be permanently based anywhere
     outside a major urban center in Texas;

          5.   the taking of any action by Company that would materially
     adversely affect the corporate amenities enjoyed by Executive on the
     Effective Date;  

          6.   a material breach by Company of any provision of this
     Agreement which, if correctable, remains uncorrected for 30 days
     following written notice of such breach by Executive to Company; or

          7.   for any other reason whatsoever, in the sole discretion of
     Executive. 

     2D.  Notice of Termination.  If Company or Executive desires to
terminate Executive's employment hereunder at any time prior to expiration of
the term of employment as provided in paragraph 2.1, it or he shall do so by
giving written notice to the other party that it or he has elected to
terminate Executive's employment hereunder and stating the effective date and
reason for such termination, provided that no such action shall alter or
amend any other provisions hereof or rights arising hereunder.


ARTICLE III.:  COMPENSATION AND BENEFITS

     3A.  Base Salary.  During the period of this Agreement, Executive shall
receive a minimum annual base salary equal to the greater of (i) $525,000.00
or (ii) such amount as the parties mutually may agree upon from time to time. 
Executive's annual base salary shall be paid in equal installments in
accordance with Company's standard policy regarding payment of compensation
to executives but no less frequently than semimonthly.

     3B.  Bonus Programs.  Executive shall participate in each cash bonus
program maintained by Company on and after the Effective Date (including,
without limitation, participation effective as of April 27, 1995 in any such
program maintained for the year during which such date occurs) at a level
which is not less than the maximum participation level made available to any
Company executive (determined without regard to period of service or other
criteria that might otherwise be necessary to entitle Executive to such level
of participation).

     3C.  Life Insurance.  During the period of this Agreement, Company shall
maintain one or more policies of life insurance on the life of Executive
providing an aggregate death benefit in an amount not less than the
Termination Payment (as such term is defined in paragraph 4.7).  Executive
shall have the right to designate the beneficiary or beneficiaries of the
death benefit payable pursuant to such policy or policies up to an aggregate
death benefit in an amount equal to the Termination Payment.  To the extent
that Company's purchase of, or payment of premiums with respect to, such
policy or policies results in compensation income to Executive, Company shall
pay to Executive an additional payment (the "Policy Payment") in an amount
such that after payment by Executive of all taxes imposed on Executive with
respect to the Policy Payment, Executive retains an amount of the Policy
Payment equal to the taxes imposed upon Executive with respect to such
purchase or the payment of such premiums.  If for any reason Company fails to
maintain the full amount of life insurance coverage required pursuant to the
preceding provisions of this paragraph 3.3, Company shall, in the event of
the death of Executive while employed by Company, pay Executive's designated
beneficiary or beneficiaries an amount equal to the sum of (1) the difference
between the Termination Payment and any death benefit payable to Executive's
designated beneficiary or beneficiaries under the policy or policies
maintained by Company and (2) such additional amount as shall be required to
hold Executive's estate, heirs, and such beneficiary or beneficiaries
harmless from any additional tax liability resulting from the failure by
Company to maintain the full amount of such required coverage.

     3D.  Vacation and Sick Leave.  During each year of his employment,
Executive shall be entitled to vacation and sick leave benefits equal to the
maximum available to any Company executive, determined without regard to the
period of service that might otherwise be necessary to entitle Executive to
such vacation or sick leave under standard Company policy.  

     3E.  Additional Disability Benefit.  If Executive shall begin to receive
long-term disability insurance benefits pursuant to a plan maintained by
Company and if such benefits cease prior to Executive's attainment of age 65
and while Executive remains disabled, then Company shall immediately pay
Executive upon the cessation of such benefits a lump-sum, cash payment in an
amount equal to the Termination Payment.  If Executive receives payment of a
Termination Payment pursuant to the provisions of Article 4, then the
provisions of this paragraph 3.5 shall terminate.  If Executive shall be
disabled at the time his employment with Company terminates and if Executive
shall not be entitled to the payment of a Termination Payment pursuant to the
provisions of Article 4 upon such termination, then Executive's right to
receive the payment upon the occurrence of the circumstances described in
this paragraph 3.5 shall be deemed to have accrued as of the date of such
termination and shall survive the termination of this Agreement.

     3F.  Stock Options and Restricted Stock.

          1.   Executive and Company have entered into an agreement
evidencing Company's award to Executive of an option to acquire 275,000
shares of Company's Class B Common Stock under Company's 1994 Incentive
Equity Plan, as amended (the "Incentive Plan").  

          2.   Executive and Company have entered into an agreement
evidencing Company's award to Executive of restricted stock under the
Incentive Plan with respect to 75,000 shares of Company's Class B Common
Stock.  

     
     3G.  Other Perquisites.  During his employment hereunder, Executive
shall be afforded the following benefits as incidences of his employment:  

          1.   Allowance for Automobile or Club Memberships -  Company shall
     provide Executive with an automobile on substantially the same terms and
     conditions as Company currently provides an automobile for its Chief
     Executive Officer.  

          2.   Business and Entertainment Expenses - Subject to Company's
     standard policies and procedures with respect to expense reimbursement
     as applied to its executive employees generally, Company shall reimburse
     Executive for, or pay on behalf of Executive, reasonable and appropriate
     expenses incurred by Executive for business related purposes, including
     dues and fees to industry and professional organizations, costs of
     entertainment and business development, and costs reasonably incurred as
     a result of Executive's spouse accompanying Executive on business
     travel.

          3.   Parking - Company shall provide at no expense to Executive a
     parking place convenient to Executive's office and a parking place at
     Intercontinental Airport in Houston, Texas.

          4.   Other Company Benefits - Executive and, to the extent
     applicable, Executive's family, dependents and beneficiaries, shall be
     allowed to participate in all benefits, plans and programs, including
     improvements or modifications of the same, which are now, or may
     hereafter be, available to similarly-situated Company employees.  Such
     benefits, plans and programs may include, without limitation, profit
     sharing plan, thrift plan, annual physical examinations, health
     insurance or health care plan, life insurance, disability insurance,
     pension plan, pass privileges on Continental Airlines, Flight Benefits
     and the like.  Company shall not, however, by reason of this paragraph
     be obligated to institute, maintain, or refrain from changing, amending
     or discontinuing, any such benefit plan or program, so long as such
     changes are similarly applicable to executive employees generally.  


ARTICLE IV.:  EFFECT OF TERMINATION ON COMPENSATION

     4A.  By Expiration.  If Executive's employment hereunder shall terminate
upon expiration of the term provided in paragraph 2.1 hereof, then all
compensation and all benefits to Executive hereunder shall terminate
contemporaneously with termination of his employment, except that Executive
shall be provided Flight Benefits (as such term is defined in paragraph 4.7)
for the remainder of Executive's lifetime and, if such termination shall
result from Company's delivery of the written notice described in paragraph
2.1, then Company shall (i) cause all options and shares of restricted stock
awarded to Executive, including, without limitation, any such awards under
the Incentive Plan, and other Awards (as defined in the Incentive Plan) made
to Executive under the Incentive Plan, to vest immediately upon such
termination, (ii) pay Executive on or before the effective date of such
termination a lump-sum, cash payment in an amount equal to the Termination
Payment, (iii) provide Executive with Outplacement Services (as such term is
defined in paragraph 4.7), and (iv) provide Executive and his eligible
dependents with Continuation Coverage (as such term is defined in paragraph
4.7) for a period of three years beginning on the effective date of such
termination.  

     4B.  By Company.  If Executive's employment hereunder shall be
terminated by Company prior to expiration of the term provided in paragraph
2.1 hereof then, upon such termination, regardless of the reason therefor,
all compensation and all benefits to Executive hereunder shall terminate
contemporaneously with the termination of such employment, except that
Executive shall be provided Flight Benefits for the remainder of Executive's
lifetime, and:

          1.   if such termination shall be for any reason other than those
     encompassed by paragraphs 2.2(i), (ii), (iii) or (iv), then Company
     shall provide Executive with the payments and benefits described in
     clauses (i) through (iv) of paragraph 4.1; and

          2.   if such termination shall be for a reason encompassed by para-
     graphs 2.2(i) or (ii), then Company shall (1) cause all options and
     shares of restricted stock awarded to Executive, including, without
     limitation, any such awards under the Incentive Plan,  and other Awards
     (as defined in the Incentive Plan) made to Executive under the Incentive
     Plan, to vest immediately upon such termination, and (2) provide
     Executive (or his designated beneficiary or beneficiaries) with the
     benefits contemplated under paragraph 3.3 or paragraph 3.5, as
     applicable.

     4C.  By Executive.  If Executive's employment hereunder shall be
terminated by Executive prior to expiration of the term provided in paragraph
2.1 hereof then, upon such termination, regardless of the reason therefor,
all compensation and benefits to Executive hereunder shall terminate
contemporaneously with the termination of such employment, except that
Executive shall be provided Flight Benefits for the remainder of Executive's
lifetime and, if such termination shall be pursuant to paragraphs 2.3(i),
(ii), (iii), (iv), (v), or (vi) or for any reason whatsoever following the
occurrence of a Change in Control (as such term is defined in the Incentive
Plan (as amended by the First Amendment thereto) in effect as of the date of
this Agreement), then Company shall provide Executive with the payments and
benefits described in clauses (i) through (iv) of paragraph 4.1.

     4D.  Certain Additional Payments by Company.  Notwithstanding anything
to the contrary in this Agreement, if any payment, distribution or provision
of a benefit by Company to or for the benefit of Executive, whether paid or
payable, distributed or distributable or provided or to be provided pursuant
to the terms of this Agreement or otherwise (a "Payment"), would be subject
to an excise or other special additional tax that would not have been imposed
absent such Payment (including, without limitation, any excise tax imposed by
Section 4999 of the Internal Revenue Code of 1986, as amended), or any
interest or penalties with respect to such excise or other additional tax
(such excise or other additional tax, together with any such interest or
penalties, are hereinafter collectively referred to as the "Excise Tax"),
Company shall pay to Executive an additional payment (a "Gross-up Payment")
in an amount such that after payment by Executive of all taxes (including any
interest or penalties imposed with respect to such taxes), including any
income taxes and Excise Taxes imposed on any Gross-up Payment, Executive
retains an amount of the Gross-up Payment (taking into account any similar
gross-up payments to Executive under the Incentive Plan) equal to the Excise
Tax imposed upon the Payments.  Company and Executive shall make an initial
determination as to whether a Gross-up Payment is required and the amount of
any such Gross-up Payment.  Executive shall notify Company in writing of any
claim by the Internal Revenue Service which, if successful, would require
Company to make a Gross-up Payment (or a Gross-up Payment in excess of that,
if any, initially determined by Company and Executive) within ten business
days after the receipt of such claim.  Company shall notify Executive in
writing at least ten business days prior to the due date of any response
required with respect to such claim if it plans to contest the claim.  If
Company decides to contest such claim, Executive shall cooperate fully with
Company in such action; provided, however, Company shall bear and pay
directly or indirectly all costs and expenses (including additional interest
and penalties) incurred in connection with such action and shall indemnify
and hold Executive harmless, on an after-tax basis, for any Excise Tax or
income tax, including interest and penalties with respect thereto, imposed as
a result of Company's action.  If, as a result of Company's action with
respect to a claim, Executive receives a refund of any amount paid by Company
with respect to such claim, Executive shall promptly pay such refund to
Company.  If Company fails to timely notify Executive whether it will contest
such claim or Company determines not to contest such claim, then Company
shall immediately pay to Executive the portion of such claim, if any, which
it has not previously paid to Executive.

     4E.  Payment Obligations Absolute.  Company's obligation to pay
Executive the amounts and to make the arrangements provided in this Article 4
shall be absolute and unconditional and shall not be affected by any cir-
cumstances, including, without limitation, any set-off, counterclaim,
recoupment, defense or other right which Company (including its subsidiaries
and affiliates) may have against him or anyone else.  All amounts payable by
Company shall be paid without notice or demand.  Executive shall not be
obligated to seek other employment in mitigation of the amounts payable or
arrangements made under any provision of this Article 4, and, except as
provided in paragraph 4.7 with respect to Continuation Coverage, the obtain-
ing of any such other employment (or the engagement in any endeavor as an
independent contractor, sole proprietor, partner, or joint venturer) shall in
no event effect any reduction of Company's obligations to make (or cause to
be made) the payments and arrangements required to be made under this
Article 4.

     4F.  Liquidated Damages.  In light of the difficulties in estimating the
damages upon  termination of this Agreement, Company and Executive hereby
agree that the payments and benefits, if any, to be received by Executive
pursuant to this Article 4 shall be received by Executive as liquidated
damages.  Payment of the Termination Payment pursuant to paragraphs 4.1, 4.2,
or 4.3 shall be in lieu of any severance benefit Executive may be entitled to
under any severance plan or policy maintained by Company.

     4G.  Certain Definitions and Additional Terms.  As used herein, the
following capitalized terms shall have the meanings assigned below:

          1.   "Continuation Coverage" shall mean the continued coverage of
     Executive and his eligible dependents under Company's welfare benefit
     plans available to executives of Company who have not terminated
     employment (or the provision of equivalent benefits), including, without
     limitation, medical, health, dental, life insurance, disability, vision
     care, accidental death and dismemberment, and prescription drug, at no
     greater cost to Executive than that applicable to a similarly situated
     Company executive who has not terminated employment; provided, however,
     that (1) subject to clause (2) below, the coverage under a particular
     welfare benefit plan (or the receipt of equivalent benefits) shall
     terminate upon Executive's receipt of comparable benefits from a
     subsequent employer and (2) if Executive (and/or his eligible
     dependents) would have been entitled to retiree coverage under a
     particular welfare benefit plan had he voluntarily retired on the date
     of his termination of employment, then such coverage shall be continued
     as provided in such plan upon the expiration of the period Continuation
     Coverage is to be provided pursuant to this Article 4.  Notwithstanding
     any provision in this Article 4 to the contrary, Executive's entitlement
     to any benefit continuation pursuant to Section 601 et. seq. of the
     Employee Retirement Income Security Act of 1974, as amended, shall
     commence at the end of the period of, and shall not be reduced by the
     provision of, any applicable Continuation Coverage;

          (ii) "Flight Benefits" shall mean flight benefits on each airline
     operated by the Company or any of its affiliates or any successor or
     successors thereto (the "CO system"), consisting of the highest priority
     space available flight passes for Executive and his eligible family
     members (as such eligibility is in effect on the date hereof), a UATP
     card (or, in the event of discontinuance of the UATP program, a similar
     charge card permitting the purchase of air travel through direct billing
     to the Company or any of its affiliates or any successor or successors
     thereto (a "Similar Card")) in Executive's name for charging flights (in
     any fare class) on the CO system for Executive, Executive's spouse,
     Executive's family and significant others as determined by Executive, a
     Gold Elite OnePass Card (or similar highest category successor frequent
     flyer card) in Executive's name for use on the CO system, a membership
     for Executive and Executive's spouse in the Company's President's Club
     (or any successor program maintained in the CO system) and reimbursement
     (while an officer of the Company) of up to $10,000 annually for U.S.
     federal, state or local income taxes on imputed income resulting from
     such flights (such imputed income to be calculated during the term of
     such Flight Benefits at the lowest published fare (i.e., 21 day advance
     purchase coach fare or other lowest available fare) for the applicable
     flight on the date of such flight, regardless of the actual fare class
     booked or flown, or as otherwise required by law);

          
          (iii)     "Outplacement Services" shall mean outplacement services,
     at Company's cost and for a period of twelve months beginning on the
     date of Executive's termination of employment, to be rendered by an
     agency selected by Executive and approved by the Board of Directors
     (with such approval not to be unreasonably withheld); and

          
          (iv) "Termination Payment" shall mean an amount equal to three
     times the sum of (1) Executive's annual base salary pursuant to
     paragraph 3.1 in effect immediately prior to Executive's termination of
     employment and (2) a deemed annual bonus which shall be equal to 25% of
     the amount described in clause (1) of this paragraph 4.7(iv).

Executive agrees that, after receipt of an invoice or other accounting
statement therefor, he will promptly (and in any event within 45 days after
receipt of such invoice or other accounting statement) reimburse the Company
for all charges on Executive's UATP card (or Similar Card) which are not for
flights on the CO system and which are not otherwise reimbursable to
Executive under the provisions of paragraph 3.7(ii) hereof.  Executive agrees
that the credit availability under Executive's UATP card (or Similar Card)
may be suspended if Executive does not timely reimburse the Company as
described in the foregoing sentence; provided, that, immediately upon the
Company's receipt of Executive's reimbursement in full, the credit
availability under Executive's UATP card (or Similar Card) will be restored. 
 The sole cost to Executive of flights on the CO system pursuant to use of
Executive's Flight Benefits will be the imputed income with respect to
flights on the CO system charged on Executive's UATP card (or Similar Card),
calculated throughout the term of Executive's Flight Benefits at the lowest
published fare (i.e., 21 day advance purchase coach fare or other lowest
available fare) for the applicable flight on the date of such flight,
regardless of the actual fare class booked or flown, or as otherwise required
by law, and reported to Executive as required by applicable law.   With
respect to any period with respect to which the Company is obligated to
provide up to $10,000 of reimbursement for income taxes as described in
paragraph 4.7(ii) above, Executive will provide to the Company, upon request,
a calculation or other evidence of Executive's marginal tax rate sufficient
to permit the Company to calculate accurately the amount to be so reimbursed
to Executive,  and Executive understands that the Company will not make any
gross-up payment to Executive with respect to the income attributable to such
reimbursement. Executive agrees that he will not resell or permit to be
resold any tickets issued on the CO system in connection with the Flight
Benefits. Executive shall be issued a UATP card (or Similar Card), a Gold
Elite OnePass Card (or similar highest category successor frequent flyer
card), a membership card in the Company's Presidents Club (or any successor
program maintained in the CO system) for Executive and Executive's spouse, an
appropriate flight pass identification card and an Employee Travel Card, each
valid at all times during the term of Executive's Flight Benefits.    


ARTICLE V.:  MISCELLANEOUS

     5A.  Interest and Indemnification.  If any payment to Executive provided
for in this Agreement is not made by Company when due, Company shall pay to
Executive interest on the amount payable from the date that such payment
should have been made until such payment is made, which interest shall be
calculated at 3% plus the prime or base rate of interest announced by Texas
Commerce Bank National Association (or any successor thereto) at its
principal office in Houston, Texas (but not in excess of the highest lawful
rate), and such interest rate shall change when and as any such change in
such prime or base rate shall be announced by such bank.  If Executive shall
obtain any money judgment or otherwise prevail with respect to any litigation
brought by Executive or Company to enforce or interpret any provision
contained herein, Company, to the fullest extent permitted by applicable law,
hereby indemnifies Executive for his reasonable attorneys' fees and
disbursements incurred in such litigation and hereby agrees (i) to pay in
full all such fees and disbursements and (ii) to pay prejudgment interest on
any money judgment obtained by Executive from the earliest date that payment
to him should have been made under this Agreement until such judgment shall
have been paid in full, which interest shall be calculated at the rate set
forth in the preceding sentence.

     5B.  Notices.  For purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be deemed to
have been duly given when personally delivered or when mailed by United
States registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:

     If to Company to         :    Continental Airlines, Inc.
                              2929 Allen Parkway, Suite 2010
                              Houston, Texas  77019
                              Attention:  General Counsel

     If to Executive to :               Mr. Gregory D. Brenneman


or to such other address as either party may furnish to the other in writing
in accordance herewith, except that notices of changes of address shall be
effective only upon receipt.

     5C.  Applicable Law.  This contract is entered into under, and shall be
governed for all purposes by, the laws of the State of Texas.

     5D.  No Waiver.  No failure by either party hereto at any time to give
notice of any breach by the other party of, or to require compliance with,
any condition or provision of this Agreement shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.

     5E.  Severability.  If a court of competent jurisdiction determines that
any provision of this Agreement is invalid or unenforceable, then the
invalidity or unenforceability of that provision shall not affect the
validity or enforceability of any other provision of this Agreement, and all
other provisions shall remain in full force and effect.

     5F.  Counterparts.  This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of
which together will constitute one and the same Agreement.

     5G.  Withholding of Taxes and Other Employee Deductions.  Company may
withhold from any benefits and payments made pursuant to this Agreement all
federal, state, city and other taxes as may be required pursuant to any law
or governmental regulation or ruling and all other normal employee deductions
made with respect to Company's employees generally.

     5H.  Headings.  The paragraph headings have been inserted for purposes
of convenience and shall not be used for interpretive purposes.

     5I.  Gender and Plurals.  Wherever the context so requires, the
masculine gender includes the feminine or neuter, and the singular number
includes the plural and conversely.
  
     5J.  Successors.  This Agreement shall be binding upon and inure to the
benefit of Company and any successor of the Company, including without
limitation any  person, association, or entity which may hereafter acquire or
succeed to all or substantially all of the business or assets of Company by
any means whether direct or indirect, by purchase, merger, consolidation, or
otherwise. Except as provided in the preceding sentence, this Agreement, and
the rights and obligations of the parties hereunder, are personal and neither
this Agreement, nor any right, benefit or obligation of either party hereto,
shall be subject to voluntary or involuntary assignment, alienation or
transfer, whether by operation of law or otherwise, without the prior written
consent of the other party.

     5K.  Term.  This Agreement has a term co-extensive with the term of
employment as set forth in paragraph 2.1.  Termination shall not affect any
right or obligation of any party which is accrued or vested prior to or upon
such termination.

     5L.  Entire Agreement. Except as provided in (i) the benefits, plans,
and programs referenced in paragraph 3.7(iv), (ii) any signed written
agreement heretofore or contemporaneously executed by Company and Executive
with respect to Awards (as defined in the Incentive Plan) under the Incentive
Plan, or (iii) any signed written agreement hereafter executed by Company and
Executive, this Agreement constitutes the entire agreement of the parties
with regard to the subject matter hereof, and contains all the covenants,
promises, representations, warranties and agreements between the parties with
respect to employment of Executive by Company.  Without limiting the scope of
the preceding sentence, all prior understandings and agreements among the
parties hereto relating to the subject matter hereof (including, without
limitation, that certain Memorandum of Understanding by and among Company,
Executive, and Turnworks, Inc. dated as of April 27, 1995, but excluding the
Termination Agreement between Company and Turnworks, Inc. referred to
therein) are hereby null and void and of no further force and effect.  Any
modification of this Agreement shall be effective only if it is in writing
and signed by the party to be charged.

     5.13 Deemed Resignations.  Any termination of Executive's employment
shall constitute an automatic resignation of Executive as an officer of
Company and each affiliate of Company, and an automatic resignation of
Executive from the Board of Directors and from the board of directors of any
affiliate of Company.




     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the  15th day of November, 1995.


                              CONTINENTAL AIRLINES, INC.


                              By:                                          
                                   Name:   Jeffery A. Smisek
                                   Title:    Senior Vice President

                              "EXECUTIVE"


                                                                           
                              GREGORY D. BRENNEMAN



<PAGE>   118

                                                               Exhibit 10.6


                 AMENDED AND RESTATED EMPLOYMENT AGREEMENT


     THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT ("Agreement") is made by
and between CONTINENTAL AIRLINES, INC., a Delaware corporation ("Company"),
and Lawrence W. Kellner ("Executive").

                           W I T N E S S E T H:

     WHEREAS, Company and Executive are parties to that certain Employment
Agreement dated as of June 5, 1995 (the "Current Agreement"); and

     WHEREAS, the Human Resources Committee of the Board of Directors, at its
November 2, 1995 meeting, authorized the amendment of the employment
agreements of officers of the Company, selected on a performance basis by the
Chief Executive Officer of the Company, with respect to certain matters; and

     WHEREAS, Executive has been so selected by the Chief Executive Officer;
and

     WHEREAS, in connection therewith, the parties desire to amend the
Current Agreement and restate it, as so amended, in its entirety as this
Agreement;  

     NOW, THEREFORE, for and in consideration of the mutual promises,
covenants and obligations contained herein, Company and Executive agree as
follows:


ARTICLE I.:  EMPLOYMENT AND DUTIES

     1A.  Employment; Effective Date.  Company agrees to employ Executive and
Executive agrees to be employed by Company, beginning as of the Effective
Date (as hereinafter defined) and continuing for the period of time set forth
in Article 2 of this Agreement, subject to the terms and conditions of this
Agreement.  For purposes of this Agreement, the "Effective Date" shall be
June 6, 1995.

     1B.  Position.  From and after the Effective Date, Company shall employ
Executive in the position of Senior Vice President and Chief Financial
Officer of Company, or in such other position or positions as the parties
mutually may agree.

     1C.  Duties and Services.  Executive agrees to serve in the position
referred to in paragraph 1.2 and to perform diligently and to the best of his
abilities the duties and services appertaining to such office as set forth in
the Bylaws of Company in effect on the Effective Date, as well as such
additional duties and services appropriate to such office which the parties
mutually may agree upon from time to time.


ARTICLE II.:  TERM AND TERMINATION OF EMPLOYMENT

     2A.  Term.  Unless sooner terminated pursuant to other provisions
hereof, Company agrees to employ Executive for a three-year period beginning
on the Effective Date.  

     2B.  Company's Right to Terminate.  Notwithstanding the provisions of
paragraph 2.1, Company, acting pursuant to an express resolution of the Board
of Directors of Company (the "Board of Directors") or the Human Resources
Committee of the Board of Directors (the "HR Committee"), shall have the
right to terminate Executive's employment under this Agreement at any time
for any of the following reasons: 

          1.   upon Executive's death;

          2.   upon Executive's becoming incapacitated for a period of at
     least 180 days by accident, sickness or other circumstance which renders
     him mentally or physically incapable of performing the material duties
     and services required of him hereunder on a full-time basis during such
     period;

          3.   for cause, which for purposes of this Agreement shall mean
     Executive's gross negligence or willful misconduct in the performance
     of, or Executive's abuse of alcohol or drugs rendering him unable to
     perform,  the material duties and services required of him pursuant to
     this Agreement;

          4.   for Executive's material breach of any provision of this
     Agreement which, if correctable, remains uncorrected for 30 days
     following written notice to Executive by Company of such breach; or

          5.   for any other reason whatsoever, in the sole discretion of the
     Board of Directors or the Human Resources Committee.

     2C.  Executive's Right to Terminate.  Notwithstanding the provisions of
paragraph 2.1, Executive shall have the right to terminate his employment
under this Agreement at any time for any of the following reasons:

          1.   the assignment to Executive by the Board of Directors or HR
     Committee or other officers or representatives of Company of duties
     materially inconsistent with the duties associated with the position
     described in paragraph 1.2 as such duties are constituted as of the
     Effective Date;

          2.   a material diminution in the nature or scope of Executive's
     authority, responsibilities, or title from those applicable to him as of
     the Effective Date; 

          3.   the occurrence of material acts or conduct on the part of
     Company or its officers or representatives which prevent Executive from
     performing his duties and responsibilities pursuant to this Agreement; 

          4.   Company requiring Executive to be permanently based anywhere
     outside a major urban center in Texas;

          5.   the taking of any action by Company that would materially
     adversely affect the corporate amenities enjoyed by Executive on the
     Effective Date;  

          6.   a material breach by Company of any provision of this
     Agreement which, if correctable, remains uncorrected for 30 days
     following written notice of such breach by Executive to Company; or

          7.   for any other reason whatsoever, in the sole discretion of
     Executive. 

     2D.  Notice of Termination.  If Company or Executive desires to
terminate Executive's employment hereunder at any time prior to expiration of
the term of employment as provided in paragraph 2.1, it or he shall do so by
giving written notice to the other party that it or he has elected to
terminate Executive's employment hereunder and stating the effective date and
reason for such termination, provided that no such action shall alter or
amend any other provisions hereof or rights arising hereunder.


ARTICLE III.:  COMPENSATION AND BENEFITS

     3A.  Base Salary.  During the period of this Agreement, Executive shall
receive a minimum annual base salary equal to the greater of (i) $350,000.00
or (ii) such amount as the parties mutually may agree upon from time to time. 
Executive's annual base salary shall be paid in equal installments in
accordance with Company's standard policy regarding payment of compensation
to executives but no less frequently than semimonthly.

     3B.  Bonus Programs.  Executive shall participate in each cash bonus
program maintained by Company on and after the Effective Date (including,
without limitation, participation effective as of April 1, 1995 in any such
program maintained for the year during which such date occurs) at a level
which is not less than the maximum participation level made available to any
other executive of Company at substantially the same title or level of
Executive (determined without regard to period of service or other criteria
that might otherwise be necessary to entitle Executive to such level of
participation).

     3C.  Vacation and Sick Leave.  During each year of his employment,
Executive shall be entitled to vacation and sick leave benefits equal to the
maximum available to any Company executive, determined without regard to the
period of service that might otherwise be necessary to entitle Executive to
such vacation or sick leave under standard Company policy.  

     3D.  Other Perquisites.  During his employment hereunder, Executive
shall be afforded the following benefits as incidences of his employment:  

          1.   Business and Entertainment Expenses - Subject to Company's
     standard policies and procedures with respect to expense reimbursement
     as applied to its executive employees generally, Company shall reimburse
     Executive for, or pay on behalf of Executive, reasonable and appropriate
     expenses incurred by Executive for business related purposes, including
     dues and fees to industry and professional organizations, costs of
     entertainment and business development, and costs reasonably incurred as
     a result of Executive's spouse accompanying Executive on business
     travel.

          2.   Parking - Company shall provide at no expense to Executive a
     parking place convenient to Executive's office and a parking place at
     Intercontinental Airport in Houston, Texas.

          3.   Other Company Benefits - Executive and, to the extent
     applicable, Executive's family, dependents and beneficiaries, shall be
     allowed to participate in all benefits, plans and programs, including
     improvements or modifications of the same, which are now, or may
     hereafter be, available to similarly-situated Company employees.  Such
     benefits, plans and programs may include, without limitation, profit
     sharing plan, thrift plan, annual physical examinations, health
     insurance or health care plan, life insurance, disability insurance,
     pension plan, pass privileges on Continental Airlines, Flight Benefits
     and the like.  Company shall not, however, by reason of this paragraph
     be obligated to institute, maintain, or refrain from changing, amending
     or discontinuing, any such benefit plan or program, so long as such
     changes are similarly applicable to executive employees generally.  


ARTICLE IV.:  EFFECT OF TERMINATION ON COMPENSATION

     4A.  By Expiration.  If Executive's employment hereunder shall terminate
upon expiration of the term provided in paragraph 2.1 hereof, then all
compensation and all benefits to Executive hereunder shall terminate
contemporaneously with termination of his employment; provided, however, that
Executive shall be provided with Flight Benefits for the remainder of
Executive's lifetime.

     4B.  By Company.  If Executive's employment hereunder shall be
terminated by Company prior to expiration of the term provided in
paragraph 2.1 hereof then, upon such termination, regardless of the reason
therefor, all compensation and all benefits to Executive hereunder shall
terminate contemporaneously with the termination of such employment, except
if such termination shall be for any reason other than those encompassed by
paragraphs 2.2(i), (ii), (iii) or (iv), then Company shall (a) pay Executive
on or before the effective date of such termination a lump-sum, cash payment
in an amount equal to the Termination Payment (as such term is defined in
paragraph 4.7), (b) provide Executive with Flight Benefits (as such term is
defined in paragraph 4.7) for the remainder of Executive's lifetime, (c)
provide Executive with Outplacement Services (as such term is defined in
paragraph 4.7), and (d) provide Executive and his eligible dependents with
Continuation Coverage (as such term is defined in paragraph 4.7) for the
Severance Period.  

     4C.  By Executive.  If Executive's employment hereunder shall be
terminated by Executive prior to expiration of the term provided in
paragraph 2.1 hereof then, upon such termination, regardless of the reason
therefor, all compensation and benefits to Executive hereunder shall
terminate contemporaneously with the termination of such employment, except
if such termination shall be pursuant to paragraphs 2.3(i), (ii), (iii),
(iv), (v), or (vi), then Company shall provide Executive with the payments
and benefits described in clauses (a) through (d) of paragraph 4.2.

     4D.  Certain Additional Payments by Company.  Notwithstanding anything
to the contrary in this Agreement, if any payment, distribution or provision
of a benefit by Company to or for the benefit of Executive, whether paid or
payable, distributed or distributable or provided or to be provided pursuant
to the terms of this Agreement or otherwise (a "Payment"), would be subject
to an excise or other special additional tax that would not have been imposed
absent such Payment (including, without limitation, any excise tax imposed by
Section 4999 of the Internal Revenue Code of 1986, as amended), or any
interest or penalties with respect to such excise or other additional tax
(such excise or other additional tax, together with any such interest or
penalties, are hereinafter collectively referred to as the "Excise Tax"),
Company shall pay to Executive an additional payment (a "Gross-up Payment")
in an amount such that after payment by Executive of all taxes (including any
interest or penalties imposed with respect to such taxes), including any
income taxes and Excise Taxes imposed on any Gross-up Payment, Executive
retains an amount of the Gross-up Payment (taking into account any similar
gross-up payments to Executive under the Incentive Plan (as such term is
defined in paragraph 4.7)) equal to the Excise Tax imposed upon the Payments. 
Company and Executive shall make an initial determination as to whether a
Gross-up Payment is required and the amount of any such Gross-up Payment. 
Executive shall notify Company in writing of any claim by the Internal
Revenue Service which, if successful, would require Company to make a Gross-
up Payment (or a Gross-up Payment in excess of that, if any, initially
determined by Company and Executive) within ten business days after the
receipt of such claim.  Company shall notify Executive in writing at least
ten business days prior to the due date of any response required with respect
to such claim if it plans to contest the claim.  If Company decides to
contest such claim, Executive shall cooperate fully with Company in such
action; provided, however, Company shall bear and pay directly or indirectly
all costs and expenses (including additional interest and penalties) incurred
in connection with such action and shall indemnify and hold Executive
harmless, on an after-tax basis, for any Excise Tax or income tax, including
interest and penalties with respect thereto, imposed as a result of Company's
action.  If, as a result of Company's action with respect to a claim,
Executive receives a refund of any amount paid by Company with respect to
such claim, Executive shall promptly pay such refund to Company.  If Company
fails to timely notify Executive whether it will contest such claim or
Company determines not to contest such claim, then Company shall immediately
pay to Executive the portion of such claim, if any, which it has not
previously paid to Executive.

     4E.  Payment Obligations Absolute.  Company's obligation to pay
Executive the amounts and to make the arrangements provided in this Article 4
shall be absolute and unconditional and shall not be affected by any cir-
cumstances, including, without limitation, any set-off, counterclaim,
recoupment, defense or other right which Company (including its subsidiaries
and affiliates) may have against him or anyone else.  All amounts payable by
Company shall be paid without notice or demand.  Executive shall not be
obligated to seek other employment in mitigation of the amounts payable or
arrangements made under any provision of this Article 4, and, except as
provided in paragraph 4.7 with respect to Continuation Coverage, the obtain-
ing of any such other employment (or the engagement in any endeavor as an
independent contractor, sole proprietor, partner, or joint venturer) shall in
no event effect any reduction of Company's obligations to make (or cause to
be made) the payments and arrangements required to be made under this
Article 4.

     4F.  Liquidated Damages.  In light of the difficulties in estimating the
damages upon termination of this Agreement, Company and Executive hereby
agree that the payments and benefits, if any, to be received by Executive
pursuant to this Article 4 shall be received by Executive as liquidated
damages.  Payment of the Termination Payment pursuant to paragraphs  4.2 or
4.3 shall be in lieu of any severance benefit Executive may be entitled to
under any severance plan or policy maintained by Company.

     4G.  Certain Definitions and Additional Terms.  As used herein, the
following capitalized terms shall have the meanings assigned below:

          1.   "Annualized Compensation" shall mean an amount equal to the
     sum of (1) Executive's annual base salary pursuant to paragraph 3.1 in
     effect immediately prior to Executive's termination of employment
     hereunder and (2) a deemed annual bonus which shall be equal to 25% of
     the amount described in clause (1) of this paragraph 4.7(i);

          2.   "Change in Control" shall have the meaning assigned to such
     term in the Incentive Plan (as amended by the First Amendment thereto)
     in effect as of the date of execution of this Agreement;

          3.   "Continuation Coverage" shall mean the continued coverage of
     Executive and his eligible dependents under Company's welfare benefit
     plans available to executives of Company who have not terminated
     employment (or the provision of equivalent benefits), including, without
     limitation, medical, health, dental, life insurance, disability, vision
     care, accidental death and dismemberment, and prescription drug, at no
     greater cost to Executive than that applicable to a similarly situated
     Company executive who has not terminated employment; provided, however,
     that (1) subject to clause (2) below, the coverage under a particular
     welfare benefit plan (or the receipt of equivalent benefits) shall
     terminate upon Executive's receipt of comparable benefits from a
     subsequent employer and (2) if Executive (and/or his eligible
     dependents) would have been entitled to retiree coverage under a
     particular welfare benefit plan had he voluntarily retired on the date
     of his termination of employment, then such coverage shall be continued
     as provided in such plan upon the expiration of the period Continuation
     Coverage is to be provided pursuant to this Article 4.  Notwithstanding
     any provision in this Article 4 to the contrary, Executive's entitlement
     to any benefit continuation pursuant to Section 601 et. seq. of the
     Employee Retirement Income Security Act of 1974, as amended, shall
     commence at the end of the period of, and shall not be reduced by the
     provision of, any applicable Continuation Coverage;

          (iv) "Flight Benefits" shall mean flight benefits on each airline
     operated by the Company or any of its affiliates or any successor or
     successors thereto (the "CO system"), consisting of the highest priority
     space available flight passes for Executive and his eligible family
     members (as such eligibility is in effect on the date hereof), a UATP
     card (or, in the event of discontinuance of the UATP program, a similar
     charge card permitting the purchase of air travel through direct billing
     to the Company or any of its affiliates or any successor or successors
     thereto (a "Similar Card")) in Executive's name for charging flights (in
     any fare class) on the CO system for Executive, Executive's spouse,
     Executive's family and significant others as determined by Executive, a
     Gold Elite OnePass Card (or similar highest category successor frequent
     flyer card) in Executive's name for use on the CO system, a membership
     for Executive and Executive's spouse in the Company's President's Club
     (or any successor program maintained in the CO system) and reimbursement
     (while an officer of the Company) of up to $10,000 annually for U.S.
     federal, state or local income taxes on imputed income resulting from
     such flights (such imputed income to be calculated during the term of
     such Flight Benefits at the lowest published fare (i.e., 21 day advance
     purchase coach fare or other lowest available fare) for the applicable
     flight on the date of such flight, regardless of the actual fare class
     booked or flown, or as otherwise required by law);  

          (v)  "Incentive Plan" shall mean Company's 1994 Incentive Equity
     Plan, as amended;

          (vi) "Outplacement Services" shall mean outplacement services, at
     Company's cost and for a period of twelve months beginning on the date
     of Executive's termination of employment, to be rendered by an agency
     selected by Executive and approved by the Board of Directors or HR
     Committee (with such approval not to be unreasonably withheld);

          (vii)     "Severance Period" shall mean:

               a.   in the case of a termination of Executive's employment
     with Company that occurs within two years after the date upon which a
     Change in Control occurs, a period commencing on the date of such
     termination and continuing for thirty-six months; or

               b.   in the case of a termination of Executive's employment
     with Company that occurs prior to a Change in Control or after the date
     which is two years after a Change in Control occurs, a period commencing
     on the date of such termination and continuing for twenty-four months;
     and

          
          (viii)    "Termination Payment" shall mean an amount equal to
     Executive's Annualized Compensation multiplied by a fraction, the
     numerator of which is the number of months in the Severance Period and
     the denominator of which is twelve.

Executive agrees that, after receipt of an invoice or other accounting
statement therefor, he will promptly (and in any event within 45 days after
receipt of such invoice or other accounting statement) reimburse the Company
for all charges on Executive's UATP card (or Similar Card) which are not for
flights on the CO system and which are not otherwise reimbursable to
Executive under the provisions of paragraph 3.4(i) hereof.  Executive agrees
that the credit availability under Executive's UATP card (or Similar Card)
may be suspended if Executive does not timely reimburse the Company as
described in the foregoing sentence; provided, that, immediately upon the
Company's receipt of Executive's reimbursement in full, the credit
availability under Executive's UATP card (or Similar Card) will be restored. 
 The sole cost to Executive of flights on the CO system pursuant to use of
Executive's Flight Benefits will be the imputed income with respect to
flights on the CO system charged on Executive's UATP card (or Similar Card),
calculated throughout the term of Executive's Flight Benefits at the lowest
published fare (i.e., 21 day advance purchase coach fare or other lowest
available fare) for the applicable flight on the date of such flight,
regardless of the actual fare class booked or flown, or as otherwise required
by law, and reported to Executive as required by applicable law.   With
respect to any period with respect to which the Company is obligated to
provide up to $10,000 of reimbursement for income taxes as described in
paragraph 4.7 (iv) above, Executive will provide to the Company, upon
request, a calculation or other evidence of Executive's marginal tax rate
sufficient to permit the Company to calculate accurately the amount to be so
reimbursed to Executive,  and Executive understands that the Company will not
make any gross-up payment to Executive with respect to the income
attributable to such reimbursement. Executive agrees that he will not resell
or permit to be resold any tickets issued on the CO system in connection with
the Flight Benefits. Executive shall be issued a UATP card (or Similar Card),
a Gold Elite OnePass Card (or similar highest category successor frequent
flyer card), a membership card in the Company's Presidents Club (or any
successor program maintained in the CO system) for Executive and Executive's
spouse, an appropriate flight pass identification card and an Employee Travel
Card, each valid at all times during the term of Executive's Flight Benefits.


ARTICLE V.:  MISCELLANEOUS

     5A.  Interest and Indemnification.  If any payment to Executive provided
for in this Agreement is not made by Company when due, Company shall pay to
Executive interest on the amount payable from the date that such payment
should have been made until such payment is made, which interest shall be
calculated at 3% plus the prime or base rate of interest announced by Texas
Commerce Bank National Association (or any successor thereto) at its
principal office in Houston, Texas (but not in excess of the highest lawful
rate), and such interest rate shall change when and as any such change in
such prime or base rate shall be announced by such bank.  If Executive shall
obtain any money judgment or otherwise prevail with respect to any litigation
brought by Executive or Company to enforce or interpret any provision
contained herein, Company, to the fullest extent permitted by applicable law,
hereby indemnifies Executive for his reasonable attorneys' fees and
disbursements incurred in such litigation and hereby agrees (i) to pay in
full all such fees and disbursements and (ii) to pay prejudgment interest on
any money judgment obtained by Executive from the earliest date that payment
to him should have been made under this Agreement until such judgment shall
have been paid in full, which interest shall be calculated at the rate set
forth in the preceding sentence.

     5B.  Notices.  For purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be deemed to
have been duly given when personally delivered or when mailed by United
States registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:

     If to Company to  :      Continental Airlines, Inc.
                              2929 Allen Parkway, Suite 2010
                              Houston, Texas  77019
                              Attention:  General Counsel

     If to Executive to :     Lawrence W. Kellner


or to such other address as either party may furnish to the other in writing
in accordance herewith, except that notices of changes of address shall be
effective only upon receipt.

     5C.  Applicable Law.  This contract is entered into under, and shall be
governed for all purposes by, the laws of the State of Texas.

     5D.  No Waiver.  No failure by either party hereto at any time to give
notice of any breach by the other party of, or to require compliance with,
any condition or provision of this Agreement shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.

     5E.  Severability.  If a court of competent jurisdiction determines that
any provision of this Agreement is invalid or unenforceable, then the
invalidity or unenforceability of that provision shall not affect the
validity or enforceability of any other provision of this Agreement, and all
other provisions shall remain in full force and effect.

     5F.  Counterparts.  This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of
which together will constitute one and the same Agreement.

     5G.  Withholding of Taxes and Other Employee Deductions.  Company may
withhold from any benefits and payments made pursuant to this Agreement all
federal, state, city and other taxes as may be required pursuant to any law
or governmental regulation or ruling and all other normal employee deductions
made with respect to Company's employees generally.

     5H.  Headings.  The paragraph headings have been inserted for purposes
of convenience and shall not be used for interpretive purposes.

     5I.  Gender and Plurals.  Wherever the context so requires, the
masculine gender includes the feminine or neuter, and the singular number
includes the plural and conversely. 
 
     5J.  Successors.  This Agreement shall be binding upon and inure to the
benefit of Company and any successor of the Company, including without
limitation any  person, association, or entity which may hereafter acquire or
succeed to all or substantially all of the business or assets of Company by
any means whether direct or indirect, by purchase, merger, consolidation, or
otherwise. Except as provided in the preceding sentence, this Agreement, and
the rights and obligations of the parties hereunder, are personal and neither
this Agreement, nor any right, benefit or obligation of either party hereto,
shall be subject to voluntary or involuntary assignment, alienation or
transfer, whether by operation of law or otherwise, without the prior written
consent of the other party.

     5K.  Term.  This Agreement has a term co-extensive with the term of
employment as set forth in paragraph 2.1.  Termination shall not affect any
right or obligation of any party which is accrued or vested prior to or upon
such termination.

     5L.  Entire Agreement. Except as provided in (i) the benefits, plans,
and programs referenced in paragraph 3.4(iii), (ii) any signed written
agreement heretofore or contemporaneously executed by Company and Executive
with respect to Awards (as defined in the Incentive Plan) under the Incentive
Plan, or (iii) any signed written agreement hereafter executed by Company and
Executive, this Agreement constitutes the entire agreement of the parties
with regard to the subject matter hereof, and contains all the covenants,
promises, representations, warranties and agreements between the parties with
respect to employment of Executive by Company.  Without limiting the scope of
the preceding sentence, all prior understandings and agreements among the
parties hereto relating to the subject matter hereof are hereby null and void
and of no further force and effect.  Any modification of this Agreement shall
be effective only if it is in writing and signed by the party to be charged.

     5.13 Deemed Resignations.  Any termination of Executive's employment
shall constitute an automatic resignation of Executive as an officer of
Company and each affiliate of Company, and an automatic resignation of
Executive from the Board of Directors (if applicable) and from the board of
directors of any affiliate of Company.


     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the 15th day of November, 1995.

                              CONTINENTAL AIRLINES, INC.


                              By:                                          
                                   Name:   Jeffery A. Smisek
                                   Title:  Senior Vice President
                              
                              "EXECUTIVE"


                                   ______________________________________
                                        Lawrence W. Kellner




<PAGE>   119

                                                               Exhibit 10.7


                 AMENDED AND RESTATED EMPLOYMENT AGREEMENT


     THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT ("Agreement") is made by
and between CONTINENTAL AIRLINES, INC., a Delaware corporation ("Company"),
and Barry P. Simon ("Executive").

                           W I T N E S S E T H:

     WHEREAS, Company and Executive are parties to that certain Employment
Agreement dated as of June 5, 1995 (the "Current Agreement"); and

     WHEREAS, the Human Resources Committee of the Board of Directors, at its
November 2, 1995 meeting, authorized the amendment of the employment
agreements of officers of the Company, selected on a performance basis by the
Chief Executive Officer of the Company, with respect to certain matters; and

     WHEREAS, Executive has been so selected by the Chief Executive Officer;
and

     WHEREAS, in connection therewith, the parties desire to amend the
Current Agreement and restate it, as so amended, in its entirety as this
Agreement;  

     NOW, THEREFORE, for and in consideration of the mutual promises,
covenants and obligations contained herein, Company and Executive agree as
follows:


ARTICLE I.:  EMPLOYMENT AND DUTIES

     1A.  Employment; Effective Date.  Company agrees to employ Executive and
Executive agrees to be employed by Company, beginning as of the Effective
Date (as hereinafter defined) and continuing for the period of time set forth
in Article 2 of this Agreement, subject to the terms and conditions of this
Agreement.  For purposes of this Agreement, the "Effective Date" shall be
June 14, 1995.

     1B.  Position.  From and after the Effective Date, Company shall employ
Executive in the position of Senior Vice President - Europe of Company, or in
such other position or positions as the parties mutually may agree.

     1C.  Duties and Services.  Executive agrees to serve in the position
referred to in paragraph 1.2 and to perform diligently and to the best of his
abilities the duties and services appertaining to such office as set forth in
the Bylaws of Company in effect on the Effective Date, as well as such
additional duties and services appropriate to such office which the parties
mutually may agree upon from time to time.


ARTICLE II.:  TERM AND TERMINATION OF EMPLOYMENT

     2A.  Term.  Unless sooner terminated pursuant to other provisions
hereof, Company agrees to employ Executive for a three-year period beginning
on the Effective Date.  

     2B.  Company's Right to Terminate.  Notwithstanding the provisions of
paragraph 2.1, Company, acting pursuant to an express resolution of the Board
of Directors of Company (the "Board of Directors") or the Human Resources
Committee of the Board of Directors (the "HR Committee"), shall have the
right to terminate Executive's employment under this Agreement at any time
for any of the following reasons: 

          1.   upon Executive's death;

          2.   upon Executive's becoming incapacitated for a period of at
     least 180 days by accident, sickness or other circumstance which renders
     him mentally or physically incapable of performing the material duties
     and services required of him hereunder on a full-time basis during such
     period;

          3.   for cause, which for purposes of this Agreement shall mean
     Executive's gross negligence or willful misconduct in the performance
     of, or Executive's abuse of alcohol or drugs rendering him unable to
     perform,  the material duties and services required of him pursuant to
     this Agreement;

          4.   for Executive's material breach of any provision of this
     Agreement which, if correctable, remains uncorrected for 30 days
     following written notice to Executive by Company of such breach; or

          5.   for any other reason whatsoever, in the sole discretion of the
     Board of Directors or the Human Resources Committee.

     2C.  Executive's Right to Terminate.  Notwithstanding the provisions of
paragraph 2.1, Executive shall have the right to terminate his employment
under this Agreement at any time for any of the following reasons:

          1.   the assignment to Executive by the Board of Directors or HR
     Committee or other officers or representatives of Company of duties
     materially inconsistent with the duties associated with the position
     described in paragraph 1.2 as such duties are constituted as of the
     Effective Date;

          2.   a material diminution in the nature or scope of Executive's
     authority, responsibilities, or title from those applicable to him as of
     the Effective Date; 

          3.   the occurrence of material acts or conduct on the part of
     Company or its officers or representatives which prevent Executive from
     performing his duties and responsibilities pursuant to this Agreement; 

          4.   Company requiring Executive to be permanently based anywhere
     outside a major urban center in Texas;

          5.   the taking of any action by Company that would materially
     adversely affect the corporate amenities enjoyed by Executive on the
     Effective Date;  

          6.   a material breach by Company of any provision of this
     Agreement which, if correctable, remains uncorrected for 30 days
     following written notice of such breach by Executive to Company; or

          7.   for any other reason whatsoever, in the sole discretion of
     Executive. 

     2D.  Notice of Termination.  If Company or Executive desires to
terminate Executive's employment hereunder at any time prior to expiration of
the term of employment as provided in paragraph 2.1, it or he shall do so by
giving written notice to the other party that it or he has elected to
terminate Executive's employment hereunder and stating the effective date and
reason for such termination, provided that no such action shall alter or
amend any other provisions hereof or rights arising hereunder.


ARTICLE III.:  COMPENSATION AND BENEFITS

     3A.  Base Salary.  During the period of this Agreement, Executive shall
receive a minimum annual base salary equal to the greater of (i) $300,000.00
or (ii) such amount as the parties mutually may agree upon from time to time. 
Executive's annual base salary shall be paid in equal installments in
accordance with Company's standard policy regarding payment of compensation
to executives but no less frequently than semimonthly.

     3B.  Bonus Programs.  Executive shall participate in each cash bonus
program maintained by Company on and after the Effective Date (including,
without limitation, participation effective as of January 1, 1995 in any such
program maintained for the year during which such date occurs) at a level
which is not less than the maximum participation level made available to any
other executive of Company at substantially the same title or level of
Executive (determined without regard to period of service or other criteria
that might otherwise be necessary to entitle Executive to such level of
participation).

     3C.  Vacation and Sick Leave.  During each year of his employment,
Executive shall be entitled to vacation and sick leave benefits equal to the
maximum available to any Company executive, determined without regard to the
period of service that might otherwise be necessary to entitle Executive to
such vacation or sick leave under standard Company policy.  

     3D.  Other Perquisites.  During his employment hereunder, Executive
shall be afforded the following benefits as incidences of his employment:  

          1.   Business and Entertainment Expenses - Subject to Company's
     standard policies and procedures with respect to expense reimbursement
     as applied to its executive employees generally, Company shall reimburse
     Executive for, or pay on behalf of Executive, reasonable and appropriate
     expenses incurred by Executive for business related purposes, including
     dues and fees to industry and professional organizations, costs of
     entertainment and business development, and costs reasonably incurred as
     a result of Executive's spouse accompanying Executive on business
     travel.

          2.   Parking - Company shall provide at no expense to Executive a
     parking place convenient to Executive's office and a parking place at
     Intercontinental Airport in Houston, Texas.

          3.   Other Company Benefits - Executive and, to the extent
     applicable, Executive's family, dependents and beneficiaries, shall be
     allowed to participate in all benefits, plans and programs, including
     improvements or modifications of the same, which are now, or may
     hereafter be, available to similarly-situated Company employees.  Such
     benefits, plans and programs may include, without limitation, profit
     sharing plan, thrift plan, annual physical examinations, health
     insurance or health care plan, life insurance, disability insurance,
     pension plan, pass privileges on Continental Airlines, Flight Benefits
     and the like.  Company shall not, however, by reason of this paragraph
     be obligated to institute, maintain, or refrain from changing, amending
     or discontinuing, any such benefit plan or program, so long as such
     changes are similarly applicable to executive employees generally.  


ARTICLE IV.:  EFFECT OF TERMINATION ON COMPENSATION

     4A.  By Expiration.  If Executive's employment hereunder shall terminate
upon expiration of the term provided in paragraph 2.1 hereof, then all
compensation and all benefits to Executive hereunder shall terminate
contemporaneously with termination of his employment; provided, however, that
Executive shall be provided with Flight Benefits for the remainder of
Executive's lifetime.

     4B.  By Company.  If Executive's employment hereunder shall be
terminated by Company prior to expiration of the term provided in
paragraph 2.1 hereof then, upon such termination, regardless of the reason
therefor, all compensation and all benefits to Executive hereunder shall
terminate contemporaneously with the termination of such employment, except
if such termination shall be for any reason other than those encompassed by
paragraphs 2.2(i), (ii), (iii) or (iv), then Company shall (a) pay Executive
on or before the effective date of such termination a lump-sum, cash payment
in an amount equal to the Termination Payment (as such term is defined in
paragraph 4.7), (b) provide Executive with Flight Benefits (as such term is
defined in paragraph 4.7) for the remainder of Executive's lifetime, (c)
provide Executive with Outplacement Services (as such term is defined in
paragraph 4.7), and (d) provide Executive and his eligible dependents with
Continuation Coverage (as such term is defined in paragraph 4.7) for the
Severance Period.  

     4C.  By Executive.  If Executive's employment hereunder shall be
terminated by Executive prior to expiration of the term provided in
paragraph 2.1 hereof then, upon such termination, regardless of the reason
therefor, all compensation and benefits to Executive hereunder shall
terminate contemporaneously with the termination of such employment, except
if such termination shall be pursuant to paragraphs 2.3(i), (ii), (iii),
(iv), (v), or (vi), then Company shall provide Executive with the payments
and benefits described in clauses (a) through (d) of paragraph 4.2.

     4D.  Certain Additional Payments by Company.  Notwithstanding anything
to the contrary in this Agreement, if any payment, distribution or provision
of a benefit by Company to or for the benefit of Executive, whether paid or
payable, distributed or distributable or provided or to be provided pursuant
to the terms of this Agreement or otherwise (a "Payment"), would be subject
to an excise or other special additional tax that would not have been imposed
absent such Payment (including, without limitation, any excise tax imposed by
Section 4999 of the Internal Revenue Code of 1986, as amended), or any
interest or penalties with respect to such excise or other additional tax
(such excise or other additional tax, together with any such interest or
penalties, are hereinafter collectively referred to as the "Excise Tax"),
Company shall pay to Executive an additional payment (a "Gross-up Payment")
in an amount such that after payment by Executive of all taxes (including any
interest or penalties imposed with respect to such taxes), including any
income taxes and Excise Taxes imposed on any Gross-up Payment, Executive
retains an amount of the Gross-up Payment (taking into account any similar
gross-up payments to Executive under the Incentive Plan (as such term is
defined in paragraph 4.7)) equal to the Excise Tax imposed upon the Payments. 
Company and Executive shall make an initial determination as to whether a
Gross-up Payment is required and the amount of any such Gross-up Payment. 
Executive shall notify Company in writing of any claim by the Internal
Revenue Service which, if successful, would require Company to make a Gross-
up Payment (or a Gross-up Payment in excess of that, if any, initially
determined by Company and Executive) within ten business days after the
receipt of such claim.  Company shall notify Executive in writing at least
ten business days prior to the due date of any response required with respect
to such claim if it plans to contest the claim.  If Company decides to
contest such claim, Executive shall cooperate fully with Company in such
action; provided, however, Company shall bear and pay directly or indirectly
all costs and expenses (including additional interest and penalties) incurred
in connection with such action and shall indemnify and hold Executive
harmless, on an after-tax basis, for any Excise Tax or income tax, including
interest and penalties with respect thereto, imposed as a result of Company's
action.  If, as a result of Company's action with respect to a claim,
Executive receives a refund of any amount paid by Company with respect to
such claim, Executive shall promptly pay such refund to Company.  If Company
fails to timely notify Executive whether it will contest such claim or
Company determines not to contest such claim, then Company shall immediately
pay to Executive the portion of such claim, if any, which it has not
previously paid to Executive.

     4E.  Payment Obligations Absolute.  Company's obligation to pay
Executive the amounts and to make the arrangements provided in this Article 4
shall be absolute and unconditional and shall not be affected by any cir-
cumstances, including, without limitation, any set-off, counterclaim,
recoupment, defense or other right which Company (including its subsidiaries
and affiliates) may have against him or anyone else.  All amounts payable by
Company shall be paid without notice or demand.  Executive shall not be
obligated to seek other employment in mitigation of the amounts payable or
arrangements made under any provision of this Article 4, and, except as
provided in paragraph 4.7 with respect to Continuation Coverage, the obtain-
ing of any such other employment (or the engagement in any endeavor as an
independent contractor, sole proprietor, partner, or joint venturer) shall in
no event effect any reduction of Company's obligations to make (or cause to
be made) the payments and arrangements required to be made under this
Article 4.

     4F.  Liquidated Damages.  In light of the difficulties in estimating the
damages upon termination of this Agreement, Company and Executive hereby
agree that the payments and benefits, if any, to be received by Executive
pursuant to this Article 4 shall be received by Executive as liquidated
damages.  Payment of the Termination Payment pursuant to paragraphs  4.2 or
4.3 shall be in lieu of any severance benefit Executive may be entitled to
under any severance plan or policy maintained by Company.

     4G.  Certain Definitions and Additional Terms.  As used herein, the
following capitalized terms shall have the meanings assigned below:

          1.   "Annualized Compensation" shall mean an amount equal to the
     sum of (1) Executive's annual base salary pursuant to paragraph 3.1 in
     effect immediately prior to Executive's termination of employment
     hereunder and (2) a deemed annual bonus which shall be equal to 25% of
     the amount described in clause (1) of this paragraph 4.7(i);

          2.   "Change in Control" shall have the meaning assigned to such
     term in the Incentive Plan (as amended by the First Amendment thereto)
     in effect as of the date of execution of this Agreement;

          3.   "Continuation Coverage" shall mean the continued coverage of
     Executive and his eligible dependents under Company's welfare benefit
     plans available to executives of Company who have not terminated
     employment (or the provision of equivalent benefits), including, without
     limitation, medical, health, dental, life insurance, disability, vision
     care, accidental death and dismemberment, and prescription drug, at no
     greater cost to Executive than that applicable to a similarly situated
     Company executive who has not terminated employment; provided, however,
     that (1) subject to clause (2) below, the coverage under a particular
     welfare benefit plan (or the receipt of equivalent benefits) shall
     terminate upon Executive's receipt of comparable benefits from a
     subsequent employer and (2) if Executive (and/or his eligible
     dependents) would have been entitled to retiree coverage under a
     particular welfare benefit plan had he voluntarily retired on the date
     of his termination of employment, then such coverage shall be continued
     as provided in such plan upon the expiration of the period Continuation
     Coverage is to be provided pursuant to this Article 4.  Notwithstanding
     any provision in this Article 4 to the contrary, Executive's entitlement
     to any benefit continuation pursuant to Section 601 et. seq. of the
     Employee Retirement Income Security Act of 1974, as amended, shall
     commence at the end of the period of, and shall not be reduced by the
     provision of, any applicable Continuation Coverage;

          (iv) "Flight Benefits" shall mean flight benefits on each airline
     operated by the Company or any of its affiliates or any successor or
     successors thereto (the "CO system"), consisting of the highest priority
     space available flight passes for Executive and his eligible family
     members (as such eligibility is in effect on the date hereof), a UATP
     card (or, in the event of discontinuance of the UATP program, a similar
     charge card permitting the purchase of air travel through direct billing
     to the Company or any of its affiliates or any successor or successors
     thereto (a "Similar Card")) in Executive's name for charging flights (in
     any fare class) on the CO system for Executive, Executive's spouse,
     Executive's family and significant others as determined by Executive, a
     Gold Elite OnePass Card (or similar highest category successor frequent
     flyer card) in Executive's name for use on the CO system, a membership
     for Executive and Executive's spouse in the Company's President's Club
     (or any successor program maintained in the CO system) and reimbursement
     (while an officer of the Company) of up to $10,000 annually for U.S.
     federal, state or local income taxes on imputed income resulting from
     such flights (such imputed income to be calculated during the term of
     such Flight Benefits at the lowest published fare (i.e., 21 day advance
     purchase coach fare or other lowest available fare) for the applicable
     flight on the date of such flight, regardless of the actual fare class
     booked or flown, or as otherwise required by law);  

          (v)  "Incentive Plan" shall mean Company's 1994 Incentive Equity
     Plan, as amended;

          (vi) "Outplacement Services" shall mean outplacement services, at
     Company's cost and for a period of twelve months beginning on the date
     of Executive's termination of employment, to be rendered by an agency
     selected by Executive and approved by the Board of Directors or HR
     Committee (with such approval not to be unreasonably withheld);

          (vii)     "Severance Period" shall mean:

               a.   in the case of a termination of Executive's employment
     with Company that occurs within two years after the date upon which a
     Change in Control occurs, a period commencing on the date of such
     termination and continuing for thirty-six months; or

               b.   in the case of a termination of Executive's employment
     with Company that occurs prior to a Change in Control or after the date
     which is two years after a Change in Control occurs, a period commencing
     on the date of such termination and continuing for twenty-four months;
     and

          
          (viii)    "Termination Payment" shall mean an amount equal to
     Executive's Annualized Compensation multiplied by a fraction, the
     numerator of which is the number of months in the Severance Period and
     the denominator of which is twelve.

Executive agrees that, after receipt of an invoice or other accounting
statement therefor, he will promptly (and in any event within 45 days after
receipt of such invoice or other accounting statement) reimburse the Company
for all charges on Executive's UATP card (or Similar Card) which are not for
flights on the CO system and which are not otherwise reimbursable to
Executive under the provisions of paragraph 3.4(i) hereof.  Executive agrees
that the credit availability under Executive's UATP card (or Similar Card)
may be suspended if Executive does not timely reimburse the Company as
described in the foregoing sentence; provided, that, immediately upon the
Company's receipt of Executive's reimbursement in full, the credit
availability under Executive's UATP card (or Similar Card) will be restored. 
 The sole cost to Executive of flights on the CO system pursuant to use of
Executive's Flight Benefits will be the imputed income with respect to
flights on the CO system charged on Executive's UATP card (or Similar Card),
calculated throughout the term of Executive's Flight Benefits at the lowest
published fare (i.e., 21 day advance purchase coach fare or other lowest
available fare) for the applicable flight on the date of such flight,
regardless of the actual fare class booked or flown, or as otherwise required
by law, and reported to Executive as required by applicable law.   With
respect to any period with respect to which the Company is obligated to
provide up to $10,000 of reimbursement for income taxes as described in
paragraph 4.7 (iv) above, Executive will provide to the Company, upon
request, a calculation or other evidence of Executive's marginal tax rate
sufficient to permit the Company to calculate accurately the amount to be so
reimbursed to Executive,  and Executive understands that the Company will not
make any gross-up payment to Executive with respect to the income
attributable to such reimbursement. Executive agrees that he will not resell
or permit to be resold any tickets issued on the CO system in connection with
the Flight Benefits. Executive shall be issued a UATP card (or Similar Card),
a Gold Elite OnePass Card (or similar highest category successor frequent
flyer card), a membership card in the Company's Presidents Club (or any
successor program maintained in the CO system) for Executive and Executive's
spouse, an appropriate flight pass identification card and an Employee Travel
Card, each valid at all times during the term of Executive's Flight Benefits.


ARTICLE V.:  MISCELLANEOUS

     5A.  Interest and Indemnification.  If any payment to Executive provided
for in this Agreement is not made by Company when due, Company shall pay to
Executive interest on the amount payable from the date that such payment
should have been made until such payment is made, which interest shall be
calculated at 3% plus the prime or base rate of interest announced by Texas
Commerce Bank National Association (or any successor thereto) at its
principal office in Houston, Texas (but not in excess of the highest lawful
rate), and such interest rate shall change when and as any such change in
such prime or base rate shall be announced by such bank.  If Executive shall
obtain any money judgment or otherwise prevail with respect to any litigation
brought by Executive or Company to enforce or interpret any provision
contained herein, Company, to the fullest extent permitted by applicable law,
hereby indemnifies Executive for his reasonable attorneys' fees and
disbursements incurred in such litigation and hereby agrees (i) to pay in
full all such fees and disbursements and (ii) to pay prejudgment interest on
any money judgment obtained by Executive from the earliest date that payment
to him should have been made under this Agreement until such judgment shall
have been paid in full, which interest shall be calculated at the rate set
forth in the preceding sentence.

     5B.  Notices.  For purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be deemed to
have been duly given when personally delivered or when mailed by United
States registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:

     If to Company to  :           Continental Airlines, Inc.
                                   2929 Allen Parkway, Suite 2010
                                   Houston, Texas  77019
                                   Attention:  General Counsel

     If to Executive to :          Barry P. Simon

or to such other address as either party may furnish to the other in writing
in accordance herewith, except that notices of changes of address shall be
effective only upon receipt.

     5C.  Applicable Law.  This contract is entered into under, and shall be
governed for all purposes by, the laws of the State of Texas.

     5D.  No Waiver.  No failure by either party hereto at any time to give
notice of any breach by the other party of, or to require compliance with,
any condition or provision of this Agreement shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.

     5E.  Severability.  If a court of competent jurisdiction determines that
any provision of this Agreement is invalid or unenforceable, then the
invalidity or unenforceability of that provision shall not affect the
validity or enforceability of any other provision of this Agreement, and all
other provisions shall remain in full force and effect.

     5F.  Counterparts.  This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of
which together will constitute one and the same Agreement.

     5G.  Withholding of Taxes and Other Employee Deductions.  Company may
withhold from any benefits and payments made pursuant to this Agreement all
federal, state, city and other taxes as may be required pursuant to any law
or governmental regulation or ruling and all other normal employee deductions
made with respect to Company's employees generally.

     5H.  Headings.  The paragraph headings have been inserted for purposes
of convenience and shall not be used for interpretive purposes.

     5I.  Gender and Plurals.  Wherever the context so requires, the
masculine gender includes the feminine or neuter, and the singular number
includes the plural and conversely. 
 
     5J.  Successors.  This Agreement shall be binding upon and inure to the
benefit of Company and any successor of the Company, including without
limitation any  person, association, or entity which may hereafter acquire or
succeed to all or substantially all of the business or assets of Company by
any means whether direct or indirect, by purchase, merger, consolidation, or
otherwise. Except as provided in the preceding sentence, this Agreement, and
the rights and obligations of the parties hereunder, are personal and neither
this Agreement, nor any right, benefit or obligation of either party hereto,
shall be subject to voluntary or involuntary assignment, alienation or
transfer, whether by operation of law or otherwise, without the prior written
consent of the other party.

     5K.  Term.  This Agreement has a term co-extensive with the term of
employment as set forth in paragraph 2.1.  Termination shall not affect any
right or obligation of any party which is accrued or vested prior to or upon
such termination.

     5L.  Entire Agreement. Except as provided in (i) the benefits, plans,
and programs referenced in paragraph 3.4(iii), (ii) any signed written
agreement heretofore or contemporaneously executed by Company and Executive
with respect to Awards (as defined in the Incentive Plan) under the Incentive
Plan, or (iii) any signed written agreement hereafter executed by Company and
Executive, this Agreement constitutes the entire agreement of the parties
with regard to the subject matter hereof, and contains all the covenants,
promises, representations, warranties and agreements between the parties with
respect to employment of Executive by Company.  Without limiting the scope of
the preceding sentence, all prior understandings and agreements among the
parties hereto relating to the subject matter hereof are hereby null and void
and of no further force and effect.  Any modification of this Agreement shall
be effective only if it is in writing and signed by the party to be charged.

     5.13 Deemed Resignations.  Any termination of Executive's employment
shall constitute an automatic resignation of Executive as an officer of
Company and each affiliate of Company, and an automatic resignation of
Executive from the Board of Directors (if applicable) and from the board of
directors of any affiliate of Company.


     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the 15th day of November, 1995.

                              CONTINENTAL AIRLINES, INC.


                              By:                                          
                                   Name:   Jeffery A. Smisek
                                   Title:  Senior Vice President
                              
                              "EXECUTIVE"


                                   ______________________________________
                                        Barry P. Simon





<PAGE>   120

                                                               Exhibit 10.8


                 AMENDED AND RESTATED EMPLOYMENT AGREEMENT


     THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT ("Agreement") is made by
and between CONTINENTAL AIRLINES, INC., a Delaware corporation ("Company"),
and C.D. McLean ("Executive").

                           W I T N E S S E T H:

     WHEREAS, Company and Executive are parties to that certain Employment
Agreement dated as of June 5, 1995 (the "Current Agreement"); and

     WHEREAS, the Human Resources Committee of the Board of Directors, at its
November 2, 1995 meeting, authorized the amendment of the employment
agreements of officers of the Company, selected on a performance basis by the
Chief Executive Officer of the Company, with respect to certain matters; and

     WHEREAS, Executive has been so selected by the Chief Executive Officer;
and

     WHEREAS, in connection therewith, the parties desire to amend the
Current Agreement and restate it, as so amended, in its entirety as this
Agreement;  

     NOW, THEREFORE, for and in consideration of the mutual promises,
covenants and obligations contained herein, Company and Executive agree as
follows:


ARTICLE I.:  EMPLOYMENT AND DUTIES

     1A.  Employment; Effective Date.  Company agrees to employ Executive and
Executive agrees to be employed by Company, beginning as of the Effective
Date (as hereinafter defined) and continuing for the period of time set forth
in Article 2 of this Agreement, subject to the terms and conditions of this
Agreement.  For purposes of this Agreement, the "Effective Date" shall be
June 6, 1995.

     1B.  Position.  From and after the Effective Date, Company shall employ
Executive in the position of Senior Vice President - Operations of Company,
or in such other position or positions as the parties mutually may agree.

     1C.  Duties and Services.  Executive agrees to serve in the position
referred to in paragraph 1.2 and to perform diligently and to the best of his
abilities the duties and services appertaining to such office as set forth in
the Bylaws of Company in effect on the Effective Date, as well as such
additional duties and services appropriate to such office which the parties
mutually may agree upon from time to time.


ARTICLE II.:  TERM AND TERMINATION OF EMPLOYMENT

     2A.  Term.  Unless sooner terminated pursuant to other provisions
hereof, Company agrees to employ Executive for a three-year period beginning
on the Effective Date.  

     2B.  Company's Right to Terminate.  Notwithstanding the provisions of
paragraph 2.1, Company, acting pursuant to an express resolution of the Board
of Directors of Company (the "Board of Directors") or the Human Resources
Committee of the Board of Directors (the "HR Committee"), shall have the
right to terminate Executive's employment under this Agreement at any time
for any of the following reasons: 

          1.   upon Executive's death;

          2.   upon Executive's becoming incapacitated for a period of at
     least 180 days by accident, sickness or other circumstance which renders
     him mentally or physically incapable of performing the material duties
     and services required of him hereunder on a full-time basis during such
     period;

          3.   for cause, which for purposes of this Agreement shall mean
     Executive's gross negligence or willful misconduct in the performance
     of, or Executive's abuse of alcohol or drugs rendering him unable to
     perform,  the material duties and services required of him pursuant to
     this Agreement;

          4.   for Executive's material breach of any provision of this
     Agreement which, if correctable, remains uncorrected for 30 days
     following written notice to Executive by Company of such breach; or

          5.   for any other reason whatsoever, in the sole discretion of the
     Board of Directors or the Human Resources Committee.

     2C.  Executive's Right to Terminate.  Notwithstanding the provisions of
paragraph 2.1, Executive shall have the right to terminate his employment
under this Agreement at any time for any of the following reasons:

          1.   the assignment to Executive by the Board of Directors or HR
     Committee or other officers or representatives of Company of duties
     materially inconsistent with the duties associated with the position
     described in paragraph 1.2 as such duties are constituted as of the
     Effective Date;

          2.   a material diminution in the nature or scope of Executive's
     authority, responsibilities, or title from those applicable to him as of
     the Effective Date; 

          3.   the occurrence of material acts or conduct on the part of
     Company or its officers or representatives which prevent Executive from
     performing his duties and responsibilities pursuant to this Agreement; 

          4.   Company requiring Executive to be permanently based anywhere
     outside a major urban center in Texas;

          5.   the taking of any action by Company that would materially
     adversely affect the corporate amenities enjoyed by Executive on the
     Effective Date;  

          6.   a material breach by Company of any provision of this
     Agreement which, if correctable, remains uncorrected for 30 days
     following written notice of such breach by Executive to Company; or

          7.   for any other reason whatsoever, in the sole discretion of
     Executive. 

     2D.  Notice of Termination.  If Company or Executive desires to
terminate Executive's employment hereunder at any time prior to expiration of
the term of employment as provided in paragraph 2.1, it or he shall do so by
giving written notice to the other party that it or he has elected to
terminate Executive's employment hereunder and stating the effective date and
reason for such termination, provided that no such action shall alter or
amend any other provisions hereof or rights arising hereunder.


ARTICLE III.:  COMPENSATION AND BENEFITS

     3A.  Base Salary.  During the period of this Agreement, Executive shall
receive a minimum annual base salary equal to the greater of (i) $300,000.00
or (ii) such amount as the parties mutually may agree upon from time to time. 
Executive's annual base salary shall be paid in equal installments in
accordance with Company's standard policy regarding payment of compensation
to executives but no less frequently than semimonthly.

     3B.  Bonus Programs.  Executive shall participate in each cash bonus
program maintained by Company on and after the Effective Date (including,
without limitation, participation effective as of January 1, 1995 in any such
program maintained for the year during which such date occurs) at a level
which is not less than the maximum participation level made available to any
other executive of Company at substantially the same title or level of
Executive (determined without regard to period of service or other criteria
that might otherwise be necessary to entitle Executive to such level of
participation).

     3C.  Vacation and Sick Leave.  During each year of his employment,
Executive shall be entitled to vacation and sick leave benefits equal to the
maximum available to any Company executive, determined without regard to the
period of service that might otherwise be necessary to entitle Executive to
such vacation or sick leave under standard Company policy.  

     3D.  Other Perquisites.  During his employment hereunder, Executive
shall be afforded the following benefits as incidences of his employment:  

          1.   Business and Entertainment Expenses - Subject to Company's
     standard policies and procedures with respect to expense reimbursement
     as applied to its executive employees generally, Company shall reimburse
     Executive for, or pay on behalf of Executive, reasonable and appropriate
     expenses incurred by Executive for business related purposes, including
     dues and fees to industry and professional organizations, costs of
     entertainment and business development, and costs reasonably incurred as
     a result of Executive's spouse accompanying Executive on business
     travel.

          2.   Parking - Company shall provide at no expense to Executive a
     parking place convenient to Executive's office and a parking place at
     Intercontinental Airport in Houston, Texas.

          3.   Other Company Benefits - Executive and, to the extent
     applicable, Executive's family, dependents and beneficiaries, shall be
     allowed to participate in all benefits, plans and programs, including
     improvements or modifications of the same, which are now, or may
     hereafter be, available to similarly-situated Company employees.  Such
     benefits, plans and programs may include, without limitation, profit
     sharing plan, thrift plan, annual physical examinations, health
     insurance or health care plan, life insurance, disability insurance,
     pension plan, pass privileges on Continental Airlines, Flight Benefits
     and the like.  Company shall not, however, by reason of this paragraph
     be obligated to institute, maintain, or refrain from changing, amending
     or discontinuing, any such benefit plan or program, so long as such
     changes are similarly applicable to executive employees generally.  


ARTICLE IV.:  EFFECT OF TERMINATION ON COMPENSATION

     4A.  By Expiration.  If Executive's employment hereunder shall terminate
upon expiration of the term provided in paragraph 2.1 hereof, then all
compensation and all benefits to Executive hereunder shall terminate
contemporaneously with termination of his employment; provided, however, that
Executive shall be provided with Flight Benefits for the remainder of
Executive's lifetime.

     4B.  By Company.  If Executive's employment hereunder shall be
terminated by Company prior to expiration of the term provided in
paragraph 2.1 hereof then, upon such termination, regardless of the reason
therefor, all compensation and all benefits to Executive hereunder shall
terminate contemporaneously with the termination of such employment, except
if such termination shall be for any reason other than those encompassed by
paragraphs 2.2(i), (ii), (iii) or (iv), then Company shall (a) pay Executive
on or before the effective date of such termination a lump-sum, cash payment
in an amount equal to the Termination Payment (as such term is defined in
paragraph 4.7), (b) provide Executive with Flight Benefits (as such term is
defined in paragraph 4.7) for the remainder of Executive's lifetime, (c)
provide Executive with Outplacement Services (as such term is defined in
paragraph 4.7), and (d) provide Executive and his eligible dependents with
Continuation Coverage (as such term is defined in paragraph 4.7) for the
Severance Period.  

     4C.  By Executive.  If Executive's employment hereunder shall be
terminated by Executive prior to expiration of the term provided in
paragraph 2.1 hereof then, upon such termination, regardless of the reason
therefor, all compensation and benefits to Executive hereunder shall
terminate contemporaneously with the termination of such employment, except
if such termination shall be pursuant to paragraphs 2.3(i), (ii), (iii),
(iv), (v), or (vi), then Company shall provide Executive with the payments
and benefits described in clauses (a) through (d) of paragraph 4.2.

     4D.  Certain Additional Payments by Company.  Notwithstanding anything
to the contrary in this Agreement, if any payment, distribution or provision
of a benefit by Company to or for the benefit of Executive, whether paid or
payable, distributed or distributable or provided or to be provided pursuant
to the terms of this Agreement or otherwise (a "Payment"), would be subject
to an excise or other special additional tax that would not have been imposed
absent such Payment (including, without limitation, any excise tax imposed by
Section 4999 of the Internal Revenue Code of 1986, as amended), or any
interest or penalties with respect to such excise or other additional tax
(such excise or other additional tax, together with any such interest or
penalties, are hereinafter collectively referred to as the "Excise Tax"),
Company shall pay to Executive an additional payment (a "Gross-up Payment")
in an amount such that after payment by Executive of all taxes (including any
interest or penalties imposed with respect to such taxes), including any
income taxes and Excise Taxes imposed on any Gross-up Payment, Executive
retains an amount of the Gross-up Payment (taking into account any similar
gross-up payments to Executive under the Incentive Plan (as such term is
defined in paragraph 4.7)) equal to the Excise Tax imposed upon the Payments. 
Company and Executive shall make an initial determination as to whether a
Gross-up Payment is required and the amount of any such Gross-up Payment. 
Executive shall notify Company in writing of any claim by the Internal
Revenue Service which, if successful, would require Company to make a Gross-
up Payment (or a Gross-up Payment in excess of that, if any, initially
determined by Company and Executive) within ten business days after the
receipt of such claim.  Company shall notify Executive in writing at least
ten business days prior to the due date of any response required with respect
to such claim if it plans to contest the claim.  If Company decides to
contest such claim, Executive shall cooperate fully with Company in such
action; provided, however, Company shall bear and pay directly or indirectly
all costs and expenses (including additional interest and penalties) incurred
in connection with such action and shall indemnify and hold Executive
harmless, on an after-tax basis, for any Excise Tax or income tax, including
interest and penalties with respect thereto, imposed as a result of Company's
action.  If, as a result of Company's action with respect to a claim,
Executive receives a refund of any amount paid by Company with respect to
such claim, Executive shall promptly pay such refund to Company.  If Company
fails to timely notify Executive whether it will contest such claim or
Company determines not to contest such claim, then Company shall immediately
pay to Executive the portion of such claim, if any, which it has not
previously paid to Executive.

     4E.  Payment Obligations Absolute.  Company's obligation to pay
Executive the amounts and to make the arrangements provided in this Article 4
shall be absolute and unconditional and shall not be affected by any cir-
cumstances, including, without limitation, any set-off, counterclaim,
recoupment, defense or other right which Company (including its subsidiaries
and affiliates) may have against him or anyone else.  All amounts payable by
Company shall be paid without notice or demand.  Executive shall not be
obligated to seek other employment in mitigation of the amounts payable or
arrangements made under any provision of this Article 4, and, except as
provided in paragraph 4.7 with respect to Continuation Coverage, the obtain-
ing of any such other employment (or the engagement in any endeavor as an
independent contractor, sole proprietor, partner, or joint venturer) shall in
no event effect any reduction of Company's obligations to make (or cause to
be made) the payments and arrangements required to be made under this
Article 4.

     4F.  Liquidated Damages.  In light of the difficulties in estimating the
damages upon termination of this Agreement, Company and Executive hereby
agree that the payments and benefits, if any, to be received by Executive
pursuant to this Article 4 shall be received by Executive as liquidated
damages.  Payment of the Termination Payment pursuant to paragraphs  4.2 or
4.3 shall be in lieu of any severance benefit Executive may be entitled to
under any severance plan or policy maintained by Company.

     4G.  Certain Definitions and Additional Terms.  As used herein, the
following capitalized terms shall have the meanings assigned below:

          1.   "Annualized Compensation" shall mean an amount equal to the
     sum of (1) Executive's annual base salary pursuant to paragraph 3.1 in
     effect immediately prior to Executive's termination of employment
     hereunder and (2) a deemed annual bonus which shall be equal to 25% of
     the amount described in clause (1) of this paragraph 4.7(i);

          2.   "Change in Control" shall have the meaning assigned to such
     term in the Incentive Plan (as amended by the First Amendment thereto)
     in effect as of the date of execution of this Agreement;

          3.   "Continuation Coverage" shall mean the continued coverage of
     Executive and his eligible dependents under Company's welfare benefit
     plans available to executives of Company who have not terminated
     employment (or the provision of equivalent benefits), including, without
     limitation, medical, health, dental, life insurance, disability, vision
     care, accidental death and dismemberment, and prescription drug, at no
     greater cost to Executive than that applicable to a similarly situated
     Company executive who has not terminated employment; provided, however,
     that (1) subject to clause (2) below, the coverage under a particular
     welfare benefit plan (or the receipt of equivalent benefits) shall
     terminate upon Executive's receipt of comparable benefits from a
     subsequent employer and (2) if Executive (and/or his eligible
     dependents) would have been entitled to retiree coverage under a
     particular welfare benefit plan had he voluntarily retired on the date
     of his termination of employment, then such coverage shall be continued
     as provided in such plan upon the expiration of the period Continuation
     Coverage is to be provided pursuant to this Article 4.  Notwithstanding
     any provision in this Article 4 to the contrary, Executive's entitlement
     to any benefit continuation pursuant to Section 601 et. seq. of the
     Employee Retirement Income Security Act of 1974, as amended, shall
     commence at the end of the period of, and shall not be reduced by the
     provision of, any applicable Continuation Coverage;

          (iv) "Flight Benefits" shall mean flight benefits on each airline
     operated by the Company or any of its affiliates or any successor or
     successors thereto (the "CO system"), consisting of the highest priority
     space available flight passes for Executive and his eligible family
     members (as such eligibility is in effect on the date hereof), a UATP
     card (or, in the event of discontinuance of the UATP program, a similar
     charge card permitting the purchase of air travel through direct billing
     to the Company or any of its affiliates or any successor or successors
     thereto (a "Similar Card")) in Executive's name for charging flights (in
     any fare class) on the CO system for Executive, Executive's spouse,
     Executive's family and significant others as determined by Executive, a
     Gold Elite OnePass Card (or similar highest category successor frequent
     flyer card) in Executive's name for use on the CO system, a membership
     for Executive and Executive's spouse in the Company's President's Club
     (or any successor program maintained in the CO system) and reimbursement
     (while an officer of the Company) of up to $10,000 annually for U.S.
     federal, state or local income taxes on imputed income resulting from
     such flights (such imputed income to be calculated during the term of
     such Flight Benefits at the lowest published fare (i.e., 21 day advance
     purchase coach fare or other lowest available fare) for the applicable
     flight on the date of such flight, regardless of the actual fare class
     booked or flown, or as otherwise required by law);  

          (v)  "Incentive Plan" shall mean Company's 1994 Incentive Equity
     Plan, as amended;

          (vi) "Outplacement Services" shall mean outplacement services, at
     Company's cost and for a period of twelve months beginning on the date
     of Executive's termination of employment, to be rendered by an agency
     selected by Executive and approved by the Board of Directors or HR
     Committee (with such approval not to be unreasonably withheld);

          (vii)     "Severance Period" shall mean:

               a.   in the case of a termination of Executive's employment
     with Company that occurs within two years after the date upon which a
     Change in Control occurs, a period commencing on the date of such
     termination and continuing for thirty-six months; or

               b.   in the case of a termination of Executive's employment
     with Company that occurs prior to a Change in Control or after the date
     which is two years after a Change in Control occurs, a period commencing
     on the date of such termination and continuing for twenty-four months;
     and

          
          (viii)    "Termination Payment" shall mean an amount equal to
     Executive's Annualized Compensation multiplied by a fraction, the
     numerator of which is the number of months in the Severance Period and
     the denominator of which is twelve.

Executive agrees that, after receipt of an invoice or other accounting
statement therefor, he will promptly (and in any event within 45 days after
receipt of such invoice or other accounting statement) reimburse the Company
for all charges on Executive's UATP card (or Similar Card) which are not for
flights on the CO system and which are not otherwise reimbursable to
Executive under the provisions of paragraph 3.4(i) hereof.  Executive agrees
that the credit availability under Executive's UATP card (or Similar Card)
may be suspended if Executive does not timely reimburse the Company as
described in the foregoing sentence; provided, that, immediately upon the
Company's receipt of Executive's reimbursement in full, the credit
availability under Executive's UATP card (or Similar Card) will be restored. 
 The sole cost to Executive of flights on the CO system pursuant to use of
Executive's Flight Benefits will be the imputed income with respect to
flights on the CO system charged on Executive's UATP card (or Similar Card),
calculated throughout the term of Executive's Flight Benefits at the lowest
published fare (i.e., 21 day advance purchase coach fare or other lowest
available fare) for the applicable flight on the date of such flight,
regardless of the actual fare class booked or flown, or as otherwise required
by law, and reported to Executive as required by applicable law.   With
respect to any period with respect to which the Company is obligated to
provide up to $10,000 of reimbursement for income taxes as described in
paragraph 4.7 (iv) above, Executive will provide to the Company, upon
request, a calculation or other evidence of Executive's marginal tax rate
sufficient to permit the Company to calculate accurately the amount to be so
reimbursed to Executive,  and Executive understands that the Company will not
make any gross-up payment to Executive with respect to the income
attributable to such reimbursement. Executive agrees that he will not resell
or permit to be resold any tickets issued on the CO system in connection with
the Flight Benefits. Executive shall be issued a UATP card (or Similar Card),
a Gold Elite OnePass Card (or similar highest category successor frequent
flyer card), a membership card in the Company's Presidents Club (or any
successor program maintained in the CO system) for Executive and Executive's
spouse, an appropriate flight pass identification card and an Employee Travel
Card, each valid at all times during the term of Executive's Flight Benefits.


ARTICLE V.:  MISCELLANEOUS

     5A.  Interest and Indemnification.  If any payment to Executive provided
for in this Agreement is not made by Company when due, Company shall pay to
Executive interest on the amount payable from the date that such payment
should have been made until such payment is made, which interest shall be
calculated at 3% plus the prime or base rate of interest announced by Texas
Commerce Bank National Association (or any successor thereto) at its
principal office in Houston, Texas (but not in excess of the highest lawful
rate), and such interest rate shall change when and as any such change in
such prime or base rate shall be announced by such bank.  If Executive shall
obtain any money judgment or otherwise prevail with respect to any litigation
brought by Executive or Company to enforce or interpret any provision
contained herein, Company, to the fullest extent permitted by applicable law,
hereby indemnifies Executive for his reasonable attorneys' fees and
disbursements incurred in such litigation and hereby agrees (i) to pay in
full all such fees and disbursements and (ii) to pay prejudgment interest on
any money judgment obtained by Executive from the earliest date that payment
to him should have been made under this Agreement until such judgment shall
have been paid in full, which interest shall be calculated at the rate set
forth in the preceding sentence.

     5B.  Notices.  For purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be deemed to
have been duly given when personally delivered or when mailed by United
States registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:

     If to Company to  :      Continental Airlines, Inc.
                              2929 Allen Parkway, Suite 2010
                              Houston, Texas  77019
                              Attention:  General Counsel

     If to Executive to :     C. D. McLean



or to such other address as either party may furnish to the other in writing
in accordance herewith, except that notices of changes of address shall be
effective only upon receipt.

     5C.  Applicable Law.  This contract is entered into under, and shall be
governed for all purposes by, the laws of the State of Texas.

     5D.  No Waiver.  No failure by either party hereto at any time to give
notice of any breach by the other party of, or to require compliance with,
any condition or provision of this Agreement shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.

     5E.  Severability.  If a court of competent jurisdiction determines that
any provision of this Agreement is invalid or unenforceable, then the
invalidity or unenforceability of that provision shall not affect the
validity or enforceability of any other provision of this Agreement, and all
other provisions shall remain in full force and effect.

     5F.  Counterparts.  This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of
which together will constitute one and the same Agreement.

     5G.  Withholding of Taxes and Other Employee Deductions.  Company may
withhold from any benefits and payments made pursuant to this Agreement all
federal, state, city and other taxes as may be required pursuant to any law
or governmental regulation or ruling and all other normal employee deductions
made with respect to Company's employees generally.

     5H.  Headings.  The paragraph headings have been inserted for purposes
of convenience and shall not be used for interpretive purposes.

     5I.  Gender and Plurals.  Wherever the context so requires, the
masculine gender includes the feminine or neuter, and the singular number
includes the plural and conversely. 
 
     5J.  Successors.  This Agreement shall be binding upon and inure to the
benefit of Company and any successor of the Company, including without
limitation any  person, association, or entity which may hereafter acquire or
succeed to all or substantially all of the business or assets of Company by
any means whether direct or indirect, by purchase, merger, consolidation, or
otherwise. Except as provided in the preceding sentence, this Agreement, and
the rights and obligations of the parties hereunder, are personal and neither
this Agreement, nor any right, benefit or obligation of either party hereto,
shall be subject to voluntary or involuntary assignment, alienation or
transfer, whether by operation of law or otherwise, without the prior written
consent of the other party.

     5K.  Term.  This Agreement has a term co-extensive with the term of
employment as set forth in paragraph 2.1.  Termination shall not affect any
right or obligation of any party which is accrued or vested prior to or upon
such termination.

     5L.  Entire Agreement. Except as provided in (i) the benefits, plans,
and programs referenced in paragraph 3.4(iii), (ii) any signed written
agreement heretofore or contemporaneously executed by Company and Executive
with respect to Awards (as defined in the Incentive Plan) under the Incentive
Plan, or (iii) any signed written agreement hereafter executed by Company and
Executive, this Agreement constitutes the entire agreement of the parties
with regard to the subject matter hereof, and contains all the covenants,
promises, representations, warranties and agreements between the parties with
respect to employment of Executive by Company.  Without limiting the scope of
the preceding sentence, all prior understandings and agreements among the
parties hereto relating to the subject matter hereof are hereby null and void
and of no further force and effect.  Any modification of this Agreement shall
be effective only if it is in writing and signed by the party to be charged.

     5.13 Deemed Resignations.  Any termination of Executive's employment
shall constitute an automatic resignation of Executive as an officer of
Company and each affiliate of Company, and an automatic resignation of
Executive from the Board of Directors (if applicable) and from the board of
directors of any affiliate of Company.


     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the 15th day of November, 1995.

                              CONTINENTAL AIRLINES, INC.


                              By:                                          
                                   Name:   Jeffery A. Smisek
                                   Title:  Senior Vice President
                              
                              "EXECUTIVE"


                                   ______________________________________
                                        C. D. McLean





<PAGE>   121

                                                             Exhibit 10.19
                                           



                                   November 13, 1995


[Name and address of director]

Dear ___________________:

      At its November 2, 1995 meeting, the Board of Directors of Continental
Airlines, Inc. (the "Company"), pursuant to the recommendation of the Human
Resources Committee of the Board of Directors and resolutions duly adopted
by the Board, granted certain lifetime flight benefits to the non-employee
members of the Board of Directors of the Company.  The purpose of this
letter agreement, as contemplated and authorized by such resolutions, is to
set forth the contractual obligations of the parties with respect to such
flight benefits. 

      Pursuant to such resolutions, you are hereby granted Flight Benefits
for your lifetime.  As used herein, "Flight Benefits" means flight benefits
on each airline operated by the Company or any of its affiliates or any
successor or successors thereto (the "CO system"), consisting of the
highest priority space available flight passes for you and your eligible
family members (as such eligibility is in effect on the date hereof), a
UATP card (or, in the event of discontinuance of the UATP program, a
similar charge card permitting the purchase of air travel through direct
billing to the Company or any of its affiliates or any successor or
successors thereto (a "Similar Card")) in your name for charging flights
(in any fare class) on the CO system for you, your spouse, your family and
significant others as determined by you, a Gold Elite OnePass Card (or
similar highest category successor frequent flyer card) in your name for
use on the CO system,  a membership for you and your spouse in the
Company's President's Club (or any successor program maintained in the CO
system) and reimbursement (while a member of the Board of Directors of the
Company) of up to $10,000 annually for U.S. federal, state or local income
taxes (or, if you are not subject to U.S. income tax, the national,
provincial, local or other income taxes to which you are subject)  on
imputed income resulting from such flights (such imputed income to be
calculated during the term of such Flight Benefits at the lowest published
fare (i.e., 21 day advance purchase coach fare or other lowest available
fare) for the applicable flight on the date of such flight, regardless of
the actual fare class booked or flown, or as otherwise required by law).  

      You agree that, after receipt of an invoice or other accounting
statement therefor, you will promptly (and in any event within 45 days
after receipt of such invoice or other accounting statement) reimburse the
Company for all charges on your UATP card (or Similar Card) which are not
for flights on the CO system and which are not otherwise reimbursable to
you under the existing policies of the Company for reimbursement of
business expenses of members of the Board of Directors.   You agree that
the credit availability under your UATP card (or Similar Card) may be
suspended if you do not timely reimburse the Company as described in the
foregoing sentence; provided, that, immediately upon the Company's receipt
of your reimbursement in full, the credit availability under your UATP card
(or Similar Card) will be restored.  

      The sole cost to you of flights on the CO system pursuant to use of
your Flight Benefits will be the imputed income with respect to flights on
the CO system charged on your UATP card (or Similar Card), calculated
throughout the term of your Flight Benefits at the lowest published fare
(i.e., 21 day advance purchase coach fare or other lowest available fare)
for the applicable flight on the date of such flight, regardless of the
actual fare class booked or flown, or as otherwise required by law, and
reported to you as required by applicable law.   With respect to any period
with respect to which the Company is obligated to provide up to $10,000 of
reimbursement for income taxes as described above, you will provide to the
Company, upon request, a calculation or other evidence of your marginal tax
rate sufficient to permit the Company to calculate accurately the amount to
be so reimbursed to you,  and you understand that the Company will not make
any gross-up payment to you with respect to the income attributable to such
reimbursement.

      You agree that you will not resell or permit to be resold any tickets
issued on the CO system in connection with the Flight Benefits. You will be
issued a UATP card (or Similar Card), a Gold Elite OnePass Card (or similar
highest category successor frequent flyer card), a membership card in the
Company's Presidents Club (or any successor program maintained in the CO
system) for you and your spouse, and an appropriate flight pass
identification card, each valid at all times during the term of your Flight
Benefits.

      This letter agreement shall be binding upon and inure to the benefit
of the Company and any successor of the Company, including without
limitation any  person, association, or entity which may hereafter acquire
or succeed to all or substantially all of the business or assets of Company
by any means whether direct or indirect, by purchase, merger,
consolidation, or otherwise.  This letter agreement supersedes and replaces
any flight benefits (including observational passes) which you otherwise
currently have on the CO system.  This letter agreement and the benefits or
obligations hereunder may not be assigned by you.

      If you are in agreement with the terms of this letter agreement,
please execute the enclosed copy hereof and return it to the Company at the
above address, whereupon this letter agreement will become a binding
obligation of the parties hereto.


                       
                                        Sincerely,

                                        CONTINENTAL AIRLINES, INC.


                                        By:_________________________________
                                             Jeffery A. Smisek
                                             Senior Vice President


ACCEPTED AND AGREED
as of the date first above written:


____________________________________



<PAGE>   122


<TABLE>
                                     CONTINENTAL AIRLINES, INC.                         EXHIBIT 11.1
                        STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS            PAGE 1 OF 2
                           (In millions of dollars, except per share data)

<CAPTION>
                                                                                     Predecessor
                                                     Reorganized Company               Company  
                                                                      Period from
                                                                     Reorganization  Period from
                                                                      (April 28,      January 1,
                                                                     1993 through    1993 through
                                          Year Ended December 31,    December 31,      April 27,
                                             1995          1994          1993)           1993   
<S>                                       <C>           <C>          <C>             <C>
Primary:
Weighted average shares outstanding . .   26,127,590    26,056,897     18,022,918     47,002,912 
Dilutive effect of outstanding stock
 options, warrants and restricted 
 stock grants (as determined by the
 application of the modified treasury
 stock method). . . . . . . . . . . . .    5,915,837             -              -              - 

Weighted average number of common
 shares outstanding, as adjusted. . . .   32,043,427    26,056,897     18,022,918     47,002,912 

Income (loss) applicable to
 common shares. . . . . . . . . . . . .  $       215   $      (619)   $       (42)    $    2,640 
Add interest expense associated with
 the assumed reduction of borrowings,
 net of federal income tax effect . . .           16             -              -              - 

Income (loss), as adjusted. . . . . . .  $       231   $      (619)   $       (42)   $     2,640 

Per share amount. . . . . . . . . . . .  $      7.20   $    (23.76)   $     (2.33)   $     *N.M. 


*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.
</TABLE>


<PAGE>

<TABLE>
                                 CONTINENTAL AIRLINES, INC.EXHIBIT 11.1
                        STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS            PAGE 2 OF 2
                           (In millions of dollars, except per share data)
                                                                                     Predecessor
<CAPTION>
                                                     Reorganized Company               Company  
                                                                      Period from
                                                                     Reorganization  Period from
                                                                      (April 28,      January 1,
                                                                     1993 through    1993 through
                                          Year Ended December 31,    December 31,      April 27,
                                             1995          1994          1993)           1993   
<S>                                       <C>           <C>          <C>             <C>
Fully diluted:
Weighted average shares outstanding . .   26,127,590    26,056,897     18,022,918     47,002,912 
Dilutive effect of outstanding stock
 options, warrants and restricted 
 stock grants (as determined by the
 application of the modified treasury
 stock method). . . . . . . . . . . . .    5,995,613             -              -              - 
Dilutive effect of convertible 
 debentures . . . . . . . . . . . . . .    2,989,074             -              -              - 
Dilutive effect of 8 1/2% convertible
 trust originated preferred 
 securities . . . . . . . . . . . . . .      456,872             -              -              - 
Weighted average number of common
 shares outstanding, as adjusted. . . .   35,569,149    26,056,897     18,022,918     47,002,912 

Income (loss) applicable to
 common shares. . . . . . . . . . . . .  $       215   $      (619)   $       (42)    $    2,640 
Add interest expense associated with
 the assumed reduction of borrowings,
 net of federal income tax effect . . .            3             -              -              - 
Add interest expense associated with 
 the assumed conversion of
 convertible debentures . . . . . . . .            4             -              -              - 
Add interest expense associated with
 the assumed conversion of 8 1/2%
 convertible trust originated
 preferred securities . . . . . . . . .            2             -              -              - 
Income (loss), as adjusted. . . . . . .  $       224   $      (619)   $       (42)   $     2,640 

Per share amount. . . . . . . . . . . .  $      6.29   $    (23.76)   $     (2.33)   $     *N.M.

*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.
</TABLE>



<PAGE>   123

                                                               Exhibit 21.1


                SUBSIDIARIES OF CONTINENTAL AIRLINES, INC.


               SUBSIDIARY                    STATE OF INCORPORATION

     Air Micronesia, Inc.                           Delaware

     Continental Express, Inc.                      Delaware

     Continental Micronesia, Inc.                   Delaware


<PAGE>   124

                                                               Exhibit 23.1


                      CONSENT OF INDEPENDENT AUDITORS


We consent to the incorporation by reference in:  (i) the Registration
Statement (Form S-3 No. 33-79688) of Continental Airlines, Inc. and in the
related Prospectus, and (ii) the Registration Statements (Form S-8 No. 33-
81324 and Form S-8 No. 33-60009) pertaining to the Continental Airlines, Inc.
1994 Incentive Equity Plan, (Form S-8 No. 33-81326 and Form S-8 No. 33-59995)
pertaining to the Continental Airlines, Inc. 1994 Restricted Stock Grant, and
(Form S-8 No. 33-81328) pertaining to the Continental Airlines, Inc. 1994
Employee Stock Purchase Plan, of our report dated February 12, 1996, with
respect to the consolidated financial statements and schedules of Continental
Airlines, Inc. included in this Form 10-K for the year ended December 31,
1995.



                                             ERNST & YOUNG LLP


Houston, Texas
February 12, 1996


<PAGE>   125

                                                               Exhibit 24.1


                             POWER OF ATTORNEY


          KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director
and/or officer of Continental Airlines, Inc. (the "Company"), does hereby
constitute and appoint Lawrence W. Kellner and Jeffery A. Smisek or either of
them, the undersigned's true and lawful attorney or attorneys, to execute the
name, place and stead of the undersigned, the Company's Annual Report on Form
10-K for the year ended December 31, 1995 (and any amendments thereto), to be
filed by the Company under the Securities Exchange Act of 1934, as amended,
as fully and effectively in all respects as the undersigned could do if
personally present.

          IN WITNESS WHEREOF, the undersigned has signed this Power of
Attorney on and as of the date set forth below:

Date:  February 1, 1996                 By: /s/ Thomas J. Barrack, Jr.



                             POWER OF ATTORNEY


          KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director
and/or officer of Continental Airlines, Inc. (the "Company"), does hereby
constitute and appoint Lawrence W. Kellner and Jeffery A. Smisek or either of
them, the undersigned's true and lawful attorney or attorneys, to execute the
name, place and stead of the undersigned, the Company's Annual Report on Form
10-K for the year ended December 31, 1995 (and any amendments thereto), to be
filed by the Company under the Securities Exchange Act of 1934, as amended,
as fully and effectively in all respects as the undersigned could do if
personally present.

          IN WITNESS WHEREOF, the undersigned has signed this Power of
Attorney on and as of the date set forth below:

Date:  February 1, 1996                 By: /s/ David Bonderman       



                             POWER OF ATTORNEY


          KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director
and/or officer of Continental Airlines, Inc. (the "Company"), does hereby
constitute and appoint Lawrence W. Kellner and Jeffery A. Smisek or either of
them, the undersigned's true and lawful attorney or attorneys, to execute the
name, place and stead of the undersigned, the Company's Annual Report on Form
10-K for the year ended December 31, 1995 (and any amendments thereto), to be
filed by the Company under the Securities Exchange Act of 1934, as amended,
as fully and effectively in all respects as the undersigned could do if
personally present.

          IN WITNESS WHEREOF, the undersigned has signed this Power of
Attorney on and as of the date set forth below:

Date:  February 1, 1996                 By: /s/ Joel H. Cowan         


                             POWER OF ATTORNEY


          KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director
and/or officer of Continental Airlines, Inc. (the "Company"), does hereby
constitute and appoint Lawrence W. Kellner and Jeffery A. Smisek or either of
them, the undersigned's true and lawful attorney or attorneys, to execute the
name, place and stead of the undersigned, the Company's Annual Report on Form
10-K for the year ended December 31, 1995 (and any amendments thereto), to be
filed by the Company under the Securities Exchange Act of 1934, as amended,
as fully and effectively in all respects as the undersigned could do if
personally present.

          IN WITNESS WHEREOF, the undersigned has signed this Power of
Attorney on and as of the date set forth below:

Date:  February 18, 1996                By: /s/ Patrick Foley         



                             POWER OF ATTORNEY


          KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director
and/or officer of Continental Airlines, Inc. (the "Company"), does hereby
constitute and appoint Lawrence W. Kellner and Jeffery A. Smisek or either of
them, the undersigned's true and lawful attorney or attorneys, to execute the
name, place and stead of the undersigned, the Company's Annual Report on Form
10-K for the year ended December 31, 1995 (and any amendments thereto), to be
filed by the Company under the Securities Exchange Act of 1934, as amended,
as fully and effectively in all respects as the undersigned could do if
personally present.

          IN WITNESS WHEREOF, the undersigned has signed this Power of
Attorney on and as of the date set forth below:

Date:  February 1, 1996                 By: /s/ Rowland C. Frazee     


                             POWER OF ATTORNEY


          KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director
and/or officer of Continental Airlines, Inc. (the "Company"), does hereby
constitute and appoint Lawrence W. Kellner and Jeffery A. Smisek or either of
them, the undersigned's true and lawful attorney or attorneys, to execute the
name, place and stead of the undersigned, the Company's Annual Report on Form
10-K for the year ended December 31, 1995 (and any amendments thereto), to be
filed by the Company under the Securities Exchange Act of 1934, as amended,
as fully and effectively in all respects as the undersigned could do if
personally present.

          IN WITNESS WHEREOF, the undersigned has signed this Power of
Attorney on and as of the date set forth below:

Date:  February 1, 1996                 By: /s/ Hollis L. Harris      





                             POWER OF ATTORNEY


          KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director
and/or officer of Continental Airlines, Inc. (the "Company"), does hereby
constitute and appoint Lawrence W. Kellner and Jeffery A. Smisek or either of
them, the undersigned's true and lawful attorney or attorneys, to execute the
name, place and stead of the undersigned, the Company's Annual Report on Form
10-K for the year ended December 31, 1995 (and any amendments thereto), to be
filed by the Company under the Securities Exchange Act of 1934, as amended,
as fully and effectively in all respects as the undersigned could do if
personally present.

          IN WITNESS WHEREOF, the undersigned has signed this Power of
Attorney on and as of the date set forth below:

Date:  February 22, 1996                By: /s/ Dean C. Kehler        



                             POWER OF ATTORNEY


          KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director
and/or officer of Continental Airlines, Inc. (the "Company"), does hereby
constitute and appoint Lawrence W. Kellner and Jeffery A. Smisek or either of
them, the undersigned's true and lawful attorney or attorneys, to execute the
name, place and stead of the undersigned, the Company's Annual Report on Form
10-K for the year ended December 31, 1995 (and any amendments thereto), to be
filed by the Company under the Securities Exchange Act of 1934, as amended,
as fully and effectively in all respects as the undersigned could do if
personally present.

          IN WITNESS WHEREOF, the undersigned has signed this Power of
Attorney on and as of the date set forth below:

Date:  February 14, 1996                By: /s/ Robert L. Lumpkins    



                             POWER OF ATTORNEY


          KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director
and/or officer of Continental Airlines, Inc. (the "Company"), does hereby
constitute and appoint Lawrence W. Kellner and Jeffery A. Smisek or either of
them, the undersigned's true and lawful attorney or attorneys, to execute the
name, place and stead of the undersigned, the Company's Annual Report on Form
10-K for the year ended December 31, 1995 (and any amendments thereto), to be
filed by the Company under the Securities Exchange Act of 1934, as amended,
as fully and effectively in all respects as the undersigned could do if
personally present.

          IN WITNESS WHEREOF, the undersigned has signed this Power of
Attorney on and as of the date set forth below:

Date:  February 14, 1996                By: /s/ Douglas McCorkindale  




                             POWER OF ATTORNEY


          KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director
and/or officer of Continental Airlines, Inc. (the "Company"), does hereby
constitute and appoint Lawrence W. Kellner and Jeffery A. Smisek or either of
them, the undersigned's true and lawful attorney or attorneys, to execute the
name, place and stead of the undersigned, the Company's Annual Report on Form
10-K for the year ended December 31, 1995 (and any amendments thereto), to be
filed by the Company under the Securities Exchange Act of 1934, as amended,
as fully and effectively in all respects as the undersigned could do if
personally present.

          IN WITNESS WHEREOF, the undersigned has signed this Power of
Attorney on and as of the date set forth below:

Date:  March 1, 1996                    By: /s/ David E. Mitchell     



                             POWER OF ATTORNEY


          KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director
and/or officer of Continental Airlines, Inc. (the "Company"), does hereby
constitute and appoint Lawrence W. Kellner and Jeffery A. Smisek or either of
them, the undersigned's true and lawful attorney or attorneys, to execute the
name, place and stead of the undersigned, the Company's Annual Report on Form
10-K for the year ended December 31, 1995 (and any amendments thereto), to be
filed by the Company under the Securities Exchange Act of 1934, as amended,
as fully and effectively in all respects as the undersigned could do if
personally present.

          IN WITNESS WHEREOF, the undersigned has signed this Power of
Attorney on and as of the date set forth below:

Date:  February 1, 1996                 By: /s/ Richard W. Pogue      




                             POWER OF ATTORNEY


          KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director
and/or officer of Continental Airlines, Inc. (the "Company"), does hereby
constitute and appoint Lawrence W. Kellner and Jeffery A. Smisek or either of
them, the undersigned's true and lawful attorney or attorneys, to execute the
name, place and stead of the undersigned, the Company's Annual Report on Form
10-K for the year ended December 31, 1995 (and any amendments thereto), to be
filed by the Company under the Securities Exchange Act of 1934, as amended,
as fully and effectively in all respects as the undersigned could do if
personally present.

          IN WITNESS WHEREOF, the undersigned has signed this Power of
Attorney on and as of the date set forth below:

Date:  February 7, 1996                 By: /s/ William S. Price III  



                             POWER OF ATTORNEY


          KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director
and/or officer of Continental Airlines, Inc. (the "Company"), does hereby
constitute and appoint Lawrence W. Kellner and Jeffery A. Smisek or either of
them, the undersigned's true and lawful attorney or attorneys, to execute the
name, place and stead of the undersigned, the Company's Annual Report on Form
10-K for the year ended December 31, 1995 (and any amendments thereto), to be
filed by the Company under the Securities Exchange Act of 1934, as amended,
as fully and effectively in all respects as the undersigned could do if
personally present.

          IN WITNESS WHEREOF, the undersigned has signed this Power of
Attorney on and as of the date set forth below:

Date:  February 1, 1996                 By: /s/ Donald L. Sturm       



                             POWER OF ATTORNEY


          KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director
and/or officer of Continental Airlines, Inc. (the "Company"), does hereby
constitute and appoint Lawrence W. Kellner and Jeffery A. Smisek or either of
them, the undersigned's true and lawful attorney or attorneys, to execute the
name, place and stead of the undersigned, the Company's Annual Report on Form
10-K for the year ended December 31, 1995 (and any amendments thereto), to be
filed by the Company under the Securities Exchange Act of 1934, as amended,
as fully and effectively in all respects as the undersigned could do if
personally present.

          IN WITNESS WHEREOF, the undersigned has signed this Power of
Attorney on and as of the date set forth below:

Date:  February 1, 1996                 By: /s/ Clause I. Taylor, O.C.



                             POWER OF ATTORNEY


          KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director
and/or officer of Continental Airlines, Inc. (the "Company"), does hereby
constitute and appoint Lawrence W. Kellner and Jeffery A. Smisek or either of
them, the undersigned's true and lawful attorney or attorneys, to execute the
name, place and stead of the undersigned, the Company's Annual Report on Form
10-K for the year ended December 31, 1995 (and any amendments thereto), to be
filed by the Company under the Securities Exchange Act of 1934, as amended,
as fully and effectively in all respects as the undersigned could do if
personally present.

          IN WITNESS WHEREOF, the undersigned has signed this Power of
Attorney on and as of the date set forth below:

Date:  February 1, 1996                 By: /s/ Karen Hastie Williams 




                             POWER OF ATTORNEY


          KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director
and/or officer of Continental Airlines, Inc. (the "Company"), does hereby
constitute and appoint Lawrence W. Kellner and Jeffery A. Smisek or either of
them, the undersigned's true and lawful attorney or attorneys, to execute the
name, place and stead of the undersigned, the Company's Annual Report on Form
10-K for the year ended December 31, 1995 (and any amendments thereto), to be
filed by the Company under the Securities Exchange Act of 1934, as amended,
as fully and effectively in all respects as the undersigned could do if
personally present.

          IN WITNESS WHEREOF, the undersigned has signed this Power of
Attorney on and as of the date set forth below:

Date:  February 1, 1996                 By: /s/ Charles A. Yamarone   









<TABLE> <S> <C>

<ARTICLE> 5
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<S>                             <C>
<PERIOD-TYPE>                   12-MOS
<FISCAL-YEAR-END>                          DEC-31-1995
<PERIOD-END>                               DEC-31-1995
<CASH>                                             747
<SECURITIES>                                         0
<RECEIVABLES>                                      351
<ALLOWANCES>                                         0
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<CURRENT-ASSETS>                                  1315
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<SALES>                                           5825
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<OTHER-EXPENSES>                                  5440
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<CHANGES>                                            0
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<EPS-PRIMARY>                                     7.20
<EPS-DILUTED>                                     6.29
        

</TABLE>