<PAGE>   1
                                             As Filed Pursuant to Rule 424(b)(2)
                                             Registration No. 333-91765


 
           PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED DECEMBER 8, 1999
 
                                  $743,317,000
 
                          [CONTINENTAL AIRLINES LOGO]
 
                           2000-1 PASS THROUGH TRUSTS
                    PASS THROUGH CERTIFICATES, SERIES 2000-1
 
     Five classes of the Continental Airlines Pass Through Certificates, Series
2000-1, will be issued in this offering: Class A-1, A-2, B, C-1 and C-2. A
separate trust will be established for each class of certificates. The proceeds
from the sale of certificates will initially be held in escrow (except as
described below). The trusts will use the escrowed funds to acquire equipment
notes. The equipment notes will be issued to finance the acquisition by
Continental Airlines of 21 new Boeing aircraft. Two of these aircraft were
delivered in February 2000 and the remaining aircraft are scheduled for delivery
from June 2000 to December 2000. The aircraft will be leased or purchased by
Continental. Payments on the equipment notes held in each trust will be passed
through to the holders of certificates of such trust. A portion of the offering
proceeds may be used at the closing of the offering to acquire equipment notes
for the aircraft previously delivered.
 
     The equipment notes issued for each aircraft will have a security interest
in such aircraft. Interest on the equipment notes will be payable semiannually
on each May 1 and November 1, beginning on May 1, 2000. Principal payments on
the equipment notes held for the Class A-1, B and C-1 certificates are scheduled
on May 1 and November 1 in certain years, beginning on November 1, 2000. The
entire principal of the equipment notes held for the Class A-2 certificates will
be scheduled for payment on May 1, 2010. The entire principal of the equipment
notes held for the Class C-2 certificates will be scheduled for payment on May
1, 2005.
 
     The Class A-1 and A-2 certificates will rank equally in right of
distributions and will rank senior to the other certificates. The Class B
certificates will rank junior to the Class A-1 and A-2 certificates and will
rank senior to the Class C-1 and C-2 certificates. The Class C-1 and C-2
certificates will rank equally and will rank junior to the other certificates.
 
     Credit Suisse First Boston, New York branch, will provide a liquidity
facility for each of the Class A-1, A-2 and B certificates, and Morgan Stanley
Capital Services Inc. will provide a liquidity facility for each of the Class
C-1 and C-2 certificates, in each case in an amount sufficient to make three
semiannual interest payments.
 
     The certificates will not be listed on any national securities exchange.
     INVESTING IN THE CERTIFICATES INVOLVES RISKS. SEE "RISK FACTORS" ON PAGE
S-19.
 

<TABLE>
<CAPTION>
              PASS THROUGH                 PRINCIPAL      INTEREST     FINAL EXPECTED      PRICE TO
              CERTIFICATES                   AMOUNT         RATE      DISTRIBUTION DATE    PUBLIC(1)
              ------------                ------------    --------    -----------------    ---------
<S>                                       <C>             <C>         <C>                  <C>
Class A-1...............................  $395,780,000     8.048%     November 1, 2020        100%
Class A-2...............................   117,852,000     7.918        May 1, 2010           100
Class B.................................   113,149,000     8.388      November 1, 2020        100
Class C-1...............................    70,619,000     8.499        May 1, 2011           100
Class C-2...............................    45,917,000     8.321        May 1, 2005           100
</TABLE>

 
---------------
(1) Plus accrued interest, if any, from the date of issuance.
 
     The underwriters will purchase all of the certificates if any are
purchased. The aggregate proceeds from the sale of the certificates will be
$743,317,000. Continental will pay the underwriters a commission of $6,689,853.
Delivery of the certificates in book-entry form only will be made on or about
March 15, 2000.
 
     Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus supplement or the accompanying prospectus is truthful or complete.
Any representation to the contrary is a criminal offense.
 
                               Joint Bookrunners
CREDIT SUISSE FIRST BOSTON                            MORGAN STANLEY DEAN WITTER
                            ------------------------
 
CHASE SECURITIES INC.
                              MERRILL LYNCH & CO.
                                                     SALOMON SMITH BARNEY
 
            THE DATE OF THIS PROSPECTUS SUPPLEMENT IS MARCH 1, 2000.

<PAGE>   2
 
                          PRESENTATION OF INFORMATION
 
     These offering materials consist of two documents: (a) this Prospectus
Supplement, which describes the terms of the certificates that we are currently
offering, and (b) the accompanying Prospectus, which provides general
information about our pass through certificates, some of which may not apply to
the certificates that we are currently offering. The information in this
Prospectus Supplement replaces any inconsistent information included in the
accompanying Prospectus.
 
     We have given certain capitalized terms specific meanings for purposes of
this Prospectus Supplement. The "Index of Terms" attached as Appendix I to this
Prospectus Supplement lists the page in this Prospectus Supplement on which we
have defined each such term.
 
     At varying places in this Prospectus Supplement and the Prospectus, we
refer you to other sections of such documents for additional information by
indicating the caption heading of such other sections. The page on which each
principal caption included in this Prospectus Supplement and the Prospectus can
be found is listed in the Table of Contents below. All such cross references in
this Prospectus Supplement are to captions contained in this Prospectus
Supplement and not in the Prospectus, unless otherwise stated.
                            ------------------------
 
                               TABLE OF CONTENTS
 
                             PROSPECTUS SUPPLEMENT
 

<TABLE>
<CAPTION>
                                        PAGE
                                        ----
<S>                                     <C>
PROSPECTUS SUPPLEMENT SUMMARY.........   S-5
  Summary of Terms of Certificates....   S-5
  Equipment Notes and the Aircraft....   S-6
  Loan to Aircraft Value Ratios.......   S-7
  Cash Flow Structure.................   S-8
  The Offering........................   S-9
  Summary Financial and Operating
     Data.............................  S-16
RISK FACTORS..........................  S-19
  Risk Factors Relating to the
     Company..........................  S-19
  Risk Factors Relating to the Airline
     Industry.........................  S-21
  Risk Factors Relating to the
     Certificates and the Offering....  S-22
USE OF PROCEEDS.......................  S-24
THE COMPANY...........................  S-25
  Domestic Operations.................  S-25
  International Operations............  S-26
DESCRIPTION OF THE CERTIFICATES.......  S-28
  General.............................  S-28
  Subordination.......................  S-29
  Payments and Distributions..........  S-31
  Pool Factors........................  S-33
  Reports to Certificateholders.......  S-35
  Indenture Defaults and Certain
     Rights Upon an Indenture
     Default..........................  S-35
  Purchase Rights of
     Certificateholders...............  S-37
  PTC Event of Default................  S-38
  Merger, Consolidation and Transfer
     of Assets........................  S-38
  Modifications of the Pass Through
     Trust Agreements and Certain
     Other Agreements.................  S-39
  Obligation to Purchase Equipment
     Notes............................  S-41
  Possible Issuance of Class D
     Certificates.....................  S-45
  Liquidation of Original Trusts......  S-45
  Termination of the Trusts...........  S-45
  The Trustees........................  S-46
  Book-Entry; Delivery and Form.......  S-46
</TABLE>

 

<TABLE>
<CAPTION>
                                        PAGE
                                        ----
<S>                                     <C>
DESCRIPTION OF THE DEPOSIT
  AGREEMENTS..........................  S-47
  General.............................  S-47
  Unused Deposits.....................  S-47
  Distribution Upon Occurrence of
     Triggering Event.................  S-48
  Depositary..........................  S-48
DESCRIPTION OF THE ESCROW
  AGREEMENTS..........................  S-49
DESCRIPTION OF THE LIQUIDITY
  FACILITIES..........................  S-50
  General.............................  S-50
  Drawings............................  S-50
  Reimbursement of Drawings...........  S-53
  Liquidity Events of Default.........  S-54
  Liquidity Providers.................  S-55
DESCRIPTION OF THE INTERCREDITOR
  AGREEMENT...........................  S-56
  Intercreditor Rights................  S-56
  Priority of Distributions...........  S-57
  Voting of Equipment Notes...........  S-61
  Addition of Trustee for Class D
     Certificates.....................  S-61
  The Subordination Agent.............  S-61
DESCRIPTION OF THE AIRCRAFT AND THE
  APPRAISALS..........................  S-62
  The Aircraft........................  S-62
  The Appraisals......................  S-63
  Deliveries of Aircraft..............  S-64
  Substitute Aircraft.................  S-64
DESCRIPTION OF THE EQUIPMENT NOTES....  S-65
  General.............................  S-65
  Subordination.......................  S-66
  Principal and Interest Payments.....  S-66
  Redemption..........................  S-67
  Security............................  S-68
  Loan to Value Ratios of Equipment
     Notes............................  S-69
  Limitation of Liability.............  S-71
  Indenture Defaults, Notice and
     Waiver...........................  S-72
</TABLE>

 
                                       S-2

<PAGE>   3
 

<TABLE>
<CAPTION>
                                        PAGE
                                        ----
<S>                                     <C>
  Remedies............................  S-73
  Modification of Indentures and
     Leases...........................  S-75
  Owner Participant's Right to
     Restructure......................  S-76
  Indemnification.....................  S-76
  The Leases and Certain Provisions of
     the Owned Aircraft Indentures....  S-76
CERTAIN U.S. FEDERAL INCOME TAX
  CONSEQUENCES........................  S-84
  General.............................  S-84
  Tax Status of the Trusts............  S-84
  Taxation of Certificateholders
     Generally........................  S-85
  Effect of Reallocation of Payments
     under the Intercreditor
     Agreement........................  S-86
  Dissolution of Original Trusts and
     Formation of New Trusts..........  S-87
  Sale or Other Disposition of the
     Certificates.....................  S-87
  Foreign Certificateholders..........  S-87
</TABLE>

 

<TABLE>
<CAPTION>
                                        PAGE
                                        ----
<S>                                     <C>
  Backup Withholding..................  S-88
CERTAIN DELAWARE TAXES................  S-88
CERTAIN ERISA CONSIDERATIONS..........  S-88
UNDERWRITING..........................  S-91
NOTICE TO CANADIAN RESIDENTS..........  S-92
  Resale Restrictions.................  S-92
  Representations of Purchasers.......  S-92
  Rights of Action (Ontario
     Purchasers)......................  S-93
  Enforcement of Legal Rights.........  S-93
  Notice to British Columbia
     Residents........................  S-93
  Taxation and Eligibility for
     Investment.......................  S-93
LEGAL MATTERS.........................  S-93
EXPERTS...............................  S-93
INCORPORATION OF CERTAIN DOCUMENTS BY
  REFERENCE...........................  S-94
INDEX OF TERMS....................Appendix I
APPRAISAL LETTERS................Appendix II
</TABLE>

 
                                   PROSPECTUS
 

<TABLE>
<CAPTION>
                                        PAGE
                                        ----
<S>                                     <C>
WHERE YOU CAN FIND MORE INFORMATION...    1
FORWARD-LOOKING STATEMENTS............    1
INCORPORATION OF CERTAIN DOCUMENTS BY
  REFERENCE...........................    2
SUMMARY...............................    3
  The Offering........................    3
  Certificates........................    3
  Pass Through Trusts.................    3
  Equipment Notes.....................    4
THE COMPANY...........................    6
USE OF PROCEEDS.......................    6
RATIO OF EARNINGS TO FIXED CHARGES....    7
DESCRIPTION OF THE CERTIFICATES.......    7
  General.............................    7
  Book-Entry Registration.............   10
  Payments and Distributions..........   13
  Pool Factors........................   14
  Reports to Certificateholders.......   14
  Voting of Equipment Notes...........   15
  Events of Default and Certain Rights
     Upon an Event of Default.........   15
  Merger, Consolidation and Transfer
     of Assets........................   17
  Modifications of the Basic
     Agreement........................   18
  Modification of Indenture and
     Related Agreements...............   19
  Cross-Subordination Issues..........   19
  Termination of the Pass Through
     Trusts...........................   19
  Delayed Purchase of Equipment
     Notes............................   19
  Liquidity Facility..................   20
</TABLE>

 

<TABLE>
<CAPTION>
                                        PAGE
                                        ----
<S>                                     <C>
  The Pass Through Trustee............   20
DESCRIPTION OF THE EQUIPMENT NOTES....   20
  General.............................   21
  Principal and Interest Payments.....   21
  Redemption..........................   21
  Security............................   21
  Ranking of Equipment Notes..........   23
  Payments and Limitation of
     Liability........................   23
  Defeasance of the Indentures and the
     Equipment Notes in Certain
     Circumstances....................   24
  Assumption of Obligations by
     Continental......................   24
  Liquidity Facility..................   25
  Intercreditor Issues................   25
U.S. INCOME TAX MATTERS...............   26
  General.............................   26
  Tax Status of the Pass Through
     Trusts...........................   26
  Taxation of Certificateholders
     Generally........................   26
  Effect of Subordination of
     Certificateholders of
     Subordinated Trusts..............   27
  Original Issue Discount.............   27
  Sale or Other Disposition of the
     Certificates.....................   27
  Foreign Certificateholders..........   28
  Backup Withholding..................   28
ERISA CONSIDERATIONS..................   28
PLAN OF DISTRIBUTION..................   28
LEGAL OPINIONS........................   30
EXPERTS...............................   30
</TABLE>

 
                            ------------------------
 
     YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR TO
WHICH WE HAVE REFERRED YOU. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
INFORMATION THAT IS DIFFERENT. THIS DOCUMENT MAY BE USED ONLY WHERE IT IS LEGAL
TO SELL THESE SECURITIES. THE INFORMATION IN THIS DOCUMENT MAY BE ACCURATE ONLY
ON THE DATE OF THIS DOCUMENT.
 
                                       S-3

<PAGE>   4
 
                      (THIS PAGE INTENTIONALLY LEFT BLANK)
 
                                       S-4

<PAGE>   5
 
                         PROSPECTUS SUPPLEMENT SUMMARY
 
     This summary highlights selected information from this Prospectus
Supplement and the accompanying Prospectus and may not contain all of the
information that is important to you. For more complete information about the
Certificates and Continental Airlines, you should read this entire Prospectus
Supplement and the accompanying Prospectus, as well as the materials filed with
the Securities and Exchange Commission that are considered to be part of this
Prospectus Supplement and the Prospectus. See "Incorporation of Certain
Documents by Reference" in this Prospectus Supplement and in the Prospectus.
 
SUMMARY OF TERMS OF CERTIFICATES
 

<TABLE>
<CAPTION>
                                  CLASS A-1          CLASS A-2           CLASS B           CLASS C-1          CLASS C-2
                                 CERTIFICATES       CERTIFICATES       CERTIFICATES       CERTIFICATES       CERTIFICATES
                                 ------------       ------------       ------------       ------------       ------------
<S>                            <C>                <C>                <C>                <C>                <C>
Aggregate Face Amount........    $395,780,000       $117,852,000       $113,149,000       $70,619,000        $45,917,000
Ratings:
  Moody's....................        Aa3                Aa3                 A2                Baa1               Baa1
  Standard & Poor's..........        AA+                AA+                AA-                 A-                 A-
Initial Loan to Aircraft
  Value (cumulative)(1)......       40.6%              40.6%              49.6%              58.6%              58.6%
Expected Highest Loan to
  Aircraft Value
  (cumulative)(2)............       41.0%              41.0%              50.2%              59.3%              59.3%
Expected Principal
  Distribution Window (in
  years).....................      0.6-20.6             10.1             0.6-20.6           0.6-11.1             5.1
Initial Average Life (in
  years from Issuance
  Date)......................        12.6               10.1               11.2               7.0                5.1
Regular Distribution Dates...     May 1 and          May 1 and          May 1 and          May 1 and          May 1 and
                                  November 1         November 1         November 1         November 1         November 1
Final Expected Regular
  Distribution Date..........  November 1, 2020     May 1, 2010      November 1, 2020     May 1, 2011        May 1, 2005
Final Maturity Date..........    May 1, 2022      November 1, 2011     May 1, 2022      November 1, 2012   November 1, 2006
Minimum Denomination.........       $1,000             $1,000             $1,000             $1,000             $1,000
Section 1110 Protection......        Yes                Yes                Yes                Yes                Yes
Liquidity Facility
  Coverage...................    3 semiannual       3 semiannual       3 semiannual       3 semiannual       3 semiannual
                                   interest           interest           interest           interest           interest
                                   payments           payments           payments           payments           payments
</TABLE>

 
---------------
(1) These percentages are calculated as of May 1, 2001, the first Regular
    Distribution Date after all Aircraft are scheduled to have been delivered.
    In making such calculations, we have assumed that all Aircraft are delivered
    prior to such date, that the maximum principal amount of Equipment Notes is
    issued and that the aggregate appraised Aircraft value is $1,237,033,857 as
    of such date. The appraised value is only an estimate and reflects certain
    assumptions. See "Description of the Aircraft and the Appraisals -- The
    Appraisals".
 
(2) See "-- Loan to Aircraft Value Ratios" in this Prospectus Supplement
    Summary.
 
                                       S-5

<PAGE>   6
 
EQUIPMENT NOTES AND THE AIRCRAFT
 
     The 21 Boeing aircraft to be financed pursuant to this offering will
consist of fourteen Boeing 737-824 aircraft, three Boeing 757-224 aircraft and
four Boeing 767-424ER aircraft. The Boeing 737-824 aircraft will be selected by
Continental from among sixteen Boeing 737-824 aircraft. Two of these aircraft
were delivered in February 2000 and the remaining aircraft are scheduled for
delivery prior to the deadline for purposes of this offering. See "Description
of the Aircraft and the Appraisals -- The Appraisals" for a description of the
aircraft that may be financed with the proceeds of this offering. Set forth
below is certain information about the Equipment Notes expected to be held in
the Trusts and the aircraft expected to secure such Equipment Notes:
 

<TABLE>
<CAPTION>
                                                            MAXIMUM
                                                        PRINCIPAL AMOUNT
                                                          OF EQUIPMENT       APPRAISED
AIRCRAFT TYPE(1)(2)                                         NOTES(3)          VALUE(4)
-------------------                                     ----------------    ------------
<S>                                                     <C>                 <C>
Boeing 737-824........................................    $30,822,220       $ 46,700,333
Boeing 737-824........................................     30,822,220         46,700,333
Boeing 737-824........................................     30,937,280         46,874,667
Boeing 737-824........................................     30,937,280         46,874,667
Boeing 737-824........................................     30,937,280         46,874,667
Boeing 737-824........................................     30,983,480         46,944,667
Boeing 737-824........................................     30,983,480         46,944,667
Boeing 737-824........................................     31,025,280         47,008,000
Boeing 737-824........................................     31,025,280         47,008,000
Boeing 737-824........................................     31,025,280         47,008,000
Boeing 737-824........................................     31,025,280         47,008,000
Boeing 737-824........................................     31,136,600         47,176,667
Boeing 737-824........................................     31,136,600         47,176,667
Boeing 737-824........................................     31,185,000         47,250,000
 
Boeing 757-224........................................     39,097,740         59,239,000
Boeing 757-224........................................     39,097,740         59,239,000
Boeing 757-224........................................     39,352,500         59,625,000
 
Boeing 767-424ER......................................     68,463,560        103,732,667
Boeing 767-424ER......................................     68,560,360        103,879,333
Boeing 767-424ER......................................     68,953,060        104,474,333
Boeing 767-424ER......................................     69,148,860        104,771,000
</TABLE>

 
---------------
 
(1) Excludes the following two available Boeing 737-824 aircraft that
    Continental currently does not expect to select: manufacturer's serial
    number 30581 (maximum principal amount of Equipment Notes: $30,983,480;
    appraised value: $46,944,667) and manufacturer's serial number 30802
    (maximum principal amount of Equipment Notes: $31,185,000; appraised value:
    $47,250,000).
 
(2) The delivery deadline for purposes of this offering is March 31, 2001 (or
    later under certain circumstances). See "Description of the Aircraft and the
    Appraisals -- Deliveries of Aircraft". Continental has the option to
    substitute other aircraft if the delivery of any Aircraft is expected to be
    delayed for more than 30 days after the month scheduled for delivery or
    beyond the delivery deadline. See "Description of the Aircraft and the
    Appraisals -- Substitute Aircraft".
 
(3) The actual principal amount issued for an Aircraft may be less depending on
    the circumstances of the financing of such Aircraft. The aggregate principal
    amount of all of the Equipment Notes will not exceed the aggregate face
    amount of the Certificates.
 
(4) The appraised value of each Aircraft set forth above is the lesser of the
    average and median values of such Aircraft as appraised by three independent
    appraisal and consulting firms, projected as of the scheduled delivery month
    of each Aircraft. Such appraisals are based upon varying assumptions and
    methodologies. An appraisal is only an estimate of value and should not be
    relied upon as a measure of realizable value. See "Risk Factors -- Risk
    Factors Relating to the Certificates and the Offering -- Appraisals and
    Realizable Value of Aircraft".
 
                                       S-6

<PAGE>   7
 
LOAN TO AIRCRAFT VALUE RATIOS
 
     The following table sets forth loan to Aircraft value ratios ("LTVs") for
each Class of Certificates as of May 1, 2001 (the first Regular Distribution
Date that occurs after all Aircraft are scheduled to have been delivered) and
each November 1 Regular Distribution Date thereafter. The LTVs for any Class of
Certificates for the period prior to May 1, 2001 are not meaningful, since
during such period all of the Equipment Notes expected to be acquired by the
Trusts and the related Aircraft will not be included in the calculation. The
table should not be considered a forecast or prediction of expected or likely
LTVs but simply a mathematical calculation based on one set of assumptions. See
"Risk Factors -- Risk Factors Relating to the Certificates and the
Offering -- Appraisals and Realizable Value of Aircraft".

<TABLE>
<CAPTION>
                          ASSUMED                                OUTSTANDING BALANCE(2)                               LTV(3)
                         AGGREGATE      ------------------------------------------------------------------------   ------------
                          AIRCRAFT       CLASS A-1      CLASS A-2       CLASS B       CLASS C-1      CLASS C-2      CLASS A-1
DATE                      VALUE(1)      CERTIFICATES   CERTIFICATES   CERTIFICATES   CERTIFICATES   CERTIFICATES   CERTIFICATES
----                   --------------   ------------   ------------   ------------   ------------   ------------   ------------
<S>                    <C>              <C>            <C>            <C>            <C>            <C>            <C>
May 1, 2001..........  $1,237,033,857   $384,934,591   $117,852,000   $110,743,091   $64,993,598    $45,917,000        40.6%
November 1, 2001.....   1,214,934,377    379,347,144    117,852,000    110,431,453    64,526,141     45,917,000        40.9
November 1, 2002.....   1,177,359,087    364,855,566    117,852,000    108,251,747    57,394,303     45,917,000        41.0
November 1, 2003.....   1,139,783,797    348,442,123    117,852,000    100,466,711    44,971,182     45,917,000        40.9
November 1, 2004.....   1,102,208,507    332,136,551    117,852,000     91,744,653    44,169,718     45,917,000        40.8
November 1, 2005.....   1,064,633,217    318,647,619    117,852,000     85,170,657    44,169,718              0        41.0
November 1, 2006.....   1,027,057,927    303,241,750    117,852,000     82,164,634    40,397,387              0        41.0
November 1, 2007.....     989,482,637    287,835,882    117,852,000     79,158,611    37,180,100              0        41.0
November 1, 2008.....     951,907,347    272,430,013    117,852,000     75,586,265    31,156,563              0        41.0
November 1, 2009.....     914,332,057    257,024,144    117,852,000     71,697,759    24,159,869              0        41.0
November 1, 2010.....     679,369,133    257,024,144              0     55,229,991    24,159,869              0        37.8
November 1, 2011.....     650,253,313    253,598,793              0     50,140,254             0              0        39.0
November 1, 2012.....     621,137,493    242,065,856              0     45,751,695             0              0        39.0
November 1, 2013.....     592,021,673    227,422,983              0     39,849,926             0              0        38.4
November 1, 2014.....     562,905,853    190,293,284              0     34,062,251             0              0        33.8
November 1, 2015.....     533,790,033    148,209,304              0     29,157,490             0              0        27.8
November 1, 2016.....     494,968,940    105,280,822              0     23,413,915             0              0        21.3
November 1, 2017.....     456,147,847     93,177,343              0     18,801,121             0              0        20.4
November 1, 2018.....     417,326,753     93,177,343              0     16,566,133             0              0        22.3
November 1, 2019.....     378,505,660     48,605,095              0      9,907,956             0              0        12.8
November 1, 2020.....               0              0              0              0             0              0          NA
 
<CAPTION>
                                                LTV(3)
                       ---------------------------------------------------------
                        CLASS A-2       CLASS B       CLASS C-1      CLASS C-2
DATE                   CERTIFICATES   CERTIFICATES   CERTIFICATES   CERTIFICATES
----                   ------------   ------------   ------------   ------------
<S>                    <C>            <C>            <C>            <C>
May 1, 2001..........      40.6%          49.6%          58.6%          58.6%
November 1, 2001.....      40.9           50.0           59.1           59.1
November 1, 2002.....      41.0           50.2           59.0           59.0
November 1, 2003.....      40.9           49.7           57.7           57.7
November 1, 2004.....      40.8           49.1           57.3           57.3
November 1, 2005.....      41.0           49.0           53.1             NA
November 1, 2006.....      41.0           49.0           52.9             NA
November 1, 2007.....      41.0           49.0           52.8             NA
November 1, 2008.....      41.0           48.9           52.2             NA
November 1, 2009.....      41.0           48.8           51.5             NA
November 1, 2010.....        NA           46.0           49.5             NA
November 1, 2011.....        NA           46.7             NA             NA
November 1, 2012.....        NA           46.3             NA             NA
November 1, 2013.....        NA           45.1             NA             NA
November 1, 2014.....        NA           39.9             NA             NA
November 1, 2015.....        NA           33.2             NA             NA
November 1, 2016.....        NA           26.0             NA             NA
November 1, 2017.....        NA           24.5             NA             NA
November 1, 2018.....        NA           26.3             NA             NA
November 1, 2019.....        NA           15.5             NA             NA
November 1, 2020.....        NA             NA             NA             NA
</TABLE>

 
---------------
(1) We have assumed that the initial appraised value of each Aircraft,
    determined as described under "-- Equipment Notes and the Aircraft",
    declines by approximately 3% per year for the first fifteen years after the
    year of delivery of such Aircraft and by approximately 4% per year
    thereafter.
 
(2) In calculating the outstanding balances, we have assumed that the Trusts
    will acquire the maximum principal amount of Equipment Notes for all
    Aircraft.
 
(3) The LTVs for each Class of Certificates were obtained for each Regular
    Distribution Date by dividing (i) the expected outstanding balance of such
    Class together with the expected outstanding balance of all other Classes
    equal or senior in right of payment to such Class after giving effect to the
    distributions expected to be made on such date, by (ii) the assumed value of
    all of the Aircraft on such date based on the assumptions described above.
    The outstanding balances and LTVs may change if, among other things, the
    aggregate principal amount of the Equipment Notes acquired by the Trusts is
    less than the maximum permitted under the terms of this offering or the
    amortization of the Equipment Notes differs from the assumed amortization
    schedule calculated for purposes of this Prospectus Supplement.
 
     The above table was compiled on an aggregate basis. However, the Equipment
Notes for an Aircraft will not have a security interest in any other Aircraft.
This means that any excess proceeds realized from the sale of an Aircraft or
other exercise of remedies will not be available to cover any shortfalls on the
Equipment Notes relating to any other Aircraft. See "Description of the
Equipment Notes -- Loan to Value Ratios of Equipment Notes" for examples of LTVs
for the Equipment Notes issued in respect of individual Aircraft, which may be
more relevant in a default situation than the aggregate values shown above.
 
                                       S-7

<PAGE>   8
 
CASH FLOW STRUCTURE
 
     Set forth below is a diagram illustrating the structure for the offering of
the Certificates and certain cash flows.
 
[Diagram omitted, which shows that Continental will pay to the Loan Trustee for
Leased Aircraft and Owned Aircraft (a) the lease rental payments, which are
assigned by the Owner Trustee, on Leased Aircraft and (b) the mortgage payments
on Owned Aircraft. From such lease rental payments and mortgage payments, the
Loan Trustee will make Equipment Note payments on the Series A-1 Equipment
Notes, the Series A-2 Equipment Notes, the Series B Equipment Notes, the Series
C-1 Equipment Notes and the Series C-2 Equipment Notes with respect to all
Aircraft to the Subordination Agent. Excess rental payments will be paid by the
Loan Trustee to the lessors for Leased Aircraft. From such Equipment Note
payments, the Subordination Agent will pay principal, premium, if any, and
interest distributions to the Class A-1 Trustee, the Class A-2 Trustee, the
Class B Trustee, the Class C-1 Trustee and the Class C-2 Trustee, who will pay
such principal, premium, if any, and interest distributions to the Class A-1
Certificateholders, the Class A-2 Certificateholders, the Class B
Certificateholders, the Class C-1 Certificateholders and the Class C-2
Certificateholders, respectively. The Subordination Agent may also receive
advances, if any, and pay reimbursements, if any, to the applicable Liquidity
Provider. The Depositary will make interest payments on the Deposits to the
Escrow Agent. From such interest payments, the Escrow Agent will make payments
to the Class A-1 Certificateholders, the Class A-2 Certificateholders, the Class
B Certificateholders, the Class C-1 Certificateholders and the Class C-2
Certificateholders.]
 
---------------
(1) Each Aircraft leased to Continental will be subject to a separate Lease and
    a related Indenture; each Aircraft owned by Continental will be subject to a
    separate Indenture.
 
(2) To the extent not used to purchase Equipment Notes at the closing of the
    offering, the proceeds of the offering of each Class of Certificates will
    initially be held in escrow and deposited with the Depositary. The
    Depositary will hold such funds as interest-bearing Deposits. Each Trust
    will withdraw funds from the Deposits relating to such Trust to purchase
    Equipment Notes from time to time as each Aircraft is financed. The
    scheduled payments of interest on the Equipment Notes and on the Deposits
    relating to a Trust, taken together, will be sufficient to pay accrued
    interest on the outstanding Certificates of such Trust. The Liquidity
    Facilities will not cover interest on the Deposits.
 
                                       S-8

<PAGE>   9
 
THE OFFERING
 
Certificates Offered..........   - Class A-1 Certificates
 
                                 - Class A-2 Certificates
 
                                 - Class B Certificates
 
                                 - Class C-1 Certificates
 
                                 - Class C-2 Certificates
 
                                 Each Class of Certificates will represent a
                                 fractional undivided interest in a related
                                 Trust.
 
Use of Proceeds...............   The proceeds from the sale of the Certificates
                                 of each Trust will initially be held in escrow
                                 and deposited with the Depositary (except as
                                 described below). Each Trust will withdraw
                                 funds from the escrow relating to such Trust to
                                 acquire Equipment Notes. The Equipment Notes
                                 will be issued to finance the acquisition by
                                 Continental of 21 new Boeing aircraft. Two of
                                 these aircraft were delivered in February 2000
                                 and the remaining aircraft are scheduled for
                                 delivery from June 2000 to December 2000. A
                                 portion of the offering proceeds may be used at
                                 the closing of the offering to acquire
                                 Equipment Notes for the aircraft previously
                                 delivered.
 
Subordination Agent, Trustee,
  Paying Agent and Loan
  Trustee.....................   Wilmington Trust Company
 
Escrow Agent..................   First Security Bank, National Association
 
Depositary....................   Credit Suisse First Boston, New York branch
 
Liquidity Providers...........   Credit Suisse First Boston, New York branch,
                                 for the Class A-1, A-2 and B Certificates, and
                                 Morgan Stanley Capital Services Inc., for the
                                 Class C-1 and C-2 Certificates. The obligations
                                 of Morgan Stanley Capital Services Inc. under
                                 its Liquidity Facilities will be guaranteed by
                                 its parent company, Morgan Stanley Dean Witter
                                 & Co.
 
Trust Property................   The property of each Trust will include:
 
                                 - Equipment Notes acquired by such Trust.
 
                                 - All monies receivable under the Liquidity
                                   Facility for such Trust.
 
                                 - Funds from time to time deposited with the
                                   Trustee in accounts relating to such Trust.
 
Regular Distribution Dates....   May 1 and November 1, commencing on May 1,
                                 2000.
 
Record Dates..................   The fifteenth day preceding the related
                                 Distribution Date.
 
Distributions.................   The Trustee will distribute all payments of
                                 principal, premium (if any) and interest
                                 received on the Equipment Notes held in each
                                 Trust to the holders of the Certificates of
                                 such Trust, subject to the subordination
                                 provisions applicable to the Certificates.
 
                                       S-9

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

<PAGE>   11
 
                                 Aircraft subject to the lien of such Indenture
                                 for less than certain specified minimums or
                                 modify lease rental payments for such Aircraft
                                 below a specified threshold.
 
Right to Buy Other Classes of
  Certificates................   If Continental is in bankruptcy or certain
                                 other specified events have occurred, the
                                 Certificateholders may have the right to buy
                                 certain other Classes of Certificates on the
                                 following basis:
 
                                 - If the Class A-1 or Class A-2
                                   Certificateholders are then represented by
                                   the Controlling Party, the Certificateholders
                                   of such other Class will have the right to
                                   purchase all of such Class of Certificates
                                   represented by the Controlling Party.
 
                                 - The Class B Certificateholders will have the
                                   right to purchase all of the Class A-1 and
                                   Class A-2 Certificates.
 
                                 - The Class C-1 and Class C-2
                                   Certificateholders will have the right to
                                   purchase all of the Class A-1, Class A-2 and
                                   Class B Certificates.
 
                                 - If the Class C-1 or Class C-2
                                   Certificateholders are then represented by
                                   the Controlling Party, the Certificateholders
                                   of such other Class will have the right to
                                   purchase all of such Class of Certificates
                                   represented by the Controlling Party.
 
                                 The purchase price in each case described above
                                 will be the outstanding balance of the
                                 applicable Class of Certificates plus accrued
                                 and unpaid interest.
 
Liquidity Facilities..........   Under the Liquidity Facility for each Trust,
                                 the Liquidity Provider will, if necessary, make
                                 advances in an aggregate amount sufficient to
                                 pay interest on the applicable Certificates on
                                 up to three successive semiannual Regular
                                 Distribution Dates at the applicable interest
                                 rate for such Certificates. The Liquidity
                                 Facilities cannot be used to pay any other
                                 amount in respect of the Certificates and will
                                 not cover interest payable on amounts held in
                                 escrow as Deposits with the Depositary.
 
                                 Notwithstanding the subordination provisions
                                 applicable to the Certificates, the holders of
                                 the Certificates to be issued by each Trust
                                 will be entitled to receive and retain the
                                 proceeds of drawings under the Liquidity
                                 Facility for such Trust.
 
                                 Upon each drawing under any Liquidity Facility
                                 to pay interest on the Certificates, the
                                 Subordination Agent will reimburse the
                                 applicable Liquidity Provider for the amount of
                                 such drawing. Such reimbursement obligation and
                                 all interest, fees and other amounts owing to
                                 the Liquidity Provider under each Liquidity
                                 Facility and certain other agreements will rank
                                 equally with comparable obligations relating to
                                 the other Liquidity Facilities and will rank
                                 senior to the Certificates in right of payment.
 
Escrowed Funds................   Funds in escrow for the Certificateholders of
                                 each Trust will be held by the Depositary as
                                 Deposits relating to such Trust. Funds may be
                                 withdrawn by the Trustees from time to time to
                                 purchase Equipment Notes prior to the deadline
                                 established for purposes of this offering. On
                                 each Regular Distribution Date, the Depositary
                                 will pay interest accrued on the Deposits
                                 relating to such Trust at a
 
                                      S-11

<PAGE>   12
 
                                 rate per annum equal to the interest rate
                                 applicable to the Certificates issued by such
                                 Trust. The Deposits relating to each Trust and
                                 interest paid thereon will not be subject to
                                 the subordination provisions applicable to the
                                 Certificates. The Deposits cannot be used to
                                 pay any other amount in respect of the
                                 Certificates.
 
Unused Escrowed Funds.........   All of the Deposits held in escrow may not be
                                 used to purchase Equipment Notes by the
                                 deadline established for purposes of this
                                 offering. This may occur because of delays in
                                 the delivery of Aircraft, variations in the
                                 terms of each Aircraft financing or other
                                 reasons. See "Description of the
                                 Certificates -- Obligation to Purchase
                                 Equipment Notes". If any funds remain as
                                 Deposits with respect to any Trust after such
                                 deadline, they will be withdrawn by the Escrow
                                 Agent for such Trust and distributed, with
                                 accrued and unpaid interest, to the
                                 Certificateholders of such Trust after at least
                                 15 days' prior written notice. See "Description
                                 of the Deposit Agreements -- Unused Deposits".
 
Obligation to Purchase
  Equipment Notes.............   The Trustees will be obligated to purchase the
                                 Equipment Notes issued with respect to each
                                 Aircraft pursuant to the Note Purchase
                                 Agreement. Continental may enter into a
                                 leveraged lease financing or a secured debt
                                 financing with respect to each Aircraft
                                 pursuant to forms of financing agreements
                                 attached to the Note Purchase Agreement.
                                 However, the terms of the financing agreements
                                 entered into may differ from the forms of such
                                 agreements described in this Prospectus
                                 Supplement. In the case of a Leased Aircraft,
                                 this is because a third party -- the Owner
                                 Participant -- will provide a portion of the
                                 financing of the Aircraft and may request
                                 changes. Although such changes are permitted,
                                 under the Note Purchase Agreement, the terms of
                                 such financing agreements must (a) contain the
                                 Mandatory Document Terms set forth in the Note
                                 Purchase Agreement and (b) not vary the
                                 Mandatory Economic Terms set forth in the Note
                                 Purchase Agreement. In addition, Continental
                                 must certify to the Trustees that any such
                                 modifications do not materially and adversely
                                 affect the Certificateholders. Continental must
                                 also obtain written confirmation from each
                                 Rating Agency that the use of financing
                                 agreements modified in any material respect
                                 from the forms attached to the Note Purchase
                                 Agreement will not result in a withdrawal,
                                 suspension or downgrading of the rating of any
                                 Class of Certificates. The Trustees will not be
                                 obligated to purchase Equipment Notes if, at
                                 the time of issuance, Continental is in
                                 bankruptcy or certain other specified events
                                 have occurred. See "Description of the
                                 Certificates -- Obligation to Purchase
                                 Equipment Notes".
 
Equipment Notes
(a) Issuer....................   Leased Aircraft.  If Continental leases an
                                 Aircraft, the related Equipment Notes will be
                                 issued by a financial institution, acting as
                                 Owner Trustee. The Owner Trustee will not be
                                 individually liable for such Equipment Notes.
                                 However, Continental's scheduled
 
                                      S-12

<PAGE>   13
 
                                 rental obligations under the related Lease will
                                 be in amounts sufficient to pay scheduled
                                 payments on such Equipment Notes.
 
                                 Owned Aircraft.  If Continental purchases an
                                 Aircraft, the related Equipment Notes will be
                                 issued by Continental.
 
(b) Interest..................   The Equipment Notes held in each Trust will
                                 accrue interest at the rate per annum for the
                                 Certificates issued by such Trust set forth on
                                 the cover page of this Prospectus Supplement.
                                 Interest will be payable on May 1 and November
                                 1 of each year, commencing on the first such
                                 date after issuance of such Equipment Notes.
                                 Interest is calculated on the basis of a
                                 360-day year consisting of twelve 30-day
                                 months.
 
(c) Principal.................   Amortizing Notes.  Principal payments on the
                                 Series A-1, Series B and Series C-1 Equipment
                                 Notes are scheduled on May 1 and November 1 in
                                 certain years, commencing on November 1, 2000.
 
                                 Bullet Maturity Notes. The entire principal
                                 amount of the Series A-2 Equipment Notes is
                                 scheduled to be paid on May 1, 2010. The entire
                                 principal amount of the Series C-2 Equipment
                                 Notes is scheduled to be paid on May 1, 2005.
 
(d) Redemption and Purchase...   Aircraft Event of Loss.  If an Event of Loss
                                 occurs with respect to an Aircraft, all of the
                                 Equipment Notes issued with respect to such
                                 Aircraft will be redeemed, unless such Aircraft
                                 is replaced by Continental under the related
                                 financing agreements. The redemption price in
                                 such case will be the unpaid principal amount
                                 of such Equipment Notes, together with accrued
                                 interest, but without any premium.
 
                                 Optional Redemption.  The issuer of the
                                 Equipment Notes with respect to an Aircraft may
                                 elect to redeem them prior to maturity. The
                                 redemption price in such case will be the
                                 unpaid principal amount of such Equipment
                                 Notes, together with accrued interest plus a
                                 Make-Whole Premium. See "Description of the
                                 Equipment Notes -- Redemption".
 
                                 Purchase by Owner.  In the case of a Leased
                                 Aircraft, if a Lease Event of Default is
                                 continuing, the applicable Owner Trustee or
                                 Owner Participant may elect to purchase all of
                                 the Equipment Notes with respect to such
                                 Aircraft, subject to the terms of the
                                 applicable Leased Aircraft Indenture.
 
                                 The purchase price in such case will be the
                                 unpaid principal amount of such Equipment
                                 Notes, together with accrued interest, but
                                 without any premium (provided that a Make-Whole
                                 Premium will be payable under certain
                                 circumstances specified in the Leased Aircraft
                                 Indenture). In the case of an Owned Aircraft,
                                 Continental will have no comparable right to
                                 purchase the Equipment Notes under such
                                 circumstances.
 
(e) Security..................   The Equipment Notes issued with respect to each
                                 Aircraft will be secured by a security interest
                                 in such Aircraft and, in the case of each
                                 Leased Aircraft, in the related Owner Trustee's
                                 rights under the Lease with respect to such
                                 Aircraft (with certain limited exceptions).
 
                                      S-13

<PAGE>   14
 
                                 The Equipment Notes issued in respect of an
                                 Aircraft will not be secured by any other
                                 Aircraft or Leases. This means that any excess
                                 proceeds from the sale of an Aircraft or other
                                 exercise of remedies with respect to such
                                 Aircraft will not be available to cover any
                                 shortfall with respect to any other Aircraft.
 
                                 There will not be cross-default provisions in
                                 the Indentures or in the Leases. This means
                                 that if the Equipment Notes issued with respect
                                 to one or more Aircraft are in default and the
                                 Equipment Notes issued with respect to the
                                 remaining Aircraft are not in default, no
                                 remedies will be exercisable with respect to
                                 the remaining Aircraft.
 
(f) Section 1110 Protection...   Continental's outside counsel will provide its
                                 opinion to the Trustees that the benefits of
                                 Section 1110 of the U.S. Bankruptcy Code will
                                 be available with respect to the Equipment
                                 Notes.
 
Certain Federal Income Tax
  Consequences................   Each Certificate Owner generally should report
                                 on its federal income tax return its pro rata
                                 share of income from the relevant Deposits and
                                 income from the Equipment Notes and other
                                 property held by the relevant Trust. See
                                 "Certain U.S. Federal Income Tax Consequences".
 
Certain ERISA
  Considerations..............   Each person who acquires a Certificate will be
                                 deemed to have represented that either: (a) no
                                 employee benefit plan assets have been used to
                                 purchase such Certificate or (b) the purchase
                                 and holding of such Certificate are exempt from
                                 the prohibited transaction restrictions of the
                                 Employee Retirement Income Security Act of 1974
                                 and the Internal Revenue Code of 1986 pursuant
                                 to one or more prohibited transaction statutory
                                 or administrative exemptions. See "Certain
                                 ERISA Considerations".
 
Rating of the Certificates....   It is a condition to the issuance of the
                                 Certificates that the Certificates be rated by
                                 Moody's and Standard & Poor's not less than the
                                 ratings set forth below:
 

<TABLE>
<CAPTION>
                                                                                     STANDARD
                                               CERTIFICATES               MOODY'S    & POOR'S
                                               ------------               -------    --------
                                  <S>                                     <C>        <C>
                                  Class A-1.............................   Aa3        AA+
                                  Class A-2.............................   Aa3        AA+
                                  Class B...............................   A2         AA-
                                  Class C-1.............................  Baa1        A-
                                  Class C-2.............................  Baa1        A-
</TABLE>

 
                                 A rating is not a recommendation to purchase,
                                 hold or sell Certificates, since such rating
                                 does not address market price or suitability
                                 for a particular investor. There can be no
                                 assurance that such ratings will not be lowered
                                 or withdrawn by a Rating Agency.
 

<TABLE>
<CAPTION>
                                                                                                 STANDARD
                                                                                      MOODY'S    & POOR'S
                                                                                      -------    --------
<S>                                           <C>                                     <C>        <C>
Rating of the Depositary..................    Short Term............................   P-1        A-1+
Threshold Rating for the Liquidity
  Providers...............................    Short Term
                                                Class A-1, Class A-2 and Class B....   P-1        A-1+
                                                Class C-1 and Class C-2.............   P-1        A-1
</TABLE>

 
                                      S-14

<PAGE>   15
 
Liquidity Provider Rating.....   Credit Suisse First Boston meets the Threshold
                                 Rating requirement for the Class A-1, Class A-2
                                 and Class B Certificates. Morgan Stanley Dean
                                 Witter & Co., the guarantor of the obligations
                                 of Morgan Stanley Capital Services Inc., as the
                                 Liquidity Provider for the Class C-1 and C-2
                                 Certificates, meets the Threshold Rating
                                 requirement for the Class C-1 and C-2
                                 Certificates.
 
                                      S-15

<PAGE>   16
 
SUMMARY FINANCIAL AND OPERATING DATA
 
     The following tables summarize certain consolidated financial data and
certain operating data with respect to Continental. The following selected
consolidated financial data for the years ended December 31, 1999, 1998 and 1997
is derived from the audited consolidated financial statements of Continental
including the notes thereto incorporated by reference in the Prospectus and
should be read in conjunction therewith. The following selected consolidated
financial data for the years ended December 31, 1996 and 1995 is derived from
the selected financial data contained in Continental's Annual Report on Form
10-K for the year ended December 31, 1999, incorporated by reference in the
Prospectus, and the audited consolidated financial statements of Continental for
the years ended December 31, 1996 and 1995 and should be read in conjunction
therewith.
 

<TABLE>
<CAPTION>
                                                              YEAR ENDED DECEMBER 31,
                                                ---------------------------------------------------
                                                 1999       1998       1997       1996       1995
                                                -------    -------    -------    -------    -------
                                                  (IN MILLIONS OF DOLLARS, EXCEPT OPERATING DATA,
                                                            PER SHARE DATA AND RATIOS)
<S>                                             <C>        <C>        <C>        <C>        <C>
FINANCIAL DATA -- OPERATIONS:
Operating Revenue.............................  $8,639     $7,927     $7,194     $6,347     $5,816
Operating Expenses............................   8,039(1)   7,226(2)   6,478      5,822(3)   5,431
                                                ------     ------     ------     ------     ------
Operating Income..............................     600        701        716        525        385
Nonoperating Income (Expense), net............     198(4)     (53)       (76)       (97)       (75)
                                                ------     ------     ------     ------     ------
Income before Income Taxes, Minority Interest,
  Extraordinary Charge and Cumulative Effect
  of Change in Accounting Principles..........     798(5)     648        640        428        310
Net Income....................................  $  455     $  383     $  385     $  319     $  224
                                                ======     ======     ======     ======     ======
Earnings per Common Share.....................  $ 6.54(6)  $ 6.34     $ 6.65     $ 5.75     $ 4.07
                                                ======     ======     ======     ======     ======
Earnings per Common Share Assuming Dilution...  $ 6.20(7)  $ 5.02     $ 4.99     $ 4.17     $ 3.37
                                                ======     ======     ======     ======     ======
Ratio of Earnings to Fixed Charges(8).........    1.80x      1.94x      2.07x      1.81x      1.53x
                                                ======     ======     ======     ======     ======
OPERATING DATA(9):
Revenue passenger miles (millions)(10)........  60,022     53,910     47,906     41,914     40,023
Available seat miles (millions)(11)...........  81,946     74,727     67,576     61,515     61,006
Passenger load factor(12).....................    73.2%      72.1%      70.9%      68.1%      65.6%
Breakeven passenger load factor(13)(14).......    65.6%      61.6%      60.1%      60.7%      60.8%
Passenger revenue per available seat mile
  (cents)(15).................................    9.06       9.23       9.29       9.01       8.26
Operating cost per available seat mile
  (cents)(14)(16).............................    9.03       8.89       9.04       8.75       8.35
Average yield per revenue passenger mile
  (cents)(17).................................   12.37      12.79      13.11      13.22      12.59
Average length of aircraft flight (miles).....   1,114      1,044        967        896        836
</TABLE>

 
                                      S-16

<PAGE>   17
 

<TABLE>
<CAPTION>
                                                                          DECEMBER 31,
                                                             --------------------------------------
                                                                   1999                 1998
                                                             -----------------    -----------------
                                                                    (IN MILLIONS OF DOLLARS)
<S>                                                          <C>                  <C>
FINANCIAL DATA -- BALANCE SHEET:
ASSETS:
Cash, Cash Equivalents and Short-Term Investments..........       $1,590               $1,399
Other Current Assets.......................................        1,016                  955
Total Property and Equipment, Net..........................        4,173                3,065
Routes, Gates and Slots, Net...............................        1,131                1,181
Other Assets, Net..........................................          313                  486
                                                                  ------               ------
     Total Assets..........................................       $8,223               $7,086
                                                                  ======               ======
Liabilities and Stockholders' Equity:
Current Liabilities........................................       $2,775               $2,442
Long-Term Debt and Capital Leases..........................        3,055                2,480
Deferred Credits and Other Long-Term Liabilities...........          800                  860
Continental-Obligated Mandatorily Redeemable Preferred
  Securities of Subsidiary Trust Holding Solely Convertible
  Subordinated Debentures(18)..............................           --                  111
Common Stockholders' Equity................................        1,593                1,193
                                                                  ------               ------
     Total Liabilities and Stockholders' Equity............       $8,223               $7,086
                                                                  ======               ======
</TABLE>

 
---------------
 (1) Includes an $81 million fleet disposition/impairment loss resulting from
     Continental's decision to accelerate the retirement of six DC-10-30
     aircraft and other items in 1999 and the first half of 2000 and to dispose
     of related excess inventory. In addition, the impairment charge related to
     Boeing 747 aircraft no longer operated by the Company, and certain other
     fleet-related items were included in the charge.
 
 (2) Includes a $122 million fleet disposition/impairment loss resulting from
     Continental's decision to accelerate the retirement of certain jet and
     turboprop aircraft.
 
 (3) Includes a $128 million fleet disposition loss associated primarily with
     Continental's decision to accelerate the replacement of certain jet
     aircraft.
 
 (4) Includes a $297 million gain on the sale of the Company's interest in
     AMADEUS Global Travel Distribution S.A. and a $33 million gain on the sale
     of a portion of the Company's interest in Equant, partially offset by
     foreign currency losses of $13 million, losses on equity investments of $7
     million and a $4 million loss on the sale of the Company's warrants to
     purchase common stock of priceline.com, Inc.
 
 (5) Reflects income before income taxes and cumulative effect of a change in
     accounting principle. During 1999, as a result of the recently issued Staff
     Accounting Bulletin No. 101 -- "Revenue Recognition in Financial
     Statements," Continental changed the method it uses to account for the sale
     of mileage credits in the OnePass program to participating partners. This
     change, which totaled $27 million, net of tax, was applied retroactively to
     January 1, 1999. Under the new accounting method, revenue from the sale of
     mileage credits is deferred and recognized when transportation is provided.
     Previously, the resulting revenue, net of the incremental costs of
     providing future air travel, was recorded in the period in which the
     credits were sold. Additionally, Continental adopted Statement of Position
     98-5, "Reporting on the Costs of Start-Up Activities", in the first quarter
     of 1999. Statement of Position 98-5 amended Statement of Position 88-1,
     "Accounting for Developmental and Preoperating Costs, Purchases and
     Exchanges of Take-Off and Landing Slots, and Airframe Modifications" by
     requiring preoperating costs related to the integration of new types of
     aircraft to be expensed as incurred and requiring all unamortized start-up
     costs (e.g., pilot training costs related to induction of new aircraft) to
     be expensed upon adoption. This resulted in the Company recording a $6
     million cumulative effect of a change in accounting principle, net of tax,
     in the first quarter of 1999.
 
 (6) Reflects earnings per common share after cumulative effect of changes in
     accounting principles. See Note (5) for a description of the changes in
     accounting principles. Earnings per common share for the
                                      S-17

<PAGE>   18
 
     year ended December 31, 1999 were $7.02 before cumulative effect of such
     changes in accounting principles.
 
 (7) Reflects earnings per common share assuming dilution after cumulative
     effect of changes in accounting principles. See Note (5) for a description
     of the changes in accounting principles. Earnings per common share assuming
     dilution for the year ended December 31, 1999 were $6.64 before cumulative
     effect of such changes in accounting principles.
 
 (8) For purposes of calculating this ratio, earnings consist of income before
     income taxes, minority interest, extraordinary charges and cumulative
     effect of a change in accounting principle plus interest expense (net of
     capitalized interest), the portion of rental expense representative of
     interest expense and amortization of previously capitalized interest. Fixed
     charges consist of interest expense and the portion of rental expense
     representative of interest expense.
 
 (9) Includes operating data for CMI, but does not include operating data for
     Express's regional jet operations or turboprop operations.
 
(10) The number of scheduled miles flown by revenue passengers.
 
(11) The number of seats available for passengers multiplied by the number of
     scheduled miles those seats are flown.
 
(12) Revenue passenger miles divided by available seat miles.
 
(13) 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.
 
(14) Excludes a $81 million fleet disposition/impairment loss in 1999, a $122
     million fleet disposition/ impairment loss in 1998 and a $128 million fleet
     disposition loss in 1996. See Notes (1), (2) and (3) for description of the
     charges.
 
(15) Passenger revenue divided by available seat miles.
 
(16) Operating expenses divided by available seat miles.
 
(17) The average revenue received for each mile a revenue passenger is carried.
 
(18) The sole assets of the Trust were convertible subordinated debentures. At
     December 31, 1998, the debentures had an aggregate principal amount of $115
     million, bore interest at the rate of 8 1/2% per annum and were to mature
     on December 1, 2020. In November and December 1998, approximately $134
     million of such securities were converted into 5,558,649 shares of Class B
     common stock, and in January 1999, the remainder of such securities were
     converted into 4,752,522 shares of Class B common stock.
 
                                      S-18

<PAGE>   19
 
                                  RISK FACTORS
 
RISK FACTORS RELATING TO THE COMPANY
 
     LEVERAGE AND LIQUIDITY
 
     Continental has a higher proportion of debt compared to its equity capital
than some of its principal competitors. In addition, Continental's cash
resources are less than some of its principal competitors. A majority of
Continental's property and equipment is subject to liens securing indebtedness.
Accordingly, Continental may be less able than some of its competitors to
withstand a prolonged recession in the airline industry or respond as flexibly
to changing economic and competitive conditions.
 
     As of December 31, 1999, Continental had:
 
     - approximately $3.4 billion (including current maturities) of long-term
       debt and capital lease obligations.
 
     - approximately $1.6 billion in cash, cash equivalents and short-term
       investments.
 
     - $225 million available to be drawn under general lines of credit.
 
     Continental has substantial commitments for capital expenditures, including
for the acquisition of new aircraft. As of February 23, 2000, Continental had
agreed to acquire or lease a total of 73 Boeing jet aircraft through 2005.
Continental anticipates taking delivery of 28 Boeing jet aircraft in 2000.
Continental also has options for an additional 118 aircraft (exercisable subject
to certain conditions). The estimated aggregate cost of Continental's firm
commitments for Boeing aircraft is approximately $4 billion. We currently plan
to finance our new Boeing aircraft with a combination of enhanced pass through
trust certificates, lease equity and other third party financing, subject to
availability and market conditions. Continental had commitments or letters of
intent for backstop financing for approximately 18% of the anticipated remaining
acquisition cost of future Boeing deliveries. In addition, at February 23, 2000,
Continental had firm commitments to purchase 34 spare engines related to the new
Boeing aircraft for approximately $219 million, which will be deliverable
through March 2005.
 
     As of February 23, 2000, Express, Continental's subsidiary that operates
regional jet and turboprop aircraft, had firm commitments for 92 Embraer ERJ-145
50-seat regional jets and 42 ERJ-135 37-seat regional jets, with options for an
additional 50 ERJ-145 and 25 ERJ-135 aircraft exercisable through 2005. Express
anticipates taking delivery of 15 ERJ-145 and 12 ERJ-135 regional jets in 2000.
Neither Express nor Continental will have any obligation to take any such firm
Embraer aircraft that are not financed by a third party and leased to Express or
Continental.
 
     We expect to finance certain of our capital commitments through operating
leases, which will increase our operating expenses. For 1999, cash expenditures
under operating leases relating to aircraft approximated $758 million, compared
to $702 million for 1998, and approximated $328 million relating to facilities
and other rentals, compared to $263 million in 1998.
 
     Additional financing will be needed to satisfy Continental's capital
commitments. We cannot predict whether sufficient financing will be available
for capital expenditures not covered by firm financing commitments.
 
     CONTINENTAL'S HISTORICAL OPERATING RESULTS
 
     Continental has recorded positive net income in each of the last five
years. However, Continental experienced significant operating losses in the
previous eight years. Historically, the financial results of the U.S. airline
industry have been cyclical. We cannot predict whether current industry
conditions will continue.
 
     SIGNIFICANT COST OF AIRCRAFT FUEL
 
     Fuel costs constitute a significant portion of Continental's operating
expenses. Fuel costs were approximately 9.7% of operating expenses for the year
ended December 31, 1999 (excluding fleet disposition/
 
                                      S-19

<PAGE>   20
 
impairment losses) and 10.2% for the year ended December 31, 1998 (excluding
fleet disposition/impairment losses). Recently, spot jet fuel prices have
increased dramatically, rising to 87.3 cents per gallon at January 21, 2000
compared to 58.3 cents per gallon at October 31, 1999. If high fuel costs
continue without an improvement in the revenue environment, Continental may not
post a profit in the first quarter of 2000.
 
     Fuel prices and supplies are influenced significantly by international
political and economic circumstances. We enter into petroleum swap contracts,
petroleum call option contracts and/or jet fuel purchase commitments to provide
some short-term protection (generally three to six months) against a sharp
increase in jet fuel prices. Our fuel hedging strategy could result in
Continental not fully benefiting from certain fuel price declines. If a fuel
supply shortage were to arise from OPEC production curtailments, a disruption of
oil imports or otherwise, higher fuel prices or a reduction of scheduled airline
service could result. Continuation of current high jet fuel prices and any price
increases would materially affect Continental's operating results.
 
     LABOR MATTERS
 
     In September 1997, we announced our intention to bring all Continental
employees to industry standard wages no later than the end of the year 2000.
Wage increases began in 1997 and will continue to be phased in through the year
2000.
 
     The current status of Continental's and its subsidiaries' principal labor
union agreements is as follows:
 
     - Continental's Pilots.  In June 1998, a five-year collective bargaining
       agreement, retroactive to October 1997, was ratified by Continental's
       pilots. The agreement becomes amendable in October 2002.
 
     - Express's Pilots.  In December 1998, Express and its pilots executed a
       new agreement. This agreement will become amendable on October 1, 2002.
 
     - Flight Attendants.  In February 2000, we announced a 54-month tentative
       collective bargaining agreement covering Continental's flight attendants,
       which is subject to ratification by the flight attendants. In September
       1999, Continental entered into negotiations to amend the collective
       bargaining agreements covering the flight attendants at Express, which
       became amendable on November 1, 1999. The flight attendants at CMI,
       Continental's subsidiary based in Guam, are covered by a collective
       bargaining agreement that becomes amendable on June 30, 2000.
 
     - Dispatchers.  The Company's dispatchers ratified a new five-year
       collective bargaining agreement in July 1998. The agreement becomes
       amendable in October 2003.
 
     - Mechanics.  Continental's mechanics are covered by a new agreement signed
       in January 1999 that becomes amendable January 8, 2002. CMI's mechanics
       are covered by a collective bargaining agreement that becomes amendable
       March 31, 2001. In August 1999, Express' mechanics ratified a four-year
       collective bargaining agreement. The agreement becomes amendable in
       January 2003.
 
     RISKS REGARDING CONTINENTAL/NORTHWEST ALLIANCE
 
     In November 1998, Continental and Northwest Airlines, Inc. ("Northwest")
began implementing a long-term global alliance involving extensive code-sharing,
frequent flyer reciprocity and other cooperative activities (the "Northwest
Alliance"). Implementation of the Northwest Alliance continued throughout 1999
and is continuing in 2000. In a related transaction on November 20, 1998, a
Northwest affiliate acquired an equity interest in Continental from
Continental's principal shareholder and certain other parties. As of January 31,
2000, the Northwest affiliate held approximately 13.5% of the common equity
interest and 49.7% of the fully diluted voting power of Continental. In
addition, as of January 31, 2000, Northwest held a limited proxy to vote certain
additional shares of Continental common stock that would raise its voting power
to approximately 54.5% of Continental's fully diluted voting power.
 
     Continental desires to simplify its equity capital structure and is
committed to continuing to repurchase outstanding equity. In connection with its
stock repurchase program, we have held preliminary discussions
                                      S-20

<PAGE>   21
 
with Northwest concerning the acquisition by Continental of all the Class A
common stock of Continental held by a Northwest affiliate in a voting trust (8.7
million shares). The Northwest Alliance is beneficial to both carriers, and any
transaction would be designed to preserve and strengthen the benefits of the
alliance. There can be no assurance as to whether a transaction between
Continental and Northwest will be agreed to or consummated, nor can we predict
the structure, form or amount of consideration or other elements of any such
transaction.
 
     Continental's ability to finalize implementation of the Northwest Alliance
and to achieve the anticipated benefits is subject to certain risks and
uncertainties, including:
 
     - Disapproval or delay by regulatory authorities or adverse regulatory
       developments.
 
     - Competitive pressures, including developments with respect to alliances
       among other air carriers.
 
     - Customer reaction to the alliance, including reaction to differences in
       product and benefits provided by Continental and Northwest.
 
     - Economic conditions in the principal markets served by Continental and
       Northwest.
 
     - Increased costs or other implementation difficulties, including those
       caused by employees.
 
     - Our ability to modify certain contracts that restrict certain aspects of
       the alliance.
 
     On October 23, 1998, the Department of Justice ("DOJ") filed a lawsuit
against Northwest and Continental challenging Northwest's acquisition of an
interest in Continental. The DOJ did not seek to preliminarily enjoin the
transaction before it closed on November 20, 1998, nor is the DOJ challenging
the Northwest Alliance at this time although the DOJ has informed the parties
that it continues to investigate certain specific aspects of the alliance.
Continental continues to implement its alliance with Northwest. While it is not
possible to predict the ultimate outcome of this litigation, we believe that
this litigation will not have a material adverse effect on Continental.
 
RISK FACTORS RELATING TO THE AIRLINE INDUSTRY
 
     COMPETITION AND INDUSTRY CONDITIONS
 
     The airline industry is highly competitive and susceptible to price
discounting. Carriers have used discount fares to stimulate traffic during
periods of slack demand, to generate cash flow and to increase market share.
Some of Continental's competitors have substantially greater financial resources
or lower cost structures than Continental.
 
     Airline profit levels are highly sensitive to changes in fuel costs, fare
levels and passenger demand. Passenger demand and fare levels have in the past
been influenced by, among other things, the general state of the economy (both
internationally and domestically), international events, airline capacity and
pricing actions taken by carriers. Domestically, from 1990 to 1993, the weak
U.S. economy, turbulent international events and extensive price discounting by
carriers contributed to unprecedented losses for U.S. airlines. In the last
several years, the U.S. economy has improved and excessive price discounting has
abated. Recently, industry capacity and growth in the transatlantic market have
resulted in lower yields and revenue per available seat mile in those markets.
We cannot predict the extent to which these industry conditions will continue.
 
     In recent years, the major U.S. airlines have sought to form marketing
alliances with other U.S. and foreign air carriers. Such alliances generally
provide for "code-sharing", frequent flyer reciprocity, coordinated scheduling
of flights of each alliance member to permit convenient connections and other
joint marketing activities. Such arrangements permit an airline to market
flights operated by other alliance members as its own. This increases the
destinations, connections and frequencies offered by the airline, which provide
an opportunity to increase traffic on such airline's segment of flights
connecting with alliance partners. The Northwest Alliance is an example of such
an arrangement, and Continental has existing alliances with numerous other air
carriers. Other major U.S. airlines have alliances or planned alliances more
extensive than Continental's. We cannot predict the extent to which Continental
will benefit from its alliances or be disadvantaged by competing alliances.
 
                                      S-21

<PAGE>   22
 
     REGULATORY MATTERS
 
     Airlines are subject to extensive regulatory and legal compliance
requirements. These requirements impose substantial costs on airlines. In the
last several years, the Federal Aviation Administration ("FAA") has issued a
number of directives and other regulations relating to the maintenance and
operation of aircraft that have required significant expenditures. Such FAA
requirements cover, among other things, retirement of older aircraft, security
measures, collision avoidance systems, airborne windshear avoidance systems,
noise abatement, commuter aircraft safety and increased inspections and
maintenance procedures to be conducted on older aircraft. We expect to continue
incurring expenses in complying with the FAA's regulations.
 
     Additional laws, regulations, taxes and airport rates and charges have been
proposed from time to time that could significantly increase the cost of airline
operations or reduce revenues. For instance, "passenger bill of rights"
legislation has been introduced in Congress that would, among other things,
require the payment of compensation to passengers as a result of certain delays,
and limit the ability of carriers to prohibit or restrict usage of certain
tickets in manners currently prohibited or restricted. In addition, the
Department of Transportation ("DOT") has proposed rules that would significantly
limit major carriers' ability to compete with new entrant carriers. If adopted,
these measures could have the effect of raising ticket prices, reducing revenue
and increasing costs.
 
     Restrictions on the ownership and transfer of airline routes and takeoff
and landing slots have also been proposed. In addition, the ability of U.S.
carriers to operate international routes is subject to change because the
applicable arrangements between the United States and foreign governments may be
amended from time to time, or because appropriate slots or facilities are not
made available. We cannot provide assurance that laws or regulations enacted in
the future will not adversely affect Continental.
 
     The FAA has designated John F. Kennedy International Airport ("Kennedy"),
New York LaGuardia Airport ("LaGuardia"), Chicago O'Hare International Airport
("O'Hare") and Ronald Reagan Washington National Airport in Washington, D.C.
("Reagan National") as "high density traffic airports" and has limited the
number of departure and arrival slots at those airports. Currently, such slots
may be voluntarily sold or transferred between carriers. Various amendments to
the slot system proposed from time to time could, if adopted, significantly
affect operations at high density traffic airports, significantly change the
value of the slots, grant slots to other carriers or for route or aircraft
specific usage, expand slots to other airports or eliminate slots entirely. The
DOT has in the past reallocated slots to other carriers and reserves the right
to withdraw slots. The DOT has proposed the elimination of slot restrictions at
high density airports other than Reagan National. Legislation containing a
similar proposal, which could eliminate slots as early as 2002 at O'Hare and
2007 at LaGuardia and Kennedy, has passed the full House of Representatives and
the full Senate and is currently being considered by a conference committee.
Continental cannot predict whether any of these proposals will be adopted.
However, if legislation or regulation eliminating slots is adopted, the value of
such slots could be deemed to be permanently impaired, resulting in a loss being
charged to Continental's earnings for the relevant period. Moreover, the
elimination of slots could have an adverse effect upon future results of
operations of Continental. At December 31, 1999, the net book value of the
Company's slots at O'Hare, LaGuardia and Kennedy was $52 million, $12 million
and $0, respectively.
 
RISK FACTORS RELATING TO THE CERTIFICATES AND THE OFFERING
 
     APPRAISALS AND REALIZABLE VALUE OF AIRCRAFT
 
     Three independent appraisal and consulting firms have prepared appraisals
of the Aircraft. Letters summarizing such appraisals are annexed to this
Prospectus Supplement as Appendix II. Such appraisals are based on varying
assumptions and methodologies, which differ among the appraisers, and were
prepared without physical inspection of the Aircraft. Appraisals that are based
on other assumptions and methodologies may result in valuations that are
materially different from those contained in such appraisals. See "Description
of the Aircraft and the Appraisals -- The Appraisals".
 
     An appraisal is only an estimate of value. It does not indicate the price
at which an Aircraft may be purchased from the Aircraft manufacturer. Nor should
an appraisal be relied upon as a measure of realizable
 
                                      S-22

<PAGE>   23
 
value. The proceeds realized upon a sale of any Aircraft may be less than its
appraised value. In particular, the appraisals of the Aircraft are estimates of
values as of future delivery dates. The value of an Aircraft if remedies are
exercised under the applicable Indenture will depend on market and economic
conditions, the supply of similar aircraft, the availability of buyers, the
condition of the Aircraft and other factors. Accordingly, there can be no
assurance that the proceeds realized upon any such exercise of remedies would be
sufficient to satisfy in full payments due on the Certificates.
 
     PRIORITY OF DISTRIBUTIONS; SUBORDINATION
 
     Certain Classes of Certificates are subordinated to other Classes in rights
to distributions. See "Description of the Certificates -- Subordination".
Consequently, a payment default under any Equipment Note or a Triggering Event
may cause the distribution to more senior Classes of Certificates of payments
received from payment on one or more junior series of Equipment Notes. If this
should occur, the interest accruing on the remaining Equipment Notes would be
less than the interest accruing on the remaining Certificates. This is because
the remaining Certificates of the junior Classes accrue interest at a higher
rate than the remaining Equipment Notes, which include series applicable to the
senior Classes bearing interest at a lower rate. As a result of this possible
interest shortfall, the holders of one or more junior Classes of Certificates
may not receive the full amount due to them after a payment default under any
Equipment Note even if all Equipment Notes are eventually paid in full.
 
     CONTROL OVER COLLATERAL; SALE OF COLLATERAL
 
     If an Indenture Default is continuing, subject to certain conditions, the
Loan Trustee under such Indenture will be directed by the "Controlling Party" in
exercising remedies under such Indenture, including accelerating the applicable
Equipment Notes or foreclosing the lien on the Aircraft securing such Equipment
Notes. See "Description of the Certificates -- Indenture Defaults and Certain
Rights Upon an Indenture Default".
 
     The Controlling Party will be:
 
     - The Class A-1 Trustee or Class A-2 Trustee, whichever represents the
       Class with the larger principal amount of Certificates outstanding at the
       time that the Indenture Default occurs.
 
     - Upon payment of final distributions to the holders of such larger Class,
       the other of the Class A-1 Trustee or Class A-2 Trustee.
 
     - Upon payment of final distributions to the holders of Class A-1 and A-2
       Certificates, the Class B Trustee.
 
     - Upon payment of final distributions to the holders of Class B
       Certificates, the Class C-1 Trustee or Class C-2 Trustee, whichever
       represents the Class with the larger principal amount of Certificates
       outstanding at such time.
 
     - Upon payment of final distributions to the holders of such larger Class,
       the other of the Class C-1 Trustee or Class C-2 Trustee.
 
     - Under certain circumstances, and notwithstanding the foregoing, the
       liquidity provider with the largest amount owed to it.
 
     During the continuation of any Indenture Default, the Controlling Party may
accelerate and sell the Equipment Notes issued under such Indenture, subject to
certain limitations. See "Description of the Intercreditor
Agreement -- Intercreditor Rights -- Sale of Equipment Notes or Aircraft". The
market for Equipment Notes during any Indenture Default may be very limited, and
there can be no assurance as to the price at which they could be sold. If the
Controlling Party sells any Equipment Notes for less than their outstanding
principal amount, certain Certificateholders will receive a smaller amount of
principal distributions than anticipated and will not have any claim for the
shortfall against Continental, any Owner Trustee, any Owner Participant or any
Trustee.
 
                                      S-23

<PAGE>   24
 
     RATINGS OF THE CERTIFICATES
 
     It is a condition to the issuance of the Certificates that the Class A-1
and A-2 Certificates be rated not lower than Aa3 by Moody's and AA+ by Standard
& Poor's, the Class B Certificates be rated not lower than A2 by Moody's and AA-
by Standard & Poor's and the Class C-1 and C-2 Certificates be rated not lower
than Baa1 by Moody's and A- by Standard & Poor's. A rating is not a
recommendation to purchase, hold or sell Certificates, since such rating does
not address market price or suitability for a particular investor. A rating may
not remain for any given period of time and may be lowered or withdrawn entirely
by a Rating Agency if in its judgment circumstances in the future (including the
downgrading of Continental, the Depositary or a Liquidity Provider) so warrant.
 
     The rating of the Certificates is based primarily on the default risk of
the Equipment Notes and the Depositary, the availability of the Liquidity
Facility for the benefit of holders of the Certificates, the collateral value
provided by the Aircraft relating to the Equipment Notes and the subordination
provisions applicable to the Certificates. Standard & Poor's has indicated that
its rating applies to a unit consisting of Certificates representing the Trust
Property and Escrow Receipts initially representing undivided interests in
certain rights to $743,317,000 of Deposits (less any amounts used to purchase
Equipment Notes on the Issuance Date). Amounts deposited under the Escrow
Agreements are not property of Continental and are not entitled to the benefits
of Section 1110 of the U.S. Bankruptcy Code. Neither the Certificates nor the
Escrow Receipts may be separately assigned or transferred.
 
     UNUSED ESCROWED FUNDS
 
     Under certain circumstances, all of the funds held in escrow as Deposits
may not be used to purchase Equipment Notes by the deadline established for
purposes of this offering. See "Description of the Deposit Agreements -- Unused
Deposits". If any funds remain as Deposits with respect to any Trust after such
deadline, they will be withdrawn by the Escrow Agent for such Trust and
distributed, with accrued and unpaid interest but without any premium, to the
Certificateholders of such Trust. Since the maximum principal amount of
Equipment Notes may not be issued with respect to an Aircraft and, in any such
case, the Series C-1 Equipment Notes are more likely not to be issued in the
maximum principal amount as compared to the other Equipment Notes, it is more
likely that a distribution of unused Deposits will be made with respect to the
Class C-1 Certificates as compared to the other Certificates. See "Description
of the Deposit Agreements -- Unused Deposits".
 
     LIMITED ABILITY TO RESELL THE CERTIFICATES
 
     Prior to this offering, there has been no public market for the
Certificates. Neither Continental nor any Trust intends to apply for listing of
the Certificates on any securities exchange or otherwise. The Underwriters may
assist in resales of the Certificates, but they are not required to do so. A
secondary market for the Certificates may not develop. If a secondary market
does develop, it might not continue or it might not be sufficiently liquid to
allow you to resell any of your Certificates.
 
                                USE OF PROCEEDS
 
     The proceeds from the sale of the Certificates being offered hereby will be
used to purchase Equipment Notes during the Delivery Period issued, at
Continental's election, either (i) by each Owner Trustee to finance a portion of
the purchase price of the Leased Aircraft or (ii) by Continental to finance a
portion of the purchase price of the Owned Aircraft. Prior to utilization of
such proceeds to purchase Equipment Notes, such proceeds from the sale of the
Certificates of each Trust will be deposited with the Depositary on behalf of
the applicable Escrow Agent for the benefit of the Certificateholders of such
Trust.
 
                                      S-24

<PAGE>   25
 
                                  THE COMPANY
 
     Continental Airlines, Inc. ("Continental" or the "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 revenue passenger miles in 1999) and, together with its wholly owned
subsidiaries, Continental Express, Inc. ("Express") and Continental Micronesia,
Inc. ("CMI"), serves 219 airports worldwide. As of February 1, 2000, Continental
flew to 132 domestic and 87 international destinations and offered additional
connecting service through alliances with domestic and foreign carriers.
Continental directly serves 16 European cities, 8 South American cities, Tel
Aviv and Tokyo and is one of the leading airlines providing service to Mexico
and Central America, serving more destinations there than any other United
States airline. Through its Guam hub, CMI provides extensive service in the
western Pacific, including service to more Japanese cities than any other United
States carrier. The Company's executive offices are located at 1600 Smith
Street, Houston, Texas 77002.
 
DOMESTIC OPERATIONS
 
     Continental operates its domestic route system primarily through its hubs
at Newark International Airport ("Newark"), George Bush Intercontinental Airport
("Bush Intercontinental") in Houston and Hopkins International Airport ("Hopkins
International") in 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. As of February 1, 2000,
Continental operated 54% of the average daily jet departures from Newark, 77% of
the average daily jet departures from Bush Intercontinental, and 52% of the
average daily jet departures from Hopkins International (in each case excluding
regional jets). Each of Continental's domestic hubs is located in a large
business and population center, contributing to a high volume of "origin and
destination" traffic.
 
     CONTINENTAL EXPRESS
 
     Continental's jet service at each of its domestic hub cities is coordinated
with Express, which operates new-generation regional jets and turboprop aircraft
under the name "Continental Express". The regional jets average one year of age
and seat either 37 or 50 passengers. The turboprop aircraft average
approximately eight years of age and seat 64 or fewer passengers.
 
     As of February 1, 2000, Express served 32 destinations from Newark (23 by
regional jet), 47 destinations from Bush Intercontinental (29 by regional jet)
and 55 destinations from Hopkins International (29 by regional jet). In
addition, commuter feed traffic is currently provided by other code-sharing
partners.
 
     Continental believes Express's regional jet and 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. Continental believes that Express's new regional jets
provide greater comfort and enjoy better customer acceptance than its turboprop
aircraft. Express is in the process of developing a plan to convert to an all
regional jet fleet over a multi-year period. The regional jets also allow
Express to serve certain routes that cannot be served by turboprop aircraft.
 
     DOMESTIC CARRIER ALLIANCES
 
     Continental has entered into and continues to develop alliances with
domestic carriers:
 
     - In January 1998, Continental announced it had entered into a long-term
       global alliance with Northwest. The Northwest Alliance includes the
       placing by each carrier of its code on a large number of the flights of
       the other and reciprocal frequent flyer programs and executive lounge
       access. Significant other joint marketing activities are being
       undertaken, while preserving the separate identities of the carriers.
       Continental has also entered into agreements to code-share with certain
       Northwest regional affiliates. See "Risk Factors -- Risk Factors Relating
       to the Company -- Risks Regarding Continental/Northwest Alliance".
 
                                      S-25

<PAGE>   26
 
     - Continental has entered into a series of agreements with America West
       Airlines, Inc. ("America West"), including agreements related to
       code-sharing and ground handling, which have created substantial benefits
       for both airlines. These code-sharing agreements covered 141 city-pairs
       as of February 1, 2000, and allow Continental to link additional
       destinations to its route network and derive additional traffic from
       America West's distribution strength in cities where Continental has less
       sales presence. The sharing of facilities and employees by Continental
       and America West in their respective key markets has resulted in
       significant cost savings.
 
     - Continental began a code-sharing arrangement with Gulfstream
       International Airlines, Inc. ("Gulfstream") in April 1997. Gulfstream
       serves as a connection for Continental passengers throughout Florida as
       well as eight destinations in the Caribbean. In the fourth quarter of
       1999, Continental acquired a 28% equity interest in Gulfstream.
 
     - Continental implemented a code-sharing agreement with Mesaba Aviation,
       Inc. ("Mesaba"), operating as a Northwest affiliate, commencing in
       January 1999. Mesaba serves as a connection for Continental passengers
       through Detroit and Minneapolis/St. Paul.
 
     - Continental and CMI entered into a cooperative marketing agreement with
       Hawaiian Airlines, Inc. ("Hawaiian") that began in October 1997 on
       flights connecting in Honolulu. The relationship expanded in 1999 to
       include code-sharing. Hawaiian connects Continental passengers through
       Honolulu to six additional Hawaiian cities.
 
     - In February 1999, Continental announced its code-sharing agreement with
       Alaska Airlines, Inc. ("Alaska Air") and its affiliate, Horizon Airlines,
       Inc. ("Horizon"). Alaska Air and Horizon serve as a connection for
       Continental passengers to 35 destinations throughout the Pacific
       Northwest.
 
INTERNATIONAL OPERATIONS
 
     Continental directly serves destinations throughout Europe, Canada, Mexico,
Central and South America and the Caribbean as well as Tokyo and Tel Aviv and
has extensive operations in the western Pacific conducted by CMI. As measured by
available seat miles for 1999, approximately 36.2% of Continental's jet
operations, including CMI, were dedicated to international traffic. Continental
anticipates that a majority of its capacity growth in 2000 will be in Europe due
to the full year impact of new markets and increased capacity added in 1999.
Continental does not intend to add any new European destinations during 2000. As
of February 1, 2000, the Company offered 146 weekly departures to 16 European
cities and marketed service to 32 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.
 
     Continental's Newark hub is a significant international gateway. From
Newark, at February 1, 2000 Continental served 16 European cities, five Canadian
cities, three Mexican cities, four Central American cities, six South American
cities, seven Caribbean destinations, Tel Aviv and Tokyo. In addition,
Continental markets numerous other destinations through code-sharing
arrangements with foreign carriers. Continental recently announced the addition
for 2000 of two South American destinations, one of which will also connect to
Houston, and one Caribbean destination, subject to government approval.
 
     The Company's Houston hub is the focus of its operations in Mexico and
Central America. As of February 1, 2000, Continental flew from Houston to 13
cities in Mexico, every country in Central America, six cities in South America,
two Caribbean destinations, three cities in Canada, two cities in Europe and
Tokyo. Express also serviced three additional cities in Mexico by regional jets
and plans to add four more cities in 2000, subject to government approval.
 
     Continental flies to London, Montreal, Toronto, San Juan and Cancun from
its hub in Cleveland.
 
     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.
From its hub operations based on the island of Guam, CMI provides service to
eight cities in Japan, more than any other United States carrier, as well as
other Pacific Rim destinations, including Taiwan, the Philippines, Hong Kong,
Australia and Indonesia. Service to these
 
                                      S-26

<PAGE>   27
 
Japanese cities and certain other Pacific Rim destinations is subject to a
variety of regulatory restrictions limiting the ability of other carriers to
service these markets.
 
     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 Tokyo and Honolulu, each of which CMI serves
non-stop from 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, to facilitate travel from the
United States into CMI's route system.
 
     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
activities. Continental is the only major United States carrier to operate a hub
in the New York City area. Consequently, management believes the Company is
uniquely situated to attract alliance partners from Europe, the Far East and
South America and has aggressively pursued such alliances. The Company believes
that the Northwest Alliance will enhance its ability to attract foreign alliance
partners. See "Risk Factors -- Risk Factors Relating to the Company -- Risks
Regarding Continental/Northwest Alliance".
 
     Continental believes that continuing to develop a network of international
alliance partners will better leverage the Company's hub assets by attracting
high-yield flow traffic and strengthening the Company's position in large, local
(non-connecting) markets and will result in improved returns to the Company.
Further, Continental can enlarge its scope of service more rapidly and enter
additional markets with lower capital and start-up costs through formation of
alliances with partners as compared with entering markets independently of other
carriers.
 
     Continental seeks to develop alliance relationships that complement
Continental's own flying and permit expanded service through Newark and Houston
to major international destinations. Route authorities necessary for the
Company's own service to certain of these destinations are not currently
available to the Company.
 
     Continental has implemented international code-sharing agreements with
Alitalia Linee Aeree Italiane, S.P.A. ("Alitalia"), CSA Czech Airlines, British
Midland, EVA Airways Corporation, an airline based in Taiwan, Virgin Atlantic
Airways ("Virgin"), Societe Air France ("Air France"), and Compania Panamena de
Aviacion, S.A., 49% of the common equity of which is owned by the Company. Upon
receipt of government approval, Continental will commence code-sharing
arrangements with Aeroservicios Carabobo S.A., a Venezuelan carrier, Avant
Airlines, a Chilean carrier, Air Aruba and Air China. In addition, Continental
and KLM Royal Dutch Airlines ("KLM") have signed a memorandum of understanding
and anticipate finalizing and implementing a comprehensive cooperative marketing
agreement by the second quarter of 2000. The joint marketing initiative is to
include through check-in of passengers and baggage, reciprocal frequent flyer
program participation, reciprocal airport lounge access, and, subject to
government approval, codesharing on selected routes. Continental has entered
into a joint marketing agreement with Aerolineas Centrales de Colombia, for
which government approval has not yet been sought.
 
     Certain of Continental's code-sharing agreements involve block-space
arrangements (pursuant to which the carriers agree to share capacity and bear
economic risk for blocks of seats on certain routes). Alitalia has agreed to
purchase blocks of seats on Continental flights between Newark and Rome and
Milan. Continental and Air France purchase blocks of seats on each other's
flights between Houston and Newark and Paris. Continental and Virgin exchange
blocks of seats on each other's flights between Newark and London. Continental's
agreement with Virgin also includes the purchase by Continental of blocks of
seats on eight other routes flown by Virgin between the United Kingdom and the
United States.
 
     The Company is negotiating an early termination of its alliance with Air
France as a result of Air France's announcement of an alliance with Delta Air
Lines, Inc.
 
     The Company might enter into other code-sharing, joint marketing and
block-space agreements in 2000, which may include the Company undertaking the
financial commitment to purchase seats from other carriers.
 
                                      S-27

<PAGE>   28
 
                        DESCRIPTION OF THE CERTIFICATES
 
     The following summary describes all material terms of the Certificates and
supplements (or, to the extent inconsistent therewith, replaces) the description
of the general terms and provisions of the Certificates set forth in the
Prospectus accompanying this Prospectus Supplement (the "Prospectus"). The
summary does not purport to be complete and is qualified in its entirety by
reference to all of the provisions of the Basic Agreement, which was filed with
the Securities and Exchange Commission (the "Commission") as an exhibit to the
Company's Current Report on Form 8-K dated September 25, 1997, and to all of the
provisions of the Certificates, the Trust Supplements, the Deposit Agreements,
the Escrow Agreements, the Intercreditor Agreement and the trust supplements
applicable to the Successor Trusts, each of which will be filed as an exhibit to
a Current Report on Form 8-K to be filed by Continental.
 
     Except as otherwise indicated, the following summary relates to each of the
Trusts and the Certificates issued by each Trust. The terms and conditions
governing each of the Trusts will be substantially the same, except as described
under "-- Subordination" and "-- Purchase Rights of Certificateholders" below
and except that the principal amount and scheduled principal repayments of the
Equipment Notes held by each Trust and the interest rate and maturity date of
the Equipment Notes held by each Trust will differ. The references to Sections
in parentheses in the following summary are to the relevant Sections of the
Basic Agreement unless otherwise indicated.
 
GENERAL
 
     Each Pass Through Certificate (collectively, the "Certificates") will
represent a fractional undivided interest in one of the five Continental
Airlines 2000-1 Pass Through Trusts (the "Class A-1 Trust", the "Class A-2
Trust", the "Class B Trust", the "Class C-1 Trust" and the "Class C-2 Trust",
and, collectively, the "Trusts"). The Trusts will be formed pursuant to a pass
through trust agreement between Continental and Wilmington Trust Company, as
trustee (the "Trustee"), dated as of September 25, 1997 (the "Basic Agreement"),
and five separate supplements thereto (each, a "Trust Supplement" and, together
with the Basic Agreement, collectively, the "Pass Through Trust Agreements")
relating to such Trusts between Continental and the Trustee, as trustee under
each Trust. The Certificates to be issued by the Class A-1 Trust, the Class A-2
Trust, the Class B Trust, the Class C-1 Trust and the Class C-2 Trust are
referred to herein as the "Class A-1 Certificates", the "Class A-2
Certificates", the "Class B Certificates", the "Class C-1 Certificates" and the
"Class C-2 Certificates".
 
     Each Certificate will represent a fractional undivided interest in the
Trust created by the Basic Agreement and the applicable Trust Supplement
pursuant to which such Certificate is issued. (Section 2.01) The Trust Property
of each Trust (the "Trust Property") will consist of:
 
     - Subject to the Intercreditor Agreement, Equipment Notes acquired under
       the Note Purchase Agreement and issued, at Continental's election in
       connection with the financing of each Aircraft during the Delivery
       Period, either (a) on a nonrecourse basis by an Owner Trustee in each
       separate leveraged lease transaction with respect to each Leased Aircraft
       to finance a portion of the purchase price of such Leased Aircraft by the
       Owner Trustee, in which case the applicable Leased Aircraft will be
       leased to Continental, or (b) on a recourse basis by Continental in
       connection with each separate secured loan transaction with respect to
       each Owned Aircraft to finance a portion of the purchase price of such
       Owned Aircraft by Continental.
 
     - The rights of such Trust to acquire Equipment Notes under the Note
       Purchase Agreement.
 
     - The rights of such Trust under the applicable Escrow Agreement to request
       the Escrow Agent to withdraw from the Depositary funds sufficient to
       enable such Trust to purchase Equipment Notes after the Issuance Date on
       the delivery of an Aircraft during the Delivery Period.
 
     - The rights of such Trust under the Intercreditor Agreement (including all
       monies receivable in respect of such rights).
 
     - All monies receivable under the Liquidity Facility for such Trust.
 
                                      S-28

<PAGE>   29
 
     - Funds from time to time deposited with the Trustee in accounts relating
       to such Trust.
 
     The Certificates of each Trust will be issued in fully registered form only
and will be subject to the provisions described below under "-- Book Entry;
Delivery and Form". Certificates will be issued only in minimum denominations of
$1,000 or integral multiples thereof, except that one Certificate of each Trust
may be issued in a different denomination. (Section 3.01)
 
     The Certificates represent interests in the respective Trusts, and all
payments and distributions thereon will be made only from the Trust Property of
the related Trust. (Section 3.09) The Certificates do not represent an interest
in or obligation of Continental, the Trustees, any of the Loan Trustees or Owner
Trustees in their individual capacities, any Owner Participant or any affiliate
of any thereof.
 
     Pursuant to the Escrow Agreement applicable to each Trust, the
Certificateholders of such Trust as holders of the Escrow Receipts affixed to
each Certificate are entitled to certain rights with respect to the Deposits
relating to such Trust. Accordingly, any transfer of a Certificate will have the
effect of transferring the corresponding rights with respect to the Deposits,
and rights with respect to the Deposits may not be separately transferred by
holders of the Certificates (the "Certificateholders"). Rights with respect to
the Deposits and the Escrow Agreement relating to a Trust, except for the right
to request withdrawals for the purchase of Equipment Notes, will not constitute
Trust Property of such Trust.
 
SUBORDINATION
 
     The subordination terms of the Certificates vary depending upon whether a
"Triggering Event" has occurred. "Triggering Event" means (x) the occurrence of
an Indenture Default under all Indentures resulting in a PTC Event of Default
with respect to the most senior Class of Certificates then outstanding, (y) the
acceleration of all of the outstanding Equipment Notes (provided that during the
Delivery Period the aggregate principal amount thereof exceeds $300 million) or
(z) certain bankruptcy or insolvency events involving Continental.
 
     BEFORE A TRIGGERING EVENT
 
     On each Regular Distribution Date or Special Distribution Date (each, a
"Distribution Date"), so long as no Triggering Event shall have occurred
(whether or not continuing), all payments received by the Subordination Agent in
respect of Equipment Notes and certain other payments under the related
Indenture will be distributed under the Intercreditor Agreement in the following
order:
 
     - To the Liquidity Providers to the extent required to pay the Liquidity
       Expenses.
 
     - To the Liquidity Providers to the extent required to pay interest accrued
       on the Liquidity Obligations.
 
     - To the Liquidity Providers to the extent required to pay or reimburse the
       Liquidity Providers for certain Liquidity Obligations (other than amounts
       payable pursuant to the two preceding clauses) and, if applicable, to
       replenish each Cash Collateral Account up to the Required Amount.
 
     - To the trustee for the Class A-1 Trust (the "Class A-1 Trustee") and the
       trustee for the Class A-2 Trust (the "Class A-2 Trustee") to the extent
       required to pay Expected Distributions on the Class A-1 Certificates and
       the Class A-2 Certificates. If available funds are insufficient to pay an
       Expected Distribution to each such Class in full, available funds will be
       distributed to each of the Class A-1 Trustee and Class A-2 Trustee in the
       same proportion as such Trustee's proportionate share of the aggregate
       amount of such Expected Distributions.
 
     - To the trustee for the Class B Trust (the "Class B Trustee") to the
       extent required to pay Expected Distributions on the Class B
       Certificates.
 
     - To the trustee for the Class C-1 Trust (the "Class C-1 Trustee") and the
       trustee for the Class C-2 Trust (the "Class C-2 Trustee") to the extent
       required to pay Expected Distributions on the Class C-1 Certificates and
       the Class C-2 Certificates. If available funds are insufficient to pay an
       Expected Distribution to each such Class in full, available funds will be
       distributed to each of the
 
                                      S-29

<PAGE>   30
 
       Class C-1 Trustee and Class C-2 Trustee in the same proportion as such
       Trustee's proportionate share of the aggregate amount of such Expected
       Distributions.
 
     - If Class D Certificates have been issued (see "-- Possible Issuance of
       Class D Certificates") to the trustee for the Class D Trust (the "Class D
       Trustee") to the extent required to pay "Expected Distributions" (to be
       defined in a manner equivalent to the definition for other Classes of
       Certificates) on the Class D Certificates.
 
     - To the Subordination Agent and each Trustee for the payment of certain
       fees and expenses.
 
     AFTER A TRIGGERING EVENT
 
     Upon the occurrence of a Triggering Event and at all times thereafter, all
payments received by the Subordination Agent in respect of the Equipment Notes
and certain other payments will be distributed under the Intercreditor Agreement
in the following order:
 
     - To the Subordination Agent, any Trustee, any Certificateholder and the
       Liquidity Providers to the extent required to pay Administration
       Expenses.
 
     - To the Liquidity Providers to the extent required to pay the Liquidity
       Expenses.
 
     - To the Liquidity Providers to the extent required to pay interest accrued
       on the Liquidity Obligations.
 
     - To the Liquidity Providers to the extent required to pay the outstanding
       amount of all Liquidity Obligations and, if applicable, with respect to
       any particular Liquidity Facility, unless (x) less than 65% of the
       aggregate outstanding principal amount of all Equipment Notes are
       Performing Equipment Notes and a Liquidity Event of Default shall have
       occurred and is continuing under such Liquidity Facility or (y) a Final
       Drawing shall have occurred under such Liquidity Facility, to replenish
       the Cash Collateral Account with respect to such Liquidity Facility up to
       the Required Amount for the related Class of Certificates (less the
       amount of any repayments of Interest Drawings under such Liquidity
       Facility while sub-clause (x) of this clause is applicable).
 
     - To the Subordination Agent, any Trustee or any Certificateholder to the
       extent required to pay certain fees, taxes, charges and other amounts
       payable.
 
     - To the Class A-1 Trustee and the Class A-2 Trustee to the extent required
       to pay Adjusted Expected Distributions on the Class A-1 Certificates and
       the Class A-2 Certificates. If available funds are insufficient to pay an
       Adjusted Expected Distribution to each such Class in full, available
       funds will be distributed to each of the Class A-1 Trustee and Class A-2
       Trustee in the same proportion as such Trustee's proportionate share of
       the aggregate amount of such Adjusted Expected Distributions.
 
     - To the Class B Trustee to the extent required to pay Adjusted Expected
       Distributions on the Class B Certificates.
 
     - To the Class C-1 Trustee and the Class C-2 Trustee to the extent required
       to pay Adjusted Expected Distributions on the Class C-1 Certificates and
       the Class C-2 Certificates. If available funds are insufficient to pay an
       Adjusted Expected Distribution to each such Class in full, available
       funds will be distributed to each of the Class C-1 Trustee and Class C-2
       Trustee in the same proportion as such Trustee's proportionate share of
       the aggregate amount of such Adjusted Expected Distributions.
 
     - If Class D Certificates have been issued, to the Class D Trustee to the
       extent required to pay "Adjusted Expected Distributions" (to be defined
       in a manner equivalent to the definition for other Classes of
       Certificates) on the Class D Certificates.
 
     For purposes of calculating Expected Distributions or Adjusted Expected
Distributions with respect to the Certificates of any Trust, any premium paid on
the Equipment Notes held in such Trust that has not been distributed to the
Certificateholders of such Trust (other than such premium or a portion thereof
applied to the payment of interest on the Certificates of such Trust or the
reduction of the Pool Balance of such Trust) shall be added to the amount of
Expected Distributions or Adjusted Expected Distributions.
 
                                      S-30

<PAGE>   31
 
     Payments in respect of the Deposits relating to a Trust and monies drawn
under a Liquidity Facility will not be subject to the subordination provisions
of the Intercreditor Agreement.
 
PAYMENTS AND DISTRIBUTIONS
 
     Payments of interest on the Deposits with respect to each Trust and
payments of principal, premium (if any) and interest on the Equipment Notes or
with respect to other Trust Property held in each Trust will be distributed by
the Paying Agent (in the case of the Deposits) or by the Trustee (in the case of
Trust Property of such Trust) to Certificateholders of such Trust on the date
receipt of such payment is confirmed, except in the case of certain types of
Special Payments.
 
     The Deposits held with respect to each Trust and the Equipment Notes held
in each Trust will accrue interest at the applicable rate per annum for
Certificates to be issued by such Trust set forth on the cover page of this
Prospectus Supplement, payable on May 1 and November 1 of each year, commencing
on May 1, 2000 (or, in the case of Equipment Notes issued after such date,
commencing with the first such date to occur after initial issuance thereof).
Such interest payments will be distributed to Certificateholders of such Trust
on each such date until the final Distribution Date for such Trust, subject in
the case of payments on the Equipment Notes to the Intercreditor Agreement.
Interest is calculated on the basis of a 360-day year consisting of twelve
30-day months.
 
     Payments of interest applicable to the Certificates to be issued by each of
the Trusts will be supported by a separate Liquidity Facility to be provided by
the applicable Liquidity Provider for the benefit of the holders of such
Certificates in an aggregate amount sufficient to pay interest thereon at the
Stated Interest Rate for such Trust on up to three successive Regular
Distribution Dates (without regard to any future payments of principal on such
Certificates), except that the Liquidity Facility with respect to such Trust
will not cover interest payable by the Depositary on the Deposits relating to
such Trust. The Liquidity Facility for any Class of Certificates does not
provide for drawings thereunder to pay for principal of or premium on the
Certificates of such Class, any interest on the Certificates of such Class in
excess of the Stated Interest Rates, or, notwithstanding the subordination
provisions of the Intercreditor Agreement, principal of or interest or premium
on the Certificates of any other Class. Therefore, only the holders of the
Certificates to be issued by a particular Trust will be entitled to receive and
retain the proceeds of drawings under the Liquidity Facility for such Trust. See
"Description of the Liquidity Facilities".
 
     Payments of principal of the Series A-1, B and C-1 Equipment Notes are
scheduled to be received by the Trustee on May 1 and November 1 in certain years
depending upon the terms of the Equipment Notes held in such Trust. The entire
principal amount of the Series A-2 Equipment Notes is scheduled for payment on
May 1, 2010. The entire principal amount of the Series C-2 Equipment Notes is
scheduled for payment on May 1, 2005.
 
     Scheduled payments of interest on the Deposits and of interest or principal
on the Equipment Notes are herein referred to as "Scheduled Payments", and May 1
and November 1 of each year are herein referred to as "Regular Distribution
Dates". See "Description of the Equipment Notes -- Principal and Interest
Payments". The "Final Maturity Date" for the Class A-1 Certificates is May 1,
2022, for the Class A-2 Certificates is November 1, 2011, for the Class B
Certificates is May 1, 2022, for the Class C-1 Certificates is November 1, 2012
and for the Class C-2 Certificates is November 1, 2006.
 
     The Paying Agent with respect to each Escrow Agreement will distribute on
each Regular Distribution Date to the Certificateholders of the Trust to which
such Escrow Agreement relates all Scheduled Payments received in respect of the
related Deposits, the receipt of which is confirmed by the Paying Agent on such
Regular Distribution Date. The Trustee of each Trust will distribute, subject to
the Intercreditor Agreement, on each Regular Distribution Date to the
Certificateholders of such Trust all Scheduled Payments received in respect of
Equipment Notes held on behalf of such Trust, the receipt of which is confirmed
by the Trustee on such Regular Distribution Date. Each Certificateholder of each
Trust will be entitled to receive its proportionate share, based upon its
fractional interest in such Trust, of any distribution in respect of Scheduled
Payments of interest on the Deposits relating to such Trust and, subject to the
Intercreditor Agreement, of principal or interest on Equipment Notes held on
behalf of such Trust. Each such distribution of Scheduled
                                      S-31

<PAGE>   32
 
Payments will be made by the applicable Paying Agent or Trustee to the
Certificateholders of record of the relevant Trust on the record date applicable
to such Scheduled Payment subject to certain exceptions. (Sections 4.01 and
4.02; Escrow Agreements, Section 2.03) If a Scheduled Payment is not received by
the applicable Paying Agent or Trustee on a Regular Distribution Date but is
received within five days thereafter, it will be distributed on the date
received to such holders of record. If it is received after such five-day
period, it will be treated as a Special Payment and distributed as described
below.
 
     Any payment in respect of, or any proceeds of, any Equipment Note, Trust
Indenture Estate under (and as defined in) any Leased Aircraft Indenture or
Collateral under (and as defined in) any Owned Aircraft Indenture other than a
Scheduled Payment (each, a "Special Payment") will be distributed on, in the
case of an early redemption or a purchase of any Equipment Note, the date of
such early redemption or purchase (which shall be a Business Day), and otherwise
on the Business Day specified for distribution of such Special Payment pursuant
to a notice delivered by each Trustee as soon as practicable after the Trustee
has received funds for such Special Payment (each a "Special Distribution
Date"). Any such distribution will be subject to the Intercreditor Agreement.
Any unused Deposits to be distributed after the Delivery Period Termination Date
or the occurrence of a Triggering Event, together with accrued and unpaid
interest thereon (each, also a "Special Payment"), will be distributed on a date
25 days after the Paying Agent has received notice of the event requiring such
distribution (also a "Special Distribution Date"). However, if such date is
within ten days before or after a Regular Distribution Date, such Special
Payment shall be made on such Regular Distribution Date.
 
     Each Paying Agent, in the case of the Deposits, and each Trustee, in the
case of Trust Property, will mail a notice to the Certificateholders of the
applicable Trust stating the scheduled Special Distribution Date, the related
record date, the amount of the Special Payment and the reason for the Special
Payment. In the case of a redemption or purchase of the Equipment Notes held in
the related Trust or any distribution of unused Deposits after the Delivery
Period Termination Date or the occurrence of a Triggering Event, such notice
will be mailed not less than 15 days prior to the date such Special Payment is
scheduled to be distributed, and in the case of any other Special Payment, such
notice will be mailed as soon as practicable after the Trustee has confirmed
that it has received funds for such Special Payment. (Section 4.02(c); Trust
Supplements, Section 3.01; Escrow Agreements, Sections 2.03 and 2.06) Each
distribution of a Special Payment, other than a final distribution, on a Special
Distribution Date for any Trust will be made by the Paying Agent or the Trustee,
as applicable, to the Certificateholders of record of such Trust on the record
date applicable to such Special Payment. (Section 4.02(b); Escrow Agreements,
Section 2.03) See " -- Indenture Defaults and Certain Rights Upon an Indenture
Default" and "Description of the Equipment Notes -- Redemption".
 
     Each Pass Through Trust Agreement requires that the Trustee establish and
maintain, for the related Trust and for the benefit of the Certificateholders of
such Trust, one or more non-interest bearing accounts (the "Certificate
Account") for the deposit of payments representing Scheduled Payments received
by such Trustee. Each Pass Through Trust Agreement requires that the Trustee
establish and maintain, for the related Trust and for the benefit of the
Certificateholders of such Trust, one or more accounts (the "Special Payments
Account") for the deposit of payments representing Special Payments received by
such Trustee, which shall be non-interest bearing except in certain
circumstances where the Trustee may invest amounts in such account in certain
permitted investments. Pursuant to the terms of each Pass Through Trust
Agreement, the Trustee is required to deposit any Scheduled Payments relating to
the applicable Trust received by it in the Certificate Account of such Trust and
to deposit any Special Payments so received by it in the Special Payments
Account of such Trust. (Section 4.01; Trust Supplements, Section 3.01) All
amounts so deposited will be distributed by the Trustee on a Regular
Distribution Date or a Special Distribution Date, as appropriate. (Section 4.02;
Trust Supplements, Section 3.01)
 
     Each Escrow Agreement requires that the Paying Agent establish and
maintain, for the benefit of the Receiptholders, one or more accounts (the
"Paying Agent Account"), which shall be non-interest bearing. Pursuant to the
terms of the Escrow Agreements, the Paying Agent is required to deposit interest
on Deposits relating to a Trust and any unused Deposits withdrawn by the Escrow
Agent in the related Paying Agent Account. All amounts so deposited will be
distributed by the Paying Agent on a Regular Distribution Date or Special
Distribution Date, as appropriate.
                                      S-32

<PAGE>   33
 
     The final distribution for each Trust will be made only upon presentation
and surrender of the Certificates for such Trust at the office or agency of the
Trustee specified in the notice given by the Trustee of such final distribution.
The Trustee will mail such notice of the final distribution to the
Certificateholders of such Trust, specifying the date set for such final
distribution and the amount of such distribution. (Trust Supplements, Section
7.01) See "-- Termination of the Trusts" below. Distributions in respect of
Certificates issued in global form will be made as described in "-- Book Entry;
Delivery and Form" below.
 
     If any Distribution Date is a Saturday, Sunday or other day on which
commercial banks are authorized or required to close in New York, New York,
Houston, Texas, Wilmington, Delaware, or Salt Lake City, Utah (any other day
being a "Business Day"), distributions scheduled to be made on such Regular
Distribution Date or Special Distribution Date will be made on the next
succeeding Business Day without additional interest.
 
POOL FACTORS
 
     The "Pool Balance" for each Trust or for the Certificates issued by any
Trust indicates, as of any date, the original aggregate face amount of the
Certificates of such Trust less the aggregate amount of all payments made in
respect of the Certificates of such Trust or in respect of Deposits relating to
such Trust other than payments made in respect of interest or premium or
reimbursement of any costs or expenses incurred in connection therewith. The
Pool Balance for each Trust or for the Certificates issued by any Trust as of
any Distribution Date shall be computed after giving effect to any special
distribution with respect to unused Deposits, payment of principal of the
Equipment Notes or payment with respect to other Trust Property held in such
Trust and the distribution thereof to be made on that date. (Trust Supplements,
Section 2.01)
 
     The "Pool Factor" for each Trust as of any Distribution Date is the
quotient (rounded to the seventh decimal place) computed by dividing (i) the
Pool Balance by (ii) the original aggregate face amount of the Certificates of
such Trust. The Pool Factor for each Trust or for the Certificates issued by any
Trust as of any Distribution Date shall be computed after giving effect to any
special distribution with respect to unused Deposits, payment of principal of
the Equipment Notes or payments with respect to other Trust Property held in
such Trust and the distribution thereof to be made on that date. (Trust
Supplements, Section 2.01) The Pool Factor for each Trust will be 1.0000000 on
the date of issuance of the Certificates; thereafter, the Pool Factor for each
Trust will decline as described herein to reflect reductions in the Pool Balance
of such Trust. The amount of a Certificateholder's pro rata share of the Pool
Balance of a Trust can be determined by multiplying the par value of the
holder's Certificate of such Trust by the Pool Factor for such Trust as of the
applicable Distribution Date. Notice of the Pool Factor and the Pool Balance for
each Trust will be mailed to Certificateholders of such Trust on each
Distribution Date. (Trust Supplements, Section 3.02)
 
     The following table sets forth an illustrative aggregate principal
amortization schedule for the Equipment Notes held in each Trust (the "Assumed
Amortization Schedule") and resulting Pool Factors with respect to such Trust.
The actual aggregate principal amortization schedule applicable to the Class
A-1, B or C-1 Trust and the resulting Pool Factors with respect to such Trust
may differ from those set forth below, since the amortization schedule for the
Series A-1, B or C-1 Equipment Notes issued with respect to an Aircraft may vary
from such illustrative amortization schedule so long as it complies with the
Mandatory Economic Terms. In the case of the Class A-2 and Class C-2 Trusts, the
scheduled date for payment of principal of the applicable Equipment Notes may
not be changed under the Mandatory Economic Terms. However, the scheduled
distribution of principal payments for any Trust would be affected if any
Equipment Notes held in such Trust are redeemed or purchased or if a default in
payment on such Equipment Notes occurred.
 
                                      S-33

<PAGE>   34
 
Accordingly, the aggregate principal amortization schedule applicable to a Trust
and the resulting Pool Factors may differ from those set forth in the following
table.

<TABLE>
<CAPTION>
                                              CLASS A-1                     CLASS A-2                     CLASS B
                                      --------------------------   ---------------------------   --------------------------
                                        SCHEDULED      EXPECTED       SCHEDULED      EXPECTED      SCHEDULED      EXPECTED
                                        PRINCIPAL        POOL         PRINCIPAL        POOL        PRINCIPAL        POOL
DATE                                     PAYMENTS       FACTOR        PAYMENTS        FACTOR        PAYMENTS       FACTOR
----                                    ---------      --------       ---------      --------      ---------      --------
<S>                                   <C>              <C>         <C>               <C>         <C>              <C>
May 1, 2000.........................  $         0.00   1.0000000   $          0.00   1.0000000   $         0.00   1.0000000
November 1, 2000....................    2,185,117.82   0.9944790              0.00   1.0000000       537,840.36   0.9952466
May 1, 2001.........................    8,660,291.13   0.9725974              0.00   1.0000000     1,868,068.40   0.9787368
November 1, 2001....................    5,587,447.20   0.9584798              0.00   1.0000000       311,638.00   0.9759826
May 1, 2002.........................    7,881,447.60   0.9385661              0.00   1.0000000       534,309.00   0.9712604
November 1, 2002....................    6,610,130.16   0.9218646              0.00   1.0000000     1,645,397.40   0.9567185
May 1, 2003.........................    9,525,190.56   0.8977977              0.00   1.0000000     1,962,970.27   0.9393700
November 1, 2003....................    6,888,252.33   0.8803935              0.00   1.0000000     5,822,065.76   0.8879151
May 1, 2004.........................   10,262,975.53   0.8544624              0.00   1.0000000     6,569,064.41   0.8298584
November 1, 2004....................    6,042,597.16   0.8391949              0.00   1.0000000     2,152,993.07   0.8108304
May 1, 2005.........................   12,211,215.35   0.8083413              0.00   1.0000000     1,788,737.37   0.7950217
November 1, 2005....................    1,277,715.80   0.8051130              0.00   1.0000000     4,785,258.49   0.7527301
May 1, 2006.........................   14,128,153.10   0.7694160              0.00   1.0000000     2,756,712.80   0.7283665
November 1, 2006....................    1,277,715.80   0.7661877              0.00   1.0000000       249,310.40   0.7261632
May 1, 2007.........................   14,128,153.10   0.7304907              0.00   1.0000000     2,756,712.80   0.7017996
November 1, 2007....................    1,277,715.80   0.7272623              0.00   1.0000000       249,310.40   0.6995962
May 1, 2008.........................   14,128,153.10   0.6915653              0.00   1.0000000     3,323,035.92   0.6702275
November 1, 2008....................    1,277,715.80   0.6883370              0.00   1.0000000       249,310.40   0.6680242
May 1, 2009.........................   14,128,153.10   0.6526400              0.00   1.0000000     3,639,195.40   0.6358613
November 1, 2009....................    1,277,715.80   0.6494117              0.00   1.0000000       249,310.40   0.6336579
May 1, 2010.........................            0.00   0.6494117    117,852,000.00   0.0000000    16,467,768.24   0.4881174
November 1, 2010....................            0.00   0.6494117              0.00   0.0000000             0.00   0.4881174
May 1, 2011.........................    3,425,350.93   0.6407570              0.00   0.0000000     5,089,737.00   0.4431347
November 1, 2011....................            0.00   0.6407570              0.00   0.0000000             0.00   0.4431347
May 1, 2012.........................   11,532,937.18   0.6116172              0.00   0.0000000     3,541,219.51   0.4118378
November 1, 2012....................            0.00   0.6116172              0.00   0.0000000       847,339.36   0.4043491
May 1, 2013.........................   14,642,872.82   0.5746197              0.00   0.0000000     5,901,769.31   0.3521898
November 1, 2013....................            0.00   0.5746197              0.00   0.0000000             0.00   0.3521898
May 1, 2014.........................   37,129,698.76   0.4808057              0.00   0.0000000     5,488,551.50   0.3036825
November 1, 2014....................            0.00   0.4808057              0.00   0.0000000       299,122.69   0.3010389
May 1, 2015.........................   42,083,979.58   0.3744740              0.00   0.0000000     4,904,761.24   0.2576911
November 1, 2015....................            0.00   0.3744740              0.00   0.0000000             0.00   0.2576911
May 1, 2016.........................   42,928,482.21   0.2660084              0.00   0.0000000     5,743,574.87   0.2069299
November 1, 2016....................            0.00   0.2660084              0.00   0.0000000             0.00   0.2069299
May 1, 2017.........................   12,103,479.75   0.2354271              0.00   0.0000000     4,612,794.28   0.1661625
November 1, 2017....................            0.00   0.2354271              0.00   0.0000000             0.00   0.1661625
May 1, 2018.........................            0.00   0.2354271              0.00   0.0000000     1,602,702.56   0.1519980
November 1, 2018....................            0.00   0.2354271              0.00   0.0000000       632,285.12   0.1464099
May 1, 2019.........................   39,471,000.70   0.1356975              0.00   0.0000000     4,612,794.28   0.1056425
November 1, 2019....................    5,101,246.64   0.1228084              0.00   0.0000000     2,045,383.14   0.0875656
May 1, 2020.........................   47,009,783.28   0.0040308              0.00   0.0000000     5,295,161.60   0.0407674
November 1, 2020....................    1,595,311.91   0.0000000              0.00   0.0000000     4,612,794.25   0.0000000
 
<CAPTION>
                                              CLASS C-1                    CLASS C-2
                                      --------------------------   --------------------------
                                        SCHEDULED      EXPECTED      SCHEDULED      EXPECTED
                                        PRINCIPAL        POOL        PRINCIPAL        POOL
DATE                                     PAYMENTS       FACTOR        PAYMENTS       FACTOR
----                                    ---------      --------      ---------      --------
<S>                                   <C>              <C>         <C>              <C>
May 1, 2000.........................  $         0.00   1.0000000   $         0.00   1.0000000
November 1, 2000....................    1,551,104.30   0.9780356             0.00   1.0000000
May 1, 2001.........................    4,074,297.74   0.9203415             0.00   1.0000000
November 1, 2001....................      467,457.00   0.9137221             0.00   1.0000000
May 1, 2002.........................    1,744,899.46   0.8890135             0.00   1.0000000
November 1, 2002....................    5,386,938.33   0.8127317             0.00   1.0000000
May 1, 2003.........................   12,418,632.65   0.6368778             0.00   1.0000000
November 1, 2003....................        4,488.59   0.6368142             0.00   1.0000000
May 1, 2004.........................      801,463.50   0.6254651             0.00   1.0000000
November 1, 2004....................            0.00   0.6254651             0.00   1.0000000
May 1, 2005.........................            0.00   0.6254651    45,917,000.00   0.0000000
November 1, 2005....................            0.00   0.6254651             0.00   0.0000000
May 1, 2006.........................    3,772,331.64   0.5720470             0.00   0.0000000
November 1, 2006....................            0.00   0.5720470             0.00   0.0000000
May 1, 2007.........................    3,217,287.17   0.5264886             0.00   0.0000000
November 1, 2007....................            0.00   0.5264886             0.00   0.0000000
May 1, 2008.........................    6,023,536.60   0.4411924             0.00   0.0000000
November 1, 2008....................            0.00   0.4411924             0.00   0.0000000
May 1, 2009.........................    6,996,694.11   0.3421157             0.00   0.0000000
November 1, 2009....................            0.00   0.3421157             0.00   0.0000000
May 1, 2010.........................            0.00   0.3421157             0.00   0.0000000
November 1, 2010....................            0.00   0.3421157             0.00   0.0000000
May 1, 2011.........................   24,159,868.91   0.0000000             0.00   0.0000000
November 1, 2011....................            0.00   0.0000000             0.00   0.0000000
May 1, 2012.........................            0.00   0.0000000             0.00   0.0000000
November 1, 2012....................            0.00   0.0000000             0.00   0.0000000
May 1, 2013.........................            0.00   0.0000000             0.00   0.0000000
November 1, 2013....................            0.00   0.0000000             0.00   0.0000000
May 1, 2014.........................            0.00   0.0000000             0.00   0.0000000
November 1, 2014....................            0.00   0.0000000             0.00   0.0000000
May 1, 2015.........................            0.00   0.0000000             0.00   0.0000000
November 1, 2015....................            0.00   0.0000000             0.00   0.0000000
May 1, 2016.........................            0.00   0.0000000             0.00   0.0000000
November 1, 2016....................            0.00   0.0000000             0.00   0.0000000
May 1, 2017.........................            0.00   0.0000000             0.00   0.0000000
November 1, 2017....................            0.00   0.0000000             0.00   0.0000000
May 1, 2018.........................            0.00   0.0000000             0.00   0.0000000
November 1, 2018....................            0.00   0.0000000             0.00   0.0000000
May 1, 2019.........................            0.00   0.0000000             0.00   0.0000000
November 1, 2019....................            0.00   0.0000000             0.00   0.0000000
May 1, 2020.........................            0.00   0.0000000             0.00   0.0000000
November 1, 2020....................            0.00   0.0000000             0.00   0.0000000
</TABLE>

 
     The Pool Factor and Pool Balance of each Trust will be recomputed if there
has been an early redemption, purchase, or default in the payment of principal
or interest in respect of one or more of the Equipment Notes held in a Trust, as
described in "-- Indenture Defaults and Certain Rights Upon an Indenture
Default" and "Description of the Equipment Notes -- Redemption", or a special
distribution attributable to unused Deposits after the Delivery Period
Termination Date or the occurrence of a Triggering Event, as described in
"Description of the Deposit Agreements". If the principal payments scheduled for
a Regular Distribution Date prior to the Delivery Period Termination Date are
changed, notice thereof will be mailed to the Certificateholders by no later
than the 15th day prior to such Regular Distribution Date. In the event of (i)
any other change in the scheduled repayments from the Assumed Amortization
Schedule or (ii) any such redemption, purchase, default or special distribution,
the Pool Factors and the Pool Balances of each Trust so affected will be
recomputed after giving effect thereto and notice thereof will be mailed to the
Certificateholders of such Trust promptly after the Delivery Period Termination
Date in the case of clause (i) and promptly after the occurrence of any event
described in clause (ii).
 
                                      S-34

<PAGE>   35
 
REPORTS TO CERTIFICATEHOLDERS
 
     On each Distribution Date, the applicable Paying Agent and Trustee will
include with each distribution by it of a Scheduled Payment or Special Payment
to Certificateholders of the related Trust a statement setting forth the
following information (per $1,000 aggregate principal amount of Certificate for
such Trust, except as to the amounts described in items (a) and (f) below):
 
        (a) The aggregate amount of funds distributed on such Distribution Date
     under the Pass Through Trust Agreement and under the Escrow Agreement,
     indicating the amount allocable to each source.
 
        (b) The amount of such distribution under the Pass Through Trust
     Agreement allocable to principal and the amount allocable to premium, if
     any.
 
        (c) The amount of such distribution under the Pass Through Trust
     Agreement allocable to interest.
 
        (d) The amount of such distribution under the Escrow Agreement allocable
     to interest.
 
        (e) The amount of such distribution under the Escrow Agreement allocable
     to unused Deposits, if any.
 
        (f) The Pool Balance and the Pool Factor for such Trust. (Trust
     Supplements, Section 3.02(a))
 
     So long as the Certificates are registered in the name of DTC or its
nominee, on the record date prior to each Distribution Date, the applicable
Trustee will request from DTC a securities position listing setting forth the
names of all DTC Participants reflected on DTC's books as holding interests in
the Certificates on such record date. On each Distribution Date, the applicable
Paying Agent and Trustee will mail to each such DTC Participant the statement
described above and will make available additional copies as requested by such
DTC Participant for forwarding to Certificate Owners. (Trust Supplements,
Section 3.02(a))
 
     In addition, after the end of each calendar year, the applicable Trustee
and Paying Agent will furnish to each Certificateholder of each Trust at any
time during the preceding calendar year a report containing the sum of the
amounts determined pursuant to clauses (a), (b), (c), (d) and (e) above with
respect to the Trust for such calendar year or, in the event such person was a
Certificateholder during only a portion of such calendar year, for the
applicable portion of such calendar year, and such other items as are readily
available to such Trustee and which a Certificateholder shall reasonably request
as necessary for the purpose of such Certificateholder's preparation of its U.S.
federal income tax returns. (Trust Supplements, Section 3.02(b)) Such report and
such other items shall be prepared on the basis of information supplied to the
applicable Trustee by the DTC Participants and shall be delivered by such
Trustee to such DTC Participants to be available for forwarding by such DTC
Participants to Certificate Owners in the manner described above. (Trust
Supplements, Section 3.02(b)) At such time, if any, as the Certificates are
issued in the form of definitive certificates, the applicable Paying Agent and
Trustee will prepare and deliver the information described above to each
Certificateholder of record of each Trust as the name and period of ownership of
such Certificateholder appears on the records of the registrar of the
Certificates.
 
INDENTURE DEFAULTS AND CERTAIN RIGHTS UPON AN INDENTURE DEFAULT
 
     An event of default under an Indenture (an "Indenture Default") will, with
respect to the Leased Aircraft Indentures, include an event of default under the
related Lease (a "Lease Event of Default"). See "Description of the Equipment
Notes -- Indenture Defaults, Notice and Waiver". Since the Equipment Notes
issued under an Indenture will be held in more than one Trust, a continuing
Indenture Default under such Indenture would affect the Equipment Notes held by
each such Trust. There are no cross-default provisions in the Indentures or in
the Leases (unless otherwise agreed between an Owner Participant and
Continental, which Continental does not expect). Consequently, events resulting
in an Indenture Default under any particular Indenture may or may not result in
an Indenture Default under any other Indenture, and a Lease Event of Default
under any particular Lease may or may not constitute a Lease Event of Default
under any other Lease. If an Indenture Default occurs in fewer than all of the
Indentures, notwithstanding the treatment of Equipment Notes issued under any
Indenture under which an Indenture Default has occurred, payments of principal
and interest on all of the Equipment Notes will continue to be distributed to
the holders
                                      S-35

<PAGE>   36
 
of the Certificates as originally scheduled, subject to the Intercreditor
Agreement. See "Description of the Intercreditor Agreement -- Priority of
Distributions".
 
     With respect to each Leased Aircraft, the applicable Owner Trustee and
Owner Participant will, under the related Leased Aircraft Indenture, have the
right under certain circumstances to cure Indenture Defaults that result from
the occurrence of a Lease Event of Default under the related Lease. If the Owner
Trustee or the Owner Participant exercises any such cure right, the Indenture
Default will be deemed to have been cured.
 
     In the event that the same institution acts as Trustee of multiple Trusts,
in the absence of instructions from the Certificateholders of any such Trust,
such Trustee could be faced with a potential conflict of interest upon an
Indenture Default. In such event, each Trustee has indicated that it would
resign as Trustee of one or all such Trusts, and a successor trustee would be
appointed in accordance with the terms of the applicable Pass Through Trust
Agreement. Wilmington Trust Company will be the initial Trustee under each
Trust.
 
     Upon the occurrence and continuation of an Indenture Default, the
Controlling Party will direct the Indenture Trustee under such Indenture in the
exercise of remedies thereunder and may accelerate and sell all (but not less
than all) of the Equipment Notes issued under such Indenture to any person,
subject to certain limitations. See "Description of the Intercreditor
Agreement -- Intercreditor Rights -- Sale of Equipment Notes or Aircraft". The
proceeds of such sale will be distributed pursuant to the provisions of the
Intercreditor Agreement. Any such proceeds so distributed to any Trustee upon
any such sale shall be deposited in the applicable Special Payments Account and
shall be distributed to the Certificateholders of the applicable Trust on a
Special Distribution Date. (Sections 4.01 and 4.02) The market for Equipment
Notes at the time of the existence of an Indenture Default may be very limited
and there can be no assurance as to the price at which they could be sold. If
any such Equipment Notes are sold for less than their outstanding principal
amount, certain Certificateholders will receive a smaller amount of principal
distributions than anticipated and will not have any claim for the shortfall
against Continental, any Liquidity Provider, any Owner Trustee, any Owner
Participant or any Trustee.
 
     Any amount, other than Scheduled Payments received on a Regular
Distribution Date or within five days thereafter, distributed to the Trustee of
any Trust by the Subordination Agent on account of any Equipment Note, Trust
Indenture Estate under (and as defined in) any Leased Aircraft Indenture or
Collateral under (and as defined in) any Owned Aircraft Indenture held in such
Trust following an Indenture Default will be deposited in the Special Payments
Account for such Trust and will be distributed to the Certificateholders of such
Trust on a Special Distribution Date. (Sections 4.01 and 4.02; Trust
Supplements, Section 3.01) In addition, if, following an Indenture Default under
any Leased Aircraft Indenture, the applicable Owner Participant or Owner Trustee
exercises its option to redeem or purchase the outstanding Equipment Notes
issued under such Leased Aircraft Indenture, the price paid by such Owner
Participant or Owner Trustee for the Equipment Notes issued under such Leased
Aircraft Indenture and distributed to such Trust by the Subordination Agent will
be deposited in the Special Payments Account for such Trust and will be
distributed to the Certificateholders of such Trust on a Special Distribution
Date. (Sections 4.01 and 4.02)
 
     Any funds representing payments received with respect to any defaulted
Equipment Notes, or the proceeds from the sale of any Equipment Notes, held by
the Trustee in the Special Payments Account for such Trust will, to the extent
practicable, be invested and reinvested by such Trustee in certain permitted
investments pending the distribution of such funds on a Special Distribution
Date. (Section 4.04) Such permitted investments are defined as obligations of
the United States or agencies or instrumentalities thereof for the payment of
which the full faith and credit of the United States is pledged and which mature
in not more than 60 days or such lesser time as is required for the distribution
of any such funds on a Special Distribution Date. (Section 1.01)
 
     Each Pass Through Trust Agreement provides that the Trustee of the related
Trust will, within 90 days after the occurrence of any default known to the
Trustee, give to the Certificateholders of such Trust notice, transmitted by
mail, of such uncured or unwaived default with respect to such Trust known to
it, provided that, except in the case of default in a payment of principal,
premium, if any, or interest on any of the Equipment Notes held in such Trust,
the applicable Trustee will be protected in withholding such notice if it
                                      S-36

<PAGE>   37
 
in good faith determines that the withholding of such notice is in the interests
of such Certificateholders. (Section 7.02) The term "default" as used in this
paragraph only with respect to any Trust means the occurrence of an Indenture
Default under any Indenture pursuant to which Equipment Notes held by such Trust
were issued, as described above, except that in determining whether any such
Indenture Default has occurred, any grace period or notice in connection
therewith will be disregarded.
 
     Each Pass Through Trust Agreement contains a provision entitling the
Trustee of the related Trust, subject to the duty of such Trustee during a
default to act with the required standard of care, to be offered reasonable
security or indemnity by the holders of the Certificates of such Trust before
proceeding to exercise any right or power under such Pass Through Trust
Agreement at the request of such Certificateholders. (Section 7.03(e))
 
     Subject to certain qualifications set forth in each Pass Through Trust
Agreement and to the Intercreditor Agreement, the Certificateholders of each
Trust holding Certificates evidencing fractional undivided interests aggregating
not less than a majority in interest in such Trust shall have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee with respect to such Trust or pursuant to the terms of
the Intercreditor Agreement, or exercising any trust or power conferred on such
Trustee under such Pass Through Trust Agreement or the Intercreditor Agreement,
including any right of such Trustee as Controlling Party under the Intercreditor
Agreement or as holder of the Equipment Notes. (Section 6.04)
 
     In certain cases, the holders of the Certificates of a Trust evidencing
fractional undivided interests aggregating not less than a majority in interest
of such Trust may on behalf of the holders of all the Certificates of such Trust
waive any past "event of default" under such Trust (i.e., any Indenture Default
under any Indenture pursuant to which Equipment Notes held by such Trust were
issued) and its consequences or, if the Trustee of such Trust is the Controlling
Party, may direct the Trustee to instruct the applicable Loan Trustee to waive
any past Indenture Default and its consequences, except (i) a default in the
deposit of any Scheduled Payment or Special Payment or in the distribution
thereof, (ii) a default in payment of the principal, premium, if any, or
interest with respect to any of the Equipment Notes and (iii) a default in
respect of any covenant or provision of the Pass Through Trust Agreement that
cannot be modified or amended without the consent of each Certificateholder of
such Trust affected thereby. (Section 6.05) Each Indenture will provide that,
with certain exceptions, the holders of the majority in aggregate unpaid
principal amount of the Equipment Notes issued thereunder may on behalf of all
such holders waive any past default or Indenture Default thereunder.
Notwithstanding such provisions of the Indentures, pursuant to the Intercreditor
Agreement only the Controlling Party will be entitled to waive any such past
default or Indenture Default.
 
PURCHASE RIGHTS OF CERTIFICATEHOLDERS
 
     Upon the occurrence and during the continuation of a Triggering Event, with
ten days' written notice to the Trustee and each Certificateholder of the same
Class:
 
     - If the Class A-1 or Class A-2 Certificateholders are then represented by
       the Controlling Party, the Certificateholders of such other Class will
       have the right to purchase all of such Class of Certificates represented
       by the Controlling Party.
 
     - The Class B Certificateholders will have the right to purchase all of the
       Class A-1 and Class A-2 Certificates.
 
     - The Class C-1 and Class C-2 Certificateholders will have the right to
       purchase all of the Class A-1, Class A-2 and Class B Certificates.
 
     - If the Class C-1 or Class C-2 Certificateholders are then represented by
       the Controlling Party, the Certificateholders of such other Class will
       have the right to purchase all of such Class of Certificates represented
       by the Controlling Party.
 
                                      S-37

<PAGE>   38
 
     - If the Class D Certificates are issued, the Class D Certificateholders
       will have the right to purchase all of the Class A-1, Class A-2, Class B,
       Class C-1 and Class C-2 Certificates.
 
     In each case the purchase price will be equal to the Pool Balance of the
relevant Class or Classes of Certificates plus accrued and unpaid interest
thereon to the date of purchase, without premium, but including any other
amounts then due and payable to the Certificateholders of such Class or Classes.
Such purchase right may be exercised by any Certificateholder of the Class or
Classes entitled to such right. In each case, if prior to the end of the ten-day
notice period, any other Certificateholder of the same Class (or, in the case of
a purchase right exercisable by the Class C-1 and Class C-2 Certificateholders,
any Certificateholder of the other relevant Class) notifies the purchasing
Certificateholder that the other Certificateholder wants to participate in such
purchase, then such other Certificateholder may join with the purchasing
Certificateholder to purchase the Certificates pro rata based on the interest in
the Trust held by each Certificateholder (or, in the case of a purchase right
exercisable by the Class C-1 and Class C-2 Certificateholders, pro rata based on
the fractional interest in the relevant Trust held by each Certificateholder
multiplied by the Pool Balance of such Trust). (Trust Supplements, Section 4.01)
 
PTC EVENT OF DEFAULT
 
     A Pass Through Certificate Event of Default (a "PTC Event of Default")
under each Pass Through Trust Agreement means the failure to pay:
 
     - The outstanding Pool Balance of the applicable Class of Certificates
       within ten Business Days of the Final Maturity Date for such Class.
 
     - Interest due on such Class of Certificates within ten Business Days of
       any Distribution Date (unless the Subordination Agent shall have made
       Interest Drawings, or withdrawals from the Cash Collateral Account for
       such Class of Certificates, with respect thereto in an aggregate amount
       sufficient to pay such interest and shall have distributed such amount to
       the Trustee entitled thereto). (Section 1.01)
 
     Any failure to make expected principal distributions with respect to any
Class of Certificates on any Regular Distribution Date (other than the Final
Maturity Date) will not constitute a PTC Event of Default with respect to such
Certificates. A PTC Event of Default with respect to the most senior outstanding
Class of Certificates resulting from an Indenture Default under all Indentures
will constitute a Triggering Event. See "Description of the Intercreditor
Agreement -- Priority of Distributions" for a discussion of the consequences of
the occurrence of a Triggering Event.
 
MERGER, CONSOLIDATION AND TRANSFER OF ASSETS
 
     Continental will be prohibited from consolidating with or merging into any
other corporation or transferring substantially all of its assets as an entirety
to any other corporation unless:
 
     - The surviving successor or transferee corporation shall be validly
       existing under the laws of the United States or any state thereof or the
       District of Columbia.
 
     - The surviving successor or transferee corporation shall be a "citizen of
       the United States" (as defined in Title 49 of the United States Code
       relating to aviation (the "Transportation Code")) holding an air carrier
       operating certificate issued by the Secretary of Transportation pursuant
       to Chapter 447 of Title 49, United States Code, if, and so long as, such
       status is a condition of entitlement to the benefits of Section 1110 of
       the Bankruptcy Code.
 
     - The surviving successor or transferee corporation shall expressly assume
       all of the obligations of Continental contained in the Basic Agreement
       and any Trust Supplement, the Note Purchase Agreement, the Indentures,
       the Participation Agreements and the Leases, and any other operative
       documents.
 
     - Continental shall have delivered a certificate and an opinion or opinions
       of counsel indicating that such transaction, in effect, complies with
       such conditions.
 
                                      S-38

<PAGE>   39
 
     In addition, after giving effect to such transaction, no Lease Event of
Default, in the case of a Leased Aircraft, or Indenture Default, in the case of
an Owned Aircraft, shall have occurred and be continuing. (Section 5.02; Leases,
Section 13.2; Owned Aircraft Indentures, Section 4.07)
 
     The Basic Agreement, the Trust Supplements, the Note Purchase Agreement,
the Indentures, the Participation Agreements and the Leases will not contain any
covenants or provisions which may afford the applicable Trustee or
Certificateholders protection in the event of a highly leveraged transaction,
including transactions effected by management or affiliates, which may or may
not result in a change in control of Continental.
 
MODIFICATIONS OF THE PASS THROUGH TRUST AGREEMENTS AND CERTAIN OTHER AGREEMENTS
 
     Each Pass Through Trust Agreement contains provisions permitting, at the
request of the Company, the execution of amendments or supplements to such Pass
Through Trust Agreement or, if applicable, to the Deposit Agreements, the Escrow
Agreements, the Intercreditor Agreement, the Note Purchase Agreement or the
Liquidity Facilities, without the consent of the holders of any of the
Certificates of such Trust:
 
     - To evidence the succession of another corporation to Continental and the
       assumption by such corporation of Continental's obligations under such
       Pass Through Trust Agreement or the Note Purchase Agreement.
 
     - To add to the covenants of Continental for the benefit of holders of such
       Certificates or to surrender any right or power conferred upon
       Continental in such Pass Through Trust Agreement, the Intercreditor
       Agreement, the Note Purchase Agreement or the Liquidity Facilities.
 
     - To correct or supplement any provision of such Pass Through Trust
       Agreement, the Deposit Agreements, the Escrow Agreements, the
       Intercreditor Agreement, the Note Purchase Agreement or the Liquidity
       Facilities which may be defective or inconsistent with any other
       provision in such Pass Through Trust Agreement, the Intercreditor
       Agreement, or the Liquidity Facilities, as applicable, or to cure any
       ambiguity or to modify any other provision with respect to matters or
       questions arising under such Pass Through Trust Agreement, the Deposit
       Agreements, the Escrow Agreements, the Intercreditor Agreement, the Note
       Purchase Agreement or the Liquidity Facilities, provided that such action
       shall not materially adversely affect the interests of the holders of
       such Certificates; to correct any mistake in such Pass Through Trust
       Agreement, the Intercreditor Agreement or the Liquidity Facilities; or,
       as provided in the Intercreditor Agreement, to give effect to or provide
       for a Replacement Facility.
 
     - To comply with any requirement of the Commission, any applicable law,
       rules or regulations of any exchange or quotation system on which the
       Certificates are listed, or any regulatory body.
 
     - To modify, eliminate or add to the provisions of such Pass Through Trust
       Agreement, the Deposit Agreements, the Escrow Agreements, the
       Intercreditor Agreement, the Note Purchase Agreement or the Liquidity
       Facilities to such extent as shall be necessary to continue the
       qualification of such Pass Through Trust Agreement (including any
       supplemental agreement) under the Trust Indenture Act of 1939, as amended
       (the "Trust Indenture Act"), or any similar federal statute enacted after
       the execution of such Pass Through Trust Agreement, and to add to such
       Pass Through Trust Agreement, the Deposit Agreements, the Escrow
       Agreements, the Intercreditor Agreement, the Note Purchase Agreement or
       the Liquidity Facilities such other provisions as may be expressly
       permitted by the Trust Indenture Act.
 
     - To evidence and provide for the acceptance of appointment under such Pass
       Through Trust Agreement, the Deposit Agreements, the Escrow Agreements,
       the Intercreditor Agreement, the Note Purchase Agreement or the Liquidity
       Facilities by a successor Trustee and to add to or change any of the
       provisions of such Pass Through Trust Agreement, the Deposit Agreements,
       the Escrow Agreements, the Intercreditor Agreement, the Note Purchase
       Agreement or the Liquidity Facilities as shall be necessary to provide
       for or facilitate the administration of the Trusts under the Basic
       Agreement by more than one Trustee.
                                      S-39

<PAGE>   40
 
     In each case, such modification or supplement may not adversely affect the
status of the Trust as a grantor trust under Subpart E, Part I of Subchapter J
of Chapter 1 of Subtitle A of the Internal Revenue Code of 1986, as amended (the
"Code"), for U.S. federal income tax purposes. (Section 9.01; Trust Supplements,
Section 6.01)
 
     Each Pass Through Trust Agreement also contains provisions permitting the
execution, with the consent of the holders of the Certificates of the related
Trust evidencing fractional undivided interests aggregating not less than a
majority in interest of such Trust, of amendments or supplements adding any
provisions to or changing or eliminating any of the provisions of such Pass
Through Trust Agreement, the Deposit Agreements, the Escrow Agreements, the
Intercreditor Agreement, the Note Purchase Agreement or the Liquidity Facilities
to the extent applicable to such Certificateholders or of modifying the rights
and obligations of such Certificateholders under such Pass Through Trust
Agreement, the Deposit Agreements, the Escrow Agreements, the Intercreditor
Agreement, the Note Purchase Agreement or the Liquidity Facilities. No such
amendment or supplement may, without the consent of the holder of each
Certificate so affected thereby:
 
     - Reduce in any manner the amount of, or delay the timing of, any receipt
       by the Trustee (or, with respect to the Deposits, the Receiptholders) of
       payments with respect to the Equipment Notes held in such Trust or
       distributions in respect of any Certificate related to such Trust (or,
       with respect to the Deposits, payments upon the Deposits), or change the
       date or place of any payment in respect of any Certificate, or make
       distributions payable in coin or currency other than that provided for in
       such Certificates, or impair the right of any Certificateholder of such
       Trust to institute suit for the enforcement of any such payment when due.
 
     - Permit the disposition of any Equipment Note held in such Trust, except
       as provided in such Pass Through Trust Agreement, or otherwise deprive
       such Certificateholder of the benefit of the ownership of the applicable
       Equipment Notes.
 
     - Alter the priority of distributions specified in the Intercreditor
       Agreement in a manner materially adverse to such Certificateholders.
 
     - Reduce the percentage of the aggregate fractional undivided interests of
       the Trust provided for in such Pass Through Trust Agreement, the consent
       of the holders of which is required for any such supplemental trust
       agreement or for any waiver provided for in such Pass Through Trust
       Agreement.
 
     - Modify any of the provisions relating to the rights of the
       Certificateholders in respect of the waiver of events of default or
       receipt of payment.
 
     - Adversely affect the status of any Trust as a grantor trust under Subpart
       E, Part I of Subchapter J of Chapter 1 of Subtitle A of the Code for U.S.
       federal income tax purposes. (Section 9.02; Trust Supplements, Section
       6.02)
 
     In the event that a Trustee, as holder (or beneficial owner through the
Subordination Agent) of any Equipment Note in trust for the benefit of the
Certificateholders of the relevant Trust or as Controlling Party under the
Intercreditor Agreement, receives (directly or indirectly through the
Subordination Agent) a request for a consent to any amendment, modification,
waiver or supplement under any Indenture, any Participation Agreement, any
Lease, any Equipment Note or any other related document, the Trustee shall
forthwith send a notice of such proposed amendment, modification, waiver or
supplement to each Certificateholder of the relevant Trust as of the date of
such notice. The Trustee shall request from the Certificateholders a direction
as to:
 
     - Whether or not to take or refrain from taking (or direct the
       Subordination Agent to take or refrain from taking) any action which a
       holder of such Equipment Note or the Controlling Party has the option to
       direct.
 
     - Whether or not to give or execute (or direct the Subordination Agent to
       give or execute) any waivers, consents, amendments, modifications or
       supplements as a holder of such Equipment Note or as Controlling Party.
                                      S-40

<PAGE>   41
 
     - How to vote (or direct the Subordination Agent to vote) any Equipment
       Note if a vote has been called for with respect thereto.
 
     Provided such a request for Certificateholder direction shall have been
made, in directing any action or casting any vote or giving any consent as the
holder of any Equipment Note (or in directing the Subordination Agent in any of
the foregoing):
 
     - Other than as Controlling Party, the Trustee shall vote for or give
       consent to any such action with respect to such Equipment Note in the
       same proportion as that of (x) the aggregate face amount of all
       Certificates actually voted in favor of or for giving consent to such
       action by such direction of Certificateholders to (y) the aggregate face
       amount of all outstanding Certificates of the relevant Trust.
 
     - As the Controlling Party, the Trustee shall vote as directed in such
       Certificateholder direction by the Certificateholders evidencing
       fractional undivided interests aggregating not less than a majority in
       interest in the relevant Trust.
 
     For purposes of the immediately preceding paragraph, a Certificate shall
have been "actually voted" if the Certificateholder has delivered to the Trustee
an instrument evidencing such Certificateholder's consent to such direction
prior to one Business Day before the Trustee directs such action or casts such
vote or gives such consent. Notwithstanding the foregoing, but subject to
certain rights of the Certificateholders under the relevant Pass Through Trust
Agreement and subject to the Intercreditor Agreement, the Trustee may, in its
own discretion and at its own direction, consent and notify the relevant Loan
Trustee of such consent (or direct the Subordination Agent to consent and notify
the relevant Loan Trustee of such consent) to any amendment, modification,
waiver or supplement under the relevant Indenture, Participation Agreement or
Lease, any relevant Equipment Note or any other related document, if an
Indenture Default under any Indenture shall have occurred and be continuing, or
if such amendment, modification, waiver or supplement will not materially
adversely affect the interests of the Certificateholders. (Section 10.01)
 
OBLIGATION TO PURCHASE EQUIPMENT NOTES
 
     The Trustees will be obligated to purchase the Equipment Notes issued with
respect to the Aircraft during the Delivery Period, subject to the terms and
conditions of a note purchase agreement (the "Note Purchase Agreement"). Under
the Note Purchase Agreement, Continental agrees to finance each Aircraft in the
manner provided therein. Continental will have the option of entering into a
leveraged lease financing or a secured debt financing with respect to each
Aircraft.
 
     - If Continental chooses to enter into a leveraged lease financing with
       respect to an Aircraft (such Aircraft, a "Leased Aircraft"), the Note
       Purchase Agreement provides for the relevant parties to enter into a
       participation agreement (each, a "Participation Agreement"), a Lease and
       an indenture (each, a "Leased Aircraft Indenture") relating to the
       financing of such Leased Aircraft.
 
     - If Continental chooses to enter into a secured debt financing with
       respect to an Aircraft (such Aircraft, an "Owned Aircraft"), the Note
       Purchase Agreement provides for the relevant parties to enter into a
       participation agreement (each, a "Participation Agreement") and an
       indenture (each, an "Owned Aircraft Indenture", and together with the
       other Owned Aircraft Indentures and the Leased Aircraft Indentures, the
       "Indentures") relating to the financing of such Owned Aircraft.
 
     The description of such financing agreements in this Prospectus Supplement
is based on the forms of such agreements attached to the Note Purchase
Agreement. However, the terms of the financing agreements actually entered into
may differ from the forms of such agreements and, consequently, may differ from
the description of such agreements contained in this Prospectus Supplement. See
"Description of the Equipment Notes". Although such changes are permitted, under
the Note Purchase Agreement, the terms of such agreements are required (a) to
contain the Mandatory Document Terms and (b) not to vary the Mandatory Economic
Terms. In addition, Continental is obligated to certify to the Trustees that any
such modifications do not materially and adversely affect the
Certificateholders. Continental must also obtain written confirmation from each
Rating Agency that the use of financing agreements modified in any material
                                      S-41

<PAGE>   42
 
respect from the forms attached to the Note Purchase Agreement will not result
in a withdrawal, suspension or downgrading of the rating of any Class of
Certificates. Further, under the Note Purchase Agreement, it is a condition
precedent to the obligation of each Trustee to purchase the Equipment Notes
related to the financing of an Aircraft that no Triggering Event shall have
occurred. The Trustees will have no right or obligation to purchase Equipment
Notes after the Delivery Period Termination Date.
 
     The "Mandatory Economic Terms", as defined in the Note Purchase Agreement,
require, among other things, that:
 
     - The aggregate principal amount of all the Equipment Notes issued with
       respect to an Aircraft shall not exceed the amounts set forth in the
       following table:
 

<TABLE>
<CAPTION>
                                                                 MAXIMUM PRINCIPAL
                                               MANUFACTURER'S        AMOUNT OF
                AIRCRAFT TYPE                  SERIAL NUMBER      EQUIPMENT NOTES
                -------------                  --------------    -----------------
<S>                                            <C>               <C>
Boeing 737-824...............................      30429            $30,822,220
Boeing 737-824...............................      30613             30,822,220
Boeing 737-824...............................      30576             30,937,280
Boeing 737-824...............................      30577             30,937,280
Boeing 737-824...............................      30578             30,937,280
Boeing 737-824...............................      30579             30,983,480
Boeing 737-824...............................      30580             30,983,480
Boeing 737-824...............................      30581             30,983,480
Boeing 737-824...............................      30582             31,025,280
Boeing 737-824...............................      30583             31,025,280
Boeing 737-824...............................      30584             31,025,280
Boeing 737-824...............................      30779             31,025,280
Boeing 737-824...............................      30610             31,136,600
Boeing 737-824...............................      30611             31,136,600
Boeing 737-824...............................      30612             31,185,000
Boeing 737-824...............................      30802             31,185,000
 
Boeing 757-224...............................      30352             39,097,740
Boeing 757-224...............................      30353             39,097,740
Boeing 757-224...............................      30354             39,352,500
 
Boeing 767-424ER.............................      29446             68,463,560
Boeing 767-424ER.............................      29447             68,560,360
Boeing 767-424ER.............................      29448             68,953,060
Boeing 767-424ER.............................      29449             69,148,860
</TABLE>

 
     - The initial LTV with respect to an Aircraft (with the value of any
       Aircraft for these purposes equal to the value (the "Assumed Appraised
       Value") for such Aircraft set forth under "Description of the Aircraft
       and the Appraisals -- The Appraisals" in the column "Appraised Value")
       shall not exceed the percentages set forth in the following table:
 

<TABLE>
<CAPTION>
SERIES A-1  SERIES A-2    SERIES B    SERIES C-1   SERIES C-2
EQUIPMENT   EQUIPMENT    EQUIPMENT    EQUIPMENT    EQUIPMENT
  NOTES       NOTES        NOTES        NOTES        NOTES
----------  ----------   ----------   ----------   ----------
<S>         <C>          <C>          <C>          <C>
  42.0%       42.0%        53.0%        66.0%        66.0%
</TABLE>

 
                                      S-42

<PAGE>   43
 
     - The LTV for each series of Equipment Notes issued in respect of each
       Aircraft (computed as of the date of the issuance thereof on the basis of
       the Assumed Appraised Value of such Aircraft and the Depreciation
       Assumption) shall not exceed as of any Regular Distribution Date
       thereafter (assuming no default in the payment of the Equipment Notes and
       after giving effect to scheduled payments) the LTV for such series of
       Equipment Notes set forth in the following table for the applicable time
       period:
 

<TABLE>
<CAPTION>
                              SERIES A-1     SERIES A-2      SERIES B      SERIES C-1     SERIES C-2
                              EQUIPMENT      EQUIPMENT      EQUIPMENT      EQUIPMENT      EQUIPMENT
        TIME PERIOD             NOTES          NOTES          NOTES          NOTES          NOTES
        -----------          ------------   ------------   ------------   ------------   ------------
<S>                          <C>            <C>            <C>            <C>            <C>
Up to May 1, 2005..........     42.0%          42.0%          53.0%          66.0%          66.0%
May 2, 2005 - May 1,
  2010.....................      42.0           42.0           51.0           66.0             NA
After May 1, 2010..........      40.0             NA           49.0           66.0             NA
</TABLE>

 
     - As of the Delivery Period Termination Date and each Regular Distribution
       Date thereafter, the LTV for each Class of Certificates (computed as of
       any such date on the basis of the Assumed Appraised Value of all Aircraft
       that have been delivered and the Depreciation Assumption) will not exceed
       (assuming no default in the payment of the Equipment Notes and after
       giving effect to scheduled payments) the percentages set forth in the
       following table for the applicable time period:
 

<TABLE>
<CAPTION>
                              CLASS A-1      CLASS A-2       CLASS B       CLASS C-1      CLASS C-2
        TIME PERIOD          CERTIFICATES   CERTIFICATES   CERTIFICATES   CERTIFICATES   CERTIFICATES
        -----------          ------------   ------------   ------------   ------------   ------------
<S>                          <C>            <C>            <C>            <C>            <C>
Up to May 1, 2005..........     41.0%          41.0%          51.0%          63.0%          63.0%
May 2, 2005 - May 1,
  2010.....................      41.0           41.0           49.0           63.0             NA
After May 1, 2010..........      39.0             NA           47.0           63.0             NA
</TABLE>

 
     - The initial average life of the Series A-1, B and C-1 Equipment Notes for
       any Aircraft shall not extend beyond 14.6 years, 13.2 years and 8.5
       years, respectively, from the Issuance Date.
 
     - As of the Delivery Period Termination Date, the average life of the Class
       A-1 Certificates, the Class B Certificates and the Class C-1 Certificates
       shall not be more than 12.6 years, 11.2 years and 7.0 years,
       respectively, from the Issuance Date (computed without regard to the
       acceleration of any Equipment Notes and after giving effect to any
       special distribution on the Certificates thereafter required in respect
       of unused Deposits).
 
     - The final expected distribution date of each Class of Certificates shall
       be no later than as set forth on the cover page of this Prospectus
       Supplement.
 
     - The final maturity date of the Series A-2 Equipment Notes shall be May 1,
       2010 and of the Series C-2 Equipment Notes shall be May 1, 2005, and
       there shall be no scheduled amortization of such Equipment Notes.
 
     - The original aggregate principal amount of all of the Equipment Notes of
       each Series shall not exceed the original aggregate face amount of the
       Certificates issued by the corresponding Trust.
 
     - As of the Delivery Period Termination Date (assuming Equipment Notes are
       acquired by the Trusts for all of the Aircraft), (a) the aggregate
       principal amount of the Series A-2 Equipment Notes shall equal the
       original face amount of the Class A-2 Certificates and (b) the aggregate
       principal amount of the Series C-2 Equipment Notes shall equal the
       original face amount of the Class C-2 Certificates.
 
     - The interest rate applicable to each Series of Equipment Notes must be
       equal to the rate applicable to the Certificates issued by the
       corresponding Trust.
 
     - The payment dates for the Equipment Notes and basic rent under the Leases
       must be May 1 and November 1.
 
     - Basic rent, stipulated loss values and termination values under the
       Leases must be sufficient to pay amounts due with respect to the related
       Equipment Notes.
 
                                      S-43

<PAGE>   44
 
     - The amounts payable under the all-risk aircraft hull insurance maintained
       with respect to each Aircraft must be sufficient to pay the applicable
       stipulated loss value, subject to certain rights of self-insurance.
 
     - (a) The past due rate in the Indentures and the Leases, (b) the
       Make-Whole Premium payable under the Indentures, (c) the provisions
       relating to the redemption and purchase of Equipment Notes in the
       Indentures, (d) the minimum liability insurance amount on Aircraft in the
       Leases, (e) the interest rate payable with respect to stipulated loss
       value in the Leases, and (f) the indemnification of the Loan Trustees,
       Subordination Agent, Liquidity Providers, Trustees, Escrow Agents and
       registered holders of the Equipment Notes (in such capacity, the "Note
       Holders") with respect to certain taxes and expenses, in each case shall
       be provided as set forth in the forms of Participation Agreements, Lease
       and Indentures attached as exhibits to the Note Purchase Agreement
       (collectively, the "Aircraft Operative Agreements").
 
     The "Mandatory Document Terms" prohibit modifications in any material
adverse respect to certain specified provisions of the Aircraft Operative
Agreements contemplated by the Note Purchase Agreement, as follows:
 
     - In the case of the Indentures, modifications are prohibited (i) to the
       Granting Clause of the Indentures so as to deprive the Note Holders of a
       first priority security interest in the Aircraft, certain of
       Continental's rights under its purchase agreement with the Aircraft
       manufacturer and, in the case of a Leased Aircraft, the Lease or to
       eliminate the obligations intended to be secured thereby, (ii) to certain
       provisions relating to the issuance, redemption, purchase, payments, and
       ranking of the Equipment Notes (including the obligation to pay the
       Make-Whole Premium in certain circumstances), (iii) to certain provisions
       regarding Indenture Defaults, remedies relating thereto and rights of the
       Owner Trustee and Owner Participant in such circumstances, (iv) to
       certain provisions relating to any replaced airframe or engines with
       respect to an Aircraft and (v) to the provision that New York law will
       govern the Indentures.
 
     - In the case of the Lease, modifications are prohibited to certain
       provisions regarding the obligation of Continental (i) to pay basic rent,
       stipulated loss value and termination value to the Leased Aircraft
       Trustee, (ii) to record the Leased Aircraft Indenture with the FAA and to
       maintain such Indenture as a first-priority perfected mortgage on the
       related Aircraft, (iii) to furnish certain opinions with respect to a
       replacement airframe and (iv) to consent to the assignment of the Lease
       by the Owner Trustee as collateral under the Leased Aircraft Indenture,
       as well as modifications which would either alter the provision that New
       York law will govern the Lease or would deprive the Loan Trustee of
       rights expressly granted to it under the Leases.
 
     - In the case of the Participation Agreement, modifications are prohibited
       (i) to certain conditions to the obligations of the Trustees to purchase
       the Equipment Notes issued with respect to an Aircraft involving good
       title to such Aircraft, obtaining a certificate of airworthiness with
       respect to such Aircraft, entitlement to the benefits of Section 1110
       with respect to such Aircraft and filings of certain documents with the
       FAA, (ii) to the provisions restricting the Note Holder's ability to
       transfer such Equipment Notes, (iii) to certain provisions requiring the
       delivery of legal opinions and (iv) to the provision that New York law
       will govern the Participation Agreement.
 
     - In the case of all of the Aircraft Operative Agreements, modifications
       are prohibited in any material adverse respect as regards the interest of
       the Note Holders, the Subordination Agent, the Liquidity Provider or the
       Loan Trustee in the definition of "Make-Whole Premium". Notwithstanding
       the foregoing, any such Mandatory Document Term may be modified to
       correct or supplement any such provision which may be defective or to
       cure any ambiguity or correct any mistake, provided that any such action
       shall not materially adversely affect the interests of the Note Holders,
       the Subordination Agent, the Liquidity Providers, the Mortgagee or the
       Certificateholders.
 
                                      S-44

<PAGE>   45
 
POSSIBLE ISSUANCE OF CLASS D CERTIFICATES
 
     Continental may elect to issue Series D Equipment Notes in connection with
the financing of Aircraft, which will be funded from sources other than this
offering (the "Offering"). Continental may elect to fund the sale of the Series
D Equipment Notes through the sale of Pass Through Certificates (the "Class D
Certificates") issued by a Class D Continental Airlines 2000-1 Pass Through
Trust (the "Class D Trust"). Continental will not issue any Series D Equipment
Notes at any time prior to the consummation of this Offering. The Note Purchase
Agreement provides that Continental's ability to issue any Series D Equipment
Notes is contingent upon its obtaining written confirmation from each Rating
Agency that the issuance of such Series D Equipment Notes will not result in a
withdrawal or downgrading of the rating of any Class of Certificates. If the
Class D Certificates are issued, the Trustee with respect to such Certificates
will become a party to the Intercreditor Agreement. If Series D Equipment Notes
are issued to other than the Class D Trust, such Series D Equipment Notes will
nevertheless be subject to provisions of the Intercreditor Agreement that allow
the Controlling Party, during the continuance of an Indenture Default, to direct
the Loan Trustee in taking action under the applicable Indenture. See
"Description of the Intercreditor Agreement".
 
LIQUIDATION OF ORIGINAL TRUSTS
 
     On the earlier of (i) the first Business Day after March 31, 2001 or, if
later, the fifth Business Day after the Delivery Period Termination Date and
(ii) the fifth Business Day after the occurrence of a Triggering Event (such
Business Day, the "Transfer Date"), each of the Trusts established on the
Issuance Date (the "Original Trusts") will transfer and assign all of its assets
and rights to a newly created successor trust (each, a "Successor Trust") with
substantially identical terms, except that (i) the Successor Trusts will not
have the right to purchase new Equipment Notes and (ii) Delaware law will govern
the Original Trusts and New York law will govern the Successor Trusts. The
institution acting as Trustee of each of the Original Trusts (each, an "Original
Trustee") will also act as Trustee of the corresponding Successor Trust (each, a
"New Trustee"). Each New Trustee will assume the obligations of the related
Original Trustee under each transaction document to which such Original Trustee
was a party. Upon the effectiveness of such transfer, assignment and assumption,
each of the Original Trusts will be liquidated and each of the Certificates will
represent the same percentage interest in the Successor Trust as it represented
in the Original Trust immediately prior to such transfer, assignment and
assumption. Unless the context otherwise requires, all references in this
Prospectus Supplement to the Trusts, the Trustees, the Pass Through Trust
Agreements and similar terms shall apply to the Original Trusts until the
effectiveness of such transfer, assignment and assumption, and thereafter shall
be applicable with respect to the Successor Trusts. If for any reason such
transfer, assignment and assumption cannot be effected to any Successor Trust,
the related Original Trust will continue in existence until it is effected. The
Original Trusts may be treated as partnerships for U.S. federal income tax
purposes. The Successor Trusts will, in the opinion of Tax Counsel, be treated
as grantor trusts. See "Certain U.S. Federal Income Tax Consequences".
 
TERMINATION OF THE TRUSTS
 
     The obligations of Continental and the applicable Trustee with respect to a
Trust will terminate upon the distribution to Certificateholders of such Trust
of all amounts required to be distributed to them pursuant to the applicable
Pass Through Trust Agreement and the disposition of all property held in such
Trust. The applicable Trustee will send to each Certificateholder of such Trust
notice of the termination of such Trust, the amount of the proposed final
payment and the proposed date for the distribution of such final payment for
such Trust. The final distribution to any Certificateholder of such Trust will
be made only upon surrender of such Certificateholder's Certificates at the
office or agency of the applicable Trustee specified in such notice of
termination. (Trust Supplements, Section 7.01)
 
                                      S-45

<PAGE>   46
 
THE TRUSTEES
 
     The Trustee for each Trust will be Wilmington Trust Company. The Trustees'
address is Wilmington Trust Company, Rodney Square North, 1100 North Market
Street, Wilmington, Delaware 19890-0001, Attention: Corporate Trust
Administration.
 
BOOK-ENTRY; DELIVERY AND FORM
 
     Upon issuance, each Class of Certificates will be represented by one or
more fully registered global certificates. Each global certificate will be
deposited with, or on behalf of, The Depository Trust Company ("DTC") and
registered in the name of Cede & Co. ("Cede"), the nominee of DTC. DTC was
created to hold securities for its participants ("DTC Participants") and
facilitate the clearance and settlement of securities transactions between DTC
Participants through electronic book-entry changes in accounts of the DTC
Participants, thereby eliminating the need for physical movement of
certificates. DTC Participants include securities brokers and dealers, banks,
trust companies and clearing corporations and certain other organizations.
Indirect access to the DTC system is available to others such as banks, brokers,
dealers and trust companies that clear through or maintain a custodial
relationship with a participant, either directly or indirectly. Interests in a
global certificate may also be held through the Euroclear System and Cedelbank.
See "Description of the Certificates -- Book-Entry Registration" in the
Prospectus for a discussion of the book-entry procedures applicable to the
Certificates and the limited circumstances under which definitive certificates
may be issued for the Certificates.
 
     So long as such book-entry procedures are applicable, no person acquiring
an interest in such Certificates ("Certificate Owner") will be entitled to
receive a certificate representing such person's interest in such Certificates.
Unless and until definitive certificates are issued under the limited
circumstances described in the Prospectus, all references to actions by
Certificateholders shall refer to actions taken by DTC upon instructions from
DTC Participants, and all references herein to distributions, notices, reports
and statements to Certificateholders shall refer, as the case may be, to
distributions, notices, reports and statements to DTC or Cede, as the registered
holder of such Certificates, or to DTC Participants for distribution to
Certificate Owners in accordance with DTC procedures.
 
                                      S-46

<PAGE>   47
 
                     DESCRIPTION OF THE DEPOSIT AGREEMENTS
 
     The following summary describes all material terms of the Deposit
Agreements. The summary does not purport to be complete and is qualified in its
entirety by reference to all of the provisions of the Deposit Agreements, each
of which will be filed as an exhibit to a Current Report on Form 8-K to be filed
by Continental with the Commission. The provisions of the Deposit Agreements are
substantially identical except as otherwise indicated.
 
GENERAL
 
     Under the Escrow Agreements, the Escrow Agent with respect to each Trust
will enter into a separate Deposit Agreement with the Depositary. Pursuant to
the Escrow Agreements, the Depositary will establish separate accounts into
which the proceeds of the Offering attributable to Certificates of the
applicable Trust, to the extent not used to purchase Equipment Notes on the
Issuance Date, will be deposited (each, a "Deposit") on behalf of such Escrow
Agent. Pursuant to the Deposit Agreement with respect to each Trust (each, a
"Deposit Agreement"), on each Regular Distribution Date the Depositary will pay
to the Paying Agent on behalf of the applicable Escrow Agent, for distribution
to the Certificateholders of such Trust, an amount equal to interest accrued on
the Deposits relating to such Trust during the relevant interest period at a
rate per annum equal to the interest rate applicable to the Certificates issued
by such Trust. After the Issuance Date, upon each delivery of an Aircraft during
the Delivery Period, the Trustee for each Trust will request the Escrow Agent
relating to such Trust to withdraw from the Deposits relating to such Trust
funds sufficient to enable the Trustee of such Trust to purchase the Equipment
Note of the series applicable to such Trust issued with respect to such
Aircraft. Accrued but unpaid interest on all such Deposits withdrawn will be
paid on the next Regular Distribution Date. Any portion of any Deposit withdrawn
which is not used to purchase such Equipment Note will be re-deposited by each
Trustee into an account relating to the applicable Trust. The Deposits relating
to each Trust and interest paid thereon will not be subject to the subordination
provisions of the Intercreditor Agreement and will not be available to pay any
other amount in respect of the Certificates.
 
UNUSED DEPOSITS
 
     The Trustees' obligations to purchase the Equipment Notes issued with
respect to each Aircraft are subject to satisfaction of certain conditions at
the time of financing, as set forth in the Note Purchase Agreement. See
"Description of the Certificates -- Obligation to Purchase Equipment Notes".
Since the Aircraft (other than the Aircraft delivered in February 2000) are
scheduled for delivery from time to time during the Delivery Period, no
assurance can be given that all such conditions will be satisfied at the time of
delivery for each such Aircraft. Moreover, since the Aircraft (other than the
Aircraft delivered in February 2000) will be newly manufactured, their delivery
as scheduled is subject to delays in the manufacturing process and to the
Aircraft manufacturer's right to postpone deliveries under its agreement with
Continental. See "Description of the Aircraft and Appraisals -- Deliveries of
Aircraft". Depending on the circumstances of the financing of each Aircraft, the
maximum aggregate principal amount of Equipment Notes may not be issued. In
addition, Continental's obligations under its predelivery deposit credit
facility are secured by Continental's purchase agreement with Boeing relating to
the Boeing 737-824, 757-224 and 767-424ER Aircraft. Accordingly, if Continental
should breach its obligations secured thereby, the secured parties could
exercise remedies and prevent delivery of Aircraft to Continental.
 
     If any funds remain as Deposits with respect to any Trust at the end of the
Delivery Period or, if earlier, upon the acquisition by the Trusts of the
Equipment Notes with respect to all of the Aircraft (the "Delivery Period
Termination Date"), such funds will be withdrawn by the Escrow Agent and
distributed, with accrued and unpaid interest thereon but without premium, to
the Certificateholders of such Trust after at least 15 days' prior written
notice. Since the maximum principal amount of Equipment Notes may not be issued
with respect to an Aircraft and, in any such case, the Series C-1 Equipment
Notes are more likely not to be issued in the maximum principal amount as
compared to the other Equipment Notes, it is more likely that a distribution of
unused Deposits will be made with respect to the Class C-1 Certificates as
compared to the other Certificates.
                                      S-47

<PAGE>   48
 
DISTRIBUTION UPON OCCURRENCE OF TRIGGERING EVENT
 
     If a Triggering Event shall occur prior to the Delivery Period Termination
Date, the Escrow Agent for each Trust will withdraw any funds then held as
Deposits with respect to such Trust and cause such funds, with accrued and
unpaid interest thereon but without any premium, to be distributed to the
Certificateholders of such Trust by the Paying Agent on behalf of the Escrow
Agent, after at least 15 days' prior written notice. Accordingly, if a
Triggering Event occurs prior to the Delivery Period Termination Date, the
Trusts will not acquire Equipment Notes issued with respect to Aircraft
delivered after the occurrence of such Triggering Event.
 
DEPOSITARY
 
     Credit Suisse First Boston, New York branch, will act as depositary (the
"Depositary"). Credit Suisse First Boston ("CSFB") is a Swiss bank with total
consolidated assets of approximately Sfr 433 billion ($280 billion) and total
consolidated shareholder's equity of approximately Sfr 12.2 billion ($7.9
billion), in each case at June 30, 1999. CSFB was founded in 1856 in Zurich.
CSFB's registered head office is in Zurich, Switzerland.
 
     CSFB has been licensed by the Superintendent of Banks of the State of New
York to operate a branch in New York. It is also subject to review and
supervision by the Federal Reserve Bank.
 
     CSFB has long-term unsecured debt ratings of A1 from Moody's Investors
Service, Inc. ("Moody's") and AA from Standard & Poor's Ratings Services, a
division of The McGraw-Hill Companies, Inc. ("Standard & Poor's", and together
with Moody's, the "Rating Agencies"), and short-term unsecured debt ratings of
P-1 from Moody's and A-1+ from Standard & Poor's.
 
     CSFB's New York branch has executive offices at Eleven Madison Avenue, New
York, New York 10010, (212) 325-9000. A copy of the Annual Report of CSFB for
the year ended December 31, 1998 may be obtained from CSFB by delivery of a
written request to its New York branch, Attention: Corporate Affairs.
 
                                      S-48

<PAGE>   49
 
                      DESCRIPTION OF THE ESCROW AGREEMENTS
 
     The following summary describes all material terms of the escrow and paying
agent agreements (the "Escrow Agreements"). The summary does not purport to be
complete and is qualified in its entirety by reference to all of the provisions
of the Escrow Agreements, each of which will be filed as an exhibit to a Current
Report on Form 8-K to be filed by Continental with the Commission. The
provisions of the Escrow Agreements are substantially identical except as
otherwise indicated.
 
     First Security Bank, N.A., as escrow agent in respect of each Trust (the
"Escrow Agent"), Wilmington Trust Company, as paying agent on behalf of the
Escrow Agent in respect of each Trust (the "Paying Agent"), each Trustee and the
Underwriters will enter into a separate Escrow Agreement for the benefit of the
Certificateholders of each Trust as holders of the Escrow Receipts affixed
thereto (in such capacity, a "Receiptholder"). The cash proceeds of the offering
of Certificates of each Trust, to the extent not used to purchase Equipment
Notes on the Issuance Date, will be deposited on behalf of the Escrow Agent (for
the benefit of Receiptholders) with the Depositary as Deposits relating to such
Trust. Each Escrow Agent shall permit the Trustee of the related Trust to cause
funds to be withdrawn from such Deposits on or prior to the Delivery Period
Termination Date to allow such Trustee to purchase the related Equipment Notes
pursuant to the Note Purchase Agreement. In addition, the Escrow Agent shall
direct the Depositary to pay interest on the Deposits accrued in accordance with
the Deposit Agreement to the Paying Agent for distribution to the
Receiptholders.
 
     Each Escrow Agreement requires that the Paying Agent establish and
maintain, for the benefit of the related Receiptholders, one or more Paying
Agent Account(s), which shall be non-interest-bearing. The Paying Agent shall
deposit interest on Deposits and any unused Deposits withdrawn by the Escrow
Agent in the related Paying Agent Account. The Paying Agent shall distribute
these amounts on a Regular Distribution Date or Special Distribution Date, as
appropriate.
 
     Upon receipt by the Depositary of cash proceeds from this Offering, the
Escrow Agent will issue one or more escrow receipts ("Escrow Receipts") which
will be affixed by the relevant Trustee to each Certificate. Each Escrow Receipt
evidences a fractional undivided interest in amounts from time to time deposited
into the Paying Agent Account and is limited in recourse to amounts deposited
into such account. An Escrow Receipt may not be assigned or transferred except
in connection with the assignment or transfer of the Certificate to which it is
affixed. Each Escrow Receipt will be registered by the Escrow Agent in the same
name and manner as the Certificate to which it is affixed.
 
                                      S-49

<PAGE>   50
 
                    DESCRIPTION OF THE LIQUIDITY FACILITIES
 
     The following summary describes all material terms of the Liquidity
Facilities and certain provisions of the Intercreditor Agreement relating to the
Liquidity Facilities. The summary supplements (and, to the extent inconsistent
therewith, replaces) the description of the general terms and provisions
relating to the Liquidity Facilities and the Intercreditor Agreement set forth
in the Prospectus. The summary does not purport to be complete and is qualified
in its entirety by reference to all of the provisions of the Liquidity
Facilities and the Intercreditor Agreement, each of which will be filed as an
exhibit to a Current Report on Form 8-K to be filed by Continental with the
Commission. The provisions of the Liquidity Facilities are substantially
identical except as otherwise indicated.
 
GENERAL
 
     CSFB, New York branch, with respect to each of the Class A-1, A-2 and B
Trusts, and Morgan Stanley Capital Services Inc. ("MSCS"), with respect to each
of the Class C-1 and C-2 Trusts (each, a "Liquidity Provider"), will enter into
a separate revolving credit agreement (each, a "Liquidity Facility") with the
Subordination Agent. Under each Liquidity Facility, the Liquidity Provider will,
if necessary, make one or more advances ("Interest Drawings") to the
Subordination Agent in an aggregate amount (the "Required Amount") sufficient to
pay interest on the related Certificates on up to three consecutive semiannual
Regular Distribution Dates at the respective interest rates shown on the cover
page of this Prospectus Supplement for such Certificates (the "Stated Interest
Rates"). If interest payment defaults occur which exceed the amount covered by
or available under the Liquidity Facility for any Trust, the Certificateholders
of such Trust will bear their allocable share of the deficiencies to the extent
that there are no other sources of funds. The initial liquidity provider with
respect to each Trust may be replaced by one or more other entities with respect
to any of such Trusts under certain circumstances.
 
     The obligations of MSCS to make advances under each of the Class C-1 and
C-2 Liquidity Facilities will be guaranteed by Morgan Stanley Dean Witter & Co.
("MSDW").
 
DRAWINGS
 
     The aggregate amount available under the Liquidity Facility for each Trust
at May 1, 2001, the first Regular Distribution Date after the scheduled Delivery
Period Termination Date, assuming that Equipment Notes in the maximum principal
amount with respect to all Aircraft are acquired by the Trusts and that all
interest and principal due on or prior to May 1, 2001, is paid, will be as
follows:
 

<TABLE>
<CAPTION>
TRUST                                                         AVAILABLE AMOUNT
-----                                                         ----------------
<S>                                                           <C>
Class A-1...................................................    $46,469,304
Class A-2...................................................     13,997,282
Class B.....................................................     13,933,696
Class C-1...................................................      8,285,709
Class C-2...................................................      5,731,130
</TABLE>

 
     Except as otherwise provided below, the Liquidity Facility for each Trust
will enable the Subordination Agent to make Interest Drawings thereunder
promptly on or after any Regular Distribution Date to pay interest then due and
payable on the Certificates of such Trust at the Stated Interest Rate for such
Trust to the extent that the amount, if any, available to the Subordination
Agent on such Regular Distribution Date is not sufficient to pay such interest;
provided, however, that the maximum amount available to be drawn under the
Liquidity Facility with respect to any Trust on any Regular Distribution Date to
fund any shortfall of interest on Certificates of such Trust will not exceed the
then Maximum Available Commitment under such Liquidity Facility. The "Maximum
Available Commitment" at any time under each Liquidity Facility is an amount
equal to the then Required Amount of such Liquidity Facility less the aggregate
amount of each Interest Drawing outstanding under such Liquidity Facility at
such time, provided that following a Downgrade Drawing, a Final Drawing or a
Non-Extension Drawing under a Liquidity Facility, the Maximum Available
Commitment under such Liquidity Facility shall be zero.
 
                                      S-50

<PAGE>   51
 
     The Liquidity Facility for any Class of Certificates does not provide for
drawings thereunder to pay for principal of or premium on the Certificates of
such Class or any interest on the Certificates of such Class in excess of the
Stated Interest Rate for such Class or more than three semiannual installments
of interest thereon or principal of or interest or premium on the Certificates
of any other Class. (Liquidity Facilities, Section 2.02; Intercreditor
Agreement, Section 3.6) In addition, the Liquidity Facility with respect to each
Trust does not provide for drawings thereunder to pay any amounts payable with
respect to the Deposits relating to such Trust.
 
     Each payment by a Liquidity Provider reduces by the same amount the Maximum
Available Commitment under the related Liquidity Facility, subject to
reinstatement as hereinafter described. With respect to any Interest Drawings,
upon reimbursement of the applicable Liquidity Provider in full for the amount
of such Interest Drawings plus interest thereon, the Maximum Available
Commitment under such Liquidity Facility in respect of interest on the
Certificates of such Trust will be reinstated to an amount not to exceed the
then Required Amount of the related Liquidity Facility. However, such Liquidity
Facility will not be so reinstated at any time if (i) a Liquidity Event of
Default shall have occurred and be continuing and (ii) less than 65% of the then
aggregate outstanding principal amount of all Equipment Notes are Performing
Equipment Notes. With respect to any other drawings under such Liquidity
Facility, amounts available to be drawn thereunder are not subject to
reinstatement. The Required Amount of the Liquidity Facility for any Trust will
be automatically reduced from time to time to an amount equal to the next three
successive interest payments due on the Certificates of such Trust (without
regard to expected future payment of principal of such Certificates) at the
Stated Interest Rate for such Trust. (Liquidity Facilities, Section 2.04(a);
Intercreditor Agreement, Section 3.6(j))
 
     "Performing Equipment Note" means an Equipment Note with respect to which
no payment default has occurred and is continuing (without giving effect to any
acceleration); provided that in the event of a bankruptcy proceeding involving
Continental under the U.S. Bankruptcy Code, (a) any payment default existing
during the 60-day period under Section 1110(a)(1)(A) of the U.S. Bankruptcy Code
(or such longer period as may apply under Section 1110(b) of the U.S. Bankruptcy
Code) (the "Section 1110 Period") shall not be taken into consideration, unless
during the Section 1110 Period the trustee in such proceeding or Continental
refuses to assume or agree to perform its obligations under the Lease related to
such Equipment Note (in the case of a Leased Aircraft) or under the Owned
Aircraft Indenture related to such Equipment Note (in the case of an Owned
Aircraft), and (b) any payment default occurring after the date of the order of
relief in such proceeding shall not be taken into consideration if such payment
default is cured under Section 1110(a)(1)(B) of the U.S. Bankruptcy Code before
the later of 30 days after the date of such default or the expiration of the
Section 1110 Period.
 
     If at any time (i) the short-term unsecured debt rating of CSFB (in the
case of the Class A-1, A-2 and B Trusts) or MSDW (in the case of the Class C-1
and C-2 Trusts) then issued by either Rating Agency is lower than the Threshold
Rating for the relevant Class or (ii) in the case of the Class C-1 or Class C-2
Liquidity Facility, MSDW's guarantee of MSCS's obligations thereunder becomes
invalid or unenforceable, then the Liquidity Facility for such Class may be
replaced by a Replacement Facility. In the event that such Liquidity Facility is
not replaced with a Replacement Facility within ten days after notice of the
downgrading or such guarantee becoming invalid or unenforceable and as otherwise
provided in the Intercreditor Agreement, such Liquidity Facility will be drawn
in full up to the then Maximum Available Commitment under such Liquidity
Facility (the "Downgrade Drawing") and the proceeds will be deposited into a
cash collateral account (the "Cash Collateral Account") for such Class of
Certificates and used for the same purposes and under the same circumstances and
subject to the same conditions as cash payments of Interest Drawings under such
Liquidity Facility would be used. (Liquidity Facilities, Section 2.02(c);
Intercreditor Agreement, Section 3.6(c))
 
     A "Replacement Facility" for any Liquidity Facility will mean an
irrevocable liquidity facility (or liquidity facilities) in substantially the
form of the replaced Liquidity Facility, including reinstatement provisions, or
in such other form (which may include a letter of credit) as shall permit the
Rating Agencies to confirm in writing their respective ratings then in effect
for the Certificates (before downgrading of such ratings, if any, as a result of
the downgrading of the applicable Liquidity Provider), in a face amount (or in
an
                                      S-51

<PAGE>   52
 
aggregate face amount) equal to the amount of interest payable on the
Certificates of such Trust (at the Stated Interest Rate for such Trust, and
without regard to expected future principal payments) on the three Regular
Distribution Dates following the date of replacement of such Liquidity Facility
and issued by a person (or persons) having unsecured short-term debt ratings
issued by both Rating Agencies which are equal to or higher than the Threshold
Rating for the relevant Class. (Intercreditor Agreement, Section 1.1) The
provider of any Replacement Facility will have the same rights (including,
without limitation, priority distribution rights and rights as "Controlling
Party") under the Intercreditor Agreement as the applicable initial Liquidity
Provider.
 
     "Threshold Rating" means the short-term unsecured debt rating of P-1 by
Moody's and A-1+ by Standard & Poor's, in the case of the Class A-1 Liquidity
Facility, the Class A-2 Liquidity Facility and the Class B Liquidity Facility,
and the short-term unsecured debt rating of P-1 by Moody's and A-1 by Standard &
Poor's, in the case of the Class C-1 Liquidity Facility and the Class C-2
Liquidity Facility.
 
     The Liquidity Facility for each Trust provides that the applicable
Liquidity Provider's obligations thereunder will expire on the earliest of:
 
     - 364 days after the initial issuance date of the Certificates (the
       "Issuance Date") (counting from, and including, the Issuance Date).
 
     - The date on which the Subordination Agent delivers to such Liquidity
       Provider a certification that all of the Certificates of such Trust have
       been paid in full.
 
     - The date on which the Subordination Agent delivers to such Liquidity
       Provider a certification that a Replacement Facility has been substituted
       for such Liquidity Facility.
 
     - The fifth Business Day following receipt by the Subordination Agent of a
       Termination Notice from such Liquidity Provider (see "-- Liquidity Events
       of Default").
 
     - The date on which no amount is or may (by reason of reinstatement) become
       available for drawing under such Liquidity Facility.
 
     Each Liquidity Facility provides that it may be extended for additional
364-day periods by mutual agreement of the relevant Liquidity Provider and the
Subordination Agent.
 
     The Intercreditor Agreement will provide for the replacement of the
Liquidity Facility for any Trust if such Liquidity Facility is scheduled to
expire earlier than 15 days after the Final Maturity Date for the Certificates
of such Trust and such Liquidity Facility is not extended at least 25 days prior
to its then scheduled expiration date. If such Liquidity Facility is not so
extended or replaced by the 25th day prior to its then scheduled expiration
date, such Liquidity Facility will be drawn in full up to the then Maximum
Available Commitment under such Liquidity Facility (the "Non-Extension
Drawing"). The proceeds of the Non-Extension Drawing will be deposited in the
Cash Collateral Account for the related Class of Certificates as cash collateral
to be used for the same purposes and under the same circumstances, and subject
to the same conditions, as cash payments of Interest Drawings under such
Liquidity Facility would be used. (Liquidity Facilities, Section 2.02(b);
Intercreditor Agreement, Section 3.6(d))
 
     Subject to certain limitations, Continental may, at its option, arrange for
a Replacement Facility at any time to replace the liquidity facility for any
Trust (including without limitation any Replacement Facility described in the
following sentence). In addition, if any liquidity provider shall determine not
to extend any liquidity facility, then such liquidity provider may, at its
option, arrange for a Replacement Facility to replace such liquidity facility
during the period no earlier than 40 days and no later than 25 days prior to the
then scheduled expiration date of such liquidity facility. If any Replacement
Facility is provided at any time after a Downgrade Drawing or a Non-Extension
Drawing under any Liquidity Facility, the funds with respect to such liquidity
facility on deposit in the Cash Collateral Account for such Trust will be
returned to the liquidity provider being replaced. (Intercreditor Agreement,
Section 3.6(e))
 
     Upon receipt by the Subordination Agent of a Termination Notice with
respect to any Liquidity Facility from the relevant Liquidity Provider, the
Subordination Agent shall request a final drawing (a "Final
 
                                      S-52

<PAGE>   53
 
Drawing") under such Liquidity Facility in an amount equal to the then Maximum
Available Commitment thereunder. The Subordination Agent will hold the proceeds
of the Final Drawing in the Cash Collateral Account for the related Trust as
cash collateral to be used for the same purposes and under the same
circumstances, and subject to the same conditions, as cash payments of Interest
Drawings under such Liquidity Facility would be used. (Liquidity Facilities,
Section 2.02(d); Intercreditor Agreement, Section 3.6(i))
 
     Drawings under any Liquidity Facility will be made by delivery by the
Subordination Agent of a certificate in the form required by such Liquidity
Facility. Upon receipt of such a certificate, the relevant Liquidity Provider is
obligated to make payment of the drawing requested thereby in immediately
available funds. Upon payment by the relevant Liquidity Provider of the amount
specified in any drawing under any Liquidity Facility, such Liquidity Provider
will be fully discharged of its obligations under such Liquidity Facility with
respect to such drawing and will not thereafter be obligated to make any further
payments under such Liquidity Facility in respect of such drawing to the
Subordination Agent or any other person.
 
REIMBURSEMENT OF DRAWINGS
 
     The Subordination Agent must reimburse amounts drawn under any Liquidity
Facility by reason of an Interest Drawing, Final Drawing, Downgrade Drawing or
Non-Extension Drawing and interest thereon, but only to the extent that the
Subordination Agent has funds available therefor.
 
     INTEREST DRAWINGS AND FINAL DRAWINGS
 
     Amounts drawn by reason of an Interest Drawing or Final Drawing will be
immediately due and payable, together with interest on the amount of such
drawing. From the date of the drawing to (but excluding) the third business day
following the applicable Liquidity Provider's receipt of the notice of such
Interest Drawing, interest will accrue at the Base Rate plus 2.00% per annum (in
the case of the Liquidity Facilities for the Class A-1, A-2 and B Trusts) or
2.25% per annum (in the case of the Liquidity Facilities for the Class C-1 and
C-2 Trusts). Thereafter, interest will accrue at LIBOR for the applicable
Interest Period plus 2.00% per annum (in the case of the Liquidity Facilities
for the Class A-1, A-2 and B Trusts) or 2.25% per annum (in the case of the
Liquidity Facilities for the Class C-1 and C-2 Trusts). In the case of the Final
Drawing, however, the Subordination Agent may convert the Final Drawing into a
drawing bearing interest at the Base Rate plus 2.00% per annum (in the case of
the Liquidity Facilities for the Class A-1, A-2 and B Trusts) or 2.25% per annum
(in the case of the Liquidity Facilities for the Class C-1 and C-2 Trusts) on
the last day of an Interest Period for such Drawing.
 
     "Base Rate" means a fluctuating interest rate per annum in effect from time
to time, which rate per annum shall at all times be equal to (a) the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers, as published for such
day (or, if such day is not a business day, for the next preceding business day)
by the Federal Reserve Bank of New York, or if such rate is not so published for
any day that is a business day, the average of the quotations for such day for
such transactions received by the applicable Liquidity Provider from three
Federal funds brokers of recognized standing selected by it, plus (b)
one-quarter of one percent 1/4 of 1%).
 
     "LIBOR" means, with respect to any interest period, (i) the rate per annum
appearing on display page 3750 (British Bankers Association -- LIBOR) of the Dow
Jones Markets Service (or any successor or substitute therefor) at approximately
11:00 A.M. (London time) two business days before the first day of such interest
period, as the rate for dollar deposits with a maturity comparable to such
interest period, or (ii) if the rate calculated pursuant to clause (i) above is
not available, the average (rounded upwards, if necessary, to the next 1/16 of
1%) of the rates per annum at which deposits in dollars are offered for the
relevant interest period by three banks of recognized standing selected by the
applicable Liquidity Provider in the London interbank market at approximately
11:00 A.M. (London time) two business days before the first day of such interest
period in an amount approximately equal to the principal amount of the LIBOR
Advance to which such interest period is to apply and for a period comparable to
such interest period.
 
                                      S-53

<PAGE>   54
 
     DOWNGRADE DRAWINGS AND NON-EXTENSION DRAWINGS
 
     The amount drawn under any Liquidity Facility by reason of a Downgrade
Drawing or a Non-Extension Drawing will be treated as follows:
 
     - Such amount will be released on any Distribution Date to the applicable
       Liquidity Provider to the extent that such amount exceeds the Required
       Amount.
 
     - Any portion of such amount withdrawn from the Cash Collateral Account for
       such Certificates to pay interest on such Certificates will be treated in
       the same way as Interest Drawings.
 
     - The balance of such amount will be invested in certain specified eligible
       investments.
 
     Any Downgrade Drawing under any of the Liquidity Facilities for the Class
A-1, A-2 and B Trusts, other than any portion thereof applied to the payment of
interest on the Certificates, will bear interest (x) subject to clause (y)
below, at a rate equal to LIBOR for the applicable Interest Period plus a
specified margin on the outstanding amount from time to time of such Downgrade
Drawing and (y) from and after the date, if any, on which it is converted into a
Final Drawing as described below under "-- Liquidity Events of Default", at a
rate equal to LIBOR for the applicable Interest Period (or, as described in the
first paragraph under "-- Interest Drawings and Final Drawings", the Base Rate)
plus 2.00% per annum. Any Downgrade Drawing under any of the Liquidity
Facilities for the Class C-1 and C-2 Trusts, other than any portion thereof
applied to the payment of interest on the Certificates, will bear interest (x)
subject to clause (y) below, in an amount equal to the investment earnings on
amounts deposited in the Cash Collateral Account attributable to such Liquidity
Facility plus a specified margin on the outstanding amount from time to time of
such Downgrade Drawing and (y) from and after the date, if any, on which it is
converted into a Final Drawing as described below under "-- Liquidity Events of
Default", at a rate equal to LIBOR for the applicable Interest Period (or, as
described in the first paragraph under "-- Interest Drawings and Final
Drawings", the Base Rate) plus 2.25% per annum.
 
     Any Non-Extension Drawing under any of the Liquidity Facilities, other than
any portion thereof applied to the payment of interest on the Certificates, will
bear interest (x) subject to clause (y) below, in an amount equal to the
investment earnings on amounts deposited in the Cash Collateral Account
attributable to such Liquidity Facility plus a specified margin on the
outstanding amount from time to time of such Non-Extension Drawing and (y) from
and after the date, if any, on which it is converted into a Final Drawing as
described below under "-- Liquidity Events of Default", at a rate equal to LIBOR
for the applicable Interest Period (or, as described in the first paragraph
under "-- Interest Drawings and Final Drawings", the Base Rate) plus 2.00% per
annum (in the case of the Liquidity Facilities for the Class A-1, A-2 and B
Trusts) or 2.25% per annum (in the case of the Liquidity Facilities for the
Class C-1 and C-2 Trusts).
 
LIQUIDITY EVENTS OF DEFAULT
 
     Events of Default under each Liquidity Facility (each, a "Liquidity Event
of Default") will consist of:
 
     - The acceleration of all the Equipment Notes (provided, that if such
       acceleration occurs during the Delivery Period, the aggregate principal
       amount thereof exceeds $300 million).
 
     - Certain bankruptcy or similar events involving Continental. (Liquidity
       Facilities, Section 1.01)
 
     If (i) any Liquidity Event of Default under any Liquidity Facility has
occurred and is continuing and (ii) less than 65% of the aggregate outstanding
principal amount of all Equipment Notes are Performing Equipment Notes, the
applicable Liquidity Provider may, in its discretion, give a notice of
termination of such Liquidity Facility (a "Termination Notice"). The Termination
Notice will have the following consequences:
 
     - The related Liquidity Facility will expire on the fifth Business Day
       after the date on which such Termination Notice is received by the
       Subordination Agent.
 
     - The Subordination Agent will promptly request, and the applicable
       Liquidity Provider will make, a Final Drawing thereunder in an amount
       equal to the then Maximum Available Commitment thereunder.
                                      S-54

<PAGE>   55
 
     - Any Drawing remaining unreimbursed as of the date of termination will be
       automatically converted into a Final Drawing under such Liquidity
       Facility.
 
     - All amounts owing to the applicable Liquidity Provider automatically will
       be accelerated.
 
     Notwithstanding the foregoing, the Subordination Agent will be obligated to
pay amounts owing to the Liquidity Provider only to the extent of funds
available therefor after giving effect to the payments in accordance with the
provisions set forth under "Description of the Intercreditor
Agreement -- Priority of Distributions". (Liquidity Facilities, Section 6.01)
Upon the circumstances described below under "Description of the Intercreditor
Agreement -- Intercreditor Rights", a liquidity provider may become the
Controlling Party with respect to the exercise of remedies under the Indentures.
(Intercreditor Agreement, Section 2.6(c))
 
LIQUIDITY PROVIDERS
 
     The initial liquidity provider for the Class A-1, A-2 and B Trusts will be
CSFB. CSFB has short-term unsecured debt ratings of P-1 from Moody's and A-1+
from Standard & Poor's.
 
     The initial liquidity provider for the Class C-1 and C-2 Trusts will be
MSCS. MSCS, a subsidiary of MSDW, commenced operation in August 1985 and was
established to conduct, primarily as principal, an interest rate, currency and
equity derivatives products business. MSCS also engages in a variety of other
related transactions.
 
     MSDW, the guarantor of MSCS's obligations under its Liquidity Facilities,
is a global financial services firm. MSDW has long-term unsecured debt ratings
of Aa3 from Moody's and A+ from Standard & Poor's and short-term unsecured debt
ratings of P-1 for Moody's and A-1 from Standard & Poor's. MSDW files reports,
proxy statements and other information with the Commission pursuant to the
information requirements of the Exchange Act. Such information can be inspected
and copied at the public reference facilities of the Commission, or
electronically accessed through the Internet.
 
     The descriptions of MSCS and MSDW above have been provided by the
respective parties. Neither MSCS nor MSDW, however, has been involved in the
preparation of or accepts responsibility for the Prospectus or this Prospectus
Supplement. Morgan Stanley & Co. Incorporated, a subsidiary of MSDW and an
affiliate of MSCS, will act as an Underwriter of the Certificates.
 
                                      S-55

<PAGE>   56
 
                   DESCRIPTION OF THE INTERCREDITOR AGREEMENT
 
     The following summary describes all material provisions of the
Intercreditor Agreement (the "Intercreditor Agreement") among the Trustees, the
Liquidity Providers and Wilmington Trust Company, as subordination agent (the
"Subordination Agent"). The summary supplements (and, to the extent inconsistent
therewith, replaces) the description of the general terms and provisions
relating to the Intercreditor Agreement set forth in the Prospectus. The summary
does not purport to be complete and is qualified in its entirety by reference to
all of the provisions of the Intercreditor Agreement, which will be filed as an
exhibit to a Current Report on Form 8-K to be filed by Continental with the
Commission.
 
INTERCREDITOR RIGHTS
 
     CONTROLLING PARTY
 
     Each Loan Trustee will be directed in taking, or refraining from taking,
any action thereunder or with respect to the Equipment Notes issued under such
Indenture, by the holders of at least a majority of the outstanding principal
amount of the Equipment Notes issued under such Indenture, so long as no
Indenture Default (which, with respect to Leased Aircraft, has not been cured by
the applicable Owner Trustee or Owner Participant) shall have occurred and be
continuing thereunder. For so long as the Subordination Agent is the registered
holder of the Equipment Notes, the Subordination Agent will act with respect to
the preceding sentence in accordance with the directions of the Trustees for
whom the Equipment Notes issued under such Indenture are held as Trust Property,
to the extent constituting, in the aggregate, directions with respect to the
required principal amount of Equipment Notes.
 
     After the occurrence and during the continuance of an Indenture Default
under such Indenture (which, with respect to Leased Aircraft, has not been cured
by the applicable Owner Trustee or Owner Participant), each Loan Trustee will be
directed in taking, or refraining from taking, any action thereunder or with
respect to the Equipment Notes issued under the related Indenture, including
acceleration of such Equipment Notes or foreclosing the lien on the related
Aircraft, by the Controlling Party, subject to the limitations described below.
See "Description of the Certificates -- Indenture Defaults and Certain Rights
Upon an Indenture Default" for a description of the rights of the
Certificateholders of each Trust to direct the respective Trustees.
 
     The "Controlling Party" will be:
 
     - The Class A-1 Trustee or Class A-2 Trustee, whichever represents the
       Class with the larger principal amount of Certificates outstanding at the
       time that the Indenture Default occurs.
 
     - Upon payment of Final Distributions to the holders of such larger Class,
       the other of the Class A-1 Trustee or Class A-2 Trustee.
 
     - Upon payment of Final Distributions to the holders of Class A-1 and A-2
       Certificates, the Class B Trustee.
 
     - Upon payment of Final Distributions to the holders of Class B
       Certificates, the Class C-1 Trustee or Class C-2 Trustee, whichever
       represents the Class with the larger principal amount of Certificates
       outstanding at such time.
 
     - Upon payment of Final Distributions to the holders of such larger Class,
       the other of the Class C-1 Trustee or Class C-2 Trustee.
 
     - Under certain circumstances, and notwithstanding the foregoing, the
       liquidity provider with the largest amount owed to it, as discussed in
       the next paragraph.
 
     At any time after 18 months from the earlier to occur of (x) the date on
which the entire available amount under any Liquidity Facility shall have been
drawn (for any reason other than a Downgrade Drawing or a Non-Extension Drawing)
and remain unreimbursed, (y) the date on which the entire amount of any
Downgrade Drawing or Non-Extension Drawing shall have been withdrawn from the
relevant Cash Collateral Account to pay interest on the relevant Class of
Certificates and remain unreimbursed and (z) the date on which all Equipment
Notes shall have been accelerated (provided that if such acceleration occurs
prior to the
 
                                      S-56

<PAGE>   57
 
Delivery Period Termination Date, the aggregate principal amount thereof exceeds
$300 million), the liquidity provider with the highest outstanding amount of
Liquidity Obligations shall have the right to become the Controlling Party with
respect to any Indenture.
 
     For purposes of giving effect to the rights of the Controlling Party, the
Trustees (other than the Controlling Party) shall irrevocably agree, and the
Certificateholders (other than the Certificateholders represented by the
Controlling Party) will be deemed to agree by virtue of their purchase of
Certificates, that the Subordination Agent, as record holder of the Equipment
Notes, shall exercise its voting rights in respect of the Equipment Notes as
directed by the Controlling Party. (Intercreditor Agreement, Section 2.6) For a
description of certain limitations on the Controlling Party's rights to exercise
remedies, see "Description of the Equipment Notes -- Remedies".
 
     "Final Distributions" means, with respect to the Certificates of any Trust
on any Distribution Date, the sum of (x) the aggregate amount of all accrued and
unpaid interest on such Certificates (excluding interest payable on the Deposits
relating to such Trust) and (y) the Pool Balance of such Certificates as of the
immediately preceding Distribution Date (less the amount of the Deposits for
such Class of Certificates as of such preceding Distribution Date other than any
portion of such Deposits thereafter used to acquire Equipment Notes pursuant to
the Note Purchase Agreement). For purposes of calculating Final Distributions
with respect to the Certificates of any Trust, any premium paid on the Equipment
Notes held in such Trust which has not been distributed to the
Certificateholders of such Trust (other than such premium or a portion thereof
applied to the payment of interest on the Certificates of such Trust or the
reduction of the Pool Balance of such Trust) shall be added to the amount of
such Final Distributions.
 
     SALE OF EQUIPMENT NOTES OR AIRCRAFT
 
     Upon the occurrence and during the continuation of any Indenture Default
under any Indenture, the Controlling Party may accelerate and, subject to the
provisions of the immediately following sentence, sell all (but not less than
all) of the Equipment Notes issued under such Indenture to any person. So long
as any Certificates are outstanding, during nine months after the earlier of (x)
the acceleration of the Equipment Notes under any Indenture and (y) the
bankruptcy or insolvency of Continental, without the consent of each Trustee, no
Aircraft subject to the lien of such Indenture or such Equipment Notes may be
sold, if the net proceeds from such sale would be less than the Minimum Sale
Price for such Aircraft or such Equipment Notes. In addition, with respect to
any Leased Aircraft, the amount and payment dates of rentals payable by
Continental under the related Lease may not be adjusted during this nine-month
period, if, as a result of such adjustment, the discounted present value of all
such rentals would be less than 75% of the discounted present value of the
rentals payable by Continental under such Lease before giving effect to such
adjustment.
 
     "Minimum Sale Price" means, with respect to any Aircraft or the Equipment
Notes issued in respect of such Aircraft, at any time, the lesser of (1) 75% of
the Appraised Current Market Value of such Aircraft and (2) the aggregate
outstanding principal amount of such Equipment Notes, plus accrued and unpaid
interest thereon. The Minimum Sale Price for such Aircraft and the discounted
present value of all rentals shall be determined using the weighted average
interest rate of the Equipment Notes outstanding under such Indenture as the
discount rate.
 
PRIORITY OF DISTRIBUTIONS
 
     BEFORE A TRIGGERING EVENT
 
     So long as no Triggering Event shall have occurred (whether or not
continuing), all payments in respect of the Equipment Notes and certain other
payments received on any Distribution Date will be promptly distributed by the
Subordination Agent on such Distribution Date in the following order of
priority:
 
     - To the Liquidity Providers to the extent required to pay the Liquidity
       Expenses.
 
     - To the Liquidity Providers to the extent required to pay interest accrued
       on the Liquidity Obligations.
 
                                      S-57

<PAGE>   58
 
     - To the Liquidity Providers to the extent required to pay or reimburse the
       Liquidity Providers for certain Liquidity Obligations (other than amounts
       payable pursuant to the two preceding clauses) and/or, if applicable, to
       replenish each Cash Collateral Account up to the Required Amount.
 
     - To the Class A-1 Trustee and the Class A-2 Trustee to the extent required
       to pay Expected Distributions on the Class A-1 Certificates and the Class
       A-2 Certificates. If available funds are insufficient to pay an Expected
       Distribution to each such Class in full, available funds will be
       distributed to each of the Class A-1 Trustee and Class A-2 Trustee in the
       same proportion as such Trustee's proportionate share of the aggregate
       amount of such Expected Distributions.
 
     - To the Class B Trustee to the extent required to pay Expected
       Distributions on the Class B Certificates.
 
     - To the Class C-1 Trustee and the Class C-2 Trustee to the extent required
       to pay Expected Distributions on the Class C-1 Certificates and the Class
       C-2 Certificates. If available funds are insufficient to pay an Expected
       Distribution to each such Class in full, available funds will be
       distributed to each of the Class C-1 Trustee and Class C-2 Trustee in the
       same proportion as such Trustee's proportionate share of the aggregate
       amount of such Expected Distributions.
 
     - If Class D Certificates have been issued, to the Class D Trustee to the
       extent required to pay "Expected Distributions" (to be defined in a
       manner equivalent to the definition below for other Classes of
       Certificates) on the Class D Certificates.
 
     - To the Subordination Agent and each Trustee for the payment of certain
       fees and expenses.
 
     "Liquidity Obligations" means the obligations to reimburse or to pay the
Liquidity Providers all principal, interest, fees and other amounts owing to
them under each Liquidity Facility or certain other agreements.
 
     "Liquidity Expenses" means the Liquidity Obligations other than any
interest accrued thereon or the principal amount of any drawing under the
Liquidity Facilities.
 
     "Expected Distributions" means, with respect to the Certificates of any
Trust on any Distribution Date (the "Current Distribution Date"), the sum of (1)
accrued and unpaid interest on such Certificates (excluding interest, if any,
payable with respect to the Deposits relating to such Trust) and (2) the
difference between:
 
        (A) the Pool Balance of such Certificates as of the immediately
     preceding Distribution Date (or, if the Current Distribution Date is the
     first Distribution Date, the original aggregate face amount of the
     Certificates of such Trust), and
 
        (B) the Pool Balance of such Certificates as of the Current Distribution
     Date calculated on the basis that (i) the principal of the Equipment Notes
     held in such Trust has been paid when due (whether at stated maturity, upon
     redemption, prepayment, purchase, acceleration or otherwise) and such
     payments have been distributed to the holders of such Certificates and (ii)
     the principal of any Equipment Notes formerly held in such Trust that have
     been sold pursuant to the Intercreditor Agreement has been paid in full and
     such payments have been distributed to the holders of such Certificates,
     but without giving effect to any reduction in the Pool Balance as a result
     of any distribution attributable to Deposits occurring after the
     immediately preceding Distribution Date (or, if the Current Distribution
     Date is the first Distribution Date, occurring after the initial issuance
     of the Certificates of such Trust).
 
     For purposes of determining the priority of distributions on account of the
redemption, purchase or prepayment of all of the Equipment Notes issued pursuant
to an Indenture, clause (1) of the definition of Expected Distributions shall be
deemed to read as follows: "(1) accrued, due and unpaid interest on such
Certificates together with (without duplication) accrued and unpaid interest on
a portion of such Certificates equal to the outstanding principal amount of the
Equipment Notes held in such Trust and being redeemed, purchased or prepaid
(immediately prior to such redemption, purchase or prepayment), in each case
excluding interest, if any, payable with respect to the Deposits relating to
such Trust".
 
                                      S-58

<PAGE>   59
 
     AFTER A TRIGGERING EVENT
 
     Subject to the terms of the Intercreditor Agreement, upon the occurrence of
a Triggering Event and at all times thereafter, all funds received by the
Subordination Agent in respect of the Equipment Notes and certain other payments
will be promptly distributed by the Subordination Agent in the following order
of priority:
 
     - To the Subordination Agent, any Trustee, any Certificateholder and the
       Liquidity Providers to the extent required to pay certain out-of-pocket
       costs and expenses actually incurred by the Subordination Agent or any
       Trustee or to reimburse any Certificateholder or the Liquidity Providers
       in respect of payments made to the Subordination Agent or any Trustee in
       connection with the protection or realization of the value of the
       Equipment Notes, any Trust Indenture Estate under (and as defined in any
       Leased Aircraft Indenture) or Collateral under (and as defined in) any
       Owned Aircraft Indenture (collectively, the "Administration Expenses").
 
     - To the Liquidity Providers to the extent required to pay the Liquidity
       Expenses.
 
     - To the Liquidity Providers to the extent required to pay interest accrued
       on the Liquidity Obligations.
 
     - To the Liquidity Providers to the extent required to pay the outstanding
       amount of all Liquidity Obligations and/or, if applicable, with respect
       to any particular Liquidity Facility, unless (x) less than 65% of the
       aggregate outstanding principal amount of all Equipment Notes are
       Performing Equipment Notes and a Liquidity Event of Default shall have
       occurred and is continuing under such Liquidity Facility or (y) a Final
       Drawing shall have occurred under such Liquidity Facility, to replenish
       the Cash Collateral Account with respect to such Liquidity Facility up to
       the Required Amount for the related Class of Certificates (less the
       amount of any repayments of Interest Drawings under such Liquidity
       Facility while sub-clause (x) of this clause is applicable).
 
     - To the Subordination Agent, any Trustee or any Certificateholder to the
       extent required to pay certain fees, taxes, charges and other amounts
       payable.
 
     - To the Class A-1 Trustee and the Class A-2 Trustee to the extent required
       to pay Adjusted Expected Distributions on the Class A-1 Certificates and
       the Class A-2 Certificates. If available funds are insufficient to pay an
       Adjusted Expected Distribution to each such Class in full, available
       funds will be distributed to each of the Class A-1 Trustee and Class A-2
       Trustee in the same proportion as such Trustee's proportionate share of
       the aggregate amount of such Adjusted Expected Distributions.
 
     - To the Class B Trustee to the extent required to pay Adjusted Expected
       Distributions on the Class B Certificates.
 
     - To the Class C-1 Trustee and the Class C-2 Trustee to the extent required
       to pay Adjusted Expected Distributions on the Class C-1 Certificates and
       the Class C-2 Certificates. If available funds are insufficient to pay an
       Adjusted Expected Distribution to each such Class in full, available
       funds will be distributed to each of the Class C-1 Trustee and Class C-2
       Trustee in the same proportion as such holder's proportionate share of
       the aggregate amount of such Adjusted Expected Distributions.
 
     - If Class D Certificates have been issued, to the Class D Trustee to the
       extent required to pay "Adjusted Expected Distributions" (to be defined
       in a manner equivalent to the definition below for other Classes of
       Certificates) on the Class D Certificates.
 
     "Adjusted Expected Distributions" means, with respect to the Certificates
of any Trust on any Current Distribution Date, the sum of (1) accrued and unpaid
interest on such Certificates (excluding interest, if any, payable with respect
to the Deposits relating to such Trust) and (2) the greater of:
 
        (A) the difference between (x) the Pool Balance of such Certificates as
     of the immediately preceding Distribution Date (or, if the Current
     Distribution Date is the first Distribution Date, the original aggregate
     face amount of the Certificates of such Trust) and (y) the Pool Balance of
     such Certificates as of the Current Distribution Date calculated on the
     basis that (i) the principal of the Equipment Notes other than Performing
     Equipment Notes (the "Non-Performing Equipment Notes") held in such Trust
     has been paid in full and such payments have been distributed to the
     holders of such Certificates, (ii) the principal of the Performing
     Equipment Notes held in such Trust has been paid when due (but without
     giving effect to any acceleration of Performing Equipment Notes) and such
                                      S-59

<PAGE>   60
 
     payments have been distributed to the holders of such Certificates and
     (iii) the principal of any Equipment Notes formerly held in such Trust that
     have been sold pursuant to the Intercreditor Agreement has been paid in
     full and such payments have been distributed to the holders of such
     Certificates, but without giving effect to any reduction in the Pool
     Balance as a result of any distribution attributable to Deposits occurring
     after the immediately preceding Distribution Date (or, if the Current
     Distribution Date is the first Distribution Date, occurring after the
     initial issuance of the Certificates of such Trust), and
 
        (B) the amount of the excess, if any, of (i) the Pool Balance of such
     Class of Certificates as of the immediately preceding Distribution Date
     (or, if the Current Distribution Date is the first Distribution Date, the
     original aggregate face amount of the Certificates of such Trust), less the
     amount of the Deposits for such Class of Certificates as of such preceding
     Distribution Date (or, if the Current Distribution Date is the first
     Distribution Date, the original aggregate amount of the Deposits for such
     Class of Certificates) other than any portion of such Deposits thereafter
     used to acquire Equipment Notes pursuant to the Note Purchase Agreement
     (the amount described in this clause (i), the "Current Pool Balance"), over
     (ii) the Aggregate LTV Collateral Amount for such Class of Certificates for
     the Current Distribution Date;
 
provided that, until the date of the initial LTV Appraisals, clause (B) shall
not apply.
 
     For purposes of calculating Expected Distributions or Adjusted Expected
Distributions with respect to the Certificates of any Trust, any premium paid on
the Equipment Notes held in such Trust that has not been distributed to the
Certificateholders of such Trust (other than such premium or a portion thereof
applied to the payment of interest on the Certificates of such Trust or the
reduction of the Pool Balance of such Trust) shall be added to the amount of
Expected Distributions or Adjusted Expected Distributions.
 
     "Aggregate LTV Collateral Amount" for any Class of Certificates for any
Distribution Date means the product of (A) (i) the sum of the applicable LTV
Collateral Amounts for each Aircraft, minus (ii) the Pool Balance for each Class
of Certificates, if any, senior to such Class, after giving effect to any
distribution of principal on such Distribution Date with respect to such senior
Class or Classes, multiplied by (B) (i) in the case of the Class A-1
Certificates or Class A-2 Certificates, a fraction the numerator of which equals
the Current Pool Balance for the Class A-1 Certificates or Class A-2
Certificates, as the case may be, and the denominator of which equals the
aggregate Current Pool Balance for the Class A-1 Certificates and Class A-2
Certificates, (ii) in the case of the Class B Certificates, 1.0, and (iii) in
the case of the Class C-1 Certificates or Class C-2 Certificates, a fraction the
numerator of which equals the Current Pool Balance for the Class C-1
Certificates or Class C-2 Certificates, as the case may be, and the denominator
of which equals the aggregate Current Pool Balance for the Class C-1
Certificates and Class C-2 Certificates.
 
     "LTV Collateral Amount" of any Aircraft for any Class of Certificates
means, as of any Distribution Date, the lesser of (i) the LTV Ratio for such
Class of Certificates multiplied by the Appraised Current Market Value of such
Aircraft (or with respect to any such Aircraft which has suffered an Event of
Loss under and as defined in the relevant Lease, in the case of a Leased
Aircraft, or relevant Indenture, in the case of an Owned Aircraft, the amount of
the insurance proceeds paid to the related Loan Trustee in respect thereof to
the extent then held by such Loan Trustee (and/or on deposit in the Special
Payments Account) or payable to such Loan Trustee in respect thereof) and (ii)
the outstanding principal amount of the Equipment Notes secured by such Aircraft
after giving effect to any principal payments of such Equipment Notes on or
before such Distribution Date.
 
     "LTV Ratio" means for each Class of Certificates as of any Distribution
Date, the percentages set forth in the following table for the applicable time
period:
 

<TABLE>
<CAPTION>
                              CLASS A-1      CLASS A-2       CLASS B       CLASS C-1      CLASS C-2
        TIME PERIOD          CERTIFICATES   CERTIFICATES   CERTIFICATES   CERTIFICATES   CERTIFICATES
        -----------          ------------   ------------   ------------   ------------   ------------
<S>                          <C>            <C>            <C>            <C>            <C>
Up to May 1, 2005..........     41.0%          41.0%          51.0%          63.0%          63.0%
May 2, 2005 - May 1,
  2010.....................      41.0           41.0           49.0           63.0             NA
After May 1, 2010..........      39.0             NA           47.0           63.0             NA
</TABLE>

 
                                      S-60

<PAGE>   61
 
     "Appraised Current Market Value" of any Aircraft means the lower of the
average and the median of the most recent three LTV Appraisals of such Aircraft.
After a Triggering Event occurs and any Equipment Note becomes a Non-Performing
Equipment Note, the Subordination Agent shall obtain LTV Appraisals of the
Aircraft securing such Equipment Note as soon as practicable and additional LTV
Appraisals on or prior to each anniversary of the date of such initial LTV
Appraisals; provided that if the Controlling Party reasonably objects to the
appraised value of the Aircraft shown in such LTV Appraisals, the Controlling
Party shall have the right to obtain or cause to be obtained substitute LTV
Appraisals (including LTV Appraisals based upon physical inspection of such
Aircraft).
 
     "LTV Appraisal" means a current fair market value appraisal (which may be a
"desk-top" appraisal) performed by any Appraiser or any other nationally
recognized appraiser on the basis of an arm's-length transaction between an
informed and willing purchaser under no compulsion to buy and an informed and
willing seller under no compulsion to sell and both having knowledge of all
relevant facts.
 
     Interest Drawings under the Liquidity Facility and withdrawals from the
Cash Collateral Account, in each case in respect of interest on the Certificates
of any Trust, will be distributed to the Trustee for such Trust, notwithstanding
the priority of distributions set forth in the Intercreditor Agreement and
otherwise described herein. All amounts on deposit in the Cash Collateral
Account for any Trust that are in excess of the Required Amount will be paid to
the applicable Liquidity Provider.
 
VOTING OF EQUIPMENT NOTES
 
     In the event that the Subordination Agent, as the registered holder of any
Equipment Note, receives a request for its consent to any amendment,
modification, consent or waiver under such Equipment Note or the related
Indenture (or, if applicable, the related Lease, the related Participation
Agreement or other related document), (i) if no Indenture Default shall have
occurred and be continuing with respect to such Indenture, the Subordination
Agent shall request instructions from the Trustee(s) and shall vote or consent
in accordance with the directions of such Trustee(s) and (ii) if any Indenture
Default (which, in the case of any Leased Aircraft Indenture, has not been cured
by the applicable Owner Trustee or Owner Participant) shall have occurred and be
continuing with respect to such Indenture, the Subordination Agent will exercise
its voting rights as directed by the Controlling Party, subject to certain
limitations; provided that no such amendment, modification, consent or waiver
shall, without the consent of the Liquidity Providers, reduce the amount of
rent, supplemental rent or stipulated loss values payable by Continental under
any Lease or reduce the amount of principal or interest payable by Continental
under any Equipment Note issued under any Owned Aircraft Indenture.
(Intercreditor Agreement, Section 9.1(b))
 
ADDITION OF TRUSTEE FOR CLASS D CERTIFICATES
 
     If the Class D Certificates are issued, the Class D Trustee will become a
party to the Intercreditor Agreement.
 
THE SUBORDINATION AGENT
 
     Wilmington Trust Company will be the Subordination Agent under the
Intercreditor Agreement. Continental and its affiliates may from time to time
enter into banking and trustee relationships with the Subordination Agent and
its affiliates. The Subordination Agent's address is Wilmington Trust Company,
Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890-0001,
Attention: Corporate Trust Administration.
 
     The Subordination Agent may resign at any time, in which event a successor
Subordination Agent will be appointed as provided in the Intercreditor
Agreement. The Controlling Party may remove the Subordination Agent for cause as
provided in the Intercreditor Agreement. In such circumstances, a successor
Subordination Agent will be appointed as provided in the Intercreditor
Agreement. Any resignation or removal of the Subordination Agent and appointment
of a successor Subordination Agent does not become effective until acceptance of
the appointment by the successor Subordination Agent. (Intercreditor Agreement,
Section 8.1)
 
                                      S-61

<PAGE>   62
 
                 DESCRIPTION OF THE AIRCRAFT AND THE APPRAISALS
 
THE AIRCRAFT
 
     The Aircraft consist of fourteen Boeing 737-824 aircraft, three Boeing
757-224 aircraft and four Boeing 767-424ER aircraft (collectively, the
"Aircraft"), two of which were delivered in February 2000 and the balance of
which will be newly delivered by the manufacturer during the Delivery Period.
The Aircraft have been designed to be in compliance with Stage 3 noise level
standards, which are the most restrictive regulatory standards currently in
effect in the United States for aircraft noise abatement.
 
     BOEING 737-824 AIRCRAFT
 
     The Boeing 737-824 aircraft is a medium-range aircraft with a seating
capacity of approximately 155 passengers. The engine type utilized on
Continental's 737-824 aircraft is the CFM International, Inc. CFM56-7B26.
 
     BOEING 757-224 AIRCRAFT
 
     The Boeing 757-224 aircraft is a medium-range aircraft with a seating
capacity of approximately 183 passengers. The engine type utilized on
Continental's 757-224 aircraft is the Rolls-Royce RB211-535E4B.
 
     BOEING 767-424ER AIRCRAFT
 
     The Boeing 767-424ER aircraft is a long-range aircraft with a seating
capacity of approximately 235 passengers. The engine type utilized on
Continental's 767-424ER aircraft is the General Electric Company CF6-80C2B8F.
Deliveries of the Boeing 767-424ER aircraft to Continental are subject to Boeing
obtaining certain approvals of the FAA with respect to such model. See
" -- Deliveries of Aircraft".
 
                                      S-62

<PAGE>   63
 
THE APPRAISALS
 
     The table below sets forth the appraised values of the aircraft that may be
financed with the proceeds of this Offering, as determined by Aircraft
Information Services, Inc. ("AISI"), AvSolutions, Inc. ("AS") and Morten Beyer
and Agnew, Inc. ("MBA"), independent aircraft appraisal and consulting firms
(the "Appraisers"). Under the Note Purchase Agreement, Continental will select
fourteen Boeing 737-824 aircraft from among the sixteen aircraft of such type
listed below to be financed pursuant to this Offering. The three Boeing 757-224
aircraft and four Boeing 767-424ER aircraft listed below all will be financed
under this Offering, subject to the terms of the Note Purchase Agreement.
 

<TABLE>
<CAPTION>
                    EXPECTED                        SCHEDULED                APPRAISER'S VALUATION
                  REGISTRATION   MANUFACTURER'S      DELIVERY      -----------------------------------------    APPRAISED
 AIRCRAFT TYPE       NUMBER      SERIAL NUMBER       MONTH(1)          AISI            AS            MBA         VALUE(2)
 -------------    ------------   --------------   --------------   ------------   ------------   -----------   ------------
<S>               <C>            <C>              <C>              <C>            <C>            <C>           <C>
Boeing 737-824       N24202          30429          June 2000      $ 48,950,000   $ 48,141,000   $43,010,000   $ 46,700,333
Boeing 737-824       N33203          30613          June 2000        48,950,000     48,141,000    43,010,000     46,700,333
Boeing 737-824       N35204          30576          July 2000        49,060,000     48,454,000    43,110,000     46,874,667
Boeing 737-824       N27205          30577          July 2000        49,060,000     48,454,000    43,110,000     46,874,667
Boeing 737-824       N11206          30578          July 2000        49,060,000     48,454,000    43,110,000     46,874,667
Boeing 737-824       N36207          30579         August 2000       49,180,000     48,454,000    43,200,000     46,944,667
Boeing 737-824       N26208          30580         August 2000       49,180,000     48,454,000    43,200,000     46,944,667
Boeing 737-824       N33209          30581         August 2000       49,180,000     48,454,000    43,200,000     46,944,667
Boeing 737-824       N73251          30582        September 2000     49,290,000     48,454,000    43,280,000     47,008,000
Boeing 737-824       N37252          30583        September 2000     49,290,000     48,454,000    43,280,000     47,008,000
Boeing 737-824       N37253          30584        September 2000     49,290,000     48,454,000    43,280,000     47,008,000
Boeing 737-824       N76254          30779        September 2000     49,290,000     48,454,000    43,280,000     47,008,000
Boeing 737-824       N37255          30610         October 2000      49,400,000     48,770,000    43,360,000     47,176,667
Boeing 737-824       N73256          30611         October 2000      49,400,000     48,770,000    43,360,000     47,176,667
Boeing 737-824       N38257          30612        November 2000      49,520,000     48,770,000    43,460,000     47,250,000
Boeing 737-824       N77258          30802        November 2000      49,520,000     48,770,000    43,460,000     47,250,000
 
Boeing 757-224       N17139          30352        February 2000      60,520,000     59,239,000    58,070,000     59,239,000
Boeing 757-224       N41140          30353        February 2000      60,520,000     59,239,000    58,070,000     59,239,000
Boeing 757-224       N19141          30354          June 2000        61,080,000     59,625,000    58,540,000     59,625,000
 
Boeing 767-424ER     N66051          29446          July 2000       106,970,000    107,028,000    97,200,000    103,732,667
Boeing 767-424ER     N67052          29447         August 2000      107,210,000    107,028,000    97,400,000    103,879,333
Boeing 767-424ER     N59053          29448         October 2000     107,710,000    107,913,000    97,800,000    104,474,333
Boeing 767-424ER     N76054          29449        December 2000     108,200,000    107,913,000    98,200,000    104,771,000
</TABLE>

 
---------------
(1) The actual delivery date for any aircraft may be subject to delay or
    acceleration. See "-- Deliveries of Aircraft".
 
(2) The appraised value of each aircraft for purposes of this Offering is the
    lesser of the average and median values of such aircraft as appraised by the
    Appraisers.
 
     For purposes of the foregoing chart, AISI, AS and MBA each was asked to
provide its opinion as to the appraised value of each aircraft projected as of
the scheduled delivery month of each such aircraft. As part of this process, all
three Appraisers performed "desk-top" appraisals without any physical inspection
of the aircraft. The appraisals are based on various assumptions and
methodologies, which vary among the appraisals. The Appraisers have delivered
letters summarizing their respective appraisals, copies of which are annexed to
this Prospectus Supplement as Appendix II. For a discussion of the assumptions
and methodologies used in each of the appraisals, reference is hereby made to
such summaries.
 
     An appraisal is only an estimate of value. It is not indicative of the
price at which an aircraft may be purchased from the manufacturer. Nor should it
be relied upon as a measure of realizable value. The proceeds realized upon a
sale of any Aircraft may be less than its appraised value. The value of the
Aircraft in the event of the exercise of remedies under the applicable Indenture
will depend on market and economic conditions, the availability of buyers, the
condition of the Aircraft and other similar factors. Accordingly, there can be
no assurance that the proceeds realized upon any such exercise with respect to
the Equipment Notes and the
 
                                      S-63

<PAGE>   64
 
Aircraft pursuant to the applicable Indenture would equal the appraised value of
such Aircraft or be sufficient to satisfy in full payments due on such Equipment
Notes or the Certificates.
 
DELIVERIES OF AIRCRAFT
 
     Two of the aircraft that may be financed with the proceeds of this Offering
were delivered in February 2000. The other aircraft that may be so financed are
scheduled for delivery under Continental's purchase agreements with The Boeing
Company ("Boeing") from June 2000 through December 2000. See the table under
"-- The Appraisals" for the scheduled month of delivery of each such aircraft.
Under such purchase agreements, delivery of an aircraft may be delayed due to
"Excusable Delay", which is defined to include, among other things, acts of God,
governmental acts or failures to act, strikes or other labor troubles, inability
to procure materials, or any other cause beyond Boeing's control or not
occasioned by Boeing's fault or negligence. In addition, the Boeing 767-424ER
aircraft model has not yet received the necessary FAA approvals, which Boeing is
required to obtain under its purchase agreement with Continental. Boeing has
advised Continental that it expects to receive such approvals in May 2000,
although no assurance can be given that this will occur. The first of the four
Boeing 767-424ER aircraft included in the Aircraft is scheduled for delivery in
July 2000. Continental cannot predict whether adjustments in the delivery
schedule for the Aircraft will be required.
 
     The Note Purchase Agreement provides that the delivery period (the
"Delivery Period") will expire on March 31, 2001, subject to extension if the
Equipment Notes relating to all of the Aircraft (or Substitute Aircraft in lieu
thereof) have not been purchased by the Trustees on or prior to such date due to
any reason beyond the control of Continental and not occasioned by Continental's
fault or negligence, to the earlier of (i) the date on which the Trustees
purchase Equipment Notes relating to the last Aircraft (or a Substitute Aircraft
in lieu thereof) and (ii) September 30, 2001. In addition, if a labor strike
occurs at Boeing prior to the scheduled expiration of the Delivery Period, the
expiration date of the Delivery Period will be extended by the number of days
that such strike continued in effect. Boeing's engineering work force,
represented by the Society of Professional Engineering Employees in Aerospace,
has recently gone on strike. Although to date Continental has not experienced
significant delivery delays during this strike, no assurance can be given that
such delays will not occur in the future.
 
     If delivery of any Aircraft is delayed by more than 30 days after the month
scheduled for delivery or beyond March 31, 2001, Continental has the right to
replace such Aircraft with a Substitute Aircraft, subject to certain conditions.
See "-- Substitute Aircraft". If delivery of any Aircraft is delayed beyond the
Delivery Period Termination Date and Continental does not exercise its right to
replace such Aircraft with a Substitute Aircraft, there will be unused Deposits
that will be distributed to Certificateholders together with accrued and unpaid
interest thereon but without a premium. See "Description of the Deposit
Agreements -- Unused Deposits".
 
SUBSTITUTE AIRCRAFT
 
     If the delivery date for any Aircraft is delayed (i) more than 30 days
after the month scheduled for delivery or (ii) beyond March 31, 2001,
Continental may identify for delivery a substitute aircraft (each, together with
the substitute aircraft referred to below, a "Substitute Aircraft") therefor
meeting the following conditions:
 
     - A Substitute Aircraft must be a Boeing 737-800, 757-200 or 767-400ER
       aircraft manufactured after the Issuance Date.
 
     - One or more Substitute Aircraft of the same or different types may be
       substituted for one or more Aircraft of the same or different types so
       long as after giving effect thereto the maximum principal amount of
       Equipment Notes of each Series issued in respect of the Substitute
       Aircraft under the Mandatory Economic Terms would not exceed the maximum
       principal amount of the Equipment Notes of each Series that could have
       been issued under the Mandatory Economic Terms in respect of the replaced
       Aircraft.
 
     - Continental will be obligated to obtain written confirmation from each
       Rating Agency that substituting such Substitute Aircraft for the replaced
       Aircraft will not result in a withdrawal, suspension or downgrading of
       the ratings of any Class of Certificates.
 
                                      S-64

<PAGE>   65
 
                       DESCRIPTION OF THE EQUIPMENT NOTES
 
     The following summary describes all material terms of the Equipment Notes
and supplements (and, to the extent inconsistent therewith, replaces) the
description of the general terms and provisions relating to the Equipment Notes,
the Indentures, the Leases, the Participation Agreements, the trust agreements
under which the Owner Trustees act on behalf of the Owner Participants (the
"Trust Agreements") and the Note Purchase Agreement set forth in the Prospectus.
The summaries make use of terms defined in and are qualified in their entirety
by reference to all of the provisions of the Equipment Notes, the Indentures,
the Leases, the Participation Agreements, the Trust Agreements and the Note
Purchase Agreement, each of which will be filed as an exhibit to a Current
Report on Form 8-K to be filed by Continental with the Commission. Except as
otherwise indicated, the following summaries relate to the Equipment Notes, the
Indenture, the Lease, the Participation Agreement and the Trust Agreement that
may be applicable to each Aircraft.
 
     Under the Note Purchase Agreement, Continental will have the option of
entering into a leveraged lease financing or a secured debt financing with
respect to each Aircraft.
 
     - If Continental chooses to enter into a leveraged lease financing with
       respect to an Aircraft, the Note Purchase Agreement provides for the
       relevant parties to enter into a Participation Agreement, a Lease and a
       Leased Aircraft Indenture (among other documents) relating to the
       financing of such Leased Aircraft.
 
     - If Continental chooses to enter into a secured debt financing with
       respect to an Aircraft, the Note Purchase Agreement provides for the
       relevant parties to enter into a Participation Agreement and an Owned
       Aircraft Indenture relating to the financing of such Owned Aircraft.
 
     The description of such financing agreements in this Prospectus Supplement
is based on the forms of such agreements annexed to the Note Purchase Agreement.
However, the terms of the financing agreements actually entered into may differ
from the forms of such agreements and, consequently, may differ from the
description of such agreements contained in this Prospectus Supplement. In the
case of a Leased Aircraft, this is because a third party -- the owner
participant that will be the beneficial owner of the Leased Aircraft (the "Owner
Participant") -- will provide a portion of the financing of such Aircraft and
may request changes. Although such changes are permitted, under the Note
Purchase Agreement the terms of such agreements are required (i) to contain the
Mandatory Document Terms and (ii) not to vary the Mandatory Economic Terms. In
addition, Continental will be obligated to certify to the Trustees that any such
modifications do not materially and adversely affect the Certificateholders.
Continental must also obtain written confirmation from each Rating Agency that
the use of financing agreements modified in any material respect from the forms
attached to the Note Purchase Agreement would not result in a withdrawal,
suspension or downgrading of the ratings of any Class of Certificates. See
"Description of the Certificates -- Obligation to Purchase Equipment Notes".
Each Owner Participant will be required to satisfy certain requirements,
including having a minimum combined capital and surplus or net worth.
 
GENERAL
 
     Equipment notes will be issued in up to five series with respect to each
Aircraft (the "Series A-1 Equipment Notes", the "Series A-2 Equipment Notes",
the "Series B Equipment Notes", the "Series C-1 Equipment Notes", the "Series
C-2 Equipment Notes", and, collectively, the "Equipment Notes"). Continental may
elect to issue a sixth series of Equipment Notes with respect to an Aircraft
(the "Series D Equipment Notes"), which will be funded from sources other than
this Offering. See "Description of the Certificates -- Possible Issuance of
Class D Certificates". The Equipment Notes with respect to each Leased Aircraft
will be issued under a separate Leased Aircraft Indenture between First Security
Bank, National Association, as owner trustee of a trust for the benefit of the
Owner Participant who will be the beneficial owner of such Aircraft (each, an
"Owner Trustee"), and Wilmington Trust Company, as indenture trustee thereunder
(each, a "Leased Aircraft Trustee"). The Equipment Notes with respect to each
Owned Aircraft will be issued under a separate Owned Aircraft Indenture between
Continental and Wilmington Trust Company, as indenture trustee thereunder (each,
an "Owned Aircraft Trustee" and, together with the other
                                      S-65

<PAGE>   66
 
Owned Aircraft Trustees and the Leased Aircraft Trustees, the "Loan Trustees").
The Indentures will not provide for defeasance, or discharge upon deposit of
cash or certain obligations of the United States, notwithstanding the
description of defeasance in the Prospectus.
 
     The related Owner Trustee will lease each Leased Aircraft to Continental
pursuant to a separate Lease between such Owner Trustee and Continental with
respect to such Leased Aircraft. Under each Lease, Continental will be obligated
to make or cause to be made rental and other payments to the related Leased
Aircraft Trustee on behalf of the related Owner Trustee, which rental and other
payments will be at least sufficient to pay in full when due all payments
required to be made on the Equipment Notes issued with respect to such Leased
Aircraft. The Equipment Notes issued with respect to the Leased Aircraft are
not, however, direct obligations of, or guaranteed by, Continental.
Continental's rental obligations under each Lease and Continental's obligations
under the Equipment Notes issued with respect to each Owned Aircraft will be
general obligations of Continental.
 
SUBORDINATION
 
     The Indentures provide for the following subordination provisions
applicable to the Equipment Notes:
 
     - Series A-1 and Series A-2 Equipment Notes issued in respect of an
       Aircraft will rank equally in right of payment and will rank senior to
       other Equipment Notes issued in respect of such Aircraft.
 
     - Series B Equipment Notes issued in respect of an Aircraft will rank
       junior in right of payment to the Series A-1 and Series A-2 Equipment
       Notes issued in respect of such Aircraft and will rank senior to the
       Series C-1, Series C-2 and, if applicable, Series D Equipment Notes
       issued in respect of such Aircraft.
 
     - Series C-1 Equipment Notes and Series C-2 Equipment Notes issued in
       respect of an Aircraft will rank equally in right of payment, will rank
       junior to the Series A-1, Series A-2 and Series B Equipment Notes issued
       in respect of such Aircraft and, if Series D Equipment Notes are issued
       in respect of such Aircraft, senior to such Series D Equipment Notes.
 
     - If Continental elects to issue Series D Equipment Notes with respect to
       an Aircraft, they will be subordinated in right of payment to the Series
       A-1, A-2, B, C-1 and C-2 Equipment Notes issued with respect to such
       Aircraft.
 
PRINCIPAL AND INTEREST PAYMENTS
 
     Subject to the provisions of the Intercreditor Agreement, interest paid on
the Equipment Notes held in each Trust will be passed through to the
Certificateholders of such Trust on the dates and at the rate per annum set
forth on the cover page of this Prospectus Supplement with respect to
Certificates issued by such Trust until the final expected Regular Distribution
Date for such Trust. Subject to the provisions of the Intercreditor Agreement,
principal paid on the Equipment Notes held in each Trust will be passed through
to the Certificateholders of such Trust in scheduled amounts on the dates set
forth herein until the final expected Regular Distribution Date for such Trust.
 
     Interest will be payable on the unpaid principal amount of each Equipment
Note at the rate applicable to such Equipment Note on May 1 and November 1 of
each year, commencing on the first such date to occur after initial issuance
thereof. Such interest will be computed on the basis of a 360-day year of twelve
30-day months.
 
     Scheduled principal payments on the Series A-1, Series B and Series C-1
Equipment Notes will be made on May 1 and November 1 in certain years. The
entire principal amount of the Series A-2 Equipment Notes is scheduled to be
paid on May 1, 2010. The entire principal amount of the Series C-2 Equipment
Notes is scheduled to be paid on May 1, 2005. See "Description of the
Certificates -- Pool Factors" for a discussion of the scheduled payments of
principal of the Equipment Notes and possible revisions thereto.
 
                                      S-66

<PAGE>   67
 
     If any date scheduled for a payment of principal, premium (if any) or
interest with respect to the Equipment Notes is not a Business Day, such payment
will be made on the next succeeding Business Day without any additional
interest.
 
REDEMPTION
 
     If an Event of Loss occurs with respect to an Aircraft and such Aircraft is
not replaced by Continental under the related Lease (in the case of a Leased
Aircraft) or under the related Owned Aircraft Indenture (in the case of an Owned
Aircraft), the Equipment Notes issued with respect to such Aircraft will be
redeemed, in whole, in each case at a price equal to the aggregate unpaid
principal amount thereof, together with accrued interest thereon to, but not
including, the date of redemption, but without premium, on a Special
Distribution Date. (Leased Aircraft Indentures, Section 2.10(a); Owned Aircraft
Indentures, Section 2.10)
 
     If Continental exercises its right to terminate a Lease under Section 9 of
such Lease, the Equipment Notes relating to the applicable Leased Aircraft will
be redeemed, in whole, on a Special Distribution Date at a price equal to the
aggregate unpaid principal amount thereof, together with accrued and unpaid
interest thereon to, but not including, the date of redemption, plus a
Make-Whole Premium. (Leased Aircraft Indentures, Section 2.10(b)) See "-- The
Leases and Certain Provisions of the Owned Aircraft Indentures -- Lease
Termination".
 
     All of the Equipment Notes issued with respect to a Leased Aircraft may be
redeemed prior to maturity as part of a refunding or refinancing thereof under
Section 11 of the applicable Participation Agreement, and all of the Equipment
Notes issued with respect to the Owned Aircraft may be redeemed prior to
maturity at any time at the option of Continental, in each case at a price equal
to the aggregate unpaid principal thereof, together with accrued and unpaid
interest thereon to, but not including, the date of redemption, plus a
Make-Whole Premium. (Indentures, Section 2.11) If notice of such a redemption
shall have been given in connection with a refinancing of Equipment Notes with
respect to a Leased Aircraft, such notice may be revoked not later than three
days prior to the proposed redemption date. (Leased Aircraft Indentures, Section
2.12)
 
     If, with respect to a Leased Aircraft, (x) one or more Lease Events of
Default shall have occurred and been continuing, (y) in the event of a
bankruptcy proceeding involving Continental, (i) during the Section 1110 Period,
the trustee in such proceeding or Continental does not assume or agree to
perform its obligations under the related Lease or (ii) at any time after
assuming or agreeing to perform such obligations, such trustee or Continental
ceases to perform such obligations such that the stay period applicable under
the U.S. Bankruptcy Code comes to an end or (z) the Equipment Notes with respect
to such Aircraft have been accelerated or the Leased Aircraft Trustee with
respect to such Equipment Notes takes action or notifies the applicable Owner
Trustee that it intends to take action to foreclose the lien of the related
Leased Aircraft Indenture or otherwise commence the exercise of any significant
remedy under such Indenture or the related Lease, then in each case all, but not
less than all, of the Equipment Notes issued with respect to such Leased
Aircraft may be purchased by the related Owner Trustee or Owner Participant on
the applicable purchase date at a price equal to the aggregate unpaid principal
thereof, together with accrued and unpaid interest thereon to, but not
including, the date of purchase, but without any premium (provided that a Make-
Whole Premium shall be payable if such Equipment Notes are to be purchased
pursuant to clause (x) when a Lease Event of Default shall have occurred and
been continuing for less than 120 days). (Leased Aircraft Indentures, Section
2.13) Continental as owner of the Owned Aircraft has no comparable right under
the Owned Aircraft Indentures to purchase the Equipment Notes under such
circumstances.
 
     "Make-Whole Premium" means, with respect to any Equipment Note, an amount
(as determined by an independent investment bank of national standing) equal to
the excess, if any, of (a) the present value of the remaining scheduled payments
of principal and interest to maturity of such Equipment Note computed by
discounting such payments on a semiannual basis on each payment date under the
applicable Indenture (assuming a 360-day year of twelve 30-day months) using a
discount rate equal to the Treasury Yield over (b) the outstanding principal
amount of such Equipment Note plus accrued interest to the date of
determination.
 
                                      S-67

<PAGE>   68
 
     For purposes of determining the Make-Whole Premium, "Treasury Yield" means,
at the date of determination with respect to any Equipment Note, the interest
rate (expressed as a decimal and, in the case of United States Treasury bills,
converted to a bond equivalent yield) determined to be the per annum rate equal
to the semiannual yield to maturity for United States Treasury securities
maturing on the Average Life Date of such Equipment Note and trading in the
public securities markets either as determined by interpolation between the most
recent weekly average yield to maturity for two series of United States Treasury
securities trading in the public securities markets, (A) one maturing as close
as possible to, but earlier than, the Average Life Date of such Equipment Note
and (B) the other maturing as close as possible to, but later than, the Average
Life Date of such Equipment Note, in each case as published in the most recent
H.15(519) or, if a weekly average yield to maturity for United States Treasury
securities maturing on the Average Life Date of such Equipment Note is reported
in the most recent H.15(519), such weekly average yield to maturity as published
in such H.15(519). "H.15(519)" means the weekly statistical release designated
as such, or any successor publication, published by the Board of Governors of
the Federal Reserve System. The date of determination of a Make-Whole Premium
shall be the third Business Day prior to the applicable payment or redemption
date and the "most recent H.15(519)" means the H.15(519) published prior to the
close of business on the third Business Day prior to the applicable payment or
redemption date.
 
     "Average Life Date" for any Equipment Note shall be the date which follows
the time of determination by a period equal to the Remaining Weighted Average
Life of such Equipment Note. "Remaining Weighted Average Life" on a given date
with respect to any Equipment Note shall be the number of days equal to the
quotient obtained by dividing (a) the sum of each of the products obtained by
multiplying (i) the amount of each then remaining scheduled payment of principal
of such Equipment Note by (ii) the number of days from and including such
determination date to but excluding the date on which such payment of principal
is scheduled to be made, by (b) the then outstanding principal amount of such
Equipment Note.
 
SECURITY
 
     LEASED AIRCRAFT
 
     The Equipment Notes issued with respect to each Leased Aircraft will be
secured by:
 
     - An assignment by the related Owner Trustee to the related Leased Aircraft
       Trustee of such Owner Trustee's rights, except for certain limited
       rights, under the Lease with respect to the related Aircraft, including
       the right to receive payments of rent thereunder.
 
     - A mortgage to such Leased Aircraft Trustee of such Aircraft, subject to
       the rights of Continental under such Lease.
 
     - An assignment to such Leased Aircraft Trustee of certain of such Owner
       Trustee's rights under the purchase agreement between Continental and the
       Aircraft manufacturer.
 
     Unless and until an Indenture Default with respect to a Leased Aircraft has
occurred and is continuing, the Leased Aircraft Trustee may not exercise the
rights of the Owner Trustee under the related Lease, except the Owner Trustee's
right to receive payments of rent due thereunder. The assignment by the Owner
Trustee to the Leased Aircraft Trustee of its rights under the related Lease
will exclude certain rights of such Owner Trustee and the related Owner
Participant, including the rights of the Owner Trustee and the Owner Participant
with respect to indemnification by Continental for certain matters, insurance
proceeds payable to such Owner Trustee in its individual capacity or to such
Owner Participant under public liability insurance maintained by Continental
under such Lease or by such Owner Trustee or such Owner Participant, insurance
proceeds payable to such Owner Trustee in its individual capacity or to such
Owner Participant under certain casualty insurance maintained by such Owner
Trustee or such Owner Participant under such Lease and certain reimbursement
payments made by Continental to such Owner Trustee. (Leased Aircraft Indentures,
Granting Clause) The Equipment Notes issued in respect of any one Aircraft will
not be secured by any of the other Aircraft or Leases (except in certain cases,
if any, where the related Owner Participant and Continental shall agree to
cross-collateralization). Accordingly, any excess proceeds from the exercise of
 
                                      S-68

<PAGE>   69
 
remedies with respect to the Equipment Notes relating to an Aircraft will not be
available to cover any shortfall with respect to any other Aircraft.
 
     OWNED AIRCRAFT
 
     The Equipment Notes issued with respect to each Owned Aircraft will be
secured by:
 
     - A mortgage to the Owned Aircraft Trustee of such Aircraft.
 
     - An assignment to the Owned Aircraft Trustee of certain of Continental's
       rights under its purchase agreement with the Aircraft manufacturer.
 
     CASH
 
     Cash, if any, held from time to time by the Loan Trustee with respect to
any Aircraft, including funds held as the result of an Event of Loss to such
Aircraft or, in the case of a Leased Aircraft, termination of the Lease, if any,
relating thereto, will be invested and reinvested by such Loan Trustee, at the
direction of the related Owner Trustee in the case of the Leased Aircraft or
Continental in the case of the Owned Aircraft, in investments described in the
related Indenture. (Leased Aircraft Indentures, Section 5.09; Owned Aircraft
Indentures, Section 6.06)
 
LOAN TO VALUE RATIOS OF EQUIPMENT NOTES
 
     The following tables set forth illustrative loan to Aircraft value ratios
for the Equipment Notes issued in respect of Leased Aircraft and Owned Aircraft
as of May 1, 2001 and the November 1 Regular Distribution Dates thereafter,
assuming that the Equipment Notes in the maximum principal amount are issued in
respect of each such Aircraft. These examples were utilized by Continental in
preparing the Assumed Amortization Schedule, although the amortization schedule
for the Series A-1, Series B and Series C-1 Equipment Notes issued with respect
to an Aircraft may vary from such assumed schedule so long as it complies with
the Mandatory Economic Terms. Accordingly, the schedules set forth below may not
be applicable in the case of any particular Aircraft. For example, in the event
the final maturity date of the Series A-1, Series B or Series C-1 Equipment
Notes for a Boeing 737-824 aircraft were significantly earlier than that shown
below, the average life of the related Certificates may be correspondingly
reduced, subject to compliance with the Mandatory Economic Terms. See
"Description of the Certificates -- Pool Factors". Although the following tables
do not contain illustrative loan to Aircraft value ratios for Equipment Notes
issued in respect of an owned Boeing 737-824 Aircraft or a leased Boeing 757-224
Aircraft, Continental will have the option of entering into a leveraged lease
financing or a secured debt financing with respect to each Aircraft. The LTV was
obtained by dividing (i) the outstanding balance (assuming no payment default)
of such Equipment Notes determined immediately after giving effect to the
payments scheduled to be made on each such Regular Distribution Date by (ii) the
assumed value (the "Assumed Aircraft Value") of the Aircraft securing such
Equipment Notes.
 
                                      S-69

<PAGE>   70
 
     The following tables are based on the assumption (the "Depreciation
Assumption") that the value of each Aircraft set forth opposite the initial
Regular Distribution Date included in each table depreciates by approximately 3%
of the initial appraised value per year for the first fifteen years after the
year of delivery of such Aircraft and by approximately 4% of the initial
appraised value per year thereafter. Other rates or methods of depreciation
would result in materially different loan to Aircraft value ratios, and no
assurance can be given (i) that the depreciation rates and method assumed for
the purposes of the tables are the ones most likely to occur or (ii) as to the
actual future value of any Aircraft. Thus the tables should not be considered a
forecast or prediction of expected or likely loan to Aircraft value ratios, but
simply a mathematical calculation based on one set of assumptions.
 

<TABLE>
<CAPTION>
                                                 BOEING 737-824                              BOEING 757-224
                                    ----------------------------------------    ----------------------------------------
                                                LEASED AIRCRAFT                              OWNED AIRCRAFT
                                    ----------------------------------------    ----------------------------------------
                                     EQUIPMENT                                   EQUIPMENT
                                       NOTE         ASSUMED                        NOTE         ASSUMED
                                    OUTSTANDING     AIRCRAFT                    OUTSTANDING     AIRCRAFT
                                      BALANCE        VALUE         LOAN TO        BALANCE        VALUE         LOAN TO
DATE                                (MILLIONS)     (MILLIONS)    VALUE RATIO    (MILLIONS)     (MILLIONS)    VALUE RATIO
----                                -----------    ----------    -----------    -----------    ----------    -----------
<S>                                 <C>            <C>           <C>            <C>            <C>           <C>
May 1, 2001.......................    $26.26         $47.25         55.6%         $38.17         $57.84          66.0%
November 1, 2001..................     25.67          45.83         56.0           38.17          57.84          66.0
November 1, 2002..................     24.13          44.42         54.3           36.99          56.05          66.0
November 1, 2003..................     23.28          43.00         54.1           35.81          54.26          66.0
November 1, 2004..................     22.44          41.58         54.0           34.63          52.47          66.0
November 1, 2005..................     21.74          40.16         54.1           24.83          50.68          49.0
November 1, 2006..................     20.99          38.75         54.2           23.96          48.89          49.0
November 1, 2007..................     20.17          37.33         54.0           23.08          47.10          49.0
November 1, 2008..................     19.28          35.91         53.7           22.20          45.32          49.0
November 1, 2009..................     18.27          34.49         53.0           21.33          43.53          49.0
November 1, 2010..................     16.65          33.08         50.3            0.00             NA            NA
November 1, 2011..................     14.88          31.66         47.0            0.00             NA            NA
November 1, 2012..................     14.06          30.24         46.5            0.00             NA            NA
November 1, 2013..................     13.23          28.82         45.9            0.00             NA            NA
November 1, 2014..................     11.17          27.41         40.8            0.00             NA            NA
November 1, 2015..................      8.94          25.99         34.4            0.00             NA            NA
November 1, 2016..................      6.52          24.10         27.1            0.00             NA            NA
November 1, 2017..................      4.75          22.21         21.4            0.00             NA            NA
November 1, 2018..................      4.65          20.32         22.9            0.00             NA            NA
November 1, 2019..................      2.92          18.43         15.8            0.00             NA            NA
November 1, 2020..................      0.00             NA           NA            0.00             NA            NA
</TABLE>

 
                                      S-70

<PAGE>   71
 

<TABLE>
<CAPTION>
                                                                      BOEING 767-424ER
                                    ------------------------------------------------------------------------------------
                                                LEASED AIRCRAFT                              OWNED AIRCRAFT
                                    ----------------------------------------    ----------------------------------------
                                     EQUIPMENT                                   EQUIPMENT
                                       NOTE         ASSUMED                        NOTE         ASSUMED
                                    OUTSTANDING     AIRCRAFT                    OUTSTANDING     AIRCRAFT
                                      BALANCE        VALUE         LOAN TO        BALANCE        VALUE         LOAN TO
DATE                                (MILLIONS)     (MILLIONS)    VALUE RATIO    (MILLIONS)     (MILLIONS)    VALUE RATIO
----                                -----------    ----------    -----------    -----------    ----------    -----------
<S>                                 <C>            <C>           <C>            <C>            <C>           <C>
May 1, 2001.......................    $58.09        $104.77         55.4%         $68.56        $103.88          66.0%
November 1, 2001..................     56.80         101.63         55.9           66.50         100.76          66.0
November 1, 2002..................     53.37          98.48         54.2           63.97          97.65          65.5
November 1, 2003..................     51.49          95.34         54.0           61.65          94.53          65.2
November 1, 2004..................     49.74          92.20         53.9           59.74          91.41          65.4
November 1, 2005..................     48.19          89.06         54.1           43.27          88.30          49.0
November 1, 2006..................     46.51          85.91         54.1           41.74          85.18          49.0
November 1, 2007..................     44.69          82.77         54.0           40.21          82.06          49.0
November 1, 2008..................     42.71          79.63         53.6           38.68          78.95          49.0
November 1, 2009..................     40.52          76.48         53.0           37.16          75.83          49.0
November 1, 2010..................     36.91          73.34         50.3            0.00             NA            NA
November 1, 2011..................     32.99          70.20         47.0            0.00             NA            NA
November 1, 2012..................     31.18          67.05         46.5            0.00             NA            NA
November 1, 2013..................     29.36          63.91         45.9            0.00             NA            NA
November 1, 2014..................     24.81          60.77         40.8            0.00             NA            NA
November 1, 2015..................     19.86          57.62         34.5            0.00             NA            NA
November 1, 2016..................     14.49          53.43         27.1            0.00             NA            NA
November 1, 2017..................     10.53          49.24         21.4            0.00             NA            NA
November 1, 2018..................     10.53          45.05         23.4            0.00             NA            NA
November 1, 2019..................      4.37          40.86         10.7            0.00             NA            NA
November 1, 2020..................      0.00             NA           NA            0.00             NA            NA
</TABLE>

 
LIMITATION OF LIABILITY
 
     The Equipment Notes issued with respect to the Leased Aircraft are not
direct obligations of, or guaranteed by, Continental, any Owner Participant or
the Leased Aircraft Trustees or the Owner Trustees in their individual
capacities. None of the Owner Trustees, the Owner Participants or the Leased
Aircraft Trustees, or any affiliates thereof, will be personally liable to any
holder of an Equipment Note or, in the case of the Owner Trustees and the Owner
Participants, to the Leased Aircraft Trustees for any amounts payable under the
Equipment Notes or, except as provided in each Leased Aircraft Indenture, for
any liability under such Leased Aircraft Indenture. All payments of principal
of, premium, if any, and interest on the Equipment Notes issued with respect to
any Leased Aircraft (other than payments made in connection with an optional
redemption or purchase of Equipment Notes issued with respect to a Leased
Aircraft by the related Owner Trustee or the related Owner Participant) will be
made only from the assets subject to the lien of the Indenture with respect to
such Leased Aircraft or the income and proceeds received by the related Leased
Aircraft Trustee therefrom (including rent payable by Continental under the
Lease with respect to such Leased Aircraft).
 
     The Equipment Notes issued with respect to the Owned Aircraft will be
direct obligations of Continental.
 
     Except as otherwise provided in the Indentures, each Owner Trustee and each
Loan Trustee, in its individual capacity, will not be answerable or accountable
under the Indentures or under the Equipment Notes under any circumstances
except, among other things, for its own willful misconduct or gross negligence.
None of the Owner Participants will have any duty or responsibility under any of
the Leased Aircraft Indentures or the Equipment Notes to the Leased Aircraft
Trustees or to any holder of any Equipment Note.
 
                                      S-71

<PAGE>   72
 
INDENTURE DEFAULTS, NOTICE AND WAIVER
 
     Indenture Defaults under each Indenture will include:
 
     - In the case of a Leased Aircraft Indenture, the occurrence of any Lease
       Event of Default under the related Lease (other than the failure to make
       certain indemnity payments and other payments to the related Owner
       Trustee or Owner Participant unless a notice is given by such Owner
       Trustee that such failure shall constitute an Indenture Default).
 
     - The failure by the related Owner Trustee (other than as a result of a
       Lease Default or Lease Event of Default), in the case of a Leased
       Aircraft Indenture, or Continental, in the case of an Owned Aircraft
       Indenture, to pay any interest or principal or premium, if any, when due,
       under such Indenture or under any Equipment Note issued thereunder that
       continues for more than ten Business Days, in the case of principal,
       interest or Make-Whole Premium, and, in all other cases, ten Business
       Days after the relevant Owner Trustee or Owner Participant, in the case
       of a Leased Aircraft Indenture, or Continental, in the case of an Owned
       Aircraft Indenture, receives written demand from the related Loan Trustee
       or holder of an Equipment Note.
 
     - The failure by the related Owner Participant or the related Owner Trustee
       (in its individual capacity), in the case of a Leased Aircraft Indenture,
       to discharge certain liens that continue after notice and specified cure
       periods.
 
     - Any representation or warranty made by the related Owner Trustee or Owner
       Participant, in the case of a Leased Aircraft Indenture, or Continental,
       in the case of an Owned Aircraft Indenture, in such Indenture, the
       related Participation Agreement or certain related documents furnished to
       the Loan Trustee or any holder of an Equipment Note pursuant thereto
       being false or incorrect in any material respect when made that continues
       to be material and adverse to the interests of the Loan Trustee or Note
       Holders and remains unremedied after notice and specified cure periods.
 
     - Failure by Continental or the related Owner Trustee or Owner Participant
       to perform or observe any covenant or obligation for the benefit of the
       Loan Trustee or holders of Equipment Notes under such Indenture or
       certain related documents that continues after notice and specified cure
       periods.
 
     - The registration of the related Aircraft ceasing to be effective as a
       result of the Owner Participant (in the case of a Leased Aircraft) or
       Continental (in the case of an Owned Aircraft) not being a citizen of the
       United States, as defined in the Transportation Code (subject to a cure
       period).
 
     - With respect to the Owned Aircraft, the lapse or cancellation of
       insurance required under the related Owned Aircraft Indenture.
 
     - The occurrence of certain events of bankruptcy, reorganization or
       insolvency of the related Owner Trustee or Owner Participant (in the case
       of a Leased Aircraft) or Continental (in the case of the Owned Aircraft).
       (Leased Aircraft Indentures, Section 4.02; Owned Aircraft Indentures,
       Section 5.01)
 
     There will not be cross-default provisions in the Indentures or in the
Leases (unless otherwise agreed between an Owner Participant and Continental).
Consequently, events resulting in an Indenture Default under any particular
Indenture may or may not result in an Indenture Default occurring under any
other Indenture, and a Lease Event of Default under any particular Lease may or
may not constitute a Lease Event of Default under any other Lease.
 
     If Continental fails to make any semiannual basic rental payment due under
any Lease, within a specified period after such failure the applicable Owner
Trustee may furnish to the Leased Aircraft Trustee the amount due on the
Equipment Notes issued with respect to the related Leased Aircraft, together
with any interest thereon on account of the delayed payment thereof, in which
event the Leased Aircraft Trustee and the holders of outstanding Equipment Notes
issued under such Indenture may not exercise any remedies otherwise available
under such Indenture or such Lease as the result of such failure to make such
rental payment, unless such Owner Trustee has previously cured three or more
immediately preceding semiannual
 
                                      S-72

<PAGE>   73
 
basic rental payment defaults or, in total, six or more previous semiannual
basic rental payment defaults (or, in the case of certain Owner Participants,
six or more immediately preceding semiannual basic rental payment defaults or,
in total, eight or more previous semiannual basic rental payment defaults). The
applicable Owner Trustee also may cure any other default by Continental in the
performance of its obligations under any Lease that can be cured with the
payment of money. (Leased Aircraft Indentures, Section 4.03)
 
     The holders of a majority in principal amount of the outstanding Equipment
Notes issued with respect to any Aircraft, by notice to the Loan Trustee, may on
behalf of all the holders waive any existing default and its consequences under
the Indenture with respect to such Aircraft, except a default in the payment of
the principal of, or premium or interest on any such Equipment Notes or a
default in respect of any covenant or provision of such Indenture that cannot be
modified or amended without the consent of each holder of Equipment Notes.
(Leased Aircraft Indentures, Section 4.08; Owned Aircraft Indentures, Section
5.06)
 
REMEDIES
 
     If an Indenture Default occurs and is continuing under an Indenture, the
related Loan Trustee or the holders of a majority in principal amount of the
Equipment Notes outstanding under such Indenture may, subject to the applicable
Owner Participant's or Owner Trustee's right to cure, as discussed above,
declare the principal of all such Equipment Notes issued thereunder immediately
due and payable, together with all accrued but unpaid interest thereon, provided
that in the event of a reorganization proceeding involving Continental
instituted under Chapter 11 of the U.S. Bankruptcy Code, if no other Lease Event
of Default and no other Indenture Default (other than the failure to pay the
outstanding amount of the Equipment Notes which by such declaration shall have
become payable) exists at any time after the consummation of such proceeding,
such declaration will be automatically rescinded without any further action on
the part of any holder of Equipment Notes. The holders of a majority in
principal amount of Equipment Notes outstanding under an Indenture may rescind
any declaration of acceleration of such Equipment Notes at any time before the
judgment or decree for the payment of the money so due shall be entered if (i)
there has been paid to the related Loan Trustee an amount sufficient to pay all
principal, interest, and premium, if any, on any such Equipment Notes, to the
extent such amounts have become due otherwise than by such declaration of
acceleration and (ii) all other Indenture Defaults and incipient Indenture
Defaults with respect to any covenant or provision of such Indenture have been
cured. (Leased Aircraft Indentures, Section 4.04(b); Owned Aircraft Indentures,
Section 5.02(b))
 
     Each Indenture provides that if an Indenture Default under such Indenture
has occurred and is continuing, the related Loan Trustee may exercise certain
rights or remedies available to it under such Indenture or under applicable law,
including (if, in the case of a Leased Aircraft, the corresponding Lease has
been declared in default) one or more of the remedies under such Indenture or,
in the case of a Leased Aircraft, such Lease with respect to the Aircraft
subject to such Lease. If an Indenture Default arises solely by reason of one or
more events or circumstances which constitute a Lease Event of Default, the
related Leased Aircraft Trustee's right to exercise remedies under a Leased
Aircraft Indenture is subject, with certain exceptions, to its having proceeded
to exercise one or more of the dispossessory remedies under the Lease with
respect to such Leased Aircraft; provided that the requirement to exercise one
or more of such remedies under such Lease shall not apply in circumstances where
such exercise has been involuntarily stayed or prohibited by applicable law or
court order for a continuous period in excess of 60 days or such period as may
be specified in Section 1110(a)(1)(A) of the U.S. Bankruptcy Code, plus an
additional period, if any, resulting from (i) the trustee or
debtor-in-possession in such proceeding agreeing to perform its obligations
under such Lease with the approval of the applicable court and its continuous
performance of such Lease under Section 1110(a)(1)(A-B) of the U.S. Bankruptcy
Code or such Leased Aircraft Trustee's consent to an extension of such period,
(ii) such Leased Aircraft Trustee's failure to give any requisite notice, or
(iii) Continental's assumption of such Lease with the approval of the relevant
court and its continuous performance of the Lease as so assumed. See "-- The
Leases and Certain Provisions of the Owned Aircraft Indentures -- Events of
Default under the Leases". Such remedies may be exercised by the related Leased
Aircraft Trustee to the exclusion of the related Owner Trustee, subject to
certain conditions specified in such Indenture and, subject to the terms of such
Lease. Any Aircraft sold in the exercise of such remedies will be
 
                                      S-73

<PAGE>   74
 
free and clear of any rights of those parties, including the rights of
Continental under the Lease with respect to such Aircraft; provided that no
exercise of any remedies by the related Leased Aircraft Trustee may affect the
rights of Continental under any Lease unless a Lease Event of Default has
occurred and is continuing. (Leased Aircraft Indentures, Section 4.04; Leases,
Section 15) The Owned Aircraft Indentures will not contain such limitations on
the Owned Aircraft Trustee's ability to exercise remedies upon an Indenture
Default under an Owned Aircraft Indenture.
 
     If a bankruptcy proceeding involving Continental under the U.S. Bankruptcy
Code occurs, all of the rights of the Owner Trustee as lessor under a particular
Lease will be exercised by the Owner Trustee in accordance with the terms
thereof unless (i) during the Section 1110 Period the trustee in such proceeding
or Continental does not assume or agree to perform its obligations under such
Lease, (ii) at any time after assuming or agreeing to perform such obligations,
such trustee or Continental ceases to perform such obligations or (iii) the
related Loan Trustee takes action, or notifies the Owner Trustee that such Loan
Trustee intends to take action, to foreclose the lien of the related Leased
Aircraft Indenture or otherwise commence the exercise of any significant remedy
in accordance with the Leased Aircraft Indenture. The Owner Trustee's exercise
of such rights shall be subject to certain limitations and, in no event, reduce
the amount or change the time of any payment in respect of the Equipment Notes
or adversely affect the validity or enforceability of the lien under the related
Leased Aircraft Indenture.
 
     If the Equipment Notes issued in respect of one Aircraft are in default,
the Equipment Notes issued in respect of the other Aircraft may not be in
default, and, if not, no remedies will be exercisable under the applicable
Indentures with respect to such other Aircraft.
 
     Section 1110 of the U.S. Bankruptcy Code ("Section 1110") provides in
relevant part that the right of lessors, conditional vendors and holders of
security interests with respect to "equipment" (as defined in Section 1110) to
take possession of such equipment in compliance with the provisions of a lease,
conditional sale contract or security agreement, as the case may be, is not
affected by:
 
     - The automatic stay provision of the U.S. Bankruptcy Code, which provision
       enjoins repossessions by creditors for the duration of the reorganization
       period.
 
     - The provision of the U.S. Bankruptcy Code allowing the trustee in
       reorganization to use property of the debtor during the reorganization
       period.
 
     - Section 1129 of the U.S. Bankruptcy Code (which governs the confirmation
       of plans of reorganization in Chapter 11 cases).
 
     - Any power of the bankruptcy court to enjoin a repossession.
 
     Section 1110 provides in relevant part, however, that the right of a
lessor, conditional vendor or holder of a security interest to take possession
of an aircraft in the event of an event of default may not be exercised for 60
days following the date of commencement of the reorganization proceedings
(unless specifically permitted by the bankruptcy court) and may not be exercised
at all if, within such 60-day period (or such longer period consented to by the
lessor, conditional vendor or holder of a security interest), the trustee in
reorganization agrees to perform the debtor's obligations that become due on or
after such date and cures all existing defaults (other than defaults resulting
solely from the financial condition, bankruptcy, insolvency or reorganization of
the debtor). "Equipment" is defined in Section 1110, in part, as an aircraft,
aircraft engine, propeller, appliance, or spare part (as defined in Section
40102 of Title 49 of the U.S. Code) that is subject to a security interest
granted by, leased to, or conditionally sold to a debtor that is a citizen of
the United States (as defined in Section 40102 of Title 49 of the U.S. Code)
holding an air carrier operating certificate issued by the Secretary of
Transportation pursuant to chapter 447 of Title 49 of the U.S. Code for aircraft
capable of carrying ten or more individuals or 6,000 pounds or more of cargo.
 
     It is a condition to the Trustee's obligation to purchase Equipment Notes
with respect to each Aircraft that outside counsel to Continental, which is
expected to be Hughes Hubbard & Reed LLP, provide its opinion to the Trustees
that (x) if such Aircraft is a Leased Aircraft, the Owner Trustee, as lessor
under the Lease for such Aircraft, and the Leased Aircraft Trustee, as assignee
of such Owner Trustee's rights under
 
                                      S-74

<PAGE>   75
 
such Lease pursuant to the related Leased Aircraft Indenture, will be entitled
to the benefits of Section 1110 with respect to the airframe and engines
comprising such Aircraft or (y) if such Aircraft is an Owned Aircraft, the Owned
Aircraft Trustee will be entitled to the benefits of Section 1110 with respect
to the airframe and engines comprising such Owned Aircraft, in each case so long
as Continental continues to be a "citizen of the United States" as defined in
Section 40102 of Title 49 of the U.S. Code holding an air carrier operating
certificate issued by the Secretary of Transportation pursuant to chapter 447 of
Title 49 of the U.S. Code for aircraft capable of carrying ten or more
individuals or 6,000 pounds or more of cargo. For a description of certain
limitations on the Loan Trustee's exercise of rights contained in the Indenture,
see "-- Indenture Defaults, Notice and Waiver".
 
     The opinion of Hughes Hubbard & Reed LLP will not address the possible
replacement of an Aircraft after an Event of Loss in the future, the
consummation of which is conditioned upon the contemporaneous delivery of an
opinion of counsel to the effect that the related Loan Trustee will be entitled
to Section 1110 benefits with respect to such replacement unless there is a
change in law or court interpretation that results in Section 1110 not being
available. See "-- The Leases and Certain Provisions of the Owned Aircraft
Indentures -- Events of Loss". The opinion of Hughes Hubbard & Reed LLP will
also not address the availability of Section 1110 with respect to any possible
sublessee of a Leased Aircraft subleased by Continental or to any possible
lessee of an Owned Aircraft if it is leased by Continental.
 
     During 1998, the U.S. District Court for the District of Colorado issued
two opinions arising from the bankruptcy proceedings of Western Pacific
Airlines, Inc. relating to Section 1110. The decisions held that, once an
airline debtor reaffirms its obligations and cures its defaults under an
aircraft lease within the prescribed period in accordance with Section 1110, the
lessor under such lease is not entitled to repossess the aircraft under Section
1110 if the airline subsequently defaults under such lease. The opinion of
Hughes Hubbard & Reed LLP will state that, in such firm's opinion, such District
Court cases were incorrectly decided, since they are contrary to the plain
language of Section 1110 that requires the cure of any default (other than
certain defaults relating to the bankruptcy proceedings) and are not limited to
defaults occurring at the commencement of the bankruptcy proceeding. Moreover,
such opinion of Hughes Hubbard & Reed LLP will state that, in such firm's
opinion, such District Court cases are contrary to the clear intent of Congress
in enacting Section 1110, since they would substantially eliminate the benefit
of Section 1110 by giving no effect to rights of repossession under Section 1110
after the initial reaffirmance and cure. On July 7, 1999, an appeal of the
District Court decisions was dismissed by the U.S. Court of Appeals for the 10th
Circuit as moot.
 
     If an Indenture Default under any Indenture occurs and is continuing, any
sums held or received by the related Loan Trustee may be applied to reimburse
such Loan Trustee for any tax, expense or other loss incurred by it and to pay
any other amounts due to such Loan Trustee prior to any payments to holders of
the Equipment Notes issued under such Indenture. (Indentures, Section 3.03)
 
     In the event of bankruptcy, insolvency, receivership or like proceedings
involving an Owner Participant, it is possible that, notwithstanding that the
applicable Leased Aircraft is owned by the related Owner Trustee in trust, such
Leased Aircraft and the related Lease and Equipment Notes might become part of
such proceeding. In such event, payments under such Lease or on such Equipment
Notes might be interrupted and the ability of the related Leased Aircraft
Trustee to exercise its remedies under the related Leased Aircraft Indenture
might be restricted, although such Leased Aircraft Trustee would retain its
status as a secured creditor in respect of the related Lease and the related
Leased Aircraft.
 
MODIFICATION OF INDENTURES AND LEASES
 
     Without the consent of holders of a majority in principal amount of the
Equipment Notes outstanding under any Indenture, the provisions of such
Indenture and any related Lease, Participation Agreement or Trust Agreement may
not be amended or modified, except to the extent indicated below.
 
     Subject to certain limitations, certain provisions of any Leased Aircraft
Indenture, and of the Lease, the Participation Agreement, and the Trust
Agreement related thereto, may be amended or modified by the parties thereto
without the consent of any holders of the Equipment Notes outstanding under such
Indenture.
                                      S-75

<PAGE>   76
 
In the case of each Lease, such provisions include, among others, provisions
relating to (i) the return to the related Owner Trustee of the related Leased
Aircraft at the end of the term of such Lease (except to the extent that such
amendment would affect the rights or exercise of remedies under the Lease) and
(ii) the renewal of such Lease and the option of Continental at the end of the
term of such Lease to purchase the related Leased Aircraft so long as the same
would not adversely affect the Note Holders. (Leased Aircraft Indentures,
Section 9.01(a)) In addition, any Indenture may be amended without the consent
of the holders of Equipment Notes to, among other things, cure any defect or
inconsistency in such Indenture or the Equipment Notes issued thereunder,
provided that such change does not adversely affect the interests of any such
holder. (Leased Aircraft Indentures, Section 9.01(c); Owned Aircraft Indentures,
Section 10.01)
 
     Without the consent of the liquidity providers and the holder of each
Equipment Note outstanding under any Indenture affected thereby, no amendment or
modification of such Indenture may among other things (a) reduce the principal
amount of, or premium, if any, or interest payable on, any Equipment Notes
issued under such Indenture or change the date on which any principal, premium,
if any, or interest is due and payable, (b) permit the creation of any security
interest with respect to the property subject to the lien of such Indenture,
except as provided in such Indenture, or deprive any holder of an Equipment Note
issued under such Indenture of the benefit of the lien of such Indenture upon
the property subject thereto or (c) modify the percentage of holders of
Equipment Notes issued under such Indenture required to take or approve any
action under such Indenture. (Leased Aircraft Indentures, Section 9.01(b); Owned
Aircraft Indentures, Section 10.01(a))
 
OWNER PARTICIPANT'S RIGHT TO RESTRUCTURE
 
     Certain Owner Participants will have the right, subject to certain
conditions, to restructure the applicable leveraged lease transaction using a
"cross-border lease", a tax lease or head-lease/sublease structure and any other
type of transaction. In no event, however, shall any such restructuring (i)
change the terms and conditions of the rights and obligations of any holder of
Equipment Notes under the relevant Aircraft Operative Agreements or any holder
of Certificates or (ii) expose any such holder to any additional risks. As a
precondition to any such restructuring, the Owner Participant will be obligated
to deliver to the Leased Aircraft Trustee an appropriate officer's certificate
as to the satisfaction of the foregoing conditions and to obtain a written
confirmation from the Rating Agencies prior to the implementation of such
restructuring to the effect that such restructuring will not adversely affect
the ratings of the Certificates.
 
INDEMNIFICATION
 
     Continental will be required to indemnify each Loan Trustee, each Owner
Participant, each Owner Trustee, each liquidity provider, the Subordination
Agent, the Escrow Agent and each Trustee, but not the holders of Certificates,
for certain losses, claims and other matters. Continental will be required under
certain circumstances to indemnify each Owner Participant against the loss of
depreciation deductions and certain other benefits allowable for certain income
tax purposes with respect to the related Leased Aircraft.
 
THE LEASES AND CERTAIN PROVISIONS OF THE OWNED AIRCRAFT INDENTURES
 
     Each Leased Aircraft will be leased to Continental by the relevant Owner
Trustee under the relevant lease agreement (each, a "Lease"). Each Owned
Aircraft will be owned by Continental.
 
     LEASE TERM RENTALS AND PAYMENTS
 
     Each Leased Aircraft will be leased separately by the relevant Owner
Trustee to Continental for a term commencing on the date on which the Aircraft
is acquired by the Owner Trustee and expiring on a date not earlier than the
latest maturity date of the relevant Equipment Notes, unless terminated prior to
the originally scheduled expiration date as permitted by the applicable Lease.
The semiannual basic rent payment under each Lease is payable by Continental on
each related Lease Payment Date (or, if such day is not a Business Day, on the
next Business Day), and will be assigned by the Owner Trustee under the
corresponding Leased Aircraft Indenture to provide the funds necessary to make
scheduled payments of
 
                                      S-76

<PAGE>   77
 
principal and interest due from the Owner Trustee on the Equipment Notes issued
under such Indenture. In certain cases, the semiannual basic rent payments under
the Leases may be adjusted, but each Lease provides that under no circumstances
will rent payments by Continental be less than the scheduled payments on the
related Equipment Notes. Any balance of each such semiannual basic rent payment
under each Lease, after payment of amounts due on the Equipment Notes issued
under the Indenture corresponding to such Lease, will be paid over to the Owner
Trustee. (Leases, Section 3; Leased Aircraft Indentures, Section 3.01)
 
     "Lease Payment Date" means, with respect to each Lease, May 1 or November 1
during the term of such Lease.
 
     Semiannual payments of interest on the Equipment Notes issued by
Continental under an Owned Aircraft Indenture are payable on May 1 and November
1 of each year, commencing on the first such date after issuance thereof.
Payments of principal of the Equipment Notes issued by Continental under an
Owned Aircraft Indenture will be payable on May 1 and November 1 in certain
years or in full on final maturity.
 
     NET LEASE; MAINTENANCE
 
     Under the terms of each Lease, Continental's obligations in respect of each
Leased Aircraft will be those of a lessee under a "net lease". Accordingly,
Continental is obligated under each Lease, among other things and at its
expense, to keep each Aircraft duly registered and insured, to pay all costs of
operating the Aircraft and to maintain, service, repair and overhaul the
Aircraft so as to keep it in as good an operating condition as when delivered to
Continental, ordinary wear and tear excepted, and in such condition as required
to maintain the airworthiness certificate for the Aircraft in good standing at
all times. (Leases, Sections 7.1, 8.1 and 11.1 and Annexes C and D) The Owned
Aircraft Indentures impose comparable maintenance, service and repair
obligations on Continental with respect to the Owned Aircraft. (Owned Aircraft
Indentures, Section 4.02)
 
     POSSESSION, SUBLEASE AND TRANSFER
 
     Each Aircraft may be operated by Continental or, subject to certain
restrictions, by certain other persons. Normal interchange and pooling
agreements customary in the commercial airline industry with respect to any
Airframe or Engine are permitted. Subleases, in the case of Leased Aircraft, and
leases, in the case of Owned Aircraft, are also permitted to U.S. air carriers
and foreign air carriers that have their principal executive office in certain
specified countries, subject to a reasonably satisfactory legal opinion that,
among other things, such country would recognize (in the case of the Leased
Aircraft) Owner Trustee's title to, and the Loan Trustee's security interest in
respect of, the applicable Aircraft. In addition, a sublessee or lessee may not
be subject to insolvency or similar proceedings at the commencement of such
sublease or lease. (Leases, Section 7, Owned Aircraft Indentures, Section 4.02)
Permitted foreign air carriers are not limited to those based in a country that
is a party to the Convention on the International Recognition of Rights in
Aircraft (Geneva 1948) (the "Convention"). It is uncertain to what extent the
relevant Loan Trustee's security interest would be recognized if an Aircraft is
registered or located in a jurisdiction not a party to the Convention. Moreover,
in the case of an Indenture Default, the ability of the related Loan Trustee to
realize upon its security interest in an Aircraft could be adversely affected as
a legal or practical matter if such Aircraft were registered or located outside
the United States.
 
     REGISTRATION
 
     Continental is required to keep each Aircraft duly registered under the
Transportation Code with the FAA, except (in the case of a Leased Aircraft) if
the relevant Owner Trustee or the relevant Owner Participant fails to meet the
applicable citizenship requirements, and to record each Lease (in the case of a
Leased Aircraft) and Indenture and certain other documents under the
Transportation Code. (Leases, Section 7; Owned Aircraft Indentures, Section
4.02(e)) Such recordation of the Indenture and certain other documents with
respect to each Aircraft will give the relevant Loan Trustee a first-priority,
perfected security interest in such Aircraft whenever it is located in the
United States or any of its territories and possessions. The Convention provides
that such security interest will also be recognized, with certain limited
exceptions, in those jurisdictions that have ratified or adhere to the
Convention.
 
                                      S-77

<PAGE>   78
 
     So long as no Lease Event of Default exists, Continental has the right to
register the Leased Aircraft subject to such Lease in a country other than the
United States at its own expense in connection with a permitted sublease of the
Aircraft to a permitted foreign air carrier, subject to certain conditions set
forth in the related Participation Agreement. These conditions include a
requirement that an opinion of counsel be provided that the lien of the
applicable Indenture will continue as a first priority security interest in the
applicable Aircraft. (Leases, Section 7.1.2; Participation Agreements, Section
7.6.11) The Owned Aircraft Indentures contain comparable provisions with respect
to registration of the Owned Aircraft in connection with a permitted lease of
the Owned Aircraft. (Owned Aircraft Indentures, Section 4.02(e))
 
     LIENS
 
     Continental is required to maintain each Aircraft free of any liens, other
than the rights of the relevant Loan Trustee, the holders of the related
Equipment Notes, Continental and, with respect to a Leased Aircraft, the Owner
Participant and Owner Trustee arising under the applicable Indenture, the Lease
(in the case of a Leased Aircraft) or the other operative documents related
thereto, and other than certain limited liens permitted under such documents,
including but not limited to (i) liens for taxes either not yet due or being
contested in good faith by appropriate proceedings; (ii) materialmen's,
mechanics' and other similar liens arising in the ordinary course of business
and securing obligations that either are not yet delinquent for more than 60
days or are being contested in good faith by appropriate proceedings; (iii)
judgment liens so long as such judgment is discharged or vacated within 60 days
or the execution of such judgment is stayed pending appeal or discharged,
vacated or reversed within 60 days after expiration of such stay; and (iv) any
other lien as to which Continental has provided a bond or other security
adequate in the reasonable opinion of the Owner Trustee; provided that in the
case of each of the liens described in the foregoing clauses (i), (ii) and
(iii), such liens and proceedings do not involve any material risk of the sale,
forfeiture or loss of such Aircraft or the interest of any Participant therein
or impair the lien of the relevant Indenture. (Leases, Section 6; Owned Aircraft
Indentures, Section 4.01)
 
     REPLACEMENT OF PARTS; ALTERATIONS
 
     Continental is obligated to replace all parts at its expense that may from
time to time be incorporated or installed in or attached to any Aircraft and
that may become lost, damaged beyond repair, worn out, stolen, seized,
confiscated or rendered permanently unfit for use. Continental or any permitted
sublessee has the right, at its own expense, to make such alterations,
modifications and additions with respect to each Aircraft as it deems desirable
in the proper conduct of its business and to remove parts which it deems to be
obsolete or no longer suitable or appropriate for use, so long as such
alteration, modification, addition or removal does not materially diminish the
fair market value, utility, condition or useful life of the related Aircraft or
Engine or invalidate the Aircraft's airworthiness certificate. (Leases, Section
8.1 and Annex C; Owned Aircraft Indentures, Section 4.04(d))
 
     INSURANCE
 
     Continental is required to maintain, at its expense (or at the expense of a
permitted lessee, in the case of the Owned Aircraft, or a permitted sublessee,
in the case of a Leased Aircraft), all-risk aircraft hull insurance covering
each Aircraft, at all times in an amount not less than, in the case of Leased
Aircraft, the stipulated loss value of such Aircraft (which will exceed the
aggregate outstanding principal amount of the Equipment Notes relating to such
Aircraft, together with accrued interest thereon) or, in the case of Owned
Aircraft, the aggregate outstanding principal amount of the Equipment Notes
relating to such Aircraft together with six months of interest accrued thereon
(the "Debt Balance"). However, after giving effect to self-insurance permitted
as described below, the amount payable under such insurance may be less than
such amounts payable with respect to the Equipment Notes. In the event of a loss
involving insurance proceeds in excess of $3,500,000 per occurrence in the case
of a Boeing 737-824 aircraft, $5,000,000 per occurrence in the case of a Boeing
757-224 aircraft and $7,500,000 per occurrence in the case of a Boeing 767-424ER
aircraft, such proceeds up to the stipulated loss value or Debt Balance, as the
case may be, of the relevant Aircraft will be payable to the applicable Loan
Trustee, for so long as the relevant Indenture shall be in effect. In the event
of
 
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<PAGE>   79
 
a loss involving insurance proceeds of up to $3,500,000 per occurrence in the
case of a Boeing 737-824 aircraft, $5,000,000 per occurrence in the case of a
Boeing 757-224 aircraft and $7,500,000 per occurrence in the case of a Boeing
767-424ER aircraft, such proceeds will be payable directly to Continental so
long as an Indenture Event of Default does not exist with respect to the Owned
Aircraft Indenture or (in the case of a Leased Aircraft) the Owner Trustee or
Leased Aircraft Trustee has not notified the insurance underwriters that a Lease
Event of Default exists. So long as the loss does not constitute an Event of
Loss, insurance proceeds will be applied to repair or replace the property.
(Leases, Sections 11 and Annex D; Owned Aircraft Indentures, Section 4.06 and
Annex B)
 
     In addition, Continental is obligated to maintain comprehensive airline
liability insurance at its expense (or at the expense of a permitted lessee, in
the case of an Owned Aircraft, or a permitted sublessee, in the case of a Leased
Aircraft), including, without limitation, passenger liability, baggage
liability, cargo and mail liability, hangarkeeper's liability and contractual
liability insurance with respect to each Aircraft. Such liability insurance must
be underwritten by insurers of nationally or internationally recognized
responsibility. The amount of such liability insurance coverage per occurrence
may not be less than the amount of comprehensive airline liability insurance
from time to time applicable to aircraft owned or leased and operated by
Continental of the same type and operating on similar routes as such Aircraft.
(Leases, Section 11.1 and Annex D, Owned Aircraft Indentures, Section 4.06 and
Annex B)
 
     Continental is also required to maintain war-risk, hijacking or allied
perils insurance if it (or any permitted sublessee or lessee) operates any
Aircraft, Airframe or Engine in any area of recognized hostilities or if
Continental (or any permitted sublessee or lessee) maintains such insurance with
respect to other aircraft operated on the same international routes or areas on
or in which the Aircraft is operated. (Leases, Annex D, Owned Aircraft
Indentures, Section 4.06 and Annex B)
 
     Continental may self-insure under a program applicable to all aircraft in
its fleet, but the amount of such self-insurance in the aggregate may not exceed
50% of the largest replacement value of any single aircraft in Continental's
fleet or 1 1/2% of the average aggregate insurable value (during the preceding
policy year) of all aircraft on which Continental carries insurance, whichever
is less, unless an insurance broker of national standing shall certify that the
standard among all other major U.S. airlines is a higher level of
self-insurance, in which case Continental may self-insure the Aircraft to such
higher level. In addition, Continental may self-insure to the extent of any
applicable deductible per Aircraft that does not exceed industry standards for
major U.S. airlines. (Leases, Section 11.1 and Annex D, Owned Aircraft
Indentures, Section 4.06 and Annex B)
 
     In respect of each Aircraft, Continental is required to name as additional
insured parties the relevant Loan Trustee and holders of the Equipment Notes and
(in the case of the Leased Aircraft) the relevant Owner Participant and Owner
Trustee, in its individual capacity and as owner of such Aircraft, and the
liquidity providers under all liability, hull and property and war risk,
hijacking and allied perils insurance policies required with respect to such
Aircraft. In addition, the insurance policies will be required to provide that,
in respect of the interests of such additional insured persons, the insurance
shall not be invalidated or impaired by any act or omission of Continental, any
permitted sublessee or any other person. (Leases, Annex D, Owned Aircraft
Indentures, Section 4.06 and Annex B)
 
     LEASE TERMINATION
 
     Unless a Lease Event of Default shall have occurred and be continuing,
Continental may terminate any Lease on any Lease Payment Date occurring after
the fifth anniversary occurred of the date on which such Lease commenced, if it
makes a good faith determination that the Leased Aircraft subject to such Lease
is economically obsolete or surplus to its requirements. Continental is required
to give notice of its intention to exercise its right of termination described
in this paragraph at least 90 days prior to the proposed date of termination,
which notice may be withdrawn up to ten Business Days prior to such proposed
date; provided that Continental may give only five such termination notices. In
such a situation, unless the Owner Trustee elects to retain title to such
Aircraft, Continental is required to use commercially reasonable efforts to sell
such Aircraft as an agent for such Owner Trustee, and Owner Trustee will sell
such Aircraft on the date of
 
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<PAGE>   80
 
termination to the highest cash bidder. If such sale occurs, the Equipment Notes
related thereto are required to be prepaid. If the net proceeds to be received
from such sale are less than the termination value for such Aircraft (which is
set forth in a schedule to each Lease), Continental is required to pay to the
applicable Owner Trustee an amount equal to the excess, if any, of the
applicable termination value for such Aircraft over such net proceeds. Upon
payment of termination value for such Aircraft and an amount equal to the
Make-Whole Premium, if any, payable on such date of payment, together with
certain additional amounts, the lien of the relevant Indenture will be released,
the relevant Lease will terminate, and the obligation of Continental thereafter
to make scheduled rent payments under such Lease will cease. (Leases, Section 9;
Leased Aircraft Indentures, Section 2.10(b))
 
     The Owner Trustee has the option to retain title to the Leased Aircraft if
Continental has given a notice of termination under the Lease. In such event,
such Owner Trustee will pay to the applicable Loan Trustee an amount sufficient
to prepay the outstanding Equipment Notes issued with respect to such Aircraft
(including the Make-Whole Premiums), in which case the lien of the relevant
Indenture will be released, the relevant Lease will terminate and the obligation
of Continental thereafter to make scheduled rent payments under such Lease will
cease. (Leases, Section 9; Leased Aircraft Indentures, Sections 2.06 and
2.10(b))
 
     EVENTS OF LOSS
 
     If an Event of Loss occurs with respect to the Airframe or the Airframe and
Engines of an Aircraft, Continental must elect within 45 days after such
occurrence either to make payment with respect to such Event of Loss or to
replace such Airframe and any such Engines. Not later than the first Business
Day following the earlier of (i) the 120th day following the date of occurrence
of such Event of Loss, and (ii) the fourth Business Day following the receipt of
the insurance proceeds in respect of such Event of Loss, Continental must either
(i) pay to the applicable Owner Trustee (in the case of a Leased Aircraft) or to
the Owned Aircraft Trustee (in the case of the Owned Aircraft) the stipulated
loss value of such Aircraft (in the case of a Leased Aircraft) or the
outstanding principal amount of the Equipment Notes (in the case of an Owned
Aircraft), together with certain additional amounts, but, in any case, without
any Make-Whole Premium or (ii) unless any Lease Event of Default or failure to
pay basic rent under the relevant Lease (in the case of a Leased Aircraft), an
Indenture Event of Default or failure to pay principal or interest under the
Owned Aircraft Indenture (in the case of the Owned Aircraft) or certain
bankruptcy defaults shall have occurred and is continuing, substitute an
airframe (or airframe and one or more engines, as the case may be) for the
Airframe, or Airframe and Engine(s), that suffered such Event of Loss. (Leases,
Sections 10.1.1 and 10.1.2; Leased Aircraft Indentures, Section 2.10(a); Owned
Aircraft Indentures, Sections 2.10 and 4.05(a))
 
     If Continental elects to replace an Airframe (or Airframe and one or more
Engines, as the case may be) that suffered such Event of Loss, it shall, in the
case of a Leased Aircraft, convey to the related Owner Trustee title to an
airframe (or airframe and one or more engines, as the case may be) or, in the
case of an Owned Aircraft, subject such an airframe (or airframe and one or more
engines) to the lien of the Owned Aircraft Indenture, and such replacement
airframe or airframe and engines must be the same model as the Airframe or
Airframe and Engines to be replaced or an improved model, with a value, utility
and remaining useful life (without regard to hours or cycles remaining until the
next regular maintenance check) at least equal to the Airframe or Airframe and
Engines to be replaced, assuming that such Airframe and such Engines had been
maintained in accordance with the related Lease or Owned Aircraft Indenture, as
the case may be. Continental is also required to provide to the relevant Loan
Trustee and (in the case of a Leased Aircraft) the relevant Owner Trustee and
Owner Participant reasonably acceptable opinions of counsel to the effect, among
other things, that (i) certain specified documents have been duly filed under
the Transportation Code and (ii) such Owner Trustee and Leased Aircraft Trustee
(as assignee of lessor's rights and interests under the Lease), in the case of a
Leased Aircraft, or the Owned Aircraft Trustee, in the case of an Owned
Aircraft, will be entitled to receive the benefits of Section 1110 of the U.S.
Bankruptcy Code with respect to any such replacement airframe (unless, as a
result of a change in law or court interpretation, such benefits are not then
available). (Leases, Sections 10.1.3 and 10.3; Owned Aircraft Indentures,
Section 4.05(c))
 
     If Continental elects not to replace such Airframe, or Airframe and
Engine(s), then upon payment of the outstanding principal amount of the
Equipment Notes issued with respect to such Aircraft (in the case of an
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<PAGE>   81
 
Owned Aircraft) or the stipulated loss value for such Aircraft (in the case of a
Leased Aircraft), together with all additional amounts then due and unpaid with
respect to such Aircraft, which must be at least sufficient to pay in full as of
the date of payment thereof the aggregate unpaid principal amount under such
Equipment Notes together with accrued but unpaid interest thereon and all other
amounts due and owing in respect of such Equipment Notes, the lien of the
Indenture and (in the case of a Leased Aircraft) the Lease relating to such
Aircraft shall terminate with respect to such Aircraft, the obligation of
Continental thereafter to make the scheduled rent payments (in the case of a
Leased Aircraft) or interest and principal payments (in the case of an Owned
Aircraft) with respect thereto shall cease and (in the case of a Leased
Aircraft) the related Owner Trustee shall transfer all of its right, title and
interest in and to the related Aircraft to Continental. The stipulated loss
value and other payments made under the Leases or the Owned Aircraft Indenture,
as the case may be, by Continental shall be deposited with the applicable Loan
Trustee. Amounts in excess of the amounts due and owing under the Equipment
Notes issued with respect to such Aircraft will be distributed by such Loan
Trustee to the applicable Owner Trustee or to Continental, as the case may be.
(Leases, Section 10.1.2; Leased Aircraft Indentures, Sections 2.06 and 3.02;
Owned Aircraft Indentures, Sections 2.10, 3.02 and 4.05(a)(ii))
 
     If an Event of Loss occurs with respect to an Engine alone, Continental
will be required to replace such Engine within 60 days after the occurrence of
such Event of Loss with another engine, free and clear of all liens (other than
certain permitted liens). Such replacement engine shall be the same make and
model as the Engine to be replaced, or an improved model, suitable for
installation and use on the Airframe, and having a value, utility and remaining
useful life (without regard to hours or cycles remaining until overhaul) at
least equal to the Engine to be replaced, assuming that such Engine had been
maintained in accordance with the relevant Lease or Owned Aircraft Indenture, as
the case may be. (Leases, Section 10.2; Owned Aircraft Indentures, Section 4.05)
 
     An "Event of Loss" with respect to an Aircraft, Airframe or any Engine
means any of the following events with respect to such property:
 
     - The destruction of such property, damage to such property beyond economic
       repair or rendition of such property permanently unfit for normal use.
 
     - The actual or constructive total loss of such property or any damage to
       such property or requisition of title or use of such property which
       results in an insurance settlement with respect to such property on the
       basis of a total loss or a constructive or compromised total loss.
 
     - Any theft, hijacking or disappearance of such property for a period of
       180 consecutive days or more.
 
     - Any seizure, condemnation, confiscation, taking or requisition of title
       to such property by any governmental entity or purported governmental
       entity (other than a U.S. government entity or an entity of the country
       of registration of the relevant Aircraft) for a period exceeding 180
       consecutive days or, if earlier, at the end of the term of such Lease (in
       the case of a Leased Aircraft).
 
     - In the case of any Leased Aircraft, any seizure, condemnation,
       confiscation, taking or requisition of use of such property by any U.S.
       government entity (or governmental entity of the country of registration
       of the relevant Aircraft) that continues until the 30th day after the
       last day of the term of the relevant Lease (unless the Owner Trustee
       shall have elected not to treat such event as an Event of Loss).
 
     - As a result of any law, rule, regulation, order or other action by the
       FAA or any governmental entity, the use of such property in the normal
       course of Continental's business of passenger air transportation is
       prohibited for 180 consecutive days, unless Continental, prior to the
       expiration of such 180-day period, shall have undertaken and shall be
       diligently carrying forward steps which are necessary or desirable to
       permit the normal use of such property by Continental, but in any event
       if such use shall have been prohibited for a period of two consecutive
       years, provided that no Event of Loss shall be deemed to have occurred if
       such prohibition has been applicable to Continental's entire U.S.
       registered fleet of similar property and Continental, prior to the
       expiration of such two-year period, shall have conformed at least one
       unit of such property in its fleet to the requirements of any such law,
       rule, regulation, order or other action and commenced regular commercial
       use of the same and shall
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<PAGE>   82
 
       be diligently carrying forward, in a manner which does not discriminate
       against applicable property in so conforming such property, steps which
       are necessary or desirable to permit the normal use of such property by
       Continental, but in any event if such use shall have been prohibited for
       a period of three years or, in the case of the Leased Aircraft, such use
       shall be prohibited at the expiration of the term of the relevant Lease.
 
     - With respect to any Engine, any divestiture of title to such Engine in
       connection with pooling or certain other arrangements shall be treated as
       an Event of Loss. (Leases, Section 7.2.6 and Annex A; Owned Aircraft
       Indentures, Annex A)
 
     RENEWAL AND PURCHASE OPTIONS
 
     At the end of the term of each Lease after final maturity of the related
Equipment Notes and subject to certain conditions, Continental will have certain
options to renew such Lease for additional limited periods. In addition,
Continental will have the right at the end of the term of each Lease to purchase
the Aircraft subject thereto for an amount to be calculated in accordance with
the terms of such Lease. (Leases, Section 17)
 
     In addition, Continental may have the right to purchase an Aircraft from
the applicable Owner Trustee and assume, as direct obligations of Continental,
the Equipment Notes issued with respect to such Aircraft. In such case, the
Leased Aircraft Indenture relating to such Equipment Notes will be amended and
restated to be substantially the same as an Owned Aircraft Indenture. See
"Certain U.S. Federal Income Tax Consequences -- Taxation of Certificateholders
Generally -- Trusts Classified as Grantor Trusts" for a discussion of certain
tax consequences of such purchase and assumption.
 
     EVENTS OF DEFAULT UNDER THE LEASES
 
     Lease Events of Default under each Lease include, among other things:
 
     - Failure by Continental to make any payment of basic rent, stipulated loss
       value or termination value under such Lease within ten Business Days
       after the same shall have become due, or failure by Continental to pay
       any other amount due under such Lease or under any other related
       operative document within ten Business Days from and after the date of
       any written notice from the Owner Trustee or Loan Trustee of the failure
       to make such payment when due.
 
     - Failure by Continental to make any excluded payment (as defined) within
       ten Business Days after written notice that such failure constitutes a
       Lease Event of Default is given by the relevant Owner Participant to
       Continental and the relevant Loan Trustee.
 
     - Failure by Continental to carry and maintain insurance on and in respect
       of the Aircraft, Airframe and Engines, in accordance with the provisions
       of such Lease.
 
     - Failure by Continental to perform or observe in any material respect any
       other covenant or agreement to be performed or observed by it under such
       Lease or the related Participation Agreement or certain other related
       operative documents (other than the related tax indemnity agreement
       between Continental and the Owner Participant), and such failure shall
       continue unremedied for a period of 30 days after written notice of such
       failure by the applicable Owner Trustee or Loan Trustee unless such
       failure is capable of being corrected and Continental shall be diligently
       proceeding to correct such failure, in which case there shall be no Lease
       Event of Default unless and until such failure shall continue unremedied
       for a period of 270 days after the receipt of such notice.
 
     - Any representation or warranty made by Continental in such Lease or the
       related Participation Agreement or in certain other related operative
       documents (other than in the related tax indemnity agreement between
       Continental and the Owner Participant) shall prove to have been untrue or
       inaccurate in any material respect at the time made, such representation
       or warranty is material at the time in question and the same shall remain
       uncured (to the extent of the adverse impact thereof) for more than 30
       days after the date of written notice thereof to Continental.
 
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<PAGE>   83
 
     - The occurrence of certain voluntary events of bankruptcy, reorganization
       or insolvency of Continental or the occurrence of involuntary events of
       bankruptcy, reorganization or insolvency which shall continue
       undismissed, unvacated or unstayed for a period of 90 days. (Leases,
       Section 14)
 
     Indenture Events of Default under the Owned Aircraft Indentures are
discussed above under "-- Indenture Defaults, Notice and Waiver".
 
     REMEDIES EXERCISABLE UPON EVENTS OF DEFAULT UNDER THE LEASE
 
     If a Lease Event of Default has occurred and is continuing, the applicable
Owner Trustee may (or, so long as the Indenture shall be in effect, the
applicable Loan Trustee may, subject to the terms of the Indenture) exercise one
or more of the remedies provided in such Lease with respect to the related
Aircraft. These remedies include the right to repossess and use or operate such
Aircraft, to rescind or terminate such Lease, to sell or re-lease such Aircraft
free and clear of Continental's rights, except as set forth in the Lease, and
retain the proceeds, and to require Continental to pay, as liquidated damages
any due and unpaid basic rent plus an amount equal to, at such Owner Trustee's
(or, subject to the terms of the relevant Leased Aircraft Indenture, the Leased
Aircraft Trustee's) option, either (i) the excess of the present value of all
unpaid rent during the remainder of the term of such Lease over the present
value of the fair market rental value of such Aircraft for the remainder of the
term of such Lease or, (ii) the excess of the stipulated loss value of such
Aircraft over the fair market sales value of such Aircraft or, if such Aircraft
has been sold, the net sales proceeds from the sale of such Aircraft. (Leases,
Section 15; Leased Aircraft Indentures, Section 4.04) If the Loan Trustee has
validly terminated such Lease, the Loan Trustee may not sell or lease or
otherwise afford the use of such Aircraft to Continental or any of its
affiliates. (Leased Aircraft Indentures, Section 4.04(a))
 
     Remedies under the Owned Aircraft Indentures are discussed above under
"-- Remedies".
 
     TRANSFER OF OWNER PARTICIPANT INTERESTS
 
     Subject to certain restrictions, each Owner Participant may transfer all or
any part of its interest in the related Leased Aircraft. (Participation
Agreements, Section 10.1.1)
 
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<PAGE>   84
 
                  CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES
 
GENERAL
 
     The following summary describes all material generally applicable U.S.
federal income tax consequences to Certificateholders of the purchase, ownership
and disposition of the Certificates offered hereby and in the opinion of Hughes
Hubbard & Reed LLP, special tax counsel to Continental ("Tax Counsel"), is
accurate in all material respects with respect to the matters discussed therein.
This summary supplements (and, to the extent inconsistent therewith, replaces)
the summary of U.S. federal income tax consequences set forth in the Prospectus.
Except as otherwise specified, the summary is addressed to beneficial owners of
Certificates ("U.S. Certificateholders") that are citizens or residents of the
United States, corporations, partnerships or other entities created or organized
in or under the laws of the United States or any state therein, estates the
income of which is subject to U.S. federal income taxation regardless of its
source, or trusts that meet the following two tests: (a) a U.S. court is able to
exercise primary supervision over the administration of the trust and (b) one or
more U.S. fiduciaries have the authority to control all substantial decisions of
the trust ("U.S. Persons") that will hold the Certificates as capital assets.
This summary does not address the tax treatment of U.S. Certificateholders that
may be subject to special tax rules, such as banks, insurance companies, dealers
in securities or commodities, tax-exempt entities, holders that will hold
Certificates as part of a straddle or holders that have a "functional currency"
other than the U.S. Dollar, nor, except as specifically indicated, does it
address the tax treatment of U.S. Certificateholders that do not acquire
Certificates at the public offering price as part of the initial offering. The
summary does not purport to be a comprehensive description of all of the tax
considerations that may be relevant to a decision to purchase Certificates. This
summary does not describe any tax consequences arising under the laws of any
state, locality or taxing jurisdiction other than the United States.
 
     The summary is based upon the tax laws and practice of the United States as
in effect on the date of this Prospectus Supplement, as well as judicial and
administrative interpretations thereof (in final or proposed form) available on
or before such date. All of the foregoing are subject to change, which change
could apply retroactively. We have not sought any ruling from the U.S. Internal
Revenue Service (the "IRS") with respect to the tax consequences described
below, and we cannot assure you that the IRS will not take contrary positions.
The Trusts are not indemnified for any U.S. federal income taxes that may be
imposed upon them, and the imposition of any such taxes on a Trust could result
in a reduction in the amounts available for distribution to the
Certificateholders of such Trust. PROSPECTIVE INVESTORS SHOULD CONSULT THEIR OWN
TAX ADVISORS WITH RESPECT TO THE FEDERAL, STATE, LOCAL AND FOREIGN TAX
CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE
CERTIFICATES.
 
TAX STATUS OF THE TRUSTS
 
     In the opinion of Tax Counsel, while there is no authority addressing the
characterization of entities that are similar to the Trusts in all material
respects, each of the Original Trusts should be classified as a grantor trust
for U.S. federal income tax purposes. If, as may be the case, the Original
Trusts are not classified as grantor trusts, they will, in the opinion of Tax
Counsel, be classified as partnerships for U.S. federal income tax purposes and
will not be classified as publicly traded partnerships taxable as corporations
provided that at least 90% of each Original Trust's gross income for each
taxable year of its existence is "qualifying income" (which is defined to
include, among other things, interest income, gain from the sale or disposition
of capital assets held for the production of interest income, and income derived
with respect to a business of investing in securities). Tax Counsel believes
that income derived by the Original Trusts from the Equipment Notes will
constitute qualifying income and that the Original Trusts therefore will meet
the 90% test, assuming that the Original Trusts operate in accordance with the
terms of the Pass Through Trust Agreements and other agreements to which they
are parties. In the opinion of Tax Counsel, the Successor Trusts will be
classified as grantor trusts.
 
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<PAGE>   85
 
TAXATION OF CERTIFICATEHOLDERS GENERALLY
 
     TRUSTS CLASSIFIED AS GRANTOR TRUSTS
 
     Assuming that a Trust is classified as a grantor trust, a U.S.
Certificateholder will be treated as owning its pro rata undivided interest in
the relevant Deposits and each of the Equipment Notes, the Trust's contractual
rights and obligations under the Note Purchase Agreement, and any other property
held by the Trust. Accordingly, each U.S. Certificateholder's share of interest
paid on Equipment Notes will be taxable as ordinary income, as it is paid or
accrued, in accordance with such U.S. Certificateholder's method of accounting
for U.S. federal income tax purposes, and a U.S. Certificateholder's share of
premium, if any, paid on redemption of an Equipment Note will be treated as
capital gain. The Deposits will likely be subject to the original issue discount
and contingent payment rules, with the result that a U.S. Certificateholder will
be required to include interest income from a Deposit using the accrual method
of accounting regardless of its normal method and with a possible slight
deferral in the timing of income recognition as compared to holding a single
debt instrument with terms comparable to a Certificate. Any amounts received by
a Trust under a Liquidity Facility in order to make interest payments will be
treated for U.S. federal income tax purposes as having the same characteristics
as the payments they replace.
 
     An Owner Participant's conveyance of its interest in an owner trust should
not constitute a taxable event to U.S. Certificateholders. However, if we assume
an owner trust's obligations under the related Equipment Notes upon a purchase
of a Leased Aircraft by Continental, such assumption would be treated for
federal income tax purposes as a taxable exchange by U.S. Certificateholders of
the Equipment Notes for "new" Equipment Notes resulting in the recognition of
taxable gain or loss equal to the difference between the U.S.
Certificateholder's adjusted basis in its interest in the Equipment Note and the
amount realized on such exchange (except to the extent attributable to accrued
interest, which would be taxable as interest income if not previously included
in income). For this purpose the amount realized (and the issue price of the
"new" Equipment Note) would be equal to the fair market value of the U.S.
Certificateholder's pro rata share of the respective Equipment Note at such time
if the Equipment Notes are "publicly traded" within the meaning of applicable
regulations and otherwise would be equal to their principal amount (or, under
certain circumstances, a lesser imputed principal amount).
 
     In the case of a subsequent purchaser of a Certificate, the purchase price
for the Certificate should be allocated among the relevant Deposits and the
assets held by the relevant Trust (including the Equipment Notes and the rights
and obligations under the Note Purchase Agreement with respect to Equipment
Notes not theretofore issued) in accordance with their relative fair market
values at the time of purchase. Any portion of the purchase price allocable to
the right and obligation under the Note Purchase Agreement to acquire an
Equipment Note should be included in the purchaser's basis in its share of the
Equipment Note when issued. Although the matter is not entirely clear, in the
case of a purchaser after initial issuance of the Certificates but prior to the
Delivery Period Termination Date, if the purchase price reflects a "negative
value" associated with the obligation to acquire an Equipment Note pursuant to
the Note Purchase Agreement being burdensome under conditions existing at the
time of purchase (e.g., as a result of the interest rate on the unissued
Equipment Notes being below market at the time of purchase of a Certificate),
such negative value probably would be added to such purchaser's basis in its
interest in the Deposits and the remaining assets of the Trust and reduce such
purchaser's basis in its share of the Equipment Notes when issued. The preceding
two sentences do not apply to purchases of Certificates following the Delivery
Period Termination Date.
 
     A U.S. Certificateholder who is treated as purchasing an interest in a
Deposit or an Equipment Note at a market discount (generally, at a cost less
than its remaining principal amount) that exceeds a statutorily defined de
minimis amount will be subject to the "market discount" rules of the Code. These
rules provide, in part, that gain on the sale or other disposition of a debt
instrument with a term of more than one year and partial principal payments
(including partial redemptions) on such a debt instrument are treated as
ordinary income to the extent of accrued but unrecognized market discount. The
market discount rules also provide for deferral of interest deductions with
respect to debt incurred to purchase or carry a debt instrument that has market
discount. A U.S. Certificateholder who purchases an interest in a Deposit or an
Equipment Note at a
 
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<PAGE>   86
 
premium may elect to amortize the premium as an offset to interest income on the
Deposit or Equipment Note under rules prescribed by the Code and Treasury
regulations promulgated under the Code.
 
     Each U.S. Certificateholder will be entitled to deduct, consistent with its
method of accounting, its pro rata share of fees and expenses paid or incurred
by the corresponding Trust as provided in Section 162 or 212 of the Code.
Certain fees and expenses, including fees paid to the Trustee and the Liquidity
Provider, will be borne by parties other than the Certificateholders. It is
possible that such fees and expenses will be treated as constructively received
by the Trust, in which event a U.S. Certificateholder will be required to
include in income and will be entitled to deduct its pro rata share of such fees
and expenses. If a U.S. Certificateholder is an individual, estate or trust, the
deduction for such holder's share of such fees or expenses will be allowed only
to the extent that all of such holder's miscellaneous itemized deductions,
including such holder's share of such fees and expenses, exceed 2% of such
holder's adjusted gross income. In addition, in the case of U.S.
Certificateholders who are individuals, certain otherwise allowable itemized
deductions will be subject generally to additional limitations on itemized
deductions under applicable provisions of the Code.
 
     ORIGINAL TRUSTS CLASSIFIED AS PARTNERSHIPS
 
     If an Original Trust is classified as a partnership (and not as a publicly
traded partnership taxable as a corporation) for U.S. federal income tax
purposes, income or loss with respect to the assets held by the Trust will be
calculated at the Trust level but the Trust itself will not be subject to U.S.
federal income tax. A U.S. Certificateholder would be required to report its
share of the Trust's items of income and deduction on its tax return for its
taxable year within which the Trust's taxable year (which should be a calendar
year) ends as well as income from its interest in the relevant Deposits. A U.S.
Certificateholder's basis in its interest in the Trust would be equal to its
purchase price therefor (including its share of any funds withdrawn from the
Depositary and used to purchase Equipment Notes), plus its share of the Trust's
net income, minus its share of any net losses of the Trust, and minus the amount
of any distributions from the Trust. In the case of an original purchaser of a
Certificate that is a calendar year taxpayer, income or loss generally should be
the same as it would be if the Trust were classified as a grantor trust, except
that income or loss would be reported on an accrual basis even if the U.S.
Certificateholder otherwise uses the cash method of accounting. A subsequent
purchaser, however, generally would be subject to tax on the same basis as an
original holder with respect to its interest in the Original Trust, and would
not be subject to the market discount rules or the bond premium rules during the
duration of the Original Trust.
 
EFFECT OF REALLOCATION OF PAYMENTS UNDER THE INTERCREDITOR AGREEMENT
 
     In the event that the Class B Trust, the Class C-1 Trust or the Class C-2
Trust (such Trusts being the "Subordinated Trusts" and the related Certificates
being the "Subordinated Certificates") receives less than the full amount of the
receipts of interest, principal or premium paid with respect to the Equipment
Notes held by it because of the subordination of the Equipment Notes held by
such Trust under the Intercreditor Agreement, the corresponding owners of
beneficial interests in the Subordinated Certificates (the "Subordinated
Certificateholders") would probably be treated for federal income tax purposes
as if they had:
 
     - received as distributions their full share of interest, principal or
       premium;
 
     - paid over the preferred class of Certificateholders an amount equal to
       their share of the amount of the shortfall; and
 
     - retained the right to reimbursement of the amount of the shortfall to the
       extent of future amounts payable to them on account of the shortfall.
 
     Under this analysis:
 
     - Subordinated Certificateholders incurring a shortfall would be required
       to include as current income any interest or other income of the
       Subordinated Trust that was a component of the shortfall, even though
       that amount was in fact paid to a preferred class of certificateholders;
 
     - a loss would only be allowed to Subordinated Certificateholders when
       their right to receive reimbursement of the shortfall becomes worthless;
       that is, when it becomes clear that funds will not be available from any
       source to reimburse the shortfall; and
 
                                      S-86

<PAGE>   87
 
     - reimbursement of the shortfall before a claim of worthlessness would not
       be taxable income to the Subordinated Certificateholders because the
       amount reimbursed would have been previously included in income.
 
     These results should not significantly affect the inclusion of income for
Subordinated Certificateholders on the accrual method of accounting, but could
accelerate inclusion of income to Subordinated Certificateholders on the cash
method of accounting by, in effect, placing them on the accrual method.
 
     Similar treatment would apply if the Class A-1 Trust, the Class A-2 Trust,
the Class C-1 Trust or the Class C-2 Trust receives less than the full amount of
the receipts of interest, principal or premium paid with respect to the
Equipment Notes held by it because of the provisions in the Intercreditor
Agreement requiring that distributions be allocated on a pro rata basis between
Trusts of equal seniority.
 
DISSOLUTION OF ORIGINAL TRUSTS AND FORMATION OF NEW TRUSTS
 
     Assuming that the Original Trusts are classified as grantor trusts, the
dissolution of an Original Trust and distribution of interests in the related
Successor Trust will not be a taxable event to U.S. Certificateholders, who will
continue to be treated as owning their shares of the property transferred from
the Original Trust to the Successor Trust. If the Original Trusts are classified
as partnerships, a U.S. Certificateholder will be deemed to receive its share of
the Equipment Notes and any other property transferred by the Original Trust to
the Successor Trust in liquidation of its interest in the Original Trust in a
non-taxable transaction. In such case, the U.S. Certificateholder's basis in the
property so received will be equal to its basis in its interest in the Original
Trust, allocated among the various assets received based upon their bases in the
hands of the Original Trust and any unrealized appreciation or depreciation in
value in such assets, and the U.S. Certificateholder's holding period for the
Equipment Notes and other property will include the Original Trust's holding
period.
 
SALE OR OTHER DISPOSITION OF THE CERTIFICATES
 
     Upon the sale, exchange or other disposition of a Certificate, a U.S.
Certificateholder generally will recognize capital gain or loss (subject to the
possible recognition of ordinary income under the market discount rules) equal
to the difference between the amount realized on the disposition (other than any
amount attributable to accrued interest which will be taxable as ordinary income
and any amount attributable to any Deposits) and the U.S. Certificateholder's
adjusted tax basis in the Note Purchase Agreement, Equipment Notes and any other
property held by the corresponding Trust. Any gain or loss will be long-term
capital gain or loss to the extent attributable to property held by the Trust
for more than one year. In the case of individuals, estates and trusts, the
maximum rate of tax on net long-term capital gains generally is 20%. Any gain
with respect to an interest in a Deposit likely will be treated as ordinary
income. Notwithstanding the foregoing, if the Original Trusts are classified as
partnerships, gain or loss with respect to an interest in an Original Trust will
be calculated and characterized by reference to the U.S. Certificateholder's
adjusted tax basis and holding period for its interest in the Original Trust.
 
FOREIGN CERTIFICATEHOLDERS
 
     Subject to the discussion of backup withholding below, payments of
principal and interest on the Equipment Notes to, or on behalf of, any
beneficial owner of a Certificate that is not a U.S. Person will not be subject
to U.S. federal withholding tax provided that:
 
     - the non-U.S. Certificateholder does not actually or constructively own
       10% or more of the total combined voting power of all classes of stock of
       an owner participant or us;
 
     - the non-U.S. Certificateholder is not a bank receiving interest pursuant
       to a loan agreement entered into in the ordinary course of its trade or
       business, or a controlled foreign corporation for U.S. tax purposes that
       is related to an owner participant or us; and
 
     - certain certification requirements (including identification of the
       beneficial owner of the certificate) are complied with.
 
     Any capital gain realized upon the sale, exchange, retirement or other
disposition of a Certificate or upon receipt of premium paid on an Equipment
Note by a non-U.S. certificateholder will not be subject to U.S.
 
                                      S-87

<PAGE>   88
 
federal income or withholding taxes if (i) such gain is not effectively
connected with a U.S. trade or business of the holder and (ii) in the case of an
individual, such holder is not present in the United States for 183 days or more
in the taxable year of the sale, exchange, retirement or other disposition or
receipt.
 
BACKUP WITHHOLDING
 
     Payments made on the Certificates and proceeds from the sale of
Certificates will not be subject to a backup withholding tax of 31% unless, in
general, the Certificateholder fails to comply with certain reporting procedures
or otherwise fails to establish an exemption from such tax under applicable
provisions of the Code.
 
                             CERTAIN DELAWARE TAXES
 
     The Trustee is a Delaware banking corporation with its corporate trust
office in Delaware. In the opinion of Richards, Layton & Finger, Wilmington,
Delaware, counsel to the Trustee, under currently applicable law, assuming that
the Trusts will not be taxable as corporations, but, rather, will be classified
as grantor trusts under subpart E, Part I of Subchapter J of the Code or as
partnerships under Subchapter K of the Code, (i) the Trusts will not be subject
to any tax (including, without limitation, net or gross income, tangible or
intangible property, net worth, capital, franchise or doing business tax), fee
or other governmental charge under the laws of the State of Delaware or any
political subdivision thereof and (ii) Certificateholders that are not residents
of or otherwise subject to tax in Delaware will not be subject to any tax
(including, without limitation, net or gross income, tangible or intangible
property, net worth, capital, franchise or doing business tax), fee or other
governmental charge under the laws of the State of Delaware or any political
subdivision thereof as a result of purchasing, holding (including receiving
payments with respect to) or selling a Certificate.
 
     Neither the Trusts nor the Certificateholders will be indemnified for any
state or local taxes imposed on them, and the imposition of any such taxes on a
Trust could result in a reduction in the amounts available for distribution to
the Certificateholders of such Trust. In general, should a Certificateholder or
any Trust be subject to any state or local tax which would not be imposed if the
Trustee were located in a different jurisdiction in the United States, the
Trustee will resign and a new Trustee in such other jurisdiction will be
appointed.
 
                          CERTAIN ERISA CONSIDERATIONS
 
     The Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
imposes certain requirements on employee benefit plans subject to Title I of
ERISA ("ERISA Plans"), and on those persons who are fiduciaries with respect to
ERISA Plans. Investments by ERISA Plans are subject to ERISA's general fiduciary
requirements, including, but not limited to, the requirement of investment
prudence and diversification and the requirement that an ERISA Plan's
investments be made in accordance with the documents governing the Plan.
 
     Section 406 of ERISA and Section 4975 of the Code prohibit certain
transactions involving the assets of an ERISA Plan (as well as those plans that
are not subject to ERISA but which are subject to Section 4975 of the Code, such
as individual retirement accounts (together with ERISA Plans, "Plans")) and
certain persons (referred to as "parties in interest" or "disqualified persons")
having certain relationships to such Plans, unless a statutory or administrative
exemption is applicable to the transaction. A party in interest or disqualified
person who engages in a prohibited transaction may be subject to excise taxes
and other penalties and liabilities under ERISA and the Code.
 
     The Department of Labor has promulgated a regulation, 29 CFR Section
2510.3-101 (the "Plan Asset Regulation"), describing what constitutes the assets
of a Plan with respect to the Plan's investment in an entity for purposes of
ERISA and Section 4975 of the Code. Under the Plan Asset Regulation, if a Plan
invests (directly or indirectly) in a Certificate, the Plan's assets will
include both the Certificate and an undivided interest in each of the underlying
assets of the corresponding Trust, including the Equipment Notes held by such
Trust, unless it is established that equity participation in the Trust by
benefit plan investors (including but not limited to Plans and entities whose
underlying assets include Plan assets by reason of an employee benefit plan's
investment in the entity) is not "significant" within the meaning of the Plan
Asset Regulation. In this regard, the extent to which there is equity
participation in a particular Trust by, or on
 
                                      S-88

<PAGE>   89
 
behalf of, employee benefit plans will not be monitored. If the assets of a
Trust are deemed to constitute the assets of a Plan, transactions involving the
assets of such Trust could be subject to the prohibited transaction provisions
of ERISA and Section 4975 of the Code unless a statutory or administrative
exemption is applicable to the transaction.
 
     The fiduciary of a Plan that proposes to purchase and hold any Certificates
should consider, among other things, whether such purchase and holding may
involve (i) the direct or indirect extension of credit to a party in interest or
a disqualified person, (ii) the sale or exchange of any property between a Plan
and a party in interest or a disqualified person, and (iii) the transfer to, or
use by or for the benefit of, a party in interest or a disqualified person, of
any Plan assets. Such parties in interest or disqualified persons could include,
without limitation, Continental and its affiliates, the Owner Participants, the
Underwriters, the Trustees, the Escrow Agent, the Depositary, the Owner Trustees
and the Liquidity Provider. In addition, whether or not the assets of a Trust
are deemed to be Plan assets under the Plan Asset Regulation, if Certificates
are purchased by a Plan and Certificates of a subordinate Class are held by a
party in interest or a disqualified person with respect to such Plan, the
exercise by the holder of the subordinate Class of Certificates of its right to
purchase the senior Classes of Certificates upon the occurrence and during the
continuation of a Triggering Event could be considered to constitute a
prohibited transaction unless a statutory or administrative exemption were
applicable. Depending on the identity of the Plan fiduciary making the decision
to acquire or hold Certificates on behalf of a Plan, Prohibited Transaction
Class Exemption ("PTCE") 91-38 (relating to investments by bank collective
investment funds), PTCE 84-14 (relating to transactions effected by a "qualified
professional asset manager"), PTCE 95-60 (relating to investments by an
insurance company general account), PTCE 96-23 (relating to transactions
directed by an in-house professional asset manager) or PTCE 90-1 (relating to
investments by insurance company pooled separate accounts) (collectively, the
"Class Exemptions") could provide an exemption from the prohibited transaction
provisions of ERISA and Section 4975 of the Code. However, there can be no
assurance that any of these Class Exemptions or any other exemption will be
available with respect to any particular transaction involving the Certificates.
 
     Governmental plans and certain church plans, while not subject to the
fiduciary responsibility provisions of ERISA or the prohibited transaction
provisions of ERISA and Section 4975 of the Code, may nevertheless be subject to
state or other federal laws that are substantially similar to the foregoing
provisions of ERISA and the Code. Fiduciaries of any such plans should consult
with their counsel before purchasing any Certificates.
 
     Any Plan fiduciary which proposes to cause a Plan to purchase any
Certificates should consult with its counsel regarding the applicability of the
fiduciary responsibility and prohibited transaction provisions of ERISA and
Section 4975 of the Code to such an investment, and to confirm that such
purchase and holding will not constitute or result in a non-exempt prohibited
transaction or any other violation of an applicable requirement of ERISA.
 
     In addition to the Class Exemptions referred to above, an individual
exemption may apply to the purchase, holding and secondary market sale of Class
A-1 Certificates and Class A-2 Certificates by Plans, provided that certain
specified conditions are met. In particular, the Department of Labor has issued
individual administrative exemptions to the Underwriters which are substantially
the same as the administrative exemptions issued to The First Boston
Corporation, Prohibited Transaction Exemption 89-90 (54 Fed. Reg. 42,597
(1989)), as amended, and Morgan Stanley & Co. Incorporated, Prohibited
Transaction Exemption 90-24 (55 Fed. Reg. 20,548 (1990)), as amended (together,
the "Underwriter Exemption"). The Underwriter Exemption generally exempts from
the application of certain, but not all, of the prohibited transaction
provisions of Section 406 of ERISA and Section 4975 of the Code certain
transactions relating to the initial purchase, holding and subsequent secondary
market sale of pass through certificates which represent an interest in a trust
that holds secured credit instruments that bear interest or are purchased at a
discount in transactions by or between business entities (including equipment
notes secured by leases) and certain other assets, provided that certain
conditions set forth in the Underwriter Exemption are satisfied.
 
     The Underwriter Exemption sets forth a number of general and specific
conditions which must be satisfied for a transaction involving the initial
purchase, holding or secondary market sale of certificates representing a
beneficial ownership interest in a trust to be eligible for exemptive relief
thereunder. In
 
                                      S-89

<PAGE>   90
 
particular, the Underwriter Exemption requires that the acquisition of
certificates by a Plan be on terms that are at least as favorable to the Plan as
they would be in an arm's-length transaction with an unrelated party; the rights
and interests evidenced by the certificates not be subordinated to the rights
and interests evidenced by other certificates of the same trust estate; the
certificates at the time of acquisition by the Plan be rated in one of the three
highest generic rating categories by Moody's, Standard & Poor's, Duff & Phelps
Inc. or Fitch Investors Service, Inc.; and the investing Plan be an accredited
investor as defined in Rule 501(a) (1) of Regulation D of the Commission under
the Securities Act of 1933, as amended.
 
     In addition, the trust corpus generally must be invested in qualifying
receivables, such as the Equipment Notes, but may not in general include a
pre-funding account (except for a limited amount of pre-funding which is
invested in qualifying receivables within a limited period of time following the
closing not to exceed three months).
 
     With respect to the investment restrictions set forth in the Underwriter
Exemption, an investment in a Certificate will evidence both an interest in the
respective Original Trust as well as an interest in the Deposits held in escrow
by an Escrow Agent for the benefit of the Certificateholder. Under the terms of
the Escrow Agreements, the proceeds from the Offering of the Certificates of
each Class, to the extent not used to purchase Equipment Notes on the Issuance
Date, will be paid over by the Underwriters to the Depositary on behalf of the
Escrow Agent (for the benefit of such Certificateholders as the holders of the
Escrow Receipts) and will not constitute property of the Original Trusts. Under
the terms of each Escrow Agreement, the Escrow Agent will be irrevocably
instructed to enter into the Deposit Agreements with the Depositary and to
effect withdrawals upon the receipt of appropriate notice from the relevant
Trustee so as to enable such Trustee to purchase the identified Equipment Notes
on the terms and conditions set forth in the Note Purchase Agreement. Interest
on the Deposits relating to each Trust will be paid to the Certificateholders of
such Trust as Receiptholders through a Paying Agent appointed by the Escrow
Agent. Pending satisfaction of such conditions and withdrawal of such Deposits,
the Escrow Agent's rights with respect to the Deposits will remain plan assets
subject to the fiduciary responsibility and prohibited transaction provisions of
ERISA and Section 4975 of the Code.
 
     There can be no assurance that the Department of Labor would determine that
the Underwriter Exemption would be applicable to Class A-1 Certificates and
Class A-2 Certificates in these circumstances. In particular, the Department of
Labor might assert that the escrow arrangement is tantamount to an impermissible
pre-funding rendering the Underwriter Exemption inapplicable. In addition, even
if all of the conditions of the Underwriter Exemption are satisfied with respect
to the Class A-1 Certificates and Class A-2 Certificates, no assurance can be
given that the Underwriter Exemption would apply with respect to all
transactions involving the Class A-1 Certificates or the Class A-2 Certificates
or the assets of the Class A-1 Trust or the Class A-2 Trust. In particular, it
appears that the Underwriter Exemption would not apply to the purchase by Class
B Certificateholders, Class C-1 Certificateholders or Class C-2
Certificateholders of Class A-1 Certificates or Class A-2 Certificates in
connection with the exercise of their rights upon the occurrence and during the
continuance of a Triggering Event. Therefore, the fiduciary of a Plan
considering the purchase of a Class A-1 Certificate or Class A-2 Certificate
should consider the availability of the exemptive relief provided by the
Underwriter Exemption, as well as the availability of any other exemptions that
may be applicable, such as the Class Exemptions.
 
     The Underwriter Exemption does not apply to the Class B, Class C-1 or Class
C-2 Certificates. Therefore, the fiduciary of a Plan considering the purchase of
a Class B, Class C-1 or Class C-2 Certificate should consider the availability
of other exemptions, such as the Class Exemptions.
 
     Each person who acquires or accepts a Certificate or an interest therein,
will be deemed by such acquisition or acceptance to have represented and
warranted that either: (i) no Plan assets have been used to purchase such
Certificate or an interest therein or (ii) the purchase and holding of such
Certificate or an interest therein are exempt from the prohibited transaction
restrictions of ERISA and the Code pursuant to one or more prohibited
transaction statutory or administrative exemptions.
 
                                      S-90

<PAGE>   91
 
                                  UNDERWRITING
 
     Under the terms and subject to the conditions contained in an underwriting
agreement dated March 1, 2000, the Underwriters named below (collectively, the
"Underwriters") have agreed with the Company to purchase from the Trustee the
following respective principal amounts of the Class A-1, Class A-2, Class B,
Class C-1 and Class C-2 Certificates.
 

<TABLE>
<CAPTION>
                           PRINCIPAL AMOUNT   PRINCIPAL AMOUNT   PRINCIPAL AMOUNT   PRINCIPAL AMOUNT   PRINCIPAL AMOUNT
                             OF CLASS A-1       OF CLASS A-2        OF CLASS B        OF CLASS C-1       OF CLASS C-2
UNDERWRITER                  CERTIFICATES       CERTIFICATES       CERTIFICATES       CERTIFICATES       CERTIFICATES
-----------                ----------------   ----------------   ----------------   ----------------   ----------------
<S>                        <C>                <C>                <C>                <C>                <C>
Credit Suisse First Boston
  Corporation.............   $ 79,156,000       $ 23,572,000       $ 22,633,000       $14,127,000        $ 9,185,000
Morgan Stanley & Co.
  Incorporated............     79,156,000         23,570,000         22,629,000        14,123,000          9,183,000
Chase Securities Inc......     79,156,000         23,570,000         22,629,000        14,123,000          9,183,000
Merrill Lynch, Pierce,
  Fenner & Smith
  Incorporated............     79,156,000         23,570,000         22,629,000        14,123,000          9,183,000
Salomon Smith Barney
  Inc. ...................     79,156,000         23,570,000         22,629,000        14,123,000          9,183,000
                             ------------       ------------       ------------       -----------        -----------
         Total............   $395,780,000       $117,852,000       $113,149,000       $70,619,000        $45,917,000
                             ============       ============       ============       ===========        ===========
</TABLE>

 
     The underwriting agreement provides that the Underwriters will be obligated
to purchase all of the Certificates if any are purchased. If an Underwriter
defaults on its purchase commitment, the purchase commitments of non-defaulting
Underwriters may be increased or the offering of Certificates may be terminated.
 
     The aggregate proceeds from the sale of the Certificates will be
$743,317,000. Continental will pay the Underwriters a commission of $6,689,853.
Continental estimates that its expenses associated with the offer and sale of
the Certificates will be approximately $500,000.
 
     The Underwriters propose to offer the Certificates initially at the public
offering prices on the cover page of this Prospectus Supplement and to selling
group members at those prices less the concessions set forth below. The
Underwriters and selling group members may allow a discount to other
broker/dealers set forth below. After the initial public offering, the public
offering prices and concessions and discounts may be changed by the
Underwriters.
 

<TABLE>
<CAPTION>
                                                                 CONCESSION
PASS THROUGH                                                  TO SELLING GROUP     DISCOUNT TO
CERTIFICATE DESIGNATION                                           MEMBERS         BROKER/DEALERS
-----------------------                                       ----------------    --------------
<S>                                                           <C>                 <C>
2000-1A-1...................................................        0.55%              0.25%
2000-1A-2...................................................        0.55               0.25
2000-1B.....................................................        0.55               0.25
2000-1C-1...................................................        0.55               0.25
2000-1C-2...................................................        0.55               0.25
</TABLE>

 
     The Certificates are a new issue of securities with no established trading
market. One or more of the Underwriters intend to make a secondary market for
the Certificates. However, they are not obligated to do so and may discontinue
any market making at any time without notice. No assurance can be given as to
the liquidity of the trading market for the Certificates.
 
     Continental has agreed to indemnify the Underwriters against liabilities
under the Securities Act, or contribute to payments which the Underwriters may
be required to make in respect thereof.
 
     Credit Suisse First Boston, New York branch, an affiliate of Credit Suisse
First Boston Corporation, will act as the Depositary and the Liquidity Provider
with respect to the Class A-1, Class A-2 and Class B Trusts. MSCS, an affiliate
of Morgan Stanley & Co. Incorporated, will act as the Liquidity Provider with
respect to the Class C-1 and Class C-2 Trusts. The obligations of MSCS under the
Liquidity Facilities for the Class C-1 and Class C-2 Trusts will be fully and
unconditionally guaranteed by its parent company, MSDW, which is also the parent
company of Morgan Stanley & Co. Incorporated. From time to time, several of the
Underwriters or their affiliates perform investment banking and advisory
services for, and provide general
 
                                      S-91

<PAGE>   92
 
financing and banking services to, Continental and its affiliates. In
particular, Credit Suisse First Boston, New York branch, and The Chase Manhattan
Bank, an affiliate of Chase Securities Inc., are lenders to Continental.
 
     The Company expects that delivery of the Certificates will be made against
payment therefor on or about the closing date specified on the cover page of
this Prospectus Supplement, which will be the tenth business day following the
date of pricing of the Certificates. Under Rule 15c6-1 of the Commission under
the Exchange Act, trades in the secondary market generally are required to
settle in three business days, unless the parties to any such trade expressly
agree otherwise. Accordingly, purchasers who wish to trade Certificates on the
date of pricing or the next six succeeding business days will be required, by
virtue of the fact that the Certificates initially will settle in T+10, to
specify an alternate settlement cycle at the time of any trade to prevent a
failed settlement and should consult their own advisor.
 
     The Underwriters may engage in over-allotment, stabilizing transactions,
syndicate covering transactions and penalty bids in accordance with Regulation M
under the Exchange Act.
 
     - Over-allotment involves syndicate sales in excess of the offering size,
       which creates a syndicate short position.
 
     - Stabilizing transactions permit bids to purchase the underlying security
       so long as the stabilizing bids do not exceed a specified maximum.
 
     - Syndicate covering transactions involve purchases of the Certificates in
       the open market after the distribution has been completed in order to
       cover syndicate short positions.
 
     - Penalty bids permit the Underwriters to reclaim a selling concession from
       a syndicate member when the Certificates originally sold by such
       syndicate member are purchased in a syndicate covering transaction to
       cover syndicate short positions.
 
Such stabilizing transactions, syndicate covering transactions and penalty bids
may cause the prices of the Certificates to be higher than they would otherwise
be in the absence of such transactions. These transactions, if commenced, may be
discontinued at any time.
 
                          NOTICE TO CANADIAN RESIDENTS
 
RESALE RESTRICTIONS
 
     The distribution of the Certificates in Canada is being made only on a
private placement basis exempt from the requirement that the Company prepare and
file a prospectus with the securities regulatory authorities in each province
where trades of the Certificates are effected. Accordingly, any resale of the
Certificates in Canada must be made in accordance with applicable securities
laws which will vary depending on the relevant jurisdiction, and which may
require resales to be made in accordance with available statutory exemptions or
pursuant to a discretionary exemption granted by the applicable Canadian
securities regulatory authority. Purchasers are advised to seek legal advice
prior to any resale of the Certificates.
 
REPRESENTATIONS OF PURCHASERS
 
     Each purchaser of Certificates in Canada who receives a purchase
confirmation will be deemed to represent to the Company and the dealer from whom
such purchase confirmation is received that (i) such purchaser is entitled under
applicable provincial securities laws to purchase such Certificates without the
benefit of a prospectus qualified under such securities laws, (ii) where
required by law, that such purchaser is purchasing as principal and not as
agent, and (iii) such purchase has reviewed the text above under "Resale
Restrictions".
 
                                      S-92

<PAGE>   93
 
RIGHTS OF ACTION (ONTARIO PURCHASERS)
 
     The securities being offered are those of a foreign issuer and Ontario
purchasers will not receive the contractual right of action prescribed by
Ontario securities law. As a result, Ontario purchasers must rely on other
remedies that may be available, including common law rights of action for
damages or rescission or rights of action under the civil liability provisions
of the U.S. federal securities laws.
 
ENFORCEMENT OF LEGAL RIGHTS
 
     All of the issuer's directors and officers as well as the experts named
herein may be located outside of Canada and, as a result, it may not be possible
for Canadian purchasers to effect service of process within Canada upon the
issuer or such persons. All or a substantial portion of the assets of the issuer
and such persons may be located outside of Canada and, as a result, it may not
be possible to satisfy a judgment against the issuer or such persons in Canada
or to enforce a judgment obtained in Canadian courts against such issuer or
persons outside of Canada.
 
NOTICE TO BRITISH COLUMBIA RESIDENTS
 
     A purchaser of Certificates to whom the Securities Act (British Columbia)
applies is advised that such purchaser is required to file with the British
Columbia Securities Commission a report within ten days of the sale of any
Certificates acquired by such purchaser pursuant to this offering. Such report
must be in the form attached to British Columbia Securities Commission Blanket
Order BOR #95/17, a copy of which may be obtained from the Company. Only one
such report must be filed in respect of Certificates acquired on the same date
and under the same prospectus exemption.
 
TAXATION AND ELIGIBILITY FOR INVESTMENT
 
     Canadian purchasers of Certificates should consult their own legal and tax
advisors with respect to the tax consequences of an investment in the
Certificates in their particular circumstances and with respect to the
eligibility of the Certificates for investment by the purchaser under relevant
Canadian legislation.
 
                                 LEGAL MATTERS
 
     The validity of the Certificates is being passed upon for Continental by
Hughes Hubbard & Reed LLP, New York, New York, and for the Underwriters by
Milbank, Tweed, Hadley & McCloy LLP, New York, New York. Milbank, Tweed, Hadley
& McCloy LLP will rely on the opinion of Richards, Layton & Finger, Wilmington,
Delaware, counsel for Wilmington Trust Company, as Trustee, as to matters of
Delaware law relating to the Pass Through Trust Agreements.
 
                                    EXPERTS
 
     The consolidated financial statements (including the financial statement
schedule) of Continental Airlines, Inc. appearing in Continental Airlines,
Inc.'s Annual Report (Form 10-K) for the year ended December 31, 1999 have been
audited by Ernst & Young LLP, independent auditors, as set forth in their
reports thereon included therein and incorporated herein by reference. Such
consolidated financial statements (including the financial statement schedule)
are incorporated herein by reference in reliance upon such reports given upon
the authority of such firm as experts in accounting and auditing.
 
     The references to AISI, AS and MBA, and to their respective appraisal
reports, dated as of February 23, February 23 and January 17, 2000,
respectively, are included herein in reliance upon the authority of each such
firm as an expert with respect to the matters contained in its appraisal report.
 
                                      S-93

<PAGE>   94
 
                INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
 
     The following documents filed by Continental with the Commission (File No.
0-9781) are hereby incorporated by reference in this Prospectus Supplement: (i)
Continental's Annual Report on Form 10-K for the year ended December 31, 1999,
filed on February 11, 2000, and (ii) Continental's Current Reports on Form 8-K,
filed on January 18 and February 8, 2000.
 
     Reference is made to the information under "Incorporation of Certain
Documents by Reference" in the accompanying Prospectus. All documents filed
under the Exchange Act with the Commission prior to January 1, 2000 and
incorporated by reference in the Prospectus have been superseded by the
above-listed documents and shall not be deemed to constitute a part of the
Prospectus or this Prospectus Supplement.
 
                                      S-94

<PAGE>   95
 
                          APPENDIX I -- INDEX OF TERMS
 

<TABLE>
<CAPTION>
                                        PAGE
                                        ----
<S>                                     <C>
Adjusted Expected Distributions.......  S-59
Administration Expenses...............  S-59
Aggregate LTV Collateral Amount.......  S-60
Air France............................  S-27
Aircraft..............................  S-62
Aircraft Operative Agreements.........  S-44
AISI..................................  S-63
Alaska Air............................  S-26
Alitalia..............................  S-27
America West..........................  S-26
Appraised Current Market Value........  S-61
Appraisers............................  S-63
AS....................................  S-63
Assumed Aircraft Value................  S-69
Assumed Amortization Schedule.........  S-33
Assumed Appraised Value...............  S-42
Average Life Date.....................  S-68
Base Rate.............................  S-53
Basic Agreement.......................  S-28
Boeing................................  S-64
Bush Intercontinental.................  S-25
Business Day..........................  S-33
Cash Collateral Account...............  S-51
Cede..................................  S-46
Certificate Account...................  S-32
Certificate Owner.....................  S-46
Certificateholders....................  S-29
Certificates..........................  S-28
Class A-1 Certificates................  S-28
Class A-1 Trust.......................  S-28
Class A-1 Trustee.....................  S-29
Class A-2 Certificates................  S-28
Class A-2 Trust.......................  S-28
Class A-2 Trustee.....................  S-29
Class B Certificates..................  S-28
Class B Trust.........................  S-28
Class B Trustee.......................  S-29
Class C-1 Certificates................  S-28
Class C-1 Trust.......................  S-28
Class C-1 Trustee.....................  S-29
Class C-2 Certificates................  S-28
Class C-2 Trust.......................  S-28
Class C-2 Trustee.....................  S-29
Class D Certificates..................  S-45
Class D Trust.........................  S-45
Class D Trustee.......................  S-30
Class Exemptions......................  S-89
CMI...................................  S-25
Code..................................  S-40
Commission............................  S-28
Company...............................  S-25
Continental...........................  S-25
Controlling Party.....................  S-10
Convention............................  S-77
</TABLE>

 

<TABLE>
<CAPTION>
                                        PAGE
                                        ----
<S>                                     <C>
CSFB..................................  S-48
Current Distribution Date.............  S-58
Current Pool Balance..................  S-60
Debt Balance..........................  S-78
default...............................  S-37
Delivery Period.......................  S-64
Delivery Period Termination Date......  S-47
Deposit...............................  S-47
Deposit Agreement.....................  S-47
Depositary............................  S-48
Depreciation Assumption...............  S-70
disqualified persons..................  S-88
Distribution Date.....................  S-29
DOJ...................................  S-21
DOT...................................  S-22
Downgrade Drawing.....................  S-51
DTC...................................  S-46
DTC Participants......................  S-46
Equipment Notes.......................  S-65
ERISA.................................  S-88
ERISA Plans...........................  S-88
Escrow Agent..........................  S-49
Escrow Agreements.....................  S-49
Escrow Receipts.......................  S-49
Event of Loss.........................  S-81
Excusable Delay.......................  S-64
Expected Distributions................  S-58
Express...............................  S-25
FAA...................................  S-22
Final Distributions...................  S-57
Final Drawing.........................  S-52
Final Maturity Date...................  S-31
Gulfstream............................  S-26
H.15(519).............................  S-68
Hawaiian..............................  S-26
Hopkins International.................  S-25
Horizon...............................  S-26
Indenture Default.....................  S-35
Indentures............................  S-41
Intercreditor Agreement...............  S-56
Interest Drawings.....................  S-50
IRS...................................  S-84
Issuance Date.........................  S-52
Kennedy...............................  S-22
KLM...................................  S-27
LaGuardia.............................  S-22
Lease.................................  S-76
Lease Event of Default................  S-35
Lease Payment Date....................  S-77
Leased Aircraft.......................  S-41
Leased Aircraft Indenture.............  S-41
Leased Aircraft Trustee...............  S-65
LIBOR.................................  S-53
Liquidity Event of Default............  S-54
</TABLE>

 
                                       I-1

<PAGE>   96
 

<TABLE>
<CAPTION>
                                        PAGE
                                        ----
<S>                                     <C>
Liquidity Expenses....................  S-58
Liquidity Facility....................  S-50
Liquidity Obligations.................  S-58
Liquidity Provider....................  S-50
Loan Trustees.........................  S-66
LTV Appraisal.........................  S-61
LTV Collateral Amount.................  S-60
LTV Ratio.............................  S-60
LTVs..................................   S-7
Make-Whole Premium....................  S-67
Mandatory Document Terms..............  S-44
Mandatory Economic Terms..............  S-42
Maximum Available Commitment..........  S-50
MBA...................................  S-63
Mesaba................................  S-26
Minimum Sale Price....................  S-57
Moody's...............................  S-48
MSCS..................................  S-50
MSDW..................................  S-50
most recent H.15(519).................  S-68
New Trustee...........................  S-45
Newark................................  S-25
Non-Extension Drawing.................  S-52
Non-Performing Equipment Notes........  S-59
Northwest.............................  S-20
Northwest Alliance....................  S-20
Note Holders..........................  S-44
Note Purchase Agreement...............  S-41
O'Hare................................  S-22
Offering..............................  S-45
Original Trustee......................  S-45
Original Trusts.......................  S-45
Owned Aircraft........................  S-41
Owned Aircraft Indenture..............  S-41
Owned Aircraft Trustee................  S-65
Owner Participant.....................  S-65
Owner Trustee.........................  S-65
Participation Agreement...............  S-41
parties in interest...................  S-88
Pass Through Trust Agreements.........  S-28
Paying Agent..........................  S-49
Paying Agent Account..................  S-32
Performing Equipment Note.............  S-51
Plan Asset Regulation.................  S-88
Plans.................................  S-88
Pool Balance..........................  S-33
Pool Factor...........................  S-33
Prospectus............................  S-28
</TABLE>

 

<TABLE>
<CAPTION>
                                        PAGE
                                        ----
<S>                                     <C>
PTC Event of Default..................  S-38
PTCE..................................  S-89
Rating Agencies.......................  S-48
Reagan National.......................  S-22
Receiptholder.........................  S-49
Regular Distribution Dates............  S-31
Remaining Weighted Average Life.......  S-68
Replacement Facility..................  S-51
Required Amount.......................  S-50
Scheduled Payments....................  S-31
Section 1110..........................  S-74
Section 1110 Period...................  S-51
Series A-1 Equipment Notes............  S-65
Series A-2 Equipment Notes............  S-65
Series B Equipment Notes..............  S-65
Series C-1 Equipment Notes............  S-65
Series C-2 Equipment Notes............  S-65
Series D Equipment Notes..............  S-65
Special Distribution Date.............  S-32
Special Payment.......................  S-32
Special Payments Account..............  S-32
Standard & Poor's.....................  S-48
Stated Interest Rates.................  S-50
Subordinated Certificateholders.......  S-86
Subordinated Certificates.............  S-86
Subordinated Trusts...................  S-86
Subordination Agent...................  S-56
Substitute Aircraft...................  S-64
Successor Trust.......................  S-45
Tax Counsel...........................  S-84
Termination Notice....................  S-54
Threshold Rating......................  S-52
Transfer Date.........................  S-45
Transportation Code...................  S-38
Treasury Yield........................  S-68
Triggering Event......................  S-29
Trust Agreements......................  S-65
Trust Indenture Act...................  S-39
Trust Property........................  S-28
Trust Supplement......................  S-28
Trustee...............................  S-28
Trusts................................  S-28
U.S. Certificateholders...............  S-84
U.S. Persons..........................  S-84
Underwriter Exemption.................  S-89
Underwriters..........................  S-91
Virgin................................  S-27
</TABLE>

 
                                       I-2

<PAGE>   97
                        APPENDIX II - APPRAISAL LETTERS

[AIRCRAFT INFORMATION SERVICES, INC. LOGO]



23 February 2000


Continental Airlines
1600 Smith Street HQSFN
Houston, TX 77002

Subject:  AISI Report No.: A0S007BVO
          AISI Sight Unseen New Aircraft Base Value Appraisal, Sixteen
          B737-800, Three B757-200Etop and Four B767-400ER Aircraft.

Reference:     (a) Morgan Stanley Memorandum 04 January 2000
               (b) Credit Suisse First Boston fax 05 January 2000
               (c) Email messages 07/12/13 January 2000
               (d) Email message 22 February 2000

Dear Gentlemen:

Aircraft Information Services, Inc. (AISI) is pleased to offer Continental
Airlines our opinion of the sight unseen base market value of various new
aircraft scheduled to be delivered from the manufacturer to Continental
Airlines between February 2000 and December 2000 as listed and defined in 
Table I.

1.   METHODOLOGY AND DEFINITIONS

The method used by AISI in its valuation of the Aircraft was based both on a
review of information and Aircraft specifications supplied by the client and
also on a review of present and past market conditions, various expert opinions
(such as aircraft brokers and financiers) and information contained in AISI's
databases that help determine aircraft availability and price data and thus
arrive at the appraised base values for the new aircraft to be delivered to
Continental Airlines.

The standard terms of reference for commercial aircraft value are 'half-life
base market value' and 'half-life current market value' of an 'average'
aircraft. Base value is a theoretical value that assumes a balanced market
while current market value is the value in the real market; both assume a
hypothetical average aircraft condition. AISI value definitions are consistent
with the current definitions of the International Society of Transport Aircraft
Trading (ISTAT). AISI is a member of that organization and employs an ISTAT
Certified and Senior Certified Aircraft Appraiser.

<PAGE>   98
                                                                     [AISI LOGO]


23 February 2000
AISI File No. A0S007BVO
Page -2-


AISI defines a 'base value' as that of a transaction between equally willing and
informed buyer and seller, neither under compulsion to buy or sell, for a single
unit cash transaction with no hidden value or liability, and with supply and
demand of the sale item roughly in balance. Base values are typically given for
aircraft in 'new' condition, 'average half-life' condition, or in a specifically
described condition unique to a single aircraft at a specific time. An 'average'
aircraft is an operable airworthy aircraft in average physical condition and
with average accumulated flight hours and cycles, with clear title and standard
unrestricted certificate of airworthiness, and registered in an authority which
does not represent a penalty to aircraft value or liquidity, with no damage
history and with inventory configuration and level of modification which is
normal for its intended use and age. AISI assumes average condition unless
otherwise specified in this report. 'Half-life' condition assumes that every
component or maintenance service which has a prescribed interval that determines
its service life, overhaul interval or interval between maintenance services, is
at a condition which is one-half of the total interval. It should be noted that
AISI and ISTAT value definitions apply to a transaction involving a single
aircraft, and that transactions involving more than one aircraft are often
executed at considerable and highly variable discounts to a single aircraft
price, for a variety of reasons relating to an individual buyer or seller.

AISI defines a 'current market value', which is synonymous with the older term
'fair market value' as that value which reflects the real market conditions,
whether at, above or below the base value conditions. Assumption of a single
unit sale and definitions of aircraft condition, buyer/seller qualifications and
type of transaction remain unchanged from that of base value. Current market
value takes into consideration the status of the economy in which the aircraft
is used, the status of supply and demand for the particular aircraft type, the
value of recent transactions and the opinions of informed buyers and sellers.
Current market value assumes that there is no short term time constraint to buy
or sell.

AISI encourages the use of base values to consider historical trends, to
establish a consistent baseline for long term value comparisons and future value
considerations, or to consider how actual market values vary from theoretical
base values. Base values are less volatile than current market values and tend
to diminish regularly with time. Base values are normally inappropriate to
determine near term values. AISI encourages the use of current market values to
consider the probable near term value of an aircraft.


2.   VALUATION

The aircraft are valued predicated upon the reference (a), (b), (c) and (d) data
which describes the aircraft MTOW, any engine upgrades, any added fuel capacity,
and any added avionics or interior upgrades.

<PAGE>   99
                                      [AIRCRAFT INFORMATION SERVICES, INC. LOGO]

23 February 2000
AISI File No. A0S007BVO
Page -3-

Following is AISI's opinion of the base market value for the subject aircraft on
their respective scheduled delivery dates in current US Dollars. Valuations are
presented in Table 1 subject to the assumptions, definitions and disclaimers
herein.

Unless otherwise agreed by Aircraft Information Services, Inc. (AISI) in
writing, this report shall be for the sole use of the client/addressee. This
report is offered as a fair and unbiased assessment of the subject aircraft.
AISI has no past, present, or anticipated future interest in the subject
aircraft. The conclusions and opinions expressed in this report are based on
published information, information provided by others, reasonable
interpretations and calculations thereof and are given in good faith. Such
conclusions and opinions are judgments that reflect conditions and values which
are current at the time of this report. The values and conditions reported upon
are subject to any subsequent change. AISI shall not be liable to any party for
damages arising out of reliance or alleged reliance on this report, or for any
parties action or failure to act as a result of reliance or alleged reliance on
this report.



Sincerely,

AIRCRAFT INFORMATION SERVICES, INC.


/s/John D. McNicol

John D. McNicol
Vice President
Appraisals & Forecasts


<PAGE>   100
                                                                          [LOGO]

                  CONTINENTAL AIRLINES - AISI FILE #A0S007BVO
                               February 23, 2000

<TABLE>
<CAPTION>
                                    TABLE I

  Scheduled               Aircraft              Expected        
Manufacturer's             Serial             Registration        New Delivery Base Value
Delivery Date              Number                Number              Current US Dollars
-----------------------------------------------------------------------------------------
<S>                     <C>                  <C>                 <C>
                  B737-800, CFM56-7B26 ENGINES, 174,200LB MTOW

Jun-00                     30429                 N24202                  $48,950,000
Jun-00                     30613                 N33203                  $48,950,000
Jul-00                     30576                 N35204                  $49,060,000
Jul-00                     30577                 N27205                  $49,060,000
Jul-00                     30578                 N11206                  $49,060,000
Aug-00                     30579                 N36207                  $49,180,000
Aug-00                     30580                 N26208                  $49,180,000
Aug-00                     30581                 N33209                  $49,180,000
Sep-00                     30582                 N73251                  $49,290,000
Sep-00                     30583                 N37252                  $49,290,000
Sep-00                     30584                 N37253                  $49,290,000
Sep-00                     30779                 N76254                  $49,290,000
Oct-00                     30610                 N37255                  $49,400,000
Oct-00                     30611                 N73256                  $49,400,000
Nov-00                     30612                 N38257                  $49,520,000
Nov-00                     30802                 N77258                  $49,520,000
-----------------------------------------------------------------------------------------
               B757-200ETOP, RB211-535E4B ENGINES, 255,000LB MTOW

Feb-00                     30352                 N17139                  $60,520,000
Feb-00                     30353                 N41140                  $60,520,000
Jun-00                     30354                 N19141                  $61,080,000
-----------------------------------------------------------------------------------------
                B767-400ER, CF6-80C2B8F ENGINES, 450,000LB MTOW

Jul-00                     29446                 N66051                 $106,970,000
Aug-00                     29447                 N67052                 $107,210,000
Oct-00                     29448                 N59053                 $107,710,000
Dec-00                     29449                 N76054                 $108,200,000
-----------------------------------------------------------------------------------------
</TABLE>


<PAGE>   101
                         [AvSolutions, Inc. Letterhead]

                                                               February 23, 2000

Mr. Gerry Laderman
Senior Vice President, Corporate Finance
Continental Airlines, Inc.
1600 Smith Street  HQ-SFN
Houston, Texas 77002


Dear Mr. Laderman:

     AvSOLUTIONS is pleased to provide this opinion on the base value, as of
February 2000, of sixteen Boeing 737-800, three Boeing 757-200 and four Boeing
767-400ER aircraft (the aircraft). The Boeing 737-800 aircraft are powered by
CFM International CFM56-7B26 engines. The Boeing 757-200 aircraft are powered
by Rolls-Royce RB211-535E4B engines. The Boeing 767-400ER aircraft are powered
by General Electric CF6-80C2B8F engines. The total of twenty-three aircraft will
be delivered new to Continental Airlines, Inc. from the first quarter of 2000
through the fourth quarter of 2000. A listing of the particular aircraft is
provided as attachment 1 of this document.

     Set forth below is a summary of the methodology, considerations and
assumptions utilized in this appraisal.

BASE VALUE

     Base value is the appraiser's opinion of the underlying economic value of
an aircraft in an open, unrestricted, stable market environment with a
reasonable balance of supply and demand, and assumes full consideration of its
"highest and best use". An aircraft's base value is founded in the historical
trend of values and in the projection of future value trends and presumes an
arm's length, cash transaction between willing, able and knowledge parties,
acting prudently, with an absence of duress and with a reasonable period of time
available for marketing.

CURRENT FAIR MARKET VALUE

     According to the International Society of Transport Aircraft Trading's
(ISTAT) definition of Fair Market Value (FMV), to which AvSOLUTIONS subscribes,
the quoted FMV is the appraiser's opinion of the most likely trading price that
may be generated for an aircraft under the market circumstances that are
perceived to exist at the time in question. The fair market value assumes that
the aircraft is valued for its highest and best use, that the parties to the
hypothetical sales transaction are willing, able, prudent and knowledgeable, and
under no unusual pressure for a prompt sale, and that the transaction would be
negotiated in an open and unrestricted market on an arm's length basis, for cash
equivalent consideration, and given an adequate amount of time for effective
market exposure to prospective buyers, which AvSOLUTIONS considers to be ten to
twenty months.



<PAGE>   102
                                                              [AvSOLUTIONS LOGO]

Page 2
Continental Airlines, Inc.

APPRAISAL METHODOLOGY

     The method employed by AvSOLUTIONS to appraise the current and future
values of aircraft and the associated equipment addresses the factors that
influence the market value of an aircraft, such as its age, condition,
configuration, the population of similar aircraft, similar aircraft on the
market, operating costs, cost to acquire a new aircraft, and the state of
demand for transportation services.

     To achieve this objective, cross-sectional data concerning the values of
aircraft in each of several general categories is collected and analyzed.
Cross-sectional data is then postulated and compared with reported market
values at a specified point in time. Such data reflects the effect of
deterioration in aircraft performance due to usage and exposure to the
elements, as well as the effect of obsolescence due to the evolutionary
development and implementation of new designs and materials.

     The product of the analysis identifies the relationship between the value
of each aircraft and its characteristics, such as age, model designation,
service configuration and engine type. Once the relationship is identified, one
can then postulate the effects of the difference between the economic
circumstances at the time when the cross-sectional data were collected and the
current situation. Therefore, if one can determine the current value of an
aircraft in one category, it is possible to estimate the current values of all
aircraft in that category.

     The manufacturer and size of the aircraft usually determine the specific
category to which it is assigned. Segregating the world airplane fleet in this
manner accommodates the potential effects of different size and different
design philosophies.

     The variability of the data used by AvSOLUTIONS to determine the current
and future market values implies that the actual value realized will fall
within a range of values. Therefore, if a contemplated value falls within the
specified confidence range, AvSOLUTIONS cannot reject the hypothesis that it is
a reasonable representation of the current market situation.

LIMITING CONDITIONS AND ASSUMPTIONS

     In order to conduct this valuation, AvSOLUTIONS is solely relying on
information as supplied by Continental Airlines, Inc. or Morgan Stanley Dean
Witter or Credit Suisse First Boston Corporation, and from data within
AvSOLUTIONS' own database. In determining the base value of the subject
aircraft, the following assumptions have been researched and determined:


<PAGE>   103
                                                              [AvSOLUTIONS LOGO]


Page 3
Continental Airlines, Inc.


1.  AvSOLUTIONS has not inspected these aircraft or their maintenance records;
accordingly, AvSOLUTIONS cannot attest to their specific location or condition.

2.  The aircraft will be delivered new to Continental Airlines, Inc. between
the first quarter of 2000 and the fourth quarter of 2000.

3.  The aircraft will be certified, maintained and operated under United States
Federal Aviation Regulation (FAR) part 121.

4.  All mandatory inspections and Airworthiness Directives have been complied
with.

5.  The aircraft have no damage history.

6.  The aircraft are in good condition.

7.  AvSOLUTIONS considers the economic useful life of these aircraft to be at
least 32 years.

     Based upon the above methodology, considerations and assumptions, it is
AvSOLUTIONS' opinion that the base value of each aircraft is as listed in
attachment 1.

<PAGE>   104
                                                              [AvSOLUTIONS LOGO]

PAGE 4
CONTINENTAL AIRLINES, INC.


STATEMENT OF INDEPENDENCE

     This appraisal report represents the opinion of AvSOLUTIONS, and is
intended to be advisory in nature. Therefore, AvSOLUTIONS assumes no
responsibility or legal liability for actions taken or not taken by the Client
or any other party with regard to the subject aircraft. By accepting this
report, the Client agrees that AvSOLUTIONS shall bear no responsibility or legal
liability regarding this report. Further, this report is prepared for the
exclusive use of the Client and shall not be provided to other parties without
the Client's express consent.

     Aviation Solutions Inc. (AvSOLUTIONS) hereby states that this valuation
report has been independently prepared and fairly represents the subject
aircraft and AvSOLUTIONS' opinion of their values. Aviation Solutions Inc.
(AvSOLUTIONS) further states that it has no present or contemplated future
interest or association with the subject aircraft.


Signed,

/s/ Bryant Lynch

Bryant Lynch
Manager, Commercial Appraisals

<PAGE>   105
                                                             [AV SOLUTIONS LOGO]


                                  ATTACHMENT 1

                            EETC COLLATERAL SUMMARY

                                    page one




<TABLE>
<CAPTION>
============================================================================================
<S>         <C>               <C>        <C>          <C>           <C>          <C>

Aircraft                      Serial     Delivery                     MTOW
Number      Aircraft          Number      Qtr/Yr      Engines       (pounds)     Base Value
____________________________________________________________________________________________
  1         Boeing 737-800    30429       2/2000       CFM56-7B26    174,200     $48,141,000
____________________________________________________________________________________________
  2         Boeing 737-800    30613       2/2000       CFM56-7B26    174,200     $48,141,000
____________________________________________________________________________________________
  3         Boeing 737-800    30576       3/2000       CFM56-7B26    174,200     $48,454,000
____________________________________________________________________________________________
  4         Boeing 737-800    30577       3/2000       CFM56-7B26    174,200     $48,454,000
____________________________________________________________________________________________
  5         Boeing 737-800    30578       3/2000       CFM56-7B26    174,200     $48,454,000
____________________________________________________________________________________________
  6         Boeing 737-800    30579       3/2000       CFM56-7B26    174,200     $48,454,000
____________________________________________________________________________________________
  7         Boeing 737-800    30580       3/2000       CFM56-7B26    174,200     $48,454,000
____________________________________________________________________________________________
  8         Boeing 737-800    30581       3/2000       CFM56-7B26    174,200     $48,454,000
____________________________________________________________________________________________
  9         Boeing 737-800    30582       3/2000       CFM56-7B26    174,200     $48,454,000
____________________________________________________________________________________________
  10        Boeing 737-800    30583       3/2000       CFM56-7B26    174,200     $48,454,000
____________________________________________________________________________________________
  11        Boeing 737-800    30584       3/2000       CFM56-7B26    174,200     $48,454,000
____________________________________________________________________________________________
  12        Boeing 737-800    30779       3/2000       CFM56-7B26    174,200     $48,454,000
____________________________________________________________________________________________
  13        Boeing 737-800    30610       4/2000       CFM56-7B26    174,200     $48,770,000
____________________________________________________________________________________________
  14        Boeing 737-800    30611       4/2000       CFM56-7B26    174,200     $48,770,000
____________________________________________________________________________________________
  15        Boeing 737-800    30612       4/2000       CFM56-7B26    174,200     $48,770,000
____________________________________________________________________________________________
  16        Boeing 737-800    30802       4/2000       CFM56-7B26    174,200     $48,770,000
____________________________________________________________________________________________
</TABLE>





<TABLE>
<CAPTION>
============================================================================================
<S>         <C>               <C>        <C>          <C>           <C>          <C>

Aircraft                      Serial     Delivery                     MTOW
Number      Aircraft          Number      Qtr/Yr      Engines       (pounds)     Base Value
____________________________________________________________________________________________
  17        Boeing 757-200    30352       1/2000      RB211-535E4B   255,000     $59,239,000
____________________________________________________________________________________________
  18        Boeing 757-200    30353       1/2000      RB211-535E4B   255,000     $59,239,000
____________________________________________________________________________________________
  19        Boeing 757-200    30354       2/2000      RB211-535E4B   255,000     $59,625,000
____________________________________________________________________________________________
</TABLE>


<PAGE>   106
                                                              [AvSOLUTIONS LOGO]


                                  ATTACHMENT 1
                            EETC COLLATERAL SUMMARY


                                    page two




<TABLE>
<CAPTION>
==================================================================================================================
Aircraft       Aircraft            Serial         Delivery       Engines             MTOW           Base Value
 Number                            Number          Qtr/Yr                          (pounds) 
------------------------------------------------------------------------------------------------------------------
<S>            <C>                 <C>            <C>            <C>                <C>             <C>
  20           Boeing 767-400ER    29446          3/2000         CF6-80C2B8F        450,000         $107,028,000
  21           Boeing 767-400ER    29447          3/2000         CF6-80C2B8F        450,000         $107,028,000
  22           Boeing 767-400ER    29448          4/2000         CF6-80C2B8F        450,000         $107,913,000
  23           Boeing 767-400ER    29449          4/2000         CF6-80C2B8F        450,000         $107,913,000
</TABLE>



<PAGE>   107
                              MORTEN BEYER & AGNEW
-----------------------------------------------------------------------------

                            AVIATION CONSULTING FIRM

                                 Appraisal of
                          23 Aircraft (2000-1 EETC)

                                 PREPARED FOR:

                              Continental Airlines



                               JANUARY 17, 2000



<TABLE>
<S>                                     <C>
   Washington, D.C.                           London

8180 Greensboro Drive                   Lahinch 62, Lashmere

     Suite 1000                              Copthorne

McLean, Virginia 22102                      West Sussex

  Phone +703 847 6598                   Phone +44 1342 716248

   Fax +703 847 1911                     Fax +44 1342 718967
</TABLE>





[ MBA LOGO ]

<PAGE>   108
I.  INTRODUCTION AND EXECUTIVE SUMMARY

MORTEN BEYER AND AGNEW (MBA) has been retained by Continental Airlines, Inc. to
determine the Current Base Value (CBV) of 23 Boeing aircraft to be delivered
new over the next eleven months. The aircraft are further identified in Section
II of this report.

MBA uses the definition of certain terms, such as CMV and Base Value (BV), as
promulgated by the International Society of Transport Aircraft Trading (ISTAT),
a non-profit association of management personnel from banks, leasing companies,
airlines, manufacturers, appraisers, brokers, and others who have a vested
interest in the commercial aviation industry.

ISTAT defines Market Value (MV) as the appraiser's opinion of the most likely
trading price that may be generated for an aircraft under market conditions
that are perceived to exist at the time in question. MV assumes that the
aircraft is valued for its highest, best use; that the parties to the
hypothetical sale are willing, able, prudent and knowledgeable and under no
unusual pressure for a prompt sale; and that the transaction would be
negotiated in an open and unrestricted market on an arm's-length basis, for
cash or equivalent consideration, and given an adequate amount of time for
effective exposure to prospective buyers.

The ISTAT definition of Base Value (BV) has, essentially, the same elements of
MV except that the market circumstances are assumed to be in a reasonable state
of equilibrium. Thus, BV pertains to an idealized aircraft and market
combination, but will not necessarily reflect the actual MV of the aircraft in
question. BV is founded in the historical trend of values and is generally used
to analyze historical values or to project future values. The Current Base
Value is the BV at the time of this opinion, effective upon the defined
delivery dates of the subject aircraft assets.

<PAGE>   109
II. CURRENT MARKET CONDITIONS

[PHOTO OF PLANE}    BOEING 737-700/800 SERIES

NUMBER OF OPERATORS:    30 
AIRCRAFT ORDERED:       520
AIRCRAFT DELIVERED      171

Boeing began replacing the trio of B-737-300/-400/-500s with upgraded new
generation versions beginning with B-737-700 in 1997. Southwest Airlines' order
for 63 of the series officially launched the program in late 1993, and new
orders increased rapidly. Boeing ramped-up production to 278 last year, but will
have to cut again as orders are filled in 2000 and not being replaced. 1999 new
orders fell to 265.                                      


The fuselage of the new aircraft mirror that of the old (which were out-growths
of the original -100s and -200s). Upgraded avionics, a new wing design, and
other improvements combine to increase range, efficiency, and performance in
general. The CFM56-7 is the exclusive engine for the 3rd generation. However,
Boeing is losing market share to the more comfortable, wider A320 family.



Prospects for the 3rd generation B-737 jets were thought to be considerably
enhanced by the discontinuation of the MD-80/-90 series. The MD-95 has been
adopted by Boeing as its 100-seat competitor under the aegis of B-717, competing
with its own B-737-600. Airbus is becoming more aggressive with its
A318/319/320/321 high-tech series and winning an increasing share of orders.
During 1998 Airbus had 437 narrowbody orders. Boeing had 516, including 28
MD-80/-90s. In 1999, Airbus overwhelmed Boeing with 408 narrowbody orders to
Boeing's 106.


As the industry passes the peak of the current cycle, the prospects for a
downturn increase, together with deferrals and cancellations of orders for both
manufacturers.















 2

<PAGE>   110

[PHOTO OF PLANE]      BOEING 757-200

NUMBER OF OPERATORS:       69
AIRCRAFT ORDERED:        1035
AIRCRAFT DELIVERED:       880

The 757 was conceived in 1978 as the successor to the 727. First deliveries
took place in late 1982 as the 727 production was terminated. The aircraft was
somewhat slow in penetrating the market, as it came on-line in the depression
of the early 1980s, but has seen accelerating popularity in the late 1980s and
90s. The aircraft is offered in two engine configurations, Rolls Royce and
Pratt & Whitney. The aircraft's popularity has increased as airlines have grown
to appreciate its fuel economy and operating efficiency.

The 757's capabilities have grown in the 18 years it has been produced, and it
is currently available at much higher gross weights and in an ER (extended
range) version used by several European carriers in transatlantic operations.
In late 1995 and 1996 a total of three 757s were lost in accidents, with crew
reactions to emergency situations considered the probable cause. In the prior
15 years only one had been lost in a hijacking situation in China.

The economic superiority of the 757 over the smaller narrowbodies (737 and
MD-80) suggests that the heaviest casualties may befall these latter aircraft,
and that the airlines will tend to move up to the 757. The major competitor to
the 757 is not the smaller American twins, but rather the Airbus A319/320/321
series which has piled up an impressive order backlog, and is increasingly
penetrating the U.S. market, as seen by USAir's recent order for up to 400 --
at the expense of then existing Boeing options. Current operating costs suggest
the A320 is up to 25 percent more efficient than the 737s or MD-80s, and even
equal to, or superior to, the 757, but Boeing's own B-737-800/900s also
challenge the B-757 from below.

In the final analysis, the 757 is assured of a firm share of the aircraft
market for many years to come in both passenger and cargo configuration. It 
has excellent environmental characteristics and has not experienced technical
difficulties, and should meet reasonable Stage 4 Noise levels.

ECONOMICS - The MBA Model shows the 757 to be one of the most efficient
aircraft of any type, size, or age. Its combination of capacity, low fuel
consumption and reasonable price all 

                                       3

<PAGE>   111
contribute to its outstanding economics. We expect that the 757 will prove to
be one of the strongest players in the residual value market for the next two
decades.



BOEING 767-400ER
[Photo of Boeing 767-400ER]

Number of Operators:  2
Aircraft Ordered:    59
Aircraft Delivered    0

Boeing tried to interest Delta in buying more B-777s, but the aircraft was just
too much for the Atlanta airline who was already suffering indigestion on its
MD-11s. Delta is a big B-767 operator with 94 in service and 24 on order. 
Boeing obligingly agreed to stretch the B-767-300ER to the -400ER configuration,
increasing gross weight from 412,000 pounds to 450,000 and seating up to 375,
only 65 below the B-777 and about the same as its 40-odd remaining L-1011s which
it is retiring. Delta and Continental are the only airlines with B-767-400ER so
far, totaling 47. There are eight additional orders from lessors.

MBA estimates the initial offering price to be $105.09 million with initial
engines to be the GE CF6-80C2B7F's. P&W or Rolls engines can also be ordered if
the customer desires. First delivery will be early this year.


                                       4

<PAGE>   112
III. VALUATION (2000-1 EETC)



<TABLE>
<CAPTION>
Scheduled           Aircraft Serial   Continental      Adj. Base Value
Manufacturer's      Number            Tail Number         ($000,000)
Delivery Date
-----------------------------------------------------------------------
                    B737-800, CFM56-7B26, 174,200(lb) MTOW
<S>                 <C>                 <C>                 <C>      
-----------------------------------------------------------------------
JUN-00              30429               N24202              43.01
                    --------------------------------------------------- 
                    30613               N33203              43.01
-----------------------------------------------------------------------
JUL-00              30576               N35204              43.11
                    ---------------------------------------------------
                    30577               N27205              43.11
                    ---------------------------------------------------
                    30578               N11206              43.11
-----------------------------------------------------------------------
AUG-00              30579               N36207              43.20
                    ---------------------------------------------------
                    30580               N26208              43.20
                    ---------------------------------------------------
                    30581               N33209              43.20
-----------------------------------------------------------------------
SEP-00              30582               N73251              43.28
                    ---------------------------------------------------
                    30583               N37252              43.28
                    ---------------------------------------------------
                    30584               N37253              43.28
                    ---------------------------------------------------
                    30779               N76254              43.28
-----------------------------------------------------------------------
OCT-00              30610               N37255              43.36
                    ---------------------------------------------------
                    30611               N73256              43.36
-----------------------------------------------------------------------
NOV-00              30612               N38257              43.46
                    ---------------------------------------------------
                    30802               N77258              43.46
-----------------------------------------------------------------------
</TABLE>



<TABLE>
<CAPTION>
Scheduled           Aircraft Serial   Continental      Adj. Base Value
Manufacturer's      Number            Tail Number         ($000,000)
Delivery Date
-----------------------------------------------------------------------
               B757-200, RB211-535E4B, Engines, 255,000(lb) MTOW
<S>                 <C>                 <C>                 <C>      
-----------------------------------------------------------------------
FEB-00              30352               N17139              58.07
                    --------------------------------------------------- 
                    30353               N41140              58.07
-----------------------------------------------------------------------
JUN-00              30354               N19141              58.54
-----------------------------------------------------------------------
</TABLE>



<TABLE>
<CAPTION>
Scheduled           Aircraft Serial   Continental      Adj. Base Value
Manufacturer's      Number            Tail Number         ($000,000)
Delivery Date
-----------------------------------------------------------------------
               B767-400ER, CF6-80C2B8F Engines, 450,000(lb) MTOW
<S>                 <C>                 <C>                 <C>      
-----------------------------------------------------------------------
JUL-00              29446               N66051              97.20
----------------------------------------------------------------------- 
AUG-00              29447               N67052              97.40
-----------------------------------------------------------------------
OCT-00              29448               N59053              97.80
-----------------------------------------------------------------------
DEC-00              29449               N76054              98.20
-----------------------------------------------------------------------
</TABLE>

   



                                       5
                    

<PAGE>   113
In developing the CBV of these aircraft, MBA did not inspect the aircraft or
its historical maintenance documentation. Therefore, we used certain
assumptions that are generally accepted industry practice to calculate the
value of an aircraft when more detailed information is not available. The
principal assumptions are as follows (for each aircraft):

     1.   The aircraft is to be delivered new.

     2.   The overhaul status of the airframe, engines, landing gear and other
          major components are the equivalent of new delivery otherwise
          specified.

     3.   The specifications of the aircraft are those most common for an
          aircraft of this type new delivery.

     4.   The aircraft is in a standard airline configuration.

     5.   Its modification status is comparable to that most common for an
          aircraft of its type and vintage.

     6.   No accounting is made for lease obligations or terms of ownership.




                                       6

<PAGE>   114
IV.  COVENANTS


This report has been prepared for the exclusive use of Credit Suisse-First
Boston/Continental Airlines and shall not be provided to other parties by MBA
without the express consent of Credit Suisse-First Boston/Continental Airlines.

MBA certifies that this report has been independently prepared and that it fully
and accurately reflects MBA's opinion as to the Current Base Value. MBA further
certifies that it does not have, and does not expect to have, any financial or
other interest in the subject or similar aircraft.

This report represents the opinion of MBA as to the Current Base Value of the
subject aircraft and is intended to be advisory only, in nature. Therefore, MBA
assumes no responsibility or legal liability for any actions taken, or not
taken, by Credit Suisse-First Boston/Continental Airlines or any other party
with regard to the subject aircraft. By accepting this report, all parties agree
that MBA shall bear no such responsibility or legal liability.


                                             PREPARED BY:


                                             /s/ Bryson P. Monteleone
                                             ------------------------
                                             Bryson P. Monteleone
                                             Director of Operations


                                             REVIEWED BY:


January 17, 2000                             /s/ Morten S. Beyer
Ref #00111                                   -------------------
                                             Morten S. Beyer, Appraiser Fellow
                                             Chairman & CEO
                                             ISTAT Certified Senior Appraiser




                                       7

<PAGE>   115
 
PROSPECTUS
 
                                 $1,500,000,000
 
                           CONTINENTAL AIRLINES, INC.
 
                           PASS THROUGH CERTIFICATES
                            ------------------------
 
     This prospectus relates to pass through certificates to be issued by one or
more trusts that we will form, as creator of each pass through trust, with a
national or state bank or trust company, as trustee. The trustee will hold all
property owned by a trust for the benefit of holders of pass through
certificates issued by that trust. Each pass through certificate issued by a
trust will represent a beneficial interest in all property held by that trust.
 
     We will describe the specific terms of any offering of pass through
certificates in a prospectus supplement to this prospectus. You should read this
prospectus and the applicable prospectus supplement carefully before you invest.
 
     This prospectus may not be used to consummate sales of pass through
certificates unless accompanied by a prospectus supplement.
 
                            ------------------------
 
     Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
 
                            ------------------------
 
                The date of this prospectus is December 8, 1999.

<PAGE>   116
 
                               TABLE OF CONTENTS
 

<TABLE>
<CAPTION>
                                        PAGE
                                        ----
<S>                                     <C>
WHERE YOU CAN FIND MORE INFORMATION...    1
FORWARD-LOOKING STATEMENTS............    1
INCORPORATION OF CERTAIN DOCUMENTS BY
  REFERENCE...........................    2
SUMMARY...............................    3
  The Offering........................    3
  Certificates........................    3
  Pass Through Trusts.................    3
  Equipment Notes.....................    4
THE COMPANY...........................    6
USE OF PROCEEDS.......................    6
RATIO OF EARNINGS TO FIXED CHARGES....    7
DESCRIPTION OF THE CERTIFICATES.......    7
  General.............................    7
  Book-Entry Registration.............   10
  Payments and Distributions..........   13
  Pool Factors........................   14
  Reports to Certificateholders.......   14
  Voting of Equipment Notes...........   15
  Events of Default and Certain Rights
     Upon an Event of Default.........   15
  Merger, Consolidation and Transfer
     of Assets........................   17
  Modifications of the Basic
     Agreement........................   18
  Modification of Indenture and
     Related Agreements...............   19
  Cross-Subordination Issues..........   19
  Termination of the Pass Through
     Trusts...........................   19
  Delayed Purchase of Equipment
     Notes............................   19
  Liquidity Facility..................   20
</TABLE>

 

<TABLE>
<CAPTION>
                                        PAGE
                                        ----
<S>                                     <C>
  The Pass Through Trustee............   20
DESCRIPTION OF THE EQUIPMENT NOTES....   20
  General.............................   21
  Principal and Interest Payments.....   21
  Redemption..........................   21
  Security............................   21
  Ranking of Equipment Notes..........   23
  Payments and Limitation of
     Liability........................   23
  Defeasance of the Indentures and the
     Equipment Notes in Certain
     Circumstances....................   24
  Assumption of Obligations by
     Continental......................   24
  Liquidity Facility..................   25
  Intercreditor Issues................   25
U.S. INCOME TAX MATTERS...............   26
  General.............................   26
  Tax Status of the Pass Through
     Trusts...........................   26
  Taxation of Certificateholders
     Generally........................   26
  Effect of Subordination of
     Certificateholders of
     Subordinated Trusts..............   27
  Original Issue Discount.............   27
  Sale or Other Disposition of the
     Certificates.....................   27
  Foreign Certificateholders..........   28
  Backup Withholding..................   28
ERISA CONSIDERATIONS..................   28
PLAN OF DISTRIBUTION..................   28
LEGAL OPINIONS........................   30
EXPERTS...............................   30
</TABLE>

 
                                        i

<PAGE>   117
 
                      WHERE YOU CAN FIND MORE INFORMATION
 
     We file annual, quarterly and special reports, proxy statements and other
information with the SEC under the Securities Exchange Act of 1934. You may read
and copy this information at the following locations of the SEC:
 

<TABLE>
<S>                     <C>                       <C>
Judiciary Plaza         Seven World Trade Center  Citicorp Center
450 Fifth Street, N.W.  13th Floor                500 West Madison Street, Suite 1400
Washington, D.C. 20549  New York, New York 10048  Chicago, Illinois 60661
</TABLE>

 
     You may also obtain copies of this information by mail from the Public
Reference Room of the SEC, 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. You may obtain information on the operation of the Public
Reference Room by calling the SEC at (800) SEC-0330.
 
     The SEC also maintains an internet world wide web site that contains
reports, proxy statements and other information about issuers, like us, who file
electronically with the SEC. The address of that site is http://www.sec.gov.
 
     You may also inspect reports, proxy statements and other information about
us at the offices of the New York Stock Exchange, Inc., 20 Broad Street, New
York, New York 10005.
 
     We have filed with the SEC a registration statement on Form S-3, which
registers the securities that we may offer under this prospectus. The
registration statement, including the attached exhibits and schedules, contains
additional relevant information about us and the securities offered. The rules
and regulations of the SEC allow us to omit certain information included in the
registration statement from this prospectus.
 
                           FORWARD-LOOKING STATEMENTS
 
     This prospectus, any prospectus supplement delivered with this prospectus
and the documents we incorporate by reference may contain statements that
constitute "forward-looking statements" within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
Forward-looking statements include any statements that predict, forecast,
indicate or imply future results, performance or achievements, and may contain
the words "believe," "anticipate," "expect,"
"estimate," "project," "will be," "will continue," "will result," or words or
phrases of similar meaning.
 
     Any such forward-looking statements are not assurances of future
performance and involve risks and uncertainties. Actual results may vary
materially from anticipated results for a number of reasons, including those
stated in our SEC reports incorporated in this prospectus by reference or as
stated in a prospectus supplement to this prospectus under the caption "Risk
Factors".
 
     All forward-looking statements attributable to us are expressly qualified
in their entirety by this cautionary statement.
 
                                        1

<PAGE>   118
 
                INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
 
     The SEC allows us to incorporate by reference information into this
prospectus. This means that we can disclose important information to you by
referring you to another document filed separately with the SEC. The information
incorporated by reference is considered to be part of this prospectus, except
for any information that is superseded by subsequent incorporated documents or
by information that is included directly in this prospectus or any prospectus
supplement.
 
     This prospectus includes by reference the documents listed below that we
previously have filed with the SEC and that are not delivered with this
document. They contain important information about our company and its financial
condition.
 

<TABLE>
<CAPTION>
                           FILING                                DATE FILED
                           ------                                ----------
<S>                                                           <C>
Annual Report on Form 10-K for the year ended December 31,
  1998......................................................  February 25, 1999
Quarterly Report on Form 10-Q for the quarter ended March
  31, 1999..................................................  April 23, 1999
Amendment to Quarterly Report on Form 10-Q for the quarter
  ended March 31, 1999......................................  April 30, 1999
Quarterly Report on Form 10-Q for the quarter ended June 30,
  1999......................................................  July 23, 1999
Amendment to Quarterly Report on Form 10-Q for the quarter
  ended June 30, 1999.......................................  July 26, 1999
Quarterly Report on Form 10-Q for the quarter ended
  September 30, 1999........................................  October 25, 1999
Current Report on Form 8-K..................................  February 18, 1999
Current Report on Form 8-K..................................  May 18, 1999
Current Report on Form 8-K..................................  June 25, 1999
</TABLE>

 
     Our SEC file number is 0-9781.
 
     We incorporate by reference additional documents that we may file with the
SEC between the date of this prospectus and the termination of the offering of
securities under this prospectus. These documents include our periodic reports,
such as Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current
Reports on Form 8-K, as well as our proxy statements.
 
     You may obtain any of these incorporated documents from us without charge,
excluding any exhibits to those documents unless the exhibit is specifically
incorporated by reference in such document. You may obtain documents
incorporated by reference in this prospectus by requesting them from us in
writing or by telephone at the following address:
 
                           Continental Airlines, Inc.
                         1600 Smith Street, Dept. HQSEO
                              Houston, Texas 77002
                              Attention: Secretary
                                (713) 324-2950.
 
                                        2

<PAGE>   119
 
                                    SUMMARY
 
THE OFFERING
 
     This prospectus describes the pass through certificates that we may offer
from time to time after the date of this prospectus. The proceeds of these
offerings will be used to provide funds for the financing or refinancing of our
aircraft. For convenience, throughout this prospectus, the words we, us, ours or
similar words refer to Continental Airlines, Inc.
 
     This prospectus describes the general terms of the pass through
certificates. The actual terms of any offering of pass through certificates will
be described in a supplement to this prospectus. To the extent that any
provision in any prospectus supplement is inconsistent with any provision in
this prospectus, the provision of the prospectus supplement will control.
 
CERTIFICATES
 
     Pass through certificates are securities that evidence an ownership
interest in a pass through trust. The holders of the certificates issued by a
pass through trust will be the beneficiaries of that trust. For convenience, we
may refer to pass through certificates as "certificates" and refer to the holder
of a pass through certificate as a "certificateholder."
 
     The beneficial interest in a pass through trust represented by a
certificate will be a percentage interest in the property of that trust equal to
the original face amount of such certificate divided by the original face amount
of all of the certificates issued by that trust. Each certificate will represent
a beneficial interest only in the property of the pass through trust that issued
the certificate. Multiple series of certificates may be issued. If more than one
series of certificates is issued, each series of certificates will be issued by
a separate pass through trust.
 
     The property that will be held by each pass through trust will include
equipment notes secured by aircraft that we own or lease. Payments of principal
and interest on the equipment notes owned by a pass through trust will be passed
through to holders of certificates issued by that trust in accordance with the
terms of the pass through trust agreement pursuant to which the trust was
formed.
 
     If certificates of any series are entitled to the benefits of a liquidity
facility or other form of credit enhancement, the prospectus supplement relating
to that series will describe the terms of the liquidity facility or other form
of credit enhancement. A liquidity facility is a revolving credit agreement,
letter of credit, bank guarantee, insurance policy or other instrument or
agreement under which another person agrees to make certain payments in respect
of the certificates if there is a shortfall in amounts otherwise available for
distribution. While a liquidity facility is designed to increase the likelihood
of the timely payment of certain amounts due under certificates, it is not a
guarantee of timely or ultimate payment.
 
     The rights of a pass through trustee to receive monies payable under
equipment notes held for that pass through trustee may be subject to the effect
of subordination provisions contained in an intercreditor agreement described in
the prospectus supplement for a series of certificates. An intercreditor
agreement will set forth the terms and conditions upon which payments made under
the equipment notes and payments made under any liquidity facility will be
received, shared and distributed among the several pass through trustees and the
liquidity provider.
 
     We may offer and sell up to $1,500,000,000 of aggregate initial offering
price of certificates pursuant to this prospectus and related prospectus
supplements in one or more offerings of certificates. The initial offering price
may be denominated in U.S. dollars or foreign currencies based on the applicable
exchange rate at the time of sale.
 
PASS THROUGH TRUSTS
 
     We will form a separate pass through trust to issue each series of
certificates. Each pass through trust will be formed by us, as creator of each
pass through trust, and a national or state bank or trust company, as
 
                                        3

<PAGE>   120
 
trustee. Unless otherwise stated in a prospectus supplement, Wilmington Trust
Company will be the trustee of each pass through trust. For convenience, we may
refer to the pass through trustee as the trustee.
 
     Each pass through trust will be governed by a trust instrument that creates
the trust and sets forth the powers of the trustee and the rights of the
beneficiaries. The trust instrument for each pass through trust will consist of
a basic pass through trust agreement between us and the pass through trustee,
which we refer to as the "Basic Agreement", and a supplement to that basic
agreement, which we refer to as a "pass through trust supplement."
 
     When a pass through trust supplement is signed and delivered, the pass
through trustee, on behalf of the related pass through trust, will enter into
one or more purchase or refunding agreements, referred to as "note purchase
agreements," under which it will agree to purchase one or more promissory notes
secured by aircraft described in the applicable prospectus supplement. These
secured promissory notes are referred to as "equipment notes."
 
     Under the applicable note purchase agreement, the pass through trustee, on
behalf of the related pass through trust, will purchase one or more equipment
notes. The equipment notes that are the property of a pass through trust will
have:
 
     - identical interest rates, in each case equal to the rate applicable to
       the certificates issued by such pass through trust; and
 
     - identical priority of payment relative to each of the other equipment
       notes held for such pass through trust.
 
     If any portion of the proceeds of an offering of a series of certificates
is not used to purchase equipment notes on the date the certificates are
originally issued, those proceeds will be held for the benefit of the
certificateholders. If any of the proceeds are not later used to purchase
equipment notes by the date specified in the applicable prospectus supplement,
the proceeds will be returned to the certificateholders.
 
EQUIPMENT NOTES
 
     The equipment notes owned by a pass through trust may consist of any
combination of:
 
     - Equipment notes issued by an owner trustee and secured by an aircraft
       owned by that trustee and leased to us. We refer to these equipment notes
       as "leased aircraft notes."
 
     - Equipment notes issued by us and secured by an aircraft owned by us. We
       refer to these equipment notes as "owned aircraft notes."
 
     Leased Aircraft Notes.  Except as specified in a prospectus supplement,
leased aircraft notes will be issued by a bank, trust company, financial
institution or other entity solely in its capacity as owner trustee in a
leveraged lease transaction. In a leveraged lease transaction, one or more
persons will form an owner trust to acquire an aircraft and then that owner
trust will lease the aircraft to us. The investors that are the beneficiaries of
the owner trusts are typically referred to as owner participants. Each owner
participant will contribute a portion of the purchase price of the aircraft to
the owner trust, and the remainder of the purchase price of the aircraft will be
financed, or "leveraged", through the issuance of leased aircraft notes. Leased
aircraft notes may also be issued to refinance an aircraft previously financed
in a leveraged lease transaction or otherwise.
 
     The leased aircraft notes will be issued pursuant to a separate indenture
between the owner trustee and a bank, trust company, financial institution or
other entity, as loan trustee. The indenture entered into in connection with the
issuance of leased aircraft notes will be referred to as a "leased aircraft
indenture." The loan trustee under a leased aircraft indenture will act as a
trustee for the holders of the leased aircraft notes issued under that leased
aircraft indenture.
 
     In a leveraged lease transaction, we will pay or advance rent and other
amounts to the owner trustee in its capacity as lessor under the lease. The
owner trustee will use the payments and certain other amounts received by it to
make payments of principal and interest on the leased aircraft notes. The owner
trustee also
                                        4

<PAGE>   121
 
will assign its rights to receive basic rent and certain other payments to a
loan trustee as security for the owner trustee's obligations to pay principal
of, premium, if any, and interest on the leased aircraft notes.
 
     Payments or advances required to be made under a lease and related
agreements will at all times be sufficient to make scheduled payments of
principal of, and interest on, the leased aircraft notes issued to finance the
aircraft subject to that lease. However, we will not have any direct obligation
to pay principal of, or interest on, the leased aircraft notes. No owner
participant or owner trustee will be personally liable for any amount payable
under a leased aircraft indenture or the leased aircraft notes issued under that
indenture.
 
     Owned Aircraft Notes.  We may finance or refinance aircraft that we own
through the issuance of owned aircraft notes. Owned aircraft notes relating to
an owned aircraft will be issued under a separate indenture relating to that
owned aircraft. Each separate indenture relating to owned aircraft notes will be
between us and a bank, trust company, financial institution or other entity, as
loan trustee. The indenture entered into in connection with the issuance of
owned aircraft notes will be referred to as an "owned aircraft indenture."
Because we often refer to owned aircraft indentures and leased aircraft
indentures together, we sometimes refer to them collectively as the
"indentures". The loan trustee under an owned aircraft indenture will act as a
trustee for the holders of the owned aircraft notes issued under that owned
aircraft indenture.
 
     Unlike the leased aircraft notes, we will have a direct obligation to pay
the principal of, and interest on, the owned aircraft notes.
 
                                        5

<PAGE>   122
 
                                  THE COMPANY
 
     We are a major United States air carrier engaged in the business of
transporting passengers, cargo and mail. We are the fifth largest U.S. airline,
as measured by revenue passenger miles in the first ten months of 1999, and,
together with our wholly owned subsidiaries, Continental Express, Inc. and
Continental Micronesia, Inc., serve 214 airports worldwide. As of October 31,
1999, we flew to 129 domestic and 85 international destinations and offered
additional connecting service through alliances with domestic and foreign air
carriers. We directly serve 16 European cities and Tel Aviv and are one of the
leading airlines providing service to Mexico and Central America, serving more
destinations there than any other U.S. airline. Continental Micronesia provides
extensive service in the western Pacific, including service to more Japanese
cities than any other U.S. carrier.
 
     We operate our route system primarily through domestic hubs at Newark
International Airport, George Bush Intercontinental Airport in Houston, Hopkins
International Airport in Cleveland, and a Pacific hub on the island of Guam. We
are the primary carrier at each of these hubs, accounting for 58%, 77%, 53% and
85% of average daily jet departures, respectively, as of October 31, 1999 (in
each case excluding regional jets). Each of our domestic hubs is located in a
large business and population center, contributing to a high volume of "origin
and destination" traffic. The Guam hub is strategically located to provide
service from Japanese and other Asian cities to popular resort destinations in
the western Pacific.
 
     We are a Delaware corporation, with executive offices located at 1600 Smith
Street, Houston, Texas 77002. Our telephone number is (713) 324-2950.
 
                                USE OF PROCEEDS
 
     Except as set forth in a prospectus supplement for a specific offering of
certificates, the certificates will be issued in order to provide funds for:
 
     - the financing or refinancing of the debt portion and, in certain cases,
       the refinancing of some of the equity portion of one or more separate
       leveraged lease transactions entered into by us, as lessee, with respect
       to the leased aircraft as described in the applicable prospectus
       supplement; and
 
     - the financing or refinancing of the aggregate principal amount of debt to
       be issued, or the purchase of the aggregate principal amount of the debt
       previously issued, by us in respect of the owned aircraft as described in
       the applicable prospectus supplement.
 
     Except as set forth in a prospectus supplement for a specific offering of
certificates, the proceeds from the sale of the certificates will be used by the
pass through trustee on behalf of the applicable pass through trust or pass
through trusts to purchase either:
 
     - leased aircraft notes issued by one or more owner trustees to finance or
       refinance, as specified in the applicable prospectus supplement, the
       related leased aircraft; or
 
     - owned aircraft notes issued by us to finance or refinance, as specified
       in the applicable prospectus supplement, the related owned aircraft.
 
If any portion of the proceeds of an offering of a series of certificates is not
used to purchase equipment notes on the date the certificates are issued, those
proceeds will be held for the benefit of the certificateholders. If any of the
proceeds are not later used to purchase equipment notes by the date specified in
the applicable prospectus supplement, the proceeds will be returned to the
certificateholders. See "Description of Certificates -- Delayed Purchase of
Equipment Notes".
 
                                        6

<PAGE>   123
 
                       RATIO OF EARNINGS TO FIXED CHARGES
 
     The ratios of our "earnings" to our "fixed charges" for each of the years
1994 through 1998 and for the nine months ended September 30, 1999 were:
 

<TABLE>
<CAPTION>
                                   NINE MONTHS ENDED
    YEAR ENDED DECEMBER 31,          SEPTEMBER 30,
--------------------------------   -----------------
1994   1995   1996   1997   1998         1999
----   ----   ----   ----   ----   -----------------
<S>    <C>    <C>    <C>    <C>    <C>
 *     1.53   1.81   2.07   1.94         1.74
</TABLE>

 
---------------
* For the year ended December 31, 1994, earnings were not sufficient to cover
  fixed charges. We needed additional earnings of $667 million to achieve a
  ratio of earnings to fixed charges of 1.0.
 
     The ratios of earnings to fixed charges are based on continuing operations.
For purposes of the ratios, "earnings" means the sum of:
 
     - our pre-tax income; and
 
     - our fixed charges, net of interest capitalized.
 
     "Fixed charges" represent:
 
     - the interest we pay on borrowed funds;
 
     - the amount we amortize for debt discount, premium and issuance expense
       and interest previously capitalized; and
 
     - that portion of rentals considered to be representative of the interest
       factor.
 
                        DESCRIPTION OF THE CERTIFICATES
 
     The following description is a summary of the terms of the certificates
that we expect will be common to all series of certificates. We will describe
the financial terms and other specific terms of any series of certificates in a
prospectus supplement. To the extent that any provision in any prospectus
supplement is inconsistent with any provision in this prospectus, the provision
of the prospectus supplement will control.
 
     Because the following description is a summary, it does not describe every
aspect of the certificates, and it is subject to and qualified in its entirety
by reference to all the provisions of the pass through trust agreement and the
applicable supplements to the pass through trust agreement. For convenience, we
will refer to the pass through trust agreement between the pass through trustee
and us as the "Basic Agreement," and to the Basic Agreement as supplemented by a
supplement as a "pass through trust agreement." The form of Basic Agreement has
been filed as an exhibit to the registration statement of which this prospectus
is a part. The supplement to the Basic Agreement relating to each series of
certificates and the forms of the other agreements described in this prospectus
and the applicable prospectus supplement will be filed as exhibits to a
post-effective amendment to the registration statement of which this prospectus
is a part, a Current Report on Form 8-K, a Quarterly Report on Form 10-Q or an
Annual Report on Form 10-K, as applicable, filed by us with the SEC.
 
GENERAL
 
     Except as amended by a supplement to the Basic Agreement, the terms of the
Basic Agreement generally will apply to all of the pass through trusts that we
form to issue certificates. We will create a separate pass through trust for
each series of certificates by entering into a separate supplement to the Basic
Agreement. Each supplement to the Basic Agreement will contain the additional
terms governing the specific pass through trust to which it relates and, to the
extent inconsistent with the Basic Agreement, will supersede the Basic
Agreement.
 
     Certificates for a pass through trust will be issued pursuant to the pass
through trust agreement applicable to such pass through trust. Unless otherwise
stated in the applicable prospectus supplement, each pass
 
                                        7

<PAGE>   124
 
through certificate will be issued in a minimum denomination of $1,000 or a
multiple of $1,000, except that one certificate of each series may be issued in
a different denomination.
 
     Each certificate will represent a fractional undivided interest in the
property of the pass through trust that issued the certificate. All payments and
distributions made with respect to a certificate will be made only from the
property owned by the pass through trust that issued the certificate. The
certificates do not represent an interest in or obligation of Continental, the
pass through trustee, any of the owner trustees or loan trustees, in their
individual capacities, or any owner participant. Each certificateholder by its
acceptance of a certificate agrees to look solely to the income and proceeds
from the property of the applicable pass through trust as provided in the pass
through trust agreement.
 
     The property of each pass through trust for which a series of certificates
will be issued will include:
 
     - the equipment notes held for the pass through trust;
 
     - all monies at any time paid under the equipment notes held for the pass
       through trust;
 
     - the rights of such pass through trust to acquire equipment notes;
 
     - funds from time to time deposited with the pass through trustee in
       accounts relating to that pass through trust; and
 
     - if so specified in the relevant prospectus supplement, rights under
       intercreditor agreements relating to cross-subordination arrangements and
       monies receivable under a liquidity facility.
 
     The rights of a pass through trustee to receive monies payable under
equipment notes held for that pass through trustee may be subject to the effect
of subordination provisions contained in an intercreditor agreement described in
the prospectus supplement for a series of certificates. An intercreditor
agreement refers to an agreement among the pass through trustees and, if
applicable, a liquidity provider under a liquidity facility, as creditors of the
issuers of the equipment notes owned by the pass through trustees. An
intercreditor agreement will set forth the terms and conditions upon which
payments made under the equipment notes and payments made under any liquidity
facility will be received, shared and distributed among the several pass through
trustees and the liquidity provider. In addition, the intercreditor agreement
will set forth agreements among the pass through trustees and the liquidity
provider relating to the exercise of remedies under the equipment notes and the
indentures.
 
     Cross-subordination refers to an agreement under which payments on a junior
class of equipment notes issued under an indenture are distributed to a pass
through trustee that holds a senior class of equipment notes issued under a
different indenture on which all required payments were not made. The effect of
this distribution mechanism is that holders of certificates of a pass through
trust that owns a junior class of equipment notes will not receive payments made
on that junior class of equipment notes until certain distributions are made on
the certificates of the pass through trust that owns a senior class of equipment
notes.
 
     Equipment notes owned by a pass through trust may be leased aircraft notes,
owned aircraft notes or a combination of leased aircraft notes and owned
aircraft notes.
 
     Leased aircraft notes will be issued in connection with the leveraged lease
of an aircraft to us. Except as set forth in the applicable prospectus
supplement, each leased aircraft will be leased to us under a lease between us,
as lessee, and an owner trustee, as lessor. Each owner trustee will issue leased
aircraft notes on a non-recourse basis under a separate leased aircraft
indenture between it and the applicable loan trustee. The owner trustee will use
the proceeds of the sale of the leased aircraft notes to finance or refinance a
portion of the purchase price paid or to be paid by the owner trustee for the
applicable leased aircraft. The owner trustee will obtain the remainder of the
funding for the leased aircraft from an equity contribution from the owner
participant that is the beneficiary of the owner trust and, to the extent set
forth in the applicable prospectus supplement, additional debt secured by the
applicable leased aircraft or other sources. A leased aircraft also may be
subject to other financing arrangements.
 
     Generally, neither the owner trustee nor the owner participant will be
personally liable for any principal or interest payable under any leased
aircraft indenture or any leased aircraft notes. In some cases, an owner
                                        8

<PAGE>   125
 
participant may be required to make payments to an owner trustee that are to be
used by the owner trustee to pay principal of, and interest on, the equipment
notes. If an owner participant is required to make payments to be used by an
owner trustee to pay principal of, and interest on, the equipment notes and the
owner participant fails to make the payment, we will be required to provide the
owner trustee with funds sufficient to make the payment. We will be obligated to
make payments or advances under a lease and the related documents sufficient to
pay when due all scheduled principal and interest payments on the leased
aircraft notes issued to finance the aircraft subject to that lease.
 
     We will issue owned aircraft notes under separate owned aircraft
indentures. Owned aircraft notes will be issued in connection with the financing
or refinancing of an aircraft that we own. Owned aircraft notes will be
obligations that have recourse to us and the related aircraft. Any owned
aircraft may secure additional debt or be subject to other financing
arrangements.
 
     An indenture may provide for the issuance of multiple classes of equipment
notes. If an indenture provides for multiple classes of equipment notes, it may
also provide for differing priority of payments among the different classes.
Equipment notes issued under an indenture may be held in more than one pass
through trust, and one pass through trust may hold equipment notes issued under
more than one indenture. Unless otherwise provided in a prospectus supplement,
only equipment notes having the same priority of payment may be held for the
same pass through trust.
 
     Except as set forth in the prospectus supplement for any series of
certificates, interest payments on the equipment notes held for a pass through
trust will be passed through to the registered holders of certificates of that
pass through trust at the annual rate shown on the cover page of the prospectus
supplement for the certificates issued by that pass through trust. The
certificateholders' right to receive payments made in respect of the equipment
notes is subject to the effect of any cross-subordination provisions described
in the prospectus supplement for a series of certificates.
 
     We refer you to the prospectus supplement that accompanies this prospectus
for a description of the specific series of certificates being offered by this
prospectus and the applicable prospectus supplement, including:
 
     - the specific designation, title and amount of the certificates;
 
     - amounts payable on and distribution dates for the certificates;
 
     - the currency or currencies, including currency units, in which the
       certificates may be denominated;
 
     - the specific form of the certificates, including whether or not the
       certificates are to be issued in accordance with a book-entry system;
 
     - a description of the equipment notes to be purchased by the pass through
       trust issuing that series of certificates, including:
 
        - the period or periods within which, the price or prices at which, and
          the terms and conditions upon which the equipment notes may or must be
          redeemed or defeased in whole or in part, by us or an owner trustee;
 
        - the payment priority of the equipment notes in relation to any other
          equipment notes issued with respect to the related aircraft; and
 
        - any intercreditor or other rights or limitations between or among the
          holders of equipment notes of different priorities issued with respect
          to the same aircraft;
 
     - a description of the aircraft to be financed with the proceeds of the
       issuance of the equipment notes;
 
     - a description of the note purchase agreement setting forth the terms and
       conditions upon which that pass through trust will purchase equipment
       notes;
 
     - a description of the indentures under which the equipment notes to be
       purchased for that pass through trust will be issued;
 
                                        9

<PAGE>   126
 
     - a description of the events of default, the remedies exercisable upon the
       occurrence of events of default and any limitations on the exercise of
       those remedies under the indentures pursuant to which the equipment notes
       to be purchased for that pass through trust will be issued;
 
     - if the certificates relate to leased aircraft, a description of the
       leases to be entered into by the owner trustees and us;
 
     - if the certificates relate to leased aircraft, a description of the
       provisions of the leased aircraft indentures governing:
 
        - the rights of the related owner trustee and/or owner participant to
          cure our failure to pay rent under the leases; and
 
        - any limitations on the exercise of remedies with respect to the leased
          aircraft notes;
 
     - if the certificates relate to leased aircraft, a description of the
       participation agreements that will set forth the terms and conditions
       upon which the owner participant, the owner trustee, the pass through
       trustees, the loan trustee and we agree to enter into a leveraged lease
       transaction;
 
     - if the certificates relate to an owned aircraft, a description of the
       participation agreements that will set forth the terms and conditions
       upon which the applicable pass through trustees, the loan trustee and we
       agree to enter into a financing transaction for the owned aircraft;
 
     - a description of the limitations, if any, on amendments to leases,
       indentures, pass through trust agreements, participation agreements and
       other material agreements entered into in connection with the issuance of
       equipment notes;
 
     - a description of any cross-default provisions in the indentures;
 
     - a description of any cross-collateralization provisions in the
       indentures;
 
     - a description of any agreement among the holders of equipment notes and
       any liquidity provider governing the receipt and distribution of monies
       with respect to the equipment notes and the enforcement of remedies under
       the indentures, including a description of any applicable intercreditor
       and cross-subordination arrangements;
 
     - a description of any liquidity facility or other credit enhancement
       relating to the certificates;
 
     - if the certificates relate to aircraft that have not yet been delivered
       or financed, a description of any deposit or escrow agreement or other
       arrangement providing for the deposit and investment of funds pending the
       purchase of equipment notes and the financing of an owned aircraft or
       leased aircraft; and
 
     - any other special terms pertaining to the certificates.
 
     The concept of cross-default mentioned above refers to a situation where a
default under one indenture or lease results in a default under other indentures
or leases. We currently do not expect any indentures or leases to contain
cross-default provisions. The concept of cross-collateralization mentioned above
refers to the situation where collateral that secures obligations incurred under
one indenture also serves as collateral for obligations under one or more other
indentures. We currently do not expect any indentures to be cross-
collateralized.
 
BOOK-ENTRY REGISTRATION
 
     GENERAL
 
     If specified in the applicable prospectus supplement, the certificates will
be subject to the procedures and provisions described below.
 
     Upon issuance, each series of certificates will be represented by one or
more fully registered global certificates. Each global certificate will be
deposited with, or on behalf of, The Depository Trust Company, referred to as
DTC, and registered in the name of Cede & Co., the nominee of DTC. No purchaser
of a
 
                                       10

<PAGE>   127
 
certificate will be entitled to receive a physical certificate representing an
interest in the global certificates, except as set forth below under
"-- Physical Certificates". For convenience, we refer to such purchasers as
"certificate owners". Unless and until physical certificates are issued under
the limited circumstances described below, all references in this prospectus and
any prospectus supplement to actions by certificateholders will refer to actions
taken by DTC upon instructions from DTC participants, and all references to
distributions, notices, reports and statements to certificateholders will refer,
as the case may be, to distributions, notices, reports and statements to DTC or
Cede, as the registered holder of the certificates, or to DTC participants for
distribution to certificateholders in accordance with DTC procedures.
 
     DTC is a limited purpose trust company organized under the laws of the
State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code and
"clearing agency" registered pursuant to Section 17A of the Securities Exchange
Act of 1934.
 
     Under the New York Uniform Commercial Code, a "clearing corporation" is
defined as:
 
     - a person that is registered as a "clearing agency" under the federal
       securities laws;
 
     - a federal reserve bank; or
 
     - any other person that provides clearance or settlement services with
       respect to financial assets that would require it to register as a
       clearing agency under the federal securities laws but for an exclusion or
       exemption from the registration requirement, if its activities as a
       clearing corporation, including promulgation of rules, are subject to
       regulation by a federal or state governmental authority.
 
     A "clearing agency" is an organization established for the execution of
trades by transferring funds, assigning deliveries and guaranteeing the
performance of the obligations of parties to trades.
 
     DTC was created to hold securities for its participants and to facilitate
the clearance and settlement of securities transactions between DTC participants
through electronic book-entry changes in the accounts of DTC participants. The
ability to execute transactions through book-entry changes in accounts
eliminates the need for transfer of physical certificates. DTC is owned by a
number of DTC participants and by the New York Stock Exchange, the American
Stock Exchange, and the National Association of Securities Dealers. DTC
participants include securities brokers and dealers, banks, trust companies,
clearing corporations and certain other organizations. Banks, brokers, dealers,
trust companies and other entities that clear through or maintain a custodial
relationship with a DTC participant, either directly or indirectly, are indirect
participants in the DTC system.
 
     Under the rules, regulations and procedures creating and affecting DTC and
its operations, DTC is required to make book-entry transfers of the certificates
among DTC participants on whose behalf it acts with respect to the certificates
and to receive and transmit distributions of principal, premium, if any, and
interest with respect to the certificates. DTC participants and indirect DTC
participants with which certificate owners have accounts similarly are required
to make book-entry transfers and receive and transmit the payments on behalf of
their respective customers. Certificate owners that are not DTC participants or
indirect DTC participants but desire to purchase, sell or otherwise transfer
ownership of, or other interests in, the certificates may do so only through DTC
participants and indirect DTC participants. In addition, certificate owners will
receive all distributions of principal, premium, if any, and interest from the
pass through trustee through DTC participants or indirect DTC participants, as
the case may be.
 
     Under a book-entry format, certificate owners may experience some delay in
their receipt of payments, because payments with respect to the certificates
will be forwarded by the pass through trustee to Cede, as nominee for DTC. DTC
will forward payments in same-day funds to each DTC participant who is credited
with ownership of the certificates in an amount proportionate to the principal
amount of that DTC participant's holdings of beneficial interests in the
certificates, as shown on the records of DTC or its nominee. Each such DTC
participant will forward payments to its indirect DTC participants in accordance
with standing instructions and customary industry practices. DTC participants
and indirect DTC participants will be responsible for forwarding distributions
to certificate owners for whom they act. Accordingly, although
 
                                       11

<PAGE>   128
 
certificate owners will not possess physical certificates, DTC's rules provide a
mechanism by which certificate owners will receive payments on the certificates
and will be able to transfer their interests.
 
     Unless and until physical certificates are issued under the limited
circumstances described below, the only physical certificateholder will be Cede,
as nominee of DTC. Certificate owners will not be recognized by the pass through
trustee as registered owners of certificates under the pass through trust
agreement. Certificate owners will be permitted to exercise their rights under
the pass through trust agreement only indirectly through DTC. DTC will take any
action permitted to be taken by a certificateholder under the pass through trust
agreement only at the direction of one or more DTC participants to whose
accounts with DTC the certificates are credited. In the event any action
requires approval by certificateholders of a certain percentage of the
beneficial interests in a pass through trust, DTC will take action only at the
direction of and on behalf of DTC participants whose holdings include undivided
interests that satisfy the required percentage. DTC may take conflicting actions
with respect to other undivided interests to the extent that the actions are
taken on behalf of DTC participants whose holdings include those undivided
interests. DTC will convey notices and other communications to DTC participants,
and DTC participants will convey notices and other communications to indirect
DTC participants in accordance with arrangements among them. Arrangements among
DTC and its direct and indirect participants are subject to any statutory or
regulatory requirements as may be in effect from time to time. DTC's rules
applicable to itself and DTC participants are on file with the SEC.
 
     A certificate owner's ability to pledge the certificates to persons or
entities that do not participate in the DTC system, or otherwise to act with
respect to the certificates, may be limited due to the lack of a physical
certificate to evidence ownership of the certificates, and because DTC can only
act on behalf of DTC participants, who in turn act on behalf of indirect DTC
participants.
 
     Neither we nor the pass through trustee will have any liability for any
aspect of the records relating to or payments made on account of beneficial
ownership interests in the certificates held by Cede, as nominee for DTC, for
maintaining, supervising or reviewing any records relating to the beneficial
ownership interests or for the performance by DTC, any DTC participant or any
indirect DTC participant of their respective obligations under the rules and
procedures governing their obligations.
 
     The applicable prospectus supplement will specify any additional book-entry
registration procedures applicable to certificates denominated in a currency
other than U.S. dollars.
 
     SAME-DAY SETTLEMENT AND PAYMENT
 
     As long as the certificates are registered in the name of DTC or its
nominee, we will make all payments to the loan trustee under any lease or any
owned aircraft indenture in immediately available funds. The pass through
trustee will pass through to DTC in immediately available funds all payments
received from us, including the final distribution of principal with respect to
the certificates of any pass through trust.
 
     Any certificates registered in the name of DTC or its nominee will trade in
DTC's Same-Day Funds Settlement System until maturity. DTC will require
secondary market trading activity in the certificates to settle in immediately
available funds. We cannot give any assurance as to the effect, if any, of
settlement in same-day funds on trading activity in the certificates.
 
     PHYSICAL CERTIFICATES
 
     Physical certificates will be issued in paper form to certificateholders or
their nominees, rather than to DTC or its nominee, only if:
 
     - we advise the pass through trustee in writing that DTC is no longer
       willing or able to discharge properly its responsibilities as depository
       with respect to the certificates and we are unable to locate a qualified
       successor;
 
     - we elect to terminate the book-entry system through DTC; or
 
                                       12

<PAGE>   129
 
     - after the occurrence of certain events of default or other events
       specified in the related prospectus supplement, certificateholders owning
       at least a majority in interest in a pass through trust advise the
       applicable pass through trustee, us and DTC through DTC participants that
       the continuation of a book-entry system through DTC or a successor to DTC
       is no longer in the certificate owners' best interest.
 
     Upon the occurrence of any of the events described in the three
subparagraphs above, the applicable pass through trustee will notify all
certificate owners through DTC participants of the availability of physical
certificates. Upon surrender by DTC of the global certificates and receipt of
instructions for re-registration, the pass through trustee will reissue the
certificates as physical certificates to certificate owners.
 
     After physical certificates are issued, the pass through trustee or a
paying agent will make distributions of principal, premium, if any, and interest
with respect to certificates directly to holders in whose names the physical
certificates were registered at the close of business on the applicable record
date. Except for the final payment to be made with respect to a certificate, the
pass through trustee or a paying agent will make distributions by check mailed
to the addresses of the registered holders as they appear on the register
maintained by the pass through trustee. The pass through trustee or a paying
agent will make the final payment with respect to any pass through certificate
only upon presentation and surrender of the applicable pass through certificate
at the office or agency specified in the notice of final distribution to
certificateholders.
 
     Physical certificates will be freely transferable and exchangeable at the
office of the pass through trustee upon compliance with the requirements set
forth in the pass through trust agreement. Neither the pass through trustee nor
any transfer or exchange agent will impose a service charge for any registration
of transfer or exchange. However, the pass through trustee or transfer or
exchange agent will require payment of a sum sufficient to cover any tax or
other governmental charge attributable to a transfer or exchange.
 
PAYMENTS AND DISTRIBUTIONS
 
     Subject to the effect of any cross-subordination provisions set forth in
the prospectus supplement for a series of certificates:
 
     - Payments of principal, premium, if any, and interest with respect to the
       equipment notes held for each pass through trust will be distributed by
       the pass through trustee, upon receipt, to certificateholders of that
       trust on the dates and in the currency specified in the applicable
       prospectus supplement, except in certain cases when some or all of the
       equipment notes are in default as described in the applicable prospectus
       supplement. Payments of principal of, and interest on, the unpaid
       principal amount of the equipment notes held in each pass through trust
       will be scheduled to be received by the pass through trustee on the dates
       specified in the applicable prospectus supplement.
 
     - Each certificateholder of a pass through trust will be entitled to
       receive a pro rata share of any distribution in respect of scheduled
       payments of principal and interest made on the equipment notes held for
       such pass through trust.
 
     If we elect or are required to redeem equipment notes relating to one or
more aircraft prior to their scheduled maturity date, payments of principal,
premium (if any) and interest received by the pass through trustee as a result
of the early redemption will be distributed on a special distribution date
determined as described in the applicable prospectus supplement. Payments
received by the pass through trustee following a default under the equipment
notes held for a pass through trust will also be distributed on a special
distribution date determined in the same way. However, if following such a
default the pass through trustee receives any scheduled payments on equipment
notes on a regular distribution date or within five days thereafter, the pass
through trustee will distribute those payments on the date they are received. In
addition, if following a default under equipment notes the pass through trustee
receives payments on the equipment notes on a regular distribution date by
making a drawing under any liquidity facility, as described in the applicable
prospectus supplement, those payments will be distributed to certificateholders
on the regular distribution date. The pass through trustee will mail notice to
the certificateholders of record of the applicable pass through trust stating
the anticipated special distribution date.
 
                                       13

<PAGE>   130
 
POOL FACTORS
 
     Unless otherwise described in the applicable prospectus supplement, the
"pool balance" for each pass through trust or for the certificates issued by any
pass through trust indicates, as of any date, the portion of the original
aggregate face amount of the certificates issued by that pass through trust that
has not been distributed to certificateholders (excluding any payments of
interest or premium). The pool balance for each pass through trust as of any
distribution date will be computed after giving effect to any distribution to
certificateholders to be made on that date.
 
     Unless otherwise described in the applicable prospectus supplement, the
"pool factor" for a pass through trust as of any distribution date for that
trust is the quotient (rounded to the seventh decimal place) computed by
dividing (a) the pool balance by (b) the aggregate original face amount of the
certificates issued by that pass through trust. The pool factor for a pass
through trust as of any distribution date will be computed after giving effect
to the payment of principal, if any, on the equipment notes held for that pass
through trust and distribution to certificateholders of the payment of principal
to be made on that date. Each pass through trust will have a separate pool
factor.
 
     The pool factor for a pass through trust initially will be 1.0000000. The
pool factor for a pass through trust will decline as described in this
prospectus and the related prospectus supplement to reflect reductions in the
pool balance of that pass through trust. As of any distribution date for a pass
through trust, a certificate will represent a share of the pool balance of that
pass through trust equal to the product obtained by multiplying the original
face amount of the certificate by the pool factor for the pass through trust
that issued such certificate. The pool factor and pool balance of each past
through trust will be mailed to the certificateholders of the pass through trust
on each distribution date.
 
     The pool factor for each pass through trust will decline in proportion to
the scheduled repayments of principal on the equipment notes held by that pass
through trust, unless there is an early redemption or purchase of equipment
notes held by a pass through trust or if a default occurs in the repayment of
equipment notes held by a pass through trust. In the event of a redemption,
purchase or default, the pool factor and the pool balance of each pass through
trust affected by the redemption, purchase or default will be recomputed, and a
notice will be mailed to the certificateholders of the pass through trust.
 
REPORTS TO CERTIFICATEHOLDERS
 
     The pass through trustee will include with each distribution of a payment
to certificateholders a statement setting forth the following information:
 
     - the amount of the distribution allocable to principal and the amount
       allocable to premium, if any;
 
     - the amount of the distribution allocable to interest; and
 
     - the pool balance and the pool factor for the pass through trust after
       giving effect to the distribution.
 
     As long as the certificates are registered in the name of DTC or its
nominee, on the record date prior to each distribution date, the pass through
trustee will request from DTC a securities position listing setting forth the
names of all DTC participants reflected on DTC's books as holding interests in
the certificates on that record date. On each distribution date, the applicable
pass through trustee will mail to each DTC participant holding certificates the
statement described above and will make available additional copies as requested
by the DTC participants for forwarding to certificate owners.
 
     After the end of each calendar year, each pass through trustee will prepare
a report for each person that was a holder of one or more of its pass through
certificates at any time during the preceding calendar year. This report will
contain the sum of the amount of distributions allocable to principal, premium
and interest with respect to that pass through trust for the preceding calendar
year or, if the person was a holder of a pass through certificate during only a
portion of the preceding calendar year, for the applicable portion of the
preceding calendar year. In addition, each pass through trustee will prepare for
each person that was a holder of one or more of its pass through certificates at
any time during the preceding calendar year any other information that are
readily available to the pass through trustee and which a certificateholder
reasonably
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<PAGE>   131
 
requests as necessary for the purpose of preparing its federal income tax
returns. The reports and other items described in this section will be prepared
on the basis of information supplied to the pass through trustee by DTC
participants and will be delivered by the pass through trustee to DTC
participants to be available for forwarding by DTC participants to certificate
owners in the manner described above.
 
     If the certificates of a pass through trust are issued in the form of
physical certificates, the pass through trustee of that pass through trust will
prepare and deliver the information described above to each record holder of a
pass through certificate issued by that pass through trust as the name and
period of ownership of the holder appears on the records of the registrar of the
certificates.
 
VOTING OF EQUIPMENT NOTES
 
     A pass through trustee has the right to vote and give consents and waivers
with respect to the equipment notes held by that pass through trust. However,
the pass through trustee's right to vote and give consents or waivers may be
restricted or may be exercisable by another person in accordance with the terms
of an intercreditor agreement, as described in the applicable prospectus
supplement. The pass through trust agreement will set forth:
 
     - the circumstances in which a pass through trustee may direct any action
       or cast any vote with respect to the equipment notes held for its pass
       through trust at its own discretion;
 
     - the circumstances in which a pass through trustee will seek instructions
       from its certificateholders; and
 
     - if applicable, the percentage of certificateholders required to direct
       the pass through trustee to take action.
 
     If the holders of certificates are entitled to the benefits of a liquidity
facility, and the liquidity facility is used to make any payments to
certificateholders, the provider of the liquidity facility may be entitled to
exercise rights to vote or give consents and waivers with respect to the
equipment notes held for the pass through trust that issued the certificates, as
described in the applicable prospectus supplement.
 
EVENTS OF DEFAULT AND CERTAIN RIGHTS UPON AN EVENT OF DEFAULT
 
     The prospectus supplement will specify the events of default that can occur
under the pass through trust agreement and under the indentures relating to the
equipment notes held for the related pass through trust. In the case of a leased
aircraft indenture, a default will include events of default under the related
lease. In the case of any equipment notes that are supported by a liquidity
facility, a default may include events of default under that liquidity facility.
 
     Unless otherwise provided in a prospectus supplement, all of the equipment
notes issued under the same indenture will relate to a specific aircraft and
there will be no cross-collateralization or cross-default provisions in the
indentures. As a result, events resulting in a default under any particular
indenture will not necessarily result in an a default under any other indenture.
If a default occurs in fewer than all of the indentures, payments of principal
and interest on the equipment notes issued under the indentures with respect to
which a default has not occurred will continue to be made as originally
scheduled.
 
     As described below under "-- Cross-Subordination Issues", a prospectus
supplement may describe the terms of any cross-subordination provisions among
certificateholders of separate pass through trusts. If cross-subordination is
provided, payments made pursuant to an indenture under which a default has not
occurred may be distributed first to the holders of the certificates issued
under the pass through trust which holds the most senior equipment notes issued
under all of the indentures.
 
     The ability of the applicable owner trustee or owner participant under a
leased aircraft indenture to cure a default under the indenture, including a
default that results from the occurrence of a default under the related lease,
will be described in the prospectus supplement. Unless otherwise provided in a
prospectus supplement, with respect to any pass through certificates or
equipment notes entitled to the benefits of a liquidity facility, a drawing
under the liquidity facility for the purpose of making a payment of interest as
a result of our failure to have made a corresponding payment will not cure a
default related to our failure.
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<PAGE>   132
 
     The prospectus supplement related to a series of pass through certificates
will describe the circumstances under which the pass through trustee of the
related pass through trust may vote some or all of the equipment notes held in
the pass through trust. The prospectus supplement also will set forth the
percentage of certificateholders of the pass through trust entitled to direct
the pass through trustee to take any action with respect to the equipment notes.
If the equipment notes outstanding under an indenture are held by more than one
pass through trust, then the ability of the certificateholders issued with
respect to any one pass through trust to cause the loan trustee with respect to
any equipment notes held in the pass through trust to accelerate the equipment
notes under the applicable indenture or to direct the exercise of remedies by
the loan trustee under the applicable indenture will depend, in part, upon the
proportion of the aggregate principal amount of the equipment notes outstanding
under that indenture and held in that pass through trust to the aggregate
principal amount of all equipment notes outstanding under that indenture.
 
     In addition, if cross-subordination provisions are applicable to any series
of certificates, then the ability of the certificateholders of any one pass
through trust holding equipment notes issued under an indenture to cause the
loan trustee with respect to any equipment notes held in that pass through trust
to accelerate the equipment notes under that indenture or to direct the exercise
of remedies by the loan trustee under that indenture will depend, in part, upon
the class of equipment notes held in the pass through trust. If the equipment
notes outstanding under an indenture are held by more than one pass through
trust, then each pass through trust will hold equipment notes with different
terms from the equipment notes held in the other pass through trusts and
therefore the certificateholders of each pass through trust may have divergent
or conflicting interests from those of the certificateholders of the other pass
through trusts holding equipment notes issued under the same indenture. In
addition, so long as the same institution acts as pass through trustee of each
pass through trust, in the absence of instructions from the certificateholders
of any pass through trust, the pass through trustee for the pass through trust
could for the same reason be faced with a potential conflict of interest upon a
default under an indenture. In that event, the pass through trustee has
indicated that it would resign as pass through trustee of one or all the pass
through trusts, and a successor trustee would be appointed in accordance with
the terms of the Basic Agreement.
 
     The prospectus supplement for a series of certificates will specify whether
and under what circumstances the pass through trustee may sell for cash to any
person all or part of the equipment notes held in the related pass through
trust. Any proceeds received by the pass through trustee upon a sale will be
deposited in an account established by the pass through trustee for the benefit
of the certificateholders of the pass through trust for the deposit of the
special payments and will be distributed to the certificateholders of the pass
through trust on a special distribution date.
 
     The market for equipment notes in default may be very limited, and we
cannot assure you that they could be sold for a reasonable price. Furthermore,
so long as the same institution acts as pass through trustee of multiple pass
through trusts, it may be faced with a conflict in deciding from which pass
through trust to sell equipment notes to available buyers. If the pass through
trustee sells any equipment notes with respect to which a default under an
indenture exists for less than their outstanding principal amount, the
certificateholders of that pass through trust will receive a smaller amount of
principal distributions than anticipated and will not have any claim for the
shortfall against us, any owner trustee, owner participant or the pass through
trustee. Furthermore, neither the pass through trustee nor the
certificateholders of that pass through trust could take any action with respect
to any remaining equipment notes held in that pass through trust so long as no
default under an indenture exists.
 
     Any amount, other than scheduled payments received on a regular
distribution date, distributed to the pass through trustee of any pass through
trust by the loan trustee under any indenture on account of the equipment notes
held in that pass through trust following a default under such indenture will be
deposited in the special payments account for that pass through trust and will
be distributed to the certificateholders of that pass through trust on a special
distribution date. In addition, if a prospectus supplement provides that the
applicable owner trustee may, under circumstances specified in the prospectus
supplement, redeem or purchase the outstanding equipment notes issued under the
applicable indenture, the price paid by the owner trustee to the pass through
trustee of any pass through trust for the equipment notes issued under that
indenture and held in that pass through trust will be deposited in the special
payments account for the pass
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<PAGE>   133
 
through trust and will be distributed to the certificateholders of the pass
through trust on a special distribution date.
 
     Any funds representing payments received with respect to any equipment
notes in default held in a pass through trust, or the proceeds from the sale by
the pass through trustee of any of those equipment notes, held by the pass
through trustee in the special payments account for that pass through trust
will, to the extent practicable, be invested and reinvested by the pass through
trustee in permitted investments pending the distribution of the funds on a
special distribution date. Permitted investments will be specified in the
related prospectus supplement.
 
     The Basic Agreement provides that the pass through trustee of each pass
through trust will give to the certificateholders of that pass through trust
notice of all uncured or unwaived defaults known to it with respect to that pass
through trust. The Basic Agreement requires the pass through trustee to provide
the notice of default within 90 days after the occurrence of the default.
However, except in the case of default in the payment of principal, premium, if
any, or interest on any of the equipment notes held for a pass through trust,
the pass through trustee will be protected in withholding a notice of default if
it in good faith determines that withholding the notice is in the interest of
the certificateholders of such pass through trust. The term "default" as used in
this paragraph means only the occurrence of a default under an indenture with
respect to equipment notes held in a pass through trust as described above,
except that in determining whether any default under an indenture has occurred,
any related grace period or notice will be disregarded.
 
     The Basic Agreement requires the pass through trustee to act with a
specified standard of care while a default is continuing under an indenture. In
addition, the Basic Agreement contains a provision entitling the pass through
trustee to require reasonable security or indemnification by the
certificateholders of the pass through trust before proceeding to exercise any
right or power under the Basic Agreement at the request of those
certificateholders.
 
     The prospectus supplement for a series of certificates will specify the
percentage of certificateholders entitled to waive, or to instruct the pass
through trustee to waive, any past default with respect to the related pass
through trust and its consequences. The prospectus supplement for a series of
certificates also will specify the percentage of certificateholders entitled to
waive, or to instruct the pass through trustee or the loan trustee to waive, any
past default under an indenture.
 
MERGER, CONSOLIDATION AND TRANSFER OF ASSETS
 
     We will be prohibited from consolidating with or merging into any other
corporation or transferring substantially all of our assets as an entirety to
any other corporation unless the surviving, successor or transferee corporation:
 
     - is validly existing under the laws of the United States or any of its
       states;
 
     - is a citizen of the United States, as defined in Title 49 of the U.S.
       Code relating to aviation, referred to as the "Transportation Code,"
       holding an air carrier operating certificate issued by the Secretary of
       Transportation pursuant to Chapter 447 of Title 49, U.S. Code, if, and so
       long as, that status is a condition of entitlement to the benefits of
       Section 1110 of the U.S. Bankruptcy Code relating to the rights of
       creditors of an airline in the event of the airline's bankruptcy; and
 
     - expressly assumes all of our obligations contained in the Basic Agreement
       and any pass through trust supplement, the note purchase agreements, any
       indentures, any participation agreements and, with respect to aircraft
       leased by us, the applicable leases.
 
     In addition, we will be required to deliver a certificate and an opinion or
opinions of counsel indicating that the transaction, in effect, complies with
these conditions.
 
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<PAGE>   134
 
MODIFICATIONS OF THE BASIC AGREEMENT
 
     The Basic Agreement contains provisions permitting us and the pass through
trustee of each pass through trust to enter into a supplemental trust agreement,
without the consent of the holders of any of the certificates issued by such
pass through trust, in order to do the following, among other things:
 
     - to provide for the formation of such pass through trust and the issuance
       of a series of certificates and to set forth the terms of the
       certificates;
 
     - to evidence the succession of another corporation to us and the
       assumption by that corporation of our obligations under the Basic
       Agreement and the pass through trust agreements;
 
     - to add to our covenants for the benefit of holders of such certificates,
       or to surrender any right or power in the Basic Agreement conferred upon
       us;
 
     - to cure any ambiguity or correct or supplement any defective or
       inconsistent provision of the Basic Agreement or any pass through trust
       agreement, so long as those changes will not materially adversely affect
       the interests of the holders of such certificates, or to cure any
       ambiguity or correct any mistake or, to give effect to or provide for
       replacement liquidity facilities, if applicable, to such certificates;
 
     - to comply with any requirement of the SEC, any applicable law, rules or
       regulations of any exchange or quotation system on which any certificates
       may be listed or of any regulatory body;
 
     - to modify, eliminate or add to the provisions of the Basic Agreement to
       the extent necessary to continue the qualification of the pass through
       trust agreement under the Trust Indenture Act of 1939, and to add to the
       Basic Agreement other provisions as may be expressly permitted by the
       Trust Indenture Act;
 
     - to provide for a successor pass through trustee or to add to or change
       any provision of the Basic Agreement as necessary to facilitate the
       administration of the pass through trusts created under the pass through
       trust agreement by more than one pass through trustee; and
 
     - to make any other amendments or modifications to the Basic Agreement so
       long as those amendments or modifications apply only to certificates of a
       series issued after the date of the amendment or modification.
 
     No pass through trust supplement may be made that will adversely affect the
status of any pass through trust as a grantor trust for U.S. federal income tax
purposes.
 
     The Basic Agreement also contains provisions permitting us and the pass
through trustee of each pass through trust, with the consent of a majority in
interest of the certificateholders of the pass through trust, to execute
supplemental trust agreements adding any provisions to or changing or
eliminating any of the provisions of the Basic Agreement, to the extent relating
to that pass through trust, and the applicable pass through trust supplement, or
modifying the rights of the certificateholders, except that no supplement may,
without the consent of each affected certificateholder:
 
     - reduce in any manner the amount of, or delay the timing of, any receipt
       by the pass through trustee of payments on the equipment notes held in
       the pass through trust or distributions in respect of any pass through
       certificate issued by the pass through trust;
 
     - change the date or place of any payment in respect of any pass through
       certificate, or make distributions payable in currency other than that
       provided for in the certificates, or impair the right of any
       certificateholder to institute suit for the enforcement of any payment
       when due;
 
     - permit the disposition of any equipment note held in the pass through
       trust, except as provided in the pass through trust agreement, or
       otherwise deprive any certificateholder of the benefit of the ownership
       of the applicable equipment note;
 
     - reduce the percentage of the aggregate fractional undivided interests of
       the pass through trust that is required in order for any supplement or
       waiver to be approved;
 
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<PAGE>   135
 
     - modify any of the provisions relating to the rights of the
       certificateholders in respect of the waiver of events of default or
       receipt of payment;
 
     - alter the priority of distributions described in any applicable
       intercreditor agreement, in a manner materially adverse to the interests
       of the certificateholders of such pass through trust; or
 
     - adversely affect the status of any pass through trust as a grantor trust
       for U.S. federal income tax purposes.
 
MODIFICATION OF INDENTURE AND RELATED AGREEMENTS
 
     The prospectus supplement will specify the pass through trustee's
obligations if a pass through trustee, as the holder of any equipment notes held
in a pass through trust, receives a request for its consent to any amendment,
modification or waiver under the indenture under which the equipment notes were
issued, under the lease relating to the aircraft leased by us that was financed
with the proceeds of the equipment notes or under any liquidity facility.
 
CROSS-SUBORDINATION ISSUES
 
     The equipment notes issued under an indenture may be held in more than one
pass through trust and one pass through trust may hold equipment notes issued
under more than one indenture. Unless otherwise provided in a prospectus
supplement, only equipment notes having the same priority for distributions
under the applicable indenture may be held in the same pass through trust. In
that event, payments made on account of a subordinate class of certificates
issued under a prospectus supplement may be subordinated, under circumstances
described in the prospectus supplement, to the prior payment of all amounts
owing to certificateholders of a pass through trust which holds senior equipment
notes issued under the applicable indentures. The prospectus supplement related
to an issuance of certificates will describe the "cross-subordination"
provisions and any related terms, including the percentage of certificateholders
under any pass through trust which are permitted to:
 
     - grant waivers of defaults under any applicable indenture;
 
     - consent to the amendment or modification of any applicable indenture; or
 
     - direct the exercise of remedial actions under any applicable indenture.
 
TERMINATION OF THE PASS THROUGH TRUSTS
 
     Our obligations and those of the pass through trustee with respect to a
pass through trust will terminate upon the distribution to certificateholders of
the pass through trust of all amounts required to be distributed to them
pursuant to the applicable pass through trust agreement and the disposition of
all property held in the pass through trust. In no event will any pass through
trust continue beyond 110 years following the date of the execution of the
applicable pass through trust supplement, or any other final expiration date as
may be specified in the pass through trust supplement. The pass through trustee
will send to each certificateholder of record of the pass through trust notice
of the termination of the pass through trust, the amount of the proposed final
payment and the proposed date for the distribution of the final payment for the
pass through trust. The final distribution to any certificateholder of the pass
through trust will be made only upon surrender of that certificateholder's
certificates at the office or agency of the pass through trustee specified in
the notice of termination.
 
DELAYED PURCHASE OF EQUIPMENT NOTES
 
     On the issuance date of any certificates, if all of the proceeds from the
sale of the certificates are not used to purchase the equipment notes
contemplated to be held in the related pass through trust, the equipment notes
may be purchased by the pass through trustee at any time on or prior to the date
specified in the applicable prospectus supplement. In that event, the proceeds
from the sale of the certificates not used to purchase equipment notes will be
held under an arrangement described in the applicable prospectus
 
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<PAGE>   136
 
supplement pending the purchase of equipment notes. The arrangements with
respect to the payment of interest on funds so held will be described in the
applicable prospectus supplement. If any proceeds are not used to purchase
equipment notes by the date specified in the applicable prospectus supplement,
the proceeds will be returned to the certificateholders.
 
LIQUIDITY FACILITY
 
     The related prospectus supplement may provide that one or more payments of
interest on the certificates of one or more series will be supported by a
liquidity facility issued by an institution identified in the related prospectus
supplement. The provider of the liquidity facility may have a claim on money and
property belonging to a pass through trust that is senior to the
certificateholders' as specified in the related prospectus supplement.
 
THE PASS THROUGH TRUSTEE
 
     Unless otherwise provided in the prospectus supplement for any series of
certificates, the pass through trustee for each series of certificates will be
Wilmington Trust Company. With certain exceptions, the pass through trustee
makes no representations as to the validity or sufficiency of the Basic
Agreement, the pass through trust supplements, the certificates, the equipment
notes, the indentures, the leases or other related documents. The pass through
trustee will not be liable with respect to any series of certificates for any
action taken or omitted to be taken by it in good faith in accordance with the
direction of the holders of a majority in principal amount of outstanding
certificates of that series issued under the Basic Agreement. Subject to those
provisions, the pass through trustee will be under no obligation to exercise any
of its rights or powers under the Basic Agreement at the request of any holders
of certificates issued under that agreement unless they will have offered to the
pass through trustee indemnity satisfactory to it. The Basic Agreement provides
that the pass through trustee in its individual or any other capacity may
acquire and hold certificates and, subject to certain conditions, may otherwise
deal with us and, with respect to the leased aircraft, with any owner trustee
with the same rights it would have if it were not the pass through trustee.
 
     The pass through trustee may resign with respect to any or all of the pass
through trusts at any time, in which event we will be obligated to appoint a
successor trustee. If the pass through trustee ceases to be eligible to continue
as pass through trustee with respect to a pass through trust or becomes
incapable of acting as pass through trustee or becomes insolvent, we may remove
the pass through trustee, or any
certificateholder of the pass through trust for at least six months may, on
behalf of himself and all others similarly situated, petition any court of
competent jurisdiction for the removal of the pass through trustee and the
appointment of a successor trustee. Any resignation or removal of the pass
through trustee with respect to a pass through trust and appointment of a
successor trustee for the pass through trust does not become effective until
acceptance of the appointment by the successor trustee. Pursuant to the
resignation and successor trustee provisions, it is possible that a different
trustee could be appointed to act as the successor trustee with respect to each
pass through trust. All references in this prospectus to the pass through
trustee should be read to take into account the possibility that the pass
through trusts could have different successor trustees in the event of a
resignation or removal.
 
     The Basic Agreement provides that we will pay the pass through trustee's
fees and expenses and indemnify the pass through trustee against certain
liabilities.
 
                       DESCRIPTION OF THE EQUIPMENT NOTES
 
     The statements made under this caption are summaries, and we refer you to
the entire prospectus and detailed information appearing in the applicable
prospectus supplement. Where no distinction is made between the leased aircraft
notes and the owned aircraft notes or between their respective indentures, those
statements refer to any equipment notes and any indenture.
 
     To the extent that any provision in any prospectus supplement is
inconsistent with any provision in this summary, the provision of the prospectus
supplement will control.
 
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<PAGE>   137
 
GENERAL
 
     The equipment notes will be issued under indentures. Equipment notes
secured by an aircraft that is leased to us will be non-recourse and will be
issued under an indenture between an owner trustee and a loan trustee. Equipment
notes secured by an aircraft that is owned by us will be recourse to us and will
be issued under an indenture between a loan trustee and us.
 
     The leased aircraft notes will be non-recourse obligations of the
applicable owner trustee. All of the leased aircraft notes issued under the same
indenture will relate to and will be secured by one or more specific aircraft
leased to us. Unless otherwise specified in the applicable prospectus
supplement, leased aircraft notes will not be secured by any other aircraft.
 
     We will be the issuer of owned aircraft notes. The owned aircraft notes
will be our direct recourse obligations. All of the owned aircraft notes issued
under the same indenture will relate to, and will be secured by, one or more
specific aircraft that we own. Unless otherwise specified in the applicable
prospectus supplement, the owned aircraft notes will not be secured by any other
aircraft.
 
PRINCIPAL AND INTEREST PAYMENTS
 
     Interest received by the pass through trustee on the equipment notes held
in a pass through trust will be passed through to the certificateholders of that
pass through trust on the dates and at the annual rate set forth in the
applicable prospectus supplement until the final distribution for that pass
through trust. Principal payments received by the pass through trustee on the
equipment notes held in a pass through trust will be passed through to the
certificateholders of that pass through trust in scheduled amounts on the dates
set forth in the applicable prospectus supplement until the final distribution
date for that pass through trust.
 
     If any date scheduled for any payment of principal, premium, if any, or
interest with respect to the equipment notes is not a business day, the payment
will be made on the next succeeding business day without any additional
interest.
 
REDEMPTION
 
     The applicable prospectus supplement will describe the circumstances,
whether voluntary or involuntary, under which the equipment notes may be
redeemed or purchased prior to their stated maturity date, in whole or in part.
The prospectus supplement will also describe the premium, if any, applicable
upon redemptions or purchases and other terms applying to the redemptions or
purchases of the equipment notes.
 
SECURITY
 
     The leased aircraft notes will be secured by:
 
     - an assignment by the related owner trustee to the related loan trustee of
       the owner trustee's rights, except for certain rights described below,
       under the lease or leases with respect to the related aircraft, including
       the right to receive payments of rent under those leases; and
 
     - a mortgage granted to the loan trustee in the aircraft, subject to our
       rights under the lease or leases.
 
     Under the terms of each lease, our obligations in respect of each leased
aircraft will be those of a lessee under a "net lease". Accordingly, we will be
obligated, among other things and at our expense, to cause each leased aircraft
to be duly registered, to pay all costs of operating the aircraft and to
maintain, service, repair and overhaul the aircraft or cause it to be
maintained, serviced, repaired and overhauled. With respect to the leased
aircraft, the assignment by the related owner trustee to the related loan
trustee of its rights under the related lease will exclude, among other things:
 
     - rights of the owner trustee and the related owner participant relating to
       indemnification by us for certain matters;
 
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<PAGE>   138
 
     - insurance proceeds payable to the owner trustee in its individual
       capacity and to the owner participant under liability insurance
       maintained by us pursuant to the lease or by the owner trustee or the
       owner participant;
 
     - insurance proceeds payable to the owner trustee in its individual
       capacity or to the owner participant under certain casualty insurance
       maintained by the owner trustee or the owner participant pursuant to the
       lease; and
 
     - any rights of the owner participant or the owner trustee to enforce
       payment of the foregoing amounts and their respective rights to the
       proceeds of the foregoing.
 
     The owned aircraft notes will be secured by a mortgage granted to the
related loan trustee of all of our right, title and interest in and to the owned
aircraft. Under the terms of each owned aircraft indenture, we will be
obligated, among other things and at our expense, to cause each owned aircraft
to be duly registered, to pay all costs of operating the aircraft and to
maintain, service, repair and overhaul the aircraft or cause it to be
maintained, serviced, repaired and overhauled.
 
     We will be required, except under certain circumstances, to keep each
aircraft registered under the Transportation Code, and to record the indenture
and the lease, if applicable, among other documents, with respect to each
aircraft under the Transportation Code. Recordation of the indenture, the lease,
if applicable, and other documents with respect to each aircraft will give the
related loan trustee a perfected security interest in the related aircraft
whenever it is located in the United States or any of its territories and
possessions. The Convention on the International Recognition of Rights in
Aircraft, referred to as the "Convention," provides that this security interest
will also be recognized, with certain limited exceptions, in those jurisdictions
that have ratified or adhere to the Convention.
 
     We will have the right, subject to certain conditions, at our own expense
to register each aircraft in countries other than the United States. Each
aircraft may also be operated by us or under lease, sublease or interchange
arrangements in countries that are not parties to the Convention. The extent to
which the related loan trustee's security interest would be recognized in an
aircraft located in a country that is not a party to the Convention, and the
extent to which the security interest would be recognized in a jurisdiction
adhering to the Convention if the aircraft is registered in a jurisdiction not a
party to the Convention, is uncertain. Moreover, in the case of a default under
an indenture, the ability of the related loan trustee to realize upon its
security interest in an aircraft could be adversely affected as a legal or
practical matter if the aircraft were registered or located outside the United
States.
 
     Unless otherwise specified in the applicable prospectus supplement, the
equipment notes will not be cross-collateralized and consequently the equipment
notes issued in respect of any one aircraft will not be secured by any other
aircraft or, in the case of leased aircraft notes, the related lease. Unless and
until a default under an indenture with respect to a leased aircraft has
occurred and is continuing, the related loan trustee may exercise only limited
rights of the related owner trustee under the related lease.
 
     The loan trustee will invest and reinvest funds, if any, held by it from
time to time under an indenture. The loan trustee will, at our direction, invest
and reinvest funds in certain investments described in the applicable indenture.
We will not be entitled to direct the loan trustee to invest and reinvest funds
with respect to a leased aircraft in the case of a default under the applicable
lease or, with respect to an owned aircraft, in the case of a default under the
applicable indenture. We will pay the net amount of any loss resulting from
these investments.
 
     Section 1110 of the U.S. Bankruptcy Code provides in relevant part that the
right of lessors, conditional vendors and holders of security interests with
respect to "equipment" (as defined in Section 1110 of the U.S. Bankruptcy Code)
to take possession of the equipment in compliance with the provisions of a
lease, conditional sale contract or security agreement, as the case may be, is
not affected by:
 
     - the automatic stay provision of the U.S. Bankruptcy Code, which generally
       prevents repossessions by creditors for the duration of the
       reorganization period;
 
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<PAGE>   139
 
     - the provision of the U.S. Bankruptcy Code allowing the trustee in
       reorganization to use property of the debtor during the reorganization
       period;
 
     - Section 1129 of the U.S. Bankruptcy Code, which governs the confirmation
       of plans of reorganization in Chapter 11 cases; and
 
     - any power of the bankruptcy court to enjoin a repossession.
 
     Section 1110 provides, however, in relevant part that the right of a
lessor, conditional vendor or holder of a security interest to take possession
of an aircraft in the event of an event of default may not be exercised for 60
days following the date of commencement of the reorganization proceedings,
unless specifically permitted by the bankruptcy court, and may not be exercised
at all if, within the 60-day period or any longer period consented to by the
lessor, conditional vendor or holder of a security interest, the trustee in
reorganization agrees to perform the debtor's obligations that become due on or
after that date and cures all existing defaults, other than defaults resulting
solely from the financial condition, bankruptcy, insolvency or reorganization of
the debtor.
 
     "Equipment" is defined in Section 1110 of the U.S. Bankruptcy Code, in
part, as an aircraft, aircraft engine, propeller, appliance, or spare part (as
defined in Section 40102 of Title 49 of the U.S. Code) that is subject to a
security interest granted by, leased to, or conditionally sold to a debtor that
is a citizen of the United States (as defined in Section 40102 of Title 49 of
the U.S. Code) holding an air carrier operating certificate issued by the
Secretary of Transportation pursuant to chapter 447 of Title 49 of the U.S. Code
for aircraft capable of carrying 10 or more individuals or 6,000 pounds of more
of cargo (subject to certain limitations in the case of equipment first placed
in service on or prior to October 22, 1994).
 
     In connection with any issuance of certificates under this prospectus and
the applicable prospectus supplement, it will be a condition to the pass through
trustee's obligation to purchase equipment notes with respect to each aircraft
that our outside counsel provide its opinion to the pass through trustee that,
so long as we continue to be a "citizen of the United States" as defined in
Section 40102 of Title 49 of the U.S. Code holding an air carrier operating
certificate issued by the Secretary of Transportation pursuant to Chapter 447 of
Title 49 of the U.S. Code for aircraft capable of carrying 10 or more
individuals or 6,000 pounds or more of cargo:
 
     - if the aircraft is a leased aircraft, the owner trustee, as lessor under
       the lease for the aircraft, and the loan trustee, as assignee of the
       owner trustee's rights under the lease pursuant to the applicable
       indenture, will be entitled to the benefits of Section 1110 of the U.S.
       Bankruptcy Code with respect to the airframe and engines comprising the
       aircraft; or
 
     - if the aircraft is an owned aircraft, the loan trustee will be entitled
       to the benefits of Section 1110 with respect to the airframe and engines
       comprising the owned aircraft.
 
     The opinion will not address the possible replacement of an aircraft after
an "Event of Loss", as defined in the applicable indenture, in the future.
 
RANKING OF EQUIPMENT NOTES
 
     Some of the equipment notes related to one or more aircraft, as described
in the related prospectus supplement, may be subordinated and junior in right of
payment to other equipment notes related to the same aircraft. The terms of the
subordination, if any, will be described in the related prospectus supplement.
 
PAYMENTS AND LIMITATION OF LIABILITY
 
     We will lease each leased aircraft from an owner trustee for a term
commencing on the delivery date of the aircraft to the owner trustee and
expiring on a date no earlier than the latest maturity date of the related
leased aircraft notes, unless previously terminated as permitted by the terms of
the related lease. We will make basic rent and other payments under each lease
to an owner trustee, as lessor. The owner trustee will assign these payments
under the applicable indenture to the related loan trustee to provide the funds
necessary to pay principal of, premium, if any, and interest due from the owner
trustee on the leased aircraft
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<PAGE>   140
 
notes issued under the indenture. Each lease will provide that under no
circumstances will our rent payments be less than the scheduled payments on the
related leased aircraft notes. The balance of any basic rent payment under each
lease, after payment of amounts due on the leased aircraft notes issued under
the indenture corresponding to the lease, will be paid over to the applicable
owner trustee. Our obligation to pay rent and to cause other payments to be made
under each lease will be our direct obligation.
 
     Except in circumstances in which we purchase a leased aircraft and assume
the related leased aircraft notes, the leased aircraft notes will not be our
direct obligation. None of the owner trustees, the owner participants or the
loan trustees will be personally liable to any holder of leased aircraft notes
for amounts payable under the leased aircraft notes. Except as provided in the
indentures relating to the lease aircraft notes, no owner trustee or loan
trustee will be liable for or incur any liability under the indentures. Except
in the circumstances described above, all amounts payable under any leased
aircraft notes, other than payments made in connection with an optional
redemption or purchase by the related owner trustee or the related owner
participant, will be made only from:
 
     - the assets subject to the lien of the applicable indenture with respect
       to the aircraft or the income and proceeds received by the related loan
       trustee from that aircraft, including rent payable by us under the
       related lease; or
 
     - if so provided in the related prospectus supplement, the applicable
       liquidity facility.
 
     With respect to the leased aircraft notes, except as otherwise provided in
the applicable indenture, no owner trustee will be personally liable for any
amount payable or for any statements, representations, warranties, agreements or
obligations under any indenture or under any leased aircraft notes. None of the
owner participants will have any duty or responsibility under the leased
aircraft indentures or under the leased aircraft notes to the related loan
trustee or to any holder of any leased aircraft note.
 
     Our obligations under each owned aircraft indenture and under the owned
aircraft notes will be our direct obligations.
 
DEFEASANCE OF THE INDENTURES AND THE EQUIPMENT NOTES IN CERTAIN CIRCUMSTANCES
 
     Unless otherwise specified in the applicable prospectus supplement, an
indenture may provide that the obligations of the related loan trustee, the
related owner trustee or us, as the case may be, under that indenture will be
deemed to have been discharged and paid in full on the 91st day after the date
that money or certain United States government securities, in an aggregate
amount sufficient to pay when due (including as a consequence of redemption in
respect of which notice is given on or prior to the date of the deposit)
principal, premium, if any, and interest on all equipment notes issued under
that indenture, are irrevocably deposited with the related loan trustee. The
discharge may occur only if, among other things, there has been published by the
IRS a ruling to the effect that holders of the equipment notes will not
recognize income, gain or loss for federal income tax purposes as a result of
the deposit, defeasance and discharge and will be subject to federal income tax
on the same amount and in the same manner and at the same time as would have
been the case if the deposit, defeasance and discharge had not occurred.
 
     Upon defeasance of the equipment notes, or upon payment in full of the
principal of, premium, if any, and interest on all equipment notes issued under
any indenture on the applicable maturity date, or upon deposit with the
applicable loan trustee of sufficient money no earlier than one year prior to
the date of maturity, the holders of the equipment notes will have no beneficial
interest in or other rights with respect to the related aircraft or other assets
subject to the lien of the indenture and the lien will terminate.
 
ASSUMPTION OF OBLIGATIONS BY CONTINENTAL
 
     Unless otherwise specified in the applicable prospectus supplement, upon
our purchase of any leased aircraft prior to the end of the applicable term, we
may assume on a full recourse basis all of the obligations of the owner trustee,
other than its obligations in its individual capacity, under the indenture and
the leased aircraft notes relating to that lease. If we assume leased aircraft
notes, provisions relating to maintenance, possession and use of the related
aircraft, liens and insurance will be incorporated into the indenture. If we
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<PAGE>   141
 
assume leased aircraft notes in connection with our purchase of a leased
aircraft, leased aircraft notes issued under the indenture will not be redeemed
and will continue to be secured by the aircraft.
 
LIQUIDITY FACILITY
 
     The related prospectus supplement may provide that one or more payments of
interest on the related equipment notes, of one or more series or distributions
made by the pass through trustee of the related pass through trust, will be
supported by a liquidity facility issued by an institution identified in the
related prospectus supplement. Unless otherwise provided in the related
prospectus supplement, the provider of the liquidity facility will have a claim
upon the assets securing the equipment notes senior to the claim of the pass
through trustee.
 
INTERCREDITOR ISSUES
 
     Equipment notes may be issued in different classes, which means that the
equipment notes may have different payment priorities even though they are
issued by the same borrower and relate to the same aircraft. If multiple classes
of equipment notes are issued, the related prospectus supplement will describe
the priority of distributions among the equipment notes, any liquidity
facilities, the ability of any class to exercise and/or enforce any or all
remedies with respect to the related aircraft, and, if the equipment notes are
leased aircraft notes, the related lease, and certain other intercreditor terms
and provisions.
 
                                       25

<PAGE>   142
 
                            U.S. INCOME TAX MATTERS
 
GENERAL
 
     Unless otherwise indicated in the applicable prospectus supplement, the
following summary describes all material generally applicable U.S. federal
income tax consequences to certificateholders of the purchase, ownership and
disposition of the certificates offered by this prospectus, and in the opinion
of Hughes Hubbard & Reed LLP, our special tax counsel, is accurate in all
material respects with respect to the matters discussed in this prospectus.
Except as otherwise specified, the summary is addressed to beneficial owners of
certificates that are citizens or residents of the United States, corporations,
partnerships or other entities created or organized in or under the laws of the
United States or any state therein, or estates or trusts the income of which is
subject to U.S. federal income taxation regardless of its source, and that will
hold the certificates as capital assets.
 
     This summary does not address the tax treatment of U.S. certificateholders
that may be subject to special tax rules, such as banks, insurance companies,
dealers in securities or commodities, tax-exempt entities, holders that will
hold certificates as part of a straddle or holders that have a "functional
currency" other than the U.S. dollar, nor, except as specifically indicated,
does it address the tax treatment of U.S.
certificateholders that do not acquire certificates at the public offering price
as part of the initial offering. The summary is not a comprehensive description
of all of the tax considerations that may be relevant to a decision to purchase
certificates. This summary does not describe any tax consequences arising under
the laws of any state, locality or taxing jurisdiction other than the United
States.
 
     The summary is based upon the tax laws and practice of the United States as
in effect on the date of this prospectus, as well as judicial and administrative
interpretations, in final or proposed form, available on or before that date.
Changes to the existing laws could apply retroactively and could alter the tax
consequences discussed below. We have not sought any ruling from the IRS with
respect to the federal income tax consequences, discussed below, and we cannot
assure you that the IRS will not take contrary positions. The pass through
trusts are not indemnified for any federal income taxes that may be imposed upon
them, and the imposition of any such taxes on a pass through trust could result
in a reduction in the amounts available for distribution to the
certificateholders of that pass through trust. Prospective investors should
consult their own tax advisors with respect to the federal, state, local and
foreign tax consequences to them of the purchase, ownership and disposition of
the certificates.
 
TAX STATUS OF THE PASS THROUGH TRUSTS
 
     In the opinion of our special tax counsel, each pass through trust will be
classified as a grantor trust for U.S. federal income tax purposes.
 
TAXATION OF CERTIFICATEHOLDERS GENERALLY
 
     A U.S. certificateholder will be treated as owning its pro rata undivided
interest in each of the equipment notes and any other property held by the
related pass through trust. Accordingly, each U.S. certificateholder's share of
interest paid on the equipment notes will be taxable as ordinary income, as it
is paid or accrued, in accordance with such U.S. certificateholder's method of
accounting, and a U.S. certificateholder's share of any premium paid on
redemption of an equipment note will be treated as capital gain. If a pass
through trust is supported by a liquidity facility, any amounts received by the
pass through trust under the liquidity facility with respect to unpaid interest
will be treated for U.S. federal income tax purposes as having the same
characteristics as the payments they replace. If we assume an owner trust's
obligations under leased aircraft notes, the assumption would be treated for
federal income tax purposes as a taxable exchange of the leased aircraft notes,
resulting in recognition of gain or loss by the U.S. certificateholder.
 
     Each U.S. certificateholder will be entitled to deduct, consistent with its
method of accounting, its pro rata share of fees and expenses paid or incurred
by the corresponding pass through trust as provided in Section 162 or 212 of the
Internal Revenue Code of 1986, as amended, referred to herein as the "Code".
Certain fees and expenses, including fees paid to the pass through trustee and
the provider of the liquidity
                                       26

<PAGE>   143
 
facility, if applicable, will be paid by parties other than the
certificateholders. These fees and expenses could be treated as constructively
received by the pass through trust, in which event a U.S. certificateholder will
be required to include in income and will be entitled to deduct its pro rata
share of the fees and expenses. If a U.S. certificateholder is an individual,
estate or trust, the deduction for the certificateholder's share of fees or
expenses will be allowed only to the extent that all of the certificateholder's
miscellaneous itemized deductions, including the certificateholder's share of
fees and expenses, exceed 2% of the certificateholder's adjusted gross income.
In addition, in the case of U.S. certificateholders who are individuals, certain
otherwise allowable itemized deductions will be subject generally to additional
limitations on itemized deductions under applicable provisions of the Code.
 
EFFECT OF SUBORDINATION OF CERTIFICATEHOLDERS OF SUBORDINATED TRUSTS
 
     In the event that any pass through trust is subordinated in right of
payment to any other pass through trust and the subordinated trust receives less
than the full amount of the interest, principal or premium paid with respect to
the equipment notes held by it because of the subordination of such pass through
trust, the certificateholders of the subordinated trust would probably be
treated for federal income tax purposes as if they had:
 
     - received as distributions their full share of interest, principal, or
       premium;
 
     - paid over to the preferred class of certificateholders an amount equal to
       their share of the amount of the shortfall; and
 
     - retained the right to reimbursement of the amount of the shortfall to the
       extent of future amounts payable to the certificateholders of the
       subordinated trust on account of the shortfall.
 
     Under this analysis:
 
     - subordinated certificateholders incurring a shortfall would be required
       to include as current income any interest or other income of the
       subordinated trust that was a component of the shortfall, even though
       that amount was in fact paid to a preferred class of certificateholders;
 
     - a loss would only be allowed to subordinated certificateholders when
     their right to receive
      reimbursement of the shortfall becomes worthless; that is, when it becomes
     clear that funds will not be available from any source to reimburse the
     shortfall; and
 
     - reimbursement of the shortfall before a claim of worthlessness would not
       be taxable income to certificateholders because the amount reimbursed
       would have been previously included in income.
 
These results should not significantly affect the inclusion of income for
certificateholders on the accrual method of accounting, but could accelerate
inclusion of income to certificateholders on the cash method of accounting by,
in effect, placing them on the accrual method.
 
ORIGINAL ISSUE DISCOUNT
 
     The equipment notes may be issued with original issue discount, referred to
as OID. The prospectus supplement will state whether any equipment notes to be
held by the related pass through trust will be issued with OID. Generally, a
holder of a debt instrument issued with OID that is not negligible must include
the OID in income for federal income tax purposes as it accrues, in advance of
the receipt of the cash attributable to such income, under a method that takes
into account the compounding of interest.
 
SALE OR OTHER DISPOSITION OF THE CERTIFICATES
 
     Upon the sale, exchange or other disposition of a certificate, a U.S.
certificateholder generally will recognize capital gain or loss equal to the
difference between the amount realized on the disposition, other than any amount
attributable to accrued interest which will be taxable as ordinary income, and
the U.S. certificateholder's adjusted tax basis in the related equipment notes
and any other property held by the corresponding pass through trust. Any gain or
loss will be long-term capital gain or loss to the extent
 
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<PAGE>   144
 
attributable to property held by the pass through trust for more than one year.
In the case of individuals, estates, and trusts, the maximum rate of tax on net
long-term capital gains generally is 20%.
 
FOREIGN CERTIFICATEHOLDERS
 
     Subject to the discussion of backup withholding below, payments of
principal and interest (including any OID) on the equipment notes to, or on
behalf of, any beneficial owner of a certificate that is not a U.S. person will
not be subject to U.S. federal withholding tax provided that:
 
     - the non-U.S. certificateholder does not actually or constructively own
       10% or more of the total combined voting power of all classes of stock of
       an owner participant or us;
 
     - the non-U.S. certificateholder is not a bank receiving interest pursuant
       to a loan agreement entered into in the ordinary course of its trade or
       business, or a controlled foreign corporation for U.S. tax purposes that
       is related to an owner participant or us; and
 
     - certain certification requirements (including identification of the
       beneficial owner of the certificate) are complied with.
 
     Any capital gain realized upon the sale, exchange, retirement or other
disposition of a certificate or upon receipt of premium paid on an equipment
note by a non-U.S. certificateholder will not be subject to U.S. federal income
or withholding taxes if (i) such gain is not effectively connected with a U.S.
trade or business of the non-U.S. certificateholder and (ii) in the case of an
individual, such non-U.S. certificateholder is not present in the United States
for 183 days or more in the taxable year of the sale, exchange, retirement or
other disposition or receipt.
 
BACKUP WITHHOLDING
 
     Payments made on the certificates will not be subject to a backup
withholding tax of 31% unless, in general, the certificateholder fails to comply
with certain reporting procedures or otherwise fails to establish an exemption
from such tax under applicable provisions of the Code.
 
                              ERISA CONSIDERATIONS
 
     Unless otherwise indicated in the applicable prospectus supplement, the
certificates may, subject to certain legal restrictions, be purchased and held
by an employee benefit plan subject to Title I of the Employee Retirement Income
Security Act of 1974, as amended, referred to as "ERISA," or an individual
retirement account or an employee benefit plan subject to section 4975 of the
Code. A fiduciary of an employee benefit plan must determine that the purchase
and holding of a certificate is consistent with its fiduciary duties under ERISA
and does not result in a non-exempt prohibited transaction as defined in section
406 of ERISA or section 4975 of the Code. Employee benefit plans which are
governmental plans, as defined in section 3(32) of ERISA, and certain church
plans, as defined in section 3(33) of ERISA, are not subject to Title I of ERISA
or section 4975 of the Code. The certificates may, subject to certain legal
restrictions, be purchased and held by such plans.
 
                              PLAN OF DISTRIBUTION
 
     Certificates may be sold to one or more underwriters for public offering
and resale by them. Certificates may also be sold to investors or other persons
directly or through one or more dealers or agents. Any underwriter, dealer or
agent involved in the offer and sale of the certificates will be named in an
applicable prospectus supplement.
 
     The certificates may be sold:
 
     - at a fixed price or prices, which may be changed;
 
     - at market prices prevailing at the time of sale;
 
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<PAGE>   145
 
     - at prices related to prevailing market prices; or
 
     - at negotiated prices.
 
     Dealer trading may take place in certain of the certificates, including
certificates not listed on any securities exchange. We do not intend to apply
for listing of the certificates on a national securities exchange. From time to
time, we also may authorize underwriters acting as our agents to offer and sell
the certificates upon the terms and conditions as will be set forth in any
prospectus supplement.
 
     In connection with the sale of certificates, underwriters may be deemed to
have received compensation from us in the form of underwriting discounts or
commissions and may also receive commissions from purchasers of certificates for
whom they may act as agent. Underwriters may sell certificates to or through
dealers, and those dealers may receive compensation in the form of discounts,
concessions or commissions from the underwriters and/or commissions, which may
be changed from time to time, from the purchasers for whom they may act as
agent.
 
     If a dealer is used directly by us in the sale of certificates in respect
of which this prospectus is delivered, we will sell the certificates to the
dealer, as principal. The dealer may then resell the certificates to the public
at varying prices to be determined by the dealer at the time of resale. The
dealer will be named in, and the terms of the sale, will be set forth in the
applicable prospectus supplement.
 
     Certificates may be offered and sold through agents designated by us from
time to time. The agent involved in the offer or sale of the certificates will
be named in, and any commissions payable by us to the agent will be set forth
in, the applicable prospectus supplement. Unless otherwise indicated in the
applicable prospectus supplement, the agent will be acting on a best efforts
basis for the period of its appointment.
 
     We may solicit directly offers to purchase certificates, and certificates
may be sold directly to institutional investors or others who may be deemed to
be underwriters within the meaning of the Securities Act with respect to any
resale. The terms of these sales will be described in the applicable prospectus
supplement. Except as set forth in the applicable prospectus supplement, no
director, officer or employee of ours will solicit or receive a commission in
connection with direct sales by us of the certificates, although those persons
may respond to inquiries by potential purchasers and perform ministerial and
clerical work in connection with our direct sales.
 
     Any underwriting compensation that we pay to underwriters, dealers or
agents in connection with the offering of certificates, and any discounts,
concessions or commissions allowed by underwriters to participating dealers,
will be set forth in an applicable prospectus supplement.
 
     Underwriters, dealers and agents participating in the distribution of the
certificates may be deemed to be underwriters, and any discounts and commissions
received by them and any profit realized by them on resale of the certificates
may be deemed to be underwriting discounts and commissions under the Securities
Act. Underwriters, dealers and agents may be entitled under agreements with us
to indemnification against and contribution toward certain civil liabilities,
including liabilities under the Securities Act, and to
reimbursement by us for certain expenses.
 
     Underwriters, dealers and agents may engage in transactions with, or
perform services for, us and our subsidiaries in the ordinary course of
business.
 
     If so indicated in an applicable prospectus supplement and subject to
existing market conditions, we will authorize dealers acting as our agents to
solicit offers by certain institutions to purchase certificates from us at the
public offering price set forth in the applicable prospectus supplement pursuant
to delayed delivery contracts. These contracts will provide for payment and
delivery on the date or dates stated in the applicable prospectus supplement.
Each contract will be for an amount not less than, and the aggregate principal
amount of certificates sold pursuant to these contracts will not be less nor
more than, the respective amounts stated in the applicable prospectus
supplement. Institutions with whom these contracts, when authorized, may be made
include commercial and savings banks, insurance companies, pension funds,
investment companies, educational and charitable institutions and other
institutions, but will in all cases be subject to our approval. These contracts
will not be subject to any conditions, except for the condition that the
purchase by an
                                       29

<PAGE>   146
 
institution of the certificates not be prohibited at the time of delivery under
the laws of any jurisdiction in the United States to which the institution is
subject. A commission set forth in the applicable prospectus supplement will be
granted to underwriters and agents soliciting purchases of certificates pursuant
to contracts accepted by us. Agents and underwriters will have no responsibility
in respect of the delivery or performance of these contracts.
 
     If an underwriter or underwriters is used in the sale of any certificates,
the applicable prospectus supplement will state the intention, if any, of the
underwriters at the date of the prospectus supplement to make a market in the
certificates. We cannot assure you that there will be a market for the
certificates.
 
     The place and time of delivery for the certificates in respect of which
this prospectus is delivered will be set forth in the applicable prospectus
supplement.
 
                                 LEGAL OPINIONS
 
     Unless otherwise indicated in the applicable prospectus supplement, our
counsel, Hughes Hubbard & Reed LLP, New York, New York, will render an opinion
with respect to the validity of the certificates being offered by such
prospectus supplement. Unless otherwise indicated in the applicable prospectus
supplement, Hughes Hubbard & Reed LLP will rely on the opinion of counsel for
the pass through trustee as to certain matters relating to the authorization,
execution and delivery of the certificates by, and the valid and binding effect
on, the pass through trustee.
 
                                    EXPERTS
 
     Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements and schedule included in our Annual Report on Form 10-K for
the year ended December 31, 1998, as set forth in their reports, which are
incorporated by reference in this prospectus and elsewhere in the registration
statement. Our financial statements and schedule are, and audited consolidated
financial statements to be included in subsequently filed documents will be,
incorporated by reference in reliance on Ernst & Young LLP's reports pertaining
to such financial statements, to the extent covered by consents filed with the
SEC, given on their authority as experts in auditing and accounting.
 
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