Continental Reports Fourth Quarter

Continental Airlines today reported fourth quarter net income of $47
million ($0.67 diluted earnings per share). These results include
additional net income of $85 million relating to special items, primarily
driven by the sale of interests in Hotwire and Orbitz, as outlined in the
attached table, “Summary of Special Items.”

Excluding the special items, Continental`s loss per share was $0.58 for
the quarter, which compares favorably to the First Call mean estimate of
$0.81 loss per share. The results, excluding special items, are a 65
percent improvement over the fourth quarter 2002 loss per share of $1.67.

Continental`s net income for the full year was $38 million ($0.58 diluted
earnings per share). Excluding special items ($136 million after taxes)
and the government security fee reimbursement ($111 million after taxes),
the net loss for the year would have been $209 million.

“Our cost reduction efforts have successfully prepared us for a tough
revenue environment in 2004,” said Continental`s Chairman and CEO Gordon
Bethune. “However, it`s going to be a struggle to break even this year
with persistently high fuel prices.”

Passenger revenue for the quarter was $2.1 billion, 8.4 percent higher
than the same period last year as a result of record mainline and regional
load factors. Continental`s mainline load factor in the fourth quarter of
2003 was 75.5 percent, up 4.4 points over the same period in 2002.
Mainline revenue passenger miles increased 6.3 percent on flat capacity
compared to the fourth quarter of 2002. Mainline yields continued to be
weak during the quarter, decreasing 2.1 percent year-over-year.


Revenue passenger miles for Continental`s regional operations were up 51.3
percent on a capacity increase of 39.3 percent during the fourth quarter
of 2003, compared to the fourth quarter of 2002. The airline`s regional
load factor was 70.4 percent in the fourth quarter, a 5.7 point increase
over the same period in 2002.

Continental recorded an increase in mainline revenue per available seat
mile (RASM) of 3.8 percent in the fourth quarter of 2003 over the same
period last year, maintaining its domestic length-of-haul adjusted yield
and RASM premiums to the industry. Pacific load factors in the fourth
quarter improved more than 10 points year-over-year due to the negative
impact last December of supertyphoon Pongsona on Micronesia results, and
improved year-over-year Trans-Pacific bookings.
Other revenue for the quarter includes $24 million of additional income
due to a change in the expected redemption of frequent flyer mileage
credits sold versus original estimates. Revenue from the sale of mileage
credits is deferred and recognized when transportation is likely to be
taken, based on estimates of the fair value of tickets to be redeemed.

Continental continued its outstanding operational performance in 2003,
with the airline reporting a record 104 days without a single flight
cancellation. With passenger traffic at record levels, Continental
recorded a U.S. Department of Transportation (DOT) on-time arrival rate of
82.0 percent and a completion factor of 99.2 percent for the year.

“In spite of two blizzards and record load factors, our team did an
excellent job to ensure our customers had a great holiday travel
experience,” said Larry Kellner, Continental`s president and chief
operating officer. “Over the 12 day December holiday period, Continental
cancelled only five of 11,982 flights.”

Sales at continued on a record pace, increasing 94 percent
in the fourth quarter 2003 over the same period last year. Online sales,
including third party sites, accounted for 33 percent of the total
segments flown in the fourth quarter.

Continental entered into alliance agreements with AeroMexico and Maersk
Air of Denmark during the fourth quarter. The codeshare flights, beginning
in the first quarter of 2004, will simplify travel by facilitating
connections between Continental and each of the two carriers, providing
greater choice and convenience to passengers.

Continental began interline electronic ticketing with KLM Royal Dutch
Airlines and AeroMexico, allowing customers to use a single electronic
ticket when their itineraries include both carriers. These two airlines
join the growing list of successful interline electronic ticketing
agreements Continental has with 19 airlines, including Northwest, Delta,
American, United, US Airways, Alaska, Aloha and America West.

Continental received the highest overall score of all airlines surveyed in
the 2003 Business Travel News Annual Airlines Survey. Continental garnered
top marks in five of the 10 categories, including services/amenities,
special VIP services, quality of airline communication, value of its sales
manager visits and empowerment of Continental`s sales representatives.

During the fourth quarter, Continental began daily nonstop service between
Houston and Ciudad del Carmen, Mexico; Houston and Manzanillo, Mexico; and
New York to Bridgetown, Barbados. In addition, Continental increased the
frequency of its nonstop service between New York and Hong Kong, and
announced that it will resume its second daily non-stop service between
New York and Tel Aviv, Israel in March 2004. Continental`s regional
operator, Continental Express, began twice daily nonstop service linking
New York with Huntsville, Alabama, and daily nonstop flights between New
York and Tulsa, Oklahoma.