Continental Airlines Files 10-K With SEC

16 March 2005

Continental Airlines today
issued the following bulletin to its employees to update them on the
company filing its 2004 10-K with the Securities and Exchange Commission: Continental today filed its annual financial report on Form 10-K as
required by the Securities and Exchange Commission (SEC). The filing will
likely generate media coverage because SEC regulations require that
Continental provide detailed information on its future prospects,
including what actions Continental will be forced to take if the tentative
union agreements are not ratified on March 30.

These actions include: * Increasing the size of needed pay and benefit
reductions to $800 million from the current $500 million—This
60-percent increase is because, without March 30 ratifications,
Continental’s deteriorating financial condition will require significantly
greater pay and benefit reductions from each work group. * Subleasing or
selling 24 Boeing 737-500 aircraft—As part of its contingency planning,
Continental has engaged aircraft broker Focus Aviation to market these
aircraft.—The 737-500 aircraft has relatively few seats compared to
Continental’s other mainline aircraft and has become less attractive to
operate in a low-fare environment.—This mainline fleet reduction will
result in frequency reductions and aircraft gauge downsizing in various
markets. * Furloughing a significant number of employees—With the
reduction of the 737-500 fleet, Continental will shrink, resulting in the
need for fewer employees.—The reduction in force will include a
significant number of pilots, flight attendants, mechanics and other
positions related to the drop in fleet size and block hours. * Canceling
the Boeing aircraft order—Cancel plans to lease eight 757-300 aircraft
—Cancel accelerated delivery of six Boeing 737-800 aircraft—Cancel
orders for 10 new Boeing 787 aircraft—Discuss with Boeing deferring all
40 remaining aircraft on order that are scheduled for delivery beyond 2005
* Needing to post up to an additional $335 million in cash deposits,
further reducing cash available for operations and pension contributions
—This will occur if Continental fails to maintain its liquidity
covenants contained in its credit card processing agreement.