Record fuel pri= CONTINENTAL AIRLINES ANNOUNCES SECOND =0AQUARTER LOSS=0A =0ARecord fuel pri= ces =0Ahurt results for quarter=0A =0AHOUSTON, July 17, 2008 =0A=96 Contine= ntal Airlines (NYSE: CAL) today reported a second quarter 2008 net loss =0A= of $3 million ($0.03 diluted loss per share). Excluding $22 million of =0A= previously announced net after tax special items, Continental recorded a ne= t =0Aloss of $25 million ($0.25 diluted loss per share). =0AThe =0Acombina= tion of record high fuel prices, weakening economic conditions and a weak = =0Adollar has resulted in the worst financial environment for U.S. network = carriers =0Asince the 9/11 terrorist attacks.=0A=93My co-workers are =0Adoi= ng a great job working through the significant challenges facing our =0Aind= ustry,=94 said Larry Kellner, Continental=92s chairman and chief executive = =0Aofficer. =93We will continue to work together to react to the market an= d maintain =0Aour focus on providing quality service to customers.=94=0AIn = response to these =0Achallenges, Continental implemented a number of initia= tives in the second =0Aquarter of 2008 to maintain its competitive position= in the industry and bolster =0Aits cash balance including:=0A=B7 An= nouncing capacity =0Areductions beginning in September 2008, which Continen= tal expects will result in =0Aa 10-percent decline in domestic mainline cap= acity, a 15.4-percent decline =0Ain domestic mainline departures and =0Aa 6= .7-percent decline =0Ain consolidated capacity in the fourth quarter 2008 c= ompared to the same period =0A2007=0A=B7 Accelerating the =0Aretirem= ent of 67 Boeing 737-300 and 737-500 aircraft, removing a majority of the = =0Aleast fuel efficient aircraft from its mainline fleet by the end of 2009= , =0Adriving the difficult decision to eliminate approximately 3,000 positi= ons across =0Aall work groups =0A=B7 Entering into a new =0Aseven-ye= ar capacity purchase agreement with ExpressJet Airlines, Inc. to provide = =0Aregional jet service at lower rates, resulting in approximately $50 mill= ion of =0Aannual savings=0A=B7 Raising approximately =0A$900 million= through a variety of initiatives including an amended credit card =0Amarke= ting agreement, issuance of common stock, sale of Continental=92s remaining= =0Aequity interest in Copa Holdings, S.A. (Copa) and several secured =0Abo= rrowings=0A=B7 Entering into framework =0Aagreements for a planned t= ransition to the Star Alliance, linking worldwide =0Anetworks and services = of alliance members including United, Lufthansa, Air =0ACanada, Singapore, = ANA and Air China, to benefit customers and create revenue =0Aopportunities= , cost savings and other efficiencies=0A=B7 Implementing a new =0Ach= ecked bag policy charging non-Elite customers oncertain economy-class =0Ati= ckets a $25 service fee for a second checked bag, and numerous fuel surchar= ge =0Aand fare increases=0ASecond =0AQuarter Revenue and Capacity=0ATotal r= evenue for the =0Aquarter of $4.0 billion increased 9.0 percent ($334 milli= on) over the same =0Aperiod in 2007, as a result of increased fuel surcharg= es on passenger tickets =0Aand on cargo, as well as international growth, i= ncreased fees and fare =0Aincreases. Passenger revenue grew 7.5 percent ($= 254 million) compared to the =0Asecond quarter of last year. =0A=93Despite = solid operational and =0Afinancial performance, we were unable to generate = enough revenue to keep pace =0Awith the stratospheric increase in fuel pric= es,=94 said Jeff Smisek, president. =0A=93We will continue to take actions= to increase our revenue and decrease our =0Acosts, while preserving our cu= lture and core product integrity.=94 =0AConsolidated revenue =0Apassenger m= iles (RPMs) for the quarter increased 0.5 percent =0Ayear-over-year on a = =0Acapacity increase of 2.7 percent, resulting in a second quarter consolid= ated =0Aload factor of 81.4 percent, 1.8 points below the second quarter re= cord set in =0A2007.=0AConsolidated yield for =0Athe quarter increased 7.0 = percent year-over-year. Consolidated revenue per =0Aavailable seat mile (R= ASM) for the quarter increased 4.6 percent year-over-year =0Adue to increas= ed yields.=0AMainline RPMs in the =0Asecond quarter of 2008 decreased 0.2 p= ercent compared to the second quarter =0A2007, on a capacity increase of 2.= 0 percent. Mainline load factor was 81.7 =0Apercent, down 1.8 points year-= over-year. Mainline yield increased 6.0 percent =0Aover the same period = =0Ain 2007. As a result, second quarter 2008 mainline RASM was up 3.8 perc= ent over =0Athe second quarter of 2007.=0APassenger revenue for =0Athe seco= nd quarter of 2008 and period-to-period comparisons of related =0Astatistic= s by geographic region for the company=92s mainline operations and =0Aregio= nal operations are as follows:=0A=0A=0A =0APassenger=0ARevenue=0A(in =0Amil= lions) Percentage Increase =0A(Decrease) in=0ASecond Quarter 2008 vs. =0ASe= cond Quarter 2007 =0APassenger=0ARevenue =0ARASM =0AASMs =0A =0AD= omestic $1,504 2.1 % 5.2 % (2.9)% =0ATrans-Atlantic 805 12.4 % = (1.3)% 14.0 % =0ALatin =0AAmerica 435 11.4 % 6.3 % 4.8 % =0APac= ific 240 0.0 % 7.4 % (6.9)% =0ATotal =0AMainline $2,984 5.8 % 3= .8 % 2.0 % =0A =0ARegional $ 666 15.6 % 6.4 % = 8.6 % =0A =0AConsolidated $3,650 7.5 % 4.6 % 2.7 %= =0A =0A =0ASecond =0AQuarter Operational Accomplishments=0ADuring the qu= arter, Continental =0Arecorded a U.S. Department of Transportation (DOT) on= -time arrival rate of 73.1 =0Apercent and a systemwide mainline segment com= pletion factor of 99.5 percent. =0AFor the fifth straight year, =0AContine= ntal was named the =93Best Airline in North America=94 at the 2008 OAG =0AA= irline of the Year Awards. =0AIn conjunction with the =0ATransportation Se= curity Administration (TSA), Continental expanded its paperless =0Aboarding= pass pilot program, already in place at its Houston hub, to include its = =0ANew York hub at Newark Liberty International Airport as well as Washingt= on =0ANational Airport and Boston=92s Logan International Airport. The pro= gram allows =0Acustomers to receive boarding passes electronically on their= cell phones or =0APDAs, which are scanned by TSA security officers at the = checkpoint and can be =0Aused to board Continental=92s flights, eliminating= the need for paper boarding =0Apasses. =0ADuring the quarter, Continental = =0Alaunched the first-ever nonstop seasonal service between its hub at Clev= eland =0AHopkins International Airport and Charles de Gaulle Airport in Par= is, France. =0AHigh =0AFuel Costs Taking a Toll =0AContinental=92s mainlin= e =0Acost per available seat mile (CASM) increased 15.1 percent (down 4.8 p= ercent =0Aholding fuel rate constant and excluding special charges) in the = second quarter =0Acompared to the same period last year. The company=92s a= verage price per mainline =0Agallon of fuel, including fuel taxes, increase= d 66.2 percent =0Ayear-over-year.=0A=93We had another quarter =0Aof outstan= ding cost control excluding the impact of fuel,=94 said Jeff Misner, =0ACon= tinental=92s executive vice president and chief financial officer. =93The = entire =0Ateam continues to impress me with their ability to find new ways = to do things =0Abetter and more efficiently, helping us mitigate rising fue= l costs.=94 =0ARecord-high jet fuel prices are =0Aadversely affecting the = company=92s financial results. In the second quarter of 2008, the price of= a barrel of =0AWest Texas Intermediate crude oil averaged almost $119 per = barrel compared to =0Aless than $65 per barrel for the same period last yea= r, with crude =0Aoil prices peaking at $140.21 per barrel and Gulf Coast je= t fuel peaking at =0A$169.79 per barrel during the quarter. Mainline fuel = costs increased 66 percent =0A($542 million) in the second quarter compared= to the second quarter of 2007. =0ADuring the quarter, Continental also inc= urred additional fuel costs of =0A$124 million year-over-year that were inc= luded as part of its regional capacity =0Apurchase cost. As a result, the = total year-over-year impact of higher fuel =0Acosts on the company for the = second quarter was $666 million, accounting for the =0Acompany=92s increase= in operating expenses compared to the second quarter of =0A2007. Continen= tal=92s annualized fuel costs increase by approximately $43 million =0Afor = each $1-per-barrel rise in the price of crude oil. =0ADuring the quarter, = Continental =0Arecognized a total of $112 million in fuel hedging gains. O= f this total, $79 =0Amillion of realized gains were included as operating e= xpenses when the =0Aunderlying fuel hedged was used. The remaining $33 mil= lion are unrealized gains =0Awhich relate to fuel hedges for the third quar= ter of 2008 and beyond which under =0Aaccounting rules were required to be = recognized in the second quarter. This $33 =0Amillion of gains, which are = included in the company=92s statement of operations =0Aunder nonoperating i= ncome (expense), were caused by the company=92s hedge =0Apositions in crude= and heating oil experiencing a relatively higher increase in =0Avalue than= the jet fuel being hedged.=0AAs of July 16, 2008, =0AContinental had hedge= d approximately 63 percent of the company=92s projected =0Aconsolidated fue= l requirements for the third and fourth quarters of 2008, and =0Ahad hedged= approximately 29 percent of its projected consolidated fuel =0Arequirement= s for the first half of 2009. =0AOther Financial =0AAccomplishments=0ADuri= ng the quarter, Continental =0Acompleted a public offering of 11 million sh= ares of its common stock, raising =0Anet proceeds of $162 million, and sold= its remaining equity stake in Copa, =0Araising net proceeds of $149 millio= n.=0AIn June 2008, Continental amended its =0Abankcard joint marketing agre= ement with Chase bank, under which Chase purchases =0Afrequent flyer mileag= e credits to be earned by OnePass members for making =0Apurchases using a C= ontinental Airlines credit card issued by Chase. Under the =0Aagreement, Co= ntinental received a payment of $413 million, of which $235 million =0Arela= ted to the advance purchase of frequent flyer mileage credits and the =0Aba= lance of which is in consideration of certain other commitments with respec= t =0Ato the co-branding relationship, including the extension of the term o= f the =0Aagreement until December 31, 2016.=0ADuring the second quarter, = =0AContinental closed transactions to borrow approximately =0A$208 million = under =0Avarious debt agreements, secured by aircraft purchase agreements a= nd mainline =0Ajet aircraft. The company received net proceeds of $173 mil= lion and expects to =0Areceive the remaining borrowings in the fourth quart= er of 2008. =0AContinental ended the =0Asecond quarter with approximately $= 3.4 billion in unrestricted cash and =0Ashort-term investments, excluding a= ll student loan related auction rate =0Asecurities. =0AFleet =0AChanges Im= prove Efficiency=0AThe company continues to improve fuel =0Aefficiency by a= dding modern, fuel efficient aircraft to its fleet and installing =0Awingle= ts on additional aircraft. During the quarter, the company took delivery = =0Aof six new Boeing 737-900ER aircraft, which have one of the lowest opera= ting =0Acosts in the fleet and allow Continental to serve high demand marke= ts more =0Aefficiently. The company also took delivery of four new Boeing 7= 37-800 aircraft =0Ain the quarter. =0AContinental=92s young, fuel efficien= t =0Afleet provides a natural hedge against rising jet fuel costs. The car= rier is =0Aabout 35 percent more fuel efficient per mainline revenue passen= ger mile than it =0Awas in 1997.=0ADuring the quarter, Continental =0Ainsta= lled winglets on two of the company=92s 737-500s and seven 737-900 aircraft= , =0Aand now has winglets on 244 of its mainline aircraft. All of the comp= any=92s =0A737-700s, 800s, 900ERs and 757-200s have winglets, as do select = airplanes from =0AContinental=92s 737-300, =0A-500 and -900 series =0Afleet= s. Winglets increase aerodynamic efficiency and decrease drag, reducing = =0Afuel consumption and emissions by up to five percent.=0AIn addition, Con= tinental announced it =0Awill accelerate the retirement of 67 Boeing 737-30= 0 and 737-500 aircraft from =0Aits fleet by the end of 2009, with 27 of the= se aircraft to be removed from =0Aservice in September 2008. =0AOther =0AMa= tters=0AContinental contributed $24 million =0Ato its defined benefit pensi= on plans during the second quarter of 2008. On July =0A16, 2008, Continent= al contributed an additional $18 million for a total of $102 =0Amillion in = contributions to its defined benefit pension plans this year, =0Asatisfying= the company=92s required minimum contributions for calendar year 2008. = =0AGiven current market conditions, the company does not plan to make addit= ional =0Acontributions this year. =0AContinental entered into a new =0Aseve= n-year capacity purchase agreement (CPA) with ExpressJet, effective July 1,= =0A2008. Under the amended CPA, ExpressJet willprovide regional jet servi= ce for Continental at rates that =0Aare lower than rates under its prior ag= reement and more competitive with those =0Aoffered by other regional servic= e providers. The amended CPA covers a minimum of 205 regional =0Ajets in t= he first year and adjusts to 190 regional jets thereafter, subject to =0Ale= ase expirations.=0AIn June 2008, Continental entered =0Ainto a framework ag= reement with United Airlines to link networks and cooperate =0Aextensively = on frequent flier programs, lounges, facility utilization, =0Ainformation t= echnology and procurement services worldwide to the benefit of =0Acustomers= . In addition, Continental will apply to join the already established =0Aa= ntitrust immunized alliance among United, Lufthansa, Air Canada and certain= =0Aother members of the Star Alliance, with the goal of entering into inte= rnational =0Ajoint ventures with United and other members of the Star =0AAl= liance.=0ACorporate =0ABackground=0AContinental Airlines is the world=92s = =0Afifth largest airline. Continental, together with Continental Express a= nd =0AContinental Connection, has more than 3,000 daily departures througho= ut the =0AAmericas, Europe and Asia, serving 140 domestic and 139 internati= onal =0Adestinations. More than 550 additional points are served via SkyTea= m alliance =0Aairlines. With more than 46,000 employees, Continental has h= ubs serving New =0AYork, Houston, Cleveland and Guam, and together with Con= tinental Express, =0Acarries approximately 69 million passengers per year. = Continental consistently =0Aearns awards and critical acclaim for both its = operation and its corporate =0Aculture. For more company information, visi= t continental.com. =0AContinental Airlines will conduct a regular quarterly= =0Atelephone briefing today to discuss these results and the company's fin= ancial =0Aand operating outlook with the financial community and news media= at 9:30 a.m. =0ACT/10:30 a.m. ET. To listen to a live broadcast of this br= iefing, go to =0Acontinental.com/About Continental /Investor Relations.=0AT= his press release =0Acontains forward-looking statements that are not limit= ed to historical facts, =0Abut reflect the company=92s current beliefs, exp= ectations or intentions regarding =0Afuture events. All forward-looking sta= tements involve risks and uncertainties =0Athat could cause actual results = to differ materially from those in the =0Aforward-looking statements. For e= xamples of such risks and uncertainties, please =0Asee the risk factors set= forth in the company=92s 2007 Form 10-K and its other =0Asecurities filing= s, including any amendments thereto, which identify important =0Amatters su= ch as the consequences of the company=92s high leverage, the significant = =0Acost of aircraft fuel, its transition to a new global alliance, delays i= n =0Ascheduled aircraft deliveries, its high labor and pension costs, servi= ce =0Ainterruptions at one of its hub airports, disruptions to the operatio= ns of its =0Aregional operators, disruptions in its computer systems, and i= ndustry =0Aconditions, including the airline pricing environment, industry = capacity =0Adecisions, industry consolidation, terrorist attacks, regulator= y matters, =0Aexcessive taxation, the availability and cost of insurance, p= ublic health =0Athreats, an economic downturn in the U.S. and global econom= ies and the seasonal =0Anature of the airline business. The company underta= kes no obligation to publicly =0Aupdate or revise any forward-looking state= ments to reflect events or =0Acircumstances that may arise after the date o= f this press release, except as =0Arequired by applicable law.=0A-tables = =0Aattached- <<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> If you wish to unsubscribe from the AIRLINE List, please send an E-mail to: "listserv@xxxxxxxxxxxxxxxxx". Within the body of the text, only write the following:"SIGNOFF AIRLINE".