Welcome to Continental Airlines third quarter 2008 financial results conference call. (Operator Instructions) I would like to turn the conference over to Ned Walker, Senior Vice President of Corporate Communications and DeAnne Gabel, Director of Investor Relations.

Here in Houston we have Larry Kellner, our Chairman and Chief Executive Officer, Jeff Smisek, our President & Chief Operating Officer and a Member of the Board, Zane Rowe, our Executive Vice President and Chief Financial Officer, Mark Moran, our Executive Vice President of Operations and Jim Compton, our Executive Vice President of Marketing as well as Jerry Laderman, our Senior Vice President of Finance and Treasurer. The format will begin with Larry will have some overview comments. Jeff Smisek will then review capacity and revenue and then we’ll conclude the comments with Zane Rowe who will discuss cost structure and the balance sheet. We’ve allocated 20 minutes for the executive comments followed by a 25 minute Q&A session for the analyst and then a 15 minute session for the media. We’d request that you have one question with a brief follow up and that way we should be able to accommodate everyone. With that, I’ll turn it over to DeAnne.

Earlier today we issued an update for investors presenting information relating to our financial and operational outlook for the fourth quarter and full and full year 2008 and other information. This investor update was included in the filing with the SEC and can be found on our website under the investor relations section. Please note that today we will be discussing some non-GAAP financial measures such as net loss excluding special items. A reconciliation of the GAAP to non-GAAP financial measures to be discussed can be found on Continental’s website at www.Continental.com under the investor relations section. In addition, our discussion today may contain forward-looking statements that are not limited to historical facts but reflect the company’s current beliefs, expectations or intentions regarding future events. All forward-looking statements involve risks and uncertainties that could cause actual results to differ materially. For examples of risks and uncertainties please see the risk factors set forth in the company’s 2007 10K as well as other Securities filings.

I want to start by thanking my co-workers for doing a great job again this quarter. Despite several severe storms including Hurricane Ike that affected both my co-workers personal lives as well as our operations, my co-workers did a great job working together to provide a suburb product. During the quarter they earned on-time incentives for two out of the three months. I also want to compliment my co-workers on how smoothly they implemented our schedule reduction and the great job they did minimizing furloughs through voluntary programs. Regardless of the challenges that arise, our teams’ dedication delivered excellent customer service and a premium product truly sets us apart from the competition. With that, let me recap our third quarter results. For the third quarter 2008 Continental reported a net loss of $145 million or a loss of $1.32 per diluted share excluding $91 million of previously announced special items. Including those special items, we reported a net loss of $236 million or a loss of $2.14 per diluted share for the third quarter. It’s disappointing to report a loss in what is historically been one of our seasonally stronger quarters. But, given that our consolidated fuel expense for the third quarter was $736 million higher than it was last year, I think our team did an excellent job minimizing the loss. During the quarter we unveiled details of the new lay flat seat for our business first cabin. I think our customers are going to be delighted with the new seat and I’m pleased that the team was able to design a seat that lays completely flat without compromising functionality or the effective use of cabin space. Customers will begin seeing the new seat on Continental’s 777 and 757 200 aircraft that serve long haul international routes beginning in…

I want to join Larry in thanking my co-workers for running a solid operation for the quarter. In addition to the usual summer storms that impact our operations we also had to deal with a couple of tropical storms and several hurricanes including Hurricane Ike that directly hit Houston and forced us to shut down our Houston hub for two and a half days. Despite these challenges and the personal impact on thousands of our co-workers who had damaged homes and no power or water, the team did a great job keeping the operation running smoothly and serving our customers. We estimate that the adverse impact of Hurricane Ike on our operating results for the third quarter was approximately $50 million. During the third quarter we had good revenue growth and again recorded year-over-year yield improvements in all regions. For the third quarter we had a domestic mainline year-over-year yield increase of 9.4%. We traded some load factor for those higher yields but the trade off was worth wild as our domestic mainline RASM was up 6.8% year-over-year. In the third quarter Trans Atlantic RASM was up 6% driven by a year-over-year increase in yields of 7.8% as load factor was down slightly. The positive foreign exchange impact on Trans Atlantic RASM was about two and a half points. Our Pacific region includes our Trans Pacific routes as well as our Continental Micronesia operations. Overall, our Pacific yields were up 9.3% for the third quarter on 7.4% less capacity. Loads were down about half a point resulting in a RASM increase of 8.6% year-over-year. Our Latin region continued to do very well. The mainline Latin yields were up 13.3% and RASM was up 14.9% as load factor increased about a point. We also saw improvement in regional yields during the…

Again thank all of you for joining us this morning. Our revenue performance for the third quarter was encouraging given the slowing economy but unfortunately it was not in us to offset cost increases driven by the rising cost of fuel which was up $736 million on a consolidated basis. During the third quarter crude oil peaked at a record high close of $145 per barrel helping drive a nearly 75% year-over-year increase in our price per gallon of fuel. Companywide everyone did a good job controlling non-fuel related costs. Third quarter mainline CASM holding fuel rate constant and excluding special items was down 2.8% year-over-year. We continue to focus on improving our cost structure. Looking for ways to work more efficiently and take out non-value added costs is a never ending process for us and we continue to see positive results from our efforts. Improvement in unit cost performance excluding special items and holding fuel rates constant will become more difficult as we remove capacity from the system. For the fourth quarter 2008 we expect our consolidated CASM excluding special items and holding fuel rate constant to be up about 3.5% year-over-year and our mainline CASM again, holding fuel rate constant and excluding special items to be up about 4% year-over-year. For the full year 2008 excluding special items and holding fuel rates constant we expect consolidated CASM to be down about .5% and mainline CASM to be down about 1%. Further details regarding fourth quarter and full year 2008 guidance can be found in our investor update published this morning which as DeAnne mentioned is posted on our website. On fuel, in recent weeks we have seen crude oil prices come down significantly. The good news is while oil prices have come down the bad news is oil…

There are many significant changes happening at Continental, in our industry and in the global economic environment. Over the last year we’ve taken steps to better align our capacity with the operating environment, take costs out of our business, to add revenue and to sure up our liquidity. While it is uncertain whether or not additional changes will be necessary, we’ll adapt quickly to any changing environment and I’m confident that we have the staying power to overcome whatever challenges lay ahead. I want to close by again thanking my co-workers who are the reason we’ll be successful as we move forward in this difficult environment. With that, I’ll turn the call back over to DeAnne to begin our Q&A.

With that we’ll begin the question and answer session for the analysts followed by the question and answer session for the media. Christine if you could please review the Q&A process we’re ready to begin.

(Operator Instructions) Our first question comes from William Greene – Morgan Stanley. William Greene – Morgan Stanley: If we look at the RASM trends by entity, domestic despite the capacity cuts didn’t perform as well as international and that wasn’t unique to Continental. So, is it safe to assume that maybe you’re already seeing the weakness then in the domestic market and that inevitably that’s going to affect international? And, if so what do you really have that you could cut because a lot of the markets, particularly in Trans Atlantic are sort of single daily flight I would think of and you would have to actually exit the city. Is that how you think about it?

I think there are a couple of things, one I think that clearly there is some challenges on a global basis in the economy and while we may have seen them start here in the US they’re out there. On the other hand there aren’t as many alternatives and there’s a certain amount of international travel I think you’re going to continue to see as the world gets more global and so there’s no question you may see some pressure. But, much like we got out [Colon] I think we’re willing to look at individual markets and make sure what makes sense. You’ve also seen some other carriers reduce the number of frequencies on a weekly basis and kind of cut capacity in that way. We’ll continue to look at all our options though I think we’ve got a very diversified international set of routes and if you look actually Latin America and in some places on the Trans Pac we still see some things we like. Europe’s clearly got some challenges and we’ll watch that but it’s uneven across Europe. But, I do think we can adjust both by frequencies per week as well as we’ll look at select markets. William Greene – Morgan Stanley: Were you surprised that even though these capacity cuts were as big as they were in September you didn’t get better domestic RASM?

It’s hard for us with Ike to have any clear data for September. Even if you look and say, “Well okay New York didn’t have Ike,” we have so much service between New York and Houston there’s a spillover effect there so I think September data is just a little cloudy for us due to the Hurricane. William Greene – Morgan Stanley: Then just real quick Larry, what’s your view on what the industry will do as we look at where fuel prices have gone, what’s the industry likely to do? Will the capacity discipline be sustained do you think?

Well, I think if you look at the action we announced today in rescheduling some Boeing deliveries you can see that-that capacity discipline is still evident here at Continental. I think as you look across the industry if you look at calls yesterday I think that there was strong evidence that-that capacity discipline will continue to be there. There’s a lot of uncertainty about the economy, it is very hard to move capacity close in and so I think – I can tell you Continental will be cautious and I expect many of our competitors will be cautious as they look forward until we have better visibility looking forward.

Our next question comes from Ray Neidl – Calyon Securities. Ray Neidl – Calyon Securities: Just two quick things, first is credit card hold backs, are you seeing any effect from the credit card companies and wanting to put up collateral or anything else for that? Or, are they tightening your credit rules there?

As you know, which is actually in our last 10Q, we had recently updated our credit card position with regards to our biggest bank card and in that we eliminated the fix charge coverage ratio. So, the only hold backs are tied to a minimum cash balances which are actually disclosed in the 10Q. Ray Neidl – Calyon Securities: With the credit crisis there’s no new pressure coming from the credit card companies?

No. Ray Neidl – Calyon Securities: The other thing is with what the DOT is doing with slot restrictions and auctions in the New York Metropolitan area, is that any effect on your planning going forward?

Obviously that’s something that we oppose. We don’t think it’s wise policy. We also think it is illegal. It is tied up in litigation, hopefully that slot auction will never occur. We think it is a really unwise step forward as a last ditch effort by this administration. That said, if the slot auctions were to proceed and be held lawful that’s something that obviously it’s not good for our business, that’s going to increase costs. But, we’ll see how that comes out in litigation. We’re not the only people who will be litigating this. This is going to be tied up in the courts six ways to Sunday.

I think the key is we need to somehow get the focus back on improving the capacity in to specifically the New York area. There’s a huge set of challenges there. It’s very troublesome for our customers, it’s very troublesome for my co-workers that the system doesn’t work well in New York and right now what we’re doing is the government is proposing shifting around who might use some of that as opposed to focusing on fixing the problem we have. Clearly, we need to get a clear focus and I hope as we move towards next year we can get that on trying to make real improvements in the airspace in New York through ATC reform. I want to compliment the controllers, I want to compliment the FAA, they’re working hard with the system they have to make it work as efficiently as possible and there have been a number of steps that they’re taking to do that. But, we need a new system. We need fundamental change and I wish that was the focus rather than slot auctions.

Our next question comes from Hunter Keay – Stifel Nicolaus. Hunter Keay – Stifel Nicolaus: A question for you, about your overall hedging strategy sort of longer term going forward in to 2009 and 2010, how are you guys thinking about doing this? Not in terms of just a level of consumption you’re protecting against but the types of derivatives you guys use. Do you think it’s worth maybe spending an extra few million just to buy simple call options so you can participate on the downside if fuel prices stay low?

Let me just start out and I’ll take a minute or two because I think it’s an important topic to address that. We look at hedging for fuel as insurance, not as something where we speculate on the prices so we don’t view it as a debt we win or lose. Much like if you have your car insurance you don’t hope you have a claim during the year, you hope you pay your premium and get nothing for it. So, our general strategy on fuel hedging has always been an insurance strategy. There really are five pieces to that, first is a fuel efficient fleet. Second is that where we’ve already sold the ticket we will tend to hedge for that to lock the fuel in because the ticket price can’t move. Ultimately we’d like to see ticket prices reflect our costs. Third, we look at a level of self insurance where we say insurance costs money so to the extent we can self insure, we do. When we see a lot of volatility our first choice is to use calls because then you can protect for the upside and be covered on the downside. Then, you’ll see at the end in periods of high volatility we’ll use more collars simply because the call costs so much you’ve got to do something to offset it. So, you’ll continue to see us take that strategy going forward and we feel very good about kind of where we sit from a fuel hedging perspective in the sense of insurance. Again, we’re not trying to be on prices we’re just trying to take some volatility out of the business and make sure we’re protected as well as get the benefit as much of upside as we can when fuel prices come down. But, you do hit a point where it becomes too expensive just to buy calls and you’ve got to use some collars. Hunter Keay – Stifel Nicolaus: With some of the hedges that you guys have that may be deeply out of the money right now have you considered maybe unwinding some of those if it is at all possible? Or, do you feel better just holding on to that just in case because of the volatility component of it?

Well, I think there’s two pieces, one there’s a volatility component. Two, where there’s a call that’s way out of the money, there’s not much value to unwinding it. Where there’s a collar that’s way out of the money you are in effect taking a hedge off because as prices go back up you’ll come back on that collar and so we have not looked other than for instance a bankrupt counterparty we have not spent any time considering taking collars off.

Our next question comes from Jamie Baker – JP Morgan. Jamie Baker – JP Morgan: Larry, a quick question, Mark [Streeter] and I were actually wondering on the United courtship whether the improved profit outlook has made the waters any more conducive to possibly taking that relationship beyond just the Star participation level?

I think we’re in a period Jamie of incredible uncertainty and so while I’ll never take consolidation off the table, for the long term I think clearly in periods of uncertainty we’re best keeping our flexibility and we do that best as an independent carrier. We’re excited about the potential to join Star, we think that will do a lot for our business and that’s our focus.

Our next question comes from Gary Chase – Barclays Capital. Gary Chase – Barclays Capital: I was curious if you could just give us a sense, you noted that you’re going to be watching demand trends carefully to see if additional capacity action is required. What should we be thinking of as the benchmark there? Is it profitability? Is it a margin? Is it a return? What’s the trigger point that gets you to go further or deeper?

I think there are a couple of things we look at, clearly we can’t go on losing money for the long term. We need to get this business to sustain profitability. But, we also don’t want to go guardrail-to-guardrail quarter between quarter. We have seen just dramatic shifts both in the economy and in fuel prices. So, as you look at planning things that were great at $70 a barrel for oil or $80 a barrel for oil don’t work at $130 a barrel for oil. But, you have to make those decisions months in advance so you will see us both be willing to move where we need to but not try to overact quarter-by-quarter. So, clearly if we feel our survival is threatened we’ll take very dramatic action but within that range we’re going to focus on sustained long term profitability. But, if we’re convinced we can’t make a route work on a long term basis we’re going to take it out. If we’re convinced in the short term we could do some fine tuning. Take during the SARs crisis we pulled Hong Kong down Jaime I think for about six months if my memory is right. That was the case where it just didn’t make sense in the environment yet Hong Kong was a market we wanted to be in for the long term but there was so much pressure on that route when you looked at the load factors you had to take it out for a while. So, we’ll continue to make those decision. But, our general focus well say, “Do we think we can have sustained profitability on a long term basis on this route?” If we don’t, it will come out. If we do, we’ll try to keep it. But, clearly if the business is under stress we’ll make the tough decisions we need to make. Gary Chase – Barclays Capital: If the Euro rate stays here, what’s the currency headwind in the fourth quarter?

Gary, as you know the Euro clearly helped us out in the third quarter about two to two and a half points. In the fourth quarter we’ve actually got a decent currency hedge on the Euro for the fourth quarter but you know most of our traffic actually comes out of the US so quite frankly we didn’t benefit as much as we would have liked to have with the strong Euro coming from the offshore traffic. We would expect some softness obviously out of Europe but we haven’t actually disclosed what the exact impact in the quarter in terms of currency that would be.

Our revenue management system does adjust for differences in strengths of currency so we can shift in terms of the buckets we open up for traffic based in the US versus traffic based in Europe. So, we are sensitive to that obviously as the currency shifts. Gary Chase – Barclays Capital: Then a very quick one for Zane, do the downside strikes on the collars require collateral postings or might they?

They might and they do. In fact, at the end of the third quarter we had $20 million posted Gary and if you were to assume a $80 price at the end of the fourth quarter we’d expect to have roughly $37 million posted. So, a lot of those hedges burn off through the quarter.

Our next question comes from Kevin Crissey – UBS. Kevin Crissey – UBS: In terms of the ancillary fees and so forth have you seen a change in behavior recently?

Absolutely. We are seeing significantly less second bags. On the first bag fee we have not yet seen much change in behavior but we are clearly seeing less second bags and that’s a result we’re very comfortable with because there’s clearly a cost both to handle and fuel related to the second bags and so our goal is to get a fee in place that we believe will help us offset those costs. But, we have seen a substantial drop in second bags. Kevin Crissey – UBS: I know it’s difficult to answer in general because of all the uncertainty but just because capacity is down and you should get better pricing than you would otherwise with capacity not down, should we be thinking that revenue falls – that there’s a decent chance that revenue overall for passenger anyway would decline next year in a reasonable recession environment?

Obviously we don’t talk forward-looking but again I think as I think about yield we’ve always talked in the past about two ways the average fare going up and the mix and so forth and so much about the uncertainty in that Larry and Jeff have both talked about relates back to the economy and demand. So, it’s really hard, the two movers of average fare that would drive yield versus that demand obviously are mix as well as the ability if supply is matched up with demand for fares to go up. But again, that’s become a function of the economy and I think it’s just too early with the uncertainty that we have. Just to jump back on bags also, the other place that we’re seeing great success is in Latin America on the second bag. We do have a last second bag Latin fee in Latin America and its doing just a terrific job for our customers in terms of less loss bags [inaudible] that we’re seeing significant loss bags. It’s not just successful under the methods [inaudible] in Latin America.

Our next question comes from Mike Linenberg – Merrill Lynch. Mike Linenberg – Merrill Lynch: Two questions here, the first one has to do with the transition from SkyTeam to Star and think you indicated maybe, Larry you had indicated that it was later in 2009. How do we think about that because to transition from one big grouping to another it would seem hard that you could come up with a transition that would actually be seamless. What I’m getting to is you’re not leaving any revenue on the table. As I recall, when some of these agreements were put in to place in the late 90s, these were agreements that maybe generated several hundred million dollars of incremental revenue. How do we think about it and is there the possibility that there is some revenue that’s left on the table? Maybe it’s late fourth quarter of ’09 early ‘010.

I think there’s clearly a risk. I think we’ve shown in the past we execute pretty well but clearly moving from one big global alliance to another presents a lot of challenges. Our number one goal is to do it in a way that is customer friendly and so that people feel like hey if they’ve come to depend on something in SkyTeam we deliver what we’re going to deliver there. With our planned move to Star obviously want to ramp that up in a way that the technology works from day one. So, I think there’s clearly some risk but by the same token we’ll work hard to execute as well as we can and make that transition just as smooth as we can be and try to manage it in a period of stronger demand. Clearly, where the economy is has some impact on that because the stronger the demand the more you can cover some traffic you might lose from an alliance partner. So with the economic uncertainty we’ve doubled our focus to make sure we do that. But, I can tell you within our priorities internally we always keep a focus on our top three items and Star is the biggest strategic thing we’re looking at. Mike Linenberg – Merrill Lynch: Then just my second question dealing with in the 8K one of your fuel hedge positions and I know Zane mentioned it was with a counterparty who filed for bankruptcy. What position does that put you in? Was that unwound? Are you a creditor? Are you actually sitting on cash collateral? I don’t know how often you settle through the quarter if it’s monthly or at the end of the quarter and given the huge run off that we had seen, were you sitting on a decent amount of cash? Is that still in your balance sheet? I’m just trying to figure out what sort of impact this had on the quarter and cash and what we can see going forward?

I would describe that position right now as [inaudible] not material. As you can imagine, as I think was described, most of our collars are from our perspective out of the money so I would not describe us today as being in a creditor position.

Let me be clear Mike, we owe them money and deposits you don’t have to put up collateral once a counterparty files.

Our next question comes from Dan McKenzie – Credit Suisse. Dan McKenzie – Credit Suisse: Just circling back on the application for antitrust immunity with United, I wonder if you can provide some perspective about how you are thinking about structuring the joint venture possibly with United?

They already have a joint venture across the North Atlantic and clearly we want to try to expand that structure, there’s a lot of work to do. Until we get antitrust immunity there’s a lot of elements of the joint venture that can’t be negotiated because we can’t exchange that information so this is a multistep process. And much like to Mike Linenberg’s question on the transition, we’ll try to keep you as updated as possible, at the same time the possibilities are so wide at the moment we want to stay away from speculation. But, just the first step is to get the antitrust immunity and then you can do a lot more detailed work on the joint venture. We’ve had a lot of discussions but I think if you look at the fact that United and Lufthansa have a JV out there today. Directionally we think what we’ve seen whether it’s there or with Northwest and Delta along with Air France and KLM, actually will be good for all parties. We think it is stronger for everybody and creates more growth and more service. It’s clearly customer friendly. We also think it provides growth for our employees but a lot of the details still have got to be worked out. We’ll be specific as soon as we can be on pieces we put out there. But, the next step is really to get antitrust immunity. Dan McKenzie – Credit Suisse: I guess secondly here, I appreciate the demand perspective that you shared around your system and I guess just taking a step back even further, as you look at this down turn international traffic of course typically comes under a tremendous amount of pressure. But, as you look back in time I’m wondering what factors might be different today from your perspective that might cause international trends to be ultimately better or perhaps worse?

I’d just say that I think the business is better prepared. You know, three months ago we were building a model looking at 2009 anticipating jet fuel costs in the $170 a barrel range so clearly, that’s provided some offset. As you look I think that has forced us – you believe a route will work at those kind of jet fuel prices, jet fuel under $100 a barrel works a lot better. Fuel is still a huge cost for us. We’re more fuel efficient then we were in previous down turns as we move towards the 787 we’ll continue to get more fuel efficient as we look towards the international side. But, I think within the basics of core demand other than the economy being more global there’s no question economic down turns are going to create less travel. That’s going to be true internationally as well as domestically and this clearly appears to be a global recession not just a US recession.

The only thing I would add to that is we and obviously some of our competitors in the industry have also been focused for many years on reducing our costs. It is a bit different environment in that we’ve been through round after round after round of cost containment, doing things more productively, using technology more productively and I think we’ve done actually at Continental a fine job of doing that. So, I think entering in to this recession is a tad different in that not only have we had capacity come out before the recession but I think we’re entering it with a set of costs that’s lower than we’ve had before. Dan McKenzie – Credit Suisse: One last very quickie here, can you talk about the flexibility to reschedule debt coming due next year?

The flexibility to reschedule it in terms of refinancing debt? Dan McKenzie – Credit Suisse: Yes, the principal debt coming due next year, I’m just wondering if that’s even something you’re thinking about?

We always think about our debt positions. Some of that debt, just like this year is related to aircraft and this year as some of that aircraft debt matured we refinanced it. Obviously with credit markets the way they are we’ll have to look very closely at what opportunities exist. But, a good chunk of that debt is aircraft related so we would look at opportunities to refinance it.

I think we’re ready to go ahead and switch over to the media portion of the Q&A.