Ratings on Continental Airlines Inc. reflect its heavy debt and lease burden, and risks of the competitive and cyclical airline industry, which outweigh a relatively favorable operating cost structure and better-than-average earnings performance. Continental, the fifth-largest U.S. airline, serves markets mainly in the southern and eastern U.S. from hubs at Houston, Texas; Newark, N.J.; and Cleveland, Ohio. International routes serve the central Pacific, Japan, Mexico, Latin America, and Europe. Continental has a substantial debt and lease burden, due to an extensive modernization and expansion of its fleet since the mid-1990s. That fleet program has, however, generated savings in fuel efficiency and maintenance. Continental's operating costs are one of the lowest among large, hub-and-spoke airlines in the U.S., due mostly to
