Ratings on Continental Airlines Inc. reflect its participation in the high-risk airline industry, a heavy debt and lease burden, and limited financial flexibility, with no general bank lines and few unencumbered assets available for sale or borrowing. These factors outweigh better-than-average operating performance among its peer large U.S. hub-and-spoke airlines. 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, selected Asian destinations, Latin America, and Europe. Continental, like other U.S. airlines, faces a difficult industry environment characterized by intense and increasing fare competition in the domestic market, high and volatile fuel prices, and an ongoing risk from terrorism. Continental
