Standard&Poor's Ratings Services' ratings on Houston-based Continental Airlines Inc. reflect its participation in the high-risk U.S. airline industry and a heavy debt and lease burden, but also our expectation of gradually improving financial measures, including 2010 funds flow to debt approaching 10% (compared with 6% in 2009), and adequate liquidity (with cash and short-term investments of $3.5 billion at June 30, 2010). We characterize Continental's business risk profile as weak and its financial profile as highly leveraged. On May 3, 2010, we placed our 'B' corporate credit rating on Continental Airlines Inc., and our ratings on its secured and unsecured debt, on CreditWatch with negative implications following announcement of a merger agreement with UAL Corp. We placed our
