plan for your retirement

Dear Pilot:

Plan For Your Retirement...

As you know, Continental Airlines, Inc. has retained Schwab Retirement Plan Services, Inc. as the new service provider for both the Continental Pilots 401(k) Plan (“Pilots 401(k) Plan”) and the Continental Pilots Defined Contribution Plan (“B-Plan”).

We will continue to keep you well informed throughout the transition to Schwab via email, home mailings, a conversion web portal, and crew room meetings at select hubs in September. During this time we hope that you take this opportunity to reassess your goals and investment strategy, commit yourself to saving, and take advantage of all of Schwab’s resources to help you reach your retirement goals.

As we move the Pilots 401(k) Plan to Schwab, there will be a brief period during which you cannot make changes to your retirement account. This blackout period is typical during this type of transition and will begin on August 26, 2005 at 3:00 p.m. Central Time for certain transactions. Because we want you to understand what’s happening with your retirement account during the transition, we’ve included a calendar of key dates and actions. Please review it carefully so you’ll know what to anticipate during the transition.

Once the transition is complete on September 8, 2005, you will be able to take advantage of the new investment options in both your 401(k) Plan account and your B-Plan account:

• A new menu of Diversified Core investment options

• The ability to invest in individual stocks and over 2,000 mutual funds through the Schwab Personal Choice Retirement Account® (PCRA)

• Specific, personalized recommendations for your retirement plan investments through Schwab Advice Services

• Model Portfolios designed to match several investment styles allocated among the Diversified Core investment options

Schwab will also provide access to resources to help you take full advantage of the Pilots’ Retirement Plans:

• Trained Participant Service Representatives available by phone between 6:00 a.m. and 10:00 p.m. Central Time, Monday through Friday at 888-863-4015. You can call to review your account balance, request investment information, or track your personal investment performance

• Retirement plan seminars at select hubs and private, one-on-one consultations with Schwab representatives

• Online access to your account at www.schwabplan.com

You may call Schwab directly at 888-863-4015 for current information about the transition.

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Transition Calendar

Phase I: Continental 401(k) Savings Plan (CAL 401(k) Plan) Now Through August 26, 2005

Use the Plan as usual until August 26, 2005, 3:00 p.m. Central Time.

Some key dates to remember:

August 26, 2005This is the last day you can: • Pay off your loan early at Hewitt (payment must be received by the deadline)

• Change your contribution rate on YBR (Your Benefits Resources) • Change your investment elections for future contributions

August 31, 2005This is the last day you can: • Return completed loan paperwork to Hewitt

• Return completed distribution paperwork to Hewitt • Execute a fund transfer

Phase II: Accessing information during the blackout period at http://continentalpilots.schwabplan.com

August 26 - September 8, 2005Although access to your individual account information during the blackout period is limited, you can access the Conversion Web Portal at http://continentalpilots.schwabplan.com for updates on the conversion’s progress, including:

• Copies of conversion communications distributed to you • Descriptions of the investment options offered through Schwab • Links to Schwab’s Market Insight: access a wide array of topics and commentary • Schedule of on-site and online education meetings

Phase III: The Transition is Complete - Your New Plans at Schwab

September 8, 2005 and beyond

The blackout period is expected to end on September 8, 2005. This is the end of the blackout period and is based on prior experience for this type of transition.

Schwab will notify you in writing once the new plans are “live” with all features available. Schwab’s notification will include your personal identification number (PIN). You will need both your PIN and Social Security Number to access the Web site and Schwab Retirement Plan Services Hotline (phone system).

• Unrestricted account access: You can change your deferral percentages or investment elections on a daily basis online.

• You may access your accounts online at www.schwabplan.com or via telephone at 888-863-4015.

• Schwab Advice Services: Get specific advice on how to invest your 401(k) Plan account and your B-Plan account as often as you wish.

Schwab representatives will be in the following crew rooms on the dates outlined below to provide assistance with your retirement plan accounts.

• EWR, September 12 - 14 • CLE, September 15 • IAH, September 19 - 21 • GUM, September 28 & 29

- More information is coming your way via email and online at http://continentalpilots.schwabplan.com -

Schwab Retirement Plan Web Site

Once the Plans are live, check balances, change your deferral percentages, request investment information, choose investments, get retirement plan advice, apply for a loan, use investment education tools and more at www.schwabplan.com.

Schwab Retirement Plan Services Hotline

Change investments, request investment information, change your deferral percentages, request a loan, allocate investments and check balances by phone at 888-863-4015. Schwab’s automated system can handle most transactions day or night. 1

NEW -- Trade Securities with Schwab’s Self-Directed Brokerage Account

Once the transition is complete, you can have more investment alternatives for your retirement plan investments with the Schwab Personal Choice Retirement Account® (PCRA). Designed for pilots with previous investing experience, this brokerage account lets you trade over 2,000 mutual funds and individual stocks for greater investment flexibility. You may use this feature for up to 50% of your 401(k) Plan account balance and 50% of your B-Plan account balance.

Place trades Monday through Friday between 8:00 a.m. and 6:30 p.m. Central Time at 888-863-4015. PCRA Investment Specialists can also set you up to place trades on www.schwab.com, where you can take advantage of lower commissions and 24-hour service. Please contact your Plan Administrator or call Schwab to learn about certain restrictions that may apply to your PCRA accounts.

Schwab Advice Services

Now you can receive professional assistance with the investment choices you make with Schwab Advice Services provided by GuidedChoiceTM2 . This third-party independent investment advisor can show you how much to save, how to create an asset allocation plan, and which funds to select. Get advice recommendations online or by phone as often as you wish. Simply log on to www.schwabplan.com or call a Schwab Advice Services Representative at 888-863-4015 between 7:00 a.m. and 9:00 p.m. Central Time to set up an appointment. 3

Access. Access. Access.

The Tools and Resources You Need To Stay Focused on Your Goals

1 Access may be limited or unavailable during some periods of peak demand, market volatility, systems upgrade and maintenance or for other reasons.

2 The GuidedChoice service and its investment advice are formulated and provided by GuidedChoice Asset Management, Inc. (“GuidedChoice”). GuidedChoice is not affiliated with, nor is it an employee or agent of Charles Schwab & Co., Inc. (“CS&Co.”) or Schwab Retirement Plan Services, Inc. (“SRPS”). The GuidedChoice service is available to participants en-rolled in plans that use the recordkeeping and related services of SRPS. Availability subject to regulatory requirements. Plan sponsors must elect to make the GuidedChoice service available. Participant access to the GuidedChoice service is facilitated through SRPS’s affiliate, CS&Co. Neither CS&Co. nor SRPS supervises, makes recommendations with respect to, or takes responsibility for monitoring the advice provided to participants by GuidedChoice. These entities are affili-ates of each other and are wholly owned subsidiaries of The Charles Schwab Corporation.

3 Advice services representatives are employees of CS&Co and not of GuidedChoice. CS&Co, its advice services represen-tatives and SRPS do not supervise, make recommendations with respect to or take responsibility for monitoring the advice provided to participants by GuidedChoice and do not provide financial planning services to participants

How will my accounts be transferred?

In September 2005, your existing 401(k) Plan account balance and investment elections for future contributions will be transferred to new investments in the Continental Pilots 401(k) Plan. You can change your existing balances and/or contributions from these accounts when Phase II of the transition period has ended.

Your account balances and investment elections will be transferred from their existing mutual funds to one of thirteen (13) “Diversified Core” and “Model Portfolio” allocation strategies. Each of these strategies will be comprised of at least one underlying investment manager. The goal of these multiple-manager strategies is to reduce the overall risk when compared to a single manager approach. The chart that follows will outline how your accounts will be transferred to the new investment allocation strategies.

If you would like to transfer any of your existing funds prior to the blackout period, you must make those changes by August 31, 2005 as outlined in the Transition Calendar on page 2 of this newsletter. Please note the Diversified Core and Model Portfolio investment allocation strategies will be available through Schwab once the transition is complete. All of these investment strategies will also be available to you under the B-Plan.

…Will be Directed toThis Investment Option…

…Which is Comprised ofThese Underlying Investments

(% of Overall Fund)

BOND PORTFOLIO

Dodge & Cox Income (50%)PIMCO Total Return Instl (50%)

MONEY MARKET FUND

T. Rowe Price Intl Bd

Janus High-Yield

T. Rowe Price Hi-Yld

Fidelity Capital & Inc

Janus Short-Term Bond

T. Rowe Price New Inc

Janus Flexible Bond

T. Rowe Price US Try Int

Fidelity Convertible Sec

T. Rowe Price Spect Inc

Hewitt Money Market

T. Rowe Prime Reserve

Schwab Value Advantage Instl (100%)

STABLE VALUE FUNDT. Rowe Price Stable Value

Charles Schwab Stable Value Fund (100%)

Any Balances & Investment Electionsin These Funds at Hewitt after

3:00 p.m. CT on August 31, 2005



(% of Overall Fund)


3:00 p.m. CT on August 31, 2005

LARGE CAPVALUE PORTFOLIO

LSV Value Equity (33.33%)American Century Equity Income (33.33%)John Hancock Classic Value Fund (33.33%)

Fidelity Sel Telecommun

T. Rowe Price Fincl Svcs

Fidelity Sel Insurance

Fidelity Sel Utilities

T. Rowe Price Mid Val

Fidelity Sel Air Trans

T. Rowe Price Eq Inc

Fidelity Equity-Inc

T. Rowe Price Value

Fidelity Sel Brokerage

T. Rowe Price New Era

T. Rowe Price Ext MktIdx

Janus Contrarian Fund

Fidelity Sel Defense & Aer

Janus Core Equity

T. Rowe Price Div Growth

T. Rowe Price Eq Idx 500

T. Rowe Price Grth & Inc

Fidelity Dividend Growth

Fidelity Fifty

T. Rowe Price Cap Opport

EQUITY INDEX FUND

Vanguard Total Stock Market Index Inst'l (100%)

Janus Global Life Sci

Fidelity Sel Health Care

T. Rowe Price Health Sci

T. Rowe Price SciTech

Fidelity Sel Technology

Fidelity Sel Computers

T. Rowe Price Mid Gr

Janus Enterprise

Fidelity Sel Retailing

Fidelity Aggressive Grth

Fidelity Mid-Cap Stock

Janus Orion

T. Rowe Price New Amer

T. Rowe Price Gr Stk

T. Rowe Price BlChpGr

Janus Twenty

Janus

Janus Growth & Income

Janus Olympus

Janus Mercury

Fidelity Sel Leisure

Fidelity OTC

Fidelity Growth Company

Fidelity Blue Chip Grth

LARGE CAPGROWTH PORTFOLIO

Smith Barney Aggressive Growth Fund (33.33%)T. Rowe Price Growth (33.33%)

Janus Aspen Forty (33.33%)

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(% of Overall Fund)


3:00 p.m. CT on August 31, 2005

LARGE CAPVALUE PORTFOLIO

LSV Value Equity (33.33%)American Century Equity Income (33.33%)John Hancock Classic Value Fund (33.33%)

Fidelity Sel Telecommun

T. Rowe Price Fincl Svcs

Fidelity Sel Insurance

Fidelity Sel Utilities

T. Rowe Price Mid Val

Fidelity Sel Air Trans

T. Rowe Price Eq Inc

Fidelity Equity-Inc

T. Rowe Price Value

Fidelity Sel Brokerage

T. Rowe Price New Era

T. Rowe Price Ext MktIdx

Janus Contrarian Fund

Fidelity Sel Defense & Aer

Janus Core Equity

T. Rowe Price Div Growth

T. Rowe Price Eq Idx 500

T. Rowe Price Grth & Inc

Fidelity Dividend Growth

Fidelity Fifty

T. Rowe Price Cap Opport

EQUITY INDEX FUND

Vanguard Total Stock Market Index Inst'l (100%)

Janus Global Life Sci

Fidelity Sel Health Care

T. Rowe Price Health Sci

T. Rowe Price SciTech

Fidelity Sel Technology

Fidelity Sel Computers

T. Rowe Price Mid Gr

Janus Enterprise

Fidelity Sel Retailing

Fidelity Aggressive Grth

Fidelity Mid-Cap Stock

Janus Orion

T. Rowe Price New Amer

T. Rowe Price Gr Stk

T. Rowe Price BlChpGr

Janus Twenty

Janus

Janus Growth & Income

Janus Olympus

Janus Mercury

Fidelity Sel Leisure

Fidelity OTC

Fidelity Growth Company

Fidelity Blue Chip Grth

LARGE CAPGROWTH PORTFOLIO

Smith Barney Aggressive Growth Fund (33.33%)T. Rowe Price Growth (33.33%)

Janus Aspen Forty (33.33%)

Investm

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(% of Overall Fund)


3:00 p.m. CT on August 31, 2005

EQUITY GLOBAL FUND

Dimensional Global Equity Inst’l (100%)

SMALL CAP EQUITYPORTFOLIO

STI Classic Small Cap Growth (50%)Boston Company Small Cap Value (50%)

T. Rowe Price Sm Val

T. Rowe Price Sm Stk

Fidelity Low-Priced Stk

T. Rowe Price New Horiz

Janus Global Technology

Janus Worldwide

INTERNATIONAL EQUITYPORTFOLIO

William Blair International Core Growth (50%)Boston Company International Core Equity (25%)Boston Company ACWI ex-US Value Equity (25%)

TACTICAL ASSETALLOCATION PORTFOLIO

UBS Global Securities Collective (50%)Mellon Global TAA (25%)

Mellon Global Alpha (25%)

T. Rowe Price Intl Disc

Janus Overseas

T. Rowe Price Intl Stk

Fidelity Diversified Int

T. Rowe Price Latin Amer

T. Rowe Price New Asia

Fidelity Pacific Basin

T. Rowe Price Euro Stock

Fidelity Europe

T. Rowe Price Pers Inc.

T. Rowe Price Pers Bal.

T. Rowe Price Pers Growth

T. Rowe Price Cap Apprec

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(% of Overall Fund)


3:00 p.m. CT on August 31, 2005

INCOME MIXMODEL PORTFOLIO

Money Market Fund (10%)Stable Value Fund (25%)

Bond Portfolio (30%)Large Cap Value Portfolio (7.5%)

Equity Index Fund (10%)Large Cap Growth Portfolio (7.5%)

Small Cap Equity Portfolio (5%)International Equity Portfolio (5%)

MODERATE MIXMODEL PORTFOLIO

Money Market Fund (5%)Stable Value Fund (20%)

Bond Portfolio (20%)Large Cap Value Portfolio (10%)

Equity Index Fund (10%)Large Cap Growth Portfolio (10%)

Small Cap Equity Portfolio (10%)International Equity Portfolio (15%)

T. Rowe Price Balanced

Fidelity Freedom 2020


Fidelity Puritan

Fidelity Asset Manager

Janus Balanced

Fidelity Balanced

Fidelity Freedom Income


CAPITAL GROWTH MIXMODEL PORTFOLIO

Stable Value Fund (15%)Bond Portfolio (10%)

Large Cap Value Portfolio (15%)Equity Index Fund (15%)

Large Cap Growth Portfolio (15%)Small Cap Equity Portfolio (15%)

International Equity Portfolio (15%)

T. Rowe Price Spect Growth


Investors should consider carefully information contained in the prospectus or fund fact sheet including investment objectives, risks, charges and expenses. You can request a prospectus or fund fact sheet by calling Schwab at 888-863-4015. You may also request a prospectus or fund fact sheet at www.schwabplan.com. Please read the prospectus or fund fact sheet carefully before investing.

Investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost.

The Continental Pilots 401(k) Plan (“Pilots 401(k) Plan”) and the Continental Pilots Defined Contribution Plan (“B-Plan”) are each intended to be a participant-directed plan as described in Section 404(c) of the Employee Retirement Income Security Act of 1974 as amended. This means that fiduciaries of these plans are ordinarily relieved of liability for any losses that are the direct and necessary result of any investment instructions given by a participant or beneficiary.

An investment in a Money Market Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund.

The Charles Schwab Stable Value Fund is a collective trust fund. It is not a mutual fund and its units are not registered under the Securities Act of 1933 or the Investment Company Act of 1940 as amended. The Fund is available for investment by eligible qualified retirement plan trusts only.

Small cap funds are subject to greater volatility than those in other asset categories.

International investments are subject to additional risks such as currency fluctuation and political instability.

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1600 Smith Street - Houston, TX 77002

Charles Schwab Corporate Services (SCS) provides services to retirement plan sponsors and participants through Schwab Retirement Plan Services, Inc., The Charles Schwab Trust Company, and Charles Schwab & Co., Inc. SCS also provides equity compensation plan services and other financial and retirement services to corporations and executives. Schwab Retirement Plan Services, Inc. provides recordkeeping and related services with respect to retirement plans. CSTC, a California state-chartered trust company, provides trust and custody services to retirement plan sponsors. Charles Schwab & Co., Inc. (Member SIPC) is a registered broker/dealer, offering the Schwab Personal Choice Retirement Account® (PCRA), as well as other brokerage and custody services to its customers. These entities are affiliates of each other and are wholly owned subsidiaries of The Charles Schwab Corporation.

Continental Airlines, Inc. and Air Line Pilots Association, Intl. are not affiliated with Schwab Retirement Plan Services. © 2005 Schwab Retirement Plan Services, Inc. All rights reserved. (0804-11193) (0705-3626) MKTNWS27579CPK (08/05)

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