Fitch Affirms 1 and Downgrades 3 Classes from Continental-backed EETCs.

CHICAGO -- Fitch Ratings has taken various rating actions on the following classes of Continental Airlines (Continental) Enhanced Equipment Trust Certificate (EETC) transactions as detailed below:

Aircraft Indebtedness Repackaging (AIR) Trust 1998-1

--Class A downgraded to 'B+' from 'BB' and assigned a Stable Rating Outlook.

Aircraft Indebtedness Repackaging (AIR) Trust 1998-2

--Class A downgraded to 'B+' from 'BB' and assigned a Stable Rating Outlook.

Continental Airlines, FEATS Series 2000

--Class A downgraded to 'BB+' from 'BBB+' and assigned a Stable Rating Outlook;

--Class B affirmed at 'B+' and assigned a Stable Rating Outlook.

EETCs are hybrid corporate - structured debt obligations in which payment on the notes is effectively supported by the underlying corporate entity, while structured elements of the transaction provide protection to investors in the event of issuer default. As such, Fitch's ratings on EETC transactions are strongly tied to the Issuer Default Rating (IDR) of the issuing entity and incorporate credit to the reduced probability of default (PD) provided by the collateral and structural enhancements in place. The analysis also incorporates a review of the recovery prospects on the issued securities in the event that they default, similar to Fitch's approach for assigning recovery credit to secured corporate debt.

On Nov. 18, 2009, Fitch released its updated 'Surveillance Criteria for Enhanced Equipment Trust Certificates'. This criteria, which can be found at 'www.fitchratings.com', was utilized in the review of the Continental EETC portfolio and in determining the rating actions detailed above. Of note, the updated criteria limits EETC ratings from exceeding six notches (or two rating categories) above the IDR of the underlying airline. This represents a change from the approach previously employed by Fitch in this sector. However, the impact of the criteria update on Continental EETCs is no greater than three notches on any class of bonds.

While the rating actions are reflective of the updated EETC surveillance criteria, the downgrades on the class A notes in each of the three transactions are largely driven by deterioration in the value of the aircraft collateral in the current aviation market downturn. This has negatively impacted the projected LTV and recovery percentages for the downgraded classes. The class B notes in Continental FEATS have been affirmed as structural enhancement features were found to be consistent with the current rating.

Fitch will continue to monitor the transaction and take appropriate rating actions if necessary.

Applicable criteria, 'Surveillance Criteria for Enhanced Equipment Trust Certificates' dated Nov. 18, 2009, and 'Global Structured Finance Rating Criteria' dated Sept. 30, 2009 are available on 'www.fitchratings.com'.

Additional information is available on www.fitchratings.com.

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