Exhibit 10.3

Supplemental Agreement No. 38



to



Purchase Agreement No. 1951



between



The Boeing Company



and



Continental Airlines, Inc.



Relating to Boeing Model 737 Aircraft


 

 

THIS SUPPLEMENTAL AGREEMENT, entered into as of June 6, 2006, by and between THE BOEING COMPANY (Boeing) and Continental Airlines, Inc. (Buyer);


WHEREAS, the parties hereto entered into Purchase Agreement No. 1951 dated July 23, 1996 (the Agreement), as amended and supplemented, relating to Boeing Model 737-500, 737-600, 737-700, 737-800, and 737-900 aircraft (the Aircraft);


WHEREAS, Buyer wishes to exercise [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]


WHEREAS, Buyer wishes to exercise [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]


WHEREAS, Buyer wishes to exercise [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]


WHEREAS, Boeing and Buyer have agreed to [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]



WHEREAS, Boeing and Buyer have agreed to [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]


WHEREAS, per paragraph 10 of Letter Agreement 6-1162-GOC-136, [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]


NOW THEREFORE, in consideration of the mutual covenants herein contained, the parties agree to amend the Agreement as follows:


1.Table of Contents, Articles, Tables and Exhibits:


1.1Remove and replace, in its entirety, the "Table of Contents", with the Table of Contents attached hereto, to reflect the changes made by this Supplemental Agreement No. 38.


1.2Remove and replace, in its entirety, page T-2-3 of Table 1 entitled the "Aircraft Deliveries and Descriptions, Model 737-700 Aircraft", with the revised page T-2-3 of Table 1 attached hereto, to reflect the [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT].


1.3Add page T-2-4 of Table 1 entitled, "Aircraft Deliveries and Descriptions, Model 737-700 Aircraft", attached hereto, to reflect the [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT].


2.Letter Agreements:


2.1Remove and replace, in its entirety, Letter Agreement 1951-3R21, "Option Aircraft - Model 737-824 Aircraft", with the revised Letter Agreement 1951-3R22 attached hereto.


2.2Remove and replace, in its entirety, Letter Agreement 1951-9R17 "Option Aircraft - Model 737-724 Aircraft", with the revised Letter Agreement 1951-9R18 attached hereto.


 

The Agreement will be deemed to be supplemented to the extent herein provided as of the date hereof and as so supplemented will continue in full force and effect.


EXECUTED IN DUPLICATE as of the day and year first written above.


 

THE BOEING COMPANYContinental Airlines, Inc.


 

 

 

By: /s/Michael S. Anderson  By: /s/ Gerald Laderman


Its:  Attorney-In-Fact    Its: Senior Vice President - 
      Finance and Treasurer













TABLE OF CONTENTS

PageSA

NumberNumber


ARTICLES


1.Subject Matter of Sale1-1SA 5


2.Delivery, Title and Risk

of Loss2-1


3.Price of Aircraft3-1SA 31


4.Taxes4-1


5.Payment5-1


6.Excusable Delay6-1


7.Changes to the Detail

Specification7-1SA 5


8.Federal Aviation Requirements and

Certificates and Export License8-1SA 5


9.Representatives, Inspection,

Flights and Test Data9-1


10.Assignment, Resale or Lease10-1


11.Termination for Certain Events11-1


12.Product Assurance; Disclaimer and Release; Exclusion

Of Liabilities; Customer Support; Indemnification and

Insurance12-1


13.Buyer Furnished Equipment and

Spare Parts13-1


14.Contractual Notices and Requests14-1SA 17


15.Miscellaneous15-1


 

TABLE OF CONTENTS


PageSA

NumberNumber

TABLES


1.Aircraft Deliveries and

Descriptions - 737-500T-1SA 3


Aircraft Deliveries and

Descriptions - 737-700T-2SA 38


Aircraft Deliveries and

Descriptions - 737-800T-3SA 33


Aircraft Deliveries and

Descriptions - 737-600T-4SA 4


Aircraft Deliveries and

Descriptions - 737-900T-5SA 31


 
EXHIBITS





A-1Aircraft Configuration - Model 737-724 

(Aircraft delivering through July 2004)SA 26


A-2Aircraft Configuration - Model 737-824 

(Aircraft delivering through July 2004)SA 26


A-3Aircraft Configuration - Model 737-624SA 1


A-4Aircraft Configuration - Model 737-524SA 3


A-5Aircraft Configuration - Model 737-924 

(Aircraft delivering through July 2004)SA 26


A-6Aircraft Configuration - Model 737-724 

(Aircraft delivering in or after August 2004)SA 31


A-7Aircraft Configuration - Model 737-824

(Aircraft delivering in or after August 2004)SA 31


A-8Aircraft Configuration - Model 737-924

(Aircraft delivering in or after August 2004)SA 31


TABLE OF CONTENTS


SA

Number
EXHIBITS (continued)





BProduct Assurance DocumentSA 1


CCustomer Support Document - Code Two - 

Major Model DifferencesSA 1


C1Customer Support Document - Code Three -

Minor Model DifferencesSA 1


DAircraft Price Adjustments - New 

Generation Aircraft (1995 Base Price - 

Aircraft delivering through July 2004)SA 1


D1Airframe and Engine Price Adjustments - 

Current Generation AircraftSA 1



D2Aircraft Price Adjustments - New 

Generation Aircraft (1997 Base Price - Aircraft 

delivering through July 2004)SA 5


D3Aircraft Price Adjustments - New 

Generation Aircraft (July 2003 Base Price - 

Aircraft delivering in or after August 2004)SA 31


EBuyer Furnished Equipment

Provisions DocumentSA 20


FDefined Terms DocumentSA 5


 
TABLE OF CONTENTS





SA

Number




LETTER AGREEMENTS

1951-1Not Used


1951-2R3Seller Purchased EquipmentSA 5


1951-3R22Option Aircraft-Model 737-824 AircraftSA 38


1951-4R1Waiver of Aircraft DemonstrationSA 1


1951-5R2Promotional Support - New Generation

AircraftSA 5


1951-6Configuration Matters


1951-7R1Spares Initial ProvisioningSA 1


1951-8R2Escalation Sharing - New Generation 

AircraftSA 4


1951-9R18Option Aircraft-Model 737-724 AircraftSA 38


1951-11R1Escalation Sharing-Current Generation 

AircraftSA 4


1951-12R7Option Aircraft - Model 737-924 Aircraft SA 32


1951-13Configuration Matters - Model 737-924     SA 5


1951-14Installation of Cabin Systems Equipment SA 22


 







TABLE OF CONTENTS


SA

Number


RESTRICTED LETTER AGREEMENTS

6-1162-MMF-295Performance Guarantees - Model 

737-724 Aircraft


6-1162-MMF-296Performance Guarantees - Model 

737-824 Aircraft


6-1162-MMF-308R3Disclosure of Confidential 

InformationSA 5


6-1162-MMF-309R1[CONFIDENTIAL MATERIAL OMITTED AND FILED 

SEPARATELY WITH THE SECURITIES AND EXCHANGE 

COMMISSION PURSUANT TO A REQUEST FOR 

CONFIDENTIAL TREATMENT]SA 1

6-1162-MMF-311R4[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]SA 22




6-1162-MMF-312R1Special Purchase Agreement

ProvisionsSA 1


6-1162-MMF-319Special Provisions Relating to the

Rescheduled Aircraft


6-1162-MMF-378R1Performance Guarantees - Model

737-524 AircraftSA 3

6-1162-GOC-015R1[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]SA 31




6-1162-GOC-131R5Special MattersSA 37


6-1162-DMH-365Performance Guarantees - Model

737-924 AircraftSA 5


 







TABLE OF CONTENTS


SA

Number


RESTRICTED LETTER AGREEMENTS (continued)

6-1162-DMH-624[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]SA 8




6-1162-DMH-680Delivery Delay Resolution ProgramSA 9

6-1162-DMH-1020[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]SA 14


6-1162-DMH-1035[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]SA 15


6-1162-DMH-1054[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]SA 16




6-1162-CHL-048Rescheduled Aircraft AgreementSA 26


6-1162-CHL-195Restructure Agreement for Model

737NG and 757-300 Aircraft     SA 30









TABLE OF CONTENTS


 

SUPPLEMENTAL AGREEMENTSDATED AS OF:

Supplemental Agreement No. 1October 10, 1996


Supplemental Agreement No. 2March 5, 1997


Supplemental Agreement No. 3July 17, 1997


Supplemental Agreement No. 4October 10, 1997


Supplemental Agreement No. 5May 21, 1998


Supplemental Agreement No. 6July 30, 1998


Supplemental Agreement No. 7November 12, 1998


Supplemental Agreement No. 8December 7, 1998


Supplemental Agreement No. 9February 18, 1999


Supplemental Agreement No. 10March 19, 1999


Supplemental Agreement No. 11May 14, 1999


Supplemental Agreement No. 12July 2, 1999


Supplemental Agreement No. 13October 13, 1999


Supplemental Agreement No. 14December 13, 1999


Supplemental Agreement No. 15January 13, 2000


Supplemental Agreement No. 16March 17, 2000


Supplemental Agreement No. 17May 16, 2000


Supplemental Agreement No. 18September 11, 2000


Supplemental Agreement No. 19October 31, 2000


Supplemental Agreement No. 20December 21, 2000


 

 

 

TABLE OF CONTENTS


 

 







SUPPLEMENTAL AGREEMENTSDATED AS OF:

Supplemental Agreement No. 21March 30, 2001 


Supplemental Agreement No. 22May 23, 2001 


Supplemental Agreement No. 23June 29, 2001 


Supplemental Agreement No. 24August 31, 2001


Supplemental Agreement No. 25December 31, 2001


Supplemental Agreement No. 26March 29, 2002


Supplemental Agreement No. 27November 6, 2002


Supplemental Agreement No. 28April 1, 2003


Supplemental Agreement No. 29August 19, 2003 


Supplemental Agreement No. 30November 4, 2003 


Supplemental Agreement No. 31August 20, 2004


Supplemental Agreement No. 32December 29, 2004 


Supplemental Agreement No. 33December 29, 2004 


Supplemental Agreement No. 34June 22, 2005 


Supplemental Agreement No. 35June 30, 2005 


Supplemental Agreement No. 36July 21, 2005 


Supplemental Agreement No. 37March 30, 2006 


Supplemental Agreement No. 38June 6, 2006 


 







Table 1 to Purchase Agreement 1951

Aircraft Deliveries and Descriptions

Model 737-700 Aircraft



 

[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

1951-9R18

June 6, 2006


 

Continental Airlines, Inc.

1600 Smith Street

Houston, Texas  77002


 
Subject:Letter Agreement No. 1951-9R18 to Purchase Agreement No. 1951 -

Option Aircraft - Model 737-724 Aircraft


 







Ladies and Gentlemen:


This Letter Agreement amends Purchase Agreement No. 1951 dated July 23, 1996 (the Agreement) between The Boeing Company (Boeing) and Continental Airlines, Inc. (Buyer) relating to Model 737-724 aircraft (the Aircraft).  This Letter Agreement supersedes and replaces in its entirety Letter Agreement 1951-9R17 dated July 21, 2005.


All terms used and not defined herein shall have the same meaning as in the Agreement.


In consideration of Buyer's purchase of the Aircraft, Boeing hereby agrees to manufacture and sell up to [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] additional Model 737-724 Aircraft (the Option Aircraft) to Buyer, on the same terms and conditions set forth in the Agreement, except as otherwise described in Attachment A hereto, and subject to the terms and conditions set forth below.


1.Delivery.


The Option Aircraft will be delivered to Buyer during or before the months set forth in the following schedule:


Month and Year  Number of

 of Delivery  Option Aircraft


[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]



	Price.  

The basic price of the Option Aircraft shall [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT].


 

3.Option Aircraft Deposit.


In consideration of Boeing's grant to Buyer of options to purchase the Option Aircraft as set forth herein, Buyer has paid a deposit to Boeing of [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] for each Option Aircraft through Supplemental Agreement 37 and (the Option Deposit) prior to the date of this Letter Agreement.  For Option Aircraft added effective Supplemental Agreement 38, the Option Deposit amount is $575,000 for each Option Aircraft.  If Buyer exercises an option herein for an Option Aircraft, the amount of the Option Deposit for such Option Aircraft will be credited against the first advance payment due for such Option Aircraft pursuant to the advance payment schedule set forth in Article 5 of the Agreement.  


If Buyer does not exercise its option to purchase a particular Option Aircraft pursuant to the terms and conditions set forth herein, Boeing shall be entitled to retain the Option Deposit for such Option Aircraft.


4.Option Exercise.


To exercise its option to purchase the Option Aircraft, Buyer shall give written notice thereof to Boeing on or before the first business day of the month in each Option Exercise Date shown below:


Option AircraftOption Exercise Date

[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]


5.Contract Terms.


Within thirty (30) days after Buyer exercises an option to purchase Option Aircraft pursuant to paragraph 4 above, Boeing and Buyer will use their best reasonable efforts to enter into a supplemental agreement amending the Agreement to add the applicable Option Aircraft to the Agreement as a firm Aircraft (the Option Aircraft Supplemental Agreement).


If the parties have not entered into such an Option Aircraft Supplemental Agreement within the time period contemplated herein, either party shall have the right, exercisable by written or telegraphic notice given to the other within ten (10) days after such period, to cancel the purchase of such Option Aircraft.


6.Cancellation of Option to Purchase.


Either Boeing or Buyer may cancel the option to purchase an Option Aircraft if any of the following events are not accomplished by the respective dates contemplated in this Letter Agreement, or in the Agreement, as the case may be:


(i)purchase of the Aircraft under the Agreement for any reason not attributable to the cancelling party;


(ii)payment by Buyer of the Option Deposit with respect to such Option Aircraft pursuant to paragraph 3 herein; or


(iii)exercise of the option to purchase such Option Aircraft pursuant to the terms hereof.


Any cancellation of an option to purchase by Boeing which is based on the termination of the purchase of an Aircraft under the Agreement shall be on a one-for-one basis, for each Aircraft so terminated.


Cancellation of an option to purchase provided by this letter agreement shall be caused by either party giving written notice to the other within ten (10) days after the respective date in question.  Upon receipt of such notice, all rights and obligations of the parties with respect to an Option Aircraft for which the option to purchase has been cancelled shall thereupon terminate.


If an option is cancelled as provided above, Boeing shall promptly refund to Buyer, without interest, any payments received from Buyer with respect to the affected Option Aircraft.  Boeing shall be entitled to retain the Option Deposit unless cancellation is attributable to Boeing's fault, in which case the Option Deposit shall also be returned to Buyer without interest.


7.Applicability.


Except as otherwise specifically provided, limited or excluded herein, all Option Aircraft that are added to the Agreement by an Option Aircraft Supplemental Agreement as firm Aircraft shall benefit from all the applicable terms, conditions and provisions of the Agreement.


 

If the foregoing accurately reflects your understanding of the matters treated herein, please so indicate by signature below.


Very truly yours,


THE BOEING COMPANY


 

 

 

By  /s/ Michael S. Anderson


Its  Attorney-In-Fact     


 

ACCEPTED AND AGREED TO this


Date: June 6, 2006


CONTINENTAL AIRLINES, INC.,


 

 

 

By  /s/ Gerald Laderman


Its  Senior Vice President - Finance and Treasurer       


 

 

Attachment

Model 737-724 Aircraft


1.Option Aircraft Description and Changes.


1.1Aircraft Description.  The Option Aircraft are described by Boeing Detail Specification D6-38808-42 Revision A, dated as of November 1, 1998, as amended and revised pursuant to the Agreement.


1.2Changes.  The Option Aircraft Detail Specification shall be revised to include:


(1)Changes applicable to the basic Model 737-700 aircraft which are developed by Boeing between the date of the Detail Specification and the signing of a Supplemental Agreement for the Option Aircraft.


(2)Changes mutually agreed upon.


(3)Changes required to obtain a Standard Certificate of Airworthiness.


1.3Effect of Changes.Changes to the Detail Specification pursuant to the provisions of the clauses above shall include the effects of such changes upon Option Aircraft weight, balance, design and performance.


2.Price Description.


2.1Price Adjustments.


2.1.1Base Price Adjustments.  The Base Airplane Price (pursuant to Article 3 of the Agreement) of the Option Aircraft will be adjusted to Boeing's and the engine manufacturer's then-current prices as of the date of execution of the Supplemental Agreement for the Option Aircraft.


2.1.2Special Features.  The price for Special Features incorporated in the Option Aircraft Detail Specification will be adjusted to Boeing's then-current prices for such features as of the date of execution of the Supplemental Agreement for the Option Aircraft [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT].


2.1.3Escalation Adjustments.  The Base Airframe and Special Features price will be escalated according to the applicable airframe and engine manufacturer escalation provisions contained in Exhibit D of the Agreement.


2.1.4Price Adjustments for Changes.  Boeing may adjust the Aircraft Basic Price and the Advance Payment Base Prices for Option Aircraft for any changes mutually agreed upon by Buyer and Boeing subsequent to the date that Buyer and Boeing enter into the Supplemental Agreement for the Option Aircraft.


2.1.5BFE to SPE.  An estimate of the total price for items of Buyer Furnished Equipment (BFE) changed to Seller Purchased Equipment (SPE) pursuant to the Detail Specification is included in the Option Aircraft price build-up.  The purchase price of the Option Aircraft will be adjusted by the price charged to Boeing for such items plus 10% of such price.


3.Advance Payments.


3.1If Buyer exercises its right under this letter agreement to acquire an Option Aircraft, Buyer shall pay to Boeing advance payments for such Option Aircraft pursuant to the schedule for payment of advance payments provided in the Agreement.


 

1951-3R22

June 6, 2006


 

Continental Airlines, Inc.

1600 Smith Street

Houston, Texas  77002


 
Subject:Letter Agreement No. 1951-3R22 to Purchase Agreement No. 1951 - 

Option Aircraft - Model 737-824 Aircraft


 







Ladies and Gentlemen:


This Letter Agreement amends Purchase Agreement No. 1951 dated July 23, 1996(the Agreement) between The Boeing Company (Boeing) and Continental Airlines, Inc. (Buyer) relating to Model 737-824 aircraft (the Aircraft).  This Letter Agreement supersedes and replaces in its entirety Letter Agreement 1951-3R21 dated June 30, 2005.


All terms used and not defined herein shall have the same meaning as in the Agreement.


In consideration of Buyer's purchase of the Aircraft, Boeing hereby agrees to manufacture and sell up to [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] additional Model 737-824 Aircraft (the Option Aircraft) to Buyer, on the same terms and conditions set forth in the Agreement, except as otherwise described in Attachment A hereto, and subject to the terms and conditions set forth below.


1.Delivery.


The Option Aircraft will be delivered to Buyer during or before the months set forth in the following schedule:


Month and Year  Number of

 of Delivery  Option Aircraft



	Price.


The basic price of the Option Aircraft shall be [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]. 


3.Option Aircraft Deposit.


In consideration of Boeing's grant to Buyer of options to purchase the Option Aircraft as set forth herein, Buyer has paid a deposit to Boeing of [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] for each Option Aircraft (the Option Deposit) prior to the date of this Letter Agreement.  If Buyer exercises an option herein for an Option Aircraft, the amount of the Option Deposit for such Option Aircraft will be credited against the first advance payment due for such Option Aircraft pursuant to the advance payment schedule set forth in Article 5 of the Agreement.  


If Buyer does not exercise its option to purchase a particular Option Aircraft pursuant to the terms and conditions set forth herein, Boeing shall be entitled to retain the Option Deposit for such Option Aircraft.


4.Option Exercise.


To exercise its option to purchase the Option Aircraft, Buyer shall give written notice thereof to Boeing on or before the first business day of the month in each Option Exercise Date shown below:


Option AircraftOption Exercise Date




5.Contract Terms.


Within thirty (30) days after Buyer exercises an option to purchase Option Aircraft pursuant to paragraph 4 above, Boeing and Buyer will use their best reasonable efforts to enter into a supplemental agreement amending the Agreement to add the applicable Option Aircraft to the Agreement as a firm Aircraft (the Option Aircraft Supplemental Agreement).


In the event the parties have not entered into such an Option Aircraft Supplemental Agreement within the time period contemplated herein, either party shall have the right, exercisable by written or telegraphic notice given to the other within ten (10) days after such period, to cancel the purchase of such Option Aircraft.


6.Cancellation of Option to Purchase.


Either Boeing or Buyer may cancel the option to purchase an Option Aircraft if any of the following events are not accomplished by the respective dates contemplated in this Letter Agreement, or in the Agreement, as the case may be:


(i)purchase of the Aircraft under the Agreement for any reason not attributable to the canceling party;


(ii)payment by Buyer of the Option Deposit with respect to such Option Aircraft pursuant to paragraph 3 herein; or


(iii)exercise of the option to purchase such Option Aircraft pursuant to the terms hereof.


Any cancellation of an option to purchase by Boeing which is based on the termination of the purchase of an Aircraft under the Agreement shall be on a one-for-one basis, for each Aircraft so terminated.


Cancellation of an option to purchase provided by this letter agreement shall be caused by either party giving written notice to the other within ten (10) days after the respective date in question.  Upon receipt of such notice, all rights and obligations of the parties with respect to an Option Aircraft for which the option to purchase has been cancelled shall thereupon terminate.


If an option is cancelled as provided above, Boeing shall promptly refund to Buyer, without interest, any payments received from Buyer with respect to the affected Option Aircraft.  Boeing shall be entitled to retain the Option Deposit unless cancellation is attributable to Boeing's fault, in which case the Option Deposit shall also be returned to Buyer without interest.


7.Applicability.


Except as otherwise specifically provided, limited or excluded herein, all Option Aircraft that are added to the Agreement by an Option Aircraft Supplemental Agreement as firm Aircraft shall benefit from all the applicable terms, conditions and provisions of the Agreement.


 

If the foregoing accurately reflects your understanding of the matters treated herein, please so indicate by signature below.


Very truly yours,


THE BOEING COMPANY


 

 

By  /s/ Michael S. Anderson


Its     Attorney-In-Fact   


 

ACCEPTED AND AGREED TO this


Date:  June 6, 2006


CONTINENTAL AIRLINES, INC.,


 

 

By /s/ Gerald Laderman


Its  Senior Vice President - Finance and Treasurer       


 

 

Attachment

Model 737-824 Aircraft


1.Option Aircraft Description and Changes.


1.1Aircraft Description.  The Option Aircraft are described by Boeing Detail Specification D6-38808-43 Revision D, dated October 2, 2001, as amended and revised pursuant to the Agreement.


1.2Changes.  The Option Aircraft Detail Specification shall be revised to include:


(1)Changes applicable to the basic Model 737-800 aircraft which are developed by Boeing between the date of the Detail Specification and the signing of a Supplemental Agreement for the Option Aircraft.


(2)Changes mutually agreed upon.


(3)Changes required to obtain a Standard Certificate of Airworthiness.


1.3Effect of Changes.Changes to the Detail Specification pursuant to the provisions of the clauses above shall include the effects of such changes upon Option Aircraft weight, balance, design and performance.


2.Price Description.


2.1Price Adjustments.


2.1.1Base Price Adjustments.  The Base Airplane Price (pursuant to Article 3 of the Agreement) of the Option Aircraft will be adjusted to Boeing's and the engine manufacturer's then-current prices as of the date of execution of the Supplemental Agreement for the Option Aircraft.


2.1.2Special Features.  The price for Special Features incorporated in the Option Aircraft Detail Specification will be adjusted to Boeing's then-current prices for such features as of the date of execution of the Supplemental Agreement for the Option Aircraft [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT].


2.1.3Escalation Adjustments.  The Base  Airplane and Special Features price will be escalated according to the applicable airframe and engine manufacturer escalation provisions contained in Exhibit D of the Agreement.


2.1.4Price Adjustments for Changes.  Boeing may adjust the Aircraft Basic Price and the Advance Payment Base Prices for Option Aircraft for any changes mutually agreed upon by Buyer and Boeing subsequent to the date that Buyer and Boeing enter into the Supplemental Agreement for the Option Aircraft.


3.Advance Payments.


If Buyer exercises its right under this letter agreement to acquire an Option Aircraft, Buyer shall pay to Boeing advance payments for such Option Aircraft pursuant to the schedule for payment of advance payments provided in the Agreement.