UNITED STATES
               SECURITIES AND EXCHANGE COMMISSION
                     Washington, D.C.  20549
                                                                 
                            FORM 10-Q

(Mark One)

[X]    QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF
               THE SECURITIES EXCHANGE ACT OF 1934

        FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1998

                               OR

[ ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
               THE SECURITIES EXCHANGE ACT OF 1934

     FOR THE TRANSITION PERIOD FROM __________ TO __________

                Commission File Number [       ]

                          CALAIR L.L.C.
     (Exact name of registrant as specified in its charter)

          Delaware                              76-0566172
  (State or other jurisdiction               (I.R.S. Employer
of incorporation or organization)           Identification No.)

                        c/o CALFINCO Inc.
               1600 Smith Street, Department HQSEO
                      Houston, Texas  77002
            (Address of principal executive offices)
                           (Zip Code)

                          713-324-2950
      (Registrant's telephone number, including area code)

     Indicate by check mark whether registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days.  Yes  X   No _____

<PAGE>
                PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS.

<TABLE>
                          CALAIR L.L.C.
              CONSOLIDATED STATEMENTS OF OPERATIONS
                           (unaudited)
                    (In thousands of dollars)


<CAPTION>
                                                  March 31, 1998
                                 Three Months      (inception)
                                    Ended            through
                                September 30,     September 30, 
                                     1998              1998     
<S>                             <C>               <C>
Rental income from
 Continental Airlines, Inc.. .     $ 4,093           $ 7,430 

Amortization expense . . . . .      (1,889)           (3,149)

Operating income . . . . . . .       2,204             4,281 

Interest expense . . . . . . .      (2,353)           (4,274)


Net income (loss). . . . . . .     $  (149)          $     7 
</TABLE>
























The accompanying Notes to Consolidated Financial Statements are an
integral part of these statements.
<PAGE>
<TABLE>
                         CALAIR L.L.C.
                   CONSOLIDATED BALANCE SHEETS
                    (in thousands of dollars)


<CAPTION>
                                                  March 31, 1998
                              September 30, 1998   (inception)  
                                 (unaudited)
<S>                           <C>                 <C>
Assets:
 Cash. . . . . . . . . . . . .    $      1           $   1
 Receivable from Continental 
  Airlines, Inc. . . . . . . .       7,773               -
 Slots, net. . . . . . . . . .     147,991               -
 Deferred financing costs, 
  net. . . . . . . . . . . . .       1,011               -

   Total Assets. . . . . . . .    $156,776           $   1


Liabilities and Members' 
 Equity:
 Interest payable. . . . . . .    $  4,156           $   -
 Other accrued liabilities . .         414               -
 Long-term debt, net . . . . .     110,533               -
 Members' equity . . . . . . .      41,673               1

  Total Liabilities and 
   Members' Equity . . . . . .    $156,776           $   1

</TABLE>






















The accompanying Notes to Consolidated Financial Statements are an
integral part of these statements.
<PAGE>
<TABLE>
                         CALAIR L.L.C.
              CONSOLIDATED STATEMENT OF CASH FLOWS
      March 31, 1998 (inception) through September 30, 1998
                           (unaudited)
                    (In thousands of dollars)

<S>                                              <C>
Cash Flows From Operating Activities:
 Net income. . . . . . . . . . . . . . . . . . . $       7 
Adjustments to reconcile net income (loss) to
  Cash Used in Operating Activities:
   Amortization. . . . . . . . . . . . . . . . .     3,149 
   Increase in receivable from Continental
    Airlines, Inc. . . . . . . . . . . . . . . .    (7,773)
   Increase in interest payable. . . . . . . . .     4,156 
   Increase in other accrued liabilities . . . .       414 
   Other . . . . . . . . . . . . . . . . . . . .       118 
    Net cash used in operating activities. . . .        71 

Cash Flows from Investing Activities:
 Purchase of slots from Continental 
  Airlines, Inc. . . . . . . . . . . . . . . . .  (151,141)
   Cash used by investing Activities . . . . . .  (151,141)

Cash Flows from Financing Activities:
 Net proceeds from issuance of long-term debt. .   110,456 
 Capital contributions . . . . . . . . . . . . .    41,666 
 Deferred financing costs. . . . . . . . . . . .    (1,052)
  Cash provided by financing activities. . . . .   151,070 

Net Change in Cash . . . . . . . . . . . . . . .         - 

Cash - Beginning of Period . . . . . . . . . . .         1 

Cash - End of Period . . . . . . . . . . . . . . $       1 
</TABLE>

















The accompanying Notes to Consolidated Financial Statements are an
integral part of these statements.
<PAGE>
                         CALAIR L.L.C.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           (UNAUDITED)


In the opinion of management, the unaudited consolidated financial
statements included herein contain all adjustments necessary to
present fairly the financial position, results of operations and
cash flows for the periods indicated.  Such adjustments are of a
normal, recurring nature.

NOTE 1 - ORGANIZATION

Calair L.L.C. ("Calair"), a Delaware limited liability company, and
its wholly owned subsidiary, Calair Capital Corporation ("Calair
Capital"), were formed in March 1998 by CALFINCO Inc. ("Calfinco"),
a wholly owned subsidiary of Continental Airlines, Inc.
("Continental"), for the purpose of acquiring certain take-off and
landing rights at Chicago O'Hare Airport, Ronald Reagan
International Airport in Washington, D.C. and New York LaGuardia
Airport (collectively, the "Slots") from Continental.

In April 1998, Calair acquired the Slots from Continental for
$151.1 million, which represented their estimated fair value.  The
acquisition of the Slots was funded with a combination of debt and
equity, which included (i) $31.7 million in capital contributions
from Calfinco, (representing a 76% equity interest in Calair), (ii)
$10.0 million in capital contributions from Chase Equity
Associates, L.P. ("CEA") representing a 24% equity interest in
Calair) and (iii) net proceeds of $110.5 million from an offering
of Senior Notes due 2008 (the "Senior Notes").

Pursuant to the terms of a Redemption Option Agreement between
Calair and CEA, Calair has the right to redeem 50% of CEA's member
interest (i.e., 12% of Calair) on April 17, 2003 (the fifth
anniversary of the closing date of the acquisition of the Slots). 
In addition, Calair has the right to redeem all of CEA's member
interest (either 12% of Calair if Calair has previously exercised
its fifth anniversary redemption option, or 24% otherwise) on April
7, 2008 (the tenth anniversary of the closing date of the
acquisition of the Slots) or upon the occurrence of certain events
described in the Redemption Option Agreement and the Company
Agreement.  If Calair has not redeemed all of CEA's member interest
on or before the tenth anniversary of the closing date of the
acquisition of the Slots, CEA will have the right to require the
liquidation of Calair.

Calair is economically dependent upon its parent, Continental, for
its operations and cash flow.

<PAGE>
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The consolidated financial statements of Calair include the
accounts of Calair and its wholly owned subsidiary, Calair Capital. 
All intercompany transactions have been eliminated in
consolidation.

Use of Estimates

The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the amounts reported in
the financial statements and accompanying notes.  Actual results
could differ from those estimates.

Slots

Slots are amortized on a straight-line basis over 20 years.  Calair
had accumulated amortization related to slots of $3.2 million as of
September 30, 1998.

Deferred Financing Costs

Deferred financing costs are amortized on a straight-line basis
over the term of the Senior Notes (10 years).

Income Taxes

Calair is a limited liability corporation which is not subject to
federal income taxes.

NOTE 3 - SENIOR NOTES

Calair and Calair Capital have outstanding $112.3 million in 8-1/8%
Senior Notes due 2008.  These notes mature April 1, 2008 and pay
interest semiannually on April 1 and October 1.  Continental has
fully and unconditionally guaranteed the Senior Notes.  As of
September 30, 1998 the unamortized discount relating to these notes
totalled $1.8 million.

In October 1998, the Senior Notes were exchanged for new publicly
registered notes with terms identical in all material respects to
the form and terms of the Senior Notes.

NOTE 4 - TRANSACTIONS WITH CONTINENTAL

Under the terms of a Slot Lease Agreement between Calair and
Continental, Continental pays Calair $8.1 million semiannually on
April 1 and October 1 for the right to use the Slots.  The term of
the Slot Lease Agreement extends through April 2008.


<PAGE>
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
         CONDITION AND RESULTS OF OPERATIONS.

Liquidity

Calair's business is primarily limited to leasing and/or selling
the Slots.  The sole sources of revenue for Calair are rental
payments received from Continental under the Slot Lease Agreement
and proceeds from the sale of any of the Slots that may be sold in
the future.  Consequently, Calair's ability to make payments of
interest on the Senior Notes in the amounts and on the dates
contemplated therein depends upon the receipt by Calair of payments
under the Slot Lease Agreement.  Regular rental payments under the
Slot Lease Agreement will not be sufficient to enable Calair to
repay the principal of the Senior Notes upon maturity.  At maturity
of the Senior Notes, it is anticipated that Calfinco will make a
voluntary capital contribution to Calair to fund repayment of the
principal of the Senior Notes.  However, Calfinco is under no
obligation under the amended and restated limited liability company
agreement between Calfinco and CEA to do so.  If Calfinco does not
make such a capital contribution in an amount equal to the
principal balance of the Senior Notes prior to maturity and Calair
is not otherwise able to pay the Senior Notes, Continental will be
obligated to make payment under a parent guarantee with respect to
the Senior Notes.

Results of Operations

Rental income for the three months ended September 30, 1998
consisted of rental payments due from Continental for the right to
use the slots.  See Note 4.

Amortization expense for the three months ended September 30, 1998
related to the amortization of slots.  See Note 2.

Interest expense for the three months ended September 30, 1998
included the interest on the Senior Notes and the amortization of
the related discount (see Note 3) as well as the amortization of
the deferred financing costs (see Note 2).

Year 2000

Continental implemented a Year 2000 project in early 1997 to ensure
that its computer systems will function properly in the year 2000
and thereafter.  See Continental's annual report on Form 10-K for
the year ended December 31, 1997 and Form 10-Q for the quarterly
period ended September 30, 1998.  Calair does not anticipate any
material expenditures relating to the Year 2000 project.
<PAGE>
PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

   None.

ITEM 2. CHANGES IN SECURITIES.

   None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

   None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

   None.

ITEM 5. OTHER INFORMATION.

   None.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.

   None.<PAGE>
                  SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                     CALAIR L.L.C.           
                                      (Registrant)

                        by:  CALFINCO Inc., Managing Member



Date: November 16, 1998 by:  /s/ Lawrence W. Kellner      
                             Lawrence W. Kellner
                             Executive Vice President and
                             Chief Financial Officer of
                             CALFINCO Inc., Managing Member
                             (On behalf of Registrant)




Date: November 16, 1998      /s/ Michael P. Bonds         
                             Michael P. Bonds
                             Vice President and Controller
                             (Chief Accounting Officer) of
                             CALFINCO Inc., Managing Member