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                    PREFERRED SECURITIES GUARANTEE AGREEMENT


                                     BETWEEN


                           CONTINENTAL AIRLINES, INC.


                                       AND


                            WILMINGTON TRUST COMPANY



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<PAGE>

                            CROSS-REFERENCE TABLE(1)



SECTION OF                                                         SECTION OF
TRUST INDENTURE ACT                                       GUARANTEE AGREEMENT
OF 1939, as amended

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         310(a).......................................................4.01(a)
         310(b).................................................4.01(c), 2.08
         310(c)..................................................Inapplicable
         311(a).......................................................2.02(b)
         311(b).......................................................2.02(b)
         311(c)..................................................Inapplicable
         312(a).......................................................2.02(a)
         312(b).......................................................2.02(b)
         313.............................................................2.03
         314(a)..........................................................2.04
         314(b)..................................................Inapplicable
         314(c)..........................................................2.05
         314(d)..................................................Inapplicable
         314(e)..............................................1.01, 2.05, 3.02
         314(f)....................................................2.01, 3.02
         315(a).......................................................3.01(d)
         315(b)..........................................................2.07
         315(c)..........................................................3.01
         315(d).......................................................3.01(d)
         316(a)..............................................1.01, 2.06, 5.04
         316(b)..........................................................5.03
         316(c)..........................................................8.02
         317(a)..................................................Inapplicable
         317(b)..................................................Inapplicable
         318(a).......................................................2.01(b)
         318(b)..........................................................2.01
         318(c).......................................................2.01(a)


------------

         (1) This Cross-Reference Table does not constitute part of the
Guarantee Agreement and shall not affect the interpretation of any of its terms
or provisions.

<PAGE>

                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----


ARTICLE I  Definitions and Interpretation......................................1

         SECTION 1.01  Definitions and Interpretation..........................1

ARTICLE II  Trust Indenture Act................................................4

         SECTION 2.01  Trust Indenture Act; Application........................4
         SECTION 2.02  Lists of Holders of Securities..........................4
         SECTION 2.03  Reports by the Guarantee Trustee........................5
         SECTION 2.04  Periodic Reports to Guarantee Trustee...................5
         SECTION 2.05  Evidence of Compliance with Conditions Precedent........5
         SECTION 2.06  Event of Default; Waiver................................5
         SECTION 2.07  Event of Default; Notice................................5
         SECTION 2.08  Conflicting Interests...................................6

ARTICLE III  Powers, Duties and Rights of Guarantee Trustee....................6

         SECTION 3.01  Powers, Duties and Rights of Guarantee Trustee..........6
         SECTION 3.02  Certain Rights of Guarantee Trustee.....................7
         SECTION 3.03  Not Responsible for Recitals or Issuance of Guarantee...9
         SECTION 3.04  Compensation; Reimbursement; Indemnity..................9

ARTICLE IV  Guarantee Trustee.................................................10

         SECTION 4.01  Guarantee Trustee; Eligibility.........................10
         SECTION 4.02  Appointment, Removal and Resignation of Guarantee
                       Trustee................................................10

ARTICLE V  GUARANTEE..........................................................11

         SECTION 5.01  Guarantee..............................................11
         SECTION 5.02  Subordination..........................................11
         SECTION 5.03  Waiver of Notice and Demand............................11
         SECTION 5.04  Obligations Not Affected...............................12
         SECTION 5.05  Rights of Holders......................................12
         SECTION 5.06  Guarantee of Payment...................................13
         SECTION 5.07  Subrogation............................................13
         SECTION 5.08  Independent Obligations................................13
         SECTION 5.09  Conversion.............................................13

ARTICLE VI  Limitation of Transactions; Subordination.........................14

         SECTION 6.01  Limitation of Transactions.............................14
         SECTION 6.02  Ranking................................................14

ARTICLE VII  TERMINATION......................................................14

         SECTION 7.01  Termination............................................14

ARTICLE VIII  Indemnification.................................................15

         SECTION 8.01  Exculpation............................................15
         SECTION 8.02  Indemnification........................................15

ARTICLE IX  MISCELLANEOUS.....................................................16

         SECTION 9.01  Successors and Assigns.................................16
         SECTION 9.02  Amendments.............................................16
         SECTION 9.03  Notices................................................16
         SECTION 9.04  Benefit................................................17
         SECTION 9.05  Governing Law..........................................17

<PAGE>

         This PREFERRED SECURITIES GUARANTEE AGREEMENT ("Guarantee"), dated as
of November 10, 2000, is executed and delivered by Continental Airlines, Inc., a
Delaware corporation (the "Guarantor"), and Wilmington Trust Company, a Delaware
banking corporation, as trustee (the "Guarantee Trustee"), for the benefit of
the Holders (as defined herein) from time to time of the Preferred Securities
(as defined herein) of Continental Airlines Finance Trust II, a Delaware
statutory business trust (the "Issuer").

         WHEREAS, pursuant to an Amended and Restated Declaration of Trust (the
"Declaration"), dated as of November 10, 2000, among the trustees of the Issuer
named therein, the Guarantor, as sponsor, and the holders from time to time of
undivided beneficial interests in the assets of the Issuer, the Issuer may issue
up to 5,750,000 Preferred Securities, having an aggregate stated liquidation
amount of up to $287,500,000 designated the 6% Convertible Preferred Securities,
Term Income Deferrable Equity Securities (TIDES)SM (liquidation amount $50 per
Preferred Security) (the "Preferred Securities");

         WHEREAS, as incentive for the Holders to purchase the Preferred
Securities, the Guarantor desires irrevocably and unconditionally to agree, to
the extent set forth in this Guarantee, to pay on a subordinated basis to the
Holders the Guarantee Payments (as defined herein) and to make certain other
payments on the terms and conditions set forth herein; and

         WHEREAS, the Guarantor is also executing and delivering a guarantee
agreement (the "Common Securities Guarantee") in substantially identical terms
to this Guarantee for the benefit of the holders of the Common Securities (as
defined herein) except that if a Debenture Event of Default or a Declaration
Event of Default (each as defined herein) (or an event that, with passage of
time, would become such a Debenture Event of Default) shall have occurred and be
continuing, the rights of holders of the Common Securities to receive Guarantee
Payments under the Common Securities Guarantee are subordinated to the rights of
Holders to receive Guarantee Payments under this Guarantee.

         NOW, THEREFORE, in consideration of the purchase by each Holder of
Preferred Securities, which purchase the Guarantor hereby agrees shall benefit
the Guarantor, the Guarantor executes and delivers this Guarantee for the
benefit of the Holders.


                                    ARTICLE I

                         Definitions and Interpretation

SECTION 1.01 Definitions and Interpretation.

         In this Guarantee, unless the context otherwise requires:

                  (a) capitalized terms used in this Guarantee but not defined
         in the preamble above have the respective meanings assigned to them in
         this Section 1.01; terms defined in the Declaration as at the date of
         execution of this Guarantee have the same meaning when used in this
         Guarantee unless otherwise defined in this Guarantee;

                  (b) a term defined anywhere in this Guarantee has the same
         meaning throughout;

                  (c) all references to "the Guarantee" or "this Guarantee" are
         to this Guarantee as modified, supplemented or amended from time to
         time;

                  (d) all references in this Guarantee to Articles and Sections
         are to Articles and Sections of this Guarantee unless otherwise
         specified;

                  (e) a term defined in the Trust Indenture Act has the same
         meaning when used in this Guarantee unless otherwise defined in this
         Guarantee or unless the context otherwise requires; and

                  (f) a reference to the singular includes the plural and vice
         versa.

         "Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
the terms "controlling" and "controlled" have meanings correlative to the
foregoing.

         "Class B Common Stock" means Class B common stock, par value $.01 per
share, of the Guarantor (or shares of any class or classes resulting from any
reclassification or reclassifications thereof).

         "Common Securities" means the convertible common securities
(liquidation amount $50 per common security) representing common undivided
beneficial interests in the assets of the Issuer.

         "Covered Person" means any Holder or beneficial owner of Preferred
Securities.

         "Debenture Event of Default" means an Event of Default as defined in
the Indenture.

         "Debentures" means the series of convertible junior subordinated debt
securities of the Guarantor designated the 6% Convertible Junior Subordinated
Debentures Due 2030 held by the Property Trustee (as defined in the Indenture)
of the Issuer.

         "Declaration Event of Default" means an Event of Default as defined in
the Declaration.

         "Event of Default" means a default by the Guarantor on any of its
payment or other obligations under this Guarantee; provided, however, that
except with respect to a default in payment of any Guarantee Payment, the
Guarantor shall have received notice of default and shall not have cured such
default within 60 days after receipt of such notice.

         "Guarantee Payments" means the following payments or distributions,
without duplication, with respect to the Preferred Securities, to the extent not
paid or made by or on behalf of the Issuer: (i) any accrued and unpaid
Distributions (as defined in the Declaration) that are required to be paid on
the Preferred Securities, to the extent that the Issuer shall have funds on hand
available therefor at such time, (ii) the applicable Redemption Price (as
defined in the Indenture) with respect to Preferred Securities called for
redemption by the Issuer, to the extent that the Issuer has funds on hand
available therefor at such time, and (iii) upon a voluntary or involuntary
dissolution, winding up or liquidation of the Issuer (other than in connection
with the distribution of Debentures to the Holders or the redemption of all the
Preferred Securities), the lesser of (a) the aggregate liquidation amount
thereof plus accrued and unpaid Distributions thereon to the date of payment
(such amount being the "Liquidation Distribution") to the extent the Issuer has
funds available therefor and (b) the amount of assets of the Issuer remaining
available for distribution to Holders upon liquidation of the Issuer after
satisfaction of liabilities to creditors of the Issuer as required by applicable
law.

         "Guarantee Trustee" means Wilmington Trust Company until a Successor
Guarantee Trustee has been appointed and has accepted such appointment pursuant
to the terms of this Guarantee and thereafter means each such Successor
Guarantee Trustee.

         "Holder" means any holder, as registered on the books and records of
the Issuer of any outstanding Preferred Securities; provided, however, that, in
determining whether the holders of the requisite percentage in liquidation
amount of the Preferred Securities have given any request, notice, consent or
waiver hereunder, "Holder" shall not include the Guarantor or any Affiliate of
the Guarantor.

         "Indemnified Person" means the Guarantee Trustee, any Affiliate of the
Guarantee Trustee, or any officers, directors, shareholders, members, partners,
employees, representatives or agents of the Guarantee Trustee.

         "Indenture" means the Indenture dated as of November 10, 2000, among
the Guarantor and Wilmington Trust Company, as trustee, and any indenture
supplemental thereto, pursuant to which the Debentures are to be issued to the
Property Trustee of the Issuer.

         "Majority in liquidation amount of the Preferred Securities" means,
except as provided by the Trust Indenture Act, Holder(s), voting separately as a
class, representing more than 50% of the stated aggregate liquidation amount
(including the stated amount that would be paid on redemption, liquidation or
otherwise) of all Preferred Securities then outstanding.

         "Officers' Certificate" means, with respect to any Person, a
certificate signed by the Chairman of the Board, President or a Vice President,
and by the Treasurer, an Assistant Treasurer, the Controller, the Secretary or
an Assistant Secretary of such Person, and delivered to the Guarantee Trustee.
Any Officers' Certificate delivered with respect to compliance with a condition
or covenant provided for in this Guarantee shall include:

                  (i) a statement that each officer signing the Officers'
         Certificate has read the covenant or condition and the definitions
         relating thereto;

                  (ii) a brief statement of the nature and scope of the
         examination or investigation undertaken by each officer in rendering
         the Officers' Certificate;

                  (iii) a statement that each such officer has made such
         examination or investigation as, in such officer's opinion, is
         necessary to enable such officer to express an informed opinion as to
         whether or not such covenant or condition has been complied with; and

                  (iv) a statement as to whether, in the opinion of each such
         officer, such condition or covenant has been complied with.

         "Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever nature.

         "Responsible Officer" means, with respect to the Guarantee Trustee, the
chairman of the board of directors, the president, any vice-president, any
assistant vice-president, the secretary, any assistant secretary, the treasurer,
any assistant treasurer, any trust officer or assistant trust officer or any
other officer of the Guarantee Trustee customarily performing functions similar
to those performed by any of the above designated officers and also means, with
respect to a particular corporate trust matter, any other officer to whom such
matter is referred because of that officer's knowledge of and familiarity with
the particular subject.

         "Senior Debt" shall have the meaning set forth in the Indenture.

         "Successor Guarantee Trustee" means a successor Guarantee Trustee
possessing the qualifications to act as Guarantee Trustee under Section 4.01.

         "Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended.


                                   ARTICLE II

                               Trust Indenture Act

SECTION 2.01      Trust Indenture Act; Application.

         (a) This Guarantee is subject to the provisions of the Trust Indenture
Act that are required to be part of this Guarantee, which are incorporated by
reference hereto, and shall, to the extent applicable, be governed by such
provisions; and

         (b) If and to the extent that any provision of this Guarantee limits,
qualifies or conflicts with the duties imposed by Sections 310 to 317,
inclusive, of the Trust Indenture Act, such imposed duties shall control.

SECTION 2.02 Lists of Holders of Securities.

         (a) The Guarantor shall provide the Guarantee Trustee (i) within 14
days after April 15 and September 15 of each year, commencing April 15, 2001, a
list, in such form as the Guarantee Trustee may reasonably require, of the names
and addresses of the Holders ("List of Holders") as of such date; provided that
the Guarantor shall not be obligated to provide such List of Holders at any time
the List of Holders does not differ from the most recent List of Holders given
to the Guarantee Trustee by the Guarantor, and (ii) at any other time, within 30
days of receipt by the Guarantor of a written request for a List of Holders as
of a date no more than 14 days before such List of Holders is given to the
Guarantee Trustee. The Guarantee Trustee may destroy any List of Holders
previously given to it on receipt of a new List of Holders.

         (b) The Guarantee Trustee shall comply with its obligations under
Sections 311(a), 311(b) and 312(b) of the Trust Indenture Act.

SECTION 2.03 Reports by the Guarantee Trustee.

         Within 60 days after April 15 of each year, commencing April 15, 2001,
the Guarantee Trustee shall provide to the Holders of the Securities such
reports as are required by Section 313 of the Trust Indenture Act, if any, in
the form and in the manner provided by Section 313 of the Trust Indenture Act.
The Guarantee Trustee shall also comply with the requirements of Section 313(d)
of the Trust Indenture Act.

SECTION 2.04 Periodic Reports to Guarantee Trustee.

         The Guarantor shall provide to the Guarantee Trustee, the Securities
and Exchange Commission and the Holders such documents, reports and information
as required by Section 314 of the Trust Indenture Act (if any) and the
compliance certificate required by Section 314 of the Trust Indenture Act in the
form, in the manner and at the times required by Section 314 of the Trust
Indenture Act.

SECTION 2.05 Evidence of Compliance with Conditions Precedent.

         The Guarantor shall provide to the Guarantee Trustee such evidence of
compliance with any conditions precedent, if any, provided for in this Guarantee
which relate to any of the matters set forth in Section 314(c) of the Trust
Indenture Act. Any certificate or opinion required to be given by an officer
pursuant to Section 314(c)(1) may be given in the form of an Officers'
Certificate.

SECTION 2.06 Event of Default; Waiver.

         The Holders of a Majority in liquidation amount of the Preferred
Securities may, by vote, on behalf of the Holders of all of the Preferred
Securities, waive any past Event of Default and its consequences. Upon such
waiver, any such Event of Default shall cease to exist, and any Event of Default
arising therefrom shall be deemed to have been cured, for every purpose of this
Guarantee, but no such waiver shall extend to any subsequent or other default or
Event of Default or impair any right consequent therefrom.

SECTION 2.07 Event of Default; Notice.

         (a) The Guarantee Trustee shall, within 30 days after the occurrence of
an Event of Default actually known to the Guarantee Trustee, transmit by mail,
first-class postage prepaid, to the Holders, notices of all Events of Default
known to the Guarantee Trustee, unless such defaults have been cured before the
giving of such notice; provided that, except in the case of a default in the
payment of a Guarantee Payment, the Guarantee Trustee shall be protected in
withholding such notice if and so long as the board of directors, the executive
committee, or a trust committee of directors and/or Responsible Officers of the
Guarantee Trustee in good faith determines that the withholding of such notice
is in the interests of the Holders.

         (b) The Guarantee Trustee shall not be deemed to have knowledge of any
Event of Default except any Event of Default as to which the Guarantee Trustee
shall have received written notice or a Responsible Officer charged with the
administration of the Declaration shall have obtained written notice.

SECTION 2.08 Conflicting Interests.

         The Declaration shall be deemed to be specifically described in this
Guarantee for the purposes of clause (i) of the first proviso contained in
Section 310(b) of the Trust Indenture Act.


                                   ARTICLE III

                 Powers, Duties and Rights of Guarantee Trustee

SECTION 3.01 Powers, Duties and Rights of Guarantee Trustee.

         (a) This Guarantee shall be held by the Guarantee Trustee for the
benefit of the Holders, and the Guarantee Trustee shall not transfer this
Guarantee to any Person except a Holder exercising his or her rights pursuant to
Section 5.05(d) or to a Successor Guarantee Trustee on acceptance by such
Successor Guarantee Trustee of its appointment to act as Successor Guarantee
Trustee. The right, title and interest of the Guarantee Trustee shall
automatically vest in any Successor Guarantee Trustee, and such vesting and
cessation of title shall be effective whether or not conveyancing documents have
been executed and delivered pursuant to the appointment of such Successor
Guarantee Trustee.

         (b) If an Event of Default has occurred and is continuing, the
Guarantee Trustee shall enforce this Guarantee for the benefit of the Holders.

         (c) The Guarantee Trustee, before the occurrence of any Event of
Default and after the curing of all Events of Default that may have occurred,
shall undertake to perform only such duties as are specifically set forth in
this Guarantee, and no implied covenants shall be read into this Guarantee
against the Guarantee Trustee. In case an Event of Default has occurred (that
has not been cured or waived pursuant to Section 2.06) and is known to the
Guarantee Trustee, the Guarantee Trustee shall exercise such of the rights and
powers vested in it by this Guarantee, and use the same degree of care and skill
in its exercise thereof, as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs.

         (d) No provision of this Guarantee shall be construed to relieve the
Guarantee Trustee from liability for its own negligent action, its own negligent
failure to act, or its own willful misconduct, except that:

                  (i) prior to the occurrence of any Event of Default and after
         the curing or waiving of all such Events of Default that may have
         occurred:

                           (A) the duties and obligations of the Guarantee
                  Trustee shall be determined solely by the express provisions
                  of this Guarantee, and the Guarantee Trustee shall not be
                  liable except for the performance of such duties and
                  obligations as are specifically set forth in this Guarantee,
                  and no implied covenants or obligations shall be read into
                  this Guarantee against the Guarantee Trustee; and

                           (B) in the absence of bad faith on the part of the
                  Guarantee Trustee, the Guarantee Trustee may conclusively
                  rely, as to the truth of the statements and the correctness of
                  the opinions expressed therein, upon any certificates or
                  opinions furnished to the Guarantee Trustee and conforming to
                  the requirements of this Guarantee; but in the case of any
                  such certificates or opinions that by any provision hereof are
                  specifically required to be furnished to the Guarantee
                  Trustee, the Guarantee Trustee shall be under a duty to
                  examine the same to determine whether or not they conform to
                  the requirements of this Guarantee;

                  (ii) the Guarantee Trustee shall not be liable for any error
         of judgment made in good faith by a Responsible Officer of the
         Guarantee Trustee, unless it shall be proved that the Guarantee Trustee
         was negligent in ascertaining the pertinent facts upon which such
         judgment was made;

                  (iii) the Guarantee Trustee shall not be liable with respect
         to any action taken or omitted to be taken by it in good faith in
         accordance with the direction of the Holders of not less than a
         Majority in liquidation amount of the Preferred Securities, relating to
         the time, method and place of conducting any proceeding for any remedy
         available to the Guarantee Trustee, or exercising any trust or power
         conferred upon the Guarantee Trustee under this Guarantee; and

                  (iv) no provision of this Guarantee shall require the
         Guarantee Trustee to expend or risk its own funds or otherwise incur
         personal financial liability in the performance of any of its duties or
         in the exercise of any of its rights or powers.

SECTION 3.02 Certain Rights of Guarantee Trustee.

         (a) Subject to the provisions of Section 3.01:

                  (i) the Guarantee Trustee may conclusively rely and shall be
         fully protected in acting or refraining from acting upon any
         resolution, certificate, statement, instrument, opinion, report,
         notice, request, direction, consent, order, bond, debenture, note,
         other evidence of indebtedness or other paper or document believed by
         it to be genuine and to have been signed, sent or presented by the
         proper party or parties;

                  (ii) any direction or act of the Guarantor contemplated by
         this Guarantee shall be sufficiently evidenced by an Officers'
         Certificate;

                  (iii) whenever, in the administration of this Guarantee, the
         Guarantee Trustee shall deem it desirable that a matter be proved or
         established before taking, suffering or omitting any action hereunder,
         the Guarantee Trustee (unless other evidence is herein specifically
         prescribed) may, in the absence of bad faith on its part, request and
         rely upon an Officers' Certificate which, upon receipt of such request,
         shall be promptly delivered by the Guarantor;

                  (iv) the Guarantee Trustee shall have no duty to see to any
         recording, filing or registration of any instrument (or any
         rerecording, refiling or reregistration thereof);

                  (v) the Guarantee Trustee may consult with legal counsel of
         its selection, and the written advice or opinion of such legal counsel
         with respect to legal matters shall be full and complete authorization
         and protection in respect of any action taken, suffered or omitted to
         be taken by it hereunder in good faith and in accordance with such
         advice or opinion. Such legal counsel may be legal counsel to the
         Guarantor or any of its Affiliates and may include any of the
         Guarantor's employees. The Guarantee Trustee shall have the right at
         any time to seek instructions concerning the administration of this
         Guarantee from any court of competent jurisdiction;

                  (vi) the Guarantee Trustee shall be under no obligation to
         exercise any of the rights or powers vested in it by this Guarantee at
         the request or direction of any Holder, unless such Holder shall have
         provided to the Guarantee Trustee security and indemnity satisfactory
         to the Guarantee Trustee against the costs, expenses (including
         attorneys' fees and expenses) and liabilities that might be incurred by
         it in complying with such request or direction, including such
         reasonable advances as may be requested by the Guarantee Trustee;
         provided that nothing contained in this Section 3.02(a)(vi) shall be
         taken to relieve the Guarantee Trustee, upon the occurrence of an Event
         of Default known to the Guarantee Trustee, of its obligation to
         exercise the rights and powers vested in it by this Guarantee;

                  (vii) the Guarantee Trustee shall not be bound to make any
         investigation into the facts or matters stated in any resolution,
         certificate, statement, instrument, opinion, report, notice, request,
         direction, consent, order, bond, debenture, note, other evidence of
         indebtedness or other paper or document, but the Guarantee Trustee, in
         its discretion, may make such further inquiry or investigation into
         such facts or matters as it may see fit; the reasonable expense of
         every such investigation shall be paid by the Guarantor or, if paid by
         the Guarantee Trustee, shall be repaid by the Guarantor upon request,
         except any such expense as may be attributable to the Guarantee
         Trustee's negligence or bad faith;

                  (viii) the Guarantee Trustee may execute any of the trusts or
         powers hereunder or perform any duties hereunder either directly or by
         or through agents or attorneys, and the Guarantee Trustee shall not be
         responsible for any misconduct or negligence on the part of any agent
         or attorney appointed with due care by it hereunder;

                  (ix) any action taken by the Guarantee Trustee or its agents
         hereunder shall bind the Holders, and the signature of the Guarantee
         Trustee or its agents alone shall be sufficient and effective to
         perform any such action; it being understood that no third party shall
         be required to inquire as to the authority of the Guarantee Trustee to
         so act or as to its compliance with any of the terms and provisions of
         this Guarantee, both of which shall be conclusively evidenced by the
         Guarantee Trustee's or its agent's taking such action;

                  (x) whenever in the administration of this Guarantee the
         Guarantee Trustee shall deem it desirable to receive instructions with
         respect to enforcing any remedy or right or taking any other action
         hereunder, the Guarantee Trustee (i) may request written instructions
         from the Holders or, other than with respect to enforcing any remedy or
         right or taking any action related thereto, the Guarantor, (ii) may
         refrain from enforcing such remedy or right or taking such other action
         until such written instructions are received, and (iii) shall be
         protected in acting in accordance with such written instructions; and

                  (xi) the Guarantee Trustee shall not be charged with knowledge
         of any default or Event of Default hereunder unless a Responsible
         Officer of the Guarantee Trustee shall have knowledge of the default or
         Event of Default.

         (b) No provision of this Guarantee shall be deemed to impose any
duty or obligation on the Guarantee Trustee to perform any act or acts or
exercise any right, power, duty or obligation conferred or imposed on it, in any
jurisdiction in which it shall be illegal, or in which the Guarantee Trustee
shall be unqualified or incompetent in accordance with applicable law, to
perform any such act or acts or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the Guarantee Trustee
shall be construed to be a duty.

SECTION 3.03 Not Responsible for Recitals or Issuance of Guarantee.

         The recitals contained in this Guarantee shall be taken as the
statements of the Guarantor, and the Guarantee Trustee does not assume any
responsibility for their correctness. The Guarantee Trustee makes no
representations as to the validity or sufficiency of this Guarantee.

SECTION 3.04 Compensation; Reimbursement; Indemnity.

         The Guarantor agrees:

                  (a) to pay the Guarantee Trustee from time to time such
         reasonable compensation as the Guarantor and the Guarantee Trustee
         shall from time to time agree in writing for all services rendered by
         it hereunder (which compensation shall not be limited by any provision
         of law in regard to the compensation of a trustee of an express trust);
         and

                  (b) except as otherwise expressly provided herein, to
         reimburse the Guarantee Trustee upon its request for all reasonable
         expenses, disbursements and advances incurred or made by the Guarantee
         Trustee in accordance with the provisions of this Guarantee (including
         the reasonable compensation and expenses of its agents and counsel),
         except any such expense, disbursement or advance as may be attributable
         to its negligence or bad faith.

         As security for the performance of the obligations of the Guarantor
under this Section 3.04, the Guarantee Trustee shall have a lien, prior to the
Preferred Securities, upon all the property and funds held or collected by the
Guarantee Trustee as such, except funds held in trust for the payment of
principal of, and premium (if any) or interest on, particular obligations of the
Guarantor under this Guarantee.

         The provisions of this Section 3.04 shall survive the termination of
this Guarantee.


                                   ARTICLE IV

                                Guarantee Trustee

SECTION 4.01 Guarantee Trustee; Eligibility.

         (a) There shall at all times be a Guarantee Trustee which shall:

                  (i) not be an Affiliate of the Guarantor; and

                  (ii) be a corporation organized and doing business under the
         laws of the United States of America or any State or Territory thereof
         or of the District of Columbia, or a corporation or Person permitted by
         the Securities and Exchange Commission to act as an institutional
         trustee under the Trust Indenture Act, authorized under such laws to
         exercise corporate trust powers, having a combined capital and surplus
         of at least 50 million U.S. dollars ($50,000,000), and subject to
         supervision or examination by Federal, State, Territorial or District
         of Columbia authority. If such corporation publishes reports of
         condition at least annually, pursuant to law or to the requirements of
         the supervising or examining authority referred to above, then, for the
         purposes of this Section 4.01(a)(ii), the combined capital and surplus
         of such corporation shall be deemed to be its combined capital and
         surplus as set forth in its most recent report of condition so
         published.

         (b) If at any time the Guarantee Trustee shall cease to be
eligible to so act under Section 4.01(a), the Guarantee Trustee shall
immediately resign in the manner and with the effect set out in Section 4.02(c).

         (c) If the Guarantee Trustee has or shall acquire any "conflicting
interest" within the meaning of Section 3.10(b) of the Trust Indenture Act, the
Guarantee Trustee and Guarantor shall in all respects comply with the provisions
of Section 3.10(b) of the Trust Indenture Act.

SECTION 4.02 Appointment, Removal and Resignation of Guarantee Trustee.

         (a) Subject to Section 4.02(b), the Guarantee Trustee may be
appointed or removed without cause at any time by the Guarantor.

         (b) The Guarantee Trustee shall not be removed in accordance with
Section 4.02(a) until a Successor Guarantee Trustee has been appointed and has
accepted such appointment by written instrument executed by such Successor
Guarantee Trustee and delivered to the Guarantor.

         (c) The Guarantee Trustee appointed to office shall hold office
until a Successor Guarantee Trustee shall have been appointed or until its
removal or resignation. The Guarantee Trustee may resign from office (without
need for prior or subsequent accounting) by an instrument in writing executed by
the Guarantee Trustee and delivered to the Guarantor, which resignation shall
not take effect until a Successor Guarantee Trustee has been appointed and has
accepted such appointment by instrument in writing executed by such Successor
Guarantee Trustee and delivered to the Guarantor and the resigning Guarantee
Trustee.

         (d) If no Successor Guarantee Trustee shall have been appointed
and accepted appointment as provided in this Section 4.02 within 60 days after
delivery to the Guarantor of an instrument of removal or resignation, the
Guarantee Trustee resigning or being removed may petition any court of competent
jurisdiction for appointment of a Successor Guarantee Trustee. Such court may
thereupon, after prescribing such notice, if any, as it may deem proper, appoint
a Successor Guarantee Trustee.

         (e) No Guarantee Trustee shall be liable for the acts or omissions
to act of any Successor Guarantee Trustee.

         (f) Upon termination of this Guarantee or removal or resignation
of the Guarantee Trustee pursuant to this Section 4.02, the Guarantor shall pay
to the Guarantee Trustee all amounts accrued to the date of such termination,
removal or resignation.


                                    ARTICLE V

                                    GUARANTEE

SECTION 5.01 Guarantee.

         The Guarantor irrevocably and unconditionally agrees to pay in full on
a subordinated basis to the Holders the Guarantee Payments (without duplication
of amounts theretofore paid by or on behalf of the Issuer), as and when due, in
U.S. dollars regardless of any defense, right of setoff or counterclaim that the
Issuer may have or assert other than the defense of payment. The Guarantor's
obligation to make a Guarantee Payment may be satisfied by direct payment of the
required amounts by the Guarantor to the Holders or by causing the Issuer to pay
such amounts to the Holders.

SECTION 5.02 Subordination.

         If a Debenture Event of Default or a Declaration Event of Default (or
an event that, with passage of time, would become a Debenture Event of Default)
shall have occurred and be continuing, the rights of holders of the Common
Securities to receive Guarantee Payments under the Common Securities Guarantee
are subordinated to the rights of Holders to receive Guarantee Payments under
this Guarantee.

SECTION 5.03 Waiver of Notice and Demand.

         The Guarantor hereby waives notice of acceptance of this Guarantee and
of any liability to which it applies or may apply, presentment, demand for
payment, any right to require a proceeding first against the Issuer or any other
Person before proceeding against the Guarantor, protest, notice of nonpayment,
notice of dishonor, notice of redemption and all other notices and demands.

SECTION 5.04 Obligations Not Affected.

         The obligations, covenants, agreements and duties of the Guarantor
under this Guarantee shall in no way be affected or impaired by reason of the
happening from time to time of any of the following:

                  (a) the release or waiver, by operation of law or otherwise,
         of the performance or observance by the Issuer of any express or
         implied agreement, covenant, term or condition relating to the
         Preferred Securities to be performed or observed by the Issuer;

                  (b) the extension of time for the payment by the Issuer of all
         or any portion of the Distributions, the amount payable upon redemption
         or the amount payable upon liquidation of the Issuer or any other sums
         payable under the terms of the Preferred Securities or the extension of
         time for the performance of any other obligation under, arising out of,
         or in connection with, the Preferred Securities (other than an
         extension of time for payment of Distributions that results from the
         extension of any interest payment period on the Debentures permitted by
         the Indenture);

                  (c) any failure, omission, delay or lack of diligence on the
         part of the Holders to enforce, assert or exercise any right,
         privilege, power or remedy conferred on the Holders pursuant to the
         terms of the Preferred Securities, or any action on the part of the
         Issuer granting indulgence or extension of any kind;

                  (d) the voluntary or involuntary liquidation, dissolution,
         sale of any collateral, receivership, insolvency, bankruptcy,
         assignment for the benefit of creditors, reorganization, arrangement,
         composition or readjustment of debt of, or other similar proceedings
         affecting, the Issuer or any of the assets of the Issuer;

                  (e) any invalidity of, or defect or deficiency in the
         Preferred Securities;

                  (f) the settlement or compromise of any obligation guaranteed
         hereby or hereby incurred; or

                  (g) any other circumstance whatsoever that might otherwise
         constitute a legal or equitable discharge or defense of a guarantor, it
         being the intent of this Section 5.04 that the obligations of the
         Guarantor hereunder shall be absolute and unconditional under any and
         all circumstances.

         There shall be no obligation of the Holders or any other Person to give
notice to, or obtain consent of, the Guarantor with respect to the happening of
any of the foregoing.

SECTION 5.05 Rights of Holders.

         The Guarantor expressly acknowledges that:

                  (a) This Guarantee will be deposited with the Guarantee
         Trustee to be held for the benefit of the Holders.

                  (b) The Guarantee Trustee has the right to enforce this
         Guarantee on behalf of the Holders.

                  (c) The Holders of a Majority in liquidation amount of the
         Preferred Securities have the right to direct the time, method and
         place of conducting any proceeding for any remedy available to the
         Guarantee Trustee in respect of this Guarantee or exercising any trust
         or power conferred upon the Guarantee Trustee under this Guarantee.

                  (d) Any Holder may institute a legal proceeding directly
         against the Guarantor to enforce its rights under this Guarantee,
         without first instituting a legal proceeding against the Issuer, the
         Guarantee Trustee or any other Person.

SECTION 5.06 Guarantee of Payment.

         This Guarantee creates a guarantee of payment and not of collection.
This Guarantee will not be discharged except by payment of the Guarantee
Payments in full (without duplication of amounts theretofore paid by the Issuer)
or upon distribution of Debentures to Holders as provided in the Declaration.

SECTION 5.07 Subrogation.

         The Guarantor shall be subrogated to all (if any) rights of the Holders
against the Issuer in respect of any amounts paid to such Holders by the
Guarantor under this Guarantee and shall have the right to waive payment by the
Issuer pursuant to Section 5.01; provided, however, that the Guarantor shall not
(except to the extent required by mandatory provisions of law) be entitled to
enforce or exercise any right that it may acquire by way of subrogation or any
indemnity, reimbursement or other agreement, in all cases as a result of payment
under this Guarantee, if, at the time of any such payment, any amounts are due
and unpaid under this Guarantee. If any amount shall be paid to the Guarantor in
violation of the preceding sentence, the Guarantor agrees to hold such amount in
trust for the Holders and to pay over such amount to the Holders.

SECTION 5.08 Independent Obligations.

         The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Preferred
Securities, and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee Payments pursuant to the terms of this Guarantee
notwithstanding the occurrence of any event referred to in subsections (a)
through (g), inclusive, of Section 5.04 hereof.

SECTION 5.09 Conversion.

         The Guarantor acknowledges its obligation to issue and deliver Class B
Common Stock upon the conversion of the Preferred Securities.


                                   ARTICLE VI

                    Limitation of Transactions; Subordination

SECTION 6.01 Limitation of Transactions.

         So long as any Preferred Securities remain outstanding, if there shall
have occurred and be continuing a Debenture Event of Default, a Declaration
Event of Default or an event that, with the giving of notice or the lapse of
time or both, would constitute a Debenture Event of Default or a Declaration
Event of Default, or a selection by the Guarantor of a Deferral Period as
provided in the Indenture and such period, or any extension thereof, shall be
continuing, then (a) the Guarantor shall not declare or pay any dividend on, or
make any distribution with respect to, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of its capital stock (other than stock
dividends paid by the Guarantor which stock dividends consist of the stock of
the same class as that on which the dividend is being paid), (b) the Guarantor
shall not make any payment of interest, principal or premium, if any, on or
repay, repurchase or redeem any debt securities issued by the Guarantor which
rank pari passu with or junior in interest to the Debentures and (c) the
Guarantor shall not make any guarantee payments with respect to any guarantee by
the Guarantor of the debt securities of any subsidiary of the Guarantor if such
guarantee ranks pari passu with or junior in interest to the Debentures (in each
case, other than (A) dividends or distributions in Class B Common Stock, (B) any
declaration of a dividend in connection with the implementation of a
stockholders' rights plan, or the issuance of stock under any such plan in the
future, or the redemption or repurchase of any such rights pursuant thereto, (C)
payments under this Guarantee and the Common Securities Guarantee, (D) purchases
or acquisitions of shares of Class B Common Stock in connection with the
satisfaction by the Guarantor of its obligations under any employee benefit plan
or any other contractual obligation of the Guarantor (other than a contractual
obligation ranking pari passu with or junior in interest to the Debentures), (E)
as a result of a reclassification of the Guarantor's capital stock or the
exchange or conversion of one class or series of the Guarantor's capital stock
for another class or series of the Guarantor's capital stock or (F) the purchase
of fractional interests in shares of the Guarantor's capital stock pursuant to
the conversion or exchange provisions of such capital stock or the security
being converted or exchanged).

SECTION 6.02 Ranking.

         This Guarantee will constitute an unsecured obligation of the Guarantor
and will rank subordinate to all Senior Debt of the Guarantor to the same extent
that the Debentures are subordinated pursuant to the Indenture.


                                   ARTICLE VII

                                   TERMINATION

SECTION 7.01 Termination.

         This Guarantee shall terminate upon (i) full payment of the amount
payable upon redemption of all Preferred Securities, (ii) the distribution of
Class B Common Stock to the Holders in respect of the conversion of the
Preferred Securities into Class B Common Stock, (iii) the distribution of the
Debentures to the Holders of all of the Preferred Securities or (iv) full
payment of the amounts payable in accordance with the Declaration upon
liquidation of the Issuer. Notwithstanding the foregoing, this Guarantee will
continue to be effective or will be reinstated, as the case may be, if at any
time any Holder must restore payment of any sums paid under the Preferred
Securities or under this Guarantee.


                                  ARTICLE VIII

                                 Indemnification

SECTION 8.01 Exculpation.

         (a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Guarantor or any Covered Person for
any loss, damage or claim incurred by reason of any act or omission performed or
omitted by such Indemnified Person in good faith in accordance with this
Guarantee and in a manner that such Indemnified Person reasonably believed to be
within the scope of the authority conferred on such Indemnified Person by this
Guarantee or by law, except that an Indemnified Person shall be liable for any
such loss, damage or claim incurred by reason of such Indemnified Person's
negligence or willful misconduct with respect to such acts or omissions.

         (b) An Indemnified Person shall be fully protected in relying in
good faith upon the records of the Guarantor and upon such information,
opinions, reports or statements presented to the Guarantor by any Person as to
matters the Indemnified Person reasonably believes are within such other
Person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Guarantor, including information,
opinions, reports or statements as to the value and amount of the assets,
liabilities, profits, losses, or any other facts pertinent to the existence and
amount of assets from which Distributions to Holders might properly be paid.

SECTION 8.02 Indemnification.

         (a) The Guarantor agrees to indemnify each Indemnified Person for,
and to hold each Indemnified Person harmless against, any and all loss,
liability or expense including taxes (other than taxes based on the income of
such Indemnified Person) incurred without negligence or bad faith on its part,
arising out of or in connection with the acceptance or administration of the
trust or trusts hereunder, including the costs and expenses (including
reasonable legal fees and expenses) of defending itself against or investigating
any claim or liability in connection with the exercise or performance of any of
its powers or duties hereunder. The obligation to indemnify as set forth in this
Section 8.02 shall survive the termination of this Guarantee.

         (b) To the fullest extent permitted by applicable law, expenses
(including legal fees and expenses) incurred by an Indemnified Person in
defending any claim, demand, action, suit or proceeding shall, from time to
time, be advanced by the Guarantor prior to the final disposition of such claim,
demand, action, suit or proceeding upon receipt by the Guarantor of an
undertaking by or on behalf of the Indemnified Person to repay such amount if it
shall be determined that the Indemnified Person is not entitled to be
indemnified as authorized in Section 8.02(a).

         (c) No Indemnified Person shall claim or exact any lien or charge
on any Guarantee Payments as a result of any amount due to it under this
Guarantee.


                                   ARTICLE IX

                                  MISCELLANEOUS

SECTION 9.01 Successors and Assigns.

         All guarantees and agreements contained in this Guarantee shall bind
the successors, assigns, receivers, trustees and representatives of the
Guarantor and shall inure to the benefit of the Holders.

SECTION 9.02 Amendments.

         Except with respect to any changes that do not materially adversely
affect the rights of Holders (in which case no consent of Holders will be
required), this Guarantee may only be amended with the prior approval of the
Holders of a Majority in liquidation amount of the Preferred Securities then
outstanding; provided, however, that no amendment that affects the rights,
powers, duties, obligations or immunities of the Guarantee Trustee shall be
effective unless approved in writing by the Guarantee Trustee. The provisions of
Section 12.02 of the Declaration with respect to meetings of holders of the
Securities (as defined in the Declaration) apply to the giving of such approval.

SECTION 9.03 Notices.

         All notices provided for in this Guarantee shall be in writing, duly
signed by the party giving such notice, and shall be delivered, telecopied or
mailed by first-class mail, as follows:

                  (a) if given to the Issuer, in care of the Regular Trustees at
         the Issuer's mailing address set forth below (or such other address as
         the Issuer may give notice):

                  Continental Airlines Finance Trust II
                  c/o Continental Airlines, Inc.
                  1600 Smith Street, HQSEO
                  Houston, Texas  77002
                  Attention: General Counsel and Chief Financial Officer
                  Facsimile No.: (713) 324-2687

                  (b) If given to the Guarantee Trustee, at the Guarantee
         Trustee's mailing address set forth below (or such other address as the
         Guarantee Trustee may give notice of to the Holders):

                  Wilmington Trust Company
                  Rodney Square North
                  1100 North Market Street
                  Wilmington, Delaware  19890
                  Attn: Corporate Trust Administration

                  (c) If given to the Guarantor, at the Guarantor's mailing
         address set forth below (or such other address as the Guarantor may
         give notice of to the Holders):

                  Continental Airlines, Inc.
                  1600 Smith Street, HQSEO
                  Houston, Texas  77002
                  Attention: General Counsel and Chief Financial Officer
                  Facsimile No.: (713) 324-2687

                  (d) If given to any Holder, at the address set forth on the
         books and records of the Issuer.

         All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery or
cannot be delivered because of a changed address of which no notice was given,
such notice or other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.

SECTION 9.04 Benefit.

         This Guarantee is solely for the benefit of the Holders and, subject to
Section 3.01(a), is not separately transferable from the Preferred Securities.

SECTION 9.05 Governing Law.

         THIS GUARANTEE SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

                [Remainder of this Page Intentionally Left Blank]

<PAGE>

         This GUARANTEE is executed as of the day and year first above written.

                                    CONTINENTAL AIRLINES, INC.
                                    as Guarantor

                                    By  /s/ Gerald Laderman
                                       ---------------------------------------
                                      Name:  Gerald Laderman
                                      Title: Senior Vice President
                                             Finance


                                    WILMINGTON TRUST COMPANY
                                    as Guarantee Trustee


                                    By  /s/ W. Chris Sponenberg
                                       ---------------------------------------
                                       Name:  W. Chris Sponenberg
                                       Title: Assistant Vice President