S&P rates Continental Airlines 2005-ERJ1 pass-throughs BBB-

Standard & Poor's said it assigned its preliminary BBB- ratings to Continental Airlines Inc.'s (B/negative/--) $255.2 million class A pass-through certificates series 2005-ERJ1 due June 1, 2022 (final maturity date; final expected distribution is Dec. 1, 2020).

The BBB- preliminary rating on the pass-through certificates is based on the credit quality of Continental, plus credit for the likelihood that the airline would affirm the financings on each individual aircraft, conservative collateral coverage provided by the aircraft, favorable legal treatment under the U.S. Bankruptcy Code, and a dedicated liquidity facility, the agency said.

S&P said ratings on Continental reflect its participation in the high-risk airline industry and a heavy debt and lease burden. These factors outweigh better-than-average operating performance among its peer large U.S. hub-and-spoke airlines.

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