The bid, which would give the partnership a 65 per cent voting stake in the fifth-largest US airline, appears to top two earlier offers, including a dollars 350m bid by Charles Hurwitz, an investor in Houston, who has signed a letter of intent with Continental.
Air Canada and its partners would contribute more equity, and the airline's creditors would control the remaining 35 per cent of the new holding company, a significantly larger stake than that offered by either Mr Hurwitz or Alfredo Brener, a Mexican who controls Aerolineas Mexicana.
The bid is being led by Hollis Harris, the chairman of Air Canada, who ran Continental until last year.
Mr Harris has said that for Air Canada to survive, it must merge with another carrier and strengthen its continental route system with a US partner - two goals that would be accomplished in taking over Continental.
Air Canada has tried unsuccessfully to buy out its only national rival, Canadian Airlines, and had been negotiating a link-up with USAir until British Airways' dollars 750m investment last month.
Canadian has since re-entered talks with American Airlines, prompting Air Canada to announce a marketing alliance with United Airlines, American's rival. Under US rules, Air Canada would be restrained from holding more than 24 per cent of Continental's voting shares.Reuse content