Continental Air Parent Ruled Out Chapter 11 : Airlines: The carrier says it has ‘decent alternatives.’

The parent of Continental Airlines considered--but rejected--seeking bankruptcy protection from its creditors, a spokesman confirmed Wednesday.

The board of Continental Airlines Holdings, formerly Texas Air, reviewed “its options and Chapter 11 was one of them,� spokesman Ned Walker said. “It was rejected outright by a unanimous vote.�

Walker said Continental, based in Houston, would instead explore alternatives that would reduce costs and improve its financial condition. He ruled out a “major downsizing� but said the airline was holding “discussions with parties interested in investing� in Continental.

The investment, he said, could take the form of debt or equity. He declined to name potential investors.

“We have a lot of decent alternatives to Chapter 11,� Walker said.

Continental’s consideration of a bankruptcy filing came as it dismissed four top officers--including President Mickey Foret--in what it described as a cost-cutting move. Observers said it appeared the executives were let go because they were closely aligned with ex-Chairman Frank Lorenzo.

There were indications during the past two days that something was up at Continental. The airline canceled its reservations for the annual Wings Club dinner three hours before the industry event took place Tuesday in New York. It also canceled a meeting with industry analysts scheduled in Newark, N.J., for Wednesday.

Meanwhile, a group of Continental executives huddled in the North Parlor room at New York’s Intercontinental Hotel Wednesday. The company had no comment on the purpose of the meeting.

That Continental would weigh a bankruptcy filing surprised industry analysts. Robert Decker, an analyst with the Duff & Phelps investment firm in Chicago, said he viewed Continental as a long-term survivor.

“It is not on my endangered species list� with Eastern Airlines, (a Continental Holdings subsidiary), Pan American World Airways and Trans World Airlines, Decker said.

Despite its difficulties, Decker added, Continental had a strong route system, with hubs in Newark, Houston and Denver. He said the non-union airline also benefited from a low-cost structure.

Mark Daugherty, an analyst with Dean Witter in New York, said it did not strike him as unusual for a troubled company to examine the ramifications of a bankruptcy filing and that he did not expect Continental to file.

Continental is apparently encountering difficulty because fuel costs are rising at a time traffic is slowing generally. The airline company also faces a large debt burden and is encumbered with obligations from Eastern, which is in bankruptcy proceedings.

Standard & Poor’s cited Continental’s financial difficulties Wednesday when it downgraded $379 million of Continental Holdings’ debt and $918 million of Continental Airlines’ debt.

The rating agency said the downgrades reflected “a heavy debt maturity schedule� with $1 billion due through 1994, as well as the impact of higher fuel prices and softening travel demand.

Although it noted that the operating performance of Continental Airlines had improved, S&P; said Continental’s parent assumed payment on $239 million of Eastern’s preferred stock and will have to pay as much as $600 million to cover Eastern’s pension funding gap.

Walker said Continental was committed to “full employment and a full schedule� and didn’t intend to makes cuts in those areas. Industry analysts Wednesday, however, expected that Continental would selectively reduce its flight schedule.