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 ~~June~~September 30, 2003

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to __________

For the transition period from __________ to __________

Commission file number 33-21220*

UNITED AIR LINES, INC.
(Exact name of registrant as specified in its charter)

Delaware	36-2675206
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

Location: 1200 East Algonquin Road, Elk Grove Township, Illinois 60007
Mailing Address: P. O. Box 66100, Chicago, Illinois 60666
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code (847) 700-4000

Indicate by check mark whether the 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

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

	Outstanding at
Class	~~July~~October 3124, 2003
Common Stock ($5 par value)	205

* Registrant is the wholly owned subsidiary of UAL Corporation (File 1-6033). Registrant became subject to filing periodic reports under the Securities Exchange Act of 1934 as a result of a public offering of securities which became effective June 3, 1988 (Registration Nos. 33-21220 and 22-18246).

United Air Lines, Inc. and Subsidiary Companies Report on Form 10-Q ~~For the Quarter Ended June 30, 2003~~

Index
PART I.		FINANCIAL INFORMATION			Page No.
	Item 1. Financial Statements
			Condensed Statements of Consolidated Financial Position (Unaudited) - as of June 30, 2003 and December 31, 2002	3
			Statements of Consolidated Operations (Unaudited) - for the three months and six months ended June 30, 2003 and 2002	5
			Condensed Statements of Consolidated Cash Flows (Unaudited) - for the six months ended June 30, 2003 and 2002	7
			Notes to Consolidated Financial Statements (Unaudited)	8
		Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations		14
		Item 3. Quantitative and Qualitative Disclosures About Market Risk		22
		Item 4. Controls and Procedures		23
PART II.		OTHER INFORMATION
		Item 6. Exhibits and Reports on Form 8-K		24
Signatures		25
Exhibit Index		26

For the Quarter Ended September 30, 2003

PART I. FINANCIAL INFORMATION

Index

PART I.		FINANCIAL INFORMATION			Page No.

	Item 1. Financial Statements

			Condensed Statements of Consolidated Financial Position (Unaudited) - as of September 30, 2003 and December 31, 2002	3

			Statements of Consolidated Operations (Unaudited) - for the three months and nine months ended September 30, 2003 and 2002	5

			Condensed Statements of Consolidated Cash Flows (Unaudited) - for the nine months ended September 30, 2003 and 2002	7

			Notes to Consolidated Financial Statements (Unaudited)	8

		Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations		19

		Item 3. Quantitative and Qualitative Disclosures About Market Risk		30

		Item 4. Controls and Procedures		31

PART II.		OTHER INFORMATION

		Item 6. Exhibits and Reports on Form 8-K		32

Signatures		33

Exhibit Index		34

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

United Air Lines, Inc. and Subsidiary Companies
(Debtor and Debtor-in-Possession)
Condensed Statements of Consolidated Financial Position (Unaudited)
(In Millions)

	June 30	December 31
	September 30	December 31
Assets	2003	2002
Current assets:
Cash and cash equivalents	$ ~~968~~1,202	$ 718
Restricted cash	~~671~~629	450
Short-term investments	~~217~~109	311
Receivables, net	~~908~~890	704
Related party receivables	13	-
Income tax receivables	47	373
Inventories, net	~~273~~303	310
Prepaid expenses and other	~~242~~218	217
	3,339	3,083
	3,398	3,083
Operating property and equipment:
Owned	1917,~~337~~999	19,540
Accumulated depreciation and amortization	(54,~~568~~975)	(5,282)
	13,768	14,258
	13,024	14,258
Capital leases	2,529	2,573
Accumulated amortization	(~~517~~537)	(494)
	2,012	2,079
	1,992	2,079
	15,781	16,337
	15,016	16,337
Other assets:
Long-term restricted cash	-	116
Investments	2120	80
Intercompany receivables and loans	613	-
Intangibles, net	~~383~~382	384
Pension assets	962	1,162
Aircraft lease deposits	~~805~~854	776
Prepaid rent	~~128~~127	338
Other, net	~~882~~854	853
	3,187	3,709
	3,212	3,709
	$22,307	$23,129
	$21,626	$23,129

See accompanying Notes to Consolidated Financial Statements.

United Air Lines, Inc. and Subsidiary Companies
(Debtor and Debtor-in-Possession)
Condensed Statements of Consolidated Financial Position (Unaudited)
(In Millions)

	June 30	December 31
	September 30	December 31
Liabilities and Stockholder's Equity	2003	2002
Current liabilities:
Current portions of long-term debt and
capital lease obligations	$ ~~240~~727	$ -
Advance ticket sales	1,~~447~~479	1,021
Accrued salaries, wages and benefits	1,~~269~~281	1,490
Accounts payable	~~466~~363	280
Related party accounts payable	3338	-
Other	~~906~~810	883
	4,361	3,674
	4,698	3,674
Long-term debt	~~524~~-	700
Other liabilities and deferred credits:
Deferred pension liability	5,~~797~~918	4,661
Postretirement benefit liability	1,~~944~~934	1,809
Deferred income taxes	~~241~~259	225
Other	~~499~~403	539
	8,481	7,234
	8,514	7,234
Liabilities subject to compromise	14,~~397~~285	13,975
Commitments and contingent liabilities (See note)
Preferred stock committed to Supplemental ESOP	-	2
Stockholder's equity:
Common stock at par	-	-
Additional capital invested	1,~~589~~588	1,592
ESOP capital	3,~~987~~988	3,986
Retained deficit	(56,~~796~~211)	(3,756)
Accumulated other comprehensive income	(3,~~621~~622)	(2,661)
Receivables from affiliates	(1,615)	(1,615)
Other	-1	(2)
	(5,456)	(2,456)
	(5,871)	(2,456)
	$22,307	$ 23,129
	$21,626	$ 23,129

See accompanying Notes to Consolidated Financial Statements.

United Air Lines, Inc. and Subsidiary Companies
(Debtor and Debtor-in-Possession)
Statements of Consolidated Operations (Unaudited)
(In Millions)

	Three Months
	Ended June 30
	Ended September 30
	2003	2002
Operating revenues:
Passenger	$ 2,625	$ 3,190
Passenger - United Airlines	$ 3,112	$ 3,143
Cargo	154	167
Passenger - Regional Affiliates	250	-
Other	256	349
Cargo	145	166
	3,035	3,706
Other	250	336
	3,757	3,645
Operating expenses:
Salaries and related costs	1,~~226~~210	1,~~776~~821
Curtailment charges	152	-
Aircraft fuel	514	532
Aircraft fuel	452	467
Purchased services	319	364
Purchased services	309	353
Aircraft rent	151	208
Aircraft rent	138	214
Landing fees and other rent	239	257
Landing fees and other rent	236	254
Depreciation and amortization	263	240
Depreciation and amortization	272	247
Cost of sales	189	292
Cost of sales	242	292
Aircraft maintenance	167	131
Aircraft maintenance	115	151
Regional affiliates	313	-
Commissions	7294	~~105~~109
Other	~~297~~309	~~383~~390
	3,511	4,242
Special charge	26	-
Loss from operations	(476)	(536)
	3,794	4,344
Loss from operations	(37)	(699)
Other income (expense):
Interest expense	(~~130~~108)	(~~149~~157)
Interest capitalized	1-	75
Interest income	5614	3128
Equity in earnings of affiliates	(31)	1-
Reorganization items, net	(398)	-
Non-operating special charges	(25)	-
Government assistance	300	80
Reorganization items, net	(237)	-
Miscellaneous, net	(4)	(2)
Government compensation	-	50
	(178)	(32)
Miscellaneous, net	(22)	1
Loss before income taxes	(654)	(568)
	(379)	(73)
Credit for income taxes	-	(205)
Loss before income taxes	(416)	(772)
Net loss	$ (654)	$ (363)
Credit for income taxes	-	139
Net loss	$ (416)	$ (911)

See accompanying Notes to Consolidated Financial Statements.

United Air Lines, Inc. and Subsidiary Companies
(Debtor and Debtor-in-Possession)
Statements of Consolidated Operations (Unaudited)
(In Millions)

	Six Months
	Nine Months
	Ended June 30
	Ended September 30
	2003	2002
Operating revenues:
Passenger	$ 5,173	$ 5,948
Passenger - United Airlines	$ 8,285	$ 9,091
Cargo	318	309
Passenger - Regional Affiliates	250	-
Other	651	645
Cargo	463	474
	6,142	6,902
Other	901	981
	9,899	10,546
Operating expenses:
Salaries and related costs	23,~~750~~960	35,~~348~~169
Curtailment charges	152	-
Aircraft fuel	1,~~023~~538	~~865~~1,397
Purchased services	~~644~~963	~~703~~1,067
Aircraft rent	~~339~~490	~~426~~633
Landing fees and other rent	~~475~~714	~~502~~759
Depreciation and amortization	~~504~~768	~~482~~723
Cost of sales	~~604~~792	~~562~~854
Aircraft maintenance	~~232~~399	~~296~~428
Commissions	146	239
Regional affiliates	313	-
Other	617	722
Commissions	239	347
	7,486	8,145
Other	926	1,111
Loss from operations	(1,344)	(1,243)
Special charge	26	-
	11,280	12,488
Loss from operations	(1,381)	(1,942)
Other income (expense):
Interest expense	(~~265~~373)	(~~296~~453)
Interest capitalized	2	1722
Interest income	7186	6593
Equity in earnings of affiliates	(34)	12
Gain on sale of investment	-	46
Non-operating special charges	(~~137~~162)	-
Reorganization items, net	(~~647~~884)	-
Government assistance	300	80
Government compensation	300	130
Miscellaneous, net	(1639)	(1614)
	(695)	(103)
	(1,074)	(174)
Loss before income taxes	(2,~~039~~455)	(12,~~346~~116)
Credit for income taxes	-	(~~486~~346)
Net loss	$(2,~~039~~455)	$ (~~860~~1,770)

See accompanying Notes to Consolidated Financial Statements.

United Air Lines, Inc. and Subsidiary Companies
(Debtor and Debtor-in-Possession)
Condensed Statements of Consolidated Cash Flows (Unaudited)
(In Millions)

	Six Months
	Nine Months
	Ended June 30
	Ended September 30
	2003	2002
Cash and cash equivalents at beginning
of period, excluding restricted cash	$ 718	$ 1,504
Cash flows from operating activities	~~533~~749	(67858)
Cash flows from reorganization activities:
Reorganization items, net	(~~647~~884)	-
Transfer of Company lease certificates	215	-
Increase in liabilities	~~280~~497	-
Loss on disposition of property	6836	-
Other	(1)	-
	(136)	-
	(85)	-
Cash flows from investing activities:
Additions to property and equipment	(5585)	(61110)
Proceeds on disposition of property and
equipment	67120	44363
Proceeds on sale of investments	15	137
Increase in restricted cash	(~~105~~63)	(~~263~~333)
Increase in related party receivables	(613)	(34)
Decrease in short-term investments	95202	~~327~~400
Increase in deferred financing costs	(5862)	(3134)
Other, net	~~(5)~~8	3835
	(52)	188
	122	454
Cash flows from financing activities:
Proceeds from DIP Financing	~~123~~138	-
Proceeds from issuance of long-term debt	-	~~911~~946
Repayment of DIP Financing	(59111)	-
Repayment of long-term debt	(~~153~~210)	(~~980~~1,273)
Principal payments under capital
lease obligations	(7286)	(~~139~~190)
Dividend to parent company	-	(3)
Decrease in short-term borrowings	-	(133)
Aircraft lease deposits	28	9
Decrease in related party debt	(20)	(10)
Decrease in related party debt	(15)	(257)
Decrease in debt certificates under Company leases	-	290
Decrease in debt certificates under Company leases	-	529
Other, net	38	10
Other, net	2	(1)
	(251)	(363)
	(146)	(64)
Increase in cash and cash equivalents	484	(767)
Increase in cash and cash equivalents	250	57
Cash and cash equivalents at end of period,
excluding restricted cash	$ ~~968~~1,202	$ ~~1,561~~737
Cash paid during the period for:
Interest (net of amounts capitalized)	$ ~~103~~276	$ ~~257~~389
Income taxes	$ -	$ 54
Non-cash transactions:
Long-term debt incurred in connection
with additions to equipment and other assets	$ -9	$ ~~639~~706
Net unrealized gain (loss) on investments	$ 3	$ (166)
Increase in pension intangible	$ 200	$ 608
Increase (decrease) in pension intangible	$ (200)	$ 608

See accompanying Notes to Consolidated Financial Statements.

United Air Lines, Inc. and Subsidiary Companies
Notes to Consolidated Financial Statements (Unaudited)

The Company

United Air Lines, Inc. ("United," "we" or the "Company") is a wholly owned subsidiary of UAL Corporation ("UAL").

Interim Financial Statements

~~The~~ We ~~consolidated~~prepared ~~financial~~the consolidated financial statements ~~included~~shown ~~herein~~here ~~have~~as ~~been~~required ~~prepared~~by ~~pursuant to~~ the ~~rules and regulations of the~~ Securities and Exchange Commission ("SEC"). ~~Certain~~Some information and footnote disclosures normally included in financial statements ~~prepared in~~that ~~accordance~~meet ~~with~~ generally accepted accounting principles have been condensed or omitted ~~pursuant to or~~ as permitted by ~~such~~the ~~rules~~SEC. ~~and~~We ~~regulations, although~~believe ~~United believes~~ that the disclosures ~~are~~presented ~~adequate~~here toare ~~make the information presented~~ not misleading. InThe ~~management's~~financial ~~opinion,~~statements include all adjustments (which include only normal recurring adjustments, reorganization items and other special charges described below) that are considered necessary for a fair presentation of ~~the results~~our offinancial ~~operations for the three-~~ position and ~~six-month~~operating ~~periods have been made~~results. These financial statements should be read ~~in conjunction~~ together with the ~~consolidated financial~~information ~~statements and footnotes thereto~~ included in ~~United's~~our most recent Annual Report on Form 10-K for the year 2002.

Voluntary Reorganization Under Chapter 11

Bankruptcy Proceedings. On December 9, 2002 (the "Petition Date"), UAL, United and 26 direct and indirect wholly owned subsidiaries ~~(collectively,~~ ~~the "Debtors")~~ filed voluntary petitions ~~for~~to ~~relief~~reorganize ~~under~~their businesses under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Northern District of Illinois, Eastern Division (the "Bankruptcy Court"). The ~~reorganization~~Bankruptcy ~~cases~~Court ~~are~~is ~~being~~ jointly ~~administered under~~administering ~~the~~these ~~caption~~cases as "In re: UAL Corporation, et al., Case No. 02-48191." ~~(the "Chapter~~The 11consolidated ~~Cases").~~financial ~~Included~~statements inshown ~~the~~here ~~Consolidated~~include ~~Financial~~certain ~~Statements are~~ subsidiaries that ~~are~~did not ~~party~~file to ~~the~~reorganize under Chapter 11 ~~Cases and are not Debtors~~. The assets and liabilities of ~~such~~these ~~non-filing~~ subsidiaries are not considered material to the Consolidated Financial Statements.

AnA ~~exception~~pre-petition toliability that requires different treatment under the ~~foregoing exists~~Bankruptcy ~~with~~Code ~~respect~~relates to certain qualifying aircraft, aircraft engines and other aircraft-related equipment that are leased or subject to a security interest or conditional sale contract,. ~~which~~Under ~~are~~Section ~~governed~~1110 ~~by a particular provision~~ of the Bankruptcy Code, ~~that~~actions ~~specifies~~to ~~different treatment. Under~~collect ~~Section~~most ~~1110~~pre-petition liabilities of ~~the~~this ~~Bankruptcy~~nature ~~Code~~are ~~("Section~~automatically ~~1110"),~~stayed ~~the automatic stay lasts~~ for ~~only~~ 60 days ~~with~~only, ~~respect to eligible property~~ except under two conditions: (a) the debtor may extend the 60-day period by agreement of with the relevant financier, and with court approval; or (b) the debtor may agree to perform all of the obligations under the applicable financing and cure any defaults ~~thereunder~~ as required byunder the Bankruptcy Code. InIf ~~the~~neither ~~absence~~ of ~~either~~these ~~such~~conditions ~~arrangement~~is met, the financier may demand the return of the aircraft or take possession of the property and enforce any of its contractual rights or remedies to sell, lease or otherwise retain or dispose of such equipment.

~~The~~In our case, the 60-day period under Section 1110 ~~in the Company's Chapter 11 Case~~ expired on February 7, 2003. ~~The Company~~We ~~has~~have reached agreements with a significant number of aircraft financiers to extend the automatic stay. ~~United~~We have also ~~has~~ made elections with respect to other aircraft to cure all existing defaults and to pay the contract rates. With respect to certain other aircraft, however, United has taken no action. The applicable lessors or lenders in those situations, therefore, are entitled ~~under Section 1110~~ to make a demand ~~before the Bankruptcy Court~~ for the return of such aircraft. Although ~~the~~we ~~Company~~believe ~~believes that~~ current market conditions for commercial aircraft make repossession unlikely, there can be no assurance that United's lenders and lessors will not repossess any of the applicable aircraft. Repossession of a significant number of aircraft could result in substantial disruptions to ~~United's~~our operations and ~~could~~ have a material ~~adverse~~ adverse effect on ~~the~~our ~~Company's~~ business.

~~During~~Integral ~~the~~to ~~second~~our ~~quarter~~restructuring ofefforts ~~2003,~~is inadjusting ~~order to adjust~~ the size and composition of ~~its~~our fleet to reflect reduced market ~~operational~~demand. ~~requirements~~To this end, ~~United~~we ~~began~~have ~~rejecting~~rejected certain aircraft leases and returned ~~abandoning~~ certain aircraft asto ~~part~~the ofrelevant ~~the~~financiers ~~Section~~during ~~1110~~the ~~process,~~first nine ~~which~~months ~~included~~of the ~~return~~year, ofas ~~such~~authorized ~~aircraft~~by toSection 1110 of the ~~financiers~~Bankruptcy Code. We ~~The~~anticipate ~~Company anticipates~~continuing ~~rejecting~~to ~~and~~reject ~~abandoning~~leases ~~additional~~and return aircraft as itwe ~~continues~~progress through the reorganization process.

In To ~~order to~~ successfully exit Chapter 11, ~~the~~UAL ~~Debtors~~must ~~will need to propose, and~~ obtain confirmation by the Bankruptcy Court of, a plan of reorganization ~~that satisfies the requirements of the Bankruptcy Code~~. A plan of reorganization ~~would~~ ~~resolve~~would, among other things, ~~the~~resolve ~~Debtors'~~our pre-petition obligations, set forth ~~the~~UAL's revised capital structure ~~of the newly reorganized entity~~ and ~~provide~~establish ~~for its~~ UAL's corporate governance subsequent to exit from bankruptcy. On March 21, 2003, the Bankruptcy Court approved the extension to October 2003 of ~~UAL~~the Company's "exclusive period" during which itUAL is the only party permitted to file a plan of reorganization. ~~The~~On ~~timing~~September of19, ~~filing~~2003, athe ~~plan~~Bankruptcy Court approved an additional five-month extension of ~~reorganization~~our exclusive period to March 8, by2004. ~~UAL~~The decision as to when we will ~~depend~~file a plan of reorganization depends on the timing and outcome of numerous ongoing matters in the Chapter 11 ~~Cases~~ process. ~~UAL~~We ~~expects~~expect to file a plan of reorganization that provides for ~~its~~ UAL's emergence from bankruptcy, but there can be no assurance at ~~this~~that ~~time~~the ~~that~~Bankruptcy Court will confirm a plan of reorganization ~~will be confirmed by the Bankruptcy Court~~ or that any such plan will be implemented successfully.

As required by the Bankruptcy Code, the United States Trustee for the Northern District of Illinois has appointed an official committee of unsecured creditors (the "Creditors' Committee"). The Creditors' Committee and its legal representatives ~~have~~ have a right to be heard on all matters that come before the Bankruptcy Court concerning ~~with~~our ~~respect to the Debtors~~reorganization. There can be no assurance that the Creditors' Committee will support ~~the~~our ~~Debtors'~~ positions or ~~the~~our ~~Debtors'~~ plan of reorganization , and any disagreements between ~~the~~us ~~Debtors~~ and the Creditors' Committee could ~~protract~~ protract the Chapter 11 ~~Cases~~process, ~~could~~hinder ~~negatively~~our ~~impact the Debtors'~~ ability to operate during the Chapter 11 ~~Cases~~process, and ~~could~~ delay ~~the~~our ~~Debtors'~~ emergence from Chapter 11.

DIP Financing.In connection with the ~~filing of the~~ Chapter 11 ~~Cases~~filings, ~~the~~UAL ~~Company~~ arranged a debtor-in-possession secured financing ~~(the~~ ("DIP Financing"). The DIP Financing consists of two facilities, a $300 million facility provided by Bank One N.A. ("Bank One Facility") and a $1.2 billion facility provided by J.P. Morgan Chase Bank, Citicorp USA, Inc., Bank One, N.A., and The CIT Group/Business Credit, Inc. ("Club Facility"). ~~The~~As ~~Company has received commitments~~ of ~~$1.0~~September ~~billion~~30, ~~under~~2003, ~~the~~we ~~Club~~had ~~Facility~~borrowed ~~following~~$300 million under the ~~completion of~~Bank ~~the~~One ~~syndication~~Facility ~~process~~and ~~for~~$427 ~~that~~million ~~facility;~~under the ~~balance~~Club ~~is conditioned~~Facility. ~~upon~~The ~~the~~borrowings ~~participation~~under ~~of one or more additional lenders approved by~~ the ~~existing~~ ~~participants.~~Bank AsOne ofFacility ~~June~~are ~~30,~~due ~~2003,~~in ~~the~~five ~~Company~~equal ~~had borrowed $300~~monthly ~~million~~installments ~~under~~beginning ~~the~~in ~~Bank~~March ~~One~~2004 ~~Facility~~ and ~~$464 million under~~ the Club Facility matures on July 1, 2004.

Financial Statement Presentation. ~~The~~ We have prepared the accompanying consolidated financial statements ~~have been prepared~~ in accordance with American Institute of Certified Public Accountants' Statement of Position 90-7 ("SOP 90-7"), "Financial Reporting by Entities in Reorganization Under the Bankruptcy Code," and on a going-concern basis, which ~~contemplates~~ assumes continuity of operations, realization of assets and satisfaction of liabilities in the ordinary course of business.

SOP 90-7 requires that the financial statements for periods subsequent to ~~the filing of~~ a Chapter 11 ~~petition~~filing ~~distinguish~~ separate transactions and events that are directly associated with the reorganization from the ongoing operations of the business. Accordingly, ~~revenues,~~all ~~expenses~~ transactions (including, but not limited to, all professional fees), realized gains and losses, and provisions for losses) directly associated with the reorganization and restructuring of the business are reported separately in the financial statements. The Statements of Consolidated Financial Position distinguish pre-petition liabilities subject to compromise both from those pre-petition liabilities that are not subject to compromise and from post-petition liabilities. Liabilities subject to compromise are reported at the amounts expected to be allowed by the Bankruptcy Court, even if they may be settled for lesser amounts.

In addition, as a result of the Chapter 11 ~~filing~~filings, the realization of assets and satisfaction of liabilities, without substantial adjustments and/or changes in ownership, are subject to uncertainty. While operating as debtors-in-possession ~~under~~ under the protection of Chapter 11 ~~of the Bankruptcy Code~~ and subject to approval of the Bankruptcy Court and the terms of the applicable DIP Financing covenants, or otherwise as permitted in the ordinary course of business, ~~the~~ ~~Debtors~~we may sell or dispose of assets (including aircraft) and liquidate or settle liabilities for some amounts other than those reflected in the consolidated financial statements. Further, athe forthcoming plan of reorganization could materially change the amounts and classifications in the historical consolidated ~~financial~~ financial statements.

Pursuant to the Bankruptcy Code, ~~the~~we ~~Debtors~~ have filed schedules with the Bankruptcy Court ~~setting~~identifying ~~forth the~~ our assets and liabilities ~~of the Debtors~~ as of the Petition Date~~. The deadline for filing proofs of claim with the Bankruptcy Court was May 12~~, ~~2003,~~while ~~with~~our acreditors ~~limited exception for governmental~~have ~~entities,~~been ~~which~~able ~~had until June 9, 2003~~ to file proofs of claim ~~and~~with ~~Canadian creditors,~~the ~~which~~Bankruptcy ~~had until June 23, 2003 to file proofs of claim~~Court. The ~~aggregate~~total amount of claims filed with the Bankruptcy Court far exceeds ~~the~~our ~~Debtors'~~ estimate of ultimate liability. ~~The~~We ~~Debtors~~ believe that many of these claims are invalid because they are duplicative, are based upon contingencies that have not occurred, or ~~otherwise~~ are ~~overstated,~~otherwise ~~and are therefore invalid~~overstated. Differences in amount between claims ~~amounts~~filed ~~recorded~~ by ~~the~~creditors ~~Debtors~~ and ~~claims~~liabilities ~~filed~~shown byin ~~creditors~~our records are being ~~investigated~~ investigated and resolved in connection with ~~the~~our ~~Debtors'~~ claims resolution process. That process has commenced and, in light of the number of claims asserted, will take significant time to complete. ~~Accordingly~~For this reason, the ultimate number and allowed amounts of such claims ~~are~~cannot ~~not~~yet ~~presently~~be ~~determinable~~determined.

New Accounting Pronouncements

In January 2003, the Financial Accounting Standards Board ("FASB") issued Interpretation 46, "Consolidation of Variable Interest Entities" ("FIN 46")., ~~FIN~~which 46 requires the "primary beneficiary" of a ~~variable interest entity ("~~VIE") to ~~include the assets,~~: liabilities and results of the activities of the VIE in its consolidated financial statements, as well as disclosure of information about the assets and liabilities, and the nature, purpose and activities of consolidated VIEs. In addition, FIN 46 requires disclosure of information about the nature, purpose and activities on unconsolidated VIEs in which the Company holds a significant variable interest. FIN 46 is effective immediately for any interests in VIEs acquired after January 31, 2003 and effective beginning in the third quarter of 2003 for all VIEs acquired before February 1, 2003. The Company is still evaluating the impact of FIN 46 on its financial statements.

FIN 46 is effective immediately for any interests acquired after January 31, 2003 and effective beginning in the third quarter of 2003 for all definite VIEs acquired before February 1, 2003. In October 2003, the FASB deferred the effective date for applying the provisions of FIN 46 until the end of the fourth quarter of 2003 for interests held by public entities in VIEs or potential VIEs created before February 1, 2003.

InWe ~~May~~have ~~2003,~~reviewed the ~~FASB issued~~new ~~Statement~~capacity ofpurchase ~~Financial~~agreements ~~Accounting~~entered ~~Standards~~into ~~("SFAS")~~after ~~No.~~February ~~150~~1, ~~"Accounting for~~2003 ~~Certain Financial Instruments~~ with ~~Characteristics of both Liabilities~~United ~~and~~Express ~~Equity"~~regional ~~("SFAS~~carriers ~~No. 150"). SFAS No. 150 establishes standards for classifying~~ and ~~measuring~~determined asthe ~~liabilities~~agreements ~~certain~~fall ~~financial~~under ~~instruments that embody~~the ~~obligations~~purview of ~~the~~FIN ~~issuer and have characteristics of both liabilities and equity~~46. ~~SFAS~~However, ~~No.~~we ~~150~~have isdetermined ~~effective~~that ~~for~~we ~~all~~are ~~financial~~not ~~instruments~~the ~~created~~"primary orbeneficiary" ~~modified~~of ~~after~~these ~~May~~agreements ~~31, 2003~~ and ~~otherwise~~therefore ishave ~~effective~~not atconsolidated the ~~beginning~~ ofentities ~~the~~in ~~first~~our ~~interim~~financial ~~period~~statements. ~~beginning~~We ~~after~~are ~~June~~still ~~15,~~evaluating ~~2003.~~the ~~The Company~~impact ~~does~~of ~~not~~FIN ~~expect~~46 ~~SFAS~~on ~~No.~~our ~~150~~financial tostatements ~~have~~for aVIEs ~~material~~or ~~impact~~potential onVIEs ~~the Company's~~created ~~financial~~before ~~statements~~February ~~upon~~1, ~~adoption~~2003.

We have identified the following as potential VIEs (created before January 31, 2003), but are still evaluating the legal structure, operational results and the cash flow of each to determine if we are the primary beneficiary:

Aircraft operating leases where the lessor is a trust established specifically to purchase, finance and lease the aircraft and United has a fixed-price purchase option to purchase the aircraft at predetermined prices during or at the end of the lease term.
Airport operating leases where United guarantees the underlying municipal or governmental debt held by public bondholders, where no one public bondholder owns more than 50% of the debt and the lessor is a trust established specifically to finance and lease the facilities.
Fuel facilities where United guarantees the majority of the underlying debt and United consumes over 50% of the fuel facility capacity.
Capacity purchase arrangements with certain regional airlines which specify limits on the regional carrier's operating margin, and over 50% of the regional carriers capacity directly benefits United.

Future guidance and/or clarification of the complex issues imposed by FIN 46 could potentially change our initial assessment of the potential VIEs identified above.

In the third quarter of 2003, we adopted Statement of Financial Accounting Standards ("SFAS") No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity" ("SFAS No. 150"). SFAS No. 150 establishes standards for classifying and measuring as liabilities certain financial instruments that have characteristics of both debt and equity. SFAS No. 150 is effective for all such financial instruments created or modified after May 31, 2003 and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003. The adoption of SFAS No. 150 was immaterial to the Company's financial statements.

Termination of ESOP

InOn ~~July~~June 26 2003, ~~the~~we ~~Company~~terminated ~~announced~~the ~~that it was terminating its~~ Employee Stock Ownership Plan ("ESOP"), following the publication of a regulation by the Internal Revenue Service that would permit the distribution of the remaining ESOP shares to plan participants without jeopardizing United's ability to utilize its net operating loss tax benefits.

Stock Option Accounting

~~The~~We ~~Company~~account ~~accounts~~ for stock-based employee compensation plans under Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees." NoWe have not incurred any stock-based employee compensation cost ~~pertaining~~for to stock options ~~is reflected in the Company's Statements of Consolidated Operations~~, as all options granted under ~~those~~the plans had an exercise price equal to the market value of the underlying common stock on the date of grant.

If compensation cost for stock-based employee compensation plans had been determined using the fair value recognition provisions of SFAS No. 123, "Accounting for Stock-Based Compensation," the Company's net loss ~~and loss per share~~ would have ~~instead~~ been reported as the pro forma amounts ~~indicated~~shown below:

(In millions)	Three Months		Six Months
(In millions, except per share)	Three Months		Nine Months
	Ended June 30		Ended June 30
	Ended September 30		Ended September 30
	2003	2002	2003	2002
Net loss, as reported	$ (~~654~~416)	$ (~~363~~911)	$(2,~~039~~455)	$ (~~860~~1,770)
Less: Total compensation expense determined under
fair value method (net of tax in 2002)	(5)	(4)	(1015)	(913)
	$ (659)	$ (367)	$(2,049)	$ (869)
	$ (421)	$ (915)	$(2,470)	$(1,783)

Income Taxes

~~For~~ We ~~2003,~~have ~~the~~determined ~~Company~~that ~~has~~it is amore ~~zero~~likely ~~percent~~than ~~effective~~not ~~tax~~that ~~rate.~~our ~~Beginning in~~gross ~~the~~deferred ~~third~~tax ~~quarter of 2002~~assets, ~~the~~net ~~Company~~of ~~established a~~ valuation ~~allowance~~ ~~against~~allowances ~~its~~at ~~net~~September ~~deferred tax asset. As of June~~ 30, 2003, ~~the~~will ~~Company~~be ~~had recorded~~realized athrough ~~valuation~~the ~~allowance~~ reversals of ~~$1.9~~existing ~~billion~~deferred tax credits.

~~The~~ For ~~Company~~2003, United has ~~determined~~a ~~that~~zero percent iteffective istax ~~more~~rate. ~~likely~~Beginning ~~than~~in ~~not~~the ~~that~~third ~~the~~quarter ~~gross~~of 2002, we ~~deferred~~established ~~tax~~a ~~assets,~~valuation allowance against our net ofdeferred ~~valuation~~tax ~~allowances~~asset. atAs of ~~June~~September 30, 2003, ~~will be~~our ~~realized~~valuation ~~through~~allowance ~~the~~totaled ~~reversals~~$2.1 ~~of existing deferred tax credits~~billion.

Restricted Cash

At ~~June~~September 30, 2003, ~~the Company~~United had $~~671~~629 million in restricted cash., ~~The cash~~representing ~~largely represents~~ security for worker compensation obligations, security deposits for airport leases and reserves with institutions that process the Company's sales.

Liabilities Subject to Compromise

Liabilities subject to compromise refers to liabilities which will be accounted for under a plan of reorganization, including claims incurred prior to the Petition Date. These amounts ~~represent~~result ~~the~~from ~~Company's estimate of~~ known or potential ~~pre-petition~~ claims to be resolved ~~in connection with~~ through the Chapter 11 ~~Cases~~process. ~~Such~~These claims remain subject to future adjustments. Adjustments may result from negotiations, actions of the Bankruptcy Court, rejection of executory contracts and unexpired leases, the determination as to the value of any collateral securing claims, proofs of claim or other events. ItTo isdate, ~~anticipated that~~ such adjustments, ifas ~~any~~reflected in reorganization expense, have ~~would~~been material and we anticipate that future adjustments will be material. as well. Payment terms for these amounts will be established in connection ~~with~~ with the Chapter 11 ~~Cases~~process.

At ~~June~~September 30, 2003, we ~~the Company~~ had liabilities subject to compromise of approximately $14.43 billion consisting ~~which consisted~~ of the following:

	(In millions)
	Long-term debt, including accrued interest	$ 87,~~170~~784
	Aircraft-related accruals and deferred gains	2,~~768~~947
	Capital lease obligations, including accrued interest	2,~~171~~211
	Accounts payable	329
	Intercompany payables and loans	277
	Other	~~682~~737
		$ 14,397
		$ 14,285

United Express

United has marketing agreements under which independent regional carriers, flying under the United Express ("UAX") name, feed passengers to other United-branded ~~owned and operated~~ flights. ~~United~~During ~~pays~~the ~~these~~third ~~carriers~~quarter onof a2003, ~~fee-per-departure~~we ~~basis~~reached ~~and~~agreements ~~includes~~with ~~the revenues~~several ~~derived from the~~ UAX carriers, inincluding ~~passenger revenue~~SkyWest, ~~net~~Air ofWisconsin ~~expenses. Amounts included~~and inMesa ~~passenger~~Air ~~revenues~~Group ~~for~~to ~~the~~operate select ~~three~~portions ~~and~~of ~~six~~our ~~month~~United ~~periods~~Express ~~are~~service. ~~as follows:~~

	Net revenues (net expenses)
(in millions)	Three Months		Six Months
	Ended June 30		Ended June 30
	2003	2002	2003	2002
United Express revenues (net of expenses)	$ (42)	$ (44)	$ (137)	$ (121)

Historically, we have paid these carriers on a fee-per-departure basis and included the revenues derived from them in passenger revenue, net of expenses. However, our revised agreements with these UAX carriers change the previous fee-per-departure arrangement to a fixed rate and capital reimbursement arrangement. Thus, in accordance with Emerging Issues Task Force No. 01-08, "Determining Whether an Arrangement Contains a Lease" ("EITF 01-08"), we have concluded that the revised agreements are operating leases as the agreements:

~~While the effect on~~ ~~United's~~1) identify ~~results,~~"right ~~taking~~of ~~into~~use" ~~account~~of ~~only the United Express flights, is negative, the Company realizes~~ a ~~significant~~specific ~~benefit~~type ~~(not~~and ~~included~~number ~~in the~~of ~~results shown above) from the traffic provided to United's operations~~aircraft asover a ~~result~~stated period of ~~these~~time; ~~agreements.~~and

2) give United the right to set the pricing, schedules and routes of aircraft specified in the agreements, as well as to direct the carriers' operating policies and procedures.

EITF 01-08 is effective for new arrangements or arrangements modified after the beginning of the third quarter of 2003. Accordingly, based on the terms in the new agreements, we have begun recording revenues and expenses related to these UAX carriers at gross, rather than net.

We have been unsuccessful in negotiating a new, similar arrangement with Atlantic Coast Airlines ("ACA"). Thus, we continue to include the revenues and expenses related to ACA net in passenger revenues.

Amounts included in passenger revenues for the three- and nine-month periods (which represent only the ACA relationship in third quarter 2003 and all UAX carriers in prior periods) were as follows:

	Net revenues (net expenses)
(in millions)	Three Months		Nine Months
	Ended September 30		Ended September 30
	2003	2002	2003	2002
United Express revenues	$ 177	$ 311	$ 854	$ 970
United Express expenses	(207)	(383)	(1,021)	(1,162)
Net amount in passenger revenues	$ (30)	$ (72)	$ (167)	$ (192)

Segment Information

United has a global route network designed to transport passengers and cargo between destinations in North America, the Pacific, the Atlantic and Latin America. These regions constitute United's four reportable segments. For internal management and decision-making purposes, we have allocated revenues and expenses (as incorporated in our consolidated financial statements) to these segments as follows:

A reconciliation of the total amounts reported by reportable segments to the applicable amounts in the financial statements follows:

(In Millions)	Three Months Ended September 30, 2003
					Reportable
	North			Latin	Segment
	America	Pacific	Atlantic	America	Total
Revenue	$2,594	$ 560	$ 494	$ 109	$3,757
Loss before income taxes, special
charges and reorganization items	$ (93)	$ (34)	$ 11	$ (12)	$ (128)

(In Millions)	Three Months Ended ~~June~~September 30, ~~2003~~2002
					Reportable
	North			Latin	Segment
	America	Pacific	Atlantic	America	Total
Revenue	$ 2,~~114~~343	$ ~~377~~657	$ ~~446~~536	$ 98109	$ 3,~~035~~645
Earnings (loss) before income taxes,
Loss before income taxes
curtailment charge, government
and government compensation	$ (584)	$(136)	$ (61)	$ (41)	$ (822)
assistance and reorganization items	$ (237)	$(121)	$ (20)	$ (25)	$ (404)

(In Millions)	~~Three~~Nine Months Ended ~~June~~September 30, ~~2002~~2003
					Reportable
	North			Latin	Segment
	America	Pacific	Atlantic	America	Total
Revenue	$ 26,~~419~~713	$ ~~647~~1,514	$ ~~518~~1,351	$ ~~122~~321	$ 39,~~706~~899
Earnings (loss) before income
Loss before income taxes, special
taxes, government assistance
charges, government compensation,
and gains on sales	$ (426)	$(124)	$ (57)	$ (41)	$ (648)
curtailment charge and
reorganization items	$(1,017)	$ (305)	$ (126)	$ (83)	$(1,531)

(In Millions)	~~Six~~Nine Months Ended ~~June~~September 30, ~~2003~~2002
					Reportable
	North			Latin	Segment
	America	Pacific	Atlantic	America	Total
Revenue	$ 46,~~119~~892	$ ~~954~~1,852	$ ~~857~~1,437	$ ~~212~~365	$ 610,~~142~~546
Earnings (loss) before income taxes,
Loss before income taxes, gains on
government assistance, gains on
sales and government compensation	$(1,519)	$ (406)	$ (235)	$(132)	$ (2,292)
sales, curtailment charge and
reorganization items	$ (924)	$(271)	$(137)	$ (71)	$(1,403)

(In Millions)	Six Months Ended June 30, 2002
	Three Months		Nine Months
					Reportable
	Ended September 30		Ended September 30
	North			Latin	Segment
(In Millions)	2003	2002	2003	2002
	America	Pacific	Atlantic	America	Total
Total loss for reportable segments	$ (128)	$ (822)	$(1,531)	$(2,292)
Revenue	$ 4,550	$ 1,195	$ 901	$ 256	$ 6,902
Curtailment charge	-	-	(152)	-
Earnings (loss) before income taxes,
Special charges	(51)	-	(188)	-
government assistance and
Reorganization items, net	(237)	-	(884)	-
gains on sales	$ (937)	$ (270)	$(174)	$ (91)	$ (1,472)
Government compensation	-	50	300	130
Gain on sale	-	-	-	46
Total loss before income taxes and
cumulative effect of accounting change	$ (416)	$ (772)	$(2,455)	$(2,116)

	Three Months Ended		Six Months Ended
	June 30		June 30
(In Millions)	2003	2002	2003	2002
Total loss for reportable segments	$ (404)	$ (648)	$ (1,403)	$ (1,472)
Curtailment charge	(152)	-	(152)	-
Non-operating special charges	-	-	(137)	-
Reorganization items, net	(398)	-	(647)	-
Government assistance	300	80	300	80
Gain on sale	-	-	-	46
Total loss before income taxes	$ (654)	$ (568)	$(2,039)	$ (1,346)

Other Comprehensive Income

Total comprehensive income (loss) for the three- and six-month periods ending June 30, 2003 was $(1.6) billion and $(3.0) billion, respectively, compared to $(438) million and $(934) million for the three- and six-month periods ending June 30, 2002, respectively. Other comprehensive income for the three months ended June 30, 2003, consisted of a minimum pension liability adjustment of $(964) million, compared to a minimum pension liability adjustment of $(57) million and net unrealized losses of $(18) million for the three months ended June 30, 2002. In addition to the minimum pension liability adjustments, the six months ended June 30, 2003 included net unrealized gains of $3 million and the six months ended June 30, 2002 included net unrealized losses of $(17) million.

Total comprehensive income (loss)	Three Months		Nine Months
	Ended September 30		Ended September 30
(In Millions)	2003	2002	2003	2002
Net loss	$ (416)	$ (911)	$(2,455)	$(1,770)
Unrealized gains (losses)	-	11	3	(6)
Minimum pension liability adjustment	-	-	(964)	(57)
Total comprehensive loss	$ (416)	$ (900)	$(3,416)	$(1,833)

Reorganization Items

In connection with ~~the~~our ~~Company's~~Chapter ~~bankruptcy~~11 ~~filing~~filings, ~~United~~we recognized $~~398~~237 million and $~~647~~884 million of ~~reorganization~~largely non-cash reorganization expenses in the ~~second~~third quarter and first ~~six~~nine months of 2003, respectively. These ~~amounts~~include ~~consisted of~~ the following:

(In millions)	Three Months	~~Six Months~~	Nine Months
	Ended June 30, 2003
	Ended September 30, 2003
Aircraft rejection costs	$ 279	$ 279
Aircraft rejection charges	$ 170		$ 449
Transfer of lease certificates	-	~~215~~	215
Professional fees	4137	75	112
Severance and employee retention	4433	48	81
Interest income	(43)	~~(7)~~	(7)
Other	38-	3734
	$ 398	$ 647
	$ 237		$ 884

Aircraft rejection ~~costs~~charges include ~~the~~our ~~Company's~~ estimate of claims ~~incurred~~resulting asfrom aUnited's ~~result~~rejection of ~~the rejection of~~ certain aircraft inleases ~~the~~and ~~second~~return ~~quarter~~of aircraft as part of the bankruptcy process.

In the first quarter of 2003, ~~United~~we renegotiated certain off-balance sheet leases as part of the Section 1110 process. Under the terms of the revised leases, ~~United~~we surrendered ~~its~~ our investment in the junior portion of the original lease debt to the ~~original~~ original equity participant. ~~Accordingly,~~As ~~the~~a ~~Company's~~result, our investment in the corresponding lease certificates was reduced to zero, ~~and~~resulting ~~the~~in ~~Company recognized~~ a $215 million non-cash charge in reorganization items.

Special Charges

~~Curtailment~~Aircraft ~~Charge~~Impairment. As a result of ~~the~~our ~~ratification~~review of ~~new~~our ~~labor~~operating ~~contracts~~fleet for its major employee groups and additional furloughs resulting from productivity improvements enabled by the revised contracts, United revalued its pension and postretirement plans for certain employee groups at various times during the second quarter. The pilot plan was revalued on April 1, 2003; the union ground and flight attendant pension and postretirement plans, as ~~well~~part asof ~~the~~our ~~management,~~overall ~~administrative and public contact postretirement plan were revalued on May 1~~restructuring, ~~2003;~~we ~~and~~decided ~~the~~to ~~management,~~accelerate ~~administrative and public contact non-qualified pension plan was revalued on June 1, 2003. The significant actuarial assumptions used for~~ the ~~revaluation~~retirement of ~~the~~our ~~plans were unchanged from December 31,~~B767-200 ~~2002,~~aircraft ~~except for the discount rate and weighted average salary scale. The discount rate was decreased~~ from ~~6.75%~~2008 ~~at December 31, 2002~~ to 62005.~~50%~~ ~~for the April 1 revaluation~~Therefore, ~~6.25% for the May 1 revaluation and 6.00% for the June 1 revaluation. The weighted average salary scale was decreased from 4.3% to 3.3%. The revaluation of the plans resulted~~ in ~~special~~accordance ~~termination and~~with ~~curtailment~~SFAS ~~charges of $152 million in the second quarter of 2003~~No. In ~~addition~~144, ~~as a direct result of the revaluation of the pension plans,~~ ~~stockholders'~~"Accounting ~~equity~~for and pension intangible assets were reduced by approximately $964 million and $200 million, respectively. The accumulated pension benefit obligation increased from $11.0 billion as of December 31, 2002 to $11.9 billion mainly due to the ~~lower~~Impairment ~~discount~~or ~~rate~~Disposal ~~and normal increase in vested employees from passage~~ of ~~time.~~Long-Lived ~~The projected pension benefit obligation decreased from $12.7 billion as of December 31~~Assets," ~~2002~~we ~~to $12.6 billion as~~reviewed ~~changes to~~ the ~~Company's~~fleet ~~collective~~for ~~bargaining~~impairment ~~agreements~~ and ~~plan~~wrote ~~amendments offset~~down the ~~impact~~aircraft ofto ~~the~~their ~~lower~~fair ~~discount rates. The accumulated postretirement~~market ~~benefit obligation decreased from $4.0 billion as of December 31~~values, ~~2002 to $3.1 billion~~ as ~~the~~estimated ~~plan~~using ~~amendments~~third-party ~~significantly~~appraisals, ~~offset~~resulting ~~the~~in ~~impact of~~an ~~the lower discount rate. These changes to the pension and postretirement~~impairment ~~plans~~charge ~~also resulted in a reduction~~ of ~~approximately~~ $~~100~~26 million in ~~expense in~~ the ~~second~~third quarter of 2003 ~~or approximately $550 million on an annualized basis~~.

~~Air~~ Aircraft ~~Canada~~Write-down. ~~On April 1, 2003, Air Canada filed for protection under the Companies' Creditors Arrangement Act ("CCAA") of the Canada Business Corporation Act.~~ During the ~~first~~third quarter of 2003, ~~the~~we ~~Company~~also ~~recorded~~incurred a ~~non-operating special charge of~~ $~~137~~25 million ~~in connection with Air Canada's CCAA filing. The~~ charge ~~included $46 million for the impairment of the Company's investment~~ in ~~Air~~non-operating ~~Canada~~expense ~~preferred stock and $91 million to record a liability~~ for the ~~Company's~~write-down ~~guarantee~~ of ~~Air~~certain ~~Canada debt. The Company considers this liability to be a pre~~non-~~petition~~operating ~~obligation and accordingly, has classified~~B767 ~~it in liabilities subject to compromise~~aircraft.

In Curtailment ~~addition, United is the~~Charge. ~~equity~~Due ~~holder on three Airbus A330 aircraft that are leased~~ to ~~Air~~the ~~Canada via~~ratification aof ~~leveraged~~new ~~lease~~labor ~~transaction.~~contracts ~~The~~for ~~Company's~~our ~~net~~major ~~investment~~employee ~~in the~~groups ~~leveraged~~and ~~lease~~significant ~~transaction~~levels isof ~~approximately~~employee ~~$88 million. Although Air Canada has not indicated an intent to reject these leases~~attrition, ~~should~~we ~~they choose~~revalued tosome ~~reject or renegotiate these leases under the provisions~~ of ~~the~~our pension ~~CCAA,~~plans ~~United~~and ~~would~~all ~~most likely incur a write-off~~ of ~~most~~our orpostretirement ~~all~~plans ofduring the ~~transaction's~~ ~~value~~second quarter 2003.

The significant actuarial assumptions used for the revaluation of the plans were unchanged from December 31, 2002, except for the discount rate and weighted average salary scale. The discount rate was decreased from 6.75% at December 31, 2002 to 6.50% for the April 1 revaluation, to 6.25% for the May 1 revaluation and to 6.00% for the June 1 revaluation, reflecting changes in the interest rate environment. Given contractual changes, the weighted average salary scale was decreased from 4.3% to 3.3%.

The revaluation of the plans resulted in special termination and curtailment charges of $152 million in the second quarter of 2003. In addition, as a direct result of the revaluation of the pension plans, stockholders' equity and pension intangible assets were reduced by $964 million and $200 million, respectively. These changes to the pension and postretirement plans also resulted in a reduction to our annual expenses of approximately $550 million.

Air Canada. On April 1, 2003, Air Canada filed for protection under the Companies' Creditors Arrangement Act ("CCAA") of the Canada Business Corporation Act. During the first quarter of 2003, the Company recorded a non-operating special charge of $137 million in connection with Air Canada's CCAA filing. The charge included $46 million for the impairment of our investment in Air Canada preferred stock and $91 million to record a liability resulting from our guarantee of Air Canada debt. We consider this liability to be a pre-petition obligation and accordingly, have classified it in liabilities subject to compromise.

In addition, we hold the equity interest on three Airbus A330 aircraft leased to Air Canada. Our net investment in this transaction is approximately $88 million. If Air Canada rejects these leases, we most likely would incur a write-off of most or all of the transaction's value.

Reconciliation of Accruals

InSpecial ~~connection with special~~ charges recorded in 2001, 2002 and 2003, resulted in the ~~Company~~creation ~~had~~of ~~the~~additional ~~following~~liabilities ~~activity~~for ~~relating~~reduction toin ~~accruals~~force ~~remaining~~and early termination fees. Following is a reconciliation of these liabilities as of ~~June~~September 30, 2003:

	Reduction in force	Early termination fees
Balance at December 31, 2002	$ 67	$ 162
Accruals	-	-
Payments	(26)	-
Balance at March 31, 2003	$ 41	$ 162
Accruals	39	-
Payments	(5832)	-
Balance at June 30, 2003	$ 48	$ 162
Accruals	20	-
Payments	(25)	-
Balance at September 30, 2003	$ 43	$ 162

Government ~~Assistance~~Compensation

On April 16, 2003, the Emergency Wartime Supplemental Appropriations Act ("Wartime Act") was signed into law. The legislation includes approximately $3 billion of ~~financial~~direct ~~aid~~compensation for U.S. ~~air~~airlines. ~~carriers,~~Of ~~including~~the ~~United~~total, ~~as follows:~~ $2.4 billion tocompensates ~~compensate~~ air carriers for ~~expenses~~lost revenues and ~~forgone~~costs ~~revenues~~ related to aviation security, (including $100 million for reinforcing cockpit doors); ~~suspension of the~~ passenger and air carrier security fees were suspended from June 1, ~~2003~~ through September 30, 2003; and ~~a one-year extension of~~ government-provided war-risk insurance was extended for one year to August 2004.

In addition, the Wartime Act requires that the total compensation of the two most highly compensated executives of certain airlines (including ~~the Company~~United) be limited, during ~~the~~ the period between April 1, 2003 and April 1, 2004, to the ~~annual~~ salary they were paid toin ~~those officers with respect to the air carrier's fiscal year~~ 2002. ~~Consequently,~~ ~~the~~We ~~Company~~have executed a contract with the government agreeing to comply with ~~the~~these ~~executive compensation~~ limits ~~described above~~. Any violation of this provision will require us ~~the Company~~ to repay the government the amount of ~~its~~ compensation we received for airline security fees described above. ~~The Company~~We ~~does~~do not anticipate any difficulties in complying with this provision and ~~believes~~believe the likelihood of repaying the government is remote. In May 2003, ~~the~~we ~~Company~~ received approximately $300 million in compensation under the Wartime Act and in September 2003, we received an additional $14 million for cockpit door reinforcement.

As part of the Air Transportation Safety and System Stabilization Act of 2001 ~~(the "Act")~~ enacted in response to the events of September 11, 2001, the federal government made $5.0 billion in ~~federal~~compensation ~~grants~~ available to the airline industry. In the first ~~six~~nine months of 2002, ~~the~~we ~~Company~~ received $80130 million in(considered ~~grants under the Act that was included in~~ non-operating income) under this legislation.

Related Party Transactions

United recognized the following amounts related to transactions with UAL Loyalty Services, Inc. ("ULS") in 2003 and 2002:

(in millions)	Three Months		~~Six~~Nine Months
	Ended June 30		Ended June 30
	Ended September 30		Ended September 30
	2003	2002	2003	2002
Revenues	$ ~~100~~106	$ 7377	$ ~~193~~300	$ ~~160~~242
Commission expense and purchased services	(910)	(810)	(2030)	(3242)
Interest Income	11	16	2132	3247

As a result of the bankruptcy filing, all intercompany accounts receivable were reclassified to United's equity and all intercompany accounts payable were reclassified to liabilities subject to compromise as of the Petition Date.

Contingencies and Commitments

United has certain contingencies resulting from litigation and claims (including environmental issues) ~~incident~~encountered toin the ordinary course of business. Management believes, after considering a number of factors, including (but not limited to) the views of legal counsel, the nature of contingencies to which ~~United~~we ~~is subject~~are subject and ~~its~~ prior experience, that the ultimate disposition of these contingencies will is not ~~expected to~~ materially affect United's consolidated financial position or results of operations.

At ~~June~~September 30, 2003, ~~commitments~~ commitments for the purchase of property and equipment, principally aircraft, ~~approximated~~ approximated $1.6 billion, after deducting advance payments. AnSince September 11, 2001, we have reached agreements with the aircraft manufacturers enabling us to delay delivery of future orders. Since resetting our fleet plan is critical to our overall restructuring, we continue to hold discussions regarding these deliveries. Our current commitments would require the payment of an estimated $0.1 billion ~~will~~ ~~be spent~~ during the remainder of 2003, ~~$0.3~~(all ~~billion~~for innon-aircraft capital ~~2004~~acquisitions), ~~and~~ $0.4 billion in each of 2005, and 2006, and ~~2007~~$0.7 billion ~~The~~in ~~major~~2007 ~~commitments~~and ~~are~~thereafter for the purchase of A319, A320 and B777 aircraft. ~~The~~It ~~Company~~is ~~continues~~likely tothat ~~evaluate~~ the ~~contracts~~amount ~~for~~and timing of these ~~aircraft~~obligations will inchange ~~light~~as a result of ~~its~~our ~~financial~~negotiations ~~condition~~with ~~and operational~~aircraft ~~requirements~~manufacturers.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Chapter 11 Reorganization

Bankruptcy Proceedings. On December 9, 2002, ~~the~~UAL, ~~Debtors~~United and 26 of its subsidiaries filed voluntary petitions ~~for~~to ~~relief~~reorganize their businesses under Chapter 11 of the United States Bankruptcy Code. For further details regarding the Chapter 11 Cases, see "Voluntary Reorganization Under Chapter 11" in the Notes to Consolidated Financial Statements.

With the exception of our ~~The~~non-filing ~~Debtors~~subsidiaries, we continue to operate ~~their~~our businesses as "debtors-in-possession" under the jurisdiction of the Bankruptcy Court ~~and in accordance with the applicable provisions of the Bankruptcy Code, the Federal Rules of Bankruptcy Procedure and applicable court orders~~. All vendors are being paid for all goods furnished and services provided after the Petition Date in the ordinary course of business. However, under Section 362 of the Bankruptcy Code, ~~the filing of the bankruptcy petition automatically stays most~~ actions ~~against~~to acollect ~~debtor, including~~ most ~~actions~~ toof ~~collect~~our pre-petition ~~indebtedness~~liabilities orare ~~to exercise control over~~automatically ~~the property of the debtor's estate~~stayed. ~~Therefore,~~Most ~~absent an order~~ of ~~the Bankruptcy~~these ~~Court, substantially all~~ pre-petition liabilities ~~are~~will ~~subject to~~be ~~settlement~~settled under a plan of reorganization to be approved by the Bankruptcy Court. AnA ~~exception~~pre-petition liability tothat ~~the~~requires ~~foregoing~~different ~~exists~~treatment ~~with~~under ~~respect~~Section 1110 of the Bankruptcy Code relates to certain qualifying aircraft, aircraft engines and other aircraft-related equipment that are leased or subject to a security interest or conditional sale contract ~~which are governed by Section 1110 of the Bankruptcy Code that specifies different treatment~~. For further information on Section 1110 and its impact on the Company, see "Voluntary Reorganization Under Chapter 11" in the Notes to Consolidated Financial Statements.

In To ~~order to~~ successfully exit Chapter 11, ~~the~~we ~~Debtors~~must ~~will need to propose, and~~ obtain confirmation by the Bankruptcy Court of, a plan of reorganization ~~that satisfies the requirements of the Bankruptcy Code~~. A plan of reorganization ~~would~~ ~~resolve~~would, among other things, ~~the~~resolve ~~Debtors'~~our pre-petition obligations, set forth ~~the~~UAL's revised capital structure ~~of the newly reorganized entity~~ and ~~provide~~establish ~~for its~~ UAL's corporate governance subsequent to exit from bankruptcy. We currently anticipate ~~The~~that ~~timing~~we ofwill ~~filing~~seek financing at exit to repay our DIP Financing and create a stable capital structure for the Company going forward. Exit financing would be part of our plan of reorganization. byThe ~~the~~decision ~~Company~~as ~~will~~to ~~depend~~when we will file a plan of reorganization depends on the timing and outcome of numerous ~~other~~ ongoing matters in the Chapter 11 ~~Cases~~process. ~~Although~~We ~~the~~expect ~~Company expects~~ to file a plan of reorganization that provides for ~~its~~United's emergence from bankruptcy, but there can be no assurance at ~~this time~~ that athe ~~plan~~Bankruptcy ofCourt ~~reorganization~~ will beconfirm ~~confirmed~~a plan byof ~~the~~reorganization ~~Bankruptcy Court,~~ or that ~~any~~the ~~such~~ plan will be implemented successfully.

At this time, it is not possible to predict ~~accurately~~ the effect of the Chapter 11 reorganization process on ~~the~~our ~~Company's~~ business or when itUnited may emerge from Chapter 11. ~~The~~ Our ~~Company's~~ future results depend on the timely and successful confirmation and implementation of a plan of reorganization. The rights and claims of various creditors and security holders will be determined by the plan as well. NoAt ~~assurance~~this time we can make beno ~~given~~prediction asconcerning tohow ~~what~~each ~~values,~~of ifthese ~~any,~~claims will be ~~ascribed~~ invalued in the bankruptcy proceedings ~~to each of these constituencies~~. ~~The~~ ~~Company~~We ~~believes~~believe that ~~its~~UAL's equity securities have little or no value and it is highly likely that the equity in UAL will be canceled under any plan of reorganization ~~proposed~~that bywe ~~the Company~~propose. ~~Accordingly~~For this reason, ~~the~~we ~~Company urges~~urge that ~~appropriate~~ caution be exercised with respect to existing and future claims or investments in any ofUAL ~~such securities and claims~~security.

Other Restructuring Issues - Pensions. The combination of 45-year low interest rates, poor stock market performance and pension benefit improvements have caused many U.S. pension funds, including ours, to become underfunded. This situation is exacerbated because government funding requirements obligate us to pay, on a going-forward basis, a special funding surcharge, referred to as a "deficit reduction contribution" ("DRC"), that is imposed when a pension plan's funding status drops below 90%. This would require us to make significant accelerated contributions to our pension plans. As described below in "Liquidity and Capital Resources," we currently estimate that we could be required to contribute approximately $4.8 billion to the defined benefit pension plan trusts by the end of 2008. As part of our bankruptcy reorganization, we must address the underfunded status of United's U.S. pension plans. We are working in several areas to address this issue. On October 10, 2003, we filed with the IRS multiple applications for pension funding waivers for all of our U.S. defined benefit pension plans. The waiver applications must be approved by the IRS and such approval, if any, is expected to take six to eight months. If approved, the waivers would allow us to reschedule the required contributions over a five-year period.

In addition, we continue to work closely with other airlines, airline unions and the AFL-CIO in support of a pension reform proposal that would allow companies affected by the DRC requirements to defer certain accelerated pension funding contributions and smooth out minimum funding requirements over a longer period of time than provided by the current law. We are also advocating for legislation (already approved by the U.S. House of Representatives) that would re-set the interest rates that are used to determine corporate funding requirements for pension obligations.

We are also actively exploring additional options that could ease the temporary cash flow requirements caused by accelerated pension contributions under the current laws and regulations. Our ultimate goal is to ensure United's financial stability as we exit from bankruptcy. In the event that these steps are not successful or are insufficient to address the funding issues in planning for exit from bankruptcy, we may need to take additional measures designed to help stabilize United's financial condition.

Results of Operations

Summary of Results. The air travel business is subject to seasonal fluctuations. United's operations are often adversely ~~impacted~~affected by winter weather and ~~United's~~our first- and fourth-quarter results normally reflect reduced travel demand. Historically, ~~operating~~ operating results are better in the second and third quarters.

For the past two years, ~~the~~we ~~Company~~have ~~has~~experienced ~~seen~~greater fluctuations in unit revenue ~~relative~~than to the rest of the industry. Immediately following the September 11 terrorist attacks, ~~the~~United ~~Company~~had ~~experienced~~ a more significant decline in unit revenue ~~relative~~than to the ~~rest of the~~ industry overall. In In early 2002, our year-over-year unit revenues began improving each month, rising from a 14% decline in January to a 4% decline in May, improving United's ~~its~~ position relative to the industry. However, ~~unit~~these ~~revenue~~gains ~~growth~~ stalled during in2002's ~~the~~ third and fourth quarters as demand continued to be weak and yields declined. As is typical with a company in bankruptcy, ~~United~~we experienced under-performance in revenues following the ~~filing of the~~ Chapter 11 ~~Cases~~filings in December of of 2002. This under-performance accelerated in the first quarter of 2003. Overall weak economic conditions, the outbreak of war in Iraq and aggressive fare competition with low-cost competitors ~~resulted~~contributed into ~~the~~a ~~Company's~~ 9% drop in passenger unit revenue in the first quarter of 2003 as compared to the same period of 2002.

~~Moving~~During ~~into~~ the second quarter of 2003, ~~the~~our ~~Company's~~ revenues were ~~negatively~~hurt ~~impacted~~ by the outbreak of Severe Acute Respiratory Syndrome ~~("SARS")~~, as well as the continued weak economic conditions, the ongoing war in Iraq, lingering customer concerns ~~regarding~~ ~~the~~about ~~Company's~~our financial stability and continued aggressive fare competition with low-cost competitors. ~~Thus~~Therefore, we ~~the Company~~ reduced ~~its~~our April schedule by 8% and ~~its~~our May schedule by another 4% as , compared to what ~~was~~ we had previously planned, with ~~changes~~reductions concentrated in the Pacific and Atlantic regions. ~~In addition~~Simultaneously, towe ~~improve~~instituted ~~its~~a ~~value~~number of ~~proposition~~pricing and inventory actions to ~~its~~maximize ~~core~~yield ~~business~~in this environment ~~customers~~of reduced capacity. Additionally, ~~the~~to ~~Company~~improve ~~increased~~our ~~its~~value ~~advertising~~to ~~and~~our core market of business customers, we began promotions such as "Fly Three, Fly Free" in ~~whereby~~which passengers ~~may~~who ~~earn~~buy three tickets get a ~~free~~fourth ticket byfree ~~purchasing~~(with ~~three~~the ~~tickets~~exception of applicable taxes and fees). As a result of these ~~and other pricing and inventory~~ actions, inwe ~~May~~began ~~and~~to ~~June~~see ~~these~~positive ~~negative~~ trends ~~began~~in toMay ~~reverse~~and June, asand passenger unit ~~revenues~~ revenues went from a 17% year-over-year decline in April to a modest year-over-year improvement in June. Overall, ~~the~~we ~~Company~~ experienced a 4% decrease in ~~passenger~~ passenger unit revenue in the second quarter of 2003 asversus ~~compared to~~ the same period of 2002. By comparison, unit revenue for the industry was flat quarter over quarter.

~~United's~~As ~~loss~~we ~~from~~approached ~~operations was $(476) million in~~ the ~~second~~ third quarter of 2003, ~~compared~~it tobecame ~~$(536)~~evident ~~million in~~that ~~the~~summer ~~second~~demand ~~quarter~~would ofbe ~~2002.~~strong ~~United's~~and industry ~~net~~capacity ~~loss~~would infall ~~the~~short ~~second quarter~~ of ~~2003~~this ~~was~~demand. ~~$(654)~~To ~~million~~capitalize on this situation, ~~compared~~we took additional actions to ~~$(363)~~ensure ~~million~~we inwould ~~the~~capture ~~same~~a ~~period~~revenue ofpremium ~~2002. The~~commensurate ~~prior~~with ~~year~~our ~~loss~~superior ~~benefited~~product ~~from~~and anservice ~~income~~levels. ~~tax~~We ~~credit~~have also reviewed and restructured many of ~~$205~~our ~~million.~~business ~~However,~~fares ~~beginning~~to inincrease ~~the~~revenue by ~~third~~stimulating ~~quarter~~traffic ofand ~~2002,~~we ~~the~~continued ~~Company~~our aggressive marketing campaign ~~established~~to are-engage ~~valuation~~customers ~~allowance~~by ~~against~~introducing ~~its~~additional ~~net~~promotions ~~deferred~~such ~~tax~~as ~~asset~~"Go, Go, Stay" for leisure customers. As a result, ~~for~~passenger ~~2003,~~unit ~~United~~revenues ~~has~~increased by aas ~~zero~~much ~~percent~~as ~~effective~~15% ~~tax~~in ~~rate~~August of 2003, ~~while comparative~~with ~~amounts~~a year-over-year increase of 12% for ~~2002~~the ~~are~~third ~~shown~~quarter. ~~net~~This compares to an industry average increase of ~~tax~~7% year-over-year.

~~The~~United ~~second~~had an operating loss of $(37) million in the third quarter of 2003, ~~results~~compared to an operating ~~include~~loss of $~~398~~(699) million in ~~reorganization~~the ~~items~~third ~~recorded~~quarter of 2002. United's net loss in ~~connection~~the ~~with~~third quarter of 2003 was $(416) million, compared to $(911) million in the ~~Company's~~same ~~bankruptcy~~period ~~proceedings~~of ~~and~~2002. In the third quarter of 2002, we recorded a valuation allowance of $~~152~~418 million ~~for~~against ~~curtailment~~our ~~charges~~net deferred tax asset. ~~See~~As ~~"Special~~a ~~Charges"~~result, infor ~~the~~2003, ~~Notes~~United tohas ~~Consolidated~~a ~~Financial~~zero ~~Statements~~percent effective tax rate; comparative amounts for 2002 are shown net of tax.

~~Additionally,~~During the ~~Company~~third quarter ~~received~~of ~~$300 million in government assistance from the~~ 2003, ~~Emergency Wartime~~we ~~Supplemental~~began ~~Appropriations~~recording ~~Act~~revenues inand ~~the~~expenses ~~second~~related ~~quarter~~to ofcertain ~~2003 and~~United ~~$80~~Express ~~million~~carriers ~~from~~at ~~the~~gross, ~~Air~~rather ~~Transportation~~than ~~Safety~~net. ~~and~~See ~~System~~"United ~~Stabilization Act~~Express" ~~of 2001~~ in the Notes to ~~second~~Consolidated ~~quarter~~Financial ~~of 2002~~Statements.

InThe ~~the~~third ~~first~~quarter ~~six~~2003 ~~months~~results include of$237 million in reorganization items recorded in connection with ~~2003~~our bankruptcy proceedings, ~~United's~~$26 ~~loss~~million ~~from~~for ~~operations~~aircraft ~~was~~impairment ~~$(1.3)~~charges in ~~billion,~~operating ~~compared~~expense toand $~~(1.2) billion~~25 million for aircraft write-downs in ~~the~~non-operating expense. ~~same~~The ~~period~~third ofquarter 2002. ~~United's~~results ~~net~~include ~~loss~~$50 inmillion from the ~~first six~~Air ~~months~~Transportation ofSafety ~~2003~~and ~~was~~System ~~$(2.0)~~Stabilization ~~billion,~~Act ~~compared~~of to2001. ~~$(860)~~See ~~million~~"Special Charges" in the ~~same period~~Notes ofto ~~2002~~Consolidated Financial Statements.

In ~~addition~~the tofirst ~~the~~nine ~~items~~months ~~described~~of ~~above~~2003, ~~for~~United's ~~the~~loss ~~second~~from ~~quarter,~~operations ~~the~~was ~~2003~~$(1.4) ~~loss~~billion, ~~includes~~compared to $~~137~~(1.9) ~~million~~ billion in ~~non-operating~~the ~~special~~first ~~charges~~nine ~~related~~months toof ~~the~~2002. ~~Company~~United's ~~investment~~net loss in the ~~Air~~first ~~Canada~~nine ~~and~~months anof ~~additional~~2003 was $~~249~~(2.5) ~~million~~billion, incompared ~~reorganization~~to ~~items~~$(1.8) ~~See~~billion ~~"Special Charges"~~ in the ~~Notes~~same toperiod ~~Consolidated~~of ~~Financial Statements~~2002. In ~~addition,~~The ~~the~~ 2002 net loss ~~includes~~benefited afrom ~~gain~~an ofincome tax ~~$46~~credit ~~million on the sale~~ of ~~the~~ ~~Company's~~$346 ~~remaining investment in Cendant Corporation~~million.

~~Specific~~In ~~factors~~addition ~~affecting United's~~to ~~consolidated~~the ~~operations~~items described above for the ~~second~~third quarter, the 2003 loss includes a $152 million curtailment charge in operating expense and ~~first~~$137 ~~six~~million ~~months~~in non-operating special charges related to our investment in Air Canada and an additional $647 million in reorganization items. See "Special Charges" in the Notes to Consolidated Financial Statements. In addition, the 2002 loss includes a gain of ~~2003~~$46 ~~are~~million ~~described~~on ~~below~~the sale of our remaining investment in Cendant Corporation.

~~Second~~Additionally, ~~Quarter~~we ~~2003~~received ~~Compared with Second Quarter 2002. Operating revenues decreased~~ $~~671~~300 million ~~(18%)~~in ~~and~~direct ~~United's~~government ~~revenue~~compensation ~~per~~under ~~available~~the ~~seat~~2003 ~~mile~~Emergency Wartime ~~(unit~~Supplemental ~~revenue) decreased~~Appropriations 4%Act toin ~~9.45~~the ~~cents.~~second ~~Passenger~~quarter ~~revenues~~of ~~decreased~~2003 and $~~565~~80 million ~~(18%) primarily~~under ~~due~~the toAir aTransportation 7%Safety ~~decrease~~and inSystem ~~yield to 10.53 cents. United's available~~Stabilization ~~seat~~Act ~~miles~~of ~~across~~2001 ~~the~~in ~~system decreased 14% from~~ the second quarter of 2002~~; however, passenger load factor increased 2~~.~~6 points to 77.0%. The following~~ ~~analysis by market is based on information reported to the U.S. Department of Transportation:~~

	Increase (Decrease)
	Available Seat	Revenue Passenger Miles	Revenue Per Revenue
	Miles (Capacity)	(Traffic)	Passenger Mile (Yield)
Domestic	(9%)	(1%)	(11%)
Pacific	(29%)	(42%)	(8%)
Atlantic	(17%)	(14%)	(10%)
Latin America	(19%)	(6%)	(17%)
System	(14%)	(11%)	(7%)

Specific factors affecting our consolidated operations for the third quarter and first nine months of 2003 are described below.

~~Cargo~~Third Quarter 2003 Compared with Third Quarter 2002. Operating revenues ~~decreased~~increased $13112 million (83%) ~~due~~and toUnited's arevenue 20per available seat mile (unit revenue) excluding regional affiliates increased 9% ~~decrease~~to in9.95 ~~cargo~~cents. ~~ton~~To ~~miles~~balance marketplace demand levels, ~~despite~~we apulled ~~15%~~down our schedule and reduced available seat miles ~~increase~~by in12% ~~yield~~from 2002. ~~Other~~In ~~operating~~spite ~~revenues~~of these lower capacity levels, passenger revenues decreased ~~$93~~only ~~million~~1% (~~27%~~$31 million) as ~~the~~we ~~result~~achieved of a ~~$50~~record ~~million~~load ~~decrease~~factor inof 80.2% ~~fuel~~and ~~sales~~increased yield by 5% to ~~third~~10.90 ~~parties~~cents. The following analysis asby ~~well~~market asis abased ~~decrease~~on ininformation ~~third-party~~reported ~~maintenance~~to ~~sales~~the U.S. Department of Transportation:

Operating expenses decreased $731 million (17%) and United's cost per available seat mile (unit cost) decreased 3%, from 11.32 cents to 10.93 cents. Salaries and related costs decreased $550 million (31%) primarily as a result of new labor agreements for all employee groups, as well as decreases in employee headcount as a result of furloughs. During the second quarter of 2003, United recognized a one-time benefit of $102 million in salaries and related costs for the reversal of a contractual payment to certain employees and changes in vacation accruals as a result of new lower pay rates for all union groups that were part of contract renegotiations. Aircraft fuel decreased $15 million (3%) as a 17% decline in consumption was offset by a 17% increase in the average cost of fuel from 74.7 cents to 87.0 cents a gallon. Purchased services decreased $44 million (12%) primarily as a result of volume-driven decreases in GDS (global distribution systems) and credit card discount fees. Aircraft rent decreased $76 million (36%) due to the restructuring of aircraft financings as part of the Section 1110 process in bankruptcy. Depreciation and amortization increased $25 million (10%) due to a $41 million loss on the sale of a B747 aircraft, which was offset by decreases to amortization expense for slots which were fully amortized in June 2002 and decreases to provisioning for obsolescence on expendables. Cost of sales decreased $50 million (17%) primarily due to lower fuel sales to third parties. Aircraft maintenance decreased $36 million (24%) due to decreases in engine and aircraft repair volumes as a result of reduced flying and the rejection of aircraft leases under Section 1110 of the Bankruptcy Code. Commissions decreased $33 million (31%) primarily as a result of a decrease in commissionable revenues. Other expenses decreased $86 million (22%) due to decreases in advertising and crew layover expenses, as well as volume-driven food and beverage costs.

	Increase (Decrease)
	Available Seat	Revenue Passenger Miles	Revenue Per Revenue
	Miles (Capacity)	(Traffic)	Passenger Mile (Yield)
Domestic	(10%)	(3%)	7%
Pacific	(19%)	(13%)	1%
Atlantic	(11%)	(8%)	1%
Latin America	(13%)	(1%)	(1%)
System	(12%)	(6%)	5%

~~Other~~Cargo ~~non-operating~~revenues ~~expense~~decreased ~~amounted to~~ $8021 million in(13%) ~~the~~due ~~second~~to ~~quarter~~a of23% ~~2003,~~decrease ~~compared to $112 million~~ in ~~the~~cargo ~~second~~ton ~~quarter of 2002~~miles, ~~excluding~~despite ~~reorganization~~a ~~items and~~13% ~~government~~increase ~~assistance~~in yield. ~~Interest~~Other ~~expense~~operating revenues decreased $1986 million (1326%) as as the ~~Company~~result ~~has~~of ~~discontinued~~an ~~recording interest expense on all unsecured pre-petition debt. Included in interest income was~~ $4189 million indecrease ~~interest income on IRS tax refunds received~~ in ~~the~~fuel ~~second~~sales ~~quarter of 2003. Excluding the interest income on the refunds, interest income decreased $16 million (52%) due~~ to ~~lower~~third ~~investment balances and decreased interest rates~~parties.

~~Six Months 2003 Compared with Six Months 2002.~~ Operating ~~revenues~~expenses decreased $~~760~~550 million (1113%) and United's ~~revenue~~cost per available seat mile (unit ~~revenue~~cost) excluding regional affiliates decreased 5 9%, from 10.90 cents to 9.2088 cents. Salaries ~~Passenger~~and ~~revenues~~related costs decreased $~~775~~611 million (1334%) ~~due~~primarily to as a result 6%of ~~decrease~~new inlabor ~~revenue~~agreements ~~passenger~~for ~~miles~~all employee groups. In addition to lower salary and anbenefit 8%levels, ~~decrease~~these inchanges ~~yield~~enabled us to improve productivity ~~10.35~~(as ~~cents.~~measured ~~United's~~by available seat miles ~~across~~per ~~the~~employee) ~~system~~by 13% and thus reduce personnel through retirements, attrition and furloughs. Aircraft fuel decreased 7$18 million (3%) ~~over~~as a 14% decline in consumption was offset by a 13% increase in the ~~first~~average ~~six~~cost ~~months~~of fuel from 80.2 cents to 90.4 cents a gallon. Purchased services decreased $45 million (12%) primarily as a result of ~~2002;~~volume-driven decreases ~~however~~in GDS (global distribution systems) and credit card discount fees. Similarly, ~~passenger~~commissions ~~load~~also ~~factor~~decreased ~~increased~~$15 million (14%) on lower 0commissionable revenues.9 ~~points~~Aircraft rent decreased $57 million (27%) due to 74the restructuring of aircraft financings as part of the Section 1110 process in bankruptcy.3 Depreciation and amortization increased $23 million (10%.) ~~The~~due ~~following~~to ~~analysis~~a $45 million loss on the sale of a B747 aircraft, which was partially offset by ~~market~~decreases isresulting ~~based~~from onrestructured ~~information~~aircraft financings ~~reported~~related to ~~the~~our Ubankruptcy filings.S. ~~Department~~Cost of ~~Transportation:~~sales decreased $103 million (35%) primarily due to lower fuel sales to third parties. Aircraft maintenance increased $36 million (27%) due to increases in purchased maintenance, including outsourcing and maintenance materials. Other expenses decreased $81 million (21%) due to decreases in crew layover expenses, as well as volume-driven food and beverage costs.

	Increase (Decrease)
	Available Seat	Revenue Passenger Miles	Revenue Per Revenue
	Miles (Capacity)	(Traffic)	Passenger Mile (Yield)
Domestic	(4%)	2%	(12%)
Pacific	(13%)	(24%)	(4%)
Atlantic	(10%)	(10%)	(3%)
Latin America	(16%)	(8%)	(15%)
System	(7%)	(6%)	(8%)

Other non-operating expense amounted to $117 million in the third quarter of 2003, compared to $123 million in the third quarter of 2002, excluding non-operating special charges, reorganization items and government assistance. Interest expense decreased $49 million (31%) as we have discontinued recording interest expense on all unsecured pre-petition debt. Interest income decreased $14 million (50%) due to lower investment balances and decreased interest rates. Miscellaneous, net increased $23 million primarily as a result of increased financing fees associated with the DIP Financing.

~~Cargo~~Nine Months 2003 Compared with Nine Months 2002. Operating revenues decreased $647 million (6%) and United's revenue per available seat mile (unit revenue) excluding regional affiliates increased slightly to 9.46 cents. Passenger revenues decreased $9806 million (39%) due to a 96% decrease in ~~cargo~~revenue ~~ton~~ passenger miles and a 143% ~~increase~~ decrease in yield to 10.55 ~~Other~~cents. ~~operating~~United's ~~revenues~~available ~~increased~~seat miles $6across ~~million~~the (1system decreased 9%) asover athe ~~decrease~~first nine months of 2002; inhowever, ~~third-party~~passenger ~~maintenance~~load ~~sales~~factor ~~was~~increased ~~offset~~2.2 points to 76.3%. The following analysis by amarket ~~$41~~is ~~million~~based ~~increase~~on ~~in fuel~~information ~~sales~~reported to ~~third~~the ~~parties~~U.S. Department of Transportation:

Operating expenses decreased $659 million (8%) and United's cost per available seat mile (unit cost) decreased 1%, from 11.36 cents to 11.21 cents. Salaries and related costs decreased $598 million (18%) primarily as a result of new labor agreements for all employee groups, as well as decreases in employee headcount as a result of furloughs. The 2003 amount also includes a one-time benefit of $102 million for the reversal of a contractual payment to certain employees and changes in vacation accruals as a result of new lower pay rates for all union groups that were part of contract renegotiations. Aircraft fuel increased $158 million (18%) as a 10% decrease in consumption more than offset by a 31% increase in the average cost of fuel from 72.8 cents to 95.3 cents a gallon. Aircraft rent decreased $87 million (20%) due to the restructuring of aircraft financings as part of the Section 1110 process in bankruptcy. Depreciation and amortization increased $22 million (5%) due to a $41 million loss on the sale of a B747 aircraft, which was offset by decreases to amortization expense for slots which were fully amortized in June 2002 and decreases to provisioning for obsolescence on expendables. Cost of sales increased $42 million (7%) primarily due to higher fuel sales to third parties. Aircraft maintenance decreased $64 million (22%) due to decreases in engine and aircraft repair volumes as a result of reduced flying. Commissions decreased $93 million (39%) primarily as a result of United discontinuing the payment of base commissions on all tickets issued in the U.S. and Canada effective March 20, 2002, as well as a decrease in commissionable revenues. Other expenses decreased $105 million (15%) due to decreases in advertising and crew layover expenses, as well as volume-driven food and beverage costs.

	Increase (Decrease)
	Available Seat	Revenue Passenger Miles	Revenue Per Revenue
	Miles (Capacity)	(Traffic)	Passenger Mile (Yield)
Domestic	(6%)	-%	(6%)
Pacific	(15%)	(20%)	(2%)
Atlantic	(10%)	(9%)	(2%)
Latin America	(15%)	(6%)	(10%)
System	(9%)	(6%)	(3%)

~~Other~~Cargo ~~non-operating~~revenues ~~expense~~decreased ~~amounted to~~ $~~211~~11 million in(2%) ~~the~~due ~~first~~to ~~six~~a ~~months~~14% ofdecrease ~~2003, compared to $229 million~~ in ~~the~~cargo ~~first~~ton ~~six months of 2002~~miles, ~~excluding~~partially ~~reorganization items,~~offset ~~non-operating special~~by ~~charges,~~a ~~government~~13% ~~assistance~~increase ~~and the gain on sale of the Company's investment~~ in ~~Cendant~~yield. ~~Interest~~Other ~~expense~~operating ~~decreased~~revenues ~~$31 million (10%) as the Company has discontinued recording interest expense on all unsecured pre-petition debt. Interest capitalized~~ decreased $1580 million (888%) ~~as a~~primarily ~~result~~due ofto ~~lower~~decreases ~~advance payments on the acquisition of aircraft. Included~~ in ~~interest~~maintenance ~~income~~sales ~~was~~and a $4147 million ~~in interest income on IRS tax refunds~~ ~~received~~decrease in ~~the~~fuel ~~second~~sales ~~quarter of 2003. Excluding the interest income on the refunds, interest income decreased $35 million (54%) due~~ to ~~lower~~third ~~investment balances and decreased interest rates~~parties.

Operating expenses decreased $1.2 billion (10%) and United's cost per available seat mile (unit cost) excluding regional affiliates decreased 4%, from 11.20 cents to 10.75 cents. Salaries and related costs decreased $1.2 billion (23%) primarily as a result of new labor agreements for all employee groups, as well as decreases in personnel as a result of furloughs. The 2003 amount also includes a one-time benefit of $102 million for the reversal of a contractual payment to certain employees and changes in vacation accruals as a result of new lower pay rates for all union groups that were part of contract renegotiations. Aircraft fuel increased $141 million (10%), as an 11% decrease in consumption was more than offset by a 24% increase in the average cost of fuel from 75.4 cents to 93.6 cents a gallon. Aircraft rent decreased $143 million (23%) due to the restructuring of aircraft financings as part of the Section 1110 process in bankruptcy. Depreciation and amortization increased $45 million (6%) due to an $86 million loss on the sale of two B747 aircraft, which was offset by decreases to amortization expense for airport slots that were fully amortized in June 2002 and decreases to provisioning for obsolescence on expendables. Cost of sales decreased $62 million (7%) primarily due to lower fuel sales to third parties. Aircraft maintenance decreased $29 million (7%) due to decreases in engine and aircraft repair volumes as a result of reduced flying. Commissions decreased $108 million (31%) primarily as a result of our discontinuing the payment of base commissions on all tickets issued in the U.S. and Canada effective March 20, 2002, as well as a decrease in commissionable revenues. Other expenses decreased $185 million (17%) due to decreases in crew layover expenses, as well as volume-driven food and beverage costs.

Other non-operating expense amounted to $328 million in the first nine months of 2003, compared to $350 million in the first nine months of 2002, excluding reorganization items, non-operating special charges, government assistance and the gain on sale of our investment in Cendant. Interest expense decreased $80 million (18%) as we have discontinued recording interest expense on all unsecured pre-petition debt. Interest capitalized decreased $20 million (91%) as a result of lower advance payments on the acquisition of aircraft. Included in interest income was $41 million in interest income on IRS tax refunds received in the second quarter of 2003. Excluding the interest income on the refunds, interest income decreased $48 million (52%) due to lower investment balances and decreased interest rates. Miscellaneous, net increased $25 million primarily as a result of increased financing fees associated with the DIP Financing.

Liquidity and Capital Resources

United's total of cash, cash equivalents and short-term investments, including restricted cash, was $1.9 billion at ~~June~~September 30, 2003, compared to $1.65 billion at December 31, 2002.

Property additions, including aircraft and aircraft spare parts, amounted to $5685 million. In the first ~~six~~nine months of 2003, ~~United~~we acquired one B757 aircraft off lease, sold ~~one~~two B747 aircraft and rejected one B757, ~~three~~four B777, one A320, five B747 and nine ~~eight~~ B737 aircraft under Section 1110 inof the ~~bankruptcy~~Bankruptcy ~~process~~Code. In addition, six B767 aircraft were transferred to non-operating status.

Financing activities included principal payments under debt and capital lease obligations of $~~153~~210 million and $7286 million, respectively. These amounts represent payments made under Section 1110 elections for liabilities ~~included in liabilities~~ subject to compromise. During the first quarter of 2003, ~~the~~we ~~Company~~ drew down $92 million in cash under the DIP Financing.

During the second quarter of 2003, ~~United~~we sold one B747 aircraft for net proceeds of $54 million. ~~The~~ The proceeds were used to pay down the DIP Financing, enabling ~~the~~us ~~Company~~ to draw down another $31 million under the DIP Financing and issue $2 million in letters of credit. During the third quarter of 2003, we sold an additional B747 aircraft for net proceeds of $51 million enabling us to further pay down the DIP Financing.

In April 2003, ~~the~~we ~~Company~~ received $365 million from the Internal Revenue Service ~~("IRS")~~after asresolving ~~a result of the resolution of~~ certain income tax refund claims ~~filed with the IRS~~.

The Emergency Wartime Supplemental Appropriations Act of 2003 ("Wartime Act") was enacted in April 2003 and included approximately $3 billion of financial aid for U.S. air carriers, including United. (See "Government ~~Assistance~~Compensation" in the Notes to Consolidated Financial Statements.) In May 2003, ~~the~~we ~~Company~~ received $300 million in compensation under the Wartime Act. In September 2003, we received an additional $14 million related to cockpit door reinforcement.

AsIncluding ~~a result of~~ the government ~~assistance~~compensation and tax refunds, ~~United's~~we had cash flow from operations ~~during~~of ~~the~~$749 ~~second~~million ~~quarter~~for ofthe ~~2003~~first ~~was~~nine ~~$756~~months ~~million~~of 2003. Excluding these amounts, ~~United's~~our cash flow from operations was $9184 million, an improvement of ~~$314~~nearly ~~million~~$1 ~~over~~billion as compared to the first ~~quarter~~nine months of ~~2003~~2002.

As of ~~June~~September 30, 2003, we ~~the Company~~ had $~~671~~629 million in restricted cash. The cash largely represents security for worker compensation obligations, security deposits for airport leases and reserves with institutions that process ~~the~~ ~~Company's~~our sales. Prior to 2002, ~~United~~ we met many of these obligations through surety bonds or a secured letter of credit facility; however, ~~many of~~such ~~the~~facilities ~~bonds~~are ~~have~~more ~~been~~difficult ~~cancelled~~to access and ~~the~~have ~~letter~~become oflargely ~~credit~~unavailable ~~facility~~to ~~expired in August of 2002~~us. As a result, ~~United~~we ~~has been and~~ may, ~~in the future,~~ be required to post additional ~~collateral in the form of~~ cash ~~deposits~~ collateral to support ~~these~~such ~~types~~obligations ofin ~~obligations~~the future.

~~United~~We did not make any cash contributions to ~~its~~our defined benefit pension plan trusts for U.S. based employees in 2001, 2002 or in the first ~~half~~three quarters of 2003. In lieu of making cash contributions, ~~the~~we ~~Company~~ utilized a portion of ~~its~~our credit balance (the cumulative difference between the prior year's minimum required contributions and actual contributions) to meet the minimum required contribution. ~~The~~On ~~Company~~October ~~has~~10, a2003, ~~remaining~~we ~~credit~~filed ~~balance~~with ~~that~~the isIRS ~~available~~multiple toapplications befor ~~used in~~pension ~~the~~funding ~~second~~waivers ~~half~~for all of ~~2003;~~United's ~~however,~~U.S. ~~once~~defined ~~the~~benefit ~~credit~~pension ~~balance~~plans, which iswould ~~fully~~allow ~~utilized, substantial~~us to reschedule our contributions. ~~may~~See be"Other ~~required~~Restructuring Issues - Pensions."

AsWe ofhave ~~June~~a ~~30,~~remaining credit balance that is available to be used in the latter part of 2003,; ~~United's~~however, ~~defined~~once ~~benefit~~the ~~pension~~credit ~~plans~~balance ~~were~~is fully utilized, in ~~compliance~~the ~~with~~absence ~~all~~of ~~U.S.~~any ~~government~~additional pension funding ~~requirements.~~relief, ~~The~~substantial ~~Company~~contributions ~~estimates~~will be required. We estimate, based on current market conditions and benefit plans, that it we could be required to contribute approximately $4.28 billion to ~~its~~our domestic defined benefit pension plan trusts by the end of 2008. ~~The~~This ~~current contribution estimate~~ is ~~lower~~ higher than previous ~~contribution~~ estimates primarily due to ~~changes~~updated indemographics ~~the~~and ~~Company's collective bargaining~~changed ~~agreements~~assumptions ~~and~~concerning ~~expected~~the ~~future~~long-term ~~population~~interest ~~mix~~rate forecast. However, future ~~funding~~ funding requirements ~~are~~depend ~~dependent~~ upon factors such as interest ~~rate levels~~rates, funded status, regulatory requirements ~~for funding purposes~~ and the level and timing of asset returns as compared ~~with~~to ~~the~~those ~~level and timing~~ of expected benefit disbursements. Significant future changes to the Company's ~~population~~ demographic mix or ~~to its~~ pension plans could also impact future funding requirements. As a result, actual future contributions may differ materially.

At ~~June~~September 30, 2003, commitments for the purchase of property and equipment, principally aircraft, approximated $1.6 billion, after deducting advance payments. Of this amount, an estimated $0.1 billion is expected to be spent during the remainder of 2003. For further details, see "Contingencies and Commitments" in the Notes to Consolidated Financial Statements.

Labor Agreements

In March and April 2003, United employees represented by various unions ratified tentative agreements between the Company and their unions to modify ~~their~~existing ~~respective~~ collective ~~bargaining~~ bargaining agreements ("CBAs"). All of these agreements became effective on May 1, 2003 and are six years in duration. When combined with expected ~~average~~ average annual savings of approximately $300 million toin salaried and management costs (achieved through wage and ~~headcount~~staffing reductions ~~and~~as ~~benefit~~well as benefit changes), these agreements are expected to reduce ~~the~~our ~~Company's~~ average annual costs by approximately $2.5 billion per year versus the previous contracts (based on the size of the airline inat the ~~first~~time ~~quarter~~of ~~2003~~the negotiations). In addition to reductions in pay, all of the contracts allow for improving productivity (through changes to work rules) and for changes toin employees' medical plans ~~(including~~, including increases to co-payments). ~~The~~These ~~Company~~changes, ~~has~~combined ~~developed~~with aoverall headcount ~~robust~~reductions, ~~oversight process~~enabled us to ~~ensure~~reduce ~~these~~salaries ~~significant~~and ~~changes~~related ~~are~~costs ~~achieved~~by $611 million (34%) and improve productivity by 13% in athe ~~seamless~~third quarter ~~and~~2003 ~~timely~~as ~~manner~~compared to third quarter 2002.

Other work-group specific changes are described below:

On April 11, 2003, the Air Line Pilots Association, International ("ALPA") ratified a previously announced tentative agreement on a restructured CBA. The new CBA reduces pay and benefits and, ~~improves productivity (~~through work-rule changes), improves productivity by an average of approximately $1.1 billion per year versus the previous contract. As part of these changes, pilots' retirement benefits ~~for pilots~~ have been reduced through a decrease in the Company's contribution to the ~~pilot~~ pilots' defined contribution plan and a reduction in the benefit formula for their defined benefit plan. The agreement also provides for significantly enhanced flexibility with respect to regional jets and code share arrangements. ~~Additionally~~In addition, the agreement provides for ALPA to retain a seat on ~~the Company~~UAL's Board of Directors for the duration of the new CBA.

On April 29, 2003, ~~the flight~~United flight attendants ratified a tentative agreement between the Company and the Association of Flight Attendants, ~~AFL-CIO~~ ("AFA") on a restructured CBA, which is expected to reduce ~~United's~~our average annual costs by approximately $300 million ~~versus~~ versus the ~~parties'~~ previous CBA. As part of these changes, future retirement benefits for flight attendants ~~are~~have been reduced through changes in the AFA pension plan.

On April 29, 2003, United employees represented by the International Association of Machinists ~~and~~ and Aerospace Workers ("IAM") District Lodge 141 ratified an agreement ~~between~~ between the Company and the IAM on four restructured CBAs as well as on a restructured CBA for employees of ~~United's~~our subsidiary Mileage Plus, Inc. The ~~agreements~~ agreements reduce average annual costs by approximately $450 million versus the ~~parties'~~ previous CBAs. On April 29, 2003, employees represented by IAM District Lodge 141M ratified agreements between the Company and the IAM on three restructured CBAs. The agreements will reduce average annual costs by approximately $350 million versus the previous CBAs. These agreements also provide ~~the~~United ~~Company~~ increased flexibility ~~with respect~~ to ~~outsourcing~~outsource and provides for the IAM to retain a seat on ~~the Company~~UAL's Board of Directors for the duration of the new CBA. In July 2003, the National Mediation Board announced that United's mechanics and ~~related~~ related employees, who were previously represented by the IAM, ~~voted~~had voted to change their union representation to the Aircraft Mechanics Fraternal Association. This change in representation will not affect the terms or duration of the CBA agreement ratified in April.

On April 11, 2003, ~~the Company~~United's dispatchers represented by the Professional Airline Flight Control Association ("PAFCA") ratified a tentative agreement between PAFCA and the Company on a restructured CBA, which is expected to reduce average annual costs by approximately $4 million versus the previous CBA. The restructured CBA also transfers dispatchers to the management, administrative and public contact pension plan. On March 23, 2003, ~~the~~United ~~Company's~~ meteorologists represented by the Transport Workers Union ("TWU") ratified a tentative agreement between TWU and the Company on a restructured CBA which is expected to reduce average annual costs by approximately $1 million versus the previous CBA.

In addition, all of the agreements provide for various common features. These include a Company-wide success ~~and profit~~-sharing program that provides the opportunity for ~~annual~~ payouts tied to ~~the~~our ~~Company's~~ level of profitability and performance. ~~All~~The ~~the~~ agreements also provide ~~the~~us ~~Company~~ with an opportunity to introduce a low-cost ~~product offering~~operation. As a ~~consequence~~result, ~~the~~we ~~Company~~are is developing plans to roll out a low-cost ~~product~~operation ~~offering~~("LCO") with an ~~estimated~~ initial ~~fleet~~first-year fleet size of approximately 40 aircraft (all redeployed ~~around~~from ~~the Company~~United's current fleet) ~~focused~~serving ~~around~~ key leisure markets. In September 2003, we announced that that LCO would launch, serving seven cities from Denver in February 2004.

~~The~~ UAL ~~Company~~has also ~~has~~ agreed to include in its plan of reorganization provisions ~~that~~for each relevant employee group to ~~will~~ receive a distribution of the equity, securities or other consideration provided to the general unsecured creditors. In addition, ~~the~~ ~~Company has agreed,~~ in all of ~~the~~our employee contracts, we have agreed that any plan of reorganization it ~~proposes~~we propose or ~~supports~~support will provide the relevant employee group with a ~~distribution~~ distribution of the above-described equity, securities or other consideration (as compared to the total distribution provided to all employee groups) that matches the proportion of each employee groups' contribution to total ~~employee~~ employee cost reductions.

Facilities

At ~~June~~September 30, 2003, there were approximately $1.7 billion in special facilities revenue bonds ("municipal bonds") ~~originally~~outstanding that were issued on behalf of United to build or improve airport-related facilities ~~were outstanding~~. The Company leases facilities at airports pursuant to lease agreements where municipal bonds funded at least some of ~~its~~the airport-related projects. ~~Pursuant~~In toconnection with the financing agreements entered into by United ~~in connection~~ with ~~such~~the issuance of ~~municipal~~ these bonds, ~~the~~we ~~Company~~are is required to make payments in amounts sufficient to ~~pay~~ cover the interest semi-annually, with principal payable upon maturity.

Under the Bankruptcy ~~United~~Code, iswe are not permitted ~~under the Bankruptcy Code~~ to make payments on unsecured pre-petition debt without ~~providing~~first ~~notice~~notifying toour ~~its~~ creditors and receiving the approval of the Bankruptcy Court. AsSince ~~United~~we ~~has~~have been advised that ~~its~~ our municipal bonds ~~are~~may be unsecured (or in certain instances, partially secured) pre-petition debt, ~~United~~we cannot make payments ~~thereon~~on these bonds without first meeting ~~the~~ the requirements outlined above. ~~Accordingly,~~For ~~the~~this ~~Company~~reason, ~~has~~we have classified all of ~~its~~the municipal bonds on- our balance sheet ~~municipal bonds~~ as liabilities subject to compromise.

Section 365 of the Bankruptcy Code requires that ~~the~~we ~~Company~~meet ~~timely perform~~ all of ~~its~~our post-petition obligations for ~~under~~ unexpired leases of non-residential real property. ~~Except~~in asa ~~noted~~timely ~~below with respect to the master lease for~~manner. ~~the~~We ~~Indianapolis~~believe ~~Maintenance Center, the Company believes~~ that itwe isare in compliance with all payment obligations under our ~~its~~ lease agreements relating to ~~those~~ airports where itwe ~~has~~have not rejected our lease and have municipal bonds outstanding. However, ~~the Company~~we ~~has~~have not made and do ~~does~~ not intend to make debt service payments or any other payment on account of any of the municipal ~~bond~~bonds ~~issuances~~ issued on behalf of the Company ~~and~~ relating to domestic airport financings. As a result, under certain of ~~the~~our airport lease agreements, ~~the~~we ~~Company~~ may be considered in default due to ~~the~~ non-payment of the debt and therefore subject to the default provisions of ~~the~~our lease agreements with the airports. Possible consequences could include loss of ~~the~~our ~~Company's~~ status as a signatory airline (resulting in increased rents and landing fees) and loss of ~~the Company's~~our exclusive space agreements.

~~Effective~~We ashave oftaken ~~May~~a 9,number ~~2003,~~of ~~United~~steps ~~rejected~~to reduce the ~~master~~risks ~~lease~~associated ~~agreement~~ with ~~respect~~non-payment toon the ~~Indianapolis~~municipal ~~Maintenance~~bonds. ~~Center~~On ~~("IMC")~~September 18, ~~which~~2003, ~~lease~~we ~~includes~~filed ~~United's~~a ~~obligation~~complaint ~~to pay~~for ondeclaratory ~~the~~judgment for ~~Indianapolis~~all seven municipal ~~bonds.~~bond ~~United~~issues ~~thus~~relating ~~did~~to ~~not~~our ~~pay~~facilities at the ~~semi-annual~~Chicago ~~interest~~O'Hare ~~payment~~International ~~due~~Airport ~~with~~("O'Hare"), ~~respect~~seeking, toamong ~~such~~other ~~bonds~~things, ona declaration ~~May~~that ~~15,~~a ~~2003~~certain ~~and~~cross-default ~~United~~provision in the O'Hare airport ~~does~~lease ~~not~~is ~~intend~~unenforceable. toAt ~~make~~this ~~any~~time, ~~further~~the ~~payments~~City onof ~~such~~Chicago ~~bonds~~has not answered the complaint.

~~The~~ Previously, ~~Company~~we ~~has~~filed ~~taken~~four complaints afor ~~number~~declaratory ofjudgment ~~steps~~and tocorresponding ~~mitigate~~motions ~~the~~for ~~risks associated~~temporary ~~with~~restraining ~~its~~order ~~non-payment~~concerning ~~on the~~ municipal bonds. Onissued ~~February~~for ~~28,~~facilities ~~2003,~~at ~~United~~the ~~filed~~Denver aInternational ~~Complaint~~Airport, ofthe ~~Debtor-Plaintiff~~New ~~for~~York ~~Declaratory~~City ~~Judgment~~- ~~with~~John ~~respect to~~F. ~~all~~Kennedy ~~seven~~International Airport, ~~municipal~~the ~~bond~~San ~~issues~~Francisco ~~relating~~International toAirport, and the ~~facilities~~Los atAngeles ~~the Chicago~~International ~~O'Hare~~Airport. ~~International~~In ~~Airport~~each ~~("O'Hare")~~case, we are seeking, ~~among~~clarification ~~other~~of ~~things,~~our aobligations ~~declaration~~under ~~that~~the aapplicable ~~certain~~municipal ~~cross-default~~bonds, ~~provision~~and in the ~~O'Hare~~protection ~~airport~~of our rights ~~lease~~concerning isrelated ~~unenforceable.~~airport Onlease ~~June~~agreements ~~20,~~at ~~2003,~~the applicable airport until the Bankruptcy Court ~~dismissed~~ decides the ~~above~~merits ~~complaint~~of ~~without~~the ~~prejudice~~complaints.

~~On March 21~~ Subsequently, ~~2003,~~ the Company filed four separate and additional Complaints of Debtor-Plaintiff for Declaratory Judgment and, in connection therewith, corresponding Motions for Temporary Restraining Order with respect to the municipal bonds issuances relating to the facilities at the Denver International Airport, the New York City - John F. Kennedy International Airport, the San Francisco International Airport, and the Los Angeles International Airport, each seeking a clarification of the Company's obligations under the applicable municipal bonds, and the protection of its rights under its underlying airport lease agreements at the applicable airport until the Bankruptcy ~~Court decides the merits of each of the above complaints.~~ ~~On March 31, 2003, the Bankruptcy~~ Court entered an order that requires each of the defendants in these actions to give ~~the~~us ~~Company~~ a 15-day notice and cure period before taking any action to terminate any ~~rights~~ of ~~United with~~our ~~respect~~rights toconcerning ~~leases~~these atairport ~~those~~leases ~~airports~~ until such time as the Bankruptcy Court enters final orders on United's declaratory ~~judgment actions. The~~ ~~above-stated declaratory~~ judgment actions ~~are currently in discovery and trial is scheduled for September 29, 2003~~. The ~~Company~~Bankruptcy isCourt ~~unable to~~has ~~predict~~conducted ~~what, if any, action might be taken in the future by either the bondholders or the airport authorities as~~ a ~~result~~hearing ofon ~~its failure to~~motions ~~pay~~for ~~these~~summary ~~obligations~~judgment asfiled ~~contractually required. However, the Company believes that the March 31, 2003 orders substantially mitigate the risk associated with any deemed default~~ by ~~providing~~various ~~the Company an opportunity to make any required payments and thus preserve its rights under its leases~~parties.

Pending the Bankruptcy Court's ruling, we are unable to predict what, if any, action might be taken in the future by either the bondholders or the airport authorities as a result of United's failure to pay these obligations as contractually required. However, we believe that the Bankruptcy Court's orders substantially reduce the risk of any declared default by providing us an opportunity to make required payments and preserve our rights under the leases.

United Express Contracts

During ~~June~~the ~~and~~third ~~July~~quarter of 2003, ~~United~~ we reached aagreements ~~Memorandum of Understanding ("MOU")~~ with several of ~~its~~ our United Express carriers, including SkyWest, Air Wisconsin, and Mesa ~~and~~Air ~~Trans States~~Group, to operate select portions of ~~the~~our ~~Company's~~ United Express service. The MOUs are conditioned upon negotiation of final agreements and may require approval of the Bankruptcy Court. Failure to negotiate final agreements with these carriers could result in disruptions to United's operations and could have an adverse effect on the Company's business.

We have been unsuccessful, however, in reaching a similar agreement with Atlantic Coast Airlines, Inc. ("ACA"), currently United's largest United Express carrier. Although our existing agreement with ACA is effective until 2010, ~~announced~~ACA announced on July 28, 2003, that it anticipates that its relationship with United will end, and that ~~ACA~~it ~~will~~intends to establish a new, independent low-fare airline based at Washington Dulles International Airport. ~~ACA's plan to operate an independent~~ low-fare airline is based on its expectation that United will reject its agreement with ACA. ACA acknowledged, however, that United has the option under bankruptcy rules to assume the existing agreement with ACA by agreeing to honor all terms in full. United has not determined whether to accept or reject the ACA agreement. While it is possible that an agreement with ACA can still be reached, United has a contingency plan in place to continue providing the best service and on-time performance to United Express customers on its routes currently served by ACA. Failure to reach an agreement with ACA in a timely manner could result in disruptions to United's operations and could have an adverse effect on the Company's business.

~~Certain~~Despite ~~statements~~our ~~throughout Management's Discussion~~efforts ~~and~~to ~~Analysis of Financial Condition and Results of Operations,~~negotiate ~~are~~a ~~forward-looking~~competitive ~~and~~agreement ~~thus reflect the Company's current expectations and beliefs~~ with ~~respect to certain current and future events and financial performance. Such forward-looking statements are and will be~~ACA, aswe ~~the~~have ~~case may~~been ~~be,~~unable ~~subject~~ to ~~many~~do risks and uncertainties relating to the operations and business environments of the Company that may cause actual results to differ materially from any future results expressed or implied in such forward-looking statementsso. ~~Factors~~As ~~that~~a ~~could significantly affect net earnings~~result, ~~revenues, expenses, unit costs, fuel, load factor and capacity~~ ~~include,~~we ~~without~~are ~~limitation,~~exploring ~~the~~alternatives ~~following: the Company's ability~~ to ~~continue as~~replace ~~a going concern;~~ the ~~Company's~~service ~~ability~~currently ~~to operate pursuant to the terms~~provided ~~of the DIP Financing; the Company's ability to obtain court approval with respect to motions in the Chapter 11 proceeding prosecuted~~ by itACA. ~~from~~Failure ~~time~~ to ~~time;~~reach ~~the~~a ~~Company's~~cost-competitive ~~ability~~agreement ~~to develop, prosecute, confirm and consummate one or more plans of reorganization~~ with ~~respect~~ACA ~~to the Chapter 11 Cases; risks associated with third parties seeking and obtaining court approval to terminate~~ or ~~shorten the exclusivity period for the Company to propose~~another ~~and~~carrier ~~confirm~~in ~~one or more plans of reorganization, for the appointment of~~ a ~~Chapter~~timely 11manner ~~trustee~~could orhave toan convert the cases to Chapter 7 cases; the Company's ability to achieve necessary reductions in labor costs; the Company's ability to obtain and maintain normal terms with vendors and service providers; the Company's ability to maintain contracts that are critical to its operations; the potential adverse impact ~~of the Chapter 11 Cases~~ on ~~the~~our Company's liquidity or results of operations; the costs and availability of financing; the Company's ability to execute its business plan; the Company's ability to attract, motivate and/or retain key employees; the Company's ability to attract and retain customers; demand for transportation in the markets in which the Company operates; general economic conditions; the effects of any hostilities or act of war (in the Middle East or elsewhere) or any terrorist attack; the ability of other air carriers with whom the Company has alliances or partnerships to provide the services contemplated by the respective arrangements with such carriers; the costs and availability of aircraft insurance; the costs of aviation fuel; the costs associated with existing or future ~~security measures and practices; competitive pressures~~financial on pricing (particularly from lower-cost competitors); government legislation and regulation; consumer perceptions of the Company's products; weather conditions; and other risks and uncertainties set forth from time to time in United's reports to the United States Securities and Exchange Commissionresults. Consequently, the forward-looking statements should not be regarded as representations or warranties by the Company that such matters will be realized. The Company disclaims any intent or obligation to update or revise any of the forward-looking statements, whether in response to new information, unforeseen events, changed circumstances or otherwise.

Subsequent Events

On October 27, 2003, we entered into a jet fuel supply agreement with Morgan Stanley Capital Group Inc. that provides for the supply to the Company of jet fuel and the maintenance of jet fuel inventories at specified airport locations. We expect that consummation of the transactions contemplated in the jet fuel supply agreement will enable us to reduce our working capital requirements by approximately $230 million from winter peak requirements. This agreement was approved by the Bankruptcy Court.

Outlook

Information regarding guidance for United's 2003 outlook can be obtained from UAL Corporation's Report on Form 10-Q for the quarter ended September 30, 2003.

Certain statements throughout Management's Discussion and Analysis of Financial Condition and Results of Operations are forward-looking and thus reflect the Company's current expectations and beliefs with respect to certain current and future events and financial performance. Such forward-looking statements are and will be, as the case may be, subject to many risks and uncertainties relating to our operations and business environments that may cause actual results to differ materially from any future results expressed or implied in such forward-looking statements. Factors that could significantly affect expenses, unit costs, load factor, capacity, working capital, and fuel costs include, without limitation, the following: our ability to continue as a going concern; our ability to operate pursuant to the terms of the DIP Financing; our ability to obtain court approval with respect to motions in the Chapter 11 proceeding prosecuted by us from time to time; our ability to develop, prosecute, confirm and consummate one or more plans of reorganization with respect to the Chapter 11 process; risks associated with third parties seeking and obtaining court approval to terminate or shorten our exclusive period to propose and confirm one or more plans of reorganization, for the appointment of a Chapter 11 trustee or to convert the cases to Chapter 7 cases; the potential adverse impact of the Chapter 11 filings on our liquidity or results of operations; the costs and availability of financing; our ability to execute our business plan; our ability to attract, motivate and/or retain key employees; our ability to attract and retain customers; demand for transportation in the markets in which we operate; general economic conditions; the effects of any hostilities or act of war or any terrorist attack; the ability of other air carriers with whom we have alliances or partnerships to provide the services contemplated by the respective arrangements with such carriers; the costs and availability of aircraft insurance; the costs of aviation fuel; the costs associated with security measures and practices; competitive pressures on pricing (particularly from lower-cost competitors); government legislation and regulation; and other risks and uncertainties set forth from time to time in United's reports to the United States Securities and Exchange Commission. Consequently, the forward-looking statements should not be regarded as representations or warranties by the Company that such matters will be realized. We disclaim any intent or obligation to update or revise any of the forward-looking statements, whether in response to new information, unforeseen events, changed circumstances or otherwise.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

For information regarding the Company's exposure to certain market risks, see Item 7A. Quantitative and Qualitative Disclosures About Market Risk in United's Annual Report on Form 10-K for the year 2002.

Interest Rate Risk -

(In millions, except average contract rates)	Notional	Average	Estimated
	Amount	Contract Rate	Fair Value
			(Pay)/Receive*
Interest rate swap	$ 130	7.56%	$ (29)

*Estimated fair values represent the amount United would pay/receive on ~~June~~September 30, 2003 to terminate the contracts.

Item 4. Controls and Procedures

An evaluation was carried out under the supervision and with the participation of the Company's management, including the Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"), of the effectiveness of the Company's disclosure controls and procedures as of ~~June~~September 30, 2003. Based on on that evaluation, the Company's management, including the CEO and CFO, ~~has~~ has concluded that the Company's disclosure controls and procedures are effective. During the ~~second~~third quarter of 2003, there was no change in the Company's internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company's internal ~~control~~ control over financial reporting.

PART II. OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits

A list of exhibits included as part of this Form 10-Q is set forth in an Exhibit Index that immediately precedes such exhibits.

(b) There were no Form 8-Ks filed in the ~~second~~third quarter of 2003.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this quarterly report on Form 10-Q for the quarter ended September 30, 2003 to be signed on its behalf by the undersigned thereunto duly authorized on the 30th day of October, 2003.

UNITED AIR LINES, INC.

By: /s/ Frederic F. Brace

Frederic F. Brace

Executive Vice President and

Chief Financial Officer

(principal financial officer)

By: /s/ M. Lynn Hughitt

M. Lynn Hughitt

Vice President and Controller

(principal accounting officer)

Exhibit Index

Exhibit No.	Description

12.1	Computation of Ratio of Earnings to Fixed Charges
31.1	Certification of the Principal Executive Officer Pursuant to 15 U.S.C. 78m(a) or 78o(d) (Section 302 of the Sarbanes-Oxley Act of 2002)
31.2	Certification of the Principal Financial OfficerPursuant to 15 U.S.C. 78m(a) or 78o(d) (Section 302 of the Sarbanes-Oxley Act of 2002)
32.1	Certification of the Chief Executive Officer Pursuant to 18 U.S.C. 1350 (Section 906 of the Sarbanes-Oxley Act of 2002)
32.2	Certification of the Chief Financial OfficerPursuant to 18 U.S.C. 1350 (Section 906 of the Sarbanes-Oxley Act of 2002)

Filing Compare · UNITED AIR LINES, INC.