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 March 31, 2004

For the quarterly period ended 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 __________

Commission file number 33-21220*

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

(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~~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	~~October~~April 2430, ~~2003~~2004
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 ~~September~~March 3031, ~~2003~~2004

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
			Condensed Statements of Consolidated Financial Position (Unaudited) - as of March 31, 2004 and December 31, 2003	3
			Statements of Consolidated Operations (Unaudited) - for the three months and nine months ended September 30, 2003 and 2002	5
			Statements of Consolidated Operations (Unaudited) - for the three months ended March 31, 2004 and 2003	5
			Condensed Statements of Consolidated Cash Flows (Unaudited) - for the nine months ended September 30, 2003 and 2002	7
			Condensed Statements of Consolidated Cash Flows (Unaudited) - for the three months ended March 31, 2004 and 2003	6
			Notes to Consolidated Financial Statements (Unaudited)	8
			Notes to Consolidated FinancialStatements (Unaudited)	7
		Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations		1917
		Item 3. Quantitative and Qualitative Disclosures About Market Risk		3025
		Item 4. Controls and Procedures		3126
PART II.		OTHER INFORMATION
		Item 6. Exhibits and Reports on Form 8-K		3227
Signatures		3328
Exhibit Index		3429

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)~~

	September 30	December 31
Assets	2003	2002
Current assets:
Cash and cash equivalents	$ 1,202	$ 718
Restricted cash	629	450
Short-term investments	109	311
Receivables, net	890	704
Income tax receivables	47	373
Inventories, net	303	310
Prepaid expenses and other	218	217
	3,398	3,083
Operating property and equipment:
Owned	17,999	19,540
Accumulated depreciation and amortization	(4,975)	(5,282)
	13,024	14,258
Capital leases	2,529	2,573
Accumulated amortization	(537)	(494)
	1,992	2,079
	15,016	16,337
Other assets:
Long-term restricted cash	-	116
Investments	20	80
Intercompany receivables and loans	13	-
Intangibles, net	382	384
Pension assets	962	1,162
Aircraft lease deposits	854	776
Prepaid rent	127	338
Other, net	854	853
	3,212	3,709
	$21,626	$23,129

(Debtor and Debtor-in-Possession)

Condensed Statements of Consolidated Financial Position (Unaudited)

(In Millions)


	March 31	December 31
Assets	2004	2003

Current assets:
Cash and cash equivalents	$ 1,365	$ 1,163
Restricted cash	661	657
Short-term investments	8	52
Receivables, net	954	837
Related party receivables	-	8
Income tax receivables	-	4
Deferred income taxes	35	26
Inventories, net	207	264
Prepaid expenses and other	425	409
	3,655	3,420

Operating property and equipment:
Owned	17,948	17,953
Accumulated depreciation and amortization	(5,257)	(5,108)
	12,691	12,845

Capital leases	2,721	2,721
Accumulated amortization	(581)	(555)
	2,140	2,166
	14,831	15,011

Other assets:
Investments	45	47
Intangibles, net	382	382
Pension assets	904	904
Aircraft lease deposits	488	679
Prepaid rent	78	79
Other, net	651	663
	2,548	2,754

	$21,034	$21,185

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)~~

	September 30	December 31
Liabilities and Stockholder's Equity	2003	2002
Current liabilities:
Current portions of long-term debt and
capital lease obligations	$ 727	$ -
Advance ticket sales	1,479	1,021
Accrued salaries, wages and benefits	1,281	1,490
Accounts payable	363	280
Related party accounts payable	38	-
Other	810	883
	4,698	3,674
Long-term debt	-	700
Other liabilities and deferred credits:
Deferred pension liability	5,918	4,661
Postretirement benefit liability	1,934	1,809
Deferred income taxes	259	225
Other	403	539
	8,514	7,234
Liabilities subject to compromise	14,285	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	1,588	1,592
ESOP capital	3,988	3,986
Retained deficit	(6,211)	(3,756)
Accumulated other comprehensive income	(3,622)	(2,661)
Receivables from affiliates	(1,615)	(1,615)
Other	1	(2)
	(5,871)	(2,456)
	$21,626	$ 23,129

(Debtor and Debtor-in-Possession)

Condensed Statements of Consolidated Financial Position (Unaudited)

(In Millions)


	March 31	December 31
Liabilities and Stockholder's Equity	2004	2003

Current liabilities:
Current portions of long-term debt and
capital lease obligations	$ 630	$ 689
Advance ticket sales	1,669	1,330
Accrued salaries, wages and benefits	2,100	2,292
Accounts payable	505	492
Related party accounts payable	307	211
Other	1,056	968
	6,267	5,982

Long-term obligations under capital leases	158	163

Other liabilities and deferred credits:
Deferred pension liability	4,976	4,747
Postretirement benefit liability	1,973	1,924
Deferred income taxes	157	150
Other	290	288
	7,396	7,109

Liabilities subject to compromise	13,908	14,084
Commitments and contingent liabilities (See note)

Stockholder's equity:
Common stock at par	-	-
Additional capital invested	1,603	1,603
ESOP capital	3,988	3,988
Retained deficit	(7,381)	(6,839)
Accumulated other comprehensive loss	(3,290)	(3,290)
Receivables from affiliates	(1,615)	(1,615)
	(6,695)	(6,153)

	$21,034	$ 21,185

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 September 30
	2003	2002
Operating revenues:
Passenger - United Airlines	$ 3,112	$ 3,143
Passenger - Regional Affiliates	250	-
Cargo	145	166
Other	250	336
	3,757	3,645
Operating expenses:
Salaries and related costs	1,210	1,821
Aircraft fuel	514	532
Purchased services	319	364
Aircraft rent	151	208
Landing fees and other rent	239	257
Depreciation and amortization	263	240
Cost of sales	189	292
Aircraft maintenance	167	131
Regional affiliates	313	-
Commissions	94	109
Other	309	390
Special charge	26	-
	3,794	4,344
Loss from operations	(37)	(699)
Other income (expense):
Interest expense	(108)	(157)
Interest capitalized	-	5
Interest income	14	28
Equity in earnings of affiliates	(1)	-
Non-operating special charges	(25)	-
Reorganization items, net	(237)	-
Government compensation	-	50
Miscellaneous, net	(22)	1
	(379)	(73)
Loss before income taxes	(416)	(772)
Credit for income taxes	-	139
Net loss	$ (416)	$ (911)

(Debtor and Debtor-in-Possession)

Statements of Consolidated Operations (Unaudited)

(In Millions)

	Three Months Ended
	March 31
	2004	2003
Operating revenues:
Passenger - United Airlines	$ 2,933	$ 2,548
Passenger - Regional Affiliates	293	-
Cargo	148	164
Other	252	395
	3,626	3,107
Operating expenses:
Salaries and related costs	1,241	1,524
Aircraft fuel	603	571
Commissions	93	73
Purchased services	352	335
Aircraft rent	138	202
Landing fees and other rent	231	239
Depreciation and amortization	228	232
Regional affiliates	374	-
Cost of sales	187	362
Aircraft maintenance	185	118
Other	297	319
	3,929	3,975

Loss from operations	(303)	(868)

Other income (expense):
Interest expense	(123)	(147)
Interest capitalized	-	1
Interest income	22	16
Equity in losses of affiliates	(3)	-
Non-operating special charges	-	(137)
Reorganization items, net	(130)	(249)
Miscellaneous, net	(6)	(1)
	(240)	(517)

Loss before income taxes	(543)	(1,385)
Credit for income taxes	-	-

Net loss	$ (543)	$(1,385)

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)~~

	Nine Months
	Ended September 30
	2003	2002
Operating revenues:
Passenger - United Airlines	$ 8,285	$ 9,091
Passenger - Regional Affiliates	250	-
Cargo	463	474
Other	901	981
	9,899	10,546
Operating expenses:
Salaries and related costs	3,960	5,169
Curtailment charges	152	-
Aircraft fuel	1,538	1,397
Purchased services	963	1,067
Aircraft rent	490	633
Landing fees and other rent	714	759
Depreciation and amortization	768	723
Cost of sales	792	854
Aircraft maintenance	399	428
Regional affiliates	313	-
Commissions	239	347
Other	926	1,111
Special charge	26	-
	11,280	12,488
Loss from operations	(1,381)	(1,942)
Other income (expense):
Interest expense	(373)	(453)
Interest capitalized	2	22
Interest income	86	93
Equity in earnings of affiliates	(4)	2
Gain on sale of investment	-	46
Non-operating special charges	(162)	-
Reorganization items, net	(884)	-
Government compensation	300	130
Miscellaneous, net	(39)	(14)
	(1,074)	(174)
Loss before income taxes	(2,455)	(2,116)
Credit for income taxes	-	(346)
Net loss	$(2,455)	$(1,770)

(Debtor and Debtor-in-Possession)

Condensed Statements of Consolidated Cash Flows (Unaudited)

(In Millions)

	Three Months
	Ended March 31
	2004	2003
Cash and cash equivalents at beginning
of period	$ 1,163	$ 718

Cash flows from operating activities	392	(223)

Cash flows from reorganization activities:
Reorganization items, net	(130)	(249)
Write off of Company lease certificates	-	215
Increase in liabilities	93	24
	(37)	(10)

Cash flows from investing activities:
Additions to property and equipment	(60)	(36)
Proceeds on disposition of property and
equipment	7	6
Increase in restricted cash	(4)	(66)
Decrease in short-term investments	44	119
Increase in related party receivables	(4)	(1)
Other, net	(5)	(32)
	(22)	(10)

Cash flows from financing activities:
Proceeds from DIP Financing Repayment of DIP Financing	- (62)	92 -
Repayment of long-term debt	(44)	(65)
Principal payments under capital
lease obligations	(169)	(53)
Decrease in advances/loans with affiliates	(4)	(10)
Aircraft lease deposits, net	148	1
	(131)	(35)

Increase (decrease) in cash and cash equivalents	202	(278)

Cash and cash equivalents at end of period,
excluding restricted cash	$ 1,365	$ 440

Cash paid during the period for:
Interest (net of amounts capitalized)	$ 157	$ 103

Non-cash transactions:
Net unrealized gain (loss) on investments	$ (1)	$ (2)

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)~~

	Nine Months
	Ended September 30
	2003	2002
Cash and cash equivalents at beginning
of period, excluding restricted cash	$ 718	$ 1,504
Cash flows from operating activities	749	(858)
Cash flows from reorganization activities:
Reorganization items, net	(884)	-
Transfer of Company lease certificates	215	-
Increase in liabilities	497	-
Loss on disposition of property	36	-
	(136)	-
Cash flows from investing activities:
Additions to property and equipment	(85)	(110)
Proceeds on disposition of property and
equipment	120	363
Proceeds on sale of investments	15	137
Increase in restricted cash	(63)	(333)
Increase in related party receivables	(13)	(4)
Decrease in short-term investments	202	400
Increase in deferred financing costs	(62)	(34)
Other, net	8	35
	122	454
Cash flows from financing activities:
Proceeds from DIP Financing	138	-
Proceeds from issuance of long-term debt	-	946
Repayment of DIP Financing	(111)	-
Repayment of long-term debt	(210)	(1,273)
Principal payments under capital
lease obligations	(86)	(190)
Dividend to parent company	-	(3)
Decrease in short-term borrowings	-	(133)
Decrease in related party debt	(20)	(10)
Decrease in debt certificates under Company leases	-	290
Other, net	38	10
	(251)	(363)
Increase in cash and cash equivalents	484	(767)
Cash and cash equivalents at end of period,
excluding restricted cash	$ 1,202	$ 737
Cash paid during the period for:
Interest (net of amounts capitalized)	$ 276	$ 389
Income taxes	$ -	$ 54
Non-cash transactions:
Long-term debt incurred in connection
with additions to equipment and other assets	$ 9	$ 706
Net unrealized gain (loss) on investments	$ 3	$ (6)
Increase (decrease) in pension intangible	$ (200)	$ 608

Notes to Consolidated Financial Statements (Unaudited)

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," "our" or the "Company") is a wholly owned subsidiary of UAL Corporation ("UAL").

Interim Financial Statements

We prepared the consolidated financial statements shown here as required by the Securities and Exchange Commission ("SEC"). Some information and footnote disclosures normally included in financial statements that meet generally accepted accounting principles have been condensed or omitted as permitted by the SEC. We believe that the disclosures presented here are not misleading. The financial 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 our financial position and operating results. These financial statements should be read together with the information included in our most recent Annual Report on Form 10-K for the year ~~2002~~2003.

Voluntary Reorganization Under Chapter 11

Bankruptcy Proceedings. On December 9, 2002 (the "Petition Date"), UAL, United and 26 direct and indirect wholly owned subsidiaries filed voluntary petitions to reorganize 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 Bankruptcy Court is jointly administering these cases as "In re: UAL Corporation, et al., Case No. 02-48191." The consolidated financial statements shown here include certain subsidiaries that did not file to reorganize under Chapter 11. The assets and liabilities of these subsidiaries are not considered material to the Consolidated Financial Statements.

~~With~~As ~~the~~required ~~exception~~by ofthe ~~our~~Bankruptcy ~~non-filing subsidiaries~~Code, wethe ~~continue~~United toStates ~~operate~~Trustee ~~our~~for ~~businesses as "debtors-in-possession" under~~ the ~~jurisdiction~~Northern District of ~~the~~Illinois ~~Bankruptcy~~has appointed ~~Court~~an ~~and~~official incommittee ~~accordance~~of ~~with~~unsecured creditors (the "Creditors' ~~applicable~~Committee"). ~~provisions~~The ofCreditors' ~~the~~Committee ~~Bankruptcy~~and ~~Code,~~its ~~the~~legal ~~Federal~~representatives ~~Rules~~have a ofright ~~Bankruptcy Procedure~~to ~~and~~be ~~applicable~~heard ~~court~~on ~~orders.~~all ~~All~~matters ~~vendors~~that ~~are~~come ~~being~~before ~~paid~~the ~~for~~Bankruptcy ~~all~~Court ~~goods~~concerning ~~furnished~~our ~~and~~reorganization. ~~services~~There ~~provided~~can ~~after~~be ~~the~~no ~~Petition~~assurance ~~Date~~that in the ~~ordinary~~Creditors' ~~course~~Committee ofwill ~~business.~~support ~~However,~~our ~~under~~positions ~~Section~~or ~~362~~our plan of ~~the Bankruptcy Code~~reorganization, and ~~actions~~any todisagreements ~~collect~~between ~~most~~the ofCreditors' ~~our~~Committee ~~pre-petition~~and ~~liabilities~~us ~~are~~could ~~automatically~~protract ~~stayed.~~the ~~Most~~Chapter of11 ~~these~~process, ~~pre-petition~~hinder ~~liabilities~~our ~~will~~ability beto ~~settled~~operate ~~under~~during athe Chapter ~~plan~~11 ofprocess, ~~reorganization~~and todelay beour ~~approved~~emergence byfrom ~~the~~Chapter ~~Bankruptcy Court~~11.

AWith ~~pre-petition~~the ~~liability that~~exception ~~requires~~of ~~different~~our non-filing ~~treatment~~subsidiaries, ~~under~~we ~~the~~continue ~~Bankruptcy Code relates~~ to ~~certain~~ ~~qualifying~~operate ~~aircraft,~~our ~~aircraft~~businesses ~~engines~~as ~~and other aircraft~~"debtors-~~related~~in-possession" ~~equipment~~under ~~that~~the ~~are~~jurisdiction ~~leased~~of orthe ~~subject~~Bankruptcy toCourt aand ~~security~~in ~~interest~~accordance orwith ~~conditional~~the ~~sale~~applicable ~~contract.~~provisions ~~Under Section 1110~~ of the Bankruptcy Code, ~~actions~~the toFederal ~~collect most~~Rules ~~pre-petition liabilities~~ of ~~this~~Bankruptcy Procedure ~~nature~~and ~~are~~applicable ~~automatically~~court ~~stayed~~orders. ~~for 60~~In ~~days only~~general, ~~except~~as ~~under two conditions: (a) the debtor may extend the 60~~debtors-~~day period by agreement with the relevant financier and with court approval;~~in-possession, orwe ~~(b)~~are ~~the~~authorized ~~debtor~~under ~~may~~Chapter ~~agree~~11 to ~~perform~~continue ~~all~~to ofoperate ~~the obligations under the applicable financing and cure any defaults~~ as ~~required~~an ~~under the Bankruptcy~~ongoing ~~Code. If neither of these conditions is met~~business, ~~the~~but ~~financier~~ may ~~demand~~not ~~the return~~engage ofin ~~the~~transactions ~~aircraft~~outside ~~or take possession of~~ the ~~property~~ordinary ~~and enforce any~~course of ~~its~~business ~~contractual~~without ~~rights~~the orprior ~~remedies~~approval ~~to sell, lease or otherwise retain or dispose~~ of ~~such~~the ~~equipment~~Bankruptcy Court.

InAll ~~our~~vendors ~~case,~~are being paid for all goods furnished and services provided after the ~~60-day~~Petition ~~period~~Date in ~~under~~the ~~Section~~ordinary ~~1110~~course ~~expired~~of ~~February~~business. 7However, ~~2003.~~under WeSection ~~have~~362 ~~reached~~of ~~agreements~~the Bankruptcy ~~with~~Code, aactions ~~significant~~to ~~number~~collect most of ~~aircraft~~our ~~financiers~~pre-petition toliabilities ~~extend~~are ~~the automatic~~automatically ~~stay.~~stayed We(except ~~have~~for ~~also~~liabilities ~~made~~relating ~~elections~~to ~~with~~certain ~~respect~~qualifying toaircraft, aircraft engines and other aircraft-related toequipment ~~cure all~~that ~~existing~~are ~~defaults~~leased ~~and~~or subject to ~~pay~~a ~~the~~security ~~contract~~interest ~~rates~~or conditional sale contract). ~~With~~Under ~~respect~~Section 1110 of the Bankruptcy Code, actions to ~~certain other~~collect such aircraft,-related ~~however,~~pre-petition liabilities ~~United~~are ~~has~~automatically ~~taken~~stayed nofor ~~action.~~60 ~~The~~days ~~applicable~~only ~~lessors or~~(our ~~lenders~~automatic instay ended ~~those~~on ~~situations~~February 7, ~~therefore~~2003), ~~are~~except ~~entitled~~under totwo ~~make~~conditions: (a) ~~demand~~the debtor ~~for~~may extend the ~~return~~60-day ofperiod ~~such~~by ~~aircraft.~~agreement ~~Although~~with wethe ~~believe~~relevant ~~current~~financier ~~market conditions~~and ~~for~~with ~~commercial~~court ~~aircraft~~approval; ~~make~~or ~~repossession~~(b) ~~unlikely,~~the ~~there~~debtor ~~can~~may beagree noto ~~assurance that~~perform ~~United's~~all ~~lenders~~of ~~and~~the obligations ~~lessors~~under ~~will~~the ~~not~~applicable ~~repossess~~financing and cure any ofdefaults ~~the~~as ~~applicable~~required ~~aircraft~~under the Bankruptcy Code. ~~Repossession~~If neither of athese ~~significant~~conditions ~~number~~is met, the financier may demand the return of the aircraft ~~could~~or ~~result~~take possession of the property inand ~~substantial~~enforce ~~disruptions~~any toof ~~our~~its ~~operations~~contractual ~~and~~rights ~~have~~or aremedies ~~material~~to ~~adverse~~sell, lease or ~~effect~~otherwise onretain ~~our~~or ~~business~~dispose of such equipment.

~~Integral~~We tohave ~~our~~negotiated ~~restructuring~~with lessors ~~efforts~~and islenders ~~adjusting~~to ~~the~~restructure ~~size~~existing ~~and~~financings ~~composition~~to ofreduce ~~our~~aircraft ~~fleet~~ownership costs to better reflect ~~reduced~~ current market ~~demand~~rates. To ~~this end~~date, we have ~~rejected~~reached agreements ~~certain~~in ~~aircraft~~principle ~~leases~~with ~~and returned~~respect ~~certain~~to a substantial majority of our financed aircraft. toThere ~~the~~can ~~relevant~~be ~~financiers~~no ~~during~~assurance, ~~the~~however, ~~first~~that ~~nine~~those tentative arrangements ~~months~~will ofbe successfully converted to final contracts. To the ~~year,~~extent aswe ~~authorized~~are unable byto ~~Section~~finalize ~~1110~~these ofagreements, ~~the~~there ~~Bankruptcy~~can ~~Code.~~be no assurance that we Wewill ~~anticipate~~be ~~continuing~~able to ~~reject~~reach ~~leases~~new ~~and~~agreements ~~return~~at comparable economics or that financiers will not repossess aircraft. asEither weof ~~progress~~these outcomes, although unlikely, ~~through~~could ~~the~~have ~~reorganization~~a ~~process~~material adverse affect on our financial and operational performance.

ToWe ~~successfully~~have ~~exit~~also ~~Chapter 11,~~rejected ~~UAL must obtain confirmation by the Bankruptcy Court of a plan of reorganization.~~or Aabandoned ~~plan~~certain ofsurplus ~~reorganization~~aircraft ~~would,~~to ~~among~~adjust ~~other things, resolve~~ our ~~pre-petition obligations,~~fleet ~~set~~size ~~forth UAL's revised capital structure~~ and ~~establish UAL's~~composition ~~corporate~~to ~~governance~~more ~~subsequent~~closely tomatch ~~exit~~market ~~from bankruptcy~~demand. OnIn ~~March 21~~addition, ~~2003, the~~as ~~Bankruptcy~~part ~~Court approved the extension to October 2003~~ of ~~the~~on-going ~~Company's~~negotiations ~~"exclusive~~with ~~period" during which UAL is the only party permitted to file a plan of reorganization. On September 19~~financiers, ~~2003,~~we ~~the~~have ~~Bankruptcy~~converted ~~Court~~many ~~approved an additional five~~long-~~month~~term ~~extension~~financing ~~of our exclusive period to March 8,~~arrangements ~~2004.~~into ~~The~~short-term ~~decision~~operating asleases ~~to when we will file a plan of reorganization depends on the timing~~ and, ~~outcome of numerous ongoing matters~~ in ~~the~~several ~~Chapter 11 process. We expect to file a plan of reorganization that provides for UAL's emergence from bankruptcy~~instances, ~~but there can be no assurance that the Bankruptcy~~re-acquired ~~Court~~previously ~~will~~rejected ~~confirm~~aircraft aas ~~plan~~circumstances ~~of reorganization or that any such plan will be implemented successfully~~warranted.

AsUnder ~~required~~Section by365 ~~the~~of ~~Bankruptcy~~the Bankruptcy Code, ~~the~~we ~~United~~may ~~States~~assume, ~~Trustee~~assume ~~for~~and ~~the~~assign, ~~Northern~~or ~~District~~reject ofcertain ~~Illinois has~~executory ~~appointed~~contracts anand ~~official~~unexpired ~~committee~~leases, including leases of ~~unsecured~~real ~~creditors~~property, (subject to the ~~"Creditors' Committee").~~approval ~~The~~of ~~Creditors'~~the ~~Committee~~Bankruptcy Court and ~~its~~certain ~~legal~~other ~~representatives~~conditions. ~~have~~Currently, aour ~~right~~Section to365 berights ~~heard~~to onassume, ~~all~~assume ~~matters~~and ~~that~~assign, ~~come~~or ~~before~~reject ~~the Bankruptcy Court~~unexpired ~~concerning~~leases ~~our~~of ~~reorganization.~~non-residential ~~There~~real ~~can~~estate beexpiring noon ~~assurance~~the ~~that~~earlier of the ~~Creditors'~~date ~~Committee~~of ~~will~~termination ~~support~~of our ~~positions~~exclusive orperiod ~~our~~to file a plan of reorganization (currently, ~~and any~~June ~~disagreements~~30, ~~between~~2004) usor ~~and~~ the ~~Creditors'~~date ~~Committee~~of ~~could~~a ~~protract the~~disclosure ~~Chapter~~statement ~~11 process, hinder our ability to operate during the Chapter~~hearing 11in ~~process,~~connection ~~and~~with ~~delay~~a ~~our~~proposed ~~emergence~~plan ~~from~~of ~~Chapter 11~~reorganization.

~~DIP Financing.~~In general, if we reject ~~connection~~an ~~with~~executory ~~the~~contract, ~~Chapter~~unexpired 11lease ~~filings~~or aircraft, ~~UAL~~it ~~arranged~~is atreated ~~debtor~~as a pre-petition breach of the lease or contract in~~-possession secured~~ ~~financing~~question ~~("DIP~~and, ~~Financing").~~subject ~~The~~to certain ~~DIP~~exceptions, ~~Financing~~relieves ~~consists~~us of ~~two~~performing any future obligations but ~~facilities,~~entitles the lessor or contract counterparty to a ~~$300~~pre-petition ~~million~~general unsecured ~~facility~~claim ~~provided~~for damages caused by ~~Bank~~such ~~One~~deemed ~~N.A.~~breach ~~("Bank~~and ~~One~~accordingly, ~~Facility")~~the ~~and~~counterparty may file a ~~$1.2~~claim ~~billion~~against ~~facility~~us ~~provided~~for bysuch Jdamages.P. ~~Morgan~~As ~~Chase~~a ~~Bank~~result, ~~Citicorp~~liabilities ~~USA,~~subject ~~Inc.,~~to ~~Bank~~compromise ~~One,~~have ~~N.A.~~increased, and ~~The~~are ~~CIT~~likely ~~Group/Business~~to ~~Credit,~~increase ~~Inc.~~in ~~("Club~~the ~~Facility").~~future, Asas a result of ~~September~~damage 30claims created by our rejection of various aircraft, ~~2003~~executory contracts and unexpired leases. Generally, if we ~~had~~assume ~~borrowed~~an ~~$300~~aircraft financing agreement, executory contract or unexpired ~~million~~lease ~~under~~we ~~the~~are ~~Bank~~required ~~One~~to ~~Facility~~cure ~~and~~most ~~$427~~existing ~~million~~defaults under ~~the~~such ~~Club~~contract or ~~Facility~~lease. ~~The~~ ~~borrowings~~We ~~under~~expect that the ~~Bank~~assumption ~~One~~of ~~Facility~~certain ~~are~~executory ~~due~~contracts and inunexpired ~~five~~leases ~~equal~~may ~~monthly installments~~convert ~~beginning~~liabilities incurrently ~~March~~shown ~~2004~~as ~~and~~subject to ~~the~~compromise ~~Club~~to ~~Facility~~liabilities ~~matures~~not onsubject ~~July 1,~~to ~~2004~~compromise.

We are currently seeking modifications to our retiree medical benefit obligations under Section 1114 of the Bankruptcy Code. We have proposed modifications which would make the medical benefit plan of those who retired before July 1, 2003 the same as the medical benefit plan provided to employees who retire after that date. We have also proposed an increase in the amount of contributions that most individuals who retired before July 1, 2003 would have to pay towards their medical benefits. While we are currently working with retiree representatives to achieve consensual agreements, such an outcome is not assured. If we do not reach consensual agreements, we will seek Bankruptcy Court approval of such modifications. The Bankruptcy Court has issued an order requiring us to file a motion seeking to modify retiree benefits by May 21, 2004, with a hearing to follow beginning June 11, 2004, if consensual modifications have not been reached by such date. There can be no assurance, however, that the Bankruptcy Court will adhere to this schedule or approve such modifications.

To successfully exit Chapter 11, we must obtain confirmation by the Bankruptcy Court of a plan of reorganization. A plan of reorganization would, among other things, resolve our pre-petition obligations and other liabilities subject to compromise, set forth our revised capital structure and establish our corporate governance subsequent to exit from bankruptcy. We are currently operating under an "exclusive period" which expires June 30, 2004, during which we are the only party permitted to file a plan of reorganization. The decision as to when we will file a plan of reorganization depends on the timing and outcome of numerous other ongoing matters in the Chapter 11 process. We expect to file a plan of reorganization that provides for UAL's emergence from bankruptcy, but there can be no assurance that the Bankruptcy Court will confirm a plan of reorganization or that any such plan will be implemented successfully.

DIP Financing.In connection with the Chapter 11 filings, the Company arranged a debtor-in-possession secured financing ("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"). As of March 31, 2004, we had $240 million in outstanding borrowings under the Bank One Facility and $362 million under the Club Facility. Repayment of the Bank One Facility began in March 2004 and will be completed by July 2004. While the Club Facility matures on July 1, 2004, we are currently in negotiations with the Club Facility lenders to extend and modify certain terms of the agreement to more favorable terms as a reflection of our improved financial condition.

Financial Statement Presentation. We have prepared the accompanying consolidated financial statements 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 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 a Chapter 11 filing~~ separate transactions and events that are directly associated with the ~~reorganization~~ restructuring from the ongoing operations of the business. Accordingly, all transactions (including, but not limited to, all professional fees, realized gains and losses, and provisions for losses) directly ~~associated~~related to ~~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~~as well as from all 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 filings, the realization of assets and ~~satisfaction~~the ofsatisfaction of liabilities, (without substantial adjustments and/or changes in ownership,) are subject to uncertainty. While operating as debtors-in-possession under the protection of Chapter 11 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, 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, ~~the~~our ~~forthcoming~~ plan of reorganization could materially change the amounts and classifications in the historical consolidated financial statements.

Pursuant to the Bankruptcy Code, we have filed schedules with the Bankruptcy Court identifying our assets and liabilities as of the Petition Date, while our creditors have been able to file proofs of claim with the Bankruptcy Court. The total amount of claims filed with the Bankruptcy Court far exceeds our estimate of ultimate liability. We believe that many of these claims are invalid because they are duplicative, are based upon contingencies that have not occurred, or are otherwise overstated. Differences in amount between claims filed by creditors and liabilities shown in our records are being investigated and resolved in connection with our claims resolution process. That process has commenced and, in light of the number of claims asserted, will take significant time to complete. For this reason, the ultimate number and allowed amounts of such claims cannot yet be determined.

New Accounting Pronouncements - Consolidation of Variable Interest Entities

InIssued in January 2003, ~~the~~ Financial Accounting Standards Board ~~("FASB") issued~~ Interpretation No. 46, "Consolidation of Variable Interest Entities" ("FIN 46"), ~~which~~and subsequently revised in December 2003 with the Financial Accounting Standards Board ("FASB") interpretation of FIN 46 ("FIN 46R"), requires the "primary beneficiary" of a variable interest entity ("VIE") to: include the VIE's assets, liabilities and operating results in its consolidated financial statements. FIN 46 also requires the disclosure of information about the VIE's assets and liabilities and the nature, purpose and activities of consolidated VIEs in its financial statements. Additionally, FIN 46R requires disclosure of information about the nature, purpose and activities for unconsolidated VIEs in which a company holds a significant variable interest.

WeCertain ~~have~~legal ~~reviewed~~entities established by various governmental municipalities for the ~~new~~purpose of issuing special ~~capacity~~facility ~~purchase~~revenue ~~agreements~~bonds ~~entered~~are ~~into~~not ~~after~~subject ~~February~~to 1the provisions of FIN 46R. Also, certain ~~2003~~entities with ~~United Express~~which ~~regional~~the ~~carriers~~Company ~~and~~has ~~determined~~capacity ~~the~~purchase agreements are ~~fall~~not ~~under~~consolidated ~~the purview~~as ofthese ~~FIN~~arrangements ~~46.~~are ~~However~~not considered VIEs, webut rather ~~have~~businesses ~~determined~~as ~~that~~defined weby ~~are~~FIN 46R, or because United is not considered the "primary beneficiary" of ~~these~~the ~~agreements~~VIE. ~~and~~We ~~therefore~~ have ~~not~~also ~~consolidated~~evaluated ~~the entities~~our interests in ~~our~~VIEs ~~financial~~including ~~statements.~~those Werelated ~~are~~to ~~still~~financing ~~evaluating~~and ~~the~~leasing ~~impact~~ of ~~FIN~~aircraft 46and certain onfuel ~~our~~consortia ~~financial~~arrangements ~~statements~~that ~~for~~are ~~VIEs~~used orto ~~potential~~maintain ~~VIEs~~fuel ~~created~~storage ~~before~~and ~~February~~distribution 1facilities. We have concluded that while the Company holds interests in these VIEs, ~~2003~~we are not the primary beneficiaries of these VIEs.

WeThe ~~have~~provisions ~~identified~~of ~~the~~FIN ~~following~~46R aswere ~~potential~~effective ~~VIEs~~immediately ~~(created~~for ~~before~~any ~~January~~interest in a VIE acquired after January 31, 2003), ~~but~~and ~~are~~beginning ~~still~~in ~~evaluating~~ the ~~legal~~fourth ~~structure~~quarter of 2003 for any interest in a VIE that was acquired before February 1, ~~operational~~2003. ~~results~~The ~~and~~FASB deferred the effective ~~cash~~date ~~flow~~ of ~~each~~FIN 46R to ~~determine~~the first quarter of 2004 for any other interests ifin a VIE acquired before February 1, 2003. As of March 31, 2004, we ~~are~~have adopted ~~the~~FIN ~~primary~~46 ~~beneficiary:~~and FIN 46R with no impact to our financial statements.

~~Aircraft~~ United ~~operating~~has 120 aircraft operating leases where the ~~lessor~~lease iscontains a ~~trust~~fair ~~established~~market ~~specifically to~~value purchase, ~~finance~~option. These leases are subject to and ~~lease~~will become effective upon the ~~aircraft~~acceptance ~~and~~of the leases by United and confirmation of the plan of reorganization. In addition, the Company has a94 operating leases that have either fixed- price ~~purchase~~or ~~option~~fair tomarket value purchase options the ~~aircraft~~majority atof ~~predetermined~~which ~~prices~~the ~~during~~Company orexpects atto renegotiate under the ~~end~~Section of1110 process. United does not guarantee the ~~lease~~residual ~~term~~value of these aircraft.

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.

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

On June 26 2003, we terminated the 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

We account for stock-based employee compensation plans under Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees." We have not incurred any stock-based employee compensation cost for stock options, as all options granted under 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 would have been reported as the pro forma amounts shown below:

(In millions, except per share)	Three Months		Nine Months
(In millions)	Three Months
	Ended September 30		Ended September 30
	Ended March 31
	2003	2002	2003	2002
	2004	2003
Net loss, as reported	$ (~~416~~543)	$ (~~911~~1,385)	~~$(2,455)~~	~~$(1,770)~~
Less: Total compensation expense determined under
fair value method (net of tax in 2002)	(5)	(4)	(15)	(13)
fair value method	(2)	(5)
	$ (421)	$ (915)	$(2,470)	$(1,783)
	$ (545)	$ (1,390)

Income Taxes

WeBeginning in the third quarter of 2002, we established a valuation allowance against our net deferred tax asset. Thus, United has a zero percent effective tax rate for both 2003 and 2004. As of March 31, 2004, our valuation allowance totaled $2.5 billion. Further, we have determined that it is more likely than not that our gross deferred tax assets, net of valuation allowances at ~~September~~March 3031, ~~2003~~ 2004, will be realized through the reversals of existing deferred tax credits.

~~For~~Retirement ~~2003,~~and ~~United~~Postretirement ~~has a zero~~Plans percent effective tax rate. Beginning in the third quarter of 2002, we established a valuation allowance against our net deferred tax asset. As of September 30, 2003, our valuation allowance totaled $2.1 billion.

In December 2003, the FASB revised Statement of Financial Accounting Standards No. 132, "Employers' Disclosures about Pensions and Other Postretirement Benefits" ("SFAS 132") effective for all interim periods following December 15, 2003. SFAS 132 revises employers' disclosures about pension plans and other postretirement benefit plans including disclosures made in interim periods. While it does not change the measurement or recognition of those plans, it requires additional interim disclosures as detailed below.

Our net periodic benefit cost included the following components for the three months ended March 31:

(In millions)	Pension Benefits		Other Benefits
	2004	2003		2004	2003
Service cost	$ 58	$ 99		$ 11	$ 30
Interest cost	198	275		50	80
Expected return on plan assets	(180)	(242)		(2)	(3)
Amortization of prior service cost
including transition obligation/(asset)	20	31		(25)	(20)
Recognized actuarial (gain)/loss	27	25		28	36
Net periodic benefit costs	$ 123	$ 188		$ 62	$ 123

We are currently required to contribute approximately $725 million to our pension plans in 2004 after giving consideration to the estimated impact of the Pension Funding Equity Act enacted in April 2004. We made $17 million in contributions to our plans in the three months ended March 31, 2004 and $110 million in contributions to the plans on April 15, 2004.

Restricted Cash

At ~~September~~March 3031, ~~2003~~2004, United had $~~629~~661 million in restricted cash, primarily representing 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~~obligations which will be accounted for under a plan of reorganization, including claims incurred prior to the Petition Date. ~~These~~They ~~amounts~~ result from known or potential claims to be resolved through the Chapter 11 process., and ~~These claims~~ remain subject to future adjustments~~. Adjustments~~ ~~may~~arising ~~result~~ from ~~negotiations,~~negotiated settlements, 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. To date, such adjustments, as reflected in reorganization expense, have been material and we anticipate that future adjustments will be material as well. Payment terms for these amounts will be established in connection with the Chapter 11 process.

At ~~September~~March 3031, ~~2003~~2004, we had liabilities subject to compromise of ~~approximately~~ $1413.39 billion consisting of ~~the following~~:

	(In millions)
	Long-term debt, including accrued interest	$ 7,~~784~~539
	Aircraft-related accruals and deferred gains	23,~~947~~302
	Capital lease obligations, including accrued interest	21,~~211~~783
	Accounts payable	329
	Intercompany payables and loans	261
	Intercompany payables and loans	277
	Accounts payable	295
	Other	~~737~~728
		$ 14,285
		$ 13,908

United Express

United has marketing ~~agreements~~ agreements under which independent regional carriers, flying under the United Express ("UAX") name, feed passengers to other United-branded flights. During the second ~~third~~half ~~quarter~~ of 2003, we reached agreements with several UAX carriers, including ~~SkyWest,~~ Air Wisconsin ~~and~~Airlines Corporation, Mesa Air Group, SkyWest Airlines and Trans States Airlines to operate select portions of our United Express service.

Historically, we ~~have~~ paid our ~~these~~UAX partner carriers on a fee-per-departure basis and included the revenues ~~derived~~ derived from them in passenger revenue, net of expenses. However, ~~our~~the ~~revised agreements~~long-term agreements we are currently entering into with these and other 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:~~.

EITF 01-08 is effective for ~~1) identify~~new ~~"right~~arrangements or arrangements modified after the beginning of ~~use"~~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. As we were not able to negotiate a ~~specific~~comparable, market-based ~~type~~arrangement with Atlantic Coast Airlines ("ACA"), revenues and ~~number~~expenses related to ACA will continue to be reflected net in passenger revenues for the duration of ~~aircraft~~our relationship with ACA. (See "United Express ~~over~~- aAtlantic ~~stated~~Coast ~~period~~Airlines" in Management's Discussion and Analysis of ~~time;~~Financial Condition and Results of Operations for an update on the United Express relationship with ACA.)

~~2) give~~ Amounts ~~United~~included ~~the~~in ~~right~~passenger revenues tofor ~~set~~ the ~~pricing,~~three-month ~~schedules~~period ~~and~~(which ~~routes of~~represent ~~aircraft~~only ~~specified~~the ACA relationship in ~~the agreements~~2004, asand ~~well~~all asUAX tocarriers ~~direct~~in the ~~carriers' operating~~prior ~~policies and~~year) ~~procedures.~~were:

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.

	Net revenues (net expenses)
(In millions)	Three Months
	Ended March 31
	2004	2003
United Express revenues	$ 147	$ 309
United Express expenses	(177)	(404)
Net amount in passenger revenues	$ (30)	$ (95)

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:

(In Millions)	Three Months Ended September 30, 2003
(In millions)	Three Months Ended March 31, 2004
					Reportable
	United Air Lines, Inc.				Reportable
	North			Latin	Segment
	America	Pacific	Atlantic	America	Total
Revenue	$2,~~594~~422	$ ~~560~~624	$ ~~494~~461	$ ~~109~~119	$ 3,~~757~~626
Loss before income taxes, special
Loss before
charges and reorganization items	$ (93)	$ (34)	$ 11	$ (12)	$ (128)
reorganization items	$ (360)	$ (18)	$ (28)	$ (7)	$ (413)

(In Millions)	Three Months Ended September 30, 2002
(In millions)	Three Months Ended March 31, 2003
					Reportable
	United Air Lines, Inc.				Reportable
	North			Latin	Segment
	America	Pacific	Atlantic	America	Total
Revenue	$ 2,~~343~~005	$ ~~657~~577	$ ~~536~~411	$ ~~109~~114	$ 3,~~645~~107
Loss before income taxes
Loss before
and government compensation	$ (584)	$(136)	$ (61)	$ (41)	$ (822)
special charges
and reorganization items	$ (687)	$ (150)	$ (117)	$ (45)	$ (999)

(In Millions)	Nine Months Ended September 30, 2003
	Three Months Ended
					Reportable
	March 31
	North			Latin	Segment
(In millions)	2004	2003
	America	Pacific	Atlantic	America	Total
Total loss for reportable segments	$ (413)	$ (999)
Revenue	$ 6,713	$ 1,514	$ 1,351	$ 321	$9,899
Special charges	-	(137)
Loss before income taxes, special
Reorganization items, net	(130)	(249)
charges, government compensation,
Total loss before income taxes	$ (543)	$ (1,385)
curtailment charge and
reorganization items	$(1,017)	$ (305)	$ (126)	$ (83)	$(1,531)

(In Millions)	Nine Months Ended September 30, 2002
					Reportable
	North			Latin	Segment
	America	Pacific	Atlantic	America	Total
Revenue	$ 6,892	$ 1,852	$ 1,437	$ 365	$ 10,546
Loss before income taxes, gains on
sales and government compensation	$(1,519)	$ (406)	$ (235)	$(132)	$ (2,292)

	Three Months		Nine Months
	Ended September 30		Ended September 30
(In Millions)	2003	2002	2003	2002
Total loss for reportable segments	$ (128)	$ (822)	$(1,531)	$(2,292)
Curtailment charge	-	-	(152)	-
Special charges	(51)	-	(188)	-
Reorganization items, net	(237)	-	(884)	-
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)

Other Comprehensive Income

Total comprehensive income (loss)	Three Months		Nine Months
Total comprehensive income (loss):	Three Months
	Ended September 30		Ended September 30
	Ended March 31
(In Millions)	2003	2002	2003	2002
(In millions)	2004	2003
Net loss	$ (~~416~~543)	$ (~~911~~1,385)	~~$(2,455)~~	~~$(1,770)~~
Unrealized gains (losses)	-	114	3	~~(6)~~
Minimum pension liability adjustment	-	-	(964)	(57)
Total comprehensive loss	$ (543)	$ (1,381)
Total comprehensive loss	$ (416)	$ (900)	$(3,416)	$(1,833)

Reorganization Items

In connection with our Chapter 11 filings, we recognized $~~237~~130 million ~~and $884 million~~ of largely non-cash ~~reorganization~~ reorganization expenses in the ~~third~~first quarter 2004 and ~~first~~$249 ~~nine~~million ~~months~~in ofthe ~~2003,~~first quarter ~~respectively~~2003. ~~These include the following:~~

(In millions)	Three Months		Nine Months
	Three Months
	Ended September 30, 2003
	Ended March 31
Aircraft rejection charges	$ 170		$ 449
(In millions)	2004	2003
Transfer of lease certificates	-		215
Aircraft rejection charges	$ 121	$ -
Professional fees	37		112
Transfer of lease certificates	-	215
Severance and employee retention	33		81
Professional fees	34	34
Interest income	(3)		(7)
Severance and employee retention	7	-
Other	-	34
Interest income	(4)	(3)
	$ 237		$ 884
Other	(28)	3
	$ 130	$ 249

Aircraft rejection charges include our estimate of claims resulting from United's rejection of certain aircraft ~~leases~~financing obligations (and return of ~~aircraft~~the associated aircraft) as part of the bankruptcy process.

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

Special Charges

~~Aircraft~~ On ~~Impairment. As~~April a1, ~~result~~2003, ofAir ~~our~~Canada filed ~~review~~for ofprotection ~~our~~under ~~operating~~the ~~fleet~~Companies' asCreditors ~~part~~Arrangement Act ("CCAA") of ~~our~~the ~~overall restructuring,~~Canada weBusiness ~~decided~~Corporation toAct. ~~accelerate~~During the ~~retirement~~first quarter of ~~our~~2003, the ~~B767~~Company recorded a non-~~200 aircraft~~operating ~~from~~special ~~2008~~charge toof ~~2005.~~$137 ~~Therefore,~~million in connection ~~accordance~~ with ~~SFAS~~Air NoCanada's CCAA filing. ~~144, "Accounting~~The charge included $46 million for the ~~Impairment~~impairment orof ~~Disposal~~our ofinvestment ~~Long-Lived~~in ~~Assets,"~~Air weCanada ~~reviewed~~preferred stock and ~~the~~$91 ~~fleet~~million ~~for~~to ~~impairment~~record ~~and~~a ~~wrote~~liability ~~down~~resulting ~~the~~from ~~aircraft~~our toguarantee ~~their~~of ~~fair~~Air ~~market~~Canada ~~values,~~debt. asWe ~~estimated~~consider ~~using~~this ~~third-party~~liability ~~appraisals,~~to ~~resulting~~be ina anpre-petition ~~impairment charge~~obligation ofand ~~$26~~accordingly, have ~~million~~classified it in ~~the~~liabilities ~~third~~subject ~~quarter~~to ~~of 2003~~compromise.

Aircraft Write-down. During the third quarter of 2003, we also incurred a $25 million charge in non-operating expense for the write-down of certain non-operating B767 aircraft.

Curtailment Charge. Due to the ratification of new labor contracts for our major employee groups and significant levels of employee attrition, we revalued some of our pension plans and all of our postretirement plans during the 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

~~Special~~In ~~charges~~the ~~recorded~~period following September in11, 2001, ~~2002~~we ~~and~~recorded ~~2003,~~an ~~resulted~~accrual inof ~~the~~$162 ~~creation~~million to reflect our estimate of ~~additional~~the ~~liabilities~~early termination fees associated with certain contracts. This obligation ~~for~~has ~~reduction~~yet into ~~force~~be resolved, and ~~early~~therefore ~~termination~~remains ~~fees~~included in our overall liabilities subject to compromise in its entirety. Following is a reconciliation of activity ~~these~~related ~~liabilities~~to the accruals for early termination fees as of ~~September 30~~March 31, ~~2003~~2004 (liabilities are included in subject to compromise):

	Reduction in force	Early termination fees
(In millions)	Early termination fees
Balance at December 31, 2002	$ 67	$ 162
Balance at December 31, 2003	$ 162
Accruals	-	-
Payments	~~(26)~~-	-
Balance at March 31, 2003	$ 41	$ 162
Balance at March 31, 2004	$ 162
Accruals	39	-
Payments	(32)	-
Balance at June 30, 2003	$ 48	$ 162
Accruals	20	-
Payments	(25)	-
Balance at September 30, 2003	$ 43	$ 162

Government Compensation

On April 16, 2003, the Emergency Wartime Supplemental Appropriations Act ("Wartime Act") was signed into law. The legislation includes approximately $3 billion of direct compensation for U.S. airlines. Of the total, $2.4 billion compensates air carriers for lost revenues and costs related to aviation security (including $100 million for reinforcing cockpit doors); passenger and air carrier security fees were suspended from June 1 through September 30, 2003; and 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 United) be limited, during the period between April 1, 2003 and April 1, 2004, to the salary they were paid in 2002. We have executed a contract with the government agreeing to comply with these limits. Any violation of this provision will require us to repay the government the amount of compensation we received for airline security fees described above. We do not anticipate any difficulties in complying with this provision and believe the likelihood of repaying the government is remote. In May 2003, we 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 enacted in response to the events of September 11, 2001, the federal government made $5.0 billion in compensation available to the airline industry. In the first nine months of 2002, we received $130 million (considered 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~~2004 and ~~2002~~2003:

(in millions)	Three Months		~~Nine Months~~
	Ended September 30		Ended September 30
	Ended March 31
	2003	2002	2003	2002
	2004	2003
Revenues	$ ~~106~~82	$ 7793	~~$ 300~~	~~$ 242~~
Commission expense and purchased services	(1013)	(1012)	~~(30)~~	~~(42)~~
Interest Income	11	16	32	47
Interest income	12	11

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~~Commitments and ~~Commitments~~Contingencies

United has certain ~~contingencies~~ contingencies resulting from litigation and claims (including environmental issues) encountered in 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 we are subject and prior experience, that the ultimate disposition of these contingencies will not materially affect ~~United~~the Company's consolidated financial position or ~~results~~ results of operations.

At We ~~September~~record ~~30,~~liabilities ~~2003,~~for ~~commitments~~legal ~~for~~and ~~the~~environmental ~~purchase~~claims ofagainst ~~property~~us ~~and~~in ~~equipment,~~accordance ~~principally~~with ~~aircraft,~~generally ~~approximated~~accepted $1accounting principles.6 ~~billion,~~These ~~after~~amounts ~~deducting~~are ~~advance~~recorded ~~payments.~~based ~~Since~~on ~~September~~our ~~11,~~assessments ~~2001,~~of wethe ~~have~~likelihood ~~reached~~of ~~agreements~~their ~~with~~eventual ~~the~~settlements. ~~aircraft~~The ~~manufacturers enabling~~amounts usof tothese ~~delay~~liabilities ~~delivery~~could ofincrease ~~future~~or ~~orders.~~decrease ~~Since~~in ~~resetting~~the ~~our~~near ~~fleet~~term, ~~plan is~~based ~~critical~~on revisions to ~~our~~estimates ~~overall~~relating ~~restructuring, we continue~~ to ~~hold~~the ~~discussions regarding~~various ~~these deliveries~~claims. ~~Our~~In ~~current~~addition, as ~~commitments~~a ~~would~~result ~~require~~of the ~~payment of~~bankruptcy anfiling, ~~estimated~~as ~~$0.1~~of ~~billion during~~ the ~~remainder~~Petition ofDate, ~~2003 (~~virtually all ~~for~~pending ~~non-aircraft capital~~litigation ~~acquisitions)~~is stayed, ~~$0.4~~and ~~billion~~absent infurther ~~each~~order of ~~2005~~the ~~and 2006~~Bankruptcy Court, ~~and~~no ~~$0.7 billion~~party, insubject ~~2007~~to ~~and~~certain ~~thereafter~~exceptions, ~~for~~may ~~the~~take ~~purchase~~any ~~of A319~~action, ~~A320 and B777~~again ~~aircraft.~~subject Itto iscertain ~~likely~~exceptions, ~~that~~to ~~the~~recover ~~amount~~on ~~and~~pre-petition ~~timing~~claims ~~of these obligations~~against ~~will~~us. ~~change~~Accordingly, aswe ahave ~~result~~classified certain of ~~our~~these ~~negotiations~~liabilities ~~with~~as ~~aircraft~~liabilities subject ~~manufacturers~~to compromise.

The Company anticipates that its liability from claims arising from the events of September 11, 2001 will be significant; however, we believe that, under federal law, our liability will be limited to our insurance coverage.

At March 31, 2004, commitments for the purchase of property and equipment, principally aircraft, approximated $1.6 billion, after deducting advance payments. Our current commitments would require the payment of an estimated $0.1 billion in 2004, $0.4 billion in each of 2005 and 2006, $0.5 billion in 2007 and $0.2 billion in 2008 and thereafter, primarily for the purchase of A319, A320 and B777 aircraft. It is likely that the amount and timing of these obligations will change, and could potentially be eliminated in their entirety. Additionally, the disposition of advance payments to the manufacturers of $161 million is subject to the ultimate outcome of these discussions.

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

Chapter 11 Reorganization

~~Bankruptcy Proceedings.~~ On December 9, 2002, UAL, United and 26 of its subsidiaries filed voluntary petitions to 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. In addition, specific information pertaining to our bankruptcy filing may be obtained through the website www.pd-ual.com.

~~With~~We ~~the~~are ~~exception~~working oftowards ~~our~~emerging ~~non-filing~~from ~~subsidiaries,~~Chapter we11 ~~continue~~in tothe ~~operate~~summer ~~our~~of ~~businesses~~2004. asThat ~~"debtors-in-possession" under~~timing ~~the~~depends ~~jurisdiction~~upon, ofamong other ~~the~~things, ~~Bankruptcy~~establishment ~~Court.~~of ~~All~~our ~~vendors~~post-exit ~~are~~capital ~~being~~structure ~~paid~~and financing, ~~for~~as ~~all~~well ~~goods~~as ~~furnished~~the timely and ~~services~~successful ~~provided~~confirmation ~~after~~and ~~the~~implementation ~~Petition Date in~~of ~~the~~a ~~ordinary~~plan ~~course~~ of ~~business~~reorganization. ~~However,~~The ~~under~~rights ~~Section~~and ~~362~~claims of ~~the~~various ~~Bankruptcy~~creditors and ~~Code,~~security ~~actions~~holders towill ~~collect~~also ~~most~~be ofdetermined ~~our~~by ~~pre-petition~~the ~~liabilities~~plan. ~~are~~At ~~automatically~~this time, it ~~stayed.~~is ~~Most~~not ofpossible ~~these~~to ~~pre-petition~~predict ~~liabilities~~accurately ~~will~~the beeffect ~~settled~~of ~~under~~the ~~a plan~~Chapter of11 reorganization process toon beour ~~approved~~business, bynor ~~the~~can ~~Bankruptcy~~we ~~Court.~~make Aany ~~pre-petition~~predictions concerning how ~~liability~~certain ~~that~~claims ~~requires~~will ~~different~~be ~~treatment~~valued ~~under~~in ~~Section~~the ~~1110~~bankruptcy ofproceedings. ~~the~~However, ~~Bankruptcy~~we ~~Code~~currently ~~relates~~believe tothat ~~certain~~UAL's ~~qualifying~~presently ~~aircraft,~~outstanding ~~aircraft~~equity ~~engines~~securities ~~and other~~will ~~aircraft-related~~have ~~equipment~~no ~~that~~value ~~are~~and ~~leased~~expect orthat ~~subject~~those tosecurities awill ~~security~~be ~~interest~~canceled under any orproposed ~~conditional~~plan ~~sale~~of ~~contract~~reorganization. For ~~further~~this ~~information~~reason, onwe ~~Section~~urge ~~1110~~that ~~and~~caution ~~its~~be ~~impact~~exercised onwith ~~the~~respect ~~Company,~~to ~~see~~existing ~~"Voluntary~~and ~~Reorganization~~future ~~Under~~investments ~~Chapter 11"~~ in ~~the~~any ~~Notes~~UAL equity ~~to Consolidated Financial Statements~~security.

ToWe ~~successfully~~are ~~exit~~currently ~~Chapter~~operating ~~11,~~under wean ~~must~~"exclusive ~~obtain~~period" ~~confirmation~~which byexpires ~~the~~June ~~Bankruptcy Court of a plan of reorganization. A plan of reorganization would~~30, ~~among other things~~2004, ~~resolve~~during ~~our~~which ~~pre-petition~~we ~~obligations,~~are ~~set~~the ~~forth~~only ~~UAL's~~party ~~revised~~permitted ~~capital~~to ~~structure~~file ~~and~~a ~~establish~~plan ~~UAL's corporate~~of ~~governance subsequent to exit from bankruptcy~~reorganization. We ~~currently anticipate~~believe ~~that~~the weadditional time will ~~seek~~ensure ~~financing~~that ~~at exit to repay~~ our ~~DIP~~plan ~~Financing~~of ~~and~~reorganization ~~create~~reflects ~~a stable capital structure for~~ the ~~Company~~actual ~~going~~outcome ~~forward.~~of ~~Exit~~issues ~~financing would~~critical beto ~~part of~~ our ~~plan~~restructuring, ofincluding ~~reorganization. The decision as to when we~~our ~~will~~pending ~~file~~application for a ~~plan~~federal ofloan ~~reorganization~~guarantee ~~depends~~from on the ~~timing~~Air ~~and outcome of~~Transportation ~~numerous~~Stabilization ~~ongoing~~Board ~~matters~~("ATSB"), inSection ~~the~~1114 ~~Chapter~~proposed 11changes ~~process. We expect~~ to ~~file a~~retiree ~~plan~~medical ofbenefits, ~~reorganization~~Section ~~that~~1110 ~~provides~~aircraft ~~for~~financing ~~United's~~restructuring ~~emergence from bankruptcy~~efforts, ~~but~~municipal ~~there~~bond ~~can~~obligations beand ~~no assurance that~~ the ~~Bankruptcy~~claims ~~Court~~resolution ~~will confirm a plan of reorganization or that the plan will be implemented successfully~~process.

~~At this time, it is not possible~~ to Federal ~~predict~~Loan ~~the~~Guarantee. ~~effect~~In ofDecember ~~the~~2003, ~~Chapter~~we 11updated ~~reorganization process on~~ our ~~business~~ orapplication ~~when~~for ~~United~~a ~~may~~federal ~~emerge~~loan guarantee from ~~Chapter~~the ~~11. Our~~ATSB ~~future~~in ~~results~~conjunction ~~depend~~with onreceiving ~~the~~conditional ~~timely~~commitments ~~and~~from ~~successful confirmation and implementation of a plan of reorganization~~J.P. ~~The~~Morgan ~~rights~~Chase ~~and~~Bank ~~claims of various creditors~~ and ~~security~~Citicorp ~~holders~~USA, ~~will~~Inc., befor ~~determined~~$2 bybillion ~~the~~in ~~plan~~exit ~~as well~~financing. At ~~this~~These ~~time~~conditional ~~we can~~commitments ~~make~~expire noon ~~prediction~~June ~~concerning~~30, ~~how~~2004 ~~each~~and ofif ~~these~~necessary ~~claims~~we ~~will~~expect beto, ~~valued~~but ~~in the bankruptcy proceedings. We believe that UAL's equity securities~~ have ~~little~~ or no ~~value and it is highly likely that the equity in UAL will~~assurances ~~be canceled under any plan of reorganization that~~ we ~~propose. For this reason~~can, weextend ~~urge~~ that ~~caution~~date beshould ~~exercised~~the ~~with~~ATSB ~~respect~~require toadditional ~~existing~~time ~~and~~to review ~~future~~our ~~claims or investments in any UAL security~~application.

~~Other~~Based ~~Restructuring Issues~~on -our ~~Pensions.~~projected ~~The~~future liquidity ~~combination of 45-year low interest rates~~needs, ~~poor~~ ~~stock~~we ~~market~~believe ~~performance~~that ~~and~~$2 ~~pension~~billion ~~benefit~~is ~~improvements~~the ~~have~~amount ~~caused many~~needed ~~U.S. pension funds, including ours,~~ to ~~become underfunded. This situation~~optimally isrun ~~exacerbated~~our ~~because~~operations ~~government~~and ~~funding~~would ~~requirements~~enable ~~obligate~~ us to ~~pay, on~~achieve aand ~~going-forward~~maintain ~~basis,~~ a ~~special~~level of ~~funding~~liquidity ~~surcharge,~~comparable ~~referred~~ to asthat ~~a "deficit~~of ~~reduction~~the ~~contribution"~~rest ~~("DRC"),~~of ~~that~~the isairline ~~imposed~~industry, ~~when a pension~~thereby ~~plan's~~enabling ~~funding status drops below 90%. This would require~~ us to ~~make~~effectively ~~significant accelerated contributions to our pension plans~~compete. AsAbsent ~~described~~an ~~below~~ATSB inloan ~~"Liquidity and Capital Resources~~guarantee," ~~we currently estimate that we could be required~~our toability ~~contribute approximately $4.8 billion~~ to access the ~~defined~~capital ~~benefit~~markets ~~pension plan~~is ~~trusts~~highly ~~by the end of 2008~~uncertain. As ~~part~~ of ~~our bankruptcy reorganization, we must address~~ the ~~underfunded status~~ date of ~~United's U.S. pension plans. We are working in several areas to address~~ this ~~issue. On October 10~~filing, ~~2003, we filed with~~ the ~~IRS~~ATSB ~~multiple~~has ~~applications~~not ~~for~~yet ~~pension~~reached ~~funding~~a ~~waivers for~~decision ~~all~~on of our Uapplication.~~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.

InRetiree ~~addition~~Medical Benefits.As part of the Chapter 11 process, we ~~continue~~are also seeking, under Section 1114 of the Bankruptcy Code, to ~~work~~modify ~~closely~~the ~~with~~medical ~~other~~benefits ~~airlines~~we currently provide to our approximately 35,000 ~~airline~~retired ~~unions~~employees ~~and~~who retired before July 1, 2003. We have proposed modifications which would make the ~~AFL-CIO~~medical inbenefit ~~support~~plan of athose ~~pension~~who ~~reform~~retired ~~proposal~~before ~~that~~July ~~would~~1, ~~allow~~2003 ~~companies~~the ~~affected by~~same as the ~~DRC~~medical ~~requirements~~benefit plan now provided to ~~defer~~employees ~~certain~~who ~~accelerated~~retire ~~pension~~after ~~funding~~that ~~contributions~~date. We have also ~~and~~proposed ~~smooth~~that ~~out~~most ~~minimum~~individuals ~~funding~~who ~~requirements~~retired ~~over~~before aJuly ~~longer~~1, ~~period~~2003 ofwould ~~time~~have ~~than~~to ~~provided~~pay byincreased ~~the~~contributions ~~current~~towards ~~law~~their coverage. We estimate that these modifications would enable us to realize over $250 million in cash savings over five years. While we are ~~also~~currently ~~advocating~~working ~~for~~with ~~legislation~~retiree representatives ~~(already~~to ~~approved~~achieve byconsensual ~~the~~agreements, Uthis outcome is not assured.S. ~~House~~If we do not reach consensual agreements, we will seek Bankruptcy Court approval of ~~Representatives)~~such ~~that~~modifications. ~~would~~The ~~re-set~~Bankruptcy Court has issued an order requiring ~~the~~us ~~interest~~to ~~rates~~file ~~that~~a ~~are~~motion ~~used~~to modify retiree benefits by May 21, 2004, with a hearing to ~~determine~~follow ~~corporate~~beginning ~~funding~~June ~~requirements~~17, 2004, if consensual modifications ~~for~~have ~~pension~~not ~~obligations~~been reached by such date. There can be no assurance, however, that the Bankruptcy Court will adhere to this schedule or approve such modifications.

WeSection ~~are~~1110 ~~also actively exploring~~Aircraft ~~additional~~Restructuring. ~~options~~Under ~~that~~Section ~~could~~1110 ~~ease~~of the ~~temporary~~Bankruptcy ~~cash~~Code ~~flow~~we ~~requirements~~have negotiated ~~caused~~with bylessors ~~accelerated~~and ~~pension~~lenders ~~contributions~~to ~~under~~restructure ~~the~~existing ~~current~~financings ~~laws~~to ~~and~~reduce aircraft ~~regulations.~~ownership ~~Our~~costs ~~ultimate~~to ~~goal~~better isreflect tocurrent ~~ensure~~market ~~United's~~rates. ~~financial~~To ~~stability as~~date, we ~~exit~~have reached ~~from~~agreements ~~bankruptcy.~~in Inprinciple ~~the~~with ~~event~~respect ~~that~~to ~~these~~a ~~steps~~substantial ~~are~~majority of ~~not~~our ~~successful~~financed aircraft. There can be no assurance, however, that those ortentative ~~are~~arrangements ~~insufficient~~will be successfully converted to ~~address~~final contracts. To the ~~funding~~extent ~~issues~~we inare ~~planning~~unable ~~for~~to ~~exit from~~finalize ~~bankruptcy~~these agreements, there can be no assurance that we ~~may~~will ~~need~~be able to ~~take~~reach ~~additional~~new ~~measures~~agreements ~~designed~~at tocomparable economics ~~help~~or that financiers will not repossess aircraft. Either of these ~~stabilize~~outcomes, ~~United's~~although unlikely, could have a material adverse affect on our financial ~~condition~~and operational performance.

In accordance with Section 1110 of the Bankruptcy Code, we have also rejected or abandoned certain surplus aircraft to adjust our fleet size and composition to more closely match market demand. As part of ongoing negotiations, we have also, on occasion, subsequently re-acquired rejected aircraft, under favorable financing arrangements, to optimize our overall cost of aircraft ownership, support operational needs and/or to take advantage of marketplace opportunities. In addition, we have converted many longer-term financing arrangements into short-term operating leases, and reduced the outstanding obligations and payment termson other aircraft financings. Through this process, we expect to achieve cash savings of approximately $900 million annually over the next five years. (See "Voluntary Reorganization Under Chapter 11" of the Notes to Consolidated Financial Statements for details on Section 1110 of the Bankruptcy Code.)

Municipal Bond Obligations. At March 31, 2004, we had approximately $1.7 billion in special facilities revenue bonds ("municipal bonds") outstanding that were issued on behalf of United to build or improve airport-related facilities. The Company leases facilities at airports pursuant to lease agreements where municipal bonds funded at least some of the airport-related projects.

During 2003, we filed four complaints for declaratory judgment and corresponding motions for temporary restraining order concerning municipal bonds issued for facilities at the Denver International Airport, the New York City - John F. Kennedy International Airport ("JFK"), the San Francisco International Airport ("SFO"), and the Los Angeles International Airport ("LAX"). In each case, we sought clarification of our obligations under the applicable municipal bonds, and the protection of our rights concerning related airport lease agreements at the applicable airport.

On March 30, 2004, the Bankruptcy Court granted our motions for summary judgment with respect to the JFK, SFO and LAX municipal bonds, holding that our payment obligations related to airport improvements at these sites are not obligations arising under "leases" pursuant to Section 365 of the Bankruptcy Code. Based on this ruling, the outstanding $248 million in principal and interest in connection with these bonds is considered pre-petition debt. The rights and claims of these bondholders, therefore, will be determined by our plan of reorganization.

In our adversary proceeding involving the Denver airport, however, the Bankruptcy Court did not grant our motion for summary judgment. Rather, the Bankruptcy Court found that our payment obligations related to airport improvements at the Denver airport (which represents approximately $261 million of debt) are obligations arising under a true lease. In accordance with the Bankruptcy Court's order, we paid $27 million into escrow (pending the outcome of our appeal) for the April 2003, October 2003 and April 2004 interest payments related to the Denver airport municipal bonds.

In April 2004, the defendants in the SFO and JFK adversary proceedings appealed the Bankruptcy Court's ruling, and we expect the defendants in the LAX adversary proceeding to do the same. Also, in April, United appealed the Bankruptcy Court's ruling with regard to the Denver airport. At the time of this filing, the Bankruptcy Court has transferred the SFO, JFK and Denver appeals to the Federal District Court for the Northern District of Illinois. The District Court has not set a schedule for these appeals.

Similarly, in September 2003, we filed a complaint for declaratory judgment for all seven municipal bond issues relating to our facilities at Chicago O'Hare International Airport ("O'Hare") (which represents approximately $601 million in debt), seeking, among other things, a declaration that a certain cross-default provision in the O'Hare airport lease is unenforceable. At the time of this filing, the Bankruptcy Court has not ruled on this matter. While that case is pending and as ordered by the Bankruptcy Court, we have paid into escrow payments totaling $15 million related to the O'Hare municipal bonds for March, April, May, September, October and November of 2003 and for March and April of 2004.

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 O'Hare contractual obligations. 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.

Claims Resolution Process. As permitted under the bankruptcy process, our creditors have filed proofs of claim with the Bankruptcy Court. The total amount of such claims filed far exceeds our estimate of ultimate liability. We believe that many of these claims are invalid because they are duplicative, are based upon contingencies which have not occurred, have been amended or superseded by later filed claims, or are otherwise overstated. Differences in amount between claims filed by creditors and liabilities shown in our records are being investigated and resolved in connection with our claims resolution process. While we have made significant progress to date, we expect this process to continue for some time and believe that further reductions to the claims register will enable us to determine with more precision the likely range of creditor distributions under a proposed plan of reorganization. At this time, the ultimate number and allowed amount of such claims cannot be determined.

Pension Legislation

On April 10, 2004, the President signed into law the Pension Funding Equity Act of 2004 (the "Act"). The Act provides temporary pension funding relief for U.S. companies by replacing the interest rate on the discontinued 30-year Treasury bond with a rate based on a composite of long-term corporate bonds for years 2004 and 2005, which lowers required pension funding obligations (for United as well as for most companies that sponsor defined benefit pension plans) during these two years. In addition, the Act permits airlines and steel companies to elect to pay reduced Deficit Reduction Contributions for their under-funded defined benefit pension plans, which has the effect of deferring a portion of our previously scheduled 2004 and 2005 pension funding obligations to future years.

In total, the Act reduced our minimum required pension funding obligations from $1.1 billion to $0.7 billion in 2004. It may also change the pattern of our 2005 to 2008 contributions depending on future economic conditions, asset returns, and interest rates. However, our overall expected funding contributions over the 2004 to 2008 time period remains unchanged at approximately $4.1 billion. Significant future changes to the Company's demographic mix, funded status, regulatory requirements, projected obligations and expected benefit disbursements could also impact future funding decisions. As a result, actual future contributions may differ materially.

In light of the passage of the Act, we withdrew our applications for certain pension funding waivers, which were filed in October 2003 with the Internal Revenue Service.

United Express - Atlantic Coast Airlines

On April 2, 2004, the Company and Atlantic Coast Airlines, Inc. ("ACA") agreed to end our United Express ("UAX") relationship and entered into a formal transition agreement providing for an orderly transition of UAX flying and ground handling operations between June 3 and August 4, 2004. On April 16, 2004, the Bankruptcy Court approved both the rejection of our United Express agreement with ACA and the transition agreement.

As part of our transition plan, we will replace ACA with a combination of six regional airlines (and some United Airlines mainline service), who will also assume ground-handling responsibilities at Chicago O'Hare, Washington Dulles and the spoke cities. To support this transition, we are expanding our relationship with current UAX partners Air Wisconsin Airlines Corporation, Mesa Air Group and SkyWest Airlines. We have also entered into new agreements with Chautauqua Airlines, Republic Airlines and Shuttle America to operate thirty-two regional jets and ten turbo-prop aircraft under the United Express brand.

Results of Operations

Summary of Results. The air travel business is subject to seasonal fluctuations. United's operations are often adversely affected by winter weather and our first- and fourth-quarter results normally reflect reduced travel demand. Historically, operating results are better in the second and third quarters. However, in the periods since the September 11 terrorist attacks (which has also seen the eruption of hostilities in Iraq as well as the emergence of the SARS epidemic in Asia) overall customer demand and hence revenue (as well as typical seasonality patterns) have been severely disrupted across the airline industry.

~~For~~ Not ~~the past two years~~unexpectedly, we ~~have~~ experienced under-performance ~~greater fluctuations~~ in ~~unit~~revenues ~~revenue than the rest of the industry. Immediately~~ following the ~~September~~Chapter 11 ~~terrorist~~filings ~~attacks,~~in ~~United~~December of ~~had~~2002. ~~a more~~This ~~significant~~under-performance ~~decline~~accelerated in ~~unit~~the ~~revenue~~first ~~than~~quarter ~~the~~of ~~industry~~2003 as ~~overall.~~weak ~~In early~~economic ~~2002~~conditions, ~~our~~the ~~year-over-year~~outbreak ~~unit~~of ~~revenues~~war ~~began~~in ~~improving~~Iraq ~~each~~and ~~month,~~aggressive ~~rising~~fare ~~from~~competition awith ~~14%~~low-cost ~~decline~~competitors incontributed ~~January~~ to a 49% ~~decline~~drop in ~~May, improving~~ ~~United's~~passenger ~~position~~unit ~~relative~~revenue toin the ~~industry.~~first ~~However,~~quarter ~~these~~of ~~gains~~2003 ~~stalled during~~versus ~~2002's~~the ~~third~~same ~~and~~period of ~~fourth~~2002 ~~quarters~~ (as ~~demand~~compared ~~continued~~ to bea ~~weak and~~4% ~~yields~~drop ~~declined.~~for Asthe isairline ~~typical~~industry ~~with~~overall). aThroughout the ~~company~~balance inof ~~bankruptcy~~2003, we ~~experienced under-performance~~implemented ina ~~revenues~~number ~~following~~of ~~the~~marketing, ~~Chapter~~sales, 11inventory management ~~filings~~and inpricing ~~December of~~actions ~~2002.~~to ~~This~~restore ~~under-performance~~customer ~~accelerated~~confidence, instimulate demand ~~the~~and ~~first~~increase ~~quarter~~revenue. ofAs ~~2003. Overall~~a ~~weak~~result ~~economic~~of ~~conditions~~these actions, we out-performed the ~~outbreak~~industry ofin ~~war~~yield, inload ~~Iraq~~factor and ~~aggressive fare~~passenger ~~competition~~unit ~~with~~revenue ~~low-cost~~growth ~~competitors~~performance during ~~contributed~~the tofirst aquarter 9%of ~~drop~~2004, in as passenger unit revenue ingrew ~~the~~by ~~first~~14%, on ~~quarter~~a of1% ~~2003~~increase in capacity, as compared to ~~the same~~a ~~period~~6% ofincrease ~~2002~~for the overall airline industry.

~~During~~United ~~the~~had ~~second~~an ~~quarter~~operating loss of ~~2003,~~$(303) ~~our~~million ~~revenues~~in ~~were hurt by~~ the ~~outbreak~~first quarter of ~~Severe Acute Respiratory Syndrome~~2004, asa ~~well~~$565 asmillion ~~the continued weak economic conditions, the ongoing~~improvement ~~war~~over in Iraq, lingering customer concerns about our financial stability and continued aggressive fare competition with low-cost competitors. Therefore, we reduced our April schedule by 8% and our May schedule by another 4%, compared to what we had previously planned, with reductions concentrated in the ~~Pacific~~first ~~and~~quarter ~~Atlantic regions. Simultaneously, we instituted a number~~ of ~~pricing and inventory actions to maximize yield in this environment of reduced capacity~~2003. ~~Additionally,~~United's tonet ~~improve~~loss ~~our value to our core market of business customers, we began promotions such as "Fly Three, Fly Free"~~ in ~~which passengers who buy three tickets get a fourth ticket free (with~~ the ~~exception~~first quarter of ~~applicable~~2004 ~~taxes~~was ~~and fees~~$(543). ~~As a result of these actions~~million, we ~~began~~compared to ~~see positive trends in May and June, and passenger unit revenues went from a 17% year-over-year decline in April to a modest year-over-year improvement in June~~$(1. ~~Overall, we experienced a~~ 4%) ~~decrease~~billion in ~~passenger unit revenue in~~ the ~~second quarter of 2003 versus the~~ same period of ~~2002~~2003. ~~By comparison, unit revenue for the industry was flat quarter over quarter.~~

As we approached the third quarter of 2003, it became evident that summer demand would be strong and industry capacity would fall short of this demand. To capitalize on this situation, we took additional actions to ensure we would capture a revenue premium commensurate with our superior product and service levels. We have also reviewed and restructured many of our business fares to increase revenue by stimulating traffic and we continued our aggressive marketing campaign to re-engage customers by introducing additional promotions such as "Go, Go, Stay" for leisure customers. As a result, passenger unit revenues increased by as much as 15% in August of 2003, with a year-over-year increase of 12% for the third quarter. This compares to an industry average increase of 7% year-over-year.

United had an operating loss of $(37) million in the third quarter of 2003, compared to an operating loss of $(699) million in the third quarter of 2002. United's net loss in the third quarter of 2003 was $(416) million, compared to $(911) million in the same period of 2002. In the third quarter of 2002, we recorded a valuation allowance of $418 million against our net deferred tax asset. As a result, for 2003, United has a zero percent effective tax rate; comparative amounts for 2002 are shown net of tax.

During the third quarter of 2003, we began recording revenues and expenses related to certain United Express carriers at gross, rather than net. See "United Express" in the Notes to Consolidated Financial Statements.

The ~~third~~first quarter ~~2003~~2004 results include $~~237~~130 million in reorganization items recorded in connection with our bankruptcy proceedings, and $2613 million ~~for~~(included ~~aircraft~~in ~~impairment charges~~Miscellaneous, innet) ~~operating~~to ~~expense and $25 million for aircraft~~ write-~~downs~~down incertain non-operating aircraft to their net realizable ~~expense~~value. The ~~third~~first quarter ~~2002~~2003 results ~~include~~included $50249 million ~~from~~in ~~the Air~~reorganization ~~Transportation~~items ~~Safety~~as ~~and~~well ~~System~~as ~~Stabilization~~$137 ~~Act~~million of ~~2001~~non-cash asset impairments related to the bankruptcy filing of our Star Alliance partner Air Canada. See "Special Charges" in the Notes to Consolidated Financial Statements.

InSpecific ~~the~~factors ~~first nine months~~affecting ofour ~~2003,~~consolidated ~~United's loss from~~ operations ~~was~~for ~~$(1.4) billion, compared to $(1.9) billion in~~ the first ~~nine~~quarter ~~months~~ of ~~2002.~~2004 ~~United's~~are ~~net loss in the~~described ~~first nine months of 2003 was $(2~~below.~~5) billion, compared to $(1.8) billion~~ ~~in the same period of 2002. The 2002 net loss benefited from an income tax credit of $346 million.~~

InFirst ~~addition~~Quarter ~~to the items~~2004 ~~described~~Compared ~~above~~with ~~for~~First ~~the~~Quarter ~~third quarter, the~~ 2003. Operating ~~loss~~revenues ~~includes a $152 million~~increased ~~curtailment charge in operating expense and~~ $~~137~~519 million in(17%) ~~non-operating special~~driven ~~charges~~by ~~related~~a to6% ~~our~~rise ~~investment~~ in ~~Air~~traffic ~~Canada~~ and an9% ~~additional $647~~increase ~~million~~ in ~~reorganization items. See "Special Charges" in the Notes~~yield toon ~~Consolidated~~slightly ~~Financial~~higher ~~Statements~~capacity. InThe ~~addition,~~following ~~the~~analysis ~~2002~~by ~~loss~~market ~~includes~~is based aon ~~gain~~information ofreported ~~$46~~to ~~million on~~ the ~~sale~~U.S. Department of ~~our remaining investment in Cendant~~Transportation: ~~Corporation.~~

Additionally, we received $300 million in direct government compensation under the 2003 Emergency Wartime Supplemental Appropriations Act in the second quarter of 2003 and $80 million under the Air Transportation Safety and System Stabilization Act of 2001 in the second quarter of 2002.

	Increase (Decrease)
	Available Seat	Revenue Passenger Miles	Revenue Per Revenue
	Miles (Capacity)	(Traffic)	Passenger Mile (Yield)
Domestic	2%	4%	9%
Pacific	(2%)	11%	9%
Atlantic	2%	10%	15%
Latin America	(13%)	(2%)	16%
System	1%	6%	9%

~~Specific~~Cargo ~~factors~~revenues ~~affecting~~decreased ~~our~~$16 ~~consolidated~~million ~~operations~~(10%) ~~for~~largely due to a 16% decrease in cargo ton miles. Other operating revenues decreased $143 million (36%) primarily as the ~~third~~result of ~~quarter~~a ~~and~~$160 ~~first~~million ~~nine~~decline ~~months~~in fuel sales to third parties. Passenger revenues were increased by an out of ~~2003~~period ~~are~~adjustment ~~described~~of ~~below~~approximately $60 million.

~~Third Quarter 2003 Compared with Third Quarter 2002.~~ Operating ~~revenues~~expenses ~~increased~~decreased $~~112~~46 million (31%) and United's ~~revenue~~mainline unit cost (operating expenses, excluding regional affiliates costs per available seat mile) ~~(unit~~decreased ~~revenue)~~11%. Salaries ~~excluding~~and ~~regional~~related ~~affiliates~~costs ~~increased~~decreased 9$283 million (19%) primarily due to ~~9.95~~productivity improvements ~~cents.~~enabled Toby ~~balance~~new ~~marketplace~~labor agreements for all employee groups. Aircraft ~~demand~~fuel ~~levels,~~increased we$32 ~~pulled~~million ~~down~~(6%) ~~our~~due ~~schedule~~to ~~and~~rising ~~reduced~~fuel ~~available~~prices. ~~seat~~Aircraft ~~miles~~rent bydecreased 12$64 million (32%) ~~from~~due ~~2002.~~to Inthe ~~spite~~restructuring of ~~these~~aircraft ~~lower~~financings under ~~capacity~~Section ~~levels,~~1110 ~~passenger~~of ~~revenues decreased~~the ~~only~~Bankruptcy 1%Code. ~~($31~~Cost of sales decreased $175 million (48%) asdue weto ~~achieved~~lower afuel ~~record~~sales. ~~load~~Aircraft ~~factor~~maintenance ofincreased $67 ~~80.2~~million (57%) ~~and~~due ~~increased~~to ~~yield~~increases byin 5%purchased tomaintenance, ~~10.90~~including ~~cents~~contracted maintenance and maintenance materials. ~~The~~This ~~following~~increase ~~analysis~~is largely driven by ~~market~~higher islevels ~~based~~of onoutsourcing ~~information~~and ~~reported~~is toslightly ~~the~~offset Uby lower salary costs.S. ~~Department~~In ofline ~~Transportation:~~with higher commissionable revenues, commission expense increased $20 million (27%).

	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 non-operating expense amounted to $110 million in the first quarter of 2004, compared to $131 million in the first quarter of 2003, excluding non-operating special charges and reorganization items. Inclusive of non-operating special charges and reorganization items, other non-operating expense amounted to $240 million in the first quarter of 2004, compared to $517 million in the first quarter of 2003. For details on the special charges and reorganization items, see "Reorganization Items" and "Special Charges" in the Notes to Consolidated Financial Statements.

Cargo revenues decreased $21 million (13%) due to a 23% decrease in cargo ton miles, despite a 13% increase in yield. Other operating revenues decreased $86 million (26%) as the result of an $89 million decrease in fuel sales to third parties.

Operating expenses decreased $550 million (13%) and United's cost per available seat mile (unit cost) excluding regional affiliates decreased 9%, from 10.90 cents to 9.88 cents. Salaries and related costs decreased $611 million (34%) primarily as a result of new labor agreements for all employee groups. In addition to lower salary and benefit levels, these changes enabled us to improve productivity (as measured by available seat miles per employee) by 13% and thus reduce personnel through retirements, attrition and furloughs. Aircraft fuel decreased $18 million (3%) as a 14% decline in consumption was offset by a 13% increase in the average cost of fuel from 80.2 cents to 90.4 cents a gallon. Purchased services decreased $45 million (12%) primarily as a result of volume-driven decreases in GDS (global distribution systems) and credit card discount fees. Similarly, commissions also decreased $15 million (14%) on lower commissionable revenues. Aircraft rent decreased $57 million (27%) due to the restructuring of aircraft financings as part of the Section 1110 process in bankruptcy. Depreciation and amortization increased $23 million (10%) due to a $45 million loss on the sale of a B747 aircraft, which was partially offset by decreases resulting from restructured aircraft financings related to our bankruptcy filings. Cost of 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.

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.

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 $806 million (9%) due to a 6% decrease in revenue passenger miles and a 3% decrease in yield to 10.55 cents. United's available seat miles across the system decreased 9% over the first nine months of 2002; however, passenger load factor increased 2.2 points to 76.3%. 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	(6%)	-%	(6%)
Pacific	(15%)	(20%)	(2%)
Atlantic	(10%)	(9%)	(2%)
Latin America	(15%)	(6%)	(10%)
System	(9%)	(6%)	(3%)

Cargo revenues decreased $11 million (2%) due to a 14% decrease in cargo ton miles, partially offset by a 13% increase in yield. Other operating revenues decreased $80 million (8%) primarily due to decreases in maintenance sales and a $47 million decrease in fuel sales to third 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 $12.90 billion at ~~September~~March 3031, ~~2003~~2004, compared to $1.59 billion at December 31, ~~2002~~ 2003.

~~Property~~As ~~additions~~of March 31, ~~including~~2004, we ~~aircraft~~had ~~and~~$661 ~~aircraft~~million ~~spare~~in ~~parts~~restricted cash, ~~amounted~~primarily torepresenting ~~$85~~security ~~million.~~for worker Incompensation ~~the~~obligations, ~~first~~security deposits for airport leases and ~~nine~~reserves ~~months~~with ofinstitutions ~~2003~~that process our sales. Prior to 2002, we ~~acquired~~met many ~~one~~of ~~B757~~these ~~aircraft~~obligations ~~off~~through ~~lease,~~surety ~~sold~~bonds ~~two B747~~or ~~aircraft~~a ~~and~~secured ~~rejected~~letter ~~one~~of ~~B757~~credit facility; however, ~~four~~such ~~B777,~~facilities ~~one~~are ~~A320,~~more ~~five~~difficult ~~B747~~to access and have ~~nine~~become ~~B737~~largely ~~aircraft~~unavailable ~~under~~to ~~Section~~us. ~~1110~~As ofa ~~the~~result, ~~Bankruptcy~~we ~~Code.~~may Inbe ~~addition, six~~required ~~B767~~to ~~aircraft~~post additional ~~were~~cash ~~transferred~~collateral to ~~non-operating~~support ~~status~~such obligations in the future.

~~Financing~~During ~~activities~~the ~~included principal~~first ~~payments~~three ~~under~~months of ~~debt~~2004, ~~and~~we ~~capital~~generated ~~lease~~$455 ~~obligations~~million of cash from operations excluding a $~~210~~63 million retro-wage payment for IAM- and AMFA-represented employees ($86392 million, ~~respectively.~~of ~~These~~cash ~~amounts~~from ~~represent~~operations ~~payments~~inclusive ~~made~~of ~~under~~the retro-wage payment). ~~Section~~Overall, ~~1110~~total ~~elections~~cash ~~for~~and ~~liabilities~~cash ~~subject~~equivalents torose ~~compromise.~~by ~~During~~$202 million during the ~~first~~ quarter, ofas ~~2003,~~compared weto ~~drew~~a ~~down~~net ~~$92~~cash ~~million~~outflow inof ~~cash~~$278 ~~under~~million during the ~~DIP~~same period ~~Financing~~in 2003.

During the ~~second~~first ~~quarter~~three months of ~~2003~~2004, we ~~sold~~contributed ~~one~~$17 ~~B747~~million ~~aircraft~~(and ~~for~~then ~~net~~an ~~proceeds~~additional of $54110 million~~. The~~ ~~proceeds~~on ~~were~~April ~~used~~15) totowards ~~pay~~our ~~down~~2004 ~~the~~pension ~~DIP~~obligation. ~~Financing,~~We ~~enabling~~are usrequired to ~~draw down~~contribute ~~another~~a ~~$31~~further ~~million under the DIP Financing and issue~~ $2600 million in ~~letters of~~2004 ~~credit.~~to ~~During~~our ~~the~~pension ~~third~~plans. ~~quarter~~For offurther ~~2003, we sold an additional B747~~details ~~aircraft~~see ~~for~~"Retirement ~~net~~and ~~proceeds~~Post-Retirement ofPlans" ~~$51~~in ~~million~~the ~~enabling~~Notes us to ~~further pay down~~Consolidated ~~the~~Financial ~~DIP Financing~~Statements.

InProperty ~~April~~additions, ~~2003~~including aircraft and aircraft spare parts, weamounted ~~received~~ to $~~365~~60 million. ~~from~~In the ~~Internal~~first three ~~Revenue~~months ~~Service~~of ~~after~~2004, ~~resolving~~we ~~certain~~re-acquired two B737, one B757, and one B777 aircraft ~~income~~(all ~~tax~~of ~~refund~~which ~~claims~~were previously rejected) and rejected two B737, one B747 and one B777 under Section 1110 of the Bankruptcy Code. In addition, two B767 aircraft were transferred to non-operating status.

~~The~~Financing ~~Emergency~~activities ~~Wartime Supplemental~~included ~~Appropriations~~principal ~~Act~~payments ofunder ~~2003~~debt ~~("Wartime~~and ~~Act")~~capital ~~was~~lease ~~enacted~~obligations inof ~~April~~$44 ~~2003 and~~million ~~included~~and ~~approximately~~ $3169 ~~billion~~million, ofrespectively. ~~financial~~These ~~aid~~amounts ~~for~~represent ~~U.S.~~payments ~~air~~made ~~carriers,~~under ~~including~~Section ~~United.~~1110 ~~(See~~elections ~~"Government~~for ~~Compensation"~~aircraft-secured inobligations ~~the~~which ~~Notes~~are ~~to Consolidated~~currently ~~Financial~~classified ~~Statements.)~~as Inliabilities ~~May~~subject ~~2003,~~to wecompromise. ~~received~~During ~~$300~~the ~~million~~first ~~in compensation~~quarter ~~under~~of ~~the~~2004, ~~Wartime~~we ~~Act.~~made In$62 ~~September~~million ~~2003,~~in weprincipal ~~received~~and aninterest ~~additional~~payments ~~$14~~towards ~~million~~the ~~related~~DIP ~~to cockpit door reinforcement~~Financing.

~~Including~~We ~~the~~expect ~~government~~to spend an estimated ~~compensation~~$0.1 ~~and~~billion ~~tax~~during ~~refunds,~~the weremainder ~~had~~of ~~cash~~2004 ~~flow~~for ~~from~~the ~~operations~~purchase of ~~$749~~property ~~million~~and ~~for~~equipment. ~~the~~At ~~first~~March ~~nine~~31, ~~months~~2004, ofcommitments ~~2003.~~for ~~Excluding~~the ~~these~~purchase ~~amounts,~~of ~~our~~property ~~cash~~and ~~flow~~equipment, ~~from~~principally ~~operations~~aircraft, ~~was~~approximated $841.6 ~~million~~billion, anafter ~~improvement~~deducting advance ofpayments. ~~nearly~~For ~~$1 billion~~further asdetails, ~~compared~~see to"Commitments and Contingencies" in the ~~first~~Notes ~~nine~~to ~~months~~Consolidated ofFinancial ~~2002~~Statements.

As of September 30, 2003, we had $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 our sales. Prior to 2002, we met many of these obligations through surety bonds or a secured letter of credit facility; however, such facilities are more difficult to access and have become largely unavailable to us. As a result, we may be required to post additional cash collateral to support such obligations in the future.

We did not make any cash contributions to our defined benefit pension plan trusts for U.S. based employees in 2001, 2002 or in the first three quarters of 2003. In lieu of making cash contributions, we utilized a portion of our credit balance (the cumulative difference between the prior year's minimum required contributions and actual contributions) to meet the minimum required contribution. On October 10, 2003, we filed with the IRS multiple applications for pension funding waivers for all of United's U.S. defined benefit pension plans, which would allow us to reschedule our contributions. See "Other Restructuring Issues - Pensions."

We have a remaining credit balance that is available to be used in the latter part of 2003; however, once the credit balance is fully utilized, in the absence of any additional pension funding relief, substantial contributions will be required. We estimate, based on current market conditions and benefit plans, that we could be required to contribute approximately $4.8 billion to our domestic defined benefit pension plan trusts by the end of 2008. This is higher than previous estimates primarily due to updated demographics and changed assumptions concerning the long-term interest rate forecast. However, future funding requirements depend upon factors such as interest rates, funded status, regulatory requirements and the level and timing of asset returns compared to those of expected benefit disbursements. Significant future changes to the Company's demographic mix or pension plans could also impact future funding requirements. As a result, actual future contributions may differ materially.

At 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 existing collective bargaining agreements ("CBAs"). All of these agreements became effective on May 1, 2003 and are six years in duration. When combined with expected average annual savings of approximately $300 million in salaried and management costs (achieved through wage and staffing reductions as well as benefit changes), these agreements are expected to reduce our average annual costs by approximately $2.5 billion per year versus the previous contracts (based on the size of the airline at the time of the negotiations). In addition to reductions in pay, all of the contracts allow for improving productivity (through changes to work rules) and for changes in employees' medical plans, including increases to co-payments. These changes, combined with overall headcount reductions, enabled us to reduce salaries and related costs by $611 million (34%) and improve productivity by 13% in the third quarter 2003 as 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, 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 have been reduced through a decrease in the Company's contribution to the 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. In addition, the agreement provides for ALPA to retain a seat on UAL's Board of Directors for the duration of the new CBA.

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

On April 29, 2003, United employees represented by the International Association of Machinists and Aerospace Workers ("IAM") District Lodge 141 ratified an agreement between the Company and the IAM on four restructured CBAs as well as on a restructured CBA for employees of our subsidiary Mileage Plus, Inc. The agreements reduce average annual costs by approximately $450 million versus the 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 United increased flexibility to outsource and provides for the IAM to retain a seat on 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 employees, who were previously represented by the IAM, 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, 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, United 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-sharing program that provides the opportunity for payouts tied to our level of profitability and performance. The agreements also provide us with an opportunity to introduce a low-cost operation. As a result, we are developing plans to roll out a low-cost operation ("LCO") with an initial first-year fleet size of approximately 40 aircraft (all redeployed from United's current fleet) serving key leisure markets. In September 2003, we announced that that LCO would launch, serving seven cities from Denver in February 2004.

UAL has also agreed to include in its plan of reorganization provisions for each relevant employee group to receive a distribution of the equity, securities or other consideration provided to the general unsecured creditors. In addition, in all of our employee contracts we have agreed that any plan of reorganization we propose or support will provide the relevant employee group with a 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 cost reductions.

Facilities

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

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

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

We have taken a number of steps to reduce the risks associated with non-payment on the municipal bonds. On September 18, 2003, we filed a complaint for declaratory judgment for all seven municipal bond issues relating to our facilities at the Chicago O'Hare International Airport ("O'Hare"), seeking, among other things, a declaration that a certain cross-default provision in the O'Hare airport lease is unenforceable. At this time, the City of Chicago has not answered the complaint.

Previously, we filed four complaints for declaratory judgment and corresponding motions for temporary restraining order concerning municipal bonds issued for 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. In each case, we are seeking clarification of our obligations under the applicable municipal bonds, and the protection of our rights concerning related airport lease agreements at the applicable airport until the Bankruptcy Court decides the merits of the complaints.

Subsequently, the Bankruptcy Court entered an order that requires each of the defendants in these actions to give us a 15-day notice and cure period before taking any action to terminate any of our rights concerning these airport leases until such time as the Bankruptcy Court enters final orders on United's declaratory judgment actions. The Bankruptcy Court has conducted a hearing on motions for summary judgment filed by various 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 the third quarter of 2003, we reached agreements with several of our United Express carriers, including SkyWest, Air Wisconsin and Mesa Air Group, to operate select portions of our United Express service.

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, ACA announced on July 28, 2003, that it anticipates that its relationship with United will end, and that it intends to establish a new, independent low-fare airline based at Washington Dulles International Airport.

Despite our efforts to negotiate a competitive agreement with ACA, we have been unable to do so. As a result, we are exploring alternatives to replace the service currently provided by ACA. Failure to reach a cost-competitive agreement with ACA or another carrier in a timely manner could have an adverse impact on our future financial results.

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~~2004 outlook can be obtained from UAL Corporation's ~~Report~~Quarterly Report on Form 10-Q for the quarter ended ~~September~~March 3031, ~~2003~~2004.

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~~capacity ~~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~~risks ~~court~~associated ~~approval~~ with ~~respect~~(i) tothird ~~motions~~parties inseeking ~~the~~and ~~Chapter~~obtaining 11court ~~proceeding prosecuted~~approval byto usterminate ~~from~~or ~~time~~shorten ~~to time;~~ our ~~ability~~exclusive period to ~~develop,~~propose ~~prosecute,~~and confirm ~~and consummate~~ one or more plans of reorganization, ~~with~~for ~~respect~~the appointment of a Chapter 11 trustee or to convert the cases to Chapter 11 ~~process;~~7 ~~risks~~cases, and (ii) other legal proceedings associated with ~~third~~the ~~parties~~Chapter ~~seeking~~11 ~~and~~process; ~~obtaining~~our ability to obtain court approval with respect to ~~terminate~~motions orin ~~shorten~~the ~~our~~Chapter ~~exclusive~~11 ~~period~~proceeding toprosecuted ~~propose~~by ~~and~~us ~~confirm~~from ~~one~~time orto ~~more~~time; ~~plans~~our ofability ~~reorganization~~to develop, ~~for~~prosecute, ~~the~~confirm ~~appointment~~and ~~of a Chapter 11~~consummate ~~trustee~~one or tomore ~~convert~~plans ~~the~~of ~~cases~~reorganization with respect to the Chapter 711 ~~cases~~process; 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~~our 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 to new information, unforeseen events, changed circumstances or otherwise.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

For information regarding ~~the~~our ~~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~~2003.

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 ~~September~~March 3031, ~~2003~~2004 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 ~~September~~March 3031, ~~2003~~2004. Based on that evaluation, the Company's management, including the CEO and CFO, has concluded that the Company's disclosure controls and procedures are effective. During the ~~third~~first quarter of ~~2003~~2004, 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 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~~Reports noon Form 8-~~Ks filed in the third quarter of 2003.~~K

~~Pursuant~~Form to8-K ~~the~~dated ~~requirements~~January of27, ~~the~~2004 ~~Securities~~attaching ~~Exchange~~the ~~Act~~Company's ofMonthly ~~1934, the~~Operating ~~Registrant~~Report ~~has duly caused this quarterly report on Form 10-Q~~ for the ~~quarter ended~~period ~~September~~December 301, 2003 tothrough beDecember ~~signed on its behalf by the undersigned thereunto duly authorized on the 30th day of October~~31, 2003.

Form 8-K dated January 27, 2004 attaching the Company's quarterly and annual earnings release.

Form 8-K dated February 26, 2004 attaching the Company's Monthly Operating Report for the period January 1, 2004 through January 31, 2004.

Form 8-K dated March 25, 2004 attaching the Company's Monthly Operating Report for the period February 1, 2004 through February 29, 2004.

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 March 31, 2004 to be signed on its behalf by the undersigned thereunto duly authorized on the 30th day of April, 2004.

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~~Officer Pursuant 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~~Officer Pursuant to 18 U.S.C. 1350 (Section 906 of the Sarbanes-Oxley Act of 2002)

Filing Compare · UNITED AIR LINES, INC.