****FORM 10-Q**
SECURITIESAND EXCHANGE COMMISSIONWashington,D.C.  20549
(Mark One)
[X] QUARTERLYREPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIESEXCHANGE ACT OF 1934
For the quarterlyperiod ended September 30, 2001
OR
[  ] TRANSITIONREPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIESEXCHANGE ACT OF 1934
For the transitionperiod from __________ to __________
Commissionfile number 33-21220 *  UNITEDAIR LINES, INC.(Exact name of registrant as specified in its charter)  Delaware(State or other jurisdiction ofincorporation or organization)36-2675206(I.R.S. EmployerIdentification No.)  1200 EastAlgonquin Road, Elk Grove Township, Illinois  60007MailingAddress:  P. O. Box 66100, Chicago, Illinois  60666(Addressof principal executive offices)          (Zip Code)  Registrant'stelephone number, including area code  (847) 700-4000
Indicate bycheck mark whether the registrant (1) has filed all reports required tobe filed by Section 13 or 15(d) of the Securities Exchange Act of 1934during the preceding 12 months (or for such shorter period that the registrantwas required to file such reports), and (2) has been subject to such filingrequirements for the past 90 days.
Yes   X       No ____
Indicate thenumber of shares outstanding of each of the issuer's classes of commonstock, as of the latest practicable date.  OutstandingatClassOctober31, 2001CommonStock ($5 par value)205 
*  Registrantis the wholly-owned subsidiary of UAL Corporation (File 1-6033). Registrant became subject to filing periodic reports under the SecuritiesExchange Act of 1934 as a result of a public offering of securities whichbecame effective June 3, 1988 (Registration Nos. 33-21220 and 22-18246).  
United Air Lines, Inc.and Subsidiary Companies Report on Form 10-QFor the Quarter EndedSeptember 30, 2001

Index PARTI.FINANCIALINFORMATIONPage No.   Item1.   Financial Statements   CondensedStatements of Consolidated Financial Position as of September 30, 2001(Unaudited) and December 31, 20003  Statementsof Consolidated Operations (Unaudited) - for the nine months ended September30, 2001 and 20005  CondensedStatements of Consolidated Cash Flows (Unaudited) - for the nine monthsended September 30, 2001 and 20007  Notesto Consolidated Financial Statements (Unaudited)8 Item2.   Management's Discussion and Analysis of Financial Conditionand Results of Operations13   Item3.   Quantitative and Qualitative Disclosures About Market Risk18PARTII.OTHERINFORMATION  Item6.  Exhibits and Reports on Form 8-K19 Signatures20 ExhibitIndex21   
PART I.   FINANCIAL INFORMATION
Item 1.   Financial Statements
United Air Lines, Inc. and Subsidiary CompaniesCondensed Statements of Consolidated Financial Position(In Millions)
 September 30  2001December 31Assets(Unaudited)2000   Current assets:     Cash and cash equivalents$    1,890 $   1,468    Short-term investments628 655    Receivables, net1,255 1,212    Related party receivables628 553    Income tax receivables271 175    Inventories, net318 424    Prepaid expenses and other   1,102      686    6,092   5,173      Operating property and equipment:     Owned18,746 19,411    Accumulated depreciation and amortization   (4,637)   (5,583)   14,109  13,828      Capital leases2,790 3,155    Accumulated amortization      (450)     (640)     2,340   2,515   16,44916,343      Other assets:     Investments421 416    Intangibles, net1,087 671    Related party receivables567 467    Aircraft lease deposits706 710    Prepaid rent83 499    Other, net      940      790    3,804   3,553    $26,345$25,069   
See accompanying Notes to Consolidated Financial Statements.   
United Air Lines, Inc. and Subsidiary CompaniesCondensed Statements of Consolidated Financial Position(In Millions)
 September 30  2001December 31Liabilities and Stockholder's Equity(Unaudited)2000   Current liabilities:     Current portions of long-term debtand        capital leaseobligations$     969$     438    Related party debt maturing withinone year147 155    Advance ticket sales1,576 1,454    Accrued salaries, wages and benefits1,940 1,508    Accounts payable1,364 1,149    Related party payables275 187    Other   2,551   2,155    8,822   7,046   Long-term debt   6,292   4,740   Long-term obligations under capital leases   2,051   2,261   Other liabilities and deferred credits:     Deferred pension liability1,380 136    Postretirement benefit liability1,705 1,557    Deferred gains850 912    Deferred income taxes232 1,265    Other   1,068      929    5,235   4,799   Commitments and contingent liabilities (Seenote)     Preferred stock committed to Supplemental ESOP     437     571   Stockholder's equity:     Common stock at par- -    Additional capital invested231 232    ESOP capital3,569 3,432    Retained earnings (deficit)(111)1,833    Accumulated other comprehensiveincome(175)163    Other         (6)         (8)    3,508   5,652    $26,345$25,069   
See accompanying Notes to Consolidated Financial Statements.   
United Air Lines, Inc. and Subsidiary CompaniesStatements of Consolidated Operations (Unaudited)(In Millions)
 Three Months Ended September 30     20012000Operating revenues:     Passenger$ 3,455 $  4,291    Cargo157 234    Other       485      391    4,097   4,916Operating expenses:     Salaries and relatedcosts1,880 1,898    Aircraft fuel655 664    Commissions128 280    Purchased services456 433    Aircraft rent207 224    Landing fees andother rent260 235    Depreciation andamortization258 253    Aircraft maintenance174 170    Cost of sales385 279    Other445 498    Special charges   1,313       12    6,161  4,946   Loss from operations(2,064)     (30)   Other income (expense):     Interest expense(132)(105)   Interest capitalized19 17    Interest income17 27    Equity in earnings(losses) of affiliates2 (6)   Non-operating specialcharges(49)(61)   Airline stabilizationgrant391 -    Miscellaneous, net      (41)       (8)     207    (136)   Loss before income taxes and extraordinaryitem (1,857)(166)Credit for income taxes    (678)     (61)   Loss before extraordinary item(1,179)(105)Extraordinary loss on debt, netof tax        -      (6)Net loss$(1,179)$  (111)
See accompanying Notes to Consolidated Financial Statements.   
United AirLines, Inc. and Subsidiary CompaniesStatementsof Consolidated Operations (Unaudited)(In Millions)
                Nine Months Ended      September 30  20012000Operatingrevenues:    Passenger$ 11,295$ 12,826   Cargo547 684   Other   1,321  1,037 13,16314,547Operatingexpenses:    Salaries and related costs5,602 5,057   Aircraft fuel2,013 1,792   Commissions616 781   Purchased services1,367 1,266   Aircraft rent623 669   Landing fees and other rent768717   Depreciation and amortization778 731   Aircraft maintenance573 522   Cost of sales1,036 729   Other1,322 1,358   Special charges  1,313       76 16,01113,698   Earnings(loss) from operations(2,848)     849   Otherincome (expense):    Interest expense(394)(304)  Interest capitalized63 57   Interest income74 63   Equity in earnings (losses) of affiliates5 (8)  Non-operating special charges(49)(61)  Airline stabilization grant391 -   Miscellaneous, net     (72)     (33)        18   (286)Earnings(loss) before income taxes,    extraordinary item and cumulative effect (2,830)563 Provision(credit) for income taxes(1,033)    209   Earnings(loss) before extraordinary item   and cumulative effect(1,797)354 Extraordinaryloss on debt, net of tax- (6)Cumulativeeffect of accounting change, net of tax          3   (209)Netearnings (loss)$(1,794)$   139   
See accompanyingNotesto Consolidated Financial Statements.    
United Air Lines, Inc. and Subsidiary CompaniesCondensed Statements of Consolidated Cash Flows (Unaudited)(In Millions)
             Nine Months Ended       September 30         2001       2000Cash and cash equivalents at beginning      of period$1,468$   235   Cash flows from operating activities     591  2,457   Cash flows from investing activities:     Additions to propertyand equipment(1,798)(1,979)   Proceeds on dispositionof property and       equipment167 68    Decrease (increase)in short-term investments27 (228)   Increase in relatedparty receivables(92)(8)   Other, net      (25)    (141) (1,721)(2,288)   Cash flows from financing activities:     Proceeds from issuanceof long-term debt1,982 874    Repayment of long-termdebt(142)(420)   Principal paymentsunder capital       lease obligations(179)(159)   Decrease in equipmentdebt certificates        under Company leases18 43    Dividends to parentcompany(150)(100)   Decrease in short-termborrowings- (61)   Decrease in related-partydebt(8)(15)   Other, net      31       4   1,552     166   Increase in cash and cash equivalents     422     335   Cash and cash equivalents at endof period$  1,890$   570   Cash paid during the period for:     Interest (net ofamounts capitalized)$   266 $  217   Income taxes$       1 $    16    Non-cash transactions:     Long-term debt incurredin connection       with additions to other assets$   232 $       -    Capital lease obligationsincurred$       - $     76    Increase in pensionintangible assets$   437 $       -    Net unrealized gain(loss) on investments$   (27)$ (232)
See accompanying Notes to Consolidated Financial Statements.     
United Air Lines, Inc. and Subsidiary CompaniesNotes to Consolidated Financial Statements (Unaudited)
The Company
         United Air Lines, Inc.("United" or the "Company") is a wholly owned subsidiary of UAL Corporation("UAL").
Interim Financial Statements
         The consolidated financialstatements included herein have been prepared pursuant to the rules andregulations of the Securities and Exchange Commission.  Certain informationand footnote disclosures normally included in financial statements preparedin accordance with accounting principles generally accepted in the UnitedStates have been condensed or omitted pursuant to or as permitted by suchrules and regulations, although United believes that the disclosures areadequate to make the information presented not misleading.  In management'sopinion, all adjustments, which include normal recurring adjustments, theimpact of the September 11 terrorist attacks referred to below and otherspecial charges, necessary for a fair presentation of the results of operationsfor the three- and nine-month periods have been made.  These financialstatements should be read in conjunction with the consolidated financialstatements and footnotes thereto included in United's Annual Report onForm 10-K for the year 2000.
Special Charges Relatedto the September 11 Terrorist Attacks
         On September 11, 2001,two United aircraft were hijacked and destroyed in terrorist attacks onThe World Trade Center in New York City and in a crash near Johnstown,Pennsylvania.  On the same day, two American Airlines aircraft werealso hijacked and used in terrorist attacks on The World Trade Center andthe Pentagon.  In addition to the loss of all passengers and crewon board the aircraft, these attacks resulted in numerous deaths and injuriesto persons on the ground and massive property damage.  In the immediateaftermath of the attacks, the Federal Aviation Administration ("FAA") orderedall aircraft operating in the U.S. grounded immediately.  This groundingeffectively lasted for three days, and the Company was able to operateonly a portion of its scheduled flights for several days thereafter. When flights were permitted to resume, passenger traffic and yields weresignificantly lower than prior to the attacks.  For further information,see "September 11 Terrorist Attacks" in Management's Discussion andAnalysis of Financial Condition and Results of Operations.
         In a direct responseto the adverse impact on air travel as a result of the September 11 terroristattacks, United announced that it would reduce capacity by as much as 23percent, which would allow for the retirement of the entire B727-200 andB737-200 fleets.  In addition, on September 19, United announced thatit would furlough approximately 20,000 employees.
         During the third quarter,United recorded a special charge of $1.3 billion in operating expense and$49 million in non-operating expense for amounts relating to the September11 terrorist attacks and the resulting impact on the Company's scheduleand operations.  In addition, as of September 30, 2001, United hadreceived $391 million in compensation under the Air Transportation Safetyand System Stabilization Act.  (See "September 11 Terrorist Attacks"in Management's Discussion and Analysis of Financial Condition and Resultsof Operations for further details.)
         The special chargeis made up of the following (in millions):  AmountAmountSpecial charges: (net of tax)  Aircraft groundings andimpairment$    788   Reduction in force     217   Early termination fees     181   Discontinued capital projects     107   Miscellaneous       20      Total operating special charges$ 1,313$   834  Non-operating special charges       49        31  Airline stabilization grant      (391)     (248)     Special charges, net of grant$    971$   617   
        As a result of the grounding of the B727-200 and B737-200 fleets, the Companyrecorded a charge of $271 million, reflecting the write down of the fleetsto fair value.
        Due to the changes being implemented to United's operations, the Companyhas reviewed its fleet for impairment in accordance with Statement of FinancialAccounting Standards No. 121, "Accounting for the Impairment of Long-LivedAssets and for Long-Lived Assets to be Disposed Of" ("SFAS No. 121"). Under SFAS No. 121, United's policy is to recognize an impairment chargewhen an asset's carrying value exceeds its net undiscounted future cashflows and its fair market value.  The amount of the charge is thedifference between the asset's carrying value and fair market value. Management has determined that the estimated net undiscounted future cashflows generated by its B737-500 and B747-400 fleets will be less than theircarrying value.  Management estimated the undiscounted future cashflows utilizing models used by the Company in making fleet and schedulingdecisions.  These models were based upon projections of passengeryield, fuel costs, labor costs and other relevant factors in the marketswhere these aircraft will operate.  The aircraft in each of thesefleets were written down to their fair market values, as estimated by managementusing published sources, third-party appraisals and bids received fromthird parties.  Accordingly, the special charge includes an impairmentcharge of $517 million for these aircraft fleets resulting from the anticipateddecrease in future cash flows.
        Also included in the special charge is $107 million relating to the write-offof capital projects no longer being pursued.  Additionally, Unitedhas recorded a non-operating special charge of $48 million relating tothe write-down of residual values on certain non-operating equipment.
        As a result of recording the above special charges related to aircraftand capital projects, depreciation and amortization expense will decreaseby approximately $80 million in 2002.
         The Company has begun the process of furloughing approximately 20,000 employeesacross all work groups (pilots, flight attendants, mechanics, ramp service,customer service and management and salaried employees).  In connectionwith the furloughs, United has accrued severance costs of approximately$217 million, including a one-time curtailment charge relating to the acceleratedrecognition of unrecognized prior service costs for certain of the Company'spension plans.  As a direct result of the revaluation of the pensionplans, shareholders' equity at September 30, 2001 was reduced by $311 milliondue to the reduction in the discount rate and the change in the portfolioasset value as a result of the current economic environment.
         The special charge also includes $181 million for amounts due under executorycontracts with third parties, including aircraft manufacturers, softwarevendors, food suppliers and governmental authorities.
Accounting Changes
         Effective January 1,2001, United adopted Statement of Financial Accounting Standards No. 133,"Accounting for Derivative Instruments and Hedging Activities" ("SFAS No.133"), as amended.  Under SFAS No. 133, all derivatives (includingcertain derivative instruments embedded in other contracts) are recognizedin the balance sheet at fair value and changes in fair value are recognizedimmediately in earnings, unless the derivatives qualify as hedges of futurecash flows.  For derivatives qualifying as hedges of future cash flows,the effective portion of changes in fair value is recorded temporarilyin equity, then recognized in earnings along with the related effects ofthe hedged items.  All ineffective portions of a hedge are recordedin "Miscellaneous, net" as they occur.
         The adoption of SFASNo. 133 resulted in a cumulative credit of $3 million, net of tax, to 2001earnings.
         During the first quarterof 2000, United changed its method of accounting for the sale of mileageto participating partners in its Mileage Plus program, in accordance withStaff Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements." Under the new accounting method, a portion of the other revenue from thesale of mileage is deferred and recognized as passenger revenue when thetransportation is provided.  Accordingly, United recorded a chargeof $209 million, net of tax, for the cumulative effect of a change in accountingprinciple to reflect the application of the accounting method to prioryears.
Derivative Financial Instruments
        The ineffectiveness resulting from the changes in fair value of aircraftfuel and interest rate hedge positions was immaterial.  There wasno ineffectiveness resulting from the changes in fair value of foreigncurrency hedge positions reported in the first nine months' earnings. Amounts excluded from the assessment of effectiveness amounted to approximately$4 million before income taxes and were recorded in "Miscellaneous, net."
        The following is a reconciliation of current period changes (net of tax)of the portion of stockholder's equity relating to derivatives that qualifyas cash flow hedges: (InMillions)(decrease)/increaseTransitionadjustment as of January 1, 2001$  (4)Currentperiod increase in fair value, net    (8)Reclassificationsinto earnings, net  (12) Balance as of September 30, 2001$ (24)
        Of this amount, $12 million in losses is expected to be recorded into earningswithin the next twelve months.  At September 30, 2001, the term ofderivative instruments hedging variability in cash flows, except thoserelated to payment of variable interest on existing financial instruments,was seventeen years.
Income Taxes
         The provision for incometaxes is based on the estimated annual effective tax rate, which differsfrom the federal statutory rate of 35% principally due to state incometaxes and certain nondeductible items.  During the second quarterof 2001, the Company adjusted its estimated annual effective tax rate,primarily as a result of a reduction in the amount of quarterly dividendpayments to ESOP shareholders and revised estimated pre-tax book lossesfor the remainder of 2001.
Long-Term Debt
         During the third quarter,United issued $300 million in long-term debt to finance the acquisitionof aircraft, as well as $1.5 billion in enhanced equipment trust certificatesto finance certain owned aircraft.
         The Company, througha special-purpose financing entity that is consolidated, has issued commercialpaper which was originally classified as long-term debt.  The proceedsfrom the commercial paper were used to refinance certain equipment certificatessupporting leveraged lease transactions.  The Company has terminatedthis transaction using proceeds from an interim bank facility to pay offthe commercial paper.  The bank facility financing is classified asshort-term debt.
Segment Information
         United has a globalroute network designed to transport passengers and cargo between destinationsin North America, the Pacific, the Atlantic and Latin America.  Theseregions constitute United's four reportable segments.
         A reconciliation ofthe total amounts reported by reportable segments to the applicable amountsin the financial statements follows: (In Millions)Three Months Ended September 30, 2001     Reportable      LatinSegment Consolidated DomesticPacificAtlanticAmericaTotalOtherTotalRevenue$  2,636 $  700 $   594 $   167 $  4,097 $   - $  4,097 Earnings (loss) before income         taxes and special charges$   (603) $(137)$ (103)$   (43)$   (886) $   - $   (886) (InMillions)Three Months Ended September 30, 2000     Reportable      LatinSegment Consolidated DomesticPacificAtlanticAmericaTotalOtherTotalRevenue$3,195 $ 874$ 647$ 200 $4,916 $    -$4,916 Earnings(loss) before income       taxesand special charges$ (148)$   25$   43 $ (13)$   (93)$    - $   (93) (In Millions)Nine Months Ended September 30, 2001     Reportable      LatinSegment Consolidated DomesticPacificAtlanticAmericaTotalOtherTotalRevenue$  8,672 $  2,192 $ 1,734 $  565 $ 13,163 $   -$ 13,163 Earnings (loss) before income         taxes and special charges $(1,162) $  (375) $  (240) $  (82) $(1,859) $   -$ (1,859) (InMillions)Nine Months Ended September 30, 2000     Reportable      LatinSegment Consolidated DomesticPacificAtlanticAmericaTotalOtherTotalRevenue$9,921$2,332$1,690$ 604$14,547$ - $14,547Earningsbefore income       taxesand special charges$   490$     74$   117$   19$     700$    - $    700  ThreeMonths EndedNineMonths Ended September30September30(InMillions)2001200020012000Totalearnings (loss) for reportable segments$  (886)$  (93)$(1,859)$  700  Special charges(1,313)(12)(1,313)(76) Non-operating special charges(49)(61)(49)(61) Airline stabilization grant   391      -     391      - Totalearnings (loss) before income taxes,     extraordinary loss on debt and cumulative     effect of accounting change $(1,857)$ (166)$(2,830)$  563     
Other Comprehensive Income
         Total comprehensiveincome (loss) for the three- and nine-month periods ending September 30,2001 was $(1.6) billion and $(2.1) billion, respectively, compared to $(173)million and $(93) million for the three- and nine-month periods endingSeptember 30, 2000, respectively.  Other comprehensive income consistedof an adjustment to the minimum pension liability of $(311) million inthe third quarter 2001 and net unrealized gains (losses) of $(133) millionand $(27) million for the three- and nine-month periods ending September30, 2001, respectively, and $(62) million and $(232) million for the three-and nine-month periods ending September 30, 2000, respectively.
Contingencies and Commitments
         United has certaincontingencies resulting from litigation and claims (including environmentalissues) incident to the ordinary course of business.  Management believes,after considering a number of factors, including (but not limited to) theviews of legal counsel, the nature of contingencies to which United issubject and its prior experience, that the ultimate disposition of thesecontingencies is not expected to materially affect United's consolidatedfinancial position or results of operations.
         In connection withthe construction of the Indianapolis Maintenance Center, United agreedto spend an aggregate $800 million on capital investments by the year 2001and employ at least 7,500 individuals by the year 2004.  In the eventsuch targets are not reached, United may be required to make certain paymentsto the city of Indianapolis and state of Indiana.  As a result ofthe events of September 11 and the subsequent reduction in the Company'soperations and capital spending, United believes it is not likely to meetone or both of these targets; however, the Company is adequately reservedfor these contingencies.
         At September 30, 2001,commitments for the purchase of property and equipment, principally aircraft,approximated $3.2 billion, after deducting advance payments.  An estimated$0.9 billion will be spent during the remainder of 2001, $1.7 billion in2002 and $0.6 billion in 2003 and thereafter.  The major commitmentsare for the purchase of A319, A320, B767 and B777 aircraft, which are scheduledto be delivered through 2003.  United is currently negotiating withboth The Boeing Company and Airbus Industrie to delay future deliveriesof aircraft beyond 2003.    
Item 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIALCONDITION AND RESULTS OF OPERATIONS
September 11 TerroristAttacks
         On September 11, 2001,two United aircraft were hijacked and destroyed in terrorist attacks onThe World Trade Center in New York City and in a crash near Johnstown,Pennsylvania.  On the same day, two American Airlines aircraft werealso hijacked and used in terrorist attacks on The World Trade Center andthe Pentagon.  In addition to the loss of all passengers and crewon board the aircraft, these attacks resulted in numerous deaths and injuriesto persons on the ground and massive property damage.  In the immediateaftermath of the attacks, the Federal Aviation Administration ("FAA") orderedall aircraft operating in the U.S. grounded immediately.  This groundingeffectively lasted for three days, and the Company was able to operateonly a portion of its scheduled flights for several days thereafter. Passenger traffic and yields on the Company's flights declined significantlywhen flights were permitted to resume, and the Company refunded significantnumbers of tickets.  Since that time, the Company has experiencedsignificantly reduced revenue and has incurred additional costs as comparedto its forecasts made prior to September 11, 2001.  Although domesticload factors on the Company's flights are gradually increasing to levelssimilar to what it experienced prior to September 11 (however, on significantlyless capacity), yields remain at unusually low levels and internationalload factors remain depressed.
         In a direct responseto the adverse impact on air travel as a result of the terrorist attacks,United has reduced its capacity by 23 percent based on system-wide availableseat miles compared to levels prior to September 11.  This schedulereduction allowed for the retirement of the entire B727-200 and B737-200fleets, effective November 1, 2001.  On September 19, United announcedthat it will furlough approximately 20,000 employees.  Additionally,United has converted six stations to United Express.  United's futureschedule will vary as the Company reacts to continuing changes in demandand yields, as well as normal factors such as seasonality and fleet composition.
         On September 22, 2001,the President signed the Air Transportation Safety and System StabilizationAct (the "Act").  The Act is intended to compensate victims of theterrorist attacks as well as air carriers for losses incurred as a resultof such attacks.  Among other things, the Act provides  (1) forthe payment of an aggregate of $5 billion to air carriers for losses incurredas a result of the ground stop order issued on September 11 and incrementallosses incurred by air carriers through December 31, 2001 as a direct resultof the terrorist attacks; (2) that the liability of any air carrier, includingUnited, for all claims arising out of the terrorist attacks will not begreater than the limits of the liability coverage maintained by that carrier;(3) for the issuance of loan guarantees of up to an aggregate of $10 billionin debt of air carriers; (4) the authority of the Secretary of Transportationto reimburse air carriers for the increase in insurance premiums for coveragethrough October 1, 2002 and, at the discretion of the Secretary of Transportation,limitation of liability for U.S. air carriers for acts of terrorism committedduring a 180-day period following the date of the Act; (5) a compensationprogram for victims and their relatives; (6) for an extension of the duedate for payment of excise taxes; and (7) that communities that had airservice prior to September 11 continue to receive adequate air service.
         The Company anticipatesthat its liability from claims arising from the events of September 11,2001 will be significant, after considering the liability protections providedfor by the Act; however, the Company expects to recover that amount fromits insurance carriers as claims are settled and, in any event, the Companybelieves that, under the Act, its liability will be limited to the amountrecovered from its insurance carriers.
         United's aircraft liabilityinsurance coverage for claims caused by acts of war, terrorism, sabotage,hijacking and other similar perils was cancelled effective September 26,2001.  United obtained replacement coverage, although it will be chargedsignificantly higher premiums for this replacement coverage, and this newcoverage is in a substantially reduced amount for claims not involvingaircraft passengers.  The FAA is providing excess liability coveragefor third party war risk liability for losses to persons other than passengersor property up to two times the airline's limit of liability availableprior to September 11, 2001 for renewable 30-day periods, up to a maximumof 180 days.
         As of September 30,2001 United had received $391 million out of an expected $780 million incompensation under the Act.  This amount is recorded as non-operatingincome in the Statements of Consolidated Operations. 
RESULTS OF OPERATIONS
Summary of Results
         United's revenues,yield, revenue passenger miles and available passenger miles were significantlyimpacted by the events of September 11 and the resulting reduction in theCompany's operations.  The Company estimates the September 11 terroristattacks to have negatively impacted the Company's revenues by approximately$500 million during the third quarter.
         United's loss fromoperations was $(2.1) billion in the third quarter of 2001, compared toan operating loss of $(30) million in the third quarter of 2000. United's net loss was $(1.2) billion, compared to a net loss before anextraordinary loss on early extinguishment of debt of $(105) million inthe same period of 2000.
         In the first nine monthsof 2001, United's loss from operations was $(2.8) billion, compared tooperating earnings of $849 million in the first nine months of 2000. United's net loss before the cumulative effect of an accounting changewas $(1.8) billion, compared to net earnings before the cumulative effectof an accounting change and an extraordinary loss on debt, of $354 millionin the same period of 2000.
         Duringthe third quarter of 2001, United recorded a special charge of $834 million,net of tax, in operating expense and $31 million, net of tax, in non-operatingexpense for amounts relating to the September 11 terrorist attacks andthe resulting impact on the Company's schedule and operations.  Inaddition, United received $248 million, net of tax, in compensation underthe Act.  (See "Special Charges Related to the September 11 TerroristAttacks" in the Notes to Consolidated Financial Statements.)
         The 2000 earnings forthe quarter and nine months include a special charge of $8 million, netof tax, for the planned early retirement of four leased DC10-30s, as wellas an impairment loss of $38 million, net of tax, related to the Company'sequity investment in Priceline.com.  In addition, the 2000 earningsfor the nine months include a special charge of $15 million, net of tax,for seven leased B747 aircraft that will continue to be leased but willno longer be used for operating purposes beyond 2000; a special chargeof $23 million, net of tax, for the retirement of the inflight video systemon certain B777 aircraft; and a special charge of $3 million, net of tax,for losses related to subleases on non-operating aircraft.
         Specific factors affectingUnited's consolidated operations for the third quarter and first nine monthsof 2001 are described below.
Third Quarter 2001 Compared with Third Quarter 2000.
         Operating revenuesdecreased $819 million (17%) and United's revenue per available seat mile(unit revenue) decreased 13% to 9.52 cents.  The Company was experiencingrevenue weakness prior to September 11 as a result of the worsening U.S.economy and after the events of September 11, the situation only grew worse. Over the third quarter, passenger unit revenue for July was down 15% fromlast year, August was 7% lower on a depressed base last year and Septemberwas 30% lower.  Passenger unit revenue for the second half of Septemberwas down 44%.  Passenger revenues decreased $836 million (19%) ona 6% decrease in revenue passenger miles and a 14% decrease in yield. United's available seat miles across the system decreased 5% from the thirdquarter of 2000 which, combined with the decrease in revenue passengermiles, resulted in a decrease to passenger load factor of 1.5 points to73.1%.  The following analysis by market is based on information reportedto the U.S. Department of Transportation:  Increase (Decrease) Available SeatRevenue Passenger MilesRevenue Per Revenue Miles (Capacity)(Traffic)Passenger Mile (Yield)Domestic  (6%)  (7%)  (14%)Pacific  (5%)  (8%)  (16%)Atlantic  4%  -%  (13%)Latin America(8%)(13%)    (8%)  System  (5%)  (6%)  (14%)
         Cargo revenues decreased$77 million (33%) primarily due to a 30% decrease in cargo ton miles asa result of the September 11 terrorist attacks, as the FAA did not permitthe carriage of cargo and mail for nearly six days following the immediateground stop order.  Other operating revenues grew $94 million (24%)primarily due to a $104 million increase in fuel sales to third parties.
         Operating expensesdecreased $86 million (2%) and United's cost per available seat mile (unitcost) increased 3%, from 10.95 cents to 11.27 cents, excluding specialcharges.  In addition to the specific explanations provided below,the events of September 11 and the Company's response to those events,caused a favorable impact on certain operating expenses, including aircraftfuel, commissions and purchased services.  Commissions decreased $152million (54%) due to the decrease in commissionable revenues as a resultof the events of September 11 and a change to the commission structureimplemented in August 2001.  Aircraft rent decreased $17 million (8%)as the retirement of older aircraft reduced the number of aircraft underoperating leases.  Landing fees and other rent increased $25 million(11%) primarily due to increased rates at various airports.  Costof sales increased $106 million (38%) primarily due to costs associatedwith fuel sales to third parties.
         Other non-operatingexpense amounted to $135 million in the third quarter of 2001 comparedto $75 million in the third quarter of 2000, excluding special chargesand the airline stabilization grant.  Interest expense increased $27million (26%) due to new debt issuances.  Interest income decreased$10 million (37%) as a result of lower average investment balances.
Nine Months 2001 Compared with Nine Months 2000.
         Operating revenuesdecreased $1.4 billion (10%) and United's revenue per available seat mile(unit revenue) decreased 8% to 10.14 cents.  Passenger revenues decreased$1.5 billion (12%) due to a 3% decrease in revenue passenger miles anda 9% decrease in yield to 12.06 cents.  United's available seat milesacross the system decreased 1% from the first nine months of 2000 which,combined with the decrease in revenue passenger miles, resulted in a decreaseto passenger load factor of 1.3 points to 71.6%.  The following analysisby market is based on information reported to the U.S. Department of Transportation:  Increase (Decrease) Available SeatRevenue Passenger MilesRevenue Per Revenue Miles (Capacity)(Traffic)Passenger Mile (Yield)Domestic  (5%)  (6%)(9%)Pacific  4%  2%(10%)Atlantic  9%  6%(8%)Latin America(6%)  (7%)(1%)  System  (1%)(3%)(5%)
         Cargo revenues decreased$137 million (20%) due to a 20% decrease in cargo ton miles largely asa result of the September 11 terrorist attacks.  Other operating revenuesgrew $284 million (27%) primarily due to a $282 million increase in fuelsales to third parties.
         Operating expensesincreased $1.1 billion (8%) and United's cost per available seat mile (unitcost) increased 9%, from 10.35 cents to 11.32 cents, excluding specialcharges.  Salaries and related costs increased $545 million (11%)due to new salary programs implemented for non-contract employees, contractually-drivenincreases for employees represented by the Air Line Pilots Association,International ("ALPA") and the estimated costs of contracts with the InternationalAssociation of Machinists and Aerospace Workers ("IAM") which became amendablein 2000 and are currently under negotiation.  Aircraft fuel increased$221 million (12%) primarily due to a 15% increase in the average costof fuel from 76.9 cents to 88.7 cents a gallon.  Commissions decreased$165 million (21%) as a result of a decrease in commissionable revenuesand the change to the commission structure implemented in August 2001. Aircraft rent decreased $46 million (7%) as the retirement of older aircraftreduced the number of aircraft under operating leases.  Depreciationand amortization increased $47 million (6%) due to an increase in the numberof owned aircraft.  Cost of sales increased $307 million (42%) primarilydue to costs associated with fuel sales to third parties.  Aircraftmaintenance increased $51 million (10%) as a result of higher volumes ofheavy maintenance visits performed by third parties.
         Other non-operatingexpense amounted to $324 million in the first nine months of 2001 comparedto $225 million in the first nine months of 2000, excluding special chargesand the airline stabilization grant.  Interest expense increased $90million (30%) as a result of new debt issuances.  Interest incomeincreased $11 million (17%) as a result of increased investment balances.
LIQUIDITY AND CAPITAL RESOURCES
         United's total of cashand cash equivalents and short-term investments was $2.5 billion at September30, 2001, compared to $2.1 billion at December 31, 2000.  Cash flowsfrom operating activities amounted to $591 million, including $391 millionin cash received from the federal government under the Act.  Financingactivities included principal payments under debt and capital lease obligationsof $142 million and $179 million, respectively.  In addition, duringthe third quarter, United issued a total of $2.0 billion in long-term debtto finance the acquisition of aircraft.
         Property additions,including aircraft and aircraft spare parts, amounted to $1.8 billion. In the first nine months of 2001, United took delivery of eleven A319,twelve A320, one B767 and six B777 aircraft.  All of these aircraftwere purchased.  One of the aircraft purchased was sold and then leasedback under an operating lease.  In addition, United acquired two B757and one B737 aircraft off lease during the period and retired three DC10-30,sixteen B727 and two B737 aircraft.
         During the second quarterof 2001, United cancelled its $750 million revolving credit facility andreduced the maximum available borrowings under a separate short-term facility from $227 million to $133 million.  Subsequent to September 30, 2001and through October 31, 2001, the Company had borrowed $124 million underthis arrangement and pledged receivables of approximately $220 million.
         As of September 30,2001, United had guaranteed approximately $100 million of third-party debt.
         It is the Company'sintention to borrow approximately $500 million against an already existingshort-term secured aircraft facility.  Net of the assets requiredto support this financing, the Company has unencumbered aircraft and spareengines valued at over $4 billion.
         At September 30, 2001,UAL and United had an effective shelf registration statement on file withthe Securities and Exchange Commission to offer up to $1.0 billion of securities,including secured and unsecured debt, equipment trust and pass throughcertificates or a combination thereof.
         On September 20, 2001,Moody's Investors Service ("Moody's") announced that it had lowered United'ssenior unsecured debt ratings from Ba1 to B2.  In addition, Standard& Poor's ("S&P") announced that it lowered United's senior unsecureddebt ratings from BB+ to BB-.  The long-term corporate credit ratingsof United remain on S&P's CreditWatch with negative implications andMoody's has retained the credit ratings of United on review for possibledowngrade.
         At September 30, 2001,commitments for the purchase of property and equipment, principally aircraft,approximated $3.2 billion, after deducting advance payments.  Of thisamount, an estimated $0.9 billion is expected to be spent during the remainderof 2001.  For further details, see "Contingencies and Commitments"in the Notes to Consolidated Financial Statements.
         The impact of the eventsof September 11, 2001 on United and the sufficiency of its financial resourcesto absorb that impact will depend on a number of factors, including thefollowing: (1) the adverse impact of the terrorist attacks on the economyin general; (2) the demand for air travel; (3) United's ability to reduceits operating costs and conserve its financial resources, taking into accountany increased costs it will incur as a consequence of the attacks, includingthose referred to below; (4) the higher costs associated with new airlinesecurity directives and any other increased regulation of air carriers;(5) the significantly higher costs of aircraft insurance coverage for futureclaims caused by acts of war, terrorism, sabotage, hijacking and othersimilar perils, and the extent to which such insurance will continue tobe available; (6) the ability of United to reduce costs to a level thattakes into account the size of its operation; (7) United's ability to raisefinancing in light of the various factors referred to in this paragraph;(8) the price of jet fuel; (9) the number of crew members who may be calledfor duty in the reserve forces of the armed services and the resultingimpact on United's ability to operate as planned; (10) the extent of uncompensatedeconomic losses to United from the FAA's shutdown of the U.S. air trafficsystem; (11) any resulting declines in the values of the aircraft in United'sfleet; and (12) the extent of the benefits received by United under theAct, taking into account any challenges to and interpretations or amendmentsof the Act.
         At this point, duein part to the lack of predictability of future traffic, business mix andyields, United is unable to fully estimate the impact on it of the eventsof September 11, 2001 and their consequences and the sufficiency of itsfinancial resources to absorb that impact, including the mitigating effectsof the Act and the Company's aggressive actions to reduce its costs. However, given the magnitude of these unprecedented events and the possiblesubsequent effects, United expects that the adverse impact to its financialcondition, its operations and its prospects will be material. 
OTHER INFORMATION
Labor Agreements
        On July 12, 2000, the Company's contracts with the IAM became amendable. The Company has been in negotiations with the IAM since December 1999 fornew contracts.  Since September 2000, the negotiations have been conductedwith the assistance of the National Mediation Board ("NMB").  Underthe terms of the Railway Labor Act, United's current agreements with theIAM remain in effect as negotiations continue.
        On March 30, 2001, the Aircraft Mechanics Fraternal Association ("AMFA")announced that it had received enough authorization cards to request theNMB to conduct an election challenging the IAM for representation of theCompany's mechanics, one of the groups represented by the IAM.  OnAugust 9, the NMB ruled that AMFA did not have sufficient authorizationcards to call for an election.  As a result, the IAM will continueto represent United's employees.
        In October 2001, management had an informational meeting with the leadershipof United's six unions to give them a financial assessment and open theCompany's books for their review.  Going forward, the Company intendsto answer their questions and work together with the unions to find creativesolutions that move the Company toward financial stability.
Subsequent Event
         As of September 30,2001, United owned 15,940,000 shares (18%) in Galileo International, Inc.("Galileo"), a leading provider of electronic global distribution servicesfor the travel industry.  On October 1, 2001, Cendant Corporation("Cendant") acquired all of the outstanding common stock of Galileo fora combination of stock and cash.  Accordingly, United tendered allof its shares in Galileo for net proceeds of $65 million and 21,168,320shares in Cendant, resulting in a pre-tax gain of approximately $244 million($153 million, net of tax).  Subsequent to the acquisition by Cendant,United sold 7 million shares of Cendant common stock for net proceeds of$88 million.  These transactions will be recorded in the fourth quarter.
New Accounting Pronouncements
        In June 2001, the FinancialAccounting Standards Board ("FASB") issued Statement of Financial AccountingStandards No. 141 "Business Combinations" ("SFAS No. 141") and Statementof Financial Accounting Standards No. 142, "Goodwill and Other IntangibleAssets" ("SFAS No. 142").  SFAS No. 141 is effective for combinationsinitiated after June 30, 2001 and requires the use of the purchase methodin accounting for business combinations.  SFAS No. 142 is effectivefor fiscal years beginning after December 15, 2001 and requires companiesto test all goodwill and indefinite-lived intangible assets for impairmentand to cease amortization of such assets.  The Company intends toadopt SFAS No. 142 beginning in the first quarter 2002 and currently estimatesdiscontinuing approximately $17 million in amortization expense in 2002.
         In June 2001, the FASBissued Statement of Financial Accounting Standards No. 143 "Accountingfor Asset Retirement Obligations" ("SFAS No. 143"), which addresses theaccounting and reporting for obligations associated with the retirementof long-lived assets and associated asset retirement costs.  UnderSFAS No. 143, the fair value of a liability for an asset retirement obligationmust be recognized in the period in which it is incurred if a reasonableestimate of fair value can be made.  In addition, the associated assetretirement costs are capitalized as part of the carrying amount of thelong-lived asset.  SFAS No. 143 is effective for fiscal years beginningafter June 15, 2002.  The Company has not yet quantified the impactof SFAS No. 143 on the Company's financial statements.
         In August 2001, theFASB issued Statement of Financial Accounting Standards No. 144 "Accountingfor the Impairment or Disposal of Long-Lived Assets" ("SFAS No. 144"),which addresses the accounting and reporting for the impairment or disposalof long-lived assets.  SFAS No. 144 supersedes SFAS No. 121, but retainsSFAS No. 121's fundamental provisions for recognition/measurement of impairmentof long-lived assets to be held and used and measurement of long-livedassets to be disposed of by sale.  SFAS No. 144 is effective for fiscalyears beginning after December 15, 2001.  The Company does not expectSFAS No. 144 to have a material impact on the Company's financial statementsupon adoption. 
OUTLOOK
         Information regardingguidance for United's outlook can be obtained from UAL Corporation's Reporton Form 10-Q for the quarter ended September 30, 2001.
         Information includedin the above "Outlook" paragraphs is forward-looking and involves risksand uncertainties that could result in actual results differing materiallyfrom expected results.  Forward-looking statements represent the Company'sexpectations and beliefs concerning future events, based on informationavailable to the Company as of the date of this filing.  Some factorsthat could significantly impact net earnings, revenues, expenses, unitcosts and capacity include, without limitation, the adverse impact of theSeptember 11 terrorist attacks on the economy in general; the demand forair travel; the ability to reduce operating costs and conserve financialresources, taking into account increased costs incurred or to be incurredas a consequence of the attacks; the higher costs associated with new airlinesecurity directives and any other increased regulation of air carriers;the significantly higher costs of aircraft insurance coverage for futureclaims caused by acts of war, terrorism, sabotage, hijacking and othersimilar perils, and the extent to which such insurance will continue tobe available; the ability to reduce costs to a level that takes into accountthe size of the Company; the ability to raise financing in light of theSeptember 11 events; the airline pricing environment; industry capacitydecisions; competitors' route decisions; the success of the Company's cost-reductionefforts; the cost of crude oil and jet fuel; the results of union contractnegotiations and their impact on labor costs and operations; actions ofthe U.S., foreign and local governments; foreign currency exchange ratefluctuations; the economic environment of the airline industry and theeconomic environment in general.
        Investors should not place undue reliance on the forward-looking informationcontained herein, which speaks only as of the date of this filing. United disclaims any intent or obligation to update or alter any of theforward-looking statements whether in response to new information, unforeseenevents, changed circumstances or otherwise.   
Item 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURESABOUT MARKET RISK
         For information regardingthe Company's exposure to certain market risks, see Item 7A. Quantitativeand Qualitative Disclosures About Market Risk in United's Annual Reporton Form 10-K for the year 2000.  Significant changes which have occurredsince year-end are as follows:
Foreign Currency Risk -(Inmillions, except average contract rates)NotionalAverageEstimated AmountContractRateFairValue   (Pay)/Receive*Forwardexchange contracts   Japanese Yen - Purchased forwards$  114118.82$      -                            - Sold forwards$    44119.26$      -     Hong Kong Dollar - Sold forwards$    28   7.79$      -     French Franc - Purchased forwards$    50   5.05 $      (7)     Euro - Purchased forwards$  152   1.27  $    (20)    Currencyoptions   Japanese Yen - Purchased put options$     36117.47$    1Australian Dollar - Purchasedput options$     24    0.52$    1British Pound - Purchased putoptions$     25    1.38$    -Euro - Purchased put options$       3    0.84$    -Canadian Dollar - Purchased putoptions$     27    1.58$    -Correlation Basket Option - Sold$  115   N/A$  (1)
Price Risk (Aircraft fuel) -(Inmillions, except average contract rates)NotionalAverageEstimated AmountContractRateFairValue   (Pay)/Receive*Purchasedforward contracts - Crude oil$  197$ 24.63/bbl$  (7)Purchasedforward contracts - Heating oil$  104$ 29.57/bbl$  (4)
*Estimated fair values represent the amount United wouldpay/receive on September 30, 2001 to terminate the contracts.  
PART II.  OTHER INFORMATION

Item 6.  Exhibitsand Reports on Form 8-K.(a) Exhibits
         A list of exhibitsincluded as part of this Form 10-Q is set forth in an Exhibit Index thatimmediately precedes such exhibits. (b) No Form 8-Ks were filed in the third quarter of 2001.     
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,the Registrant has duly caused this report to be signed on its behalf bythe undersigned thereunto duly authorized.  UNITED AIR LINES, INC.By:  /s/ FredericF. Brace    Frederic F. Brace    Senior Vice President    and Chief Financial Officer    (principal financial officer)  By:/s/M. Lynn Hughitt    M. Lynn Hughitt    Vice President and Controller    (principal accounting officer)Dated:  November 8, 2001        Exhibit Index ExhibitNo.Description 12Computationof Ratio of Earnings to Fixed Charges   

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