**
**FORM 10-Q**
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C.  20549
(Mark One)
     [X] QUARTERLY REPORT PURSUANTTO SECTION 13 OR 15(d) OF THE                           SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended March 31, 2001OR     [  ] TRANSITION REPORT PURSUANTTO SECTION 13 OR 15(d) OF THE                                    SECURITIES EXCHANGE ACT OF 1934For the transition period from __________ to __________
Commission file number 33-21220 *
UNITED AIR LINES, INC.(Exact name of registrant as specified in its charter)Delaware 36-2675206(State or other jurisdiction of (I.R.S. Employerincorporation or organization) Identification No.) 1200 East Algonquin Road, Elk Grove Township, Illinois 60007Mailing Address:  P. O. Box 66100, Chicago,Illinois  60666(Address of principal executive offices)     (Zip Code)Registrant's telephone number, including areacode  (847) 700-4000 
Indicate by check mark whether the registrant (1) hasfiled all reports required to be filed by Section 13 or 15(d) of the SecuritiesExchange Act of 1934 during the preceding 12 months (or for such shorterperiod 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 theissuer's classes of common stock, as of the latest practicable date.  Outstanding atClass April 30, 2001Common Stock ($5 par value)205
*  Registrant is the wholly-owned subsidiary of UALCorporation (File 1-6033).  Registrant became subject to filing periodicreports under the Securities Exchange Act of 1934 as a result of a publicoffering of securities which became effective June 3, 1988 (RegistrationNos. 33-21220 and 22-18246).  
United Air Lines, Inc. and Subsidiary Companies Report on Form 10-QFor the Quarter Ended March 31, 2001IndexPART I. FINANCIAL INFORMATIONPage No.Item 1.  Financial Statements  Condensed Statements of Consolidated   Financial Position - as of March 31, 2001  (Unaudited) and December 31, 20003  Statements of Consolidated Operations  (Unaudited) - for the three months ended  March 31, 2001 and 2000 5  Condensed Statements of Consolidated  Cash Flows (Unaudited) - for the three  months ended March 31, 2001 and 2000 6  Notes to Consolidated Financial  Statements (Unaudited) 7Item 2.   Management's Discussion and Analysis of Financial Condition and Results of Operations 12Item 3.   Quantitative and Qualitative Disclosures AboutMarket Risk 17PART II. OTHER INFORMATIONItem 6.  Exhibits and Reports on Form 8-K 18Signatures19Exhibit Index20      
PART I.   FINANCIAL INFORMATION
Item 1.   Financial Statements
United Air Lines, Inc. and Subsidiary CompaniesCondensed Statements of Consolidated Financial Position(In Millions)
 March 31  2001December 31Assets(Unaudited)2000   Current assets:     Cash and cash equivalents$     960 $   1,468    Short-term investments498 655    Receivables, net1,384 1,212    Related party receivables571 553    Income tax receivables319 175    Inventories, net450 424    Prepaid expenses and other      658      686    4,840   5,173      Operating property and equipment:     Owned20,003 19,411    Accumulated depreciation and amortization   (5,696)   (5,583)   14,307  13,828      Capital leases3,044 3,155    Accumulated amortization      (613)     (640)     2,431   2,515   16,73816,343      Other assets:     Investments445 416    Intangibles, net663 671    Related party receivables469 467    Aircraft lease deposits672 710    Prepaid rent488 499    Other, net   1,031      790    3,768   3,553    $25,346$25,069   
See accompanying Notes to Consolidated Financial Statements.     
United Air Lines, Inc. and Subsidiary CompaniesCondensed Statements of Consolidated Financial Position(In Millions)
 March 31  2001December 31Liabilities and Stockholder's Equity(Unaudited)2000   Current liabilities:     Current portions of long-term debtand        capital leaseobligations$     417 $     438    Related party debt maturing withinone year165 155    Advance ticket sales1,822 1,454    Accrued salaries, wages and benefits1,597 1,508    Accounts payable1,230 1,149    Other   2,419   2,342    7,650   7,046   Long-term debt   4,912   4,740   Long-term obligations under capital leases   2,157   2,261   Other liabilities and deferred credits:     Deferred pension liability222 136    Postretirement benefit liability1,602 1,557    Deferred gains888 912    Deferred income taxes1,238 1,265    Other      903      929    4,853   4,799   Commitments and contingent liabilities (Seenote)     Preferred stock committed to Supplemental ESOP     476     571   Stockholder's equity:     Common stock at par- -    Additional capital invested232 232    ESOP capital3,530 3,432    Retained earnings1,362 1,833    Accumulated other comprehensiveincome182 163    Other         (8)         (8)    5,298   5,652    $25,346$25,069   
See accompanying Notes to Consolidated Financial Statements.      
United Air Lines, Inc. and Subsidiary CompaniesStatements of Consolidated Operations (Unaudited)(In Millions)
 Three Months Ended March 31     20012000Operating revenues:     Passenger$ 3,812 $ 3,967    Cargo192 217    Other       414      349    4,418   4,533Operating expenses:     Salaries and related costs1,849 1,515    Aircraft fuel664 539    Commissions233 249    Purchased services453 403    Aircraft rent209 222    Landing fees and other rent239 232    Depreciation and amortization252 235    Cost of sales307 254    Aircraft maintenance200 189    Other       440      414    4,846   4,252   Earnings (loss) from operations    (428)      281   Other income (expense):     Interest expense(132)(101)   Interest capitalized22 20    Interest income33 15    Equity in earnings (losses) ofaffiliates1 (1)   Miscellaneous, net      (18)      (10)       (94)      (77)Earnings (loss) before income taxes and     cumulative effect of accountingchanges(522)204 Provision for income taxes    (198)       76   Earnings (loss) before cumulative     effect of accounting changes(324)128 Cumulative effect of accounting change, netof tax        3    (209)Net loss$  (321)$    (81)   
See accompanying Notes to Consolidated Financial Statements.       
United Air Lines, Inc. and Subsidiary CompaniesCondensed Statements of Consolidated Cash Flows (Unaudited)(In Millions)
       Three Months       Ended March 31         2001       2000Cash and cash equivalents at beginning      of period$1,468$   235   Cash flows from operating activities     178     889   Cash flows from investing activities:     Additions to property and equipment(619)(556)   Proceeds on disposition of propertyand        equipment1 6    Decrease (increase) in short-terminvestments157 (72)   Increase in related party receivables(2)(4)   Other, net       (8)   (112)    (471)   (738)   Cash flows from financing activities:     Proceeds from issuance of long-termdebt- 200    Repayment of long-term debt(36)(127)   Principal payments under capital        lease obligations(69)(58)   Dividends to parent company(150)-    Decrease in short-term borrowings- (61)   Other, net      40      23    (215)     (23)   Increase (decrease) in cash and cash equivalents   (508)    128   Cash and cash equivalents at end of period$  960$  363      Cash paid during the period for:     Interest (net of amounts capitalized)$    81 $    71    Income taxes$      - $      2    Non-cash transactions:     Long-term debt incurred in connection        with additionsto other assets$   203 $      -    Capital lease obligations incurred$       - $      3 
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 generally accepted accounting principles have been condensedor omitted pursuant to or as permitted by such rules and regulations, althoughUnited believes that the disclosures are adequate to make the informationpresented not misleading.  In management's opinion, all adjustments(which include only normal recurring adjustments) necessary for a fairpresentation of the results of operations for the three month periods havebeen made.  These financial statements should be read in conjunctionwith the consolidated financial statements and footnotes thereto includedin United's Annual Report on Form 10-K for the year 2000.
Accounting Changes
         Effective January 1,2001, UAL 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 firstquarter 2001 earnings.
         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. 
Accounting Policies - Derivative Financial Instruments
*Hedges of Future Cash Flows*
***        **Foreign Currency*-****United enters into forwards and currency swaps to reduce exposureto currency fluctuations on Japanese yen-, Euro- and French franc-denominatedcapital lease obligations.  The cash flows of the forwards and swapsmirror those of the capital leases.  These forwards and swaps havebeen designated as cash flow hedges of the foreign currency denominatedlease payments.  For these forwards and swaps, United excludes changesin fair value resulting from changes in the forward points in its assessmentof effectiveness.  Any gains or losses realized upon early terminationof these forwards and swaps are recorded (net of tax) as a component ofother comprehensive income and recognized in income as the hedged transactionimpacts earnings.
         The Company hedgessome of the risks of exchange rate volatility on its anticipated futureJapanese yen, Euro, Canadian dollar, Australian dollar and British poundrevenues by purchasing put options and on Hong Kong dollar revenues byentering into forward contracts.  These options and forwards havea duration of less than one year and the amounts are synchronized withthe expected cash receipts.  Accordingly, the put options and forwardshave been designated as cash flow hedges of the anticipated cash receipts. Changes in the fair value of purchased put option contracts, to the extentthey are effective, are recorded in other comprehensive income (net oftax) and then recognized as a component of passenger revenue when the underlyinghedged revenue is recorded.  United excludes, in its assessment ofeffectiveness, changes in the fair value of these instruments that area result of changes in their time value.
***        *AircraftFuel** - United uses crude oil forwards and options to hedge a portionof its price risk related to aircraft fuel purchases.  These contractshave maturity dates of less than one year and have been designated as cashflow hedges of anticipated jet fuel purchases.  These contracts arerecorded at fair value with the changes in fair value, to the extent theyare effective, recorded in other comprehensive income (net of tax), untilthe underlying hedged fuel is consumed.  The Company determines theineffective portion of the fuel forwards and options as the excess of thefair value of the hedge contracts compared to the change in expected cashoutflows for the hedged fuel.  United excludes, in its assessmentof effectiveness, changes in the fair value of these instruments that area result of changes in their time value.
         *Interest Rate -*Unitedis a party to a series of interest rate swaps that convert floating-rateoperating leases to fixed-rate leases.  United has designated theseswaps as cash flow hedges of the floating-rate leases and has recordedthese contracts at fair value with the effective portion recorded as acomponent of other comprehensive income (net of tax).
         There was no ineffectivenessresulting from the changes in fair value of these foreign currency, aircraftfuel and interest rate hedge positions reported in first quarter earnings. Amounts excluded from the assessment of effectiveness amounted to approximately$1 million before income taxes and were recorded in "Miscellaneous, net." No amounts were reclassified to earnings during the first quarter in connectionwith forecasted transactions that were no longer considered probable ofoccurrence.
         The following is areconciliation of current period changes (net of tax) of the portion ofstockholders'equity relating to derivatives that qualify as cash flow hedges: (In Millions)(debit)/creditTransition adjustment as of January1, 2001$   (4)Current period increase in fairvalue, net      6Reclassifications into earnings,net   (10)Balance as of March 31, 2001$  (8)
         Of this amount, $5million in gains is expected to be recorded into earnings within the nexttwelve months.  At March 31, 2001, the term of derivative instrumentshedging variability in cash flows, except those related to payment of variableinterest on existing financial instruments, was seventeen years.
*Other Derivative Instruments Not Designated as Hedges*
***        *Equity Warrants**-The Company may also invest in or receive warrants to purchase securitiesof other companies as strategic investments.  Changes in the fairvalue of warrants that are not designated as hedge instruments are includedin "Miscellaneous, net."
         *Foreign Currency-*From time to time, United enters into Japanese yen forward exchangecontracts to minimize gains and losses on the revaluation of short-termyen-denominated liabilities.  The yen forwards, typically having short-termmaturities, are not designated hedges under SFAS No. 133 and are markedto fair value through the income statement at the end of each accountingperiod.  The unrealized mark-to-market gains and losses generallyoffset the losses and gains recorded on the yen liabilities.
         To reduce hedging costs,the Company sells a correlation option denominated in Japanese yen, Euros,Canadian dollars, Australian dollars and British pounds.  These correlationoptions are not designated as a hedge and the changes in the fair marketvalue of the correlation options are included in "Miscellaneous, net."
Employee Stock Ownership Plans
         Pursuant to amendedlabor agreements which provide for wage and benefit reductions and work-rulechanges which commenced July 1994, UAL agreed to issue convertible preferredstock to employees.  Note 2 of the Notes to Consolidated FinancialStatements in the 2000 Annual Report on Form 10-K contains additional discussionof the agreements, stock issued to employees and the related accountingtreatment.  The final allocation of shares occurred in March 2001as follows:  669,966 shares of Class 1 ESOP Preferred Stock were allocatedunder the Leveraged ESOP, 167,523 shares of Class 2 ESOP Preferred Stockwere contributed to the Non-Leveraged ESOP and an additional 20,007 shareswere allocated in "book entry" form under the Supplemental Plan.
Income Taxes
         The provisions forincome taxes are based on the estimated annual effective tax rate, whichdiffers from the federal statutory rate of 35% principally due to stateincome taxes and certain nondeductible items. 
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 March 31, 2001     Reportable      LatinSegment Consolidated DomesticPacificAtlanticAmericaTotalOtherTotalRevenue$2,953 $ 745 $ 513 $ 207 $ 4,418 $    -$ 4,418 Earnings (loss) before         income taxes$ (320)$(118)$  (72)$  (12)$  (522)$    -$  (522)(In Millions)Three Months Ended March 31, 2000     Reportable      LatinSegment Consolidated DomesticPacificAtlanticAmericaTotalOtherTotalRevenue$ 3,190$  689$  446$  208$ 4,533$    -$ 4,533Earnings (loss) before         income taxes and         special charges$    164$    21$      3$    19$    207$    -$    207 Three Months Ended March 31(In Millions)20012000Total earnings (loss) for reportablesegments$  (522)$   207   Special charges       -       (3)Total earnings (loss) before incometaxes and    cumulative effect of accountingchange$  (522)$   204
Other Comprehensive Income
         Total comprehensiveincome (loss) for the three months ending March 31, 2001 was $(302) millioncompared to $(176) million for the first quarter 2000.  Other comprehensiveincome consisted of net unrealized gains of $19 million in 2001 and netunrealized losses of $95 million in 2000.
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.
         At March 31, 2001,commitments for the purchase of property and equipment, principally aircraft,approximated $4.2 billion, after deducting advance payments.  An estimated$2.0 billion will be spent during the remainder of 2001, $1.7 billion in2002 and $0.5 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.  
Item 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIALCONDITION AND RESULTS OF OPERATIONS
US AIRWAYS ACQUISITION
         On May 24, 2000, UALannounced that it had entered into a definitive merger agreement with USAirways Group, Inc. ("US Airways") pursuant to which US Airways will beacquired by the Company in an all-cash transaction for $4.3 billion. Additionally, UAL will assume approximately $1.7 billion in US Airwaysnet debt and $6.3 billion in operating leases.  On October 12, 2000,the stockholders of US Airways approved the merger.  The transactionis subject to regulatory clearance and other customary closing conditions. If the closing does not occur by August 1, 2001, the agreement generallymay be terminated by either party and in such case UAL has agreed to payUS Airways a termination fee of $50 million.  Definitive financingagreements have not yet been arranged; however, UAL expects to incur upto approximately $4.5 billion in additional indebtedness, some or all ofwhich may be incurred by United, through a combination of bank and publicfinancing, to cover the cost of the acquisition as well as additional costsrelated to the integration of the airlines.  Following consummationof the transaction, the operations of US Airways will be integrated withthose of United, although, in the near term, US Airways will remain asa separate subsidiary of UAL, not owned by United.
         The Company expectsthat the new network will make traveling more convenient for passengers,connecting US Airways' eastern U.S. markets with United's east-west andinternational markets, thereby creating the nation's most comprehensiveairline network. However, the Company recognizes that it will incur significantcosts associated with the integration of US Airways in order to achievethe anticipated benefits to both the Company and the millions of passengersand hundreds of communities served by United throughout the United Statesand that it may encounter difficulties in achieving these significant benefits. Through March 31, 2001, the Company has deferred approximately $50 millionin incremental direct costs related to the acquisition on its balance sheet. Also, on June 20, 2000, the Company announced its intention to expand USAirways' maintenance facility in Pittsburgh at a total projected cost of$160 million, subject to closing of the US Airways transaction and thesuccessful outcome of negotiations with local authorities.
         In addition, UAL andUS Airways announced on May 24, 2000, that they had entered into a bindingmemorandum of understanding with Robert Johnson, a member of the US Airways'Board of Directors, under which Mr. Johnson would buy certain of US Airways'assets and create a new airline, to be called DC Air, which would competeon numerous routes currently served by US Airways in the Washington D.C.area.
         Furthermore, UAL andAMR Corporation ("AMR") on January 9, 2001 announced the approval of abinding memorandum of understanding ("MOU"), under which AMR's AmericanAirlines subsidiary ("American") would provide competitive service on keyhub-to-hub routes where United and US Airways currently are the only competitorswith non-stop flights.  Under the MOU, American would also enter intoa 20-year joint venture with United to jointly provide service on routescurrently served by the US Airways Shuttle between New York's LaGuardiaAirport, Washington, D.C.'s Reagan National Airport and Boston's LoganAirport.  In addition, the MOU provides that United would transfera number of gates, slots and up to 86 aircraft acquired in its merger withUS Airways to American.
         Under the MOU, AMRwould pay UAL up to $1.2 billion in cash for this transaction and Americanwould assume certain lease obligations and buy certain spare engines andother parts associated with the aircraft being transferred.
         On March 2, 2001, UALannounced that it had reached agreement with Atlantic Coast Airlines Holdings,Inc. ("ACAI") for US Airways to sell its three wholly owned regional airlines(Allegheny Airlines, Piedmont Airlines and PSA Airlines) to ACAI for aninitial purchase price of $200 million.  UAL and ACAI will seek toagree upon the ultimate purchase price over an 18-month period.  Ifan ultimate purchase price is not agreed as to a carrier, then the transactionas to that carrier is subject to being unwound.  If ACAI is not theultimate purchaser of at least one of the carriers, UAL has agreed to payACAI a termination fee of up to $10 million.  The transaction, whichis contingent upon and will occur at the same time as closing of the proposedacquisition of US Airways, is subject to regulatory approvals and to certaintermination rights by UAL.  In addition, at closing, the three carriersare expected to execute agreements to provide feeder service to the combinedUnited and US Airways network.
         For accounting purposes,until the ultimate purchase price is agreed upon, this transaction willnot be treated as a sale and the total assets and total liabilities ofthe three carriers will remain on the balance sheet of UAL.  UAL willrecognize revenues and expenses from these feeder operations in the samemanner as it would for any other United Express carrier.
         UAL and the variousparties are in the process of negotiating definitive agreements to implementthe MOU and ACAI agreements described above; however, there can be no assurancesthat such agreements will be completed.  Given the complexity of thetransactions related to the US Airways acquisition and the regulatory reviewprocess, the Company is unable to determine when the transaction will close.
Summary of Results
         United's loss fromoperations was $(428) million in the first quarter of 2001, compared tooperating earnings of $281 million in the first quarter of 2000. United's net loss before the cumulative effect of an accounting changewas $(324) million compared to net earnings of $128 million in the sameperiod of 2000.
         Specific factors affectingUnited's consolidated operations for the first quarter of 2001 are describedbelow.
First Quarter 2001 Compared with First Quarter 2000.
         Operating revenuesdecreased $115 million (3%) and United's revenue per available seat mile(unit revenue) decreased 2% to 10.49 cents.  Passenger revenues decreased$155 million (4%) primarily due to a 3% decrease in yield to 13.15 cents. United's revenue passenger miles decreased slightly, while available seatmiles across the system were down 1% over the first quarter of 2000; however,passenger load factor increased 0.1 point to 68.3%.  The followinganalysis by market is based on information reported to the U.S. Departmentof Transportation:  Increase (Decrease) Available SeatRevenue Passenger MilesRevenue Per Revenue Miles (Capacity)(Traffic)Passenger Mile (Yield)Domestic  (6%)  (6%)(2%)Pacific12%11%(3%)Atlantic11%12%-Latin America(7%)  (5%)7%  System(1%)(1%)(3%)
         Cargo revenues decreased$25 million (12%) due to a 15% decrease in cargo ton miles as a resultof the discontinuation of freighter operations in the fourth quarter 2000,offset by a 4% increase in yield.  Other operating revenues increased$65 million (19%) primarily due to increased fuel sales to third partiesand increased revenues from the sale of miles to Mileage Plus partners.
         Operating expensesincreased $594 million (14%) and United's cost per available seat mile(unit cost) increased 15%, from 10.00 cents to 11.51 cents.  Salariesand related costs increased $334 million (22%) due to new salary programsimplemented for non-contract employees, the new contract with the Air LinePilots Association, International and the estimated costs of contractswith the International Association of Machinists and Aerospace Workers("IAM") which became amendable in 2000 and are currently under negotiation. Aircraft fuel increased $125 million (23%) due to a 25% increase in theaverage cost of fuel from 73.0 cents to 91.1 cents a gallon.  Commissionsdecreased $16 million (6%) as a result of a decrease in commissionablerevenues.  Aircraft rent decreased $13 million (6%) due to a decreasein aircraft under operating leases as a result of aircraft retirements. Depreciation and amortization increased $17 million (7%) due to an increasein the number of owned aircraft.  Cost of sales increased $53 million(21%) primarily due to costs associated with fuel sales to third parties.
         Other non-operatingexpense amounted to $94 million in the first quarter of 2001 compared to$77 million in the first quarter of 2000.  Interest expense increased$31 million (31%) due to new debt issuances during the latter part of 2000. Interest income increased $18 million (120%) as a result of increased investmentbalances.  Miscellaneous, net includes $7 million in other foreignexchange losses in 2001, compared to $7 million in losses on currency optionsand $5 million of other foreign exchange gains in 2000.
LIQUIDITY AND CAPITAL RESOURCES
         United's total of cashand cash equivalents and short-term investments was $1.5 billion at March31, 2001, compared to $2.1 billion at December 31, 2000.  Cash flowsfrom operating activities amounted to $178 million.  Financing activitiesincluded principal payments under debt and capital lease obligations of$36 million and $69 million, respectively.
         Property additions,including aircraft and aircraft spare parts, amounted to $619 million. In the first quarter of 2001, United took delivery of four A319, threeA320 and two B777 aircraft.  All of these aircraft were purchased. In addition, United acquired two B757 aircraft off lease during the quarterand retired three DC10-30 and four B727 aircraft.
         At March 31, 2001,commitments for the purchase of property and equipment, principally aircraft,approximated $4.2 billion, after deducting advance payments.  Of thisamount, an estimated $2.0 billion is expected to be spent during the remainderof 2001.  For further details, see "Contingencies and Commitments"in the Notes to Consolidated Financial Statements.
OTHER INFORMATION
Labor Agreements
         On July 12, 2000, theCompany's contracts with the IAM became amendable.  The Company hasbeen in negotiations with the IAM since December 1999 for new contracts. Since September 2000, the negotiations have been conducted with the assistanceof the National Mediation Board ("NMB").  Under the terms of the RailwayLabor Act, United's current agreements with the IAM remain in effect asnegotiations continue.
         On March 30, 2001,the Aircraft Mechanics Fraternal Association ("AMFA") announced that ithad received enough authorization cards to request the NMB to conduct anelection challenging the IAM for representation of the Company's mechanics,one of the groups represented by the IAM.  The NMB is currently reviewingthese cards, as well as other issues, to determine whether an electionshould be held.
         The Company's contractwith the Association of Flight Attendants ("AFA"), which becomes amendablein 2006, provided for a mid-term compensation conference beginning in thefirst quarter of 2001.  Pursuant to the contract, the Company andthe AFA began compensation conference negotiations in February 2001 andin April began arbitration proceedings.  On May 10, an arbitrationpanel concluded that United's flight attendants are not entitled to additionalcompensation at this time because United's overall flight attendant costscontinue to exceed an index of flight attendant costs at peer carriersin the U.S. airline industry.
         In separate discussionsdesigned to avoid the need for this conference and address potential integrationissues related to the US Airways acquisition, the Company offered the AFAa 4% increase in exchange for the AFA's waiver of any claim that the scopeclause in its labor contract applies to the US Airways acquisition, althoughthe Company does not believe that obtaining such a waiver is legally required. The AFA rejected this offer, countering with a request for a 20% increase,which the Company declined.  The AFA has threatened to disrupt operationsif the US Airways transaction closes without the Company first having obtainedthe scope waiver.  Any such disruptions would violate both the currentcontract and federal labor law.  Should such action occur, the Companywould take all necessary steps to minimize the impact on the Company andits customers.
OUTLOOK FOR 2001
         Information regardingguidance for United's 2001 outlook can be obtained from UAL Corporation'sReport on Form 10-Q for the quarter ended March 31, 2001.
         Information includedin the "Outlook for 2001" and "US Airways Acquistion" sections are forward-lookingand involve risks and uncertainties that could result in actual resultsdiffering materially from expected results.  Forward-looking statementsrepresent the Company's expectations and beliefs concerning future events,based on information available to the Company as of the date of this filing. Some factors that could significantly impact revenues, expenses, unit costs,capacity, earnings and the results and benefits of the pending merger betweenUnited and US Airways include, without limitation, the airline pricingenvironment; industry capacity decisions; competitors' route decisions;obtaining regulatory approvals for the United and US Airways merger; successfullyintegrating the businesses of United and US Airways; costs related to theUnited and US Airways merger; achieving cost-cutting synergies resultingfrom the United and US Airways merger; labor integration issues; the ultimateoutcome of existing litigation; the success of the Company's cost-controlefforts; the cost of crude oil and jet fuel; the results of union contractnegotiations and their impact on labor costs; operational disruptions asa result of bad weather, air traffic control-related difficulties and laborissues; the growth of e-commerce and off-tariff distribution channels;the effective deployment of customer service tools and resources; actionsof the U.S., foreign and local governments; foreign currency exchange ratefluctuations; the economic environment of the airline industry and theeconomic environment in general.
         Investors should notplace undue reliance on the forward-looking information contained herein,which speaks only as of the date of this filing.  United disclaimsany intent or obligation to update or alter any of the forward-lookingstatements whether in response to new information, unforeseen events, changedcircumstances or otherwise.   
Item 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURESABOUT MARKET RISK
For information regarding the Company's exposure to certain market risks,see Item 7A. Quantitative and Qualitative Disclosures About Market Riskin United's Annual Report on Form 10-K for the year 2000.  Significantchanges which have occurred since year-end are as follows:
Foreign Currency Risk - (In millions, except averagecontract rates)NotionalAverageEstimated AmountContract RateFair Value   (Pay)/Receive*Forward exchange contracts   Japanese Yen - Purchased forwards$     98120.97$    (4)                            - Sold forwards$     43125.16$       -     Hong Kong Dollar - Sold forwards$   105    7.79$       -     French Franc - Purchased forwards$     50    5.05$    (6)     Euro - Purchased forwards$   152    1.27$  (17)    Currency options   Japanese Yen - Purchased put options$    187119.25$     9Australian Dollar - Purchasedput options$      80     0.52$     4British Pound - Purchased putoptions$      88     1.38$     1Euro - Purchased put options$      59     0.88$     1Canadian Dollar - Purchased putoptions$      67     1.58$     1Correlation Basket Option - Sold$   481    N/A$   (4)
Price Risk (Aircraft fuel) - (In millions, except averagecontract rates)NotionalAverageEstimated AmountContract RateFair Value   (Pay)/Receive*Purchased forward contracts -Crude oil$    50$  26.13/bbl$    -
*Estimated fair values represent the amount United wouldpay/receive on March 31, 2001 to terminate the contracts.  
PART II.  OTHER INFORMATION
Item 6.  Exhibits and Reports on Form 8-K. (a)   Exhibits        A list of exhibits included aspart of this Form 10-Q is set forth in an Exhibit Index that immediatelyprecedes such exhibits.
(b)   Form 8-K dated January 18, 2001 to report a press releaseto report earnings for the quarter ended December 31, 2000.           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/ Douglas A. Hacker      Douglas A. Hacker      Executive Vice President-      Finance and Planningand      Chief Financial Officer      (principal financialofficer)     By:  /s/ M. Lynn Hughitt      M. Lynn Hughitt      Vice President andController      (principal accountingofficer)
Dated:  May 14, 2001             Exhibit Index Exhibit No.Description   12Computation of Ratio of Earnings to Fixed Charges     
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