UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                     WASHINGTON, D.C. 20549

                            FORM 10-Q

           QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
             OF THE SECURITIES EXCHANGE ACT OF 1934

For Quarter Ended September 30, 1996, Commission File Number 33-21220*
----------------------------------------------------------------------

                     UNITED AIR LINES, INC.
                     ----------------------
     (Exact name of Registrant as specified in its charter)
                                
             Delaware                    36-2675206
             --------                    ----------
   (State or other jurisdiction of     (I.R.S. Employer
    incorporation or organization)     Identification No.)

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

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

Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the Registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.


                     Yes    X           No
                          -----             -----


Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
                                
                                         Outstanding at
          Class                         October 31, 1996
          -----                         ----------------

    Common Stock ($5 par value)              200

*  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 30, 1996
             ----------------------------------------

Index
-----

Part I.   Financial Information                             Page No.
------    ---------------------                             -------

          Item 1.   Financial statements:

                    Condensed statement of consolidated           3
                    financial position (unaudited) - as of 
                    September 30, 1996 and December 31, 1995

                    Statement of consolidated operations          5
                    (unaudited) - for the three months and nine
                    months ended September 30, 1996 and 1995

                    Condensed statement of consolidated           7
                    cash flows (unaudited) - for the nine
                    months ended September 30, 1996 and 1995

                    Notes to consolidated financial               8
                    statements (unaudited)

          Item 2.   Management's discussion and analysis         11
                    of financial condition and results of
                    operations

Part II.  Other Information
-------   -----------------

          Item 1.   Legal Proceedings                            17
          Item 6.   Exhibits and Reports on Form 8-K             18



Signatures                                                       19
----------

Exhibit Index                                                    20
-------------


                              
               PART I.   FINANCIAL INFORMATION
                              
Item 1.   Financial Statements
                              
<TABLE>
<CAPTION>
          United Air Lines, Inc. and Subsidiary Companies
 Condensed Statements of Consolidated Financial Position (Unaudited)
                        (In Millions)
                              
                                                            
                                   September 30,  December 31,
                                       1996           1995
                                      ------         ------
<S>                                  <C>          <C>
Assets
------                                                           
Current assets:                                            
   Cash and cash equivalents          $    217    $     142
   Short-term investments                  405          425
   Receivables, net                      1,115          947
   Related party receivables                 4           -
   Inventories, net                        351          298
   Deferred income taxes                   224          240
   Prepaid expenses and other              285          380
                                       -------      -------
                                         2,601        2,432
                                       -------      -------              
                                                           
Operating property and equipment:                          
   Owned                                12,052       11,213
   Accumulated depreciation 
     and amortization                   (5,335)      (5,153)
                                       -------      -------
                                         6,717        6,060
                                       -------      -------
                                                           
   Capital leases                        1,875        1,464
   Accumulated amortization               (564)        (503)
                                       -------      -------
                                         1,311          961
                                       -------      -------
                                         8,028        7,021
                                       -------      -------              
                                                           
Other assets:                                              
   Intangibles, net                        718          736
   Deferred income taxes                   136          238
   Related party receivables               421          482
   Aircraft lease deposits                 173           71
   Other                                   443          413
                                       -------      -------
                                         1,891        1,940
                                       -------      -------
                                      $ 12,520     $ 11,393
                                       =======      =======
                              
                              
  See accompanying notes to consolidated financial statements.
                         
</TABLE>

<TABLE>
<CAPTION>
                              
          United Air Lines, Inc. and Subsidiary Companies
 Condensed Statements of Consolidated Financial Position (Unaudited)
                        (In Millions)
                              
                                                            
                                   September 30,   December 31,
                                       1996            1995
                                      ------          ------
<S>                                  <C>           <C>
Liabilities and Stockholders' Equity
------------------------------------                                                           
Current liabilities:                                       
   Long-term debt maturing 
     within one year                 $    69        $     84
   Related party debt maturing              
     within one year                      55              43
   Current obligations under                          
     capital leases                      128              98
   Advance ticket sales                1,335           1,100
   Accounts payable                      815             682
   Other                               2,560           2,396
                                     -------         -------
                                       4,962           4,403
                                     -------         -------
                                                           
Long-term debt                         1,854           2,338
                                     -------         -------
                                                           
Long-term obligations under 
  capital leases                       1,350             990
                                     -------         -------

Other liabilities and deferred credits:                             
   Deferred pension liability             47             368
   Postretirement benefit liability    1,288           1,225
   Deferred gains                      1,163           1,214
   Other                                 615             598
                                     -------         -------
                                       3,113           3,405
                                     -------         -------
                                                           
Minority interest                         31              59
                                     -------         -------
                                                           
Preferred stock committed 
  to Supplemental ESOP                    97              60
                                     -------         -------
                                                           
Stockholders' equity:                                      
   Common stock at par                    -               -
   Additional capital invested         1,429             822
   Retained earnings (deficit)           101            (413)
   Unearned ESOP preferred stock        (327)           (175)
   Other                                 (90)            (96)
                                     -------         -------
                                       1,113             138
                                     -------         -------             
Commitments and contingent                                 
  liabilities (See note)
                                                           
                                    $ 12,520        $ 11,393
                                     =======         =======
                              
  See accompanying notes to consolidated financial statements.
</TABLE>                       

<TABLE>
<CAPTION>
                              
       United Air Lines, Inc. and Subsidiary Companies
      Statements of Consolidated Operations (Unaudited)
                        (In Millions)
                              
                                       Three Months Ended
                                          September 30
                                        1996        1995
                                       ------      ------
<S>                                   <C>          <C>
Operating revenues:                                        
   Passenger                          $ 4,003      $ 3,694
   Cargo                                  191          197
   Other                                  283          224
                                       ------       ------
                                        4,477        4,115
                                       ------       ------
Operating expenses:                                        
   Salaries and related costs           1,171        1,137
   ESOP compensation expense              157          139
   Aircraft fuel                          538          435
   Commissions                            397          409
   Purchased services                     303          277
   Aircraft rent                          236          258
   Landing fees and other rent            206          216
   Depreciation and amortization          217          182
   Aircraft maintenance                   106          100
   Other                                  533          494
                                       ------       ------
                                        3,864        3,647
                                       ------       ------             
                                       
Earnings from operations                  613          468
                                       ------       ------             
Other income (expense):                                    
   Interest expense                       (71)         (90)
   Interest capitalized                    18            9
   Interest income                          8           25
   Equity in earnings of affiliates        16           14
   Miscellaneous, net                     (28)         (24)
                                       ------       ------
                                          (57)         (66)
                                       ------       ------
Earnings before income taxes and                           
   extraordinary item                     556          402
Provision for income taxes                208          155
                                       ------       ------
Earnings before extraordinary item        348          247
Extraordinary loss on early                                
  extinguishment of debt, net of tax       (7)          -
                                       ------       ------
Net earnings                          $   341      $   247
                                       ======       ======
                              
                              
  See accompanying notes to consolidated financial statements.
</TABLE>                      
                              
<TABLE>                              
<CAPTION>
                              
       United Air Lines, Inc. and Subsidiary Companies
      Statements of Consolidated Operations (Unaudited)
                        (In Millions)
                              
                                        Nine Months Ended
                                           September 30
                                         1996        1995
                                        ------      ------
<S>                                  <C>          <C>
Operating revenues:                                        
   Passenger                         $  10,975    $  10,006
   Cargo                                   558          557
   Other                                   819          676
                                       -------      -------
                                        12,352       11,239
                                       -------      -------
Operating expenses:                                        
   Salaries and related costs            3,513        3,397
   ESOP compensation expense               488          336
   Aircraft fuel                         1,504        1,225
   Commissions                           1,108        1,115
   Purchased services                      876          782
   Aircraft rent                           716          768
   Landing fees and other rent             628          600
   Depreciation and amortization           588          519
   Aircraft maintenance                    336          302
   Other                                 1,519        1,386
                                       -------      -------
                                        11,276       10,430
                                       -------      -------
                                                           
Earnings from operations                 1,076          809
                                       -------      -------
                                                           
Other income (expense):                                    
   Interest expense                       (227)        (275)
   Interest capitalized                     57           31
   Interest income                          29           67
   Equity in earnings of affiliates         53           41
   Miscellaneous, net                      (52)         (43)
                                       -------      -------
                                          (140)        (179)
                                       -------      -------
Earnings before income taxes and                           
   extraordinary item                      936          630
Provision for income taxes                 356          246
                                       -------      -------
Earnings before extraordinary item         580          384
Extraordinary loss on early                                
  extinguishment of debt, net of tax       (66)          -
                                       -------      -------
Net earnings                         $     514    $     384
                                       =======      =======
                              
                              
  See accompanying notes to consolidated financial statements.
                    
</TABLE>                              

<TABLE>                              
<CAPTION>                              
                              
       United Air Lines, Inc. and Subsidiary Companies
 Condensed Statements of Consolidated Cash Flows (Unaudited)
                        (In Millions)
                              
                                         Nine Months Ended
                                           September 30
                                          1996       1995
                                         ------     ------
<S>                                     <C>        <C>
Cash and cash equivalents at                               
  beginning of period                   $   142    $   444
                                         ------     ------             
                                         
Cash flows from operating activities      1,955      1,440
                                         ------     ------
                                                           
Cash flows from investing activities:                                 
  Additions to property and            
    equipment                            (1,100)      (742)
  Proceeds on disposition of                              
    property and equipment                   20        327
  Decrease (increase) in 
    short-term investments                   20       (269)
  Decrease in related party                
    receivables                              57         94
  Other, net                                (19)       (14)
                                         ------     ------
                                         (1,022)      (604)
                                         ------     ------             
Cash flows from financing activities:                                 
  Repayment of long-term debt              (682)      (510)
  Principal payments under capital                         
    lease obligations                       (91)       (66)
  Decrease in short-term borrowings          -        (269)
  Other, net                                (85)       (13)
                                         ------     ------
                                           (858)      (858)
                                         ------     ------            
Increase (decrease) in cash 
  and cash equivalents                       75        (22)
                                         ------     ------
Cash and cash equivalents 
  at end of period                      $   217    $   422
                                         ======     ======
                                                           
Cash paid during the period for:                           
   Interest (net of amounts            
     capitalized                        $   181    $   231
   Income taxes                         $   180    $     6
                                                           
Non-cash transactions:                                     
   Capital lease obligations incurred   $   497    $   277
   Long-term debt incurred in                              
     connection with additions 
     to equipment                       $    77    $    23
                                                          
                              
   See accompanying notes to consolidated financial statements.
                       
</TABLE>                              
                              
                              
                              
       United Air Lines, Inc. and Subsidiary Companies
   Notes 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 financial statements included herein have 
been prepared pursuant to the rules and regulations of the Securities 
and Exchange Commission.  Certain information and footnote disclosures 
normally included in financial statements prepared in accordance with 
generally accepted accounting principles have been condensed or
omitted pursuant to or as permitted by such rules and regulations, 
although United believes that the disclosures are adequate to make 
the information presented not misleading.  In management's opinion, 
all adjustments (which include only normal recurring adjustments) 
necessary for a fair presentation of the results of operations for
the three and nine month periods have been made.  These financial 
statements should be read in conjunction with the consolidated 
financial statements and footnotes thereto included in United's Annual 
Report on Form 10-K for the year 1995.

Employee Stock Ownership Plans
------------------------------
      Pursuant to amended labor agreements which provide for wage 
and benefit reductions and work-rule changes which commenced July 1994, 
UAL has agreed to issue convertible preferred stock to employees.  
Notes 2 and 14 of the Notes to Consolidated Financial Statements in 
the 1995 Annual Report on Form 10-K contain additional discussion of 
the agreements, stock to be issued to employees and the related
accounting treatment.  Shares earned in 1995 were allocated in March 
1996 as follows:  359,577 shares of Class 2 ESOP Preferred Stock were 
contributed to the Non-Leveraged ESOP and an additional 312,086 shares 
were allocated in "book entry" form under the Supplemental Plan.  
Additionally, 2,402,310 shares of Class 1 ESOP Preferred Stock were
allocated under the Leveraged ESOP.  Finally, an additional 2,305,479 
shares of Class 1 and Class 2 ESOP Preferred Stock have been committed 
to be released by the Company since January 1, 1996.

      In August 1996, UAL sold 2,367,575 shares of Class 1 ESOP 
Preferred Stock to the ESOP Trustee; this was the third of seven such 
sales.

Other Income (Expense) - Miscellaneous
--------------------------------------
      "Miscellaneous, net" consisted of the following:
<TABLE>
<CAPTION>
                             Third Quarter       Nine-month Period
                            1996       1995       1996       1995
                           ------     ------     ------     ------
<S>                        <C>        <C>        <C>        <C>
Foreign exchange       
  gains (losses)           $  (2)     $ (16)     $  (9)     $ (14)
Minority interests            (6)        (6)       (18)       (18)
Travel agency litigation                                             
  settlement                 (20)         -        (20)         -
Gains on disposition                                      
  of property                  -          5          -          6
Other                          -         (7)        (5)       (17)
                            ----       ----       ----       ----
                           $ (28)     $ (24)     $ (52)     $ (43)
                            ====       ====       ====       ====
</TABLE>

Income Taxes
------------
      The provisions for income taxes are based on the estimated 
annual effective tax rate, which differs from the federal statutory 
rate of 35% principally due to state income taxes and certain 
nondeductible expenses.  Deferred tax assets are recognized based 
upon United's history of operating earnings and expectations for 
future taxable income.

Long-Term Obligations
---------------------
      During the nine months ended September 30, 1996, United repaid 
prior to maturity $529 million in principal amount of various debt 
securities, resulting in an extraordinary loss of $66 million, after 
a tax benefit of $40 million.  Of this amount, $63 million was repaid 
during the third quarter, resulting in a $7 million extraordinary
loss, net of tax benefits of $4 million.  The securities were scheduled 
for repayment periodically through 2021.

      In connection with the financing of certain aircraft accounted 
for as capital leases, United had on deposit at September 30, 1996 
an aggregate 19 billion yen ($173 million) in certain banks and had 
pledged an irrevocable security interest in such deposits to the 
aircraft lessors.  While this transaction does not qualify as an 
in-substance defeasance for financial reporting purposes, these 
deposits will be used to pay off an equivalent amount of recorded
capital lease obligations.

Short-Term Borrowings
---------------------
      In April 1996, United entered into an agreement with a 
syndicate of banks for a $750 million revolving credit facility 
expiring in 1999.  Interest on drawn amounts under the facility is 
calculated at floating rates based on the London interbank offered 
rate (LIBOR) plus a margin which is subject to adjustment based on 
certain changes in the credit ratings of United's long-term senior 
unsecured debt.  Among other restrictions, the credit facility 
contains a covenant which restricts United's ability to grant liens 
on or otherwise encumber certain identified assets with a market 
value of approximately $1.1 billion.

      During the second quarter, United reduced the maximum available 
amount of borrowings under a separate short-term borrowing facility 
from $270 million to $227 million.  This agreement has been extended 
through August 1997.

 
Related Party Transactions
--------------------------
      At September 30, 1996 and December 31, 1995, United had accounts 
receivable from UAL of $421 million and $482 million, respectively.

Lease Obligations
-----------------
      During the third quarter, United renegotiated the financing 
arrangements with Airbus Industrie ("Airbus") and International Aero 
Engines for the acquisition of A320-200 aircraft.  In connection 
therewith, United relinquished its right to return such aircraft 
upon eleven months' notice.  As a result, the Company's capital 
commitments include the 15 A320s still to be delivered through 1998 
(see Contingencies and Commitments), and the Company's future
minimum lease payment disclosures will now include the A320s already 
delivered under operating lease.  This increase in future minimum 
lease payments of approximately $1.9 billion has no impact on the 
reported monthly rent expense for these aircraft.

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

      At September 30, 1996, commitments for the purchase of property 
and equipment, principally aircraft, approximated $7.0 billion, after 
deducting advance payments.  An estimated $0.4 billion will be spent 
during the remainder of 1996, $2.8 billion in 1997, $1.8 billion in 
1998, and $2.0 billion in 1999 and thereafter.  The above amounts 
reflect firm orders placed in summer 1996 with the Boeing Company and 
Airbus for 19 B747, 6 B757, 2 B777 and 24 A319 aircraft to be delivered 
through 2002, as part of the Company's retire and replace fleet plan.  
Some of these firm orders were in lieu of purchase options which were 
exercisable during 1996 and 1997.  Also included in the above amounts is
the committed value for the following previously ordered aircraft:  
18 B777s, 2 B747s, and 15 A320s.  Finally, consistent with UAL's 
strategic plan and the Company's focus on attracting more high yield 
passengers, the Board of Directors has authorized an investment of 
approximately $400 million in United's on-board product, including 
new aircraft seats and other cabin improvements, through 1999.  This
amount is not reflected in the above commitments.

      United's contract with the Association of Flight Attendants ("AFA") 
became amendable March 1, 1996.  On April 9, 1996, United announced that 
the flight attendants had rejected a previously announced tentative 
agreement.  United and the AFA are involved in traditional negotiations
under the Railway Labor Act, which historically have taken two to three 
years to complete.  While negotiations continue, the terms of United's 
current flight attendant agreement will remain in effect.




Item 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION      
           AND RESULTS OF OPERATIONS



LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
      United's total of cash and cash equivalents and short-
term investments was $622 million at September 30, 1996,
compared to $567 million at December 31, 1995.  Cash flows
from operating activities for the nine-month period
amounted to $1.955 billion.  Investing activities resulted
in cash outflows of $1.022 billion, primarily due to
additions to property.  Financing activities included
principal payments under debt and capital lease obligations
of $682 million and $91 million, respectively.  Included in
the debt payments was the retirement of $529 million of
long-term debt prior to maturity.

      In the first nine months of 1996, United took
delivery of six A320, eight B777, four B757 and two B747
aircraft.  Twelve of these aircraft were purchased, three
were acquired under operating leases and five were acquired
under capital leases.  Property additions, including
aircraft spare parts, facilities and ground equipment,
amounted to $1.100 billion, while property dispositions
resulted in proceeds of $20 million.

      During the third quarter, United renegotiated the
financing arrangements with Airbus Industrie ("Airbus") and
International Aero Engines for the acquisition of A320-200
aircraft.  In connection therewith, United relinquished its
right to return such aircraft upon eleven months' notice.
As a result, the Company's capital commitments include the
15 A320s still to be delivered through 1998, and the
Company's future minimum lease payment disclosures will now
include the A320s already delivered under operating lease.
This increase in future minimum lease payments of
approximately $1.9 billion has no impact on the reported
monthly rent expense for these aircraft.

      At September 30, 1996, commitments for the purchase
of property and equipment, principally aircraft,
approximated $7.0 billion, after deducting advance
payments.  An estimated $0.4 billion will be spent during
the remainder of 1996, $2.8 billion in 1997, $1.8 billion
in 1998, and $2.0 billion in 1999 and thereafter.  The
above amounts reflect firm orders placed in summer 1996
with the Boeing Company and Airbus for 19 B747, 6 B757, 2
B777 and 24 A319 aircraft to be delivered through 2002, as
part of the Company's retire and replace fleet plan.  Some
of these firm orders were in lieu of purchase options which
were exercisable during 1996 and 1997.  Also included in
the above amounts is the committed value for the following
previously ordered aircraft:  18 B777s, 2 B747s, and 15
A320s.  Finally, consistent with UAL's strategic plan and
the Company's focus on attracting more high yield
passengers, UAL's Board of Directors has authorized an
investment of approximately $400 million in United's on-
board product, including new aircraft seats and other cabin
improvements, through 1999.  This amount is not reflected
in the above commitments.  Funds necessary to finance
capital expenditures are expected to be obtained from
internally generated funds, irrevocable external financing
arrangements or other external sources.

      In April 1996, United entered into an agreement with
a syndicate of banks for a $750 million revolving credit
facility expiring in 1999.  Interest on drawn amounts under
the facility is calculated at floating rates based on the
London interbank offered rate (LIBOR) plus a margin which
is subject to adjustment based on certain changes in the
credit ratings of United's long-term senior unsecured debt.
Among other restrictions, the credit facility contains a
covenant which restricts United's ability to grant liens on
or otherwise encumber certain identified assets with a
market value of approximately $1.1 billion.

      During the second quarter, United reduced the maximum
available borrowings under a separate short-term borrowing
facility from $270 million to $227 million.  This agreement
has been extended through August 1997.



RESULTS OF OPERATIONS
---------------------
      United's results of operations for interim periods
are not necessarily indicative of those for an entire year,
as a result of seasonal factors to which United is subject.
First and fourth quarter results are normally affected by
reduced travel demand in the fall and winter and United's
operations, particularly at its Chicago and Denver hubs and
at certain east coast cities, are adversely affected by
winter weather on occasion.

      The results of operations in the airline business
historically fluctuate significantly in response to general
economic conditions.  This is because small fluctuations in
yield (passenger revenue per revenue passenger mile) and
cost per available seat mile can have a significant effect
on operating results.  United anticipates industrywide fare
levels, increasing low-cost competition, general economic
conditions, fuel costs, international governmental policies
and other factors will continue to affect its operating
results.

      Summary of Results
      ------------------
      United's earnings from operations were $1,076 million
in the first nine months of 1996, compared to operating
earnings of $809 million in the first nine months of 1995.
United's net earnings were $514 million compared to net
earnings of $384 million during the same period in 1995.
The 1996 nine-month period includes an extraordinary loss
of $66 million on early extinguishment of debt.

      In the third quarter of 1996, United's earnings from
operations were $613 million compared to operating earnings
of $468 million in the third quarter of 1995.  United had
net earnings in the 1996 third quarter of $341 million
compared to net earnings of $247 million in the same period
of 1995.  The 1996 third quarter results include an
extraordinary loss of $7 million on early extinguishment of
debt.

      Specific factors affecting United's consolidated
operations for the third quarter and first nine months of
1996 are described below.

      Third Quarter 1996 Compared with Third Quarter 1995
      ---------------------------------------------------
      Operating revenues increased $362 million (9%).
United's revenue per available seat mile increased 7% to
10.50 cents.  Passenger revenues increased $309 million
(8%) due to a 5% increase in yield to 12.41 cents and a 4%
increase in revenue passenger miles.  The following
analysis by market is based on information reported to the
U.S. Department of Transportation:

      Domestic revenue passenger miles and yield both
increased 7%.  The domestic yield increase is attributable
to a larger proportion of high yield business traffic and
fare levels influenced by the temporary suspension of the
Federal passenger excise tax.  In the Pacific, revenue
passenger miles increased 3%; however, yield decreased 5%
from the same period last year, largely due to a weak
Japanese yen versus the dollar. Atlantic revenue passenger
miles decreased 11%; however, yield increased 9% over the
same period last year due to a larger proportion of high-
yield traffic and an improved fare environment.  Latin
America revenue passenger miles increased 5% over the same
period last year, with a nearly 6% increase in yield.
Available seat miles increased 1% systemwide, reflecting
increases of 4% in the Pacific, 2% on Domestic routes and
1% in Latin America, offset by a 10% decrease in the
Atlantic.  The system passenger load factor increased 1.7
points to 75.4%.

      Cargo revenues decreased $6 million (3%) primarily
due to decreased freight revenues.  Freight ton miles and
mail ton miles each increased 4%.  However, a 10% lower
freight yield was only partially offset by a 3% increase in
mail yield.  Other operating revenues increased $59 million
(26%) due to increases in Mileage Plus partner-related
revenues and contract maintenance and fuel sales to third
parties.

      Operating expenses increased $217 million (6%) and
United's cost per available seat mile increased 4%, from
8.67 cents to 9.06 cents, including ESOP compensation
expense.  Without the ESOP compensation expense, United's
cost per available seat mile would have increased 4%, from
8.34 cents to 8.69.  ESOP compensation expense increased
$18 million (13%), reflecting the increase in the estimated
average fair value of ESOP preferred stock committed to be
released to employees as a result of UAL's higher common
stock price.  Fuel expense increased $103 million (24%) due
to a 22% increase in the average price per gallon of fuel
to 71.2 cents.  The federal jet fuel tax which went into
effect October 1, 1995, accounted for approximately $21
million of this increase.  Other operating expenses
increased $39 million (8%) due principally to costs
associated with sales to third parties of fuel, contract
maintenance and other work.  Depreciation and amortization
increased $35 million (19%) due primarily to a $30 million
charge to reduce the carrying value of aircraft seats that
will be replaced under a plan to improve the Company's
onboard product.  Purchased services increased $26 million
(9%) due principally to volume-related increases in
computer reservations fees, credit card discounts and
communication charges.  Aircraft rent decreased $22 million
(9%) due to a decrease in the number of aircraft on
operating leases.

      Other expense amounted to $57 million in the third
quarter of 1996 compared to $66 million in the third
quarter of 1995.  Interest capitalized, primarily on
aircraft advance payments, increased $9 million (100%).
Interest expense decreased $19 million (21%) due to the
prepayment of long-term debt in 1995 and 1996.  Interest
income decreased $17 million (68%) due to lower investment
balances.  Equity in earnings of affiliates increased $2
million (14%) due to higher earnings from the Galileo
International Partnership ("Galileo"), resulting from
increased booking revenues.  Included in "Miscellaneous,
net" in the 1996 third quarter were foreign exchange losses
of $2 million compared to foreign exchange losses of $16
million in the 1995 third quarter.  In addition, the third
quarter of 1996 includes a $20 million charge for the
tentative settlement of litigation related to the travel
agency commission cap implemented by the Company in
February 1995.


      Nine Months 1996 Compared with Nine Months 1995
      -----------------------------------------------
      Operating revenues increased $1,113 million (10%).
United's revenue per available seat mile increased 7% to
10.13 cents.  Passenger revenue increased $969 million
(10%), due principally to a 5% increase in revenue
passenger miles and a 5% increase in yield to 12.38 cents.
The following analysis by market is based on information
reported to the U.S. Department of Transportation:

      Domestic revenue passenger miles increased 5%;
domestic yield increased 8% over the same period as a
result of a higher proportion of high yield business
traffic and the temporary suspension of the Federal
passenger excise tax.  In the Pacific, revenue passenger
miles increased 6%; however, yield decreased 6% from the
same period last year, largely due to a weaker Japanese
yen.  Latin America revenue passenger miles increased 5%
over the same period last year, with a 3% increase in
yield.  Atlantic revenue passenger miles remained
unchanged, while yield increased 8% due to a larger
proportion of high-yield traffic and an improved fare
environment.  Available seat miles increased 3% systemwide,
reflecting increases of 5% in Latin America, 4% in the
Pacific and 2% on Domestic routes.  The system passenger
load factor increased 1.5 points to 72.5%.

      Other operating revenues increased $143 million (21%)
due to increases in Mileage Plus partner-related revenues
and contract maintenance and fuel sales to third parties.

      Operating expenses increased $846 million (8%) and
United's cost per available seat mile increased 5%, from
8.77 to 9.25 cents, including ESOP compensation expense.
Without the ESOP compensation expense, United's 1996 nine-
month cost per available seat mile would have been 8.85
cents, an increase of 4% from 1995.  ESOP compensation
expense increased $152 million (45%), reflecting the
increase in the estimated average fair value of ESOP stock
committed to be released to employees as a result of UAL's
higher common stock price.  Aircraft fuel increased $279
million (23%) due to a 2% increase in consumption and a 20%
increase in the average price per gallon of fuel to 69.6
cents.   The federal jet fuel tax which went into effect
October 1, 1995, accounted for approximately $60 million of
this increase. Other operating expenses increased $133
million (10%) due principally to costs associated with
sales to third parties of fuel, contract maintenance and
other work.  Purchased services increased $94 million (12%)
due principally to volume-related increases in computer
reservations fees, credit card discounts and communication
charges.  Depreciation and amortization increased $69
million (13%) due to the acquisition of 39 aircraft off-
lease in 1995 and new B777 aircraft accounted for under
capital leases.  In addition, $30 million of the increase
is due to the charge to reduce the carrying value of
aircraft seats to be replaced.  Aircraft maintenance
increased $34 million (11%) due to the timing of
maintenance cycles.  Landing fees and other rent increased
$28 million (5%) due to increased facilities rent,
particularly at the new Denver International Airport.
Aircraft rent decreased $52 million (7%) due to a decrease
in the number of aircraft on operating leases as discussed
above.

      Other expense amounted to $140 million for the first
nine months of 1996 compared to $179 million for the first
nine months of 1995.  Interest capitalized, primarily on
aircraft advance payments, increased $26 million (84%).
Interest expense decreased $48 million (17%) due to the
prepayment of long-term debt in 1995 and 1996.  Interest
income decreased $38 million (57%) due to lower investment
balances.  Equity in earnings of affiliates increased $12
million (29%) due to higher Galileo earnings resulting from
increased booking revenues.  Included in other expense for
1996 is a $20 million charge for the tentative settlement
of the travel agency commission cap litigation.

WAGE ADJUSTMENT AND LABOR NEGOTIATIONS
--------------------------------------
      The amended labor agreements entered into in July 1994
provide that employees represented by the Air Line Pilots
Association, International ("ALPA") and the International
Association of Machinists and Aerospace Workers ("IAM") may
receive wage increases beginning mid-1997.  The Company is
currently negotiating the mid-term wage increase with ALPA
and the IAM.  Increases to the "per diem" pay for ALPA are
subject to the same process.  If the parties do not reach
agreement on the amount of such increases through
negotiation, a neutral arbitrator will determine the amount
of the increase, if any, based upon and subject to standards
and limitations specified in the labor agreements.

      Concurrently, management may award wage rate increases
to United States salaried and management employees of United
("SAM Employees") based upon and subject to standards and
limitations specified in the agreements entered into in the
July 1994 recapitalization.  While these processes are
expected to result in increased salary costs for employees
represented by ALPA and the IAM and SAM Employees by the
second half of 1997, the Company is unable to predict the
extent of the increases at this time.

      United's contract with the Association of Flight
Attendants ("AFA") became amendable March 1, 1996.  On April
9, 1996, United announced that the flight attendants had
rejected a previously announced tentative agreement.  United
and the AFA are involved in traditional negotiations under
the Railway Labor Act, which historically have taken two to
three years to complete.  While negotiations continue, the
terms of United's current flight attendant agreement will
remain in effect.


OUTLOOK
-------
      Fourth quarter 1996 available seat miles are expected
to grow 4% year over year, with a 5% increase in the
domestic market and 2% higher international capacity.  Year
over year system load factor is expected to increase
slightly in the fourth quarter.  Domestic yield increases
as large as those seen during the first nine months of 1996
are not expected, due primarily to the reimposition of the
passenger excise tax; however, a slight increase over 1995
is expected.  Strong revenue performance is expected to
continue in the Atlantic and Latin America.

      Fourth quarter unit cost, excluding the ESOP charge
and fuel, is expected to increase by over 1% compared to
the same quarter in 1995, largely due to volume-driven
costs.  Fourth quarter unit cost, including fuel but
excluding the ESOP charge, is expected to increase by 3.6%.
Net interest expense for the year should be lower due to
the early repayments of relatively high interest rate
debentures.  Other non-operating expenses are expected to
be comparable to the third quarter.

      During the third quarter, President Clinton formed a
special committee to review aviation safety and airport
security.  The committee has completed its review and has
made initial recommendations calling for increased security
measures.  Although the extent of specific programs and
their related implementation schedules are still not clear,
further increases in government-mandated security measures
may have an adverse affect on the Company's results of
operations and financial condition depending upon such
factors as the ability of United to pass through any new
Federal taxes, surcharges or additional operating expenses
to customers.  Any effective increase in the cost of air
transportation may dampen passenger and cargo traffic
levels and have a dilutive effect on yield.

      The information included in the previous three
paragraphs is forward-looking and involves risks and
uncertainties that could result in actual results differing
materially from expected results.  It is not reasonably
possible to itemize all of the many factors and specific
events that could affect the outlook of an airline
operating in the global economy.  Some factors that could
significantly impact expected capacity, load factors,
yields, revenues, expenses and unit costs  include the
airline pricing environment, willingness of customers to
travel, fuel costs, low-fare carrier expansion, capacity
decisions of other carriers, actions of the U.S. and
foreign governments, foreign currency exchange rate
fluctuations, costs of security and safety measures, the
price of UAL common stock, inflation, the economic
environment of the airline industry, the general economic
environment, and other factors discussed herein.





                              Part II
                              -------
                         Other Information
                         -----------------


Item 1.  Legal Proceedings.
------   -----------------

     Travel Agency Commission Litigation - As reported in United's
Form 10-Q for the quarter ended June 30, 1996, on February 13,
l995 and dates thereafter United and six other airlines were sued
in various courts around the nation by travel agents and the
American Society of Travel Agents claiming as a class action that
the carriers acted collusively in violation of federal antitrust
laws when they imposed a cap on ticket sales commissions payable
to travel agencies by the carriers.  The cases were consolidated
before the federal court in Minneapolis.  As relief, the
plaintiffs sought an order declaring the carriers' commission cap
action to be illegal and the recovery of damages (trebled) to the
agencies resulting from that action.  On September 3, 1996, the
remaining parties (one defendant had settled earlier in the case)
agreed to settle the case by defendants' payment of money in
return for the plaintiffs' dismissal with prejudice of this
lawsuit and a full release.  United's share of the settlement is
$19.5 million.  The caps on ticket sales commissions were
unaffected by this settlement.  Final settlement is subject to
court approval after class members have had the opportunity to
object.  A court hearing to approve final settlement is scheduled
for November 15, 1996.

     GEC-Marconi Claim - As reported in United's Form 10-Q for the
quarter ended June 30, 1996, on April 4, 1996 United filed suit in
the Circuit Court of Cook County, Illinois, Law Division, against
GEC-Marconi Inflight Systems Overseas, Ltd. ("GMIS"), its 777
inseat video vendor, claiming breach of contract for GMIS's
failure to deliver the contracted product in the specified time
frame, and seeking monetary and injunctive relief.  United also
named in the suit GEC-Marconi Inflight Systems, Inc. ("GMIS,
Inc."), its 777 video maintenance provider, seeking declaratory
relief on the maintenance contract.  On July 19, 1996 GMIS and
GMIS, Inc. filed a counterclaim against United seeking in excess
of $240 million for various alleged breaches of contract by
United, plus consequential damages and attorney's fees and costs,
relating to the same product purchase agreement (which, in
addition, included a 747 and 767 retrofit order that United
terminated on April 4, 1996) and maintenance service agreement
which form the basis of United's complaint, as well as an alleged
June 1996 "agreement" that had been the subject of negotiations
between the parties but was never signed by United regarding
interim arrangements between the parties.  GMIS and GMIS, Inc.
also seek injunctive relief to enforce the alleged "agreement" and
prevent United from obtaining substitute goods from other vendors.
On August 1, GMIS and GMIS, Inc. filed an emergency motion on the
claims for injunctive relief.  On August 28, the judge denied
GMIS' and GMIS, Inc.'s motion for a preliminary injunction.  The
parties are engaged in the discovery phase of this litigation.



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 which immediately precedes
        such exhibits.
        
    (b) No reports on Form 8-K have been filed during the third
        quarter of 1996.
        



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 by the undersigned thereunto duly authorized.


                                   UNITED AIR LINES, INC.


                                   By:  /s/ Douglas A. Hacker
                                        ---------------------
                                        Douglas A. Hacker
                                        Senior Vice President and Chief
                                        Financial Officer
                                        (principal financial officer)


                                   By:  /s/ Frederic F. Brace
                                        ---------------------
                                        Frederic F. Brace
                                        Vice President - Financial
                                        Analysis and Controller  
                                        (principal accounting officer)



Dated:  November 8, 1996





                           Exhibit Index
                           -------------

Exhibit No.          Description
----------           -----------

12.1           Computation of Ratio of Earnings to Fixed Charges.

27             Financial Data Schedule.