****FORM 10-Q**
**SECURITIES AND EXCHANGE COMMISSION**
**Washington, D.C.  20549**
**(Mark One)**
**[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE**
**SECURITIES EXCHANGE ACT OF 1934**
**For the quarterly period ended March 31, 2002**
**OR**
**[  ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE**
**SECURITIES EXCHANGE ACT OF 1934**
**For the transition period from __________ to __________**
**Commission file number 33-21220***
**UNITED AIR LINES, INC.**
**(Exact name of registrant as specified in its charter)**
Delaware36-2675206(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 area code  (847)700-4000 
Indicate by check mark whether the registrant (1) has filed all reportsrequired to be filed by Section 13 or 15(d) of the Securities ExchangeAct of 1934 during the preceding 12 months (or for such shorter periodthat the registrant was required to file such reports), and (2) has beensubject to such filing requirements for the past 90 days.
Yes    X       No
Indicate the number of shares outstanding of each of the issuer's classesof common stock, as of the latest practicable date.  Outstanding atClassApril 29, 2002Common Stock ($5 par value)205 
* Registrant is the wholly owned subsidiary of UAL Corporation (File1-6033). Registrant became subject to filing periodic reports under theSecurities Exchange Act of 1934 as a result of a public offering of securitieswhich 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 March 31, 2002
Index PART I.FINANCIAL INFORMATIONPage No.  Item 1. Financial Statements  Condensed Statements of Consolidated FinancialPosition - as of March 31, 2002
(Unaudited) and December 31, 20013  Statements of Consolidated Operations (Unaudited)- for the three months ended
March 31, 2002 and 20015  Condensed Statements of Consolidated
Cash Flows (Unaudited) - for the three 
months ended March 31, 2002 and 20016  Notes to Consolidated Financial
Statements (Unaudited)7 Item 2. Management's Discussionand Analysis of Financial Condition and Results of Operations12  Item 3. Quantitative and QualitativeDisclosures About Market Risk16PART II.OTHER INFORMATION  Item 6. Exhibits and Reports onForm 8-K17 Signatures18 Exhibit Index19             
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
United Air Lines, Inc. and Subsidiary Companies
Condensed Statements of Consolidated Financial Position
(In Millions)
 March 31  2002December 31Assets(Unaudited)2001   Current assets:  Cash and cash equivalents, including restricted   cash of $201 million at March 31, 2002$ 2,052 $ 1,504 Short-term investments544 852 Receivables, net1,142 1,026 Related party receivables670 536 Income tax receivables205 217 Inventories, net323 329 Deferred income taxes282 278 Prepaid expenses and other373634 5,5915,376      Operating property and equipment:  Owned19,607 19,129 Accumulated depreciation and amortization(4,838)(4,702) 14,76914,427   Capital leases2,699 2,766 Accumulated amortization(462)(472) 2,2372,294 17,00616,721      Other assets:  Investments91 236 Intangibles, net387 390 Related party receivables1,478 576 Aircraft lease deposits664 667 Prepaid rent68 307 Other, net1,3581,473 4,0463,649    $26,643$25,746   
See accompanying Notes to Consolidated Financial Statements.
United Air Lines, Inc. and Subsidiary Companies
Condensed Statements of Consolidated Financial Position
(In Millions)
 March 31  2002December 31Liabilities and Stockholder's Equity(Unaudited)2001   Current liabilities:  Notes payable$ 133 $ 133 Current portions of long-term debt and  capital lease obligations1,888 1,454 Related party debt maturing within one year160 162 Advance ticket sales1,485 1,183 Accrued salaries, wages and benefits1,299 1,268 Accounts payable913 1,222 Other2,1922,845 8,0708,267   Long-term debt6,6726,674   Long-term obligations under capital leases1,8601,943   Other liabilities and deferred credits:  Deferred pension liability1,310 1,241 Postretirement benefit liability1,699 1,690 Deferred gains800 827Deferred income taxes266 - Other1,5301,598 5,6055,356   Commitments and contingent liabilities (Seenote)     Preferred stock committed to Supplemental ESOP2977   Stockholder's equity:  Common stock at par- - Additional capital invested1,655 231 ESOP capital3,946 3,898 Retained deficit(923)(427)Accumulated other comprehensive income(268)(269)Other(3)(4) 4,4073,429    $26,643$25,746   
See accompanying Notes to Consolidated Financial Statements.  
United Air Lines, Inc. and Subsidiary Companies
Statements of Consolidated Operations (Unaudited)
(In Millions) Three Months Ended March 31 20022001Operating revenues:  Passenger$ 2,758 $ 3,812 Cargo141 192 Other 297414 3,1964,418Operating expenses:  Salaries and related costs1,572 1,849 Aircraft fuel398 664 Commissions133 233 Purchased services350 453 Aircraft rent212 209 Landing fees and other rent248 239 Depreciation and amortization236 252 Cost of sales270 307 Aircraft maintenance145 200 Other 338440 3,9024,846   Loss from operations(706)(428)   Other income (expense):  Interest expense(146)(132)Interest capitalized11 22 Interest income34 33 Equity in earnings of affiliates1 1 Gain on sale of investment46 - Miscellaneous, net(16)(18) (70)(94)Loss before income taxes and  cumulative effect of accounting changes(776)(522)Credit for income taxes(280)(198)   Loss before cumulative effect of accountingchanges(496)(324)Cumulative effect of accounting change, netof tax-3Net loss$ (496)$ (321)   
See accompanying Notes to Consolidated Financial Statements.
United Air Lines, Inc. and Subsidiary Companies
Condensed Statements of Consolidated Cash Flows (Unaudited)
(In Millions) Three Months Ended March 31 20022001Cash and cash equivalents at beginning   of period$1,504$1,468   Cash flows from operating activities(96)178   Cash flows from investing activities:  Additions to property and equipment(27)(619)Proceeds on disposition of property and  equipment40 1 Proceeds on sale of investments137 - Increase in restricted cash(201)- Decrease in short-term investments308 157 Increase in related party receivables(2)(2)Other, net27(8) 282(471)   Cash flows from financing activities:  Proceeds from issuance of long-term debt540 - Repayment of long-term debt(598)(36)Principal payments under capital  lease obligations(56)(69)Decrease in debt certificates under companyleases525 8 Decrease in advances/loans with affiliates(251)- Dividends to parent company- (150)Other, net132 161(215)   Increase (decrease) in cash and cash equivalents347(508)   Cash and cash equivalents at end of period,  excluding restricted cash$1,851$ 960   Cash paid during the period for:  Interest (net of amounts capitalized)$ 114 $ 81    Non-cash transactions:  Long-term debt incurred in connection  with additions to equipment and other assets$ 487 $ 203 Net unrealized gain (loss) on investments$ 2 $ 15 
See accompanying Notes to Consolidated Financial Statements.
United Air Lines, Inc. and Subsidiary Companies
Notes to Consolidated Financial Statements (Unaudited)
The Company
         United Air Lines, Inc.("United" 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 (whichinclude only normal recurring adjustments) necessary for a fair presentationof the results of operations for the three month periods have been made.Certain prior-year financial statement items have been reclassified toconform to the current year's presentation. These financial statementsshould be read in conjunction with the consolidated financial statementsand footnotes thereto included in United's Annual Report on Form 10-K forthe year 2001.
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. The adoption of SFAS No. 133 resulted in a cumulativecredit of $3 million, net of tax, to first quarter 2001 earnings.
         Effective January 1,2002, United adopted Statement of Financial Accounting Standards No. 142,"Goodwill and Other Intangible Assets" ("SFAS No. 142"). In connectionwith the adoption, United has discontinued $12 million in annual amortizationexpense on route acquisition costs, which are indefinite-lived intangibleassets, beginning January 1. SFAS No. 142 also requires companies to testintangibles for impairment on an annual basis. During the first quarter,the Company performed an evaluation of its intangibles and determined thatthere were no impairment issues.
         The following informationrelates to United's intangibles at March 31, 2002: (In millions)Gross CarryingAccumulated AmountAmortizationAmortized intangible assets  Airport Slots and Gates$ 184$ 164Other307 $ 214$ 171   Unamortized intangible assets  Routes$ 344 
         Slots and gates arebeing amortized on a straight-line basis over the life of the related leases.Other intangibles are being amortized over 10 years.
         Pro forma results forthe three months ended March 31, 2001, assuming the discontinuation ofamortization are shown below: (In millions) Loss before cumulative effectof accounting change, as reported$ (324)Amortization of routes, net oftax2Loss before cumulative effectof accounting change, pro forma$ (322)  Net loss, as reported$ (321)Amortization of routes, net oftax2Net loss, pro forma$ (319)
         Effective January 1,2002, the Company adopted Statement of Financial Accounting Standards No.144, "Accounting for the Impairment or Disposal of Long-Lived Assets" ("SFASNo. 144"), which addresses the accounting and reporting for the impairmentor disposal of long-lived assets. SFAS No. 144 did not have an effect onthe Company's results of operations.
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.
         On March 9, 2002,the President signed an economic stimulus package which contained a provisionchanging the allowable carry-back period for net operating losses fromtwo years to five years. This change enabled the Company to carry backits 2001 loss and recover taxes paid during the 1996 to 2000 period. Asa result, United received an additional tax refund of approximately $460million during the first quarter of 2002.
         The Company has determined,based on its history of operating earnings and expectations of future taxableincome, that it is more likely than not that the deferred tax assets atMarch 31, 2002 will be realized.
Segment Information
         United has a globalroute network designed to transport passengers and cargo between destinationsin North America, the Pacific, the Atlantic and Latin America. These regionsconstitute United's four reportable segments.
         A reconciliation ofthe total amounts reported by reportable segments to the applicable amountsin the financial statements follows:   (In Millions)Three Months Ended March 31, 2002     Reportable   North  LatinSegment Consolidated AmericaPacificAtlanticAmericaTotalOtherTotalRevenue$ 2,131 $ 548 $ 383 $ 134 $  3,196 $ -$ 3,196 Loss before income taxes       and gain on sale$ (509)$ (146)$ (117)$ (50)$ (822)$ -$ (822)(In Millions)Three Months Ended March 31, 2001     Reportable   North  LatinSegment Consolidated AmericaPacificAtlanticAmericaTotalOtherTotalRevenue$2,953 $ 745 $ 513 $ 207 $ 4,418 $ -$ 4,418         Loss before income taxes$ (320)$(118)$ (72)$ (12)$ (522)$ -$ (522) Three Months Ended March 31(In Millions)20022001Total loss for reportable segments$ (822)$ (522)Gain on sale46-Total loss before income taxesand  cumulative effect of accountingchange$ (776)$ (522)
Other Comprehensive Income
         Total comprehensiveincome (loss) for the three months ended March 31, 2002 was $(495) millioncompared to $(302) million for the first quarter 2001. Other comprehensiveincome consisted of net unrealized gains of $1 million and $19 millionin 2002 and 2001, respectively.
Special Charges Related to the September 11 Terrorist Attacks
         At December 31,2001, UAL had accruals of $87 million related to the reduction in forceand $171 million related to early termination fees. During the first quarterof 2002, the Company made payments of $34 million for severance and relatedfringe benefits to displaced employees. As passenger demand has reboundedfaster than anticipated, the Company increased its scheduled flying beyondplanned levels effective April 1, 2002. As a result, the Company now expectsthat fewer front-line employees will be permanently displaced, and thushas reversed $25 million of accrued severance and related costs. In addition,the Company paid $11 million in early termination fees during the quarter.Accordingly, accruals remaining at March 31, 2002 were $28 million relatedto the reduction in force and $160 million in early termination fees.
ULS Transaction
            UALLoyalty Services ("ULS"), a wholly owned subsidiary of UAL, has been United'sagent to market and sell Mileage Plus miles to non-airline business partners.In the first quarter of 2002, UAL made changes to its corporate structurewhich resulted in substantially all of UAL's customer loyalty and marketingprograms becoming the responsibility of ULS. These changes were designedto increase the overall value of these businesses by focusing managementattention on these activities and enhancing the range of products and servicesoffered to Mileage Plus members and business partners.
            First,Mileage Plus, Inc. ("MPI") dividended certain assets related to the MileagePlus business to its parent company, Mileage Plus Holdings, Inc. ("MPH"),which was then a wholly owned subsidiary of United. Immediately thereafter,MPH dividended to United all of the stock of MPI. United then sold allof the stock of MPH and Premier Group (a separate wholly owned subsidiaryof United), to ULS in consideration for a $900 million unsecured promissorynote (payable over 12 years and bearing interest at a rate of 7% per annum),plus the assumption of the outstanding liability for miles previously soldto non-airline third parties (approximately $500 million). The purchaseprice was based on the estimated fair value of MPH and Premier Group, asdetermined by the present value of the net future cash flows of the twoentities.
            Simultaneouslywith the above transactions, United also dividended certain assets associatedwith direct-to-consumer marketing and service businesses. These includedcertain united.com related assets, certain United Vacations and MileagePlus related assets, and the assets relating to Silver Wings, Cruise4Milesand Sky Mall services. UAL then made a capital contribution of these sameassets to ULS.
            MileagePlus participation agreements with other airlines and the customer servicecall centers supporting Mileage Plus members were not included in thesetransactions. These assets will remain part of MPI and therefore, of United.
            Dueto the related party nature of these transactions, no gain or loss wasrecorded at United, UAL or ULS. Any differences between the purchase priceand the book value of the assets was adjusted through equity. As a resultof these transactions, United's equity increased approximately $1.4 billion.
            Alsoas a result of these transactions, ULS became responsible for the saleof non-airline miles and retains the gross proceeds (and associated liability)for the sale of those miles. United, through MPI, retains the right tosell and the associated liability of the miles awarded for travel on Unitedor any of its airline partners. As Mileage Plus members use miles earnedthrough means other than air travel to redeem a travel award on United,ULS will be obligated to compensate United for the value of this awardtravel. Likewise, United will be obligated to pay ULS for miles earnedthrough air travel as they are redeemed for any non-air travel award. Theprice of a mile sold between the two entities as a result of these arrangementsis expected to be contractually mandated and fixed. The initial allocationof the total mileage liability and the percentage of miles deemed to beearned through other than air travel are also expected to be contractuallyfixed and will be based on specified market factors. Terms of these contractsmay change based upon market conditions.
            Itis the intention of both United and ULS that these transactions and theallocation of miles be transparent to Mileage Plus members and partners.While United's passenger and other revenue will be significantly impactedfrom these transactions, the interest and principal repayments on the promissorynote, as well as the anticipated growth in the number and value of United'scustomers and business partners as a result of these relationships, areintended to compensate United for this reduction in revenue.  
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, 2002,commitments for the purchase of property and equipment, principally aircraft,approximated $2.2 billion, after deducting advance payments. An estimated$0.7 billion will be spent during the remainder of 2002, $0.1 billion in2003, $0.5 billion in 2004 and $0.9 billion in 2005 and thereafter. Themajor commitments are for the purchase of A319, A320 and B777 aircraftwhich are scheduled to be delivered through 2007.
Item 2.  Management's Discussion and Analysis of FinancialCondition and Results of Operations
Summary of Results
         In the first quarterof 2002, United and UAL completed a series of transactions which effectivelytransferred the responsibility for all of UAL's customer loyalty and marketingprograms from United to UAL Loyalty Services ("ULS"), a wholly owned subsidiaryof UAL. (See "ULS Transaction" in the Notes to Consolidated FinancialStatements.) The net effect of these transactions was to reduce United'srevenue by approximately $68 million in the first quarter 2002. These transactionsare expected to reduce United's revenue by $324 million on an annualizedbasis.
         United's loss fromoperations was $(706) million in the first quarter of 2002, compared to$(428) million in the first quarter of 2001. United's net loss was $(496)million compared to a net loss of $(324) million before the cumulativeeffect of an accounting change in the same period of 2001.
         The 2002 loss includesa gain of $29 million, net of tax, on the sale of the Company's remaininginvestment in Cendant Corporation.
         Specific factors affectingUnited's consolidated operations for the first quarter of 2002 are describedbelow.
First Quarter 2002 Compared with First Quarter 2001.
         Operating revenuesdecreased $1.2 billion (28%) and United's revenue per available seat mile(unit revenue) decreased 11% to 9.34 cents. Passenger revenues decreased$1.1 billion (28%) due to a 14% decrease in revenue passenger miles anda 16% decrease in yield to 11.11 cents. United's available seat miles acrossthe system were down 19% over the first quarter of 2001; however, passengerload factor increased 3.9 points to 72.2%. The following analysis by marketis 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(17%)(15%)(15%)Pacific(26%)(11%)(15%)Atlantic(17%)(13%)(16%)Latin America(16%)(21%)(20%)System(19%)(14%)(16%)
         Cargo revenues decreased$51 million (27%) due to a 22% decrease in cargo ton miles and a 6% decreasein yield. Other operating revenues decreased $117 million (28%) due toa $39 million decrease in fuel sales to third parties and the transferof revenues from the sale of miles to Mileage Plus partners to ULS.
         Operating expensesdecreased $944 million (19%) and United's cost per available seat mile(unit cost) increased 1%, from 11.51 cents to 11.41 cents. Salaries andrelated costs decreased $277 million (15%) primarily due to the reductionin force implemented after September 11. Aircraft fuel decreased $266 million(40%) due to a 23% decrease in consumption and a 23% decrease in the averagecost of fuel from 91.1 cents to 70.6 cents a gallon. Commissions decreased$100 million (43%) primarily as a result of a decrease in commissionablerevenues. In addition, on March 20, 2002, United discontinued paying basecommissions on all tickets issued in the U.S. and Canada. Purchased servicesdecreased $103 million (23%) primarily as a result of volume-driven decreasesin GDS (global distribution systems) and credit card discount fees. Costof sales decreased $37 million (12%) primarily due to the decrease in costsassociated with fuel sales to third parties. Aircraft maintenance decreased$55 million (28%) due to a decrease in engine and aircraft repair volumesas a result of reduced flying.
         Other non-operatingexpense amounted to $116 million in the first quarter of 2002 excludingthe gain on the sale of the Company's investment in Cendant, compared to$94 million in the first quarter of 2001. Interest expense increased $14million (11%) due to new debt issuances. Interest capitalized decreased$11 million (50%) primarily as a result of lower advance payments on theacquisition of aircraft.
LIQUIDITY AND CAPITAL RESOURCES
         United's total of cash,cash equivalents and short-term investments, including restricted cash,was $2.6 billion at March 31, 2002, compared to $2.4 billion at December31, 2001. Cash flows used in operating activities amounted to $96 million.
         Financing activitiesincluded principal payments under debt and capital lease obligations of$598 million and $56 million, respectively. During the first quarter, Unitedclosed on a $775 million private debt financing which refinanced certainaircraft and raised approximately $250 million in additional cash.
         Property additions,including aircraft and aircraft spare parts, amounted to $514 million,including $487 million financed through non-cash transactions. In the firstquarter of 2002, United took delivery of six A319, three A320 and fourB777 aircraft. All of these aircraft were purchased. In addition, Unitedacquired one B757 aircraft off lease during the quarter.
         During the first quarterof 2002, United received over $600 million in income tax refunds part ofwhich was a result of changes in the tax laws as discussed in "Income Taxes"in the Notes to Consolidated Financial Statements. In addition,United paid $290 million in federal transportation taxes that had beendeferred as a result of legislation enacted after the September 11 terroristattacks. The Company also received $137 million in proceeds from the saleof its remaining investment in Cendant Corporation.
         Certain of United'ssurety bonds for workers' compensation have been cancelled in various stateswhere United is self-insured. As a result, United has been and may, inthe future, be required to post collateral in the form of cash depositsor letters of credit. Included in cash and cash equivalents at March 31,2002, is $201 million in restricted cash, which includes deposits postedfor various states where United is self-insured for workers' compensationclaims.
         At March 31, 2002,commitments for the purchase of property and equipment, principally aircraft,approximated $2.2 billion, after deducting advance payments. Of this amount,an estimated $0.7 billion is expected to be spent during the remainderof 2002. For further details, see "Contingencies and Commitments" in theNotesto Consolidated Financial Statements.
OTHER INFORMATION
Financial Recovery Plan
         In the aftermath ofSeptember 11, and its dramatic impact on the airline industry, the Companydeveloped a four-plank financial recovery plan to get the airline backon the road to financial stability:Reducing the size of the airline and cutting both capital and operatingspending;
Generating as much revenue as possible from each flight;
Working with employee groups to find further labor and other savings; and
Implementing a financing plan to support the Company through these turbulenttimes.

       To date, the Company has realizedsignificant progress in reducing spending, improving liquidity and boostingrevenue. The Company continues to work to develop and implement initiativesto further reduce spending and enhance revenue. As part of these efforts,the Company has met and continues to meet with leaders of all of its employeegroups. However, complications with negotiating labor contracts have slowedthe Company's progress on achieving further reductions to labor and otheroperating costs. Management continues to have discussions with the leadershipof United's unions and to work towards a solution to increase productivityand reduce operating expenses, including labor costs. The resolution ofthese issues is taking longer than anticipated.
Labor Agreements
         On July 12, 2000, theCompany's contracts with the International Association of Machinists andAerospace Workers ("IAM") became amendable. The Company has been in negotiationswith the both IAM District 141M (representing mechanics) and 141 (representingpublic contact, ramp and stores, food services and security employees)since December 1999 for new contracts. Since September 2000, the negotiationshave been conducted with the assistance of the National Mediation Board("NMB"). Under the terms of the Railway Labor Act, United's current agreementswith the IAM remain in effect as negotiations continue.
         On February 18, 2002,the Company and IAM District 141M reached a tentative agreement on a newcontract and on March 5, the IAM ratified the tentative agreement.
         Negotiations with IAMDistrict 141 resumed on April 22 and on April 25, the Company and the IAMannounced that they had reached a tentative agreement on a new contract.The tentative agreement provides for base wage increases of approximately32% over the life of the contract, as well as providing for payment ofretroactive wages, of a lesser amount, to July 12, 2000. The retroactivewages will be payable in eight equal quarterly installments, including6% interest, commencing December 2002. The agreement is subject to a ratificationvote by the IAM, which is scheduled for May 10.
         The Company's contractwith the Association of Flight Attendants ("AFA"), which becomes amendablein 2006, provides for a mid-term compensation conference each year through2005. Pursuant to the contract, the Company and the AFA began compensationconference negotiations in April 2002.
OUTLOOK FOR 2002
         Information regardingguidance for United's 2002 outlook can be obtained from UAL Corporation'sReport on Form 10-Q for the quarter ended March 31, 2002.
         Information includedin the "Financial Recovery Plan" and "Outlook for 2002" sections is forward-lookingand involves 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 net earnings, revenues, expenses,unit costs, load factor and capacity include, without limitation, the economyand the demand for air travel; the ability to reduce operating costs andconserve financial resources, taking into account increased costs incurredas a consequence of the September 11 terrorist attacks to the Company;the higher costs associated with new airline security directives and anyother increased regulation of air carriers; the significantly higher costsof aircraft insurance coverage for future claims caused by acts of war,terrorism, sabotage, hijacking and other similar perils, and the extentto which such insurance will continue to be available; the ability to raiseand the cost of financing in light of the September 11 events and the possibilityof any further credit downgrades of the Company; the cost of crude oiland jet fuel; the airline pricing environment; industry capacity decisions;competitors' route decisions; the success of the Company's cost-reductionefforts; the success of the Company's implementation of its financial recoveryplan; results of union contract negotiations and cost-reduction discussionsand their impact on labor costs and operations; actions of the U.S., foreignand local governments; foreign currency exchange rate fluctuations; theeconomic environment of the airline industry and the economic environmentin general.
         Investors should notplace undue reliance on the forward-looking information contained herein,which speaks only as of the date of this filing. United disclaims any intentor obligation to update or alter any of the forward-looking statementswhether in response to new information, unforeseen events, changed circumstancesor otherwise.  
Item 3.Quantitative and Qualitative Disclosures About MarketRisk
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 2001.
Interest Rate Risk -(In millions, except averagecontract rates)NotionalAverageEstimated AmountContract RateFair Value   (Pay)/Receive*Interest rate swap$ 1357.86%$ (17)
Foreign Currency Risk -(In millions, except averagecontract rates)NotionalAverageEstimated AmountContract RateFair Value   (Pay)/Receive*Forward exchange contracts   Japanese Yen - Purchased forwards$ 80133.06$ -- Sold forwards$ 41132.62$ -Euro - Purchased forwards$ 2021.28$ (24)    Currency options   Japanese Yen - Purchased put options$ 56138.79$ -British Pound - Purchased putoptions$ 281.34$ -Euro - Purchased put options$ 300.82$ -Canadian Dollar - Purchased putoptions$ 181.67$ -Correlation Basket Option - Sold$ 132N/A$ (1)
Price Risk (Aircraft fuel) -(In millions, except averagecontract rates)NotionalAverageEstimated AmountContract RateFair Value   (Pay)/Receive*Purchased forward contracts -Crude oil$ 164$ 23.83/bbl$ 12Purchased forward contracts -Heating oil$ 80$ 27.39/bbl$ 3
*Estimated fair values represent the amount United wouldpay/receive on March 31, 2002 to terminate the contracts.     
PART II.  OTHER INFORMATION
Item 6.  Exhibits and Reports on Form 8-K.Exhibits

A list of exhibits included as part of this Form 10-Q is set forthin an Exhibit Index that immediately precedes such exhibits.(b) No Form 8-Ks were filed in the first quarter of 2002.  
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/ Frederic F. Brace      Frederic F. Brace      Senior Vice President      and Chief FinancialOfficer      (principal financialofficer)     By:  /s/ M. Lynn Hughitt      M. Lynn Hughitt      Vice President andController      (principal accountingofficer)     
Dated:  April 29, 2002     Exhibit Index Exhibit No.Description  12Computation of Ratio of Earnings to Fixed Charges     

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