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 September 30, 1998

                                 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)

                  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, 1998
                    -----               ----------------
       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, 1998
             ----------------------------------------


Index
-----

PART I.  FINANCIAL INFORMATION                                     Page No.
-------  ---------------------                                     --------

         Item 1.  Financial Statements   
         
                  Condensed Statements of Consolidated                3
                  Financial Position - as of September 30, 1998
                  (Unaudited) and December 31, 1997

                  Statements of Consolidated Operations               5
                  (Unaudited) - for the three months and nine 
                  months ended September 30, 1998 and 1997

                  Condensed Statements of Consolidated                7
                  Cash Flows (Unaudited) - for the nine
                  months ended September 30, 1998 and 1997

                  Notes to Consolidated Financial                     8 
                  Statements (Unaudited)

         Item 2.  Management's Discussion and Analysis of            11
                  Financial Condition and Results of Operations

         Item 3.  Quantitative and Qualitative Disclosures About     19
                  Market Risk          


PART II.  OTHER INFORMATION
--------  -----------------
         
         Item 5.  Other Information                                  20

         Item 6.  Exhibits and Reports on Form 8-K                   20


Signatures                                                           21
----------

Exhibit Index                                                        22
-------------
                              
               PART I.   FINANCIAL INFORMATION
                              
Item 1.   Financial Statements

<TABLE>
<CAPTION>
       United Air Lines, Inc. and Subsidiary Companies
   Condensed Statements of Consolidated Financial Position
                        (In Millions)
                              
                                    September 30,  December 31,
                                         1998         1997
Assets                               (Unaudited)   -----------     
                                     -----------                      
<S>                                   <C>         <C>
Current assets:                                            
   Cash and cash equivalents          $    394    $     268
   Short-term investments                  401          509
   Receivables, net                      1,400        1,049
   Related party receivables                44            5
   Inventories, net                        364          355
   Deferred income taxes                   242          245
   Prepaid expenses and other              281          484
                                        ------       ------
                                         3,126        2,915
                                        ------       ------            
                                                           
Operating property and equipment:                          
   Owned                                15,894       14,196
   Accumulated depreciation and         
    amortization                        (5,147)      (5,116)
                                        ------       ------
                                        10,747        9,080
                                        ------       ------            
                                        
   Capital leases                        2,727        2,319
   Accumulated amortization               (625)        (625)
                                        ------       ------
                                         2,102        1,694
                                        ------       ------
                                        12,849       10,774
                                        ------       ------            
                                                           
Other assets:                                              
   Investments in affiliates               296          223
   Intangibles, net                        691          703
   Related party receivables               421          406
   Aircraft lease deposits                 491          318
   Prepaid rent                            618           60
   Other                                   666          708
                                        ------       ------
                                         3,183        2,418
                                        ------       ------            
                                      $ 19,158     $ 16,107
                                        ======       ======
                              
  See accompanying notes to consolidated financial statements.
</TABLE>

<TABLE>
<CAPTION>

       United Air Lines, Inc. and Subsidiary Companies
   Condensed Statements of Consolidated Financial Position
                        (In Millions)
                              
                                      September 30,  December 31,
                                         1998            1997
Liabilities and Stockholder's Equity   (Unaudited)   -----------     
                                       -----------
<S>                                     <C>           <C>
Current liabilities:
   Current portions of long-term                           
     debt and capital lease obligations $  325        $   405
   Related party debt maturing                      
     within one year                       119             97
   Advance ticket sales                  1,682          1,267
   Accounts payable                      1,191          1,030
   Other                                 2,588          2,497
                                        ------         ------
                                         5,905          5,296
                                        ------         ------          
Long-term debt                           2,721          2,081
                                        ------         ------          
Long-term obligations under 
  capital leases                         2,035          1,676
                                        ------         ------
Other liabilities and deferred credits:
   Postretirement benefit liability      1,480          1,361
   Deferred gains                        1,153          1,210
   Other                                 1,484          1,266
                                        ------         ------
                                         4,117          3,837
                                        ------         ------          
Preferred stock committed to               
  Supplemental ESOP                        711            514
                                        ------         ------
Stockholder's equity:                                      
   Common stock at par                       -              -
   Additional capital invested              21             29
   ESOP capital                          2,639          2,053
   Retained earnings                     1,310            805
   Unearned ESOP preferred stock          (297)          (177)
   Other                                    (4)            (7)
                                        ------         ------
                                         3,669          2,703
                                        ------         ------          
Commitments and contingent                                 
  liabilities (See note)
                                                           
                                      $ 19,158       $ 16,107
                                        ======         ======
                              
      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
                                         1998         1997
                                         ----         ----
<S>                                   <C>          <C>
Operating revenues:
   Passenger                          $  4,263     $  4,147
   Cargo                                   228          225
   Other                                   281          258
                                        ------       ------
                                         4,772        4,630
                                        ------       ------
Operating expenses:                                        
   Salaries and related costs            1,350        1,265
   ESOP compensation expense               173          256
   Aircraft fuel                           470          510
   Commissions                             354          409
   Purchased services                      384          329
   Aircraft rent                           221          235
   Landing fees and other rent             225          206
   Depreciation and amortization           199          182
   Aircraft maintenance                    165          153
   Other                                   544          537
                                        ------       ------
                                         4,085        4,082
                                        ------       ------
                                                           
Earnings from operations                   687          548
                                        ------       ------            
Other income (expense):                                    
   Interest expense                        (94)         (74)
   Interest capitalized                     26           25
   Interest income                          15           13
   Equity in earnings of affiliates         19           17
   Gain on sale of partnership interest      -          275
   Gain on sale of affiliate's stock         -          103
   Miscellaneous, net                      (16)          (9)
                                        ------       ------
                                           (50)         350
                                        ------       ------

Earnings before income taxes               637          898
Provision for income taxes                 217          327
                                        ------       ------            
Net earnings                           $   420      $   571
                                        ======       ======
                              
                                                                                    
      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
                                         1998        1997
                                         ----        ----
<S>                                  <C>          <C>
Operating revenues:
   Passenger                         $  11,777    $  11,628
   Cargo                                   666          634
   Other                                   804          849
                                        ------       ------
                                        13,247       13,111
                                        ------       ------
Operating expenses:                                        
   Salaries and related costs            3,959        3,733
   ESOP compensation expense               663          666
   Aircraft fuel                         1,346        1,559
   Commissions                           1,000        1,159
   Purchased services                    1,098          946
   Aircraft rent                           673          707
   Landing fees and other rent             664          656
   Depreciation and amortization           582          533
   Aircraft maintenance                    462          447
   Other                                 1,535        1,564
                                        ------       ------
                                        11,982       11,970
                                        ------       ------            
Earnings from operations                 1,265        1,141
                                        ------       ------
                                                           
Other income (expense):                                    
   Interest expense                       (270)        (216)
   Interest capitalized                     82           75
   Interest income                          44           35
   Equity in earnings of affiliates         62           64
   Gain on sale of partnership interest      -          275
   Gain on sale of affiliate's stock         -          103
   Miscellaneous, net                      (37)         (33)
                                        ------       ------
                                          (119)         303
                                        ------       ------            
Earnings before income taxes             1,146        1,444
Provision for income taxes                 391          532
                                        ------       ------            
Net earnings                           $   755      $   912
                                        ======       ======
                              
                           
      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
                                          1998        1997
                                          ----        ----
<S>                                    <C>          <C>
Cash and cash equivalents at
  beginning of period                  $   268      $   203
                                         -----        -----          

Cash flows from operating activities     2,776        2,398
                                         -----        -----
                                                           
Cash flows from investing activities:
 Additions to property and equipment    (2,389)      (2,170)
 Proceeds on disposition of                              
   property and equipment                  413           41
 Proceeds on disposition of                
   partnership interest                     -           539
 Decrease (increase) in short-term           
   investments                             109          (30)
 Increase in related party receivables     (15)         (38)
 Other, net                                (40)         (19)
                                         -----        -----
                                        (1,922)      (1,677)
                                         -----        -----          
Cash flows from financing activities:
 Proceeds from issuance of long-term debt  831            -
 Repayment of long-term debt              (247)         (79)
 Principal payments under capital                         
   lease obligations                      (270)        (114)
 Purchase of equipment certificates 
   under Company operating leases         (655)           -
 Aircraft lease deposits                  (160)        (107)
 Dividend to parent company               (250)        (250)
 Increase in related party debt             22           25
 Other, net                                  1            -
                                         -----        -----
                                          (728)        (525)
                                         -----        -----          
Increase (decrease) in cash and            
  cash equivalents                         126          196
                                         -----        -----

Cash and cash equivalents at 
  end of period                         $  394       $  399
                                         =====        =====
                                                           
Cash paid during the period for:                           
   Interest (net of amounts           
     capitalized)                       $  166       $  119
   Income taxes                         $  128       $  215
                                                           
Non-cash transactions:                                     
   Capital lease obligations incurred   $  635       $  477

      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") 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 1997.

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.  Note 2 of the Notes to
Consolidated Financial Statements in the 1997 Annual Report
on Form 10-K contains additional discussion of the
agreements, stock to be issued to employees and the related
accounting treatment.  Shares earned in 1997 were allocated
in March 1998 as follows:  97,406 shares of Class 2 ESOP
Preferred Stock were contributed to the Non-Leveraged ESOP
and an additional 889,031 shares were allocated in "book
entry" form under the Supplemental Plan.  Additionally,
2,087,531 shares of Class 1 ESOP Preferred Stock were
allocated under the Leveraged ESOP.  Finally, an additional
2,305,579 shares of Class 1 and Class 2 ESOP Preferred
Stock have been committed to be released by UAL since
January 1, 1998.

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
dividends on ESOP Preferred Stock and other tax credits,
partially offset by 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 Debt and Lease Obligations
------------------------------------
      In March 1998, the Company, through a special-purpose
financing entity which is consolidated, issued $604 million
of commercial paper to refinance certain lease commitments.
Although the issued commercial paper has short maturities,
the Company expects to continually rollover this obligation
throughout the 5-year life of its supporting liquidity
facility or bank standby facility.  As such, the commercial
paper is classified as a long-term obligation in the
Company's statement of financial position.

      The proceeds from the commercial paper, as well as $46
million from internally generated funds, were used to
refinance $650 million face-value of equipment certificates
supporting leveraged lease transactions between United and
various lessors.  During the second quarter, the Company
purchased an additional $5 million face-value of equipment
certificates using internally generated funds.  While the
terms of the original leases between United and these
lessors remain unchanged, these actions effectively satisfy
future minimum payments under these leases of  $922 million,
which are scheduled for payment as follows:
<TABLE>
<CAPTION>
                         (In millions)
                                           After    
        1998   1999   2000   2001   2002   2002    Total
        ----   ----   ----   ----   ----   -----   -----
        <C>    <C>    <C>    <C>    <C>    <C>     <C>
         $11    $56    $57    $57    $52   $689    $922
</TABLE>

      Additionally, in connection with the acquisition of
one B747 aircraft, four A319 aircraft, and several aircraft
simulators, the Company issued $226 million of secured notes
during the nine-month period.

Other Comprehensive Income
--------------------------
      On January 1,1998, the Company adopted Statement of
Financial Accounting Standards ("SFAS") No. 130, "Reporting
Comprehensive Income" which establishes standards for
displaying comprehensive income and its components in a
full set of general purpose financial statements.  The
reconciliation of net income to comprehensive net income is
as follows:
<TABLE>
<CAPTION>
                             Three Months Ended   Nine Months Ended             Ended
                                September 30         September 30
                               1998      1997       1998      1997
                               ----      ----       ----      ----
<S>                           <C>       <C>        <C>       <C>
Net earnings, as reported     $ 420     $ 571      $ 755     $ 912
  Other comprehensive income      1        -           1        (2)
                               ----      ----       ----      ----
Total comprehensive income    $ 421     $ 571      $ 756     $ 910
                               ====      ====       ====      ====
</TABLE>

      Accumulated other comprehensive income included in
other stockholder's equity was $(1) million and $(2) million
at September 30, 1998 and December 31, 1997, respectively.

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, 1998, commitments for the purchase
of property and equipment, principally aircraft,
approximated $7.2 billion, after deducting advance
payments.  An estimated $0.5 billion will be spent during
the remainder of 1998, $2.5 billion in 1999, $1.8 billion
in 2000 and $2.4 billion in 2001 and thereafter.  The major
commitments are for the purchase of B777, B747, B767, B757,
A320 and A319 aircraft, which are scheduled to be delivered
through 2002.  The above amounts include commitments for
the August 1998 order with Airbus Industrie for an
additional 10 A319 and 12 A320 aircraft to be delivered
through 2001.  These commitments, combined with aircraft
retirements, are part of the Company's plan to eventually
increase the fleet to an expected 645 aircraft at the end
of 2001.


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 $795 million at September 30, 1998, compared to
$777 million at December 31, 1997.  Cash flows from operating
activities for the nine-month period amounted to $2.8 billion.
Financing activities included principal payments under debt and
capital lease obligations of $247 million and $270 million,
respectively and deposits of an equivalent $160 million in
Japanese yen, French francs and German marks with certain banks
in connection with the financing of capital lease transactions.
Additionally, the Company issued $831 million in debt during the
period and used part of the proceeds to purchase $655 million in
equipment certificates under Company operating leases.  See
"Long-Term Debt and Lease Obligations" in the Notes to
Consolidated Financial Statements for further details.

      Property additions, including aircraft and aircraft spare
parts, amounted to $2.4 billion, while property dispositions
resulted in proceeds of $413 million.  In the first nine months
of 1998, United took delivery of ten A320, thirteen A319, four
B777, two B757, four B767 and three B747 aircraft.  Thirty-one
of the aircraft were purchased and five were acquired under
capital leases.  Eight of the aircraft purchased during the
period were later sold and then leased back.  In addition,
United acquired four B727 and two DC10-10 aircraft off lease
during the first nine months and retired twenty-five B737, four
B747 aircraft and two DC10 aircraft.

      At September 30, 1998, commitments for the purchase of
property and equipment, principally aircraft, approximated $7.2
billion, after deducting advance payments.  Of this amount, an
estimated $0.5 billion is expected to be spent during the
remainder of 1998.  For further details, see "Contingencies and
Commitments" in the Notes to Consolidated Financial Statements.



RESULTS OF OPERATIONS
---------------------
      Summary of Results
      ------------------
      United's earnings from operations were $1,265 million in
the first nine months of 1998, compared to $1,141 million in the
first nine months of 1997.  United's net earnings were $755
million compared to $912 million during the same period of 1997.
The 1997 nine-month period includes an after-tax one-time gain
of $235 million on the ATS/Galileo transaction (see "Sale of
Affiliate").

      In the third quarter of 1998, United's earnings from
operations were $687 million compared to $548 million in the
third quarter of 1997.  United had net earnings in the 1998
third quarter of $420 million compared to $571 million in the
same period of 1997.  The 1997 third quarter includes an
after-tax one-time gain of $235 million on the ATS/Galileo
transaction (see "Sale of Affiliate").

      Specific factors affecting United's consolidated
operations for the third quarter and first nine months of 1998
are described below.

Third Quarter 1998 Compared with Third Quarter 1997
---------------------------------------------------
      Operating revenues increased $142 million (3%) and
United's revenue per available seat mile (unit revenue)
decreased very slightly to 10.39 cents compared to 10.43 cents a
year ago.  Passenger revenues increased $116 million (3%)
despite a 2% decrease in yield from 12.33 to 12.10 cents due to
a 5% increase in United's revenue passenger miles.  Available
seat miles across the system were up 4% over the third quarter
of 1997, resulting in a passenger load factor increase of 0.8
point to 76.1%.  The following analysis by market is based on
information reported to the U.S. Department of Transportation:

<TABLE>
<CAPTION>
                                 Increase (Decrease)
                                 -------------------
                                                            Revenue Per Revenue
              Available Seat Miles  Revenue Passenger Miles    Passenger Mile
                    (Capacity)              (Traffic)              (Yield)
              --------------------  ----------------------- -------------------
<S>                   <C>                    <C>                    <C>
Domestic                6%                     8%                     4%
Pacific                (9%)                   (6%)                  (20%)
Atlantic               10%                     8%                    (5%)
Latin America          20%                     8%                   (10%)
</TABLE>

          Domestic yields increased as the U.S. economy
continued to expand and industry capacity growth remained
relatively modest.  Results were also helped by the pilot strike
at Northwest Airlines.  Pacific yields continue to be negatively
impacted by the weakness of most Pacific currencies compared to
the U.S dollar, especially the Japanese yen, and the effects of
the Asian economic turmoil on demand for travel.  Year-over-year
in the third quarter of 1998 the Japanese yen was 18% weaker
compared to the U.S. dollar.  Yields in other international
markets have been impacted by a negative pricing environment
resulting from excess industry capacity and weakened economies.

          Cargo revenues increased $3 million (1%) on increased
freight ton miles of 3%.  A 1% higher freight yield was offset
by a 5% lower mail yield, resulting in 1% decrease to cargo
yield for the period.  Other operating revenues increased $23
million (9%) due to growth in frequent flyer program partner-
related revenues and contract sales to third parties.

      Operating expenses increased $3 million (0.1%) and
United's cost per available seat mile inclusive of ESOP
compensation expense decreased 3%, from 9.19 cents to 8.90
cents.  Without the ESOP compensation expense, United's cost per
available seat mile would have been 8.52 cents, a decrease of 1%
from the 1997 third quarter.  ESOP compensation expense
decreased $83 million (32%), reflecting a decrease in the
estimated average fair value of ESOP stock committed to be
released to employees as a result of lower average price of
UAL's common stock.  Purchased services increased $55 million
(17%) due to increases in computer reservations fees, credit
card discounts, communications expense and Year 2000 related
spending.  Depreciation and amortization increased $17 million
(9%) due to an increase in the number of owned aircraft and
aircraft under capital lease.  Salaries and related costs
increased $85 million (7%) due to ESOP mid-term wage adjustments
which took place in July 1998 and increased staffing in certain
customer-contact positions.  Commissions decreased $55 million
(13%) due to a change in the commission structure implemented in
the third quarter of 1997 as well as a slight decrease in
commissionable revenues.  Aircraft fuel decreased $40 million
(8%) due to a 10% decrease in the cost of fuel from 65.3 cents
to 58.5 cents a gallon.  Aircraft maintenance increased $12
million (8%) due to an increase in engine overhauls.  Aircraft
rent decreased $14 million (6%) due to refinancing aircraft
under operating lease.  Other expenses increased $7 million (1%)
as a result of higher advertising and promotion expense and cost
of contract sales partly offset by the sale of ATS.

      Other expense amounted to $50 million in the third quarter
of 1998 compared to $28 million in the third quarter of 1997
(excluding the gain on the ATS/Galileo transaction - see "Sale
of Affiliate).  Interest expense increased $20 million (27%) due
to the issuance of long-term debt in 1997 and 1998.  Interest
income increased $2 million (15%) due to higher investment
balances.

Nine Months 1998 Compared with Nine Months 1997
-----------------------------------------------
      Operating revenues increased $136 million (1%) and
United's revenue per available seat mile (unit revenue)
decreased 2% to 10.18 cents.  Passenger revenues increased $149
million (1%) despite a 1% decrease in yield from 12.56 to 12.45
cents due to a 2% increase in United's revenue passenger miles.
Available seat miles across the system were up 3%; however
passenger load factor decreased 0.5 points to 72.1%.  The
following analysis by market is based on information reported to
the U.S. Department of Transportation:

<TABLE>
<CAPTION>
                                 Increase (Decrease)
                                 -------------------
                                                            Revenue Per Revenue
              Available Seat Miles  Revenue Passenger Miles    Passenger Mile 
                   (Capacity)               (Traffic)              (Yield)
              --------------------  ----------------------- -------------------
<S>                  <C>                     <C>                    <C>
Domestic               4%                      4%                     3%
Pacific               (8%)                   (10%)                  (13%)
Atlantic              14%                     12%                    (5%)
Latin America         19%                      8%                    (8%)
</TABLE>


      Pacific yields continue to be negatively impacted by the
weakness of the Japanese yen compared to the dollar, and the
effects of the Asian economic turmoil on demand for travel.
Yields in other international markets have been impacted by a
negative pricing environment resulting from excess industry
capacity and weakened economies.

      Cargo revenues increased $32 million (5%) on increased
freight ton miles of 9%.  A relatively flat freight yield
together with a 1% lower mail yield, resulted in a 1% decrease
in cargo yield for the period.  Other operating revenues
decreased $45 million (5%) due primarily to the sale of the
Apollo Travel Services Partnership ("ATS") in July 1997,
partialy offset by increases in frequent flyer program partner-
related revenues and contract sales to third parties.

      Operating expenses increased $12 million (0.1%) and
United's cost per available seat mile inclusive of ESOP
compensation expense decreased 3%, from 9.46 cents to 9.22
cents.  Without the ESOP compensation expense, United's cost per
available seat mile would have been 8.70 cents, a decrease of 3%
from the 1997 nine-month period.  ESOP compensation expense
decreased $3 million (0.5%), reflecting the decrease in the
estimated average fair value of ESOP stock committed to the
supplemental ESOP as a result of UAL's lower common stock price.
Purchased services increased $152 million (16%) due to increases
in computer reservations fees, credit card discounts,
communications expense and Year 2000 related spending.
Depreciation and amortization increased $49 million (9%) due to
an increase in the number of owned aircraft and aircraft under
capital lease.  Salaries and related costs increased $226
million (6%) due to ESOP mid-term wage adjustments which took
place in July 1998 and increased staffing in certain customer-
contact positions.  Commissions decreased $159 million (14%) due
to a change in the commission structure implemented in the third
quarter of 1997 as well as a slight decrease in commissionable
revenues.  Aircraft fuel decreased $213 million (14%) due to a
15% decrease in the cost of fuel from 70.1 cents to 59.4 cents a
gallon.  Aircraft rent decreased $34 million (5%) due to a
reduction in the number of aircraft under operating lease and
refinancing aircraft under operating lease.  Other expenses
decreased $29 million (2%) as a result of the sale of ATS.

      Other expense amounted to $119 million in the first nine
months of 1998 compared to $75 million in the first nine months
of 1997 (excluding the gain on the ATS/Galileo transaction - see
"Sale of Affiliate).  Interest expense increased $54 million
(25%) due to the issuance of long-term debt in 1997 and 1998.
Interest income increased $9 million (26%) due to higher
investment balances.

SALE OF AFFILIATE
-----------------
       In July 1997, United completed the sale of its interest in
the Apollo Travel Services Partnership ("ATS"), a 77% owned
affiliate whose accounts were consolidated, to Galileo
International, Inc. ("Galileo"), heretofore a 38% owned affiliate
accounted for under the equity method, for $539 million in cash.
This transaction resulted in a pre-tax gain of approximately $405
million.  Of this amount, $275 million was recognized during the
third quarter and the balance will be recognized over the next 25
years, the estimated remaining life of the assets acquired by
Galileo.

       Galileo raised a portion of the proceeds used to purchase
ATS through the completion of an initial public offering of
16,799,700 shares of its common stock, representing 16.0% of its
economic interest, at $24.50 per share for net proceeds of
approximately $390 million.  This transaction resulted in a
reduction of the Company's ownership in Galileo from 38% to 32%.
In accordance with the Company's policy of recognizing gains or
losses on the sale of a subsidiary's stock based on the
difference between the offering price and the Company's carrying
amount of such stock, the Company recognized a pre-tax gain of
$103 million during the third quarter.  Pursuant to Statement of
Financial Accounting Standards No. 109, the Company also recorded
$40 million of deferred taxes related to this gain.

      United continues to account for Galileo under the equity
method and will continue to purchase computer reservations
services under its existing services agreement with Galileo.

LABOR AGREEMENTS & WAGE ADJUSTMENTS
-----------------------------------
      On April 2, 1998, the International Association of
Machinists and Aerospace Workers ("IAM") filed an application
with the National Mediation Board ("NMB") seeking recognition as
the collective-bargaining representative for United's
approximately 19,000 public contact employees (primarily customer
service and reservations sales and service representatives).  On
July 17, 1998, the NMB announced that the IAM had received
sufficient votes to represent United's public contact employees.
As a result, the IAM becomes the bargaining representative for
these employees and will begin negotiations regarding a contract
for the affected employees, a process which is expected to last
for several months.

     Also in July, United announced its intentions to improve
compensation and benefits for the Company's nearly 2,000
administrative employees hired on or after February 1, 1994
("post-ESOP employees").  Currently, the Company's administrative
employees are being paid under a two-tier wage structure which
went into effect at the time of the 1994 recapitalization.
Effective April 13, 2000, the two-tier wage structure will be
eliminated and post-ESOP employees will be paid on the same basis
as those employees hired prior to February 1, 1994.  In addition,
on January 1, 1999, the benefits for post-ESOP employees will
match those of employees hired prior to February 1, 1994,
including company-paid medical, dental and pension.  The Company
expects the increase in salaries and related costs resulting from
this change to be immaterial.


DEPARTMENT OF TRANSPORTATION POLICY STATEMENT
---------------------------------------------
     On April 10, 1998, the Department of Transportation ("DOT")
issued a proposed Statement of the Department of Transportation's
Enforcement Policy Regarding Unfair Exclusionary Conduct in the
Air Transportation Industry.  The proposed policy sets forth
tentative findings and guidelines for use by the DOT in
evaluating whether major carriers' competitive responses to new
entry warrant enforcement action.  On July 24, 1998, United filed
comments on the proposed policy, opposing the policy as being
anti-competitive, anti-consumer and outside of the DOT's
administrative authority.

     In a related matter, the Omnibus Consolidated and Emergency
Supplemental Appropriations Act signed by President Clinton on
October 21, 1998, requires certain specified studies to be
prepared and transmitted to Congress concerning the various
factors which may impact competition in the airline industry.
This legislation effectively suspends implementation of the above
stated DOT policy until the required studies are completed.


UNITED-DELTA ALLIANCE
---------------------
      On April 30, 1998, United announced a tentative, seven-year
bilateral alliance with Delta Air Lines, Inc. ("Delta") that
allowed code-sharing between the carriers, if approved by both
carriers' pilot unions, reciprocal participation in frequent
flyer programs, as well as other areas of marketing cooperation.

      United and Delta initially expected to implement code-
sharing on U.S. domestic flights and eventually including
international flights in Latin America and the Pacific, pending
agreement of both companies' foreign alliance partners and the
appropriate governments.  During August 1998, the Delta pilots'
union said it would no longer consider the approval of the code-
sharing aspect of the alliance.  As a result, Delta has
discontinued consideration of the code-sharing arrangements with
United.

      Effective September 1, 1998, United and Delta participate
in each other's frequent flyer programs.  Frequent flyer members
can earn miles on United and Delta flights within the United
States, Puerto Rico and the U.S. Virgin Islands and choose to
credit the miles to their frequent flyer account with either
carrier.  Effective October 15, participants in United's and
Delta's frequent flyer programs can redeem miles on either
carriers' routes within the United States, Puerto Rico and U.S.
Virgin Islands.


UPDATE ON YEAR 2000 READINESS
-----------------------------
      The Company, like most corporations, faces potential problems if
software applications, computer equipment and embedded computer
chips fail to recognize calendar dates beginning in the year
2000. The Company has developed a five-step process to achieve
Year 2000 readiness: Awareness, Inventory, Assessment,
Remediation, and Testing.  Awareness consists of the initial
recognition that a program, system, or device could be date-
sensitive and susceptible to malfunction.  Inventory refers to
the identification and documentation of all such programs,
systems, and devices.  Assessment refers to the evaluation and
determination of what course of action should be taken with
respect to a specific program, system or device.  Remediation
refers to the corrective action taken, such as repairing or
replacing, to avoid malfunctions.  Testing consists of all
activities undertaken to gain assurance that the remediated
program, system or device will function as expected for dates
after 1999.  The Company has established a Year 2000 Program
office to oversee this process.

       The above-referenced five-step process is being applied in four
major areas.  The first area consists of the information systems
maintained and supported by the Company's Information Services
Division, collectively referred to as information technology or
"IT" systems.  The IT systems include, among other things, (1)
the hardware related infrastructure, which includes voice and
data communications networks, and (2) mainframe and non-mainframe
based software applications.  The Company develops and uses these
software applications in functions such as reservations,
ticketing, flight scheduling, seat inventory and customer
service.

       The second area consists of user maintained applications that
generally are not supported by the Company's Information Services
Division.  The third area consists of operational systems and
devices that include, among other things, aircraft avionics,
baggage handling, aircraft ground handling, passenger loading
bridges, and flight simulators. User maintained applications and
operational systems and devices are collectively referred to as
"non-IT systems."

       The fourth area consists of the Company's critical business
partners which would include, among others, air traffic control
systems, airport authorities, telecommunications providers, computer
reservation systems, and airframe and engine manufacturers.

       As discussed below, the Company remains on target in completing
its five-step process.  The awareness and inventory phases are
complete.  The assessment phase is complete with respect to IT
and non-IT systems, and substantial progress has been made in the
remediation phase of the IT systems, and with a few exceptions
for non-critical systems, all IT and non-IT systems will be
remediated by March 31, 1999.  The assessment process is still
ongoing with respect to critical business partners.

       IT systems. The Company remains on schedule for completing the
remediation of its hardware infrastructure.   Remediation and the
initial system testing of the mainframe hardware is expected to
be completed by December 31, 1998, while all other hardware
infrastructure, including data and voice networks, is expected to
be remediated and tested by March 31, 1999.  The Company is
developing a plan to remediate desktop computers, all of which
are expected to be remediated by June 30, 1999.

       Remediation and initial testing of all internally developed IT
software applications is expected to be completed by December
31, 1998.  Currently about 90% of the affected applications have
been remediated.  Of the remediated applications, most have been
fully tested and the rest are in the final testing stage. The
remaining 10% of affected applications are currently being
remediated.

       System integration testing for all IT systems that are critical
to the operations is expected to be completed by March 31, 1999,
and system integration testing for all other systems is expected
to be completed by June 30, 1999.

       Non-IT Systems.  The technical assessment stage for non-IT
Systems is complete.  Most airport systems (including aircraft
ground handling equipment, customer service equipment at airports
and passenger loading bridges) are not date-sensitive and
therefore will not require remediation.  Those non-IT systems
that are date-sensitive and critical to the Company's business,
such as aircraft avionics and flight simulators, are scheduled to
be remediated and tested by March 31, 1999, while all others are
expected to be completed by June 30, 1999.

       Critical Business Partners.  The Company has grouped its critical
business partners into three categories: strategic, preferred or
commodity.  The "strategic" category consists of those partners,
such as air traffic control systems, airport authorities,
telecommunications providers, computer reservation systems, and 
airframe and engine manufacturers, without which the Company would 
cease to operate.  The "preferred" category consists of partners that 
have substantial interaction with the Company, but whose absence would
not necessarily cause an immediate or irreversible interruption
or cessation of business operations.  The "commodity" category
consists of those partners who provide goods or services that
could be readily replaced and whose absence would not materially
impact the business. The Company has been contacting its
"strategic" partners to ascertain their state of Year 2000
readiness, and the Company expects to have contacted all of them
by December 31, 1998.  The other partners (preferred and
commodity) are expected to be contacted by March 31, 1999.

       The Company is working closely with the Air Transport Association
("ATA"), an industry organization consisting mostly of 
North American airlines.  The ATA has undertaken a study to
assess the process that major domestic airports are using to
achieve Year 2000 readiness.  Preliminary results of that study
suggest most of the larger domestic airports are making progress
toward being Year 2000 ready.  Many of the smaller domestic
airports do not, as yet, have detailed Year 2000 plans in place.
A similar project is underway with the International Air
Transport Association to review the Year 2000 process at
international airports.  Current information suggests that some
key international airports may be behind schedule.

       The Company's aircraft manufacturers have concluded that there
are no flight safety issues.  However, the Company continues to
test its aircraft systems and to work with its manufacturers to
ensure Year 2000 readiness.

       To date, the Company has projected that it will cost
approximately $70 million ($22 million in capital spending and
$48 million in expense) to make the Company Year 2000 ready.  Of
that total, $23 million has already been spent and $10 million is
expected to be spent during the fourth quarter of 1998, while the
remaining $37 million is expected to be spent in 1999.  All the
amounts expected to be recognized as expense in 1998 have been
taken into consideration in the earnings outlook discussed in the
"Outlook for the Fourth Quarter and Full Year 1998" section.
Because the Company is still determining the remediation plans
for desktop hardware and some non-IT systems, final costs could
differ significantly from the above estimates.

       A series of airline readiness reviews are planned during the
second quarter of 1999 to ensure aircraft, airports, support groups and
critical business partners are prepared for Year 2000 and can
provide uninterrupted operations.  The Company will complete a
risk analysis and develop risk estimates after completing the
airline readiness reviews.  Based on the results of the airline
readiness review, the Company will develop any contingency plans
that are needed.  At this point in time, the Company does not
have specific Year 2000 contingency plans in place.

     The Company believes that the current and planned activities
to modify its systems will reduce the risks of a business 
interruption.  A failure by its systems to be Year 2000 ready could
materially and adversely impact the Company's results of operations,
liquidity and financial condition.  The Company also relies heavily 
upon its critical business partners in carrying out its normal 
business activities.  Failure by critical business partners to be  
Year 2000 ready could materially and adversely impact the Company's
results of operations, liquidity and financial condition. Due to
the general uncertainty surrounding the Year 2000 problem, and the 
uncertainty surrounding the readiness of its critical business partners, 
the Company is unable at this time to determine if any failure will 
occur or if such failure will have a material impact on the Company's 
results of operations, liquidity or financial condition.  

       Readers are cautioned that the Year 2000 section contains forward-
looking information.  Please see the "Outlook" for a list of some of the 
factors that could cause actual results to differ materially from expected
results.


NEW ACCOUNTING PRONOUNCEMENTS
-----------------------------
      In June 1998, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 133,
"Accounting for Derivative Instruments and Hedging Activities"
("SFAS No. 133"), which establishes accounting and reporting
standards requiring that every derivative instrument be recorded
in the balance sheet as either an asset or liability measured at
its fair value.  SFAS No. 133 requires that changes in the
derivative's fair value be recognized currently in earnings
unless specific hedge accounting criteria are met.  Special
accounting for qualifying hedges allows a derivative's gains and
losses to offset related results on the hedged item in the
income statement, and requires that a company must formally
document, designate and assess the effectiveness of transactions
that receive hedge accounting.

      SFAS No. 133 is effective for fiscal years beginning after
June 15, 1999.  The Company has not yet quantified the impacts
of adopting SFAS No. 133 on the financial statements.  However,
it could increase volatility in earnings and other comprehensive
income.

OUTLOOK 
-------
      In the fourth quarter of 1998, available seat miles are
expected to increase approximately 3%, with total system
revenue per available seat mile approximating last year within
1% up or down.  Costs per available seat mile excluding ESOP 
charges are expected to approximate 1% worse than the prior
year.  This unit cost forecast assumes the average cost of jet
fuel per gallon in the fourth quarter is lower in 1998 than in
1997.  Industry capacity increases in international markets and
the economic situation in Asia are forecast to adversely affect
international revenue performance.

      In November, the Company implemented changes to its travel agency 
commission rate for international travel purchased in the U.S. and      
Canada.  Effective November 12, 1998, tickets purchased in the U.S.
and Canada for travel outside those points will earn an 8% base
commission rate with a maximum pay out of $50 one-way ($100 
round-trip).  This action is expected to save approximately $100 
million annually in commission costs.

      The information included in the previous paragraph and in
the paragraph "Update on Year 2000 Readiness" as well as the
asterisked information in Item 3 below, 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, international revenues, unit revenues, unit
costs and fuel prices include: industry capacity decisions, the
airline pricing environment, fuel prices, the success of the
Company's cost-control efforts, actions of the U.S., foreign and
local governments, the Asian economic environment and travel
patterns, foreign currency exchange rate fluctuations, the
economic environment of the airline industry and the general
economic environment.  Some factors that could significantly
impact the Company's expected Year 2000 readiness and the
estimated cost thereof include: the results of the technical
assessment, remediation and testing of date-sensitive systems and
equipment and the ability of critical business partners,
including domestic and international airport authorities,
aircraft manufacturers and the Federal Aviation Administration to
achieve Year 2000 readiness.

Item 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
          ----------------------------------------------------------

      For information regarding the Company's exposure to certain
market risks, see Item 7A. Quantitative and Qualitative
Disclosures About Market Risk in United's Annual Report on Form 10-K
for the year 1997.  Significant changes which have occurred since
year-end are as follows:
<TABLE>
<CAPTION>
Price Risk (Aircraft fuel) -

(In millions, except average contract rates)
--------------------------------------------
                                       Notional     Average       Estimated Fair Value
                                        Amount   Contract Rate  as of September 30, 1998
                                       --------  -------------  ------------------------
<S>                                     <C>       <C>                    <C>
Purchased call contracts - Crude oil    $ 515     $17.40/bbl             $  24
                         - Heating oil  $  25     $ 0.42/gal             $   2
                                                          
Sold put contracts - Crude oil          $ 368     $17.46/bbl             $ (40)
                   - Heating oil        $  19     $ 0.43/gal             $  (1)
</TABLE>

<TABLE>
<CAPTION>

Foreign currency (Japanese Yen) -

(In millions, except average contract rates)
--------------------------------------------
                                       Notional     Average       Estimated Fair Value
                                        Amount   Contract Rate  as of September 30, 1998
                                       --------  -------------  ------------------------
<S>                                     <C>         <C>                  <C>
Purchased put contracts                 $ 356       $130.68              $  21
                                                         
Sold call contracts                     $ 358       $129.68              $ (13)
</TABLE>
                                                     

       The appreciation of the Japanese yen during October 1998
decreased the estimated fair market value of the sold calls by
$35 million to $40 million, some or all of which may be
recognized as an expense in the fourth quarter of 1998 depending
upon the relative value of the Japanese yen versus the U.S.
dollar during and at the end of the period.*


                   PART II.  OTHER INFORMATION
                   ---------------------------

Item 5.  Other Information.
-------  -----------------
      
      In November, the Company implemented changes to its travel agency 
commission rate for international travel purchased in the U.S. and      
Canada.  Effective November 12, 1998, tickets purchased in the U.S.
and Canada for travel outside those points will earn an 8% base
commission rate with a maximum pay out of $50 one-way ($100 
round-trip).  
      
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 1998.
     
     

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 - Finance
                                        (principal accounting officer)



Dated:  November 13, 1998


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

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

12             Computation of Ratio of Earnings to Fixed Charges.

27             Financial Data Schedule.