****UNITED STATES SECURITIESAND EXCHANGE COMMISSION****Washington, D.C. 20549**
**FORM 10-Q**
**(Mark One)**
**[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE****       SECURITIES EXCHANGE ACT OF1934**
**For the quarterly period ended March 31, 2005**
**OR**
**[  ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE****       SECURITIES EXCHANGE ACT OF1934**
**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**(Stateor other jurisdiction of(I.R.S. Employerincorporationor organization)Identification No.)  **Location:1200 East Algonquin Road, Elk Grove Township, Illinois               60007****MailingAddress:  P. O. Box 66100, Chicago, Illinois                                         60666**(Addressof principal executive offices)                                                              (Zip Code)  **Registrant'stelephone number, including area code  (847) 700-4000**
    Indicateby check mark whether the Registrant (1) has filed all reports requiredto be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934during the preceding 12 months (or for such shorter period that the registrantwas required to file such reports), and (2) has been subject to such filingrequirements for the past 90 days.  Yes    X      No
    Indicatethe number of shares outstanding of each of the issuer's classes of commonstock, as of the latest practicable date.  Outstanding atClassMay 13, 2005Common Stock ($5 par value)205
*  Registrant is the whollyowned subsidiary of UAL Corporation (File 1-6033).  Registrant becamesubject to filing periodic reports under the Securities Exchange Act of1934 as a result of a public offering of securities which became effectiveJune 3, 1988 (Registration Nos. 33-21220 and 22-18246).  
United Air Lines, Inc. and SubsidiaryCompanies Report on Form 10-QFor the Quarter Ended March 31, 2005
Index PARTI.FINANCIALINFORMATIONPage No.    Item 1. Financial Statements  Condensed Statementsof Consolidated Financial Position (Unaudited) - as of March 31, 2005 andDecember 31, 20043  Statements of ConsolidatedOperations (Unaudited) - for the three months endedMarch 31, 2005 and 20045  Condensed Statementsof ConsolidatedCash Flows (Unaudited) - for the three months ended March 31, 2005 and 20046  Notes to ConsolidatedFinancialStatements (Unaudited)7 Item2. Management's Discussion and Analysis of Financial Condition and Resultsof Operations21  Item3. Quantitative and Qualitative Disclosures AboutMarket Risk32    Item4. Controls and Procedures33PARTII.OTHERINFORMATION  Item6. Exhibits 34 Signatures35 ExhibitIndex36 
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
United Air Lines, Inc. and Subsidiary Companies(Debtor and Debtor-in-Possession)Condensed Statements of Consolidated Financial Position (Unaudited)(In Millions)
    March 31December 31Assets20052004   Current assets:  Cash and cash equivalents$ 1,389 $ 1,248 Restricted cash864 856 Short-term investments24 32 Receivables, net1,147 941 Related party receivable252 239 Deferred income taxes122 117 Inventories, net211 234 Prepaid fuel expense255 187 Prepaid expenses and other357260 4,6214,114   Operating property and equipment:  Owned17,553 17,730 Accumulated depreciation and amortization(5,718)(5,623) 11,83512,107   Capital leases2,724 2,708 Accumulated amortization(677)(653) 2,0472,055 13,88214,162   Other assets:  Investments22 22 Intangibles, net379 380 Pension assets233 665 Aircraft lease deposits525 540 Prepaid rent70 71 Other, net751782 1,9802,460    $20,483$20,736   
See accompanying Notes to Consolidated Financial Statements.  
United Air Lines, Inc. and Subsidiary Companies(Debtor and Debtor-in-Possession)Condensed Statements of Consolidated Financial Position (Unaudited)(In Millions)
    March 31December 31Liabilities and Stockholder's Equity20052004   Current liabilities:  Current portions of long-term debt and  capital lease obligations$ 902 $ 903 Advance ticket sales1,828 1,361 Accrued salaries, wages and benefits1,664 2,098 Accounts payable652 599 Related party payable235 478 Fuel purchase commitments255 187 Other1,6231,321 7,1596,947   Long-term debt and capital lease obligations310301   Other liabilities and deferred credits:  Deferred pension liability1,289 2,333 Postretirement benefit liability1,915 1,920 Deferred income taxes335 330 Other982938 4,5215,521   Liabilities subject to compromise17,66516,162   Commitments and contingent liabilities (Seenote)     Stockholder's equity:  Common stock at par- - Additional capital invested4,152 4,152 Retained deficit(8,791)(7,779)Accumulated other comprehensive loss(3,296)(3,331)Receivables from affiliates(1,237)(1,237) (9,172)(8,195)    $20,483$20,736   
See accompanying Notes to Consolidated Financial Statements.  
United Air Lines, Inc. and Subsidiary Companies(Debtor and Debtor-in-Possession)Statements of Consolidated Operations (Unaudited)(In Millions)
 Three Months Ended March 31 20052004Operating revenues:  Passenger -United Airlines$ 2,916 $ 2,991 Passenger - Regional Affiliates524 440 Cargo172 148 Other 304335 3,9163,914Operating expenses:  Salaries and related costs1,031 1,249 Aircraft fuel805 603 Regional affiliates645 551 Purchased services360 352 Landing fees and other rent233 231 Aircraft maintenance219 185 Depreciation and amortization212 229 Cost of sales136 191 Aircraft rent121 138 Commissions77 81 Other 316303 4,1554,113   Loss from operations(239)(199)   Other income (expense):  Interest expense(112)(123)Interest capitalized(5)- Interest income4 10 Non-operating special charges- (13)Reorganization items, net(718)(130)Miscellaneous, net589 (773)(247)   Loss before income taxes and equity in lossesof   affiliates(1,012)(446)Credit for income taxes--Loss before equity in losses of affiliates(1,012)(446)Equity in losses of affiliates-(3)Net loss$(1,012)$ (449)
See accompanying Notes to Consolidated Financial Statements.  
United Air Lines, Inc. and Subsidiary Companies(Debtor and Debtor-in-Possession)Condensed Statements of Consolidated Cash Flows (Unaudited)(In Millions)
 Three Months Ended March 31 20052004Cash and cash equivalents at beginning   of period$ 1,248$ 1,646   Cash flows provided by operatingactivities257385   Cash flows provided (used) byreorganization activities:  Reorganization items, net(718)(130)Pension curtailment433 - Increase in liabilities244 93 Other11 - (30)(37)   Cash flows provided(used) by investing activities:  Additions to propertyand equipment(13)(60)Proceeds on dispositionof property and  equipment22 7 Increase in restrictedcash(8)(4)Decrease in short-terminvestments8 44 Increase in relatedparty receivables- (4)Other, net(3)(5) 6(22)   Cash flows provided(used) by financing activities:  Repayment of DIP Financing(4)(62)Repayment of long-termdebt(55)(44)Principal paymentsunder capital     leaseobligations(28)(169)Decrease in advances/loanswith affiliates(5)(4)Aircraft lease deposits,net-148 (92)(131)   Increase in cash andcash equivalents141195   Cash and cash equivalentsat end of period,  excluding restrictedcash$ 1,389$ 1,841   Cash paid during theperiod for:  Interest (net of amountscapitalized)$ 102 $ 157    Non-cash transactions:  Net unrealized gain(loss) on investments$ - $ (1)
See accompanying Notes to Consolidated Financial Statements.   
United Air Lines, Inc. and Subsidiary CompaniesNotes to Consolidated Financial Statements (Unaudited)
The Company
        United Air Lines, Inc. ("United,""we," "our" or the "Company") is a wholly owned subsidiary of UAL Corporation("UAL").
Interim Financial Statements
        We prepared the consolidatedfinancial statements shown here as required by the Securities and ExchangeCommission ("SEC"). Some information and footnote disclosures normallyincluded in financial statements that meet generally accepted accountingprinciples have been condensed or omitted as permitted by the SEC. We believethat the disclosures presented here are not misleading. The financial statementsinclude all adjustments (which include only normal recurring adjustments,reorganization items and other special charges described below) that areconsidered necessary for a fair presentation of our financial positionand operating results.
        Certain prior year financialstatement items have been reclassified to conform to the current year'spresentation. These financial statements should be read together with theinformation included in our most recent Annual Report on Form 10-K forthe year 2004.
        Effective first quarter 2005,our financial statements reflect reclassifications associated with a corporatereorganization of the entities under common control. Prior periods havebeen reclassified to conform to the current year's presentation. For furtherdetails, see "Related Party Transactions" in the Notes to the ConsolidatedFinancial Statements.
Voluntary Reorganization Under Chapter 11
        *Bankruptcy Considerations.* On December 9, 2002 ("Petition Date"), UAL, United and 26 direct and indirectwholly owned subsidiaries filed voluntary petitions to reorganize theirbusinesses under Chapter 11 of the United States Bankruptcy Code in theUnited States Bankruptcy Court for the Northern District of Illinois, EasternDivision (the "Bankruptcy Court"). The Bankruptcy Court is jointly administeringthese cases as "In re UAL Corporation, et al., Case No. 02-B-48191." Theconsolidated financial statements shown here include certain subsidiariesthat did not file to reorganize under Chapter 11. The assets and liabilitiesof these subsidiaries are not considered material to the consolidated financialstatements.
        As required by the BankruptcyCode, the United States Trustee for the Northern District of Illinois appointedon December 13, 2002 an official committee of unsecured creditors (the"Creditors' Committee"). The Creditors' Committee and its legal representativeshave a right to be heard on all matters that come before the BankruptcyCourt concerning our reorganization. There can be no assurance that theCreditors' Committee will support our positions or our plan of reorganization,and any disagreements between the Creditors' Committee and us could protractthe Chapter 11 process, hinder our ability to operate during the Chapter11 process, and delay our emergence from Chapter 11.
        With the exception of ournon-filing subsidiaries, we continue to operate our businesses as "debtor-in-possession"under the jurisdiction of the Bankruptcy Court and in accordance with theapplicable provisions of the Bankruptcy Code, the Federal Rules of BankruptcyProcedure and applicable court orders. In general, as debtor-in-possession,we are authorized under Chapter 11 to continue to operate as an ongoingbusiness, but may not engage in transactions outside the ordinary courseof business without the prior approval of the Bankruptcy Court.
        All vendors are being paidfor all goods furnished and services provided after the Petition Date inthe ordinary course of business. However, under Section 362 of the BankruptcyCode, actions to collect most of our pre-petition liabilities are automaticallystayed, except for liabilities relating to certain qualifying aircraft,aircraft engines and other aircraft-related equipment that are leased orsubject to a security interest or conditional sale contract. Under Section1110 of the Bankruptcy Code, actions to collect such aircraft-related pre-petitionliabilities are automatically stayed for 60 days after the Petition Date(the stay of such actions in our case ended on February 7, 2003), exceptunder two conditions: (a) the debtor may extend the 60-day period by agreementwith the relevant financier and with court approval; or (b) the debtormay agree to perform all of the obligations under the applicable leaseor financing and cure any defaults as required under the Bankruptcy Code.If neither of these conditions is met, the lessor or financier may demandthe return of the aircraft and enforce any of its contractual rights orremedies to sell, lease or otherwise retain or dispose of such property.
        We have negotiated with ouraircraft lessors and lenders to restructure existing financings to reduceaircraft ownership costs to better reflect current market rates, and wehave reached agreements in principle to restructure transactions with respectto a majority of our financed aircraft. However, the need for further costreductions due to difficult changes in the airline industry, substantiallyhigher fuel prices and the continuing weak revenue environment has requiredus to re-examine these agreements and to seek to renegotiate certain ofthose financings. To the extent we are unable to restructure any financingsthat we believe are unaffordable under our revised business plan, we mayface the possibility that one or more lessors or lenders may seek to repossessa significant number of aircraft. We also will need to finalize those agreementsin principle, and to the extent we are unable to do so, we may likewiseface the possibility of repossessions. In either case, the loss of a significantnumber of aircraft could result in a material adverse affect on our financialand operational performance.
       We are currently in discussionsover a significant number of aircraft with a group of mostly public-marketfinanciers to renegotiate an agreement in principle reached in the summerof 2004 from which we subsequently withdrew due to the need for furthercost reductions. While we believe we can ultimately reach a mutually acceptablerestructuring for the continued use of these aircraft at affordable rates,the financiers have demanded the return of certain aircraft and there canbe no assurance that these aircraft will be available for our continueduse.
        Previously, the BankruptcyCourt had enjoined the repossession of six B737 and eight B767 aircraft.On May 6, 2005, the Seventh Circuit Court of Appeals ordered the BankruptcyCourt to vacate the temporary restraining order ("TRO") issued in November2004 preventing the repossession of these aircraft. Dissolution of theTRO will affect only the eight B767 aircraft as United has since rejectedleases for the six B737s that were previously subject to it. The Companyis exploring all legal and business options to decrease the risk that thiswould disrupt our ongoing operations. However, if  we do not successfullynegotiate a solution with the financiers, our operational and financialperformance could be adversely affected.
        We have also rejected orabandoned certain surplus aircraft to adjust our fleet size and compositionto more closely match market demand, and are continuing this process toachieve a reduced fleet of 455 aircraft in 2005. In addition, as part ofongoing negotiations with financiers, we have converted some long-termfinancing arrangements into operating leases of a reduced term and, inseveral instances, re-acquired previously rejected aircraft as circumstanceswarranted.
        Under Section 365 of theBankruptcy Code, we may assume, assume and assign, or reject certain executorycontracts and unexpired leases, including leases of real property, subjectto the approval of the Bankruptcy Court and certain other conditions. Byorder of the Bankruptcy Court, our Section 365 rights to assume, assumeand assign, or reject unexpired leases of non-residential real estate expireon the earlier of the date of termination of our exclusive period to filea plan of reorganization (currently, July 1, 2005) or the date of the conclusionof a disclosure statement hearing in connection with a proposed plan ofreorganization.
        In general, if we rejectan executory contract or unexpired lease, it is treated as a pre-petitionbreach of the lease or contract in question and, subject to certain exceptions,relieves us of performing any future obligations. However, such a rejectionentitles the lessor or contract counterparty to a pre-petition generalunsecured claim for damages caused by such deemed breach and accordingly,the counterparty may file a claim against us for such damages. As a result,liabilities subject to compromise are likely to change in the future asa result of damage claims created by our rejection of various aircraft,executory contracts and unexpired leases. Generally, if we assume an aircraftfinancing agreement, executory contract or unexpired lease we are requiredto cure existing defaults under such contract or lease. We expect thatthe future assumption of certain executory contracts and unexpired leasesmay convert liabilities currently shown as subject to compromise to liabilitiesnot subject to compromise.
        To successfully emerge fromChapter 11, in addition to obtaining exit financing, the Bankruptcy Courtmust confirm a plan of reorganization, the filing of which will dependon the timing and outcome of numerous ongoing matters in the Chapter 11process. We expect to file a plan of reorganization that provides for United'semergence from bankruptcy later in 2005, but there can be no assurancethat the Bankruptcy Court will confirm a plan of reorganization or thatany such plan will be implemented successfully.
        The reorganization plan willdetermine the rights and claims of various creditors and security holders.At this time, it is not possible to predict accurately the effect of theChapter 11 reorganization process on our business, nor can we make anypredictions concerning how each of these claims will be valued in the bankruptcyproceedings.
*        Financial Statement Presentation.*Wehave prepared the accompanying consolidated financial statements in accordancewith American Institute of Certified Public Accountants' Statement of Position90-7 ("SOP 90-7"), "*Financial Reporting by Entities in ReorganizationUnder the Bankruptcy Code*," and on a going-concern basis, which assumescontinuity of operations, realization of assets and satisfaction of liabilitiesin the ordinary course of business.    
        SOP 90-7 requires that thefinancial statements for periods subsequent to a Chapter 11 filing separatetransactions and events that are directly associated with the reorganizationfrom the ongoing operations of the business. Accordingly, all transactions(including, but not limited to all professional fees, realized gains andlosses and provisions for losses) directly associated with the reorganizationand restructuring of the business are reported separately in the financialstatements. For the three-month periods ending March 31, 2005 and 2004,we recognized the following reorganization expenses in our financial statements: (In millions)Three Months Ended March 31 20052004Curtailment charges$ 433 $ - Aircraft rejection charges244 121 Professional fees 44 34 Severance and employee retention7 7 Interest income(7)(4)Other(3)(28) $ 718$ 130
        Aircraft rejection chargesare non-cash costs that include our estimate of claims resulting from United'srejection of certain aircraft leases and return of aircraft as part ofthe bankruptcy process.
        As we restructure aircraftfinancings as permitted by Section 1110 of the Bankruptcy Code, our policyis to reflect the revised lease rates in aircraft rent once we have signeddefinitive term sheets for the financing.
        In the first quarter of 2005,we recognized a pension curtailment charge of $433 million associated witha motion filed by the Pension Benefit Guaranty Corporation ("PBGC") toinvoluntarily terminate (on March 11, 2005) the Company's defined benefitpension plan for covered members of certain represented ground employees.Based upon the involuntary nature of the termination of this plan and itsdirect relationship to the Company's reorganization, the 2005 curtailmentcharge is classified as a reorganization expense.
        The Condensed Statementsof Consolidated Financial Position distinguish pre-petition liabilitiessubject to compromise from both those pre-petition liabilities that arenot subject to compromise and from post-petition liabilities. Liabilitiessubject to compromise are reported at the amounts expected to be allowedby the Bankruptcy Court, even if they may be settled for lesser amounts.
        In addition, as a resultof the Chapter 11 filing, the realization of assets and satisfaction ofliabilities, without substantial adjustments and/or changes in ownership,are subject to uncertainty. While operating as debtor-in-possession underthe protection of Chapter 11 and subject to approval of the BankruptcyCourt and the terms of the applicable debtor-in-possession secured financing("DIP Financing") covenants, or otherwise as permitted in the ordinarycourse of business, we may sell or otherwise dispose of assets (includingaircraft) and liquidate or settle liabilities for some amounts other thanthose reflected in the consolidated financial statements. Further, theforthcoming plan of reorganization could materially change the amountsand classifications in the historical consolidated financial statements.
        Pursuant to the BankruptcyCode, we have filed schedules with the Bankruptcy Court identifying ourassets and liabilities as of the Petition Date, while our creditors havebeen able to file proofs of claim with the Bankruptcy Court and we expectnew claims to be filed in the future. Approximately 13,000 proofs of claim(including late-filed claims) have been filed so far with the BankruptcyCourt requesting payments from United. Through the claims resolution processwe have identified many claims which we believe should be disallowed bythe Bankruptcy Court, for a number of reasons such as our identificationof claims that are duplicative, have been amended or superseded by laterfiled claims, are without merit, or are otherwise overstated. We have filedomnibus objections to many of these claims and will continue to file additionalobjections. As of March 31, 2005, approximately 5,000 of the total claimshave either been withdrawn by the claimants or disallowed by the BankruptcyCourt.
        As of March 31, 2005, approximately8,000 proofs of claim totaling $31.4 billion remain filed with the BankruptcyCourt. The remaining amount of the proofs of claim filed continues to farexceed our estimate of ultimate liability. Differences in amount betweenclaims filed by creditors and liabilities shown in our records continueto be investigated and resolved in connection with our claims resolutionprocess. While we have made significant progress to date, we expect thisprocess to continue for some time and believe that further resolution ofclaims will enable us to determine with more precision the likely rangeof creditor distributions under a proposed plan of reorganization. We haverecorded liability amounts for the claims that can be reasonably estimatedand which we believe are probable of being allowed by the Bankruptcy Courtand we have classified these as liabilities subject to compromise in theattached Condensed Statements of Consolidated Financial Position.
        We will continue to evaluateexisting and new claims filed and will make adjustments, as appropriate.To date, such adjustments have been material and we anticipate that futureadjustments will be material as well. At this time, the ultimate numberand allowed amount of such claims cannot be determined, due primarily tothe uncertainties of the Chapter 11 process, and the in-progress stateof our investigation and resolution of submitted claims.
***       ** DIP Financing.*Inconnection with the Chapter 11 filings, the Company arranged DIP Financing.As of March 31, 2005, the DIP Financing consisted of a $1.0 billion facilityof which $900 million was available due to a $100 million reserve for collateralmaintenance and liquidation expenses. The facility included a revolvingcredit and letter of credit facility of $200 million and a term loan of$800 million, and is scheduled to mature on September 30, 2005. We havethe option of borrowing under the DIP Financing at an interest rate ofthe prime rate plus 3.5% or LIBOR plus 4.5% plus mutually agreed upon fees.As of March 31, 2005, we had outstanding borrowings of $859 million ata rate of 7.5%. In addition, letters of credit were issued under the DIPFinancing in an aggregate amount equal to $37 million. We are requiredto maintain a minimum unrestricted cash balance of $750 million with thepossibility of a reduction to $600 million if certain EBITDAR milestonesare met.
**       **The terms of the DIPFinancing include covenants that require us to satisfy ongoing monthlyfinancial requirements, including minimum EBITDAR thresholds, limitationson capital expenditures and minimum unrestricted cash. Failure to complywith these covenants would constitute an event of default under the DIPFinancing and allow the lenders to accelerate the loan. For the month ofJanuary 2005, we obtained a waiver from the lenders under the DIP Financingwith respect to the defaults and events of default created as a resultof our failure to comply with the EBITDAR covenant during such time. TheCompany complied with the EBITDAR covenant in February, March and April,2005.
**       **The terms of the DIPFinancing also contain a financial covenant which does not permit us tomake payments which are not materially consistent with our business plan,unless the lenders otherwise consent based on approval of a modified businessplan. To preserve the Company's liquidity, our business plan does not providefor contributions to our defined benefit pension plans.
**       **Effective April 28,2005, we entered into an agreement with the DIP Financing lenders to waivecertain events of default and to modify certain terms of the DIP Financing.The modified DIP Financing (i) includes certain technical amendments tothe definition of EBITDAR, (ii) requires the delivery of an updated businessplan on or before July 31, 2005, (iii) increases the Company's flexibilityto lease and sublease a limited number of engines, and (iv) makes certainother technical modifications.
**        B**orrowing availabilityis determined by a formula based on a percentage of eligible assets. Theeligible assets consist of certain previously unencumbered aircraft, spareengines, spare parts inventory, certain flight simulators and quick enginechange kits. The underlying value of such assets may fluctuate periodicallydue to prevailing market conditions and fluctuations in value may havean impact on the borrowing availability under the DIP Financing. Availabilitymay be further limited by additional reserves imposed by the lending banksin their commercially reasonable discretion.
**        T**he DIP Financingis guaranteed by UAL and all filing subsidiaries and is secured by firstpriority liens on all unencumbered present and future assets and by juniorliens on all other assets, other than certain specified assets, includingassets which are subject to financing agreements that are entitled to thebenefits of Section 1110 and to the extent such financing agreements prohibitsuch junior liens.
New Accounting Pronouncements
        In December 2004, the FinancialAccounting Standards Board ("FASB") issued Statement of Financial AccountingStandards No. 123 (Revised 2004), "*Share-Based Payment*" ("SFAS 123R")which establishes standards for accounting for transactions in which anentity obtains employee services in exchange for stock options or share-basedpayments. SFAS 123R requires that the compensation cost (as measured bythe fair value of the equity or liability instruments issued) relatingto share-based payment transactions be recognized in financial statements.This statement replaces SFAS No. 123, "*Accounting for Stock-Based Compensation,*"and supersedes APB Opinion No. 25, "*Accounting for Stock Issued to Employees.*"Currently we account for stock options under APB Opinion No. 25 as permittedby SFAS No. 123. SFAS No. 123R is effective for the first interim or annualreporting period of the Company's first fiscal year that begins after June15, 2005. The Company will recognize compensation expense for its participationin stock-based compensation plans for the portion of outstanding awardsfor which the employee service has not yet been rendered, based on thegrant date fair value of those awards calculated under SFAS 123R. We anticipatethe adoption of SFAS 123R will not have a material impact on our financialstatements while we are in bankruptcy.
        In March 2005, the FASB issuedFASB Interpretation No. 47, *Accounting for Conditional Asset RetirementObligations - An Interpretation of FASB Statement No. 143* ("FIN47").FIN47 clarifies the term conditional asset retirement obligation as usedin SFAS No. 143 and addresses the diverse accounting practices that havedeveloped with respect to the timing of liability recognition for legalobligations associated with the retirement of a tangible long-lived assetwhen the timing and (or) method of settlement of the obligation are conditionalon a future event. In addition, FIN47 clarifies that an entity is requiredto recognize a liability for the fair value of a conditional asset retirementobligation when incurred if the liability's fair value can be reasonablyestimated. FIN47 is effective no later than the end of fiscal year endingDecember 31, 2005. Currently, we are evaluating the impact of FIN47 onour financial statements.
Stock Option Accounting
        At March 31, 2005, we hadcertain stock-based employee compensation plans. We account for these plansunder Accounting Principles Board Opinion No. 25, "*Accounting for StockIssued to Employees*," ("APB 25") and related Interpretations. No stock-basedemployee compensation cost for stock options is reflected in our financialstatements as provided under APB 25, as all options granted under the planshad an exercise price equal to the market value of the underlying commonstock on the date of grant.
        If compensation cost forstock-based employee compensation plans had been determined using the fairvalue recognition provisions of SFAS No. 123, "*Accounting for Stock-BasedCompensation*," we would have reported our net loss as the pro formaamounts shown below: (In millions)Three Months  Ended March 31  20052004  Net loss, as reported$ (1,012)$ (449)  Less: Total compensation expensedetermined under    fair value method(1)(2)   $ (1,013)$ (451)       
Income Taxes
        Beginning in the third quarterof 2002, we established a valuation allowance against our net deferredtax asset. Thus, United has a zero percent effective tax rate for the threemonth periods ended March 31, 2005 and 2004. As of March 31, 2005, ourvaluation allowance totaled $3.1 billion. Further, we have determined thatit is more likely than not that our gross deferred tax assets, net of valuationallowances at March 31, 2005, will be realized through the reversals ofexisting deferred tax credits.  
Retirement and Postretirement Plans
        Our net periodic benefitcost included the following components for the three month periods endedMarch 31, 2005 and 2004: (In millions)Pension BenefitsOther Benefits 20052004 20052004 Service cost$ 38 $ 58  $ 12 $ 11  Interest cost 221 198  35 50  Expected return on plan assets(182)(180) (2)(2) Amortization of prior servicecost      including transition obligation/(asset)8 20  (38)(25) Curtailment charge433 -  - -  Settlement gain(15)-     Recognized actuarial (gain)/loss4727 2628 Net periodic benefit costs$ 550$ 123 $ 33$ 62 
        Historically, the Companyhas maintained a nonqualified supplemental retirement plan for managementemployees who have benefits under the tax-qualified pension plan that cannotbe paid due to Internal Revenue Code limits on compensation or benefits.In June 2003, we terminated all participation and benefit payments underthe nonqualified plan for those participants who had terminated employmentwith the Company prior to December 9, 2002. Effective February 28, 2005,we terminated the nonqualified supplemental plan for all remaining participantsand recorded a settlement gain of $15 million.
       OnMarch 11, 2005, the PBGC filed a complaint against the Company in the U.S.District Court for the Eastern District of Virginia to seek the involuntarytermination of the Ground Employees' Plan. Participants in this definedbenefit pension plan include United's mechanics and related employees representedby the Aircraft Mechanics Fraternal Association ("AMFA"); United's rampand stores, food services, and security officer employees represented bythe International Association of Machinists and Aerospace Workers ("IAM");and a small number of retired flight dispatchers. The PBGC is seeking toassume pension responsibility with benefit accruals terminated effectiveMarch 11, 2005. The Company recorded a $433 million pension curtailmentcharge in the first quarter of 2005 relating to the PBGC's involuntarytermination action.
        Effective July 2004, theCompany ceased making contributions to its qualified defined benefit pensionplans to preserve its liquidity and does not anticipate making furthercontributions. We believe that in order to obtain exit financing and successfullyreorganize and emerge from Chapter 11 bankruptcy proceedings, it will benecessary to terminate and replace all of our defined benefit pension plans.
Restricted Cash
        At March 31, 2005, Unitedhad $864 million in restricted cash, primarily representing security forworker compensation obligations, security deposits for airport leases andreserves with institutions that process our credit card ticket sales. Therecan be no assurance that these institutions will not require additionallevels of security deposits or reserve holdbacks. The Company was notifiedin the second quarter of 2005 that one such institution processing creditcard ticket sales plans to increase their level of reserve holdbacks.
Liabilities Subject to Compromise
        Liabilitiessubject to compromise refers to both secured and unsecured obligationswhich will be accounted for under a plan of reorganization, including claimsincurred prior to the Petition Date. They represent the estimated amountexpected to be allowed on known or potential claims to be resolved throughthe Chapter 11 process, and remain subject to future adjustments arisingfrom negotiated settlements, actions of the Bankruptcy Court, rejectionof executory contracts and unexpired leases, the determination as to thevalue of any collateral securing claims, proofs of claim or other events.To date, such adjustments, as reflected in reorganization expense, havebeen material and we anticipate that future adjustments will be materialas well.
        Differences between liabilityamounts we have estimated and claims filed by our creditors are being investigatedand the Bankruptcy Court will make a final determination of the allowableclaims. The determination of how these liabilities ultimately will be treatedcannot be made until the Bankruptcy Court approves a plan of reorganization.We will continue to evaluate the amounts of these liabilities through theremainder of the Chapter 11 process. To the extent that we identify additionalamounts subject to compromise, we recognize them accordingly. As a result,the amounts of liabilities subject to compromise are subject to change.
        At March 31, 2005, we hadliabilities subject to compromise of $17.7 billion consisting of the following:  (In millions)  Long-term debt, including accruedinterest$ 7,016  Qualified defined benefit pensionplans3,980  Aircraft-related accruals anddeferred gains3,637  Capital lease obligations, includingaccrued interest1,744  Accounts payable287  Intercompany payables and loans266  Other 735  $ 17,665
Segment Information
        We have five reportable segmentsthat reflect the management of our business: North America, the Pacific,the Atlantic, Latin America and UAL Loyalty Services, LLC ("ULS"). Forinternal management and decision-making purposes, we have allocated expensesand revenues (as incorporated in our consolidated financial statements)to these segments as follows: (In millions)Three Months Ended March 31, 2005 United Air Lines, Inc. Inter-United North  Latin segmentConsolidated AmericaPacificAtlanticAmericaULSEliminationTotalRevenue$ 2,394 $ 693 $  461 $ 125 $  243 $ - $ 3,916 Intersegment revenue59 20 14 4 - (97)- Earnings (loss) before       reorganization items$ (304)$ (26)$ (41)$ (17)$  94 $ - $ (294)  (In millions)Three Months Ended March 31, 2004 United Air Lines, Inc. Inter-United North  Latin segmentConsolidated AmericaPacificAtlanticAmericaULSEliminationTotalRevenue$ 2,542 $ 609 $  451 $ 116 $  196$ - $ 3,914 Intersegment revenue 66 17 12 3 - (98)$ - Earnings (loss) before       reorganization items$ (331)$ (10)$ (23)$ (6)$ 64$ - $ (306)
        Beginning in the third quarterof 2004, our Statements of Consolidated Operations reflect reclassificationsof regional carrier revenue and expenses in order to provide better presentationof results of operations for United Airlines mainline and United Express(Regional affiliates). Prior periods have been reclassified to conformto the current year's presentation. The effect of these reclassificationson reportable segments for the first quarter of 2004 from amounts previouslyreported on our Form 10-Q was an increase of $177 million to North Americarevenue.
        A reconciliation of the totalamounts reported by reportable segments to the applicable amounts in theconsolidated financial statements follows:  Three Months Ended  March 31 (In millions)20052004  Total loss for reportable segments$ (294)$ (306)  Special items- (13)  Reorganization items, net(718)(130)  Total loss before income taxes $ (1,012)$ (449)  
        United's dedicated revenue-producingassets (primarily aircraft) generally can be deployed in any of its reportablesegments, while ULS had $1.2 billion in total assets as of March 31, 2005.
Comprehensive Income (Loss)
Accumulated other comprehensive income (loss) is comprised of the following: (In millions)Minimum UnrealizedTotal PensionGains (Losses) Comprehensive Liabilityon Derivatives Income (Loss)Balance at December 31, 2004$ (3,311)$ (20)$ (3,331)Current year net change-3535Balance at March 31, 2005$ (3,311)$ 15$ (3,296)
Special Items
        During the first quarterof 2004, we incurred a $13 million charge in non-operating expense forthe write-down of certain non-operating B767 aircraft.
Reconciliation of Accruals
        In the period following September11, 2001, we recorded an accrual of $162 million to reflect our estimateof the early termination fees associated with certain contracts. This obligationhas yet to be resolved, and therefore continues to be included in liabilitiessubject to compromise in its entirety.
Aircraft Fuel Hedging
        Aircraft fuel represented19% and 15%, respectively, of our total operating expenses for the threemonth periods ended March 31, 2005 and 2004.
        During the second quarterof 2004, we began to implement a strategy to hedge a portion of our pricerisk related to projected jet fuel requirements, primarily using collaroptions. The collars (only some of which were designated as cash flow hedges)involve the purchase of fuel call options with the simultaneous sale offuel put options with identical expiration dates. Those contracts designatedas hedges are recorded at fair value, with the changes in fair value, tothe extent they are effective, recorded in other comprehensive income untilthe underlying hedged fuel is consumed. To the extent that the designatedhedges are ineffective, gain or loss is recognized currently. The fairvalue of each designated hedge is determined by the use of standard optionvalue models using commodity-related assumptions derived from prices observedin underlying markets. For those contracts not designated as hedges, therelated gain or loss is recognized currently as an element of non-operatingincome. In the first quarter of 2005, the Company recognized $41.5 million($3.8 million relating to the options' time-value and $2.7 million as aresult of ineffective hedges) in non-operating income from ineffectivehedges and from contracts not designated as hedges of fuel purchases.
        We have hedged approximately12% of our remaining 2005 projected fuel requirements at an average priceof $1.24 per gallon, excluding taxes. We are currently hedged through December31, 2005. The current fair value of our designated hedge position is approximately$38.3 million as of March 31, 2005 and is included in other comprehensiveincome. We expect that this entire amount, to the extent it remains effective,will be recognized into earnings within the next nine months as a reductionto fuel expense. We plan to continue to hedge future fuel purchases ascircumstances and market conditions allow.
Commitments and Contingencies
        In addition to common commerciallease transactions, we have entered into numerous long-term agreementsto lease certain airport and maintenance facilities that are financed throughtax-exempt special facilities revenue bonds ("municipal bonds") and issuedby various local municipalities to build or improve airport and maintenancefacilities.
        During 2003, we filed fourcomplaints for declaratory judgment and corresponding motions for temporaryrestraining orders concerning United's municipal bond obligations for facilitiesat Denver International Airport ("DEN"), John F. Kennedy InternationalAirport ("JFK"), San Francisco International Airport ("SFO"), and Los AngelesInternational Airport ("LAX"). In each case, we sought clarification ofour obligations to pay principal and interest under the applicable municipalbonds, and the protection of our rights concerning related airport leaseagreements at the applicable airports.
        On March 30, 2004, the BankruptcyCourt granted our motions for summary judgment with respect to the JFK,SFO and LAX municipal bonds, holding that our payment obligations relatedto municipal bonds financing airport improvements at these sites are notobligations arising under "leases" pursuant to Section 365 of the BankruptcyCode. Based on this ruling, the outstanding $248 million in principal inconnection with these municipal bonds is considered pre-petition debt andthe applicable accrued rent has been classified as liabilities subjectto compromise.
        In our adversary proceedinginvolving DEN, however, the Bankruptcy Court did not grant our motion forsummary judgment. Rather, the Bankruptcy Court found that our payment obligationsfor the municipal bonds financing airport improvements at DEN (which representsapproximately $261 million in principal) are obligations arising undera true lease. We have appealed the adverse ruling of the DEN proceeding,but in accordance with the Bankruptcy Court's order, we have paid $45 millioninto escrow for the April 2003, October 2003, April 2004, October 2004and April 2005 interest payments due for the DEN municipal bonds.
        The defendants in the JFK,SFO and LAX adversary proceedings also appealed the Bankruptcy Court'sruling in the U.S. District Court for the Northern District of Illinois("District Court"). In November 2004, the District Court reversed the BankruptcyCourt's ruling and held in favor of the defendants in the SFO adversaryproceeding. In January 2005, the District Court affirmed the BankruptcyCourt's ruling with respect to the DEN adversary proceeding and reversedthe Bankruptcy Court's ruling with respect to the LAX adversary proceeding.On February 18, 2005, the District Court affirmed the Bankruptcy Court'sruling in the Company's favor in the JFK adversary proceeding.
        The Company has appealedthe District Court's ruling with respect to the SFO, LAX and DEN adversaryproceedings to the United States Court of Appeals, Seventh Circuit, andthe defendants have appealed the ruling in the Company's favor in the JFKmatter. The outcome of these matters is uncertain and, therefore, the ultimatetreatment of these municipal bond obligations in reorganization is uncertain.In accordance with the Bankruptcy Court's order, we have paid $10 millioninto escrow for the April 2003, May 2003, October 2003, November 2003,April 2004, May 2004, October 2004, November 2004 and April 2005 interestpayments due for the LAX municipal bonds, and $22 million for the April2003, October 2003, April 2004, October 2004 and April 2005 interest paymentsfor the SFO municipal bonds.
        Similarly, in September 2003,we filed a complaint for declaratory judgment for all seven municipal bondissues (which represents approximately $601 million in principal) relatingto our facilities at Chicago O'Hare International Airport ("O'Hare"), seeking,among other things, a declaration that a certain cross-default provisionin the O'Hare airport lease is unenforceable. On February 15, 2005, theBankruptcy Court approved an agreement ("O'Hare Settlement Agreement")resolving the disputes between United, the trustees and the bondholdersthat in effect reduces the Company's indebtedness related to these bondissues from approximately $601 million to approximately $150 million. TheCity of Chicago, a party to these adversary proceedings, is not a partyto the O'Hare Settlement Agreement.
        The O'Hare Settlement Agreementrequires the indenture trustees and certain designated bondholders to waiveany existing defaults with respect to the bonds, and not to seek any furtherpayment on account of the bonds beyond the consideration set forth in theO'Hare Settlement Agreement. It requires UAL, in connection with the confirmationof its plan of reorganization, to relinquish any claims to certain unusedconstruction fund monies (which currently total approximately $65 million)and to issue convertible debt to the counterparties in the O'Hare SettlementAgreement, upon emergence from bankruptcy of the reorganized UAL Corporation,having a par value of $150 million.
        As of March 31, 2005, theCompany had paid into escrow cash payments totaling approximately $22 millionrelated to interest due on three of the seven O'Hare municipal bonds forsemi-annual interest payments that are purported to come due during thependency of the Chapter 11 reorganization. As part of the O'Hare SettlementAgreement, these escrow funds, less the legal fees of the trustees andcertain holders, will be remitted back to the Company.
        United has certain contingenciesresulting from litigation and claims (including environmental issues) incidentto the ordinary course of business. Management believes, after consideringa number of factors, including (but not limited to) the views of legalcounsel, the nature of contingencies to which we are subject and priorexperience, that the ultimate disposition of these contingencies will notmaterially affect the Company's consolidated financial position or resultsof operations.
        We record liabilities forlegal and environmental claims against us in accordance with GAAP. Theseamounts are recorded based on our assessments of the likelihood of theireventual settlements. The amounts of these liabilities could increase ordecrease in the near term, based on revisions to estimates relating tothe various claims. In addition, as a result of the bankruptcy filing,as of the Petition Date, virtually all pending litigation is stayed, andabsent further order of the Bankruptcy Court, no party, subject to certainexceptions, may take any action, again subject to certain exceptions, torecover on pre-petition claims against us. Accordingly, we have classifiedcertain of these liabilities as liabilities subject to compromise.
        The Company anticipates thatits liability from claims arising from the events of September 11, 2001will be significant; however, we believe that, under the Air TransportationSafety and System Stabilization Act of 2001, our liability will be limitedto our insurance coverage.
        At March31, 2005, commitments for the purchase of property and equipment, principallyaircraft, approximated****$1.7****billion, after deducting advancepayments. Since September 11, 2001, we have reached agreements with theaircraft manufacturers enabling us to delay or cancel delivery of futureorders. Since resetting our fleet plan is critical to our overall restructuring,we continue to hold discussions regarding these deliveries. Our currentcommitments would require the payment of an estimated $0.1 billion in 2005,$0.1 billion in 2006, $0.4 billion in 2007, $0.5 billion in 2008 and $0.6billion in 2009 and thereafter primarily for the purchase of A319 and A320aircraft. It is likely that the amount and timing of these obligationswill change, and could potentially be eliminated in their entirety. Additionally,the disposition of advance payments to the manufacturers of $116 millionis subject to the ultimate outcome of these discussions.
        In March 2005, the BankruptcyCourt approved an agreement which eliminated the obligation to accept deliveryof one remaining B777 aircraft and allowed United to use a significantportion of the approximately $45 million in associated advance paymentsfor other purposes. Therefore, this commitment has been excluded from theobligations and advance payments disclosed above.
Related Party Transactions
        On March 21, 2005, the BankruptcyCourt approved a corporate restructuring that (a) moved Confetti, Inc.as a subsidiary of ULS to a subsidiary of MyPoints.com, Inc. ("MyPoints"),(b) moved MyPoints as a subsidiary of ULS to a subsidiary of UAL, and (c)moved ULS as a subsidiary of UAL to a subsidiary of United. This changein ownership was accounted for as a restructuring of entities under commoncontrol and all assets and liabilities transferred have been stated atnet book values and all prior periods presented have been reclassified.This restructuring resulted in a decreased net loss of $94 million forthree-months ended March 31, 2004. In addition, the restructuring resultedin a change in classification of operating revenues that are associatedwith our Mileage Plus program as follows: Increase/(decrease)Three Months Ended March 31(In millions)2004Operating revenues: Passenger - United Airlines$ 28 Other(28)Total operating revenues $ -
       As of result of the bankruptcyfiling, we reclassified all pre-petition intercompany accounts receivableto equity and all pre-petition intercompany accounts payable to liabilitiessubject to compromise. 
Item 2.  Management's Discussion and Analysis of FinancialCondition and Results of Operations
Chapter 11 Restructuring Efforts
        The following sections describedetails of restructuring efforts underway by the Company in the areas oflabor agreements, defined benefit pension plans, aircraft financings, futureoperating fleet redeployment and reductions, municipal bond obligations,and the ongoing bankruptcy claims resolution process. See "Voluntary ReorganizationUnder Chapter 11" in the Notes to Consolidated Financial Statementsfor further information on the reorganization process.
***       **Labor Restructuring.* Effective January 1, 2005, the Company reduced the compensation of itsnon-represented salaried and management employees and announced changesto benefits and productivity for this group. The combination of lower salaries,benefit changes and workforce reductions are expected to provide the Companywith approximately $112 million of $725 million in targeted average annuallabor and benefit cost savings, other than pensions.
        On January 31, 2005, theBankruptcy Court approved amended collective bargaining agreements ("CBAs")between the Company and the Association of Flight Attendants ("AFA"), theAir Line Pilots Association ("ALPA"), the Professional Airline Flight ControlAssociation ("PAFCA"), and the Transport Workers Union ("TWU") (all ofwhom had ratified such amendments) that are expected to provide approximately$130 million, $181 million, $2.8 million and $0.2 million, respectively,in average annual savings through 2009 from changes in salaries, work rulesand benefits, other than pensions. Together with savings expected fromsalaried and management employees, all expected savings realized to datefor labor groups represents approximately 60% of the $725 million target.
        The ALPA, PAFCA and TWU contractsalso include contingent commitments to issue, respectively, $550 million,$0.4 million and $24,000 in convertible notes upon the emergence of theCompany from bankruptcy in the event the groups' defined benefit pensionplans are terminated. These groups have agreed to eliminate any CBA requirementto maintain, and not to oppose efforts by the Company to terminate, theirrespective defined benefit pension plans.
        The AFA, ALPA, PAFCA, andTWU agreements each contain termination rights for the respective union.Among other things, all provide that the unions can terminate the agreement(upon a failure of the Company to cure within twenty days) if the Companyfails to obtain specified levels of average annual savings from all otherunion groups and the Company's salaried and management employees. Additionally,the PAFCA and TWU agreements each provide that the Company can terminatethe agreements if a court of competent jurisdiction enters a final orderthat the Company is not entitled to terminate the defined benefit pensionplans covering that employee group.
        On April 8, 2005, the AFAserved notice to the Company of their intention to exercise this terminationprovision. Although the Company believes that the union has no right toterminate this amendment, the parties have agreed to resolve the matterthrough expedited arbitration.
        We were unable to reach ratifiedagreements on amended CBAs with the employees represented by IAM and AMFA.As such, on January 6, 2005, the Bankruptcy Court approved the Company's1113(e) motion seeking interim savings from IAM. The Bankruptcy Court'sorder, effective through April 11, 2005, and which has now been extendedthrough May 31, 2005, requires a temporary pay rate reduction for IAM-representedemployees of 11.5%, elimination of a scheduled May 1 increase in hourlypay rates, and provides that these employees will receive 70% of the paythey would normally have received for sick days taken.
        Likewise, on January 31,2005, the Bankruptcy Court approved the Company's 1113(e) motion seekinginterim savings from AMFA. The Bankruptcy Court's order, effective throughMay 31, 2005, requires a temporary pay rate reduction for AMFA-representedemployees of 9.8% and that these employees receive 75% of the pay theywould normally have received for sick days taken, up to the first 15 days.
        These interim cost savingsordered by the Bankruptcy Court will provide the Company with additionaltime to attempt to resolve the longer-term cost savings it needs from bothIAM and AMFA and to work together to resolve pension issues. Since theCompany was unable to reach ratifiable long-term agreements with both IAMand AMFA, the Company proceeded to trial under Section 1113(c) of the BankruptcyCode, which began on May 11, 2005 in the Bankruptcy Court.
        The AFA, AMFA and IAM haveindicated that they may seek to engage in self-help activities due to thesettlement agreement reached with the PBGC (see "Pensions" below for furtherdetails) and/or the Bankruptcy Court's ruling in the Section 1113(c) proceedings.Such self-help could adversely affect the Company's operations and/or customerdemand for the Company's products and services. The Company believes thatsuch actions would violate both the Railway Labor Act and the BankruptcyCode and will pursue all available legal remedies to defend itself againstdisruptions.
        On May 16, 2005, United andAMFA reached a consensual tentative agreement outside of Bankruptcy Courtproviding for wage reductions and other contractual modifications to theirexisting CBA. The tentative agreement will provide the Company with approximately$96 million in average annual savings from changes in salaries, work rulesand benefits, other than pensions over its five year term. The agreementprovides, among other things, for the issuance of $40 million in convertiblenotes upon the emergence of the Company from bankruptcy in the event theirdefined benefit pension plan is terminated. The agreement also eliminatesany CBA requirement to maintain, and not to oppose efforts by the Companyto terminate, their respective defined benefit pension plans. The agreementis subject to ratification by AMFA membership which is expected to be completedon May 31, 2005. If the tentative agreement is ratified, it is also subjectto Bankruptcy Court approval. In the event that the membership does notratify the tentative agreement, the parties would explore various alternativessuch as returning to negotiations, returning to the Bankruptcy Court orengaging in self-help.
        The 1113(c) trial with respectto the IAM is proceeding, but at the same time the Company continues toengage in active negotiations with the IAM to reach a consensual agreement.
        In recognition of savingsprovided throughout the bankruptcy case, the Company has agreed to provideeach employee group a portion of the equity, securities or other considerationprovided to general unsecured creditors under any plan of reorganizationproposed or supported by the Company. Each employee group is to receivea distribution based on the value of cost savings provided by that group.
        *Pensions. *Asof December 31, 2004 our projected minimum pension funding obligation between2005 and 2010 was approximately $4.9 billion for our defined benefit pensionplans, even after giving consideration to the temporary pension fundingrelief provided by the Pension Funding Equity Act of 2004. Effective July2004, the Company ceased making contributions to its qualified definedbenefit pension plans to preserve its liquidity and does not anticipatemaking further contributions.
        On November 30, 2004, IndependentFiduciary Services, Inc. ("IFS"), the independent fiduciary appointed bythe Company, filed a motion in the Bankruptcy Court requesting the allowanceof a $288 million to $993 million administrative claim against the Companyfor unpaid minimum funding contributions. On March 18, 2005, the BankruptcyCourt ruled that only those contributions arising from pension benefitsassociated with service performed by participants in the post-petitionperiod would be considered an administrative claim. IFS is appealing thisdecision.
       We believe that in order to obtain exit financing and successfully reorganizeand emerge from Chapter 11 bankruptcy proceedings, it will be necessaryto terminate and replace all of our defined benefit pension plans. To thisend, on April 22, 2005, the Company and the PBGC entered into a globalsettlement agreement which provides for the settlement and compromise ofvarious disputes and controversies with respect to four defined benefitpension plans of United, including the United Pilot Pension Plan, FlightAttendant Pension Plan, Ground Employees' Pension Plan and the Management,Administrative and Public Contact Pension Plan (collectively, the "PensionPlans"). In addition, in accordance with requests by certain creditors,the Company negotiated modifications and clarifications to the terms ofthe settlement agreement in the beginning of May, 2005. The BankruptcyCourt approved the settlement agreement on May 10, 2005.  The AFAhas filed an appeal of the Bankruptcy Court's approval of the settlement.
        Upon the receipt of the approvalsrequired under the settlement agreement, the PBGC and the Company willexecute termination and trusteeship agreements with respect to each ofthe Pension Plans. As previously mentioned, the termination date for theGround Employees' Pension Plan will be March 11, 2005, while terminationdates for the other plans will be as specified in the settlement agreement.As of the date specified in the termination and trusteeship agreement foreach of the Pension Plans, the PBGC will become the statutory trustee ofthose plans, and the Company will have no further duties or rights withrespect to the plans.
        Under the settlement agreement,the Company has agreed to propose a plan of reorganization that providesfor the distribution of the following consideration to the PBGC:- $500 million in principal amount of 6% senior subordinated unsecured notesto be issued to the PBGC no later than the bankruptcy exit date; maturing25 years from issuance date; with interest payable in kind (notes or commonstock) through 2011 (and thereafter in cash) in semi-annual installments;the notes will rank pari passu with all current and future UAL or Unitedsenior unsecured debt; and be callable at any time at 100% of par value.
- 5,000,000 shares of 2% convertible preferred stock to be issued to thePBGC no later than the bankruptcy exit date, at a liquidation value of$100 per share, convertible at any time following the second anniversaryof the issuance date into common stock of the reorganized Company at aconversion price equal to 125% of the average closing price of the commonstock during the first 60 days following exit from bankruptcy; with dividendspayable in kind semi-annually; the preferred stock will rank pari passuwith all current and future UAL or United preferred stock; and be redeemableat any time at $100 par value at the option of the issuer; and being non-transferableuntil two years after the issuance date.
- $500 million in principal amount of 8% senior subordinated unsecured notescontingently issuable to the PBGC in up to eight equal tranches of $62.5million (with no more than two tranches issued on a single date), beginningwith the fiscal year ending December 31, 2009 and ending with the fiscalyear ending December 31, 2017 in which there is an issuance trigger date.Issuance is triggered when, among other things, the Company's EBITDAR exceeds$3.5 billion over the prior twelve months, provided that issuance wouldnot cause a default under any other securities then existing. Each issuedtranche would mature 15 years from its respective issuance date; with interestpayable in cash in semi-annual installments; the notes will rank pari passuwith the notes to be issued to ALPA under the January 2005 Letter of Agreementbetween ALPA and United, and be callable at any time at 100% of par value.For more information on the terms of the settlement agreement, see theCompany's Form 8-K filed with the SEC on April 28, 2005.
        Thedistribution of these securities to the PBGC is subject to a "safety valve"provision that allows for modifications to the terms of the securitiesto the extent that such terms are materially impairing, hindering or delayingthe Company's ability to obtain the necessary financing to exit bankruptcy.
        The settlement agreementrequires that any defined contribution plan proposed to be provided bythe Company to its employees following the termination of the Pension Plansshall be subject to the PBGC's consent, such consent not to be unreasonablywithheld. The Company further agrees not to establish any ERISA-qualifieddefined benefit pension plan for five years after the date of the Company'sexit from bankruptcy.
        Additionally, the Companyhas agreed to propose a plan of reorganization that provides the PBGC witha single pre-petition general unsecured unfunded liability claim arisingfrom the termination of the Pension Plans. At United's option, the PBGCwill assign 45% of the distribution it receives from this claim as directedby United; provided that United's direction of this assignment must be(1) consistent with the best interests of general unsecured creditors,(2) subject to at least 10 business days prior notice to the Creditor'sCommittee and after consultation with the Committee, and (3) subject toBankruptcy Court approval under the best interest of creditors' test ina de novo review. If United does not comply with the above, the distributionwill be directed to the unsecured creditors.
       Sincethe settlement agreement shall be deemed to have settled and released anyclaims by the PBGC on its own behalf or on behalf of the Pension Plansarising from or related to any minimum funding obligations (subject tocertain terms and conditions), it also provides for United to terminatethe IFS agreement, and for the PBGC to support the Company's actions incertain circumstances.
     *Section 1110 Aircraft Restructuring.*****Allvendors are being paid for all goods furnished and services provided afterthe Petition Date in the ordinary course of business. However, under Section362 of the Bankruptcy Code, actions to collect most of our pre-petitionliabilities are automatically stayed, except for liabilities relating tocertain qualifying aircraft, aircraft engines and other aircraft-relatedequipment that are leased or subject to a security interest or conditionalsale contract. Under Section 1110 of the Bankruptcy Code, actions to collectsuch aircraft-related pre-petition liabilities are automatically stayedfor 60 days after the Petition Date (the stay of such actions in our caseended on February 7, 2003), except under two conditions: (a) the debtormay extend the 60-day period by agreement with the relevant financier andwith court approval; or (b) the debtor may agree to perform all of theobligations under the applicable lease or financing and cure any defaultsas required under the Bankruptcy Code. If neither of these conditions ismet, the lessor or financier may demand the return of the aircraft andenforce any of its contractual rights or remedies to sell, lease or otherwiseretain or dispose of such property.
        We have negotiated with ouraircraft lessors and lenders to restructure existing financings to reduceaircraft ownership costs to better reflect current market rates, and wehave reached agreements in principle to restructure transactions with respectto a majority of our financed aircraft. However, the need for further costreductions due to difficult changes in the airline industry, substantiallyhigher fuel prices and the continuing weak revenue environment has requiredus to re-examine these agreements and to seek to renegotiate certain ofthose financings. To the extent we are unable to restructure any financingsthat we believe are unaffordable under our revised business plan, we mayface the possibility that one or more lessors or lenders may seek to repossessa significant number of aircraft. We also will need to finalize those agreementsin principle, and to the extent we are unable to do so, we may likewiseface the possibility of repossessions. In either case, the loss of a significantnumber of aircraft could result in a material adverse affect on our financialand operational performance.
        We are currently in discussionsover a significant number of aircraft with a group of mostly public-marketfinanciers to renegotiate an agreement in principle reached in the summerof 2004 from which we subsequently withdrew due to the need for furthercost reductions. While we believe we can ultimately reach a mutually acceptablerestructuring for the continued use of these aircraft at affordable rates,the financiers have demanded the return of certain aircraft and there canbe no assurance that these aircraft will be available for our continueduse.
        Previously, the BankruptcyCourt had enjoined the repossession of six B737 and eight B767 aircraft.On May 6, 2005, the Seventh Circuit Court of Appeals ordered the BankruptcyCourt to vacate the TRO issued in November 2004 preventing the repossessionof these aircraft. Dissolution of the TRO will affect only the eight B767aircraft as United has since rejected leases for the six B737s that werepreviously subject to it. The Company is exploring all legal and businessoptions to decrease the risk that this would disrupt our ongoing operations.However, if we do not successfully negotiate a solution with the financiers,our operational and financial performance could be adversely affected.
        We havealso rejected or abandoned certain surplus aircraft to adjust our fleetsize and composition to more closely match market demand, and are continuingthis process to achieve a reduced fleet of 455 aircraft in 2005. In addition,as part of ongoing negotiations with financiers, we have converted somelong-term financing arrangements into operating leases of a reduced termand, in several instances, re-acquired previously rejected aircraft ascircumstances warranted.
        *Redeployment and Reductionof Fleet.*  On October 6, 2004, the Company announced a plan toexpand its international route network, redeploying aircraft to more profitableroutes and reducing the overall size of its mainline fleet. These actionsare part of the Company's ongoing strategy to adjust fleet size and routemix to current market conditions, which continue to be intensely competitive.Fundamental changes in our industry demand that we take aggressive stepsnow to implement this plan to ensure that we remain competitive. In thefirst quarter of 2005, we reduced our mainline operating fleet by 31 aircraftas compared to December 31, 2004.
        In addition, on April 22,2005, the Bankruptcy Court approved an agreement to transition to otherregional carriers all flying operations currently performed for the Companyby United Express carrier Air Wisconsin Airlines Corporation ("AWAC").This transition will be completed by early 2006. The Company does not anticipatethat this change will adversely affect its United Express operations. Underthis transition agreement, AWAC refunded approximately $22 million to theCompany in April 2005.
        On May 13, 2005, the Companyannounced that it reached a five-year agreement with United Express carrierMesa Air Group to operate 30 replacement aircraft under the United Expressname, beginning in the fall of 2005.
        *Municipal Bond Obligations.*As a result of our bankruptcy filing, we are not permitted to make paymentson unsecured pre-petition debt. We have been advised that our municipalbonds may be unsecured (or in certain instances, partially secured) pre-petitiondebt. At March 31, 2005, we had approximately $1.7 billion outstandingin municipal bonds that were issued on behalf of United to finance theconstruction of improvements at airport-related facilities. For furtherdetails, see "Commitments and Contingencies" in the Notes to the ConsolidatedFinancial Statements.
        *Claims Resolution Process.*As permitted under the bankruptcy process, our creditors have filed proofsof claim with the Bankruptcy Court and we expect new claims to be filedin the future. Through the claims resolution process we have identifiedmany claims which we believe should be disallowed by the Bankruptcy Court,for a number of reasons such as our identification of claims that are duplicative,have been amended or superseded by later filed claims, are without merit,or are otherwise overstated. We have filed omnibus objections to many ofthese claims and will continue to file additional objections. For furtherdetails, see "Voluntary Reorganization Under Chapter 11 - Financial StatementPresentation" in the Notes to the Consolidated Financial Statements.
Results of Operations
        Over the past several years,the Company and the airline industry have been faced with severe businesschallenges and fundamental changes in the airline industry that have producedmaterial adverse impacts on our results of operations, financial positionand liquidity. We reported losses from operations of $239 million and $199million, respectively, for the quarters ended March 31, 2005 and 2004,and we reported net losses of $1.0 billion and $449 million for the samerespective periods.
        Operating revenues for theairline industry in general, as well as for the Company, have been adverselyimpacted by a variety of factors in the last few years. Such factors haveincluded from time to time unfavorable general economic conditions; theterrorist attacks of September 11, 2001 and fears of further terroristactivities; enhanced airport security measures which have increased airportinconvenience and produced some negative customer reaction; the enactmentof federal taxes on ticket sales to fund those new security measures; theoutbreak of Severe Acute Respiratory Syndrome in early 2003 and subsequentfears of other outbreaks of communicable diseases; and the growth of low-costcarriers in the United States placing further downward pressures on revenuesby forcing us to compete with discounted fares offered by low-cost airlinesin a growing percentage of the markets we serve. These and other adversefactors caused United mainline passenger revenue per revenue passengermile to decline from 13.3 cents in 2000 (the last year we reported an operatingprofit) to 10.8 cents in 2004.
        In the first quarter of 2005,United mainline passenger revenue was 10.8 cents per revenue passengermile, or 4% lower than it was in the first quarter of 2004. Passenger loadfactor improved from 75.3% in the first quarter of 2004 to 78.2% in thesame quarter of 2005. These results reflect a 2% reduction in system capacitybetween quarters. As announced in the fourth quarter of 2004, the Companycontinues to shift capacity from domestic to international markets andit believes that its actions to address overcapacity domestically are beginningto produce unit revenue improvements in that segment.
        Our operating expenses havefluctuated as we have sought to restructure our obligations in bankruptcy,adjust our mainline and regional carrier operating capacity to match marketplacedemand, and cope with historically high jet fuel prices throughout recentyears. United mainline operating cost per available seat mile increasedfrom 10.6 cents in 2000 to 12.0 cents in 2001, and then declined to 10.2cents by 2004. In spite of significant accomplishments in restructuringour operating expenses, including significant contributions from employeesand creditors through the bankruptcy process, high fuel costs have hada significant adverse affect on unit operating costs, particularly in morerecent periods. In the first quarter of 2005, United mainline operatingcost per available seat mile ("CASM") was 10.3 cents per available seatmile, or less than 1% higher than it was in the first quarter of 2004.The increase in fuel prices between quarters added approximately six tenthsof a cent to the first quarter 2005 CASM, as compared to the first quarterof 2004.
        In the summer of 2004, weidentified a further $2 billion in required future annual cash savings(to be fully realized in fiscal year 2007) that we believe are necessaryto qualify for exit financing and to emerge from reorganization later in2005. We are using all means available to us in the bankruptcy processto implement changes to our CBAs to enable us to achieve approximately$725 million in average annual labor savings toward the $2 billion goal.We are seeking operational savings and the termination and replacementof defined benefit pension plans to achieve the remainder of the $2 billionsavings target.
*        Summary of Results*.The air travel business is subject to seasonal fluctuations. Our operationscan be impacted by adverse weather and our first- and fourth-quarter resultsnormally reflect reduced travel demand. Historically, results of operationsare better in the second and third quarters.
        The first quarter 2005 resultsinclude $718 million in reorganization items recorded in connection withour bankruptcy proceedings. The first quarter 2004 results included a favorableout-of-period adjustment to passenger mainline revenue of $60 million,$130 million in reorganization items as well as $13 million to write-downcertain non-operating aircraft to their net realizable value.
        *First Quarter 2005Compared with First Quarter 2004.*  Operating revenues increased$2 million. Passenger mainline revenues declined $75 million due to a 4%decrease in yield partially offset by a 2% increase in traffic. In addition,passenger revenues in the first quarter of 2004 included a $60 millionfavorable adjustment. The following analysis by market is based on informationreported to the U.S. Department of Transportation: 2005SystemDomesticPacificAtlanticLatinPassenger revenues (in millions)$ 2,916$ 1,789$ 604$ 407$ 116      Increase (Decrease) from 2004:     Passenger revenues (in millions)(75)(209)892718Passenger revenues (percent)(2.5%)(10.5%)17.3%7.1%18.4%      Available seat miles (capacity)(1.9%)(9.6%)16.0%4.2%18.3%Passenger load factor3.9%8.1%(5.2%)-(2.3%)Revenue passenger miles (traffic)1.9%(2.2%)9.9%4.2%15.6%Revenue per revenue passengermile (yield)(4.2%)(6.5%)4.3%(0.1%)(6.5%)
        Cargo revenues increased$24 million (16%) largely due to a 14% increase in cargo ton miles. Otheroperating revenues decreased $31 million (9%) primarily due to a decreaseof $73 million in United Airlines Fuel Corporation ("UAFC") fuel salesto third parties, partially offset by increases in third party maintenancerevenues and Mileage Plus mileage sales.
        Operating expenses increased$42 million (1%) and mainline unit cost (operating expenses, excludingregional affiliates costs per available seat mile) increased 0.5%. (In millions)
Operating expenses:Increase/(Decrease) from 2004Percentage Change Salaries and related costs(218)(17.5%)(a)Aircraft fuel202 33.5% (b)Regional affiliates94 17.1% (c)Purchased services8 2.3%  Landing fees and other rent2 0.9%  Aircraft maintenance34 18.4% (d)Depreciation and amortization(17)(7.4%) Cost of sales(55)(28.8%)(e)Aircraft rent(17)(12.3%)(f)Commissions(4)(4.9%) Other134.3% Total42 1.0%  
(a) Decreased primarily due to cost savings associated with lower salaryrates and lower full-time equivalent employees.
(b) Increased primarily as a result of a 36% increase in the averagecost of fuel (including tax and hedge impact) partially offset by a 2%decrease in consumption.
(c) Increased primarily as a result of greater volumes of United Expressregional carrier flying, partially offset by new flying and ground handlingcontract savings.
(d) Increased due to higher levels of maintenance activity, includingcontracted maintenance and maintenance materials.
(e) Decreased primarily due to lower third-party fuel sales by UAFC.
(f) Decreased due to restructuring of aircraft lease obligations andfleet reductions.
        Other non-operating expenseamounted to $55 million in the first quarter of 2005, compared to $104million in the first quarter of 2004, excluding non-operating special itemsand reorganization items. In the first quarter of 2005, the Company recognizeda non-operating gain of $42 million in miscellaneous, net to record theimpact of non-designated and ineffective fuel hedges. Inclusive of non-operatingspecial items and reorganization items, other non-operating expense amountedto $773 million in the first quarter of 2005, compared to $247 millionin the first quarter of 2004. For details on the special items and reorganizationitems, see "Reorganization Items" and "Special Items" in the Notes toConsolidated Financial Statements.
Liquidity and Capital Resources
         The matters describedin "Liquidity and Capital Resources," to the extent that they relate tofuture events or expectations, may be significantly affected by the Chapter11 reorganization process. Those proceedings involve, or may result in,various restrictions on the Company's activities, limitations on financing,and may require Bankruptcy Court and Creditors' Committee approval forvarious matters, and may create uncertainty as to ongoing relationshipswith vendors, suppliers, customers and others with whom we may conductor seek to conduct business.
        Generally, under the BankruptcyCode most of a debtor's liabilities must be satisfied in full before thedebtor's stockholders can receive any distribution on account of such shares.The rights and claims of our various creditors and security holders willbe determined by the confirmed plan of reorganization. It is likely thatpre-petition unsecured claims against the Company will be substantiallyimpaired in connection with our reorganization. At this time we can makeno prediction concerning how each of these claims will be valued in thebankruptcy proceedings.
        United's total of cash, cashequivalents and short-term investments, including restricted cash, was$2.3 billion at March 31, 2005, as compared to $2.1 billion at December31, 2004.
        As of March 31, 2005, wehad $864 million in restricted cash, an increase of $8 million as comparedto December 31, 2004. Restricted cash primarily represents cash collateralto secure workers' compensation obligations, security deposits for airportleases and reserves with institutions that process our credit card ticketsales. Prior to 2003, we met many of these obligations (which were smallerin amount) through surety bonds or secured letters of credit; however,such facilities are currently largely unavailable to us. As a result, wemay be required to post significant additional cash collateral to meetsuch obligations in the future.
       Aninstitution that processes our credit card ticket sales notified the Companyduring the second quarter of 2005 that it planned to increase its cashholdback to secure advanced ticket sales in accordance with the terms ofits merchant agreement.  The Company does not believe that this increasein restricted cash will be material to its expected future liquidity.
        *Operating Activities.*For the quarter ended March 31, 2005, we generated cash flow from operationsof $257 million, a $128 million decrease as compared to $385 million inoperating cash flows generated in 2004.
        We contributed $127 milliontowards our pension funding obligations in 2004, but made no cash contributionsin 2005. We currently anticipate that we will not make any further cashpension contributions, and believe that it will be necessary for the Companyto terminate and replace its defined benefit pension plans to obtain exitfinancing and successfully emerge from bankruptcy. Detailed informationregarding our pension plans is included in "Retirement and PostretirementPlans" in the Notes to Consolidated Financial Statements.
        *Investing Activities.*Cash generated from investing activities was $6 million in 2005 comparedto cash flows used in investing activities of $22 million in 2004. Thechange from 2004 to 2005 primarily reflects fewer short-term investmentconversions to cash, decreased property additions (including aircraft andaircraft spare parts) and increased proceeds from aircraft sales and otherproperty. In the first quarter of 2005, the Company sold two B727, fourB737 and two B767 aircraft, transferred four B767 aircraft to non-operatingstatus and rejected (and/or returned to the lessor) 27 B737 aircraft underSection 1110 of the Bankruptcy Code.
        *Financing Activities.*Cash flows used in financing activities were $92 million in 2005 and $131million in 2004. In the first quarter of 2005, we made principal paymentsunder debt and capital lease obligations of $55 million and $28 million,respectively. The decrease in principal payments on capital lease obligationswas related to aircraft rejections under Section 1110. In addition, wemade $4 million in principal payments on the DIP Financing.
        We expect to spend an estimated$100 million in 2005 for the purchase of property and equipment. At March31, 2005, commitments for the purchase of property and equipment, principallyaircraft, approximated $1.7 billion, after deducting advance payments.For further details, see "Commitments and Contingencies" in the Notesto the Consolidated Financial Statements.
        At March 31, 2005, we hada total of $859 million in debt outstanding under the DIP Financing and$37 million in letters of credit. We believe that the existing DIP Financing,together with other sources of cash, such as from operations, will be adequateto provide for our projected future liquidity needs through our emergencefrom bankruptcy.
        With the historically highfuel prices and continuing weak revenue environment, we have continuedto restructure our costs to achieve a business plan that will permit theCompany to qualify for exit financing for our projected future liquidityneeds upon emergence from bankruptcy. This exit financing, together withother available cash and cash flows from future operations, is expectedto provide us with adequate levels of liquidity necessary for our ongoingoperations and to service our restructured fixed obligations. We expectthat in order for the Company to qualify for exit financing, we will berequired to comply with financial covenants, and that this financing wouldbe approved as part of an overall plan of reorganization. However, theCompany cannot guarantee that this financing will be obtained, or thata plan of reorganization will be approved or implemented successfully.
Outlook
Information regarding guidance for United's 2005 outlook can be obtainedfrom the UAL Corporation's Quarterly report on Form 10-Q for the quarterended March 31, 2005.
        Certain statements throughoutManagement'sDiscussion and Analysis of Financial Condition and Results of Operationsare forward-looking and thus reflect the Company's current expectationsand beliefs with respect to certain current and future events and financialperformance. Such forward-looking statements are and will be subject tomany risks and uncertainties relating to our operations and business environmentthat may cause actual results to differ materially from any future resultsexpressed or implied in such forward-looking statements. Factors that couldcause actual results to differ materially from these forward-looking statementsinclude, without limitation, the following: our ability to continue asa going concern; our ability to comply with the terms of the DIP Financingor negotiate modifications or amendments thereto as necessary; our abilityto obtain court approval with respect to motions in the Chapter 11 proceedingprosecuted by us from time to time; our ability to develop, prosecute,confirm and consummate one or more plans of reorganization with respectto the Chapter 11 cases; risks associated with third parties seeking andobtaining court approval to terminate or shorten our exclusive period topropose and confirm one or more plans of reorganization; the potentialadverse impact of the Chapter 11 cases on our liquidity or results of operations;the appointment of a Chapter 11 trustee or conversion of the cases to Chapter7; the costs and availability of financing; our ability to execute ourbusiness plan; our ability to attract, motivate and/or retain key employees;our ability to attract and retain customers; demand for transportationin the markets in which we operate; general economic conditions; the effectsof any hostilities or act of war or any terrorist attack; the ability ofother air carriers with whom we have alliances or partnerships to providethe services contemplated by the respective arrangements with such carriers;the costs and availability of aircraft insurance; the costs of aviationfuel; the costs associated with security measures and practices; laborcosts; competitive pressures on pricing (particularly from lower-cost competitors)and on demand; government legislation and regulation; the ability of theCompany to maintain satisfactory labor relations;any disruptions to operationsdue to any potential actions by our labor groups; weather conditions; andother risks and uncertainties set forth from time to time in United's reportsto the United States Securities and Exchange Commission. Consequently,the forward-looking statements should not be regarded as representationsor warranties by the Company that such matters will be realized. We disclaimany intent or obligation to update or revise any of the forward-lookingstatements, whether in response to new information, unforeseen events,changed circumstances or otherwise. 
Item 3.Quantitative and Qualitative Disclosures About MarketRisk
        For information regardingour exposure to certain market risks, see Item 7A. Quantitative andQualitative Disclosures About Market Risk in United's Annual Reporton Form 10-K for the year 2004.
Interest Rate Risk - (In millions, except averagecontract rates)NotionalAverageEstimated AmountContract RateFair Value   (Pay)/Receive*Interest rate swap$ 1307.56%$ (29)
Price Risk (Aircraft Fuel) - When market conditions indicate risk reductionis achievable, United enters into fuel option contracts to reduce its pricerisk exposure to jet fuel. The option contracts are designed to provideprotection against increases in the price of aircraft fuel. As market conditionschange, so may United's hedging program.   March 31, 2005 (In millions, except averagecontract rates)NotionalAverageEstimated AmountContract RateFair Value   (Pay)/Receive*Purchased call options - Heatingoil$ 250 $ 1.24/gal$ 80Sold put options - Heating oil(211)1.05/gal- 
*Estimated fair values represent the amount United wouldpay/receive on March 31, 2005 to terminate the contracts.  
Item 4.  Controls and Procedures
         An evaluation was carriedout under the supervision and with the participation of the Company's management,including the Chief Executive Officer ("CEO") and Chief Financial Officer("CFO"), of the effectiveness of the Company's disclosure controls andprocedures as of March 31, 2005.  Based on that evaluation, the Company'smanagement, including the CEO and CFO, has concluded that the Company'sdisclosure controls and procedures are effective. During the first quarterof 2005, there was no change in the Company's internal control over financialreporting that has materially affected, or is reasonably likely to materiallyaffect, the Company's internal control over financial reporting.  
PART II.  OTHER INFORMATION
Item 6.  ExhibitsA list of exhibits included as part of this Form 10-Q is set forthin an Exhibit Index that immediately precedes such exhibits.SIGNATURESPursuant to the requirements of the Securities Exchange Act of 1934,the Registrant has duly caused this quarterly report on Form 10-Q for thequarter ended March 31, 2005 to be signed on its behalf by the undersignedthereunto duly authorized on the 20th day of May, 2005.  UNITED AIR LINES, INC. By:  /s/ Frederic F.BraceFrederic F. BraceExecutive Vice President andChief Financial Officer(principal financial officer)  By:  /s/ David M. WingDavid M. WingVice President and Controller(principal accounting officer)   Exhibit Index Exhibit No.Description     12.1Computation of Ratio of Earnings to Fixed Charges   31.1Certification of the Principal Executive OfficerPursuant to 15 U.S.C. 78m(a) or 78o(d) (Section 302 of the Sarbanes-OxleyAct of 2002)   31.2Certification of the Principal Financial OfficerPursuant to 15 U.S.C. 78m(a) or 78o(d) (Section 302 of the Sarbanes-OxleyAct of 2002)   32.1Certification of the Chief Executive OfficerPursuant to 18 U.S.C. 1350 (Section 906 of the Sarbanes-Oxley Act of 2002)   32.2Certification of the Chief Financial OfficerPursuant to 18 U.S.C. 1350 (Section 906 of the Sarbanes-Oxley Act of 2002)         

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