ual annual report2000

K 541 8400

2000 Annual R

eportU

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UALCorporation

2000Annual Report

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This was a tough year.Tough for employees.Tough for customers.Tough for stockholders.

But there is good news.

Contents

2 Spotlight 20004 Chairman’s Letter8 United’s Strategy

28 Just the Facts35 Route Maps

41 Financial HighlightsOperating Statistics

42 Financial Review54 Directors and Officers56 Stockholder Information

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We took bold stepsin 2000 that willprofoundly shapeUnited’s future.

Spotlight 2000

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We’re…strengtheningour domesticnetwork

Maximizingthe power of our globalalliance network

Making ourairline runmore reliably

Leading theindustry intacklingkey issues

Addinglegroom forour premiumcustomers

Improvingthe airportexperience

Harnessingtechnologyfor ourcustomers

Capitalizing one-commerceopportunities

Streamliningthe work experience for our employees

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As a leader, United has big plans down the road, but we’re not going anywhere until we get our customers where they’re going first.

Jim Goodwin

Chairman’s Letter

Pages 4-7

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Dear Owners andEmployees,

There’s no question that 2000was an eventful year for United.And while we remained com-mitted to safety, enhancingcustomer service, improvingreliability and financial per-formance, as well as makingUnited a better place to work,we clearly had our fair shareof highs and lows. So I’llbegin by offering our collec-tive thanks and appreciationto all of you who stood by us during what were, quitesimply, turbulent times.

I’d also like to take thisopportunity to give you myassessment of our perform-ance, share some of our majorpriorities for 2001, and tell youwhy – despite considerablechallenges last year – I’m veryoptimistic about our future.

A Great Start

Reflecting on our 2000 per-formance, we actually got off to a great start for the firstfour months of the year:

Reliability was up … customerservice was up … profitabilitywas up.

We enjoyed above-industry-average revenue growth andwitnessed a substantial switchof bookings to online channels,reducing our distribution costs.

We had significant revenuegrowth across most interna-tional markets.

We initiated a dividend pro-gram, paying dividends oncommon stock for the firsttime since 1987, and com-plemented this move with our newly established divi-dend-reinvestment and stock-purchase programs.

We introduced several productand service enhancements:

Improved legroom in ourindustry-leading EconomyPlus® section;

Installation of United FirstSuiteSM, a luxury seat withwork space and entertainmentfeatures, which fully reclinesinto a private, cozy bed;

Installation of larger over-head bins on our Boeing737s and B757s, resulting in substantial improvementsin customer satisfaction –and establishing a newindustry standard; and

Introduction of B777 serviceto the Pacific.

We improved on key opera-tional performance indicators,including on-time departuresand mishandled baggage.

We restored non-unionemployee pay to market-competitive levels, resultingin increased workforce competitiveness and re-duced attrition.

And we exceeded our goalsfor people of color and womenin management positions.

Followed by aPeriod of Challenges

Despite these early successes,the summer proved to be oneof the most difficult and chal-lenging times in our business.We were affected – as wasthe rest of the industry – byhorrendous summer weatherand the inadequacy of theU.S. air traffic control system.

We also did not anticipatehow tough labor negotiationswould become, and we weredisappointed that some ofour employees took actionsthat disrupted operations. Inresponse to this unfortunatesituation, we acted quickly toprovide more resources foremployees to minimize dis-ruptions to customers. Weimplemented an aggressiverecovery program to bring ourcustomers back into the fold,cutting back our operations,adjusting schedules, contact-ing customers in advancewhen flights were canceled,and deploying additional air-craft to key hubs.

Even with our hardest efforts,however, we lost the confi-dence and patronage of manycustomers, employees, stock-holders and other investors.The delays and cancellationswe experienced this summer,coupled with rising fuel andlabor costs, did impact ourfinancial performance for2000. Nonetheless, we gen-erated full-year net earningsof $322 million, or earningsper diluted share of $2.38,excluding certain items. Anddespite our operational setbacks, we continued to surpass the industry in year-over-year yield improvement.

Positioned for a Bright Future

In light of our challenges,there are several reasons formy confidence in the future of our business. Through agrowing Star AllianceTM andnew, proprietary code-sharearrangements, we continue to expand our global reach.We are aggressively pursuinge-commerce initiatives throughUnited NewVenturesSM, ournew stand-alone e-com-merce subsidiary.

And our proposed mergerwith US Airways is truly a historic and bold move for us. By uniting the assets ofour two carriers, we plan tooffer our customers increasedtravel choices and conven-ience, provide our employeeswith more job opportunities,and offer growth and economicbenefits for communitiesacross the United States.

If approved, this merger notonly will offer significant ad-vantages for our customers, it also will position United foroptimal growth and strengthenour industry leadership. It will allow us to augment ourpresence on the East Coast –solving a pressing structuralproblem in our U.S. domesticroute network. Combining the two carriers also will pro-vide us with the best possiblecompetitive response to aninternational trend toward airline consolidation.

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In this report, you’ll read in more detail about how,through strategic moves like the US Airways merger,we’re meeting the challengesfacing the entire industry, andalso how United is using itsexpertise to positively impactthe entire airline industry itself.

Goals for 2001

In 2001, we are singularlyfocused on restoring theUnited name and brand in the minds of our customers,employees and stockhold-ers … with a goal of winningback their goodwill, patron-age and support. Towardachieving this goal, we’remaking better on-time andbaggage performance a key priority.

We also are continuing workon Our United CommitmentSM,a comprehensive programwe introduced in 1999 aspart of our effort to improveoverall customer service.

United’s 12-point customerservice plan was created toensure that we give our cus-tomers the respect, courtesy,fairness and honesty theyexpect and deserve.

Through this ongoing com-mitment, we’re addressingindustry issues head-onwhile working diligently toimprove our customers’experience on the groundand in the air. We’re payingparticular attention to pro-viding increased and timelycommunication with passen-gers about flight delays andcancellations, which weknow to be one of theirgreatest concerns. Last yearwe introduced several prod-ucts and initiatives designedto keep customers better

informed during extendeddelays. We’ll continue tobuild on this progress in2001 and beyond.

We’re also committed toachieving fair contracts andeffective labor-managementrelationships that will enableus to return quickly to runninga dependable and on-timeairline. Going forward, wewant to move toward aninterest-based relationshipwith our unions that relies onsharing of information, mutualproblem solving, setting andadhering to objective stan-dards and dealing with eachother with mutual respect.

and that wewill achieveour mission…

I believeUnited’s prospects are bright…

…to be theglobal airlineof choiceworldwide.

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During 2000, we resolvedfive of the labor contractsthat became amendable withthe end of the EmployeeStock Ownership Plan(ESOP) allocation period in2000, including that with theAir Line Pilots Association(ALPA). Given the reality thatwe’re in a high-cost busi-ness, we plan to manage ourcosts to the greatest degreepossible to help bring ourprofitability back in line. Weresponded to an increasinglydifficult cost environment

through our successful fuel-hedging program and strate-gic adjustments to our fleetplan in 2000. In 2001, wealso will work to drive in-creased productivity, simplifi-cation and other efficienciesthrough our system.

For all these reasons, Ibelieve that our long-termprospects are bright, andthat we will achieve our mis-sion to be the global airline ofchoice worldwide. This beliefis supported by the strengthof our strategic initiatives in2000 and our focus for 2001and beyond. I hope afterreading this report you willshare my optimism aboutUnited’s potential.

I would like to close this year’sletter with a note of thanks.First, to our thousands offront-line United employeesaround the globe who lead incountless ways – both bigand small – every day. I’mgrateful to them for their loyal-ty and commitment to Unitedand for everything they did to respond to and accommo-date our customers during adifficult period last summer.

I also want to thank everyone of our customers andstockholders. We owe you a debt of gratitude for yoursupport, confidence andtrust in United. You stuck by us, and we intend to do everything possible to ensure your utmost satisfac-tion each time you do busi-ness with us in the future. We hope you have more reasons to stay with us nowthan ever before.

March 1, 2001

We are singularlyfocused on restoring the United name andbrand in the minds of our customers, employees and stockholders.


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Serving 133destinations in 28 countries

Offering morethan 2,200daily flights

Providing anunparalleledglobal network

Transporting85 million customers

Making travel easier

United’s Strategy:Strengthening OurNetwork

Pages 8-11

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In 2000, nearly 640 millionpeople took to the skies fortravel. More than 85 million of those passengers choseUnited Airlines and our 2,200average daily scheduledflights. This unprecedentedhigh travel volume continuesto increase every year, asdoes the demand for airlinesto meet the growing needs oftheir customers worldwide.

At United, we’re continuing tofind ways to strengthen ourglobal network. We’re maxi-mizing our global presencethrough Star Alliance, andwe’re expanding our U.S.domestic network with theplanned acquisition of USAirways. Together, thesedevelopments will give us anunparalleled global network,coupled with the best U.S.hub network in the industry,which will allow United todeliver on our goal of exceptional customer access and service.

Star AllianceLeads the Way

United’s founding member-ship in Star Alliance, theworld’s most successful air carrier alliance, is oneexample of our position as a progressive leader in theindustry. Our advantage is inthe alliance’s early formationalmost four years ago, whichgives us a solid base fromwhich to strengthen our inter-national network.

The addition of new membersin 2000 – Austrian AirlinesGroup, Singapore Airlines,Mexicana and British Mid-land – brings together thevast networks of 15 world-class airlines. Now, more thanever, Star Alliance providescustomers with global accessand greater flexibility in accru-ing and redeeming frequent-flyer awards to more than 800destinations worldwide.

With key members in place,Star Alliance is now focusingon deeper levels of coopera-tion among the airlines. Forexample, we are working todevelop technologies that will help front-line employeesdeliver seamless serviceacross all airlines.

Star Alliance is creating anautomation infrastructure that will allow Star members’computer systems to talk toeach other. Using this com-munication link will enableStar front-line employees touse their reservation systemsto access name records forpassengers with ticketsissued by other Star Alliancemembers. The system willalso provide real-time flightinformation and mileageredemption information for all Star members.

Recent studies have shownthat Star Alliance alreadysaves customers $100 millionannually, since they benefitfrom the lower fares availablethrough allied airlines. As StarAlliance focuses on enhanc-ing service, it will continue tooffer passengers substantialbenefits and access to theworld through a “just like oneairline” travel experience.

Merging with US Airways

In our next move to redefinethe airline industry, UnitedAirlines is working to enhanceour U.S. domestic network toparallel the international reachwe have with Star Alliance.United’s existing domesticnetwork effectively covers all of the United States, withthe exception of the EastCoast. In an effort to com-plete our national networkpresence, United announcedin May 2000 its plan toacquire US Airways.

As part of the transaction,United entered into agree-ments that will create the first minority-controlled andoperated airline in the U.S. – DC Air – by carving out routesbased at Washington, D.C.-National. In addition, toenhance the competitive benefits of the merger andaddress concerns raised bythe Department of Justice,United entered into an agree-ment with AMR Corporation,parent company of AmericanAirlines, to divest certainassets of US Airways. (See“United’s Agreement withAmerican Airlines,” page 11.)

In addition to providing addedcompetition to the market-place, merging United Airlinesand US Airways will createthe first truly comprehensiveU.S. airline network and willmean travel convenience andefficiency for millions of pas-sengers across the UnitedStates. By bringing togethertwo complementary routesystems, we will be able togive even the smallest cities in our combined networkimproved service to virtuallyanywhere in the world.

We made the decision toacquire US Airways based onthe strategic understandingthat as a mature industry, our opportunities to furtherenhance our network – andtherefore provide our cus-tomers more access to thedestinations they want to go – were limited. Most of the communities on the EastCoast are mature marketswith existing service. Thismade building our presencethere economically and logis-tically unfeasible.

We recognized and acted on the solution – to acquireanother carrier. We’re not theonly company to make sucha move – many industries,including telecommunications,automotive and retailing, areconsolidating globally. But wewere the first U.S. airline totake that bold step. Andbeing the first gave us theadvantage of choosing theairline which best comple-mented our network. USAirways fit that profile.

Acquiring US Airways willenable us to better serve our customers, and if it goesthrough as planned, weexpect it to provide potentialfuture revenue benefits for thecombined carrier.


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The combined assets of thetwo companies will result in anationwide network secondto none. US Airways’ opera-tions are focused on thelucrative East Coast market,which represents $26 billionin revenue for the U.S. dom-estic airline industry, with $16 billion in the Northeastalone. United’s strength is the Midwest, MountainRegion and West Coast;once the two airlines aremerged, United will have the capacity to serve a new,mostly untapped market, providing current US Airwayspassengers in Pittsburgh,Philadelphia and Charlotteconnections to many moreglobal destinations.

This merger, if approved, willenable United to demonstratemore than ever our commit-ment to innovation in cus-tomer service and secure ourplace as the industry leader.With our complementaryroutes coming together intoone nationwide network, wetruly would become the airlineof choice for 148,000 employ-ees worldwide … for 140 mil-lion customers annually … onmore than 4,300 daily flights …to approximately 170 destina-tions in 32 countries and territories around the world.

With the plannedUS Airways merger, we’ll enhance our U.S. network to parallelthe international reach we have with Star Alliance.

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May/June 2000 – Unitedannounced its plan to acquireUS Airways. The transactionis subject to the approval ofthe Department of Justice(DOJ), European Commis-sion and U.S. Department of Transportation. In June,United filed its acquisition planwith the DOJ, and they askedfor additional information toconsider whether the dealwould lessen competition.

October 2000 – United com-pleted the DOJ’s request forinformation and agreed to aDOJ decision deadline ofJanuary 2001.

December 2000 – With theimminent announcement of the American Airlinestransaction, United and USAirways agreed to extend theDOJ’s review period of themerger proposal and divest-iture plans to April 2001.

January 2001 – Unitedannounced an agreementwith American Airlines to ad-dress competitive concernsrelated to the merger with USAirways. The European Com-mission approved the mergerof United and US Airways.

March 2001 – United an-nounced plans to sell USAirways’ subsidiary regionalcarriers – Allegheny, Piedmontand PSA – to Atlantic CoastAirlines, one of the UnitedExpress® carriers.

Customers of both Unitedand US Airways will realizesignificant benefits as a resultof the merger of the two carriers. Passengers will haveunprecedented access andtravel convenience to anexpanded number of U.S.domestic and internationaldestinations. The airline created as a result of themerger will provide United’scurrent customers opportuni-ties to fly to East Coast citieslike never before.

US Airways’ customers will have one-airline accessaround the nation and acrossthe globe, including morethan 500 additional interna-tional destinations throughStar Alliance. Their DividendMiles® preferred customers will receive the same level ofhigh service they’re accus-tomed to through United’sprograms to recognize ourbest customers. Eventually,both groups of customers will enjoy the convenience of one ticket, one baggagecheck-in and one frequent-flyer program for all their destinations.

Communities served by thecombined United and USAirways will experience significant economic benefitsfrom more commerce, jobopportunities and economicgrowth generated across thenation. The expanded net-work created from both air-lines’ routes will give smallercities what they need to thrive:access. The ability to attractnational and international

business through hub-and-spoke networks will no longerbe limited to large cities. Wewill be able to offer expandedsingle-carrier service on thou-sands of routes where it hasnever before been available.United plans to offer 539 newcity-to-city routes, amongthem: Sacramento-Erie,Panama City-Fargo, Phoenix-Copenhagen, Birmingham-Brussels and Tulsa-London.

Employees of both airlinesalso stand to reap significantbenefits as a result of themerger. Once operations areintegrated, the combinedorganizations will provideincreased career opportuni-ties with more work locations,more aircraft to fly and maintain, and more flightsserving more passengers and destinations.

To increase the competitivenature of its acquisition of US Airways and address concerns raised by the De-partment of Justice, Unitedagreed to sell selected assets of US Airways toAmerican Airlines.

Under the agreement,American would providecompetitive service on keyhub-to-hub routes whereUnited and US Airways arecurrently the only competitorswith non-stop flights. Addi-tionally, United would transferup to 86 aircraft acquired inits merger with US Airways to American Airlines. Americanwould assume certain leaseobligations and buy certainspare engines and other partsassociated with the aircraft.

United also would divest 36LaGuardia slots, the landingand take-off rights at appoint-ed times at airports, as wellas 14 gates at six airports.

American would enter into a20-year joint operations ven-ture with United to provideshuttle service on routes be-tween New York LaGuardia,Washington, D.C.-Nationaland Boston Logan airports.

Separately, AMR Corporation –American’s parent company –would purchase a 49 percentstake in DC Air, the companythat would provide competi-tive service at Washington,D.C.-National when Unitedacquires US Airways.

The transaction with Americanwould provide United addi-tional financial benefits by re-ducing the debt requirementsrelated to its acquisition of USAirways, enhancing the valueof the original transaction forUAL stockholders.

Merging with US Airways:The Benefits

United’s Agreement withAmerican Airlines

US Airways Merger:Chronology and Status

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United’s Strategy:Improving OurReliability

Pages 12-15

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With the proposed acquisitionof US Airways, some havequestioned whether a mergerof this size will affect United’sability to deliver reliable serv-ice, especially given the operational challenges wefaced last summer. As aresult, we are renewing ourcommitment to reliability and making operational im-provements to ensure that ourcustomers arrive and departsafely and on time, every time.This means having a singularfocus on reliability in schedules,on-time departures and bag-gage handling, as well as de-livering accurate, up-to-dateinformation to our customers.

Despite the operational problems we experiencedduring the most heavily trav-eled time of the year, Unitedtook immediate steps to im-prove on-time performanceand reduce, as much as possible, customer incon-venience – and our commit-ment continues.

Responding to OperationalDisruptions

We quickly cut back opera-tions last summer, trimmingthousands of flights from theschedule. Since then, we’velengthened block and groundtimes for flights by addingmore than 4,000 hours sinceSeptember, which gives us a better opportunity to meetour reliability goals and createmore realistic customer ex-pectations. We’ve increasedconnection times for widebodyand international connections,as well as for United Expressflights, to mainline connec-tions at all hub stations. Andwe’ve increased the numberof spare aircraft on hand.

United also has initiated several customer service en-hancements, including theCustomer Advocate Center.The Center – currently supporting eight airport locations with more sched-uled for 2001 – has a team of employees who quicklyand proactively develop reaccommodation plans for passengers affected by disrupted operations, such as maintenance delays orsudden changes in weatherconditions that cause flightdelays and cancellations.

The Center makes it easier for front-line employees tocommunicate flight changes,while at the same time mak-ing customers’ experiencesless difficult during delays. In addition, our AircraftScheduling Automation Pro-ject (ASAP) maximizes theuse of United’s entire fleet by matching aircraft to ourschedule of daily flights. The program has allowedUnited to build greater relia-bility into the schedule by better matching our aircraft to customer demands.

We also are using our mobileChariotSM to harness high-tech solutions to resolve customers' problems at the airport during times of irregu-lar flight operations. Thesemobile check-in units – bat-tery-powered and connectedto computer systems throughwireless technology – enableemployees anywhere in theairport to rebook and checkin customers and to issuetickets, boarding passes andbag tags. Currently, Unitedhas chariots in service atChicago O'Hare, SanFrancisco, Los Angeles,Washington, D.C.-Dulles andWashington, D.C.-National.We plan to deploy additionalchariots to other airport loca-tions throughout 2001.

Boosting Our On-TimePerformance

United has made furtheroperational enhancements to enable consistent on-timeperformance. For instance,we increased manpower inbaggage operations anddeployed 2,500 baggagescanners throughout NorthAmerica, which use state-of-the-art technology to expe-dite handling and help ensurethat every bag reaches itsintended destination.

Our performance toward theend of 2000 demonstratedimprovements in reliability. By December, United rankedNo. 5 in the U.S. Departmentof Transportation’s on-timearrivals report, up from No.10 in September. For 2000we had more 1K® customers –customers who fly more than 100,000 miles a year on United – than in 1999,which shows that our effortsare working. And we’veagreed to invest more than$100 million in the comingyear in initiatives that willstructurally improve reliability.


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Addressing Industry Issues

Beyond operational improve-ments that United can directlycontrol, we also are workingto influence external condi-tions outside of our control,which affect the entire airtransportation system’s performance and reliability.United and its competitorscontinue to be hampered byan aging aviation infrastruc-ture that simply cannot sup-port the explosive growth innumbers of the flying public.

The Federal Aviation Admin-istration predicts that in 10years the number of airlinepassengers will rise by nearly60 percent – bringing theannual total number of travelers to one billion. Thecurrent system is stretched to capacity, and the effectsare beginning to show.

Outdated air traffic controlsystems, inadequate airportcapacity and runways, lack of resources, crowded conditions – these factors are causing delays and can-cellations resulting from aninsufficient and non-integrat-ed approach to massive air-line industry growth.

As the pressure continues to increase and take a heavy toll on passengers and businesses, United hastaken the lead in pressing forlong-term, permanent solu-tions to this crisis.

With the rise in the number of air travelers each year,infrastructure problems havebecome a global issue thatsimply cannot be ignored.Finding the solutions requirescooperation among business,community and political leaders. As the largest U.S.

domestic and global airline,United Airlines is uniquelypositioned to drive the industry’s efforts to make significant infrastructureimprovements. Structuralchanges in the industry, coupled with United’s owninvestments in customerservice initiatives and airport facilities, will go a long way toward helping usfulfill our reliability commit-ments to customers.

By working together, we aremoving toward a dramaticallyreshaped air transportationenvironment where UnitedAirlines will continue to meetour customers’ expectationsof safe, convenient andaffordable global travel.

…and on time,every time.

…to ensurethat our customersarrive anddepart safely…

We’re renewing ourcommitmentto reliability…

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United worked in tandemwith our chief trade organi-zation, the Air TransportAssociation, to enact Air 21,federal legislation that unlocksmoney paid into the U.S.Aviation Trust Fund. Almost$40 billion dollars will beinvested in the next threeyears in aviation facilities,equipment and training.

The fund provides for radarmodernization, airport con-struction projects, increasedhiring and training of air trafficcontrollers, and additionalnoise abatement at airports.

Air 21 is tangible evidence of our ability to work with the federal government toachieve meaningful solutionsin the area of infrastructure.While Air 21 is an importantfirst step, it is just a first step.Our goal of providing reliable,on-time service requires that we continue to drive forlonger-term, more permanentsolutions to prepare our airtransportation infrastructurefor the demands of the future.

…for the aging U.S. airtransportationinfrastructuresystem.

United Supports Air 21

United is taking the lead for long-termsolutions…


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United’s Strategy:Improving theCustomer Experience

Pages 16-19

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While customers expect and deserve reliable service,United also is dedicated togiving them a travel experiencethat is easy, comfortable andconvenient. We continue todevelop products and servicesthat deliver on that promise,based on detailed research of what our wide array of passengers need and want.

Our loyal customers told usthey wanted more legroom,so United raised the bar for the entire industry and redefined the standard foreconomy-class travel with the rollout of Economy Plus.Economy Plus repays ourpremium flyers with morespace, up to five additionalinches of legroom in the firstsix to 11 rows (depending on the type of aircraft) of theUnited Economy® cabin.

Economy Plus – anIndustry First

United can offer EconomyPlus to full-fare customerswithout compromising theneeds of our leisure or bar-gain travelers. One of ourcompetitor’s responses toEconomy Plus was completecabin conversion, whichresults in fewer seats avail-able at discounted fares. Ourresearch tells us that leisuretravelers are willing to forgoadditional legroom for theability to travel inexpensively.Economy Plus is tailored torespond to our passengers’needs and makes sense forall our customers.

In March 2000, United completed installation ofEconomy Plus in our U.S.domestic fleet, excludingUnited Shuttle® aircraft.Because of the enthusiasticresponse to Economy Plusfrom our customers, we havebegun introducing the prod-uct internationally on selectBoeing 767, 777 and 747aircraft. The international rollout should be completeby the end of 2001.

Improving theAirport Experience

Economy Plus is just onevariable in the service equa-tion. We know that improvingoverall customer service iskey to enhancing the airportexperience. The way werespond to our customers’questions, handle their bags,and greet them at the gateare all part of the airportexperience. Our service im-provement initiatives – guidedby Our United Commitment –are the most aggressive and far-reaching of any of our competitors.

Our United Commitmentpromises our customers therespect, courtesy, fairnessand honesty they expect anddeserve from us. This pledgeis especially important giventhe disruptions and frustra-tions our operational issuescaused for our customerslast summer.

United has implemented newservice training programsand systems enhancementsso our employees can providecustomers more accurate,up-to-the-minute informationwhen delays or other unex-pected events occur. In addi-tion to providing better flightinformation to our CustomerService Representatives, we also are upgrading therange and timeliness of theflight information we post on monitors at the gates.

At the Gate…

United EasyInfoSM is a newinformation display that weunveiled at gates at ChicagoO’Hare and are installing inour other North Americanhubs. United EasyInfo pro-vides customers with real-timeflight information, includingdeparture time, seat availabil-ity and destination weather.During irregular service, theelectronic display providesreasons for flight delays,alternate flight options andthe status of inbound aircraft.

We are working on develop-ing new ways to get our cus-tomers the information theyneed, especially when flightsare delayed or cancelled. The latest advances are inthe area of wireless andInternet-enabled phones and handheld devices.Through United UpdateSM, afree proactive paging service,United customers can auto-matically receive messagesabout flight delays, cancella-tions and gate changes attheir personal computer, cellular phone or pager.

We also are applying newtechnology at the gate tomake check-in and boardingsmoother and swifter. Lastyear, we launched a newelectronic upgrade product.Electronic upgrades may bepurchased or earned byMileage Plus® PremierExecutives® through flight activity. The upgrades willnow be in electronic formand added automatically to aPremier Executive’s account,eliminating the need to keeptrack of paper certificatesand speeding up the check-in process. Customers canview their Mileage Plusaccount and E-UpgradeSM

summaries, as well as pur-chase or request upgrades,on united.com.

At Baggage Claim…

In addition, we’re using tech-nology to improve our bag-gage handling capabilities.Nothing can sour a trip fasterthan mishandled bags. That’swhy United has more than2,500 BullsEyeSM bag scan-ners in use throughout ourNorth American stations.Functioning like trackingdevices, these electronicscanners capture passengerinformation, providing timelyand reliable information topeople who handle the bagsand work in our ramp area.The new equipment is part of a customer-focused, totalbaggage-tracking networkUnited is developing andimplementing to ensure thatevery bag reaches its owner.


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…And Even at Check-In

We’ve been rolling out ournew self-service check-inequipment in several cities as another part of United’sefforts to marry technologyand service. Customersusing E-TicketsSM can walk right by airport lines and use a self check-in kiosk in Chicago, San Diego orAspen, Colorado. With anaverage check-in time of onlyone minute, these machinescan issue a boarding pass for any United, United Shuttle or

United Express flight in NorthAmerica. Customers simplyinsert a major credit card orMileage Plus Premier card. In addition, they can checktheir bags, select or changetheir seat assignment, or add themselves to theupgrade list. The kiosk tech-nology, part of our UnitedEasyCheck-InSM package ofservices designed to stream-line the check-in process, will be deployed at additionalairport locations in 2001.

Whether the solution is newtechnology, better training ora new way of thinking, Unitedis committed to creating abetter travel experience forour customers.

United First Suite is a luxuriousseat offering that combines awork space, an entertainmentcenter and a cozy, privatesleeping area. The recliningelectronic seat is built forcomfort with lumbar support,back stimulation and fullyadjustable leg and headrests. When passengers areready to turn in, First Suite

United is dedicated to giving our customersa travel experience that is easy, comfortableand convenient.

United First Suite

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reclines to 180 degrees,transforming itself into a soft lie-flat bed.

Our passengers want theoption of spending their timeworking or being entertained.First Suite offers an individualaudio-visual system with upto 20 feature film tapes, ninechannels of movie and TVprogramming, and up to 21channels of CD-quality musicand news through a noise-reducing headset. The workspace is appointed like anexecutive office, with a per-sonal phone for worldwidecalls and fax or e-mail access,ample shelf and storagespace, a handy flex lamp and a laptop power sourcewith modem connection.

In our drive to enhance ourcustomers’ travel experience,United expanded its enter-tainment offerings on U.S.domestic flights.

In 2000, United became thefirst major U.S. carrier to offer free headsets and moviesto customers in all serviceclasses onboard U.S. domes-tic flights. Customers canenjoy short-subject video

programming, such as popular sitcoms and speciallyproduced programs.

Customers also have freeaccess to United’s exclusive“From the Cockpit,” whichtransmits conversations between the flight crew and air traffic controllers.

The new content and ex-panded access is designedto give our passengers moreoptions if they choose tospend their time relaxingwhile they fly.

Roomier overhead bins

Self-servicecheck-inkiosks

More legroom

Expanded EntertainmentOptions


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United’s Strategy:Maximizing E-CommerceOpportunities

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In an age when the informa-tion superhighway has foreverchanged the way people“travel,” the airline industryhas joined the Internet revolution in an effort to giveconsumers an even better,more convenient flying experi-ence. At United Airlines, we’retapping into our expertise togive our customers what theywant most from the web –greater choices, more access and easier travel.

As customers conduct theirlives and businesses at Inter-net speed, United is enhanc-ing existing services as wellas developing new technologyproducts and partnerships tomore quickly and efficientlymeet our customers’ needs.We started years ago by pio-neering the use of E-Tickets,and we helped pave the wayfor more customers turning to the web to book their travel plans.

United.com

One way we’re taking advantage of this trend is byconstantly evaluating andimproving our award-win-ning proprietary web site –united.com. In addition topurchasing tickets at the site,customers can redeem andbook Mileage Plus awardtravel, request travel upgradesand check up-to-the-minuteflight information.

In addition, two new featureson united.com are makingtravel scheduling and ticket-ing even easier. Customerswho purchase E-Tickets onour web site can now printreceipts as soon as theyreceive confirmations of theirtransactions. The receipt provides itinerary and flightinformation and will makecompleting business travelexpense reports a breeze.Visitors to united.com alsocan download a completeUnited flight schedule to theirown computers.

United’s Internet conven-ience doesn’t stop at thedesktop or notebook com-puter. We provide real-timeflight information throughPalm VIITM handheld personaldigital assistant devices, andwe also offer a flight-pagingservice that proactively in-forms customers aboutschedule changes and gate information throughtheir handheld devices,pagers, personal computeror Wireless ApplicationProtocol (WAP)-enabledmobile telephones.

Introducing UnitedNewVentures

In 2000, to manage theincredibly high demand forweb-based travel optionsand growing e-commerceopportunities, we createdUnited NewVentures, the first stand-alone e-com-merce subsidiary in the U.S. airline industry. UnitedNewVentures is whollyfocused on creating busi-nesses that offer innovativecustomer solutions, strength-en our airline business andcreate incremental value forour stockholders.

United NewVentures is made up of two divisions,United NetWorksSM andUnited NetVenturesSM. United NetWorks managesall United branded e-com-merce activities, developingstrategies for and driving theoperations of United’s website and wireless communica-tion initiatives. It also man-ages third-party sales ofMileage Plus program fre-quent-flyer miles. UnitedNetVentures focuses on collaborative partnerships,including the developing ofbusiness sponsorship efforts and non-Unitedbranded businesses.

In an effort to deliver seam-less global travel, UnitedNetWorks has introducedcountry-specific versions ofunited.com in most of the 28 countries we serve. Cus-tomers around the world can now shop for travel withat-home convenience, nolonger just in English orwith U.S. currency.

For travelers who are on theroad, United NetWorks hasannounced a cutting-edgewireless booking and ticket-ing service that allows cus-tomers to book flights andpurchase E-Tickets from any Internet-enabled mobilephone. Users of this indus-try-first free service can purchase E-Tickets for any United Airlines, UnitedShuttle or United Expressflight originating in the UnitedStates, view their itineraries,check their seat assignments,and make special meal re-quests – all via wirelessphone. Once this service is off the ground, we plan toexpand its capability to allowtravelers to make changes toalready-booked flights.

United NetVentures’ collabo-rative partnerships will bene-fit our customers in equallyinnovative ways. For example,through United NetVentures,United was one of the fivefounding member airlines of Orbitz, a travel-orientedmega-web site. This web siteis designed to be the com-prehensive and unbiasedsource of travel informationon the Internet. With 28 airlines currently onboard,Orbitz will be a multi-airlineportal offering low-fare ticketsalong with hotel reservations,car rentals and a host of othertravel-related services.

United NetVentures is en-gaged in other groundbreak-ing initiatives to offer Unitedflyers the greatest possiblevalue and convenience.Hotwire is a new online dis-count-ticketing venture thatwill auction off vacant airlineseats to last-minute andprice-driven travelers.


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Our efforts are not solely oriented to passengers.United NetVentures is meeting United’s cargo customers’ needs through a variety of web-based initiatives, including United-Cargo.com, where our cus-tomers can book and tracktheir shipments online.

In 2000 we introducedUnitedSameDaySM, a “next-flight-out” small packagedelivery service targeted toour corporate customers.

Developing the B2BPotential

United is also using informa-tion technology to capitalizeon exciting new e-commerceopportunities. The Internetprovides us with tremendouspower to develop more effi-cient business processes forUnited and our suppliers.

We are one of nine leadingglobal airlines who have linkedtogether to create CordiemSM,a web-based virtual market-place that brings carriersworldwide in contact withqualified sellers of airline-related goods and services.This business-to-businessprocurement venture willhandle approximately $32billion of the member airlines’annual supply-chain business.We anticipate capturing sig-nificant value from this initiativeby lowering transaction, pro-cessing and inventory costs.

United understands howimportant choice, accessand convenience are totoday’s air travelers, cargocustomers and airline-relatedbusinesses. We continue tolead the industry in innovativeelectronic services, redefiningboth competition and part-nership in the virtual airlinemarketplace to give our customers all they need and more.

We’re tapping into the Internet to give ourcustomers fingertipaccess to greater choices, key informationand easier travel.

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In December 2000, Informa-tion Week, a publication forthe information technology(IT) industry, named UnitedAirlines to its first “Innovation100” list. United ranked 17among the 100 companies IT considers “innovative prac-titioners of IT that combinetechnology with businesssavvy to learn more about andbetter serve their customers.”

The publication praisedUnited’s industry-leadingintroduction in November2000 of wireless booking and ticketing through UnitedUpdate, our comprehensivesuite of wireless services thatprovides access to electronictravel updates and flight infor-mation through pagers, Inter-net-enabled phones, e-mailor personal digital assistants.

United Recognizedfor IT Innovation


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United’s Strategy:Making United aBetter Place to Work

Pages 24-27

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The people of United Airlinesmake the difference in theservice we deliver, and weknow the only way to ensuresatisfied customers is to havecommitted and engagedemployees. This is why westrive to improve the quality of life for our workforce andmake United a better place to work. We’re working onseveral fronts to make this areality for our employees.

The ESOP Transition

It’s important to note thatsince the ESOP investmentperiod ended in 2000, Unitedfaced a year of transition, withalmost all U.S. domestic laborcontracts open for renegotia-tion. The first contract wereached in the bargainingcycle took our pilots to anindustry-leading pay position,and we followed that withagreements for flight dis-patchers, fleet technicalinstructors and meteorolo-gists. We anticipate finalizingthis bargaining cycle in thesame manner for all unionizedemployee groups, as well asbringing compensation forour non-union staff and management to industry-leading levels.

In order to sustain thesecompensation levels for our employees, United mustdeliver high performance. We have a good startingpoint on which to build – ouremployees’ strong sense ofpride and enjoyment in theirwork and their willingness toexert the extra effort to makeUnited succeed. Clearly wesaw this last summer amongour front-line employees, whoput forth extraordinary effortsto manage customers’ expec-tations during the operationalchallenges we experienced.

Simplifying the WorkProcess…

To fuel our employees’ energyand recognize their commit-ment, we’ve taken severalsteps during this past year to make their working lives a little easier and improve the quality of their workexperience. We began byrecognizing that, as it standstoday, airline employeesdon’t have easy jobs.

In fact, it can take as manyas 1,700 tasks for a Cus-tomer Service Representa-tive (CSR) to check in a customer, issue a boardingpass and get the passengeron an airplane. That’s exactlywhy United has begun aneffort to simplify airport pro-cesses. A cross-functionalteam continues to prioritizethe various tasks a CSR per-forms by determining howfrequently each is done, howlong it takes and how it con-tributes to getting the cus-tomers and their belongingson the airplane safely for anon-time departure. Oneexample of a process simpli-fication that has already beenimplemented is a reduction in the number of prices forNorth America excess bag-gage from 33 to two. Notonly is this simple, two-pricesystem more consistent andeasier to understand, it alsospeeds up the check-inprocess for our customers.

Another example of howwe’re streamlining proceduresis our new stand-by fee policy.Proposed by a group of ourfront-line CSRs, the policyallows customers to stand by for any flight scheduled to depart on the same day to the same destination astheir original reservation without incurring a fee. Pre-viously, certain fares requireda change fee for same-daystandby situations, whichmeant our employees had to

check the rules of the faretype, often minutes beforedeparture. This new stream-lined policy provides anotherwin-win solution for both ourcustomers and employees.

…With New TechnologyTools

United is using technology tomake our employees’ jobseasier and less stressful. Forexample, we enhanced ourinternal communications systems to improve the con-nection between United’sreservations and operatingsystems to give our front-lineemployees real-time informa-tion on flight status.

We also launched CustomerService Info (CS INFO), anew technology that allowsfront-line employees to quick-ly access vital operationalinformation and provide it tothe customers they serve.CS INFO collects informationfrom numerous sources, in-cluding a live weather source,giving front-line employees asingle resource from which toanswer customer questions.

In November 2000, we rolledout CHRONOS, a real-timeairline operations predictionand solutions tool. The system uses status of allflight resources, aircraft, flight crew and wheels-uptime to predict departure and arrival times. We alsodeployed Artemis, a new soft-ware application that allowsUnited’s operations managersto determine reschedulingstrategies during high-volumeirregular operations.


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And as we mentioned in ourdiscussion on improvingUnited’s reliability, the intro-duction of our CustomerAdvocate Center in 2000allows us to proactively antic-ipate our customers’ needsduring major service disrup-tions and make the neces-sary arrangements for ourcustomers – such as rebook-ing them on other flights orarranging for hotels – beforethey get to an airport counterwith questions. Nobody – notour employees, nor our pas-sengers – likes it when badweather causes cancellationsor delays. When our peoplecan apply technology to im-prove a travel experience thathits a glitch, everyone benefits.

Technology solutions canhelp improve the customerand employee experience,but ultimately it’s the face-to-face personal interactionbetween them that makesthe difference. We’re invest-ing in leadership develop-ment for more and bettertraining for our front-linesupervisors, adding newtraining techniques and more tools for them to serve our customers. Ourleaders regularly assessemployee feedback to measure and improve employee engagement.

Promoting PerformanceThrough Teamwork

Additionally, two team-basedprograms are successfullybeing implemented to achieveeven higher levels of front-line performance.

The O’Hare Timeline Team is a cross-functional group created in the summer of2000 to improve departureperformance by improvingwork processes. By workingtogether and coordinatingexpertise and resources, the team developed 30- and 50-minute timing mapsthat identify the sequence inwhich critical events need tooccur in order to successfullymeet on-time departuregoals at Chicago’s O’Hare

airport. Map timelines areposted visibly at gate areapodiums, in jetways and in“ready rooms” so that plane-side employees can refer tothem at any point duringdeparture. The TimelineTeam, which is also in placein San Francisco and will berolled out at other airports in2001, is another example ofhow United is leveragingteamwork among front-lineemployees to improve on-time performance, baggage reliability and customer satisfaction.

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United’s Team BasedOrganization (TBO) at theDenver airport was createdto promote better cross-functional communicationand work performance toultimately improve and expe-dite customer service. TBOconsists of teams of localmanagement and unionleadership, employees whoare responsible for solvingproblems and making deci-sions for a set number ofgates on a day-to-day basis.Smaller groups of employees

from different divisions suchas maintenance, ramp serv-ice and customer service areempowered to work togetherto make decisions as closeto the customer as possible.Following a successful imple-mentation in Denver, TBO iscurrently being rolled out at the Washington, D.C.-Dulles airport.

United’s people commitmentis also reflected in our work-force diversity. Our workforcemust reflect our customerbase and the labor market,and we’ve taken a number of steps to keep pace in thisarea, including tying manage-

ment incentive compensationto diversity goals.

In the end, whether it’s a newtechnology or system thatexpedites and simplifies awork process or a trainingtool that helps employeesimprove their performance,we will continue to exploreways to make United a great,diverse place to work, whileat the same time enhancingour employees’ ability todeliver an exceptional cus-tomer travel experience.

Fortune Magazine namedUnited in 2000 as one of the 50 Best Companies for Minorities. The rankingreflects United’s commitmentto a diverse workforcearound the globe.

Fortune MagazineRecognizes United


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United in 2000

Just the Facts

Pages 28-34

United carried an average of 231,000 customers everyday in 2000 to points all overthe world. The company iswell represented in the fourmarket segments it serves –North America, the Pacific,the Atlantic and Latin America.This regional diversificationallows United an important

measure of flexibility in re-sponding to varying industryand economic conditionsaround the world, as well asto unusual circumstancessuch as the disruptions toservice the company experi-enced in 2000. United wasable to strategically reallocatecapacity to respond to marketconditions during the year.We also were able to mini-mize the inconvenience cus-tomers experienced duringour operational disruptions,which primarily affected theNorth America market, byreducing the flight schedule.

This resulted in a one percentdecrease to capacity com-pared to 1999. Passengerunit revenue, which is pas-senger revenues divided byavailable seat miles, rose sixpercent in 2000 for the totalUnited system.

Latin America5.1%

NorthAmerica65.0%

Pacific17.4%

Atlantic12.5%

1999 – Capacity by Region(available seat miles; percent of system)

Latin America4.6%

NorthAmerica62.7%

Pacific19.3%

Atlantic13.4%

2000 – Capacity by Region(available seat miles; percent of system)

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North America

United’s North America operations accounted for 68 percent of the company’srevenues in 2000. Passengerunit revenue for the yearincreased seven percent, due in part to a four percentreduction in capacity for themarket, a measure the com-pany took partly in responseto the operational disruptionsof the summer and in part tomore effectively match thecompany’s fleet to customerdemand.

2000 HighlightsUnited announced plans toacquire US Airways, whichwill round out United’s excel-lent U.S. network by ad-dressing its relatively weakpresence in the East Coastmarkets. The merger wouldmake traveling more conven-ient for passengers, con-necting US Airways’ easternU.S. markets with United'seast-west and internationalmarkets. (See “Merging withUS Airways,” page 9.)

Economy Plus, United’s extralegroom product in UnitedEconomy, completed its successful roll-out. (See“Economy Plus – an IndustryFirst,” page 17.)

United completed the instal-lation of 463 gate readers in87 U.S. stations, as well as

state-of-the-art internationalterminal. United’s facilities inthe new terminal offer cus-tomers a Red Carpet Club®

and International First ClassLounge, as well as a UnitedArrivals® lounge. Several Star Alliance partners alsoare located in the terminal, providing the alliance’s cus-tomers a more seamlesstravel experience.

Supporting the growth ofUnited’s international trafficout of Los Angeles, the company made substantialimprovements to its facilitiesat the Los Angeles Interna-tional Airport, including therenovation of United’s Inter-national First Class Lounge in Terminal 7.

United Shuttle grew fromserving nine destinationswhen it began in 1994 to 23 destinations in 2000, withthe addition of new Denver-Colorado Springs service, as well as the launch of new Los Angeles service toPortland and Salt Lake City.

two international locations.By automatically “reading”the boarding pass informa-tion, these gatesidemachines streamline theboarding process for cus-tomers and employees.

United moved into SanFrancisco InternationalAirport’s newly opened,

1996 1997 1998 1999 2000

10,717

13,09412,51611,99711,214

North America Revenues ($ millions)

1996 1997 2000

738

380

652

19991998

990

1,236

North America Operating Earnings ($ millions)As reported to the U.S. Department of Transportation

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International

United’s presence spans theglobe and is the U.S. carrierwith the broadest internationalreach. Operating revenues forUnited’s international segmenttotaled $6.2 billion in 2000,up 15 percent over 1999. The following provides oper-ating information for eachinternational market.

Pacific

The largest U.S. airline oper-ating in the Pacific, United’soperations in the region ac-counted for 16 percent of thecompany’s revenues in 2000.Responding to the improvingeconomies in several of thecountries United serves in the Pacific, United added significant capacity back intothe region during the year,increasing available seatmiles, or capacity, by 10 per-cent. Despite this substantial

increase, passenger unit revenues increased for thePacific by five percent.

Of significant importance tothe company’s Pacific opera-tions, United received authorityto fly two additional frequenciesto China in November. Unitedhad inaugurated nonstop SanFrancisco-Shanghai serviceearlier in the year on a five-day-a-week basis; the newflying authority allows thecompany to expand the flyingto daily service, which com-plements our new daily SanFrancisco-Beijing service.

United’s Pacific customersalso benefit from the newlyopened state-of-the-art com-bination Red Carpet Club andFirst Class Lounge in Tokyo’sNarita International Airport.

1996 1997 1998 1999 2000

288

92112

(68)

267

Pacific Operating Earnings ($ millions)As reported to the U.S. Department of Transportation

1996 1997 1998 1999 2000

3,438

3,1612,6912,843

3,552

Pacific Revenues ($ millions)

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Atlantic

United’s Atlantic operationsaccounted for 12 percent of the company’s revenues in 2000. Reduced industrycapacity in the region aidedperformance; however,United’s capacity in the mar-ket rose six percent. Despitethis increase, Atlantic passen-ger unit revenue increased sixpercent for the year. BritishMidland’s entry into the StarAlliance greatly enhancesUnited’s trans-Atlantic opera-tions. Hubbed at London’sHeathrow International Air-port, the gateway airport toEurope, British Midland offers306 daily departures to 31destinations in 12 countries.

1996 1997 1998 1999 2000

86

175

205

238238

1996 1997 1998 1999 2000

1,412

2,2601,973

1,8461,745

Atlantic Revenues ($ millions)

Latin America

United saw Latin Americapassenger unit revenue im-prove almost 13 percent in2000, boosted by improvedeconomies in several of theregion’s countries and 10percent less capacity. LatinAmerica operations in theregion accounted for fourpercent of United’s revenuesin 2000.

1996 1997 1998 1999 2000

750816787832824

1996 1997 1998 1999 2000

1826

3541

69

Atlantic Operating Earnings ($ millions)As reported to the U.S. Department of Transportation

Latin America Revenues ($ millions)

Latin America Operating Earnings ($ millions)As reported to the U.S. Department of Transportation

Service Highlights for 2000

North America Pacific Atlantic Latin AmericaAdded San Francisco- Resumed Hong Kong- Added Los Angeles-Paris Added Chicago-ArubaLihue, Kauai Singapore

Added Denver-Toronto Resumed San Francisco- Added San Francisco- Expanded Chicago-Seoul Frankfurt Mexico City

Added Los Angeles- Added San Francisco-Salt Lake City Shanghai

Expanded Los Angeles-Kona Added San Francisco-BeijingExpanded Chicago-Toronto Discontinued Bangkok-Hong KongDiscontinued Washington, Discontinued Tokyo (Narita)-BeijingD.C. (Dulles)-Fort Meyers

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Alliances

Star Alliance

From its beginnings in 1997as the first global networkalliance with five inauguralmembers, Star Alliance grewin 2000 to a network of 15airlines that provides cus-tomers access to more than 815 destinations in 130 countries.

During the year, Star Alliancelaunched the industry's firsttrue interline electronic ticketing service, a historicdevelopment that enablescustomers to use one elec-tronic ticket for travel onmore than one airline.

The alliance augmentedUnited's revenues in 2000 bymore than $235 million. Formore information on StarAlliance, see “Star AllianceLeads the Way,” page 9.

Other Alliance Agreements

In addition to Star Alliance,United has independentalliance agreements with nineregional carriers: Aeromar,ALM Antillean, Aloha, CaymanAirways, Continental Connec-tion, Emirates, Saudi ArabianAirlines, Spanair and ournewest alliance carrier, BWIA,which became one of ourregional partners in 2000.

Star Alliance Members Year Joined

Air Canada 1997Air New Zealand 1999All Nippon Airways 1999Ansett Australia 1999Austrian Airlines Aviation Group 2000

(Austrian Airlines, Lauda Air and Tyrolean Airways)British Midland Airways 2000Lufthansa German Airlines 1997Mexicana Airlines 2000Scandinavian Airline System-SAS 1997Singapore Airlines 2000Thai Airways International 1997United Airlines 1997Varig Brazilian Airlines 1997

Effective May 1, 2001, GreatLakes Aviation will transitionfrom the United Express pro-gram to become one of ourindependent alliance carriers.This move recognizes GreatLakes’ strength in servingsmaller communities with turboprop aircraft and UnitedExpress’ greater emphasison regional jets.

2000 HighlightsUnited’s amended contractwith the Air Line Pilots Assoc-iation, signed in October,allows United Express carriersto increase the number ofregional jets beyond the pre-vious contract’s limit of 65.

United Express

United offers a network ofconnecting flights within NorthAmerica through our market-ing arrangements with fourregional U.S. carriers, whichoperate under the brandname of United Express.These carriers are Air Wis-consin Airlines Corporation,Atlantic Coast Airlines, Great Lakes Aviation andSkyWest Airlines.

With a combined fleet ofmore than 255 regional jetand turboprop aircraft, UnitedExpress is able to offer cus-tomers an additional 2,000daily flights to nearly 180destinations across theUnited States.

With the new provision, up to150 turboprop aircraft can bereplaced with the customer-preferred regional jets. It alsoallows United Express tooperate more regional jetsbased on the size of United’sjet fleet.

United signed a new 10-yearcontract with Atlantic CoastAirlines in December 2000.Under the new agreement,Atlantic Coast Airlines is ableto increase the number ofregional jets it flies to 108 by the end of 2003.

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E-Commerce

During 2000, the companylaunched United NewVentures,a subsidiary dedicated tomaximizing United's pres-ence in the rapidly evolvingworld of the Internet. (See“Introducing United New-Ventures,” page 21.) As the2000 highlights illustrate be-low, the company’s Internetand e-commerce initiativestouch every aspect of busi-ness United conducts. TotalUnited revenue generatedover the Internet reached$755 million for the year versus $400 million in 1999,an 89 percent increase.

2000 HighlightsUnited’s award-winning website became even better withthe redesign of united.comearly in the year. The subse-quent launching of country-specific versions, includingthe historic launch of the

industry’s first Japanese-lan-guage booking engine, meansthat United customers all overthe world can access travelinformation in their native lan-guage, as well as view faresin the local currency.

Gross air bookings on united.com for 2000 grewmore than 101 percent overthe same period last year.

In November 2000, Unitedbecame the first airline tooffer air-travel wireless book-ing capability, allowing cus-tomers to book flights andcheck itineraries on WirelessApplication Protocol (WAP)-enabled devices.

In conjunction with MileagePlus and United NetVenture’s

new partnership withdash.com, the companyexpanded online shoppingopportunities with mileageincentives.

United Cargo entered into a strategic relationship withNextJet, an industry-leadingdelivery service company, to launch United SameDay in 2000. This door-to-door time-sensitive small-packagedelivery service is targeted to United’s existing corporatecustomers. In December2000, in conjunction withUnited NetVentures, theservice became available on-line with the introduction ofUnited-SameDay.com, whichprovides customers access toinstant price quotes, itinerariesand tracking capabilities.

(See pages 21-23 for more e-commerce initiatives in 2000.)

1Q 99 2Q 99 3Q 99 4Q 99 1Q 00

60

215

2Q 00 3Q 00 4Q 00

80

109

151

178

204

158

Total United Revenue Generated Over the Internet ($ millions)

United Cargo®

The sixth largest airfreightcarrier in the world, UnitedCargo generated $931 mil-lion in revenue in 2000, upthree percent over 1999.Cargo ton miles reached 3.1 billion in 2000, three percent greater than in theprevious year.

2000 HighlightsUnited Cargo’s web site,UnitedCargo.com, continuedto offer customers the con-venience of online bookingand order tracking. Since itsdebut in April 1999, when it

was the first cargo web siteof any commercial air carrierto offer online cargo booking,online tracking inquiries haveincreased, now representing25 percent of all United Cargo

inquiries. Three to five per-cent of cargo bookings arenow done online through theweb site.

As part of the company’sdecision to retire its remain-ing DC-10 aircraft early, Uniteddiscontinued its dedicatedDC-10 freighter service inDecember and is now usingthe company’s growing fleetof cargo-friendly widebodyaircraft for its cargo operations.

1996 1997 1998 1999 2000

773

931906913892

Cargo Revenues ($ millions)

Mileage Plus®

The company's award-win-ning frequent-flyer programgrew significantly in 2000due to the continued successof more than 100 partnershipssuch as First USA MileagePlus Visa and Master Card,MCI WorldCom and a newpartner in 2000, E*TRADE.

Revenue from third-partymileage sales reached $456million during the year, representing a 16 percentincrease for the program,whose enrolled membershipexceeds 40 million.

2000 HighlightsWith new partner Safeway,Mileage Plus launchedGrocery Miles, a programwhich allows customers toearn frequent-flyer miles forgrocery purchases.

Mileage Plus made it eveneasier for members to access account informationand more with the launch of MyMileagePlusSM in Dec-ember. The personalizedelectronic communicationprovides mileage summary,news and partner offers via e-mail.

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Awards in 2000

United receives a variety ofawards every year, rangingfrom local recognition toglobal awards and spanningthe many areas of businessUnited’s operations touch.2000 was no exception. High-lights of United’s awards in2000 include:

Fortune Magazine namesUnited as one of the 50 BestCompanies for Minorities.

Merrill Lynch Global SecuritiesGroup ranks Star Allianceas the leading global airlinealliance for the second con-secutive year.

Salomon Smith Barneynames United as one of itstop picks for its “FuturePortfolio,” which consists of companies that not onlyhave identified Internetopportunities but also haveintegrated the Internet intheir business models.

Corporate travel buyers rank United No. 1 inBusiness Travel News’annual airline survey.

The Far Eastern EconomicReview names United as one of the top multinationalcompanies doing business in Asia.

Gomez Advisors, one of theworld’s leading e-commerceconsulting groups, namesunited.com the best airlineInternet site. Separately,Peppers and Rogers Group,specialists in one-to-onemarketing, names united.comto its “Top 25 Web Sites” forthe second consecutive year.

The U.S. Federal AviationAdministration awardsUnited the industry’s firstauthority for extended-rangetwin-engine operations forits Boeing 777 aircraft flyingover the Pacific.

Two United information tech-nology systems, SkyPathTM

and the Aircraft SchedulingAutomation Project, areawarded membership in the 2000 ComputerworldSmithsonian Collection inWashington, D.C.

And though technically notan award, United reached its goal – six months aheadof schedule – of hiring 2,000former welfare recipients aspart of the U.S. businesscommunity’s independent,nonpartisan Welfare to WorkPartnership. United Airlineswas one of the foundingmembers of the partnership,established in 1997.

Corporation Description

UAL Corporation is the holding company for United Airlines, the largest air carrier in the world. With hubs in Chicago, Denver, LosAngeles, San Francisco and Washington, D.C., and key international gateways in Tokyo, London, Frankfurt, Miami and Toronto,United flies to 133 destinations in 28 countries. United’s 102,000-plus employees worldwide bring people together more than 2,200times a day.

United is an industry innovator with customer-service breakthroughs such as Economy Plus seating, United First Suite, Our UnitedCommitment, E-Ticket service, airport gate readers, the Chariot mobile airport podium, United Shuttle and the introduction of the tech-nologically advanced Boeing 777.

United also leads the way in safety and technological advancements for the aviation industry. The pioneer of systems such as theEnhanced Ground Proximity Warning System (EGPWS), United always focuses on its core value of “safety at all times, in all things.”

United’s mission is “to be recognized worldwide as the airline of choice.”

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Aircraft FleetAverage Number of Leased Average

Operating fleet as of December 31, 2000 Seats Aircraft Owned Operating Capital age (yrs)

A319-100 120 32 14 0 18 2A320-200 138 68 19 32 17 4B727-200 141 75 67 0 8 22B737-200 103 24 24 0 0 22B737-300 120 101 10 91 0 12B737-500 104 57 27 15 15 9B747-400 368 44 23 21 0 6B757-200 182 98 41 50 7 9B767-200 168 19 19 0 0 18B767-300 219 35 15 17 3 6B777-200 288 48 30 4 14 3DC10-30 298 3 0 3 0 23

Total 604 289 233 82 10

2003 andDelivery schedule for aircraft on order as of December 31, 2000* 2001 2002 beyond Total

A319 15 22 7 44A320 18 22 8 48B767-300 2 – – 2B777-200 8 5 – 13

Total 43 49 15 107

2003 andRetirement schedule for aircraft as of December 31, 2000 2001 2002 beyond Total

B727-200 25 25 25 75DC10-30 3 – – 3

Total 28 25 25 78

*Figures include 15 aircraft which, in February 2001, United exercised options to acquire.

Major U.S. Domestic and International Connecting AirportsSan Los Washington,

Chicago Denver Francisco Angeles D.C. Miami Frankfurt London Tokyo TorontoAs scheduled for March 2001 (ORD) (DEN) (SFO) (LAX) (IAD) (MIA) (FRA) (LHR) (NRT) (YYZ)

Average daily departures – United Airlines 444 298 231 213 113 22 4 13 14 6Operated by: United Express Partners 128 206 100 165 245 0 0 0 0 0

Star Alliance Members 21 4 9 16 10 7 336 56 23 218Code-share Partners 7 1 4 16 14 50 9 96 0 1

Total 600 509 344 410 382 79 349 165 37 225

Nonstop markets – United Airlines 96 61 48 45 35 14 2 7 12 2Served by: United Express Partners 34 56 15 21 44 0 0 0 0 0

Star Alliance Members 10 1 7 16 6 8 140 23 27 66Code-share Partners 6 4 3 7 3 16 5 23 0 2

Total 146 122 73 89 88 38 147 53 39 70

Note: The Fleet Facts reflect United’s fleet projections as of March 1, 2001, which would be adjusted accordingly in the event the merger withUS Airways is consummated.

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C M Y K 541 290United Map #27988 batch #___ Assm by: KK Proof by:_____ QC by:_____ Date:_____Inks/Density: C ______M ______Y ______K ______SPOT ______SPOT ______SPOT ______❏ 2up Approval ❏ 4up Approval ❏ Waterproof ❏ CPI Standard Stock ❏ Customer Stock

LakeSuperior

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A T L A N T I C O C E A N

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United’s U.S. Domestic Destinations

Legend

Tulsa

Hays

Schedule as of March 1, 2001

United Airlines hub cities

United Airlines destinations

United Airlines and United Shuttle destinations

United Express destinations

United Airlines or United Shuttle and United Express destinations

Code-share partner destinations

United Airlines or United Express and code-share partner destinations

Austin

Hartford/Springfield Providence

Manchester

Lincoln

Des Moines

Kansas City

Cedar Falls/Waterloo

St. Louis

Spencer

Moline/DavenportCedar Rapids/Iowa City

Springfield

Ottumwa

Yankton

Springfield/Branson

OmahaPeoria/Bloomington

Indianapolis

Salina

Kearney

North PlatteGrand Island

Norfolk

McCook

Dubuque

Minneapolis/St. Paul

Brookings

Sioux Falls

Pierre Huron

Madison

Oshkosh

Milwaukee

Appleton/Neenah/Menasha

Wausau/Stevens Point

Kalamazoo

LansingGrand Rapids

Muskegon

Iron Mountain

Traverse City

ManisteeGreen Bay

Ironwood

Roanoke

Charleston

Pittsburgh

Cleveland

LexingtonLouisville

Detroit

Cincinnati

Dayton

Columbus

Akron/CantonSouth Bend

Saginaw/Midland/Bay City

Ft. WaynePhiladelphia

New YorkWhite Plains

Newburgh

Binghamton

Newark

SyracuseRochester

Buffalo

Richmond

Lynchburg

Charlottesville

HarrisburgState College

Wilkes-Barre

Charleston

Columbia

Baltimore

Charlotte

Albany

Allentown/Bethlehem/Easton

Norfolk/PortsmouthNewport News

Raleigh/DurhamGreensboro/High Point/Winston-Salem

Burlington

Savannah

Portland

Boston

Ft. Lauderdale/Hollywood

Jackson

Memphis

New Orleans

Mobile

Nashville

Miami

Ft. MyersWest Palm Beach

Birmingham

Knoxville

Greenville

Orlando

Jacksonville

Tampa/St. Petersburg/Clearwater

Garden City

Liberal/Guymon

Oklahoma City

Dodge City

Houston

Santa Fe

Wichita

Albuquerque Amarillo

Durango/Purgatory

Chadron

AllianceScottsbluff

LaramieRock Springs

AlamosaLas Vegas

St. George

Montrose

Vail/Eagle

Tucson

Yuma

Telluride Pueblo

Gunnison

Cortez

Farmington

Hayden/Steamboat Springs

Cheyenne

Rapid CityGilletteWorland

Jackson

RivertonCasper

Phoenix

Aspen/Snowmass

Colorado Springs

Grand Junction

Billings

Williston

JamestownBismarck

Dickinson

SheridanCody

Salt Lake City

Devils Lake

Fargo

Bellingham

Portland

Chico

Reno

Redding

Eugene

Medford

Yakima

Redmond/Bend

Seattle/Tacoma

Oakland

San Jose

SacramentoSanta Rosa

Crescent City

Pasco-Richland

Arcata/Eureka

Modesto

Santa Maria

Visalia

Ontario

Merced

Inyokern

Fresno

Oxnard

San Luis Obispo

Burbank

Monterey

Bakersfield

Santa Barbara

Carlsbad

Palm Springs

Anchorage

San Diego

Orange County

Imperial

Honolulu

Lihue

HiloKona

Maui

San Juan St. Thomas

Washington, D.C.

Chicago

DenverSan Francisco

Los Angeles

Key West

Quincy

Bristol (Tri-Cities Regional)

Little Rock

Bozeman

Dallas/Ft. Worth

San Antonio

Atlanta

Boise

Staunton

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PACIFIC OCEAN

INDIAN OCEAN

ATLANTIC OCEAN

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INDIAN OCEAN

Black Sea

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Legend

United’s International Destinations

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Beijing

Tokyo

Osaka

Seoul

Shanghai

Taipei

Hong Kong

Bangkok

Singapore

MelbourneCanberra

Wellington

Christchurch

Surfers ParadiseBrisbane

Cairns

Hobart

Adelaide

PerthSydney

Auckland

Calgary/BanffVancouver

Seattle/Tacoma

San Francisco

Los Angeles

Honolulu

Chicago

Winnipeg

Toronto

Québec

HalifaxOttawa

New YorkBoston

Newark

Washington, D.C.

Miami

Mexico City

Monterrey

Caracas

Rio de JaneiroSão Paulo

Buenos Aires

HamburgHanover

London

Glasgow

Belfast

Amsterdam

BerlinLeipzig

Bremen Copenhagen

Paris

Brussels

Frankfurt

DresdenCologne

Düsseldorf

TeessideLeeds/Bradford

Birmingham

Edinburgh

Helsinki

Vilnius

Stockholm

Gothenburg

Munich

GrazVienna

Stuttgart

NurembergBudapest

ZurichGeneva

Kuwait

Tashkent

Cairo

Asmera

Dubai

San José

Guatemala CitySan Salvador

Santiago Montevideo

MilanNice

Morelia

BakuAshkhabad

Warsaw

Montréal

Oslo

Guadalajara

Belo Horizonte

Brasília

San José del Cabo/Cabo San Lucas Abu Dhabi

Edmonton

Basel

Cape Town

Johannesburg

Friedrichshafen

Prague

Mumbai/Bombay

CancúnPuerto VallartaMazatlán

NadiRarotonga

Jeddah

Belém

Manaus

Recife

Fortaleza

Kiev

Malta

Madras

Manchester

Nagoya

Sapporo

Okinawa

Fukuoka

Norrköping

JönköpingMalmo

BergenStavanger

Addis Ababa

Sanaa

Papeete

Schedule as of March 1, 2001

United Airlines U.S. gateway cities

United Airlines destinations

Star Alliance member destinations

United Airlines and Star Alliance member destinations

Code-share partner destinations

Star Alliance and code-share partner destinations

United Airlines, Star Alliance and code-share destinations

Katowice

Muscat

Bucharest

Leon-Guanajuato

Queenstown

Salvador

Münster

Dunedin

Tijuana

Durango

Zacatecas

CuritibaFlorianópolis

Goiânia

Vitoria

AbidjanAccra

Apia

Dublin

RomeIstanbul

Lagos

Itami

Florence

Aruba

Palma Mallorca

Barbados

Port-of-Spain

Madrid

Grand Cayman

Málaga

Barcelona

Nassau

Lisbon

Cayman Brac Antigua

Pôrto Alegre

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Financial HighlightsYear ended December 31 In millions, except per share 2000 1999 1998

Operating revenues $19,352 $18,027 $17,561Operating expenses $18,698 $16,636 $16,083Earnings from operations $ 654 $ 1,391 $ 1,478Earnings before special charges, gains on sales, investment

impairment, extraordinary item and cumulative effect $ 322 $ 781 $ 821Net earnings $ 50 $ 1,235 $ 821Per share, diluted:

Earnings before special charges, gains on sales, investmentimpairment, extraordinary item and cumulative effect $ 2.38 $ 5.87 $ 6.83

Special charges, net(1) (0.76) (0.09) –Investment impairment, net(2) (0.33) – –Gains on sales, net(2) 0.60 4.19 –Extraordinary loss, net (0.06) (0.03) –Cumulative effect of accounting change, net (1.79) – –Net earnings $ 0.04 $ 9.94 $ 6.83

Average number of common shares assumed outstanding 116.5 111.6 105.2

Operating StatisticsYear ended December 31 2000 1999 1998

Revenue passengers (millions) 85 87 87Revenue passenger miles (millions) 126,933 125,465 124,609Available seat miles (millions) 175,485 176,686 174,008Passenger load factor – system 72.3% 71.0% 71.6%

Domestic 71.4% 70.1% 71.8%Pacific 72.8% 72.3% 71.5%Atlantic 77.0% 76.8% 76.3%Latin America 69.8% 63.4% 60.5%

Breakeven passenger load factor 69.4% 64.9% 64.9%Passenger revenue per passenger mile (yield) 13.25¢ 12.48¢ 12.36¢Operating revenue per available seat mile 11.02¢ 10.17¢ 10.07¢Operating expenses per available seat mile 10.63¢ 9.41¢ 9.24¢Revenue ton miles (millions) 15,829 15,604 15,424Cargo ton miles (millions) 3,141 3,065 2,963Available ton miles (millions) 27,559 27,130 26,390Average price per gallon of jet fuel 81.0¢ 57.9¢ 59.0¢Gallons of jet fuel consumed (millions) 3,101 3,065 3,029Number of aircraft in operating fleet at end of year 604 594 577Average age of aircraft in years at end of year 10.1 9.9 9.8

(1) See page 48, Note 1g, for further details. (2) See page 49, Note 4, for further details.

Financial HighlightsOperating Statistics

Page 41

1996 1997 1998 1999 2000

10.0211.02

10.1710.0710.25

Operating RevenuePer Available Seat Mile: Unit Revenue

(in cents)

1996 1997 1998 1999 2000

9.3310.63

9.419.249.53

Operating ExpensePer Available Seat Mile: Unit Cost

(in cents)

Capital Expenditures(in billions of dollars)

1996 1997 1998 1999 2000

1.5

2.52.4

2.82.8


Please note that all Digital proofs will simulate the Spot colors with CMYK values. For accurate Spot color representation please refer to a Pantone directory, or a Draw Down of the actual color being used.

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Statements of Consolidated Financial Position – AssetsDecember 31 In millions 2000 1999

Current assets Cash and cash equivalents $ 1,679 $ 310

Short-term investments 665 379

Receivables, less allowance for doubtful accounts

(2000 – $14; 1999 – $13) 1,216 1,284

Aircraft fuel, spare parts and supplies, less obsolescence allowance

(2000 – $55; 1999 – $45) 424 340

Income tax receivables 110 32

Deferred income taxes 225 222

Prepaid expenses and other 460 368

4,779 2,935

Operating property Owned –

and equipment Flight equipment 14,888 13,518

Advances on flight equipment 810 809

Other property and equipment 3,714 3,368

19,412 17,695

Accumulated depreciation and amortization (5,583) (5,207)

13,829 12,488

Capital leases –

Flight equipment 3,055 2,929

Other property and equipment 99 93

3,154 3,022

Accumulated amortization (640) (645)

2,514 2,377

16,343 14,865

Other assets Investments 435 750

Intangibles, less accumulated amortization (2000 – $306; 1999 – $279) 671 568

Aircraft lease deposits 710 594

Prepaid rent 567 585

Other 850 666

3,233 3,163

$24,355 $20,963

See accompanying condensed notes to consolidated financial statements.

Financial Review

Pages 42-46

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Statements of Consolidated Financial Position – Liabilities and Stockholders’ EquityDecember 31 In millions, except share data 2000 1999

Current liabilities Notes payable $ – $ 61Long-term debt maturing within one year 170 92Current obligations under capital leases 269 190Advance ticket sales 1,454 1,412Accounts payable 1,188 967Accrued salaries, wages and benefits 1,508 1,002Accrued aircraft rent 840 783Other accrued liabilities 1,352 904

6,781 5,411

Long-term debt 4,688 2,650

Long-term obligations under capital leases 2,261 2,337

Other liabilities and Deferred pension liability 136 70deferred credits Postretirement benefit liability 1,557 1,489

Deferred gains 912 986Accrued aircraft rent 408 390Deferred income taxes 1,241 1,147Other 511 339

4,765 4,421

Commitments and contingent liabilities

Company-obligated mandatorily redeemable preferred securities of a subsidiary trust 99 100

Preferred stock committed to Supplemental ESOP 571 893

Stockholders’ equity Serial preferred stock – –ESOP preferred stock – –Common stock, $0.01 par value; authorized 200,000,000 shares;

issued 68,834,167 shares at December 31, 2000 and 65,771,802 shares at December 31, 1999 1 1

Additional capital invested 4,530 4,099Retained earnings 1,998 2,138Unearned ESOP preferred stock – (28)Stock held in treasury, at cost –

Preferred, 10,213,519 depositary shares at December 31, 2000 and 1999 (305) (305)Common, 16,295,475 shares at December 31, 2000 and (1,179) (1,097)

14,995,219 shares at December 31, 1999Accumulated other comprehensive income 152 352Other (7) (9)

5,190 5,151$24,355 $20,963


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Statements of Consolidated OperationsYear ended December 31 In millions, except per share 2000 1999 1998

Operating revenues Passenger $16,932 $15,784 $15,520Cargo 931 906 913Other operating revenues 1,489 1,337 1,128

19,352 18,027 17,561

Operating expenses Salaries and related costs 6,730 5,670 5,341ESOP compensation expense 147 756 829Aircraft fuel 2,511 1,776 1,788Commissions 1,025 1,139 1,325Purchased services 1,711 1,575 1,505Aircraft rent 919 876 893Landing fees and other rent 959 949 881Depreciation and amortization 1,058 867 793Cost of sales 1,038 602 474Aircraft maintenance 698 689 624Other operating expenses 1,902 1,737 1,630

18,698 16,636 16,083

Earnings from operations 654 1,391 1,478

Other income (expense) Interest expense (402) (362) (355)Interest capitalized 77 75 105Interest income 101 68 59Equity in earnings (losses) of affiliates (12) 37 72Gain on sale of investments 109 731 –Investment impairment (61) – –Miscellaneous, net (35) 2 (103)

(223) 551 (222)

Earnings Earnings before income taxes, distributions on preferredsecurities, extraordinary item and cumulative effect 431 1,942 1,256

Provision for income taxes 160 699 429Earnings before distributions on preferred securities,

extraordinary item and cumulative effect 271 1,243 827Distributions on preferred securities, net of tax (6) (5) (6)Extraordinary loss on early extinguishment of debt, net of tax (6) (3) –Cumulative effect of accounting change, net of tax (209) – –Net earnings $ 50 $ 1,235 $ 821

Per share, basic Earnings before extraordinary item and cumulative effect $ 4.29 $ 21.26 $ 12.71Extraordinary loss on early extinguishment of debt, net of tax (0.13) (0.06) –Cumulative effect of accounting change, net of tax (4.08) – –Net earnings $ 0.08 $ 21.20 $ 12.71

Per share, diluted Earnings before extraordinary item and cumulative effect $ 1.89 $ 9.97 $ 6.83Extraordinary loss on early extinguishment of debt, net of tax (0.06) (0.03) –Cumulative effect of accounting change, net of tax (1.79) – –Net earnings $ 0.04 $ 9.94 $ 6.83


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Statements of Consolidated Cash FlowsYear ended December 31 In millions 2000 1999 1998

Cash and cash equivalents at beginning of year $ 310 $ 390 $ 295

Cash flows from Net earnings 50 1,235 821operating activities Adjustments to reconcile to net cash provided by

operating activities –ESOP compensation expense 147 756 829Cumulative effect of accounting change, net 209 – –Extraordinary loss on debt extinguishment, net 6 3 –Gain on sale of investments (109) (731) –Investment impairment 61 – –Pension funding less than (greater than) expense (21) 94 101Deferred postretirement benefit expense 153 65 149Depreciation and amortization 1,058 867 793Provision for deferred income taxes 317 590 307Undistributed (earnings) losses of affiliates 13 (20) (62)Decrease (increase) in receivables 68 (146) (97)Decrease (increase) in other current assets (208) 2 105Increase (decrease) in advance ticket sales 42 (17) 162Increase (decrease) in accrued income taxes (77) (76) 38Increase (decrease) in accounts payable and accrued liabilities 761 (86) 69Amortization of deferred gains (66) (66) (64)Other, net 68 (49) 43

2,472 2,421 3,194

Cash flows from Additions to property and equipment (2,538) (2,389) (2,832)investing activities Proceeds on disposition of property and equipment 324 154 452

Proceeds on sale of investments 147 828 –Decrease (increase) in short-term investments (286) 46 125Other, net (168) (263) (63)

(2,521) (1,624) (2,318)

Cash flows from Reacquisition of preferred stock – – (3)financing activities Repurchase of common stock (81) (261) (459)

Proceeds from issuance of long-term debt 2,515 286 928Repayment of long-term debt (441) (513) (271)Principal payments under capital leases (283) (248) (322)Purchase of equipment certificates under Company leases (208) (47) (693)Decrease in equipment certificates under Company leases 228 33 22Increase (decrease) in short-term borrowings (61) (123) 184Aircraft lease deposits (138) (20) (154)Cash dividends (118) (10) (10)Other, net 5 26 (3)

1,418 (877) (781)

Increase (decrease) in cash and cash equivalents during the year 1,369 (80) 95

Cash and cash equivalents at end of year $ 1,679 $ 310 $ 390


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Statements of Consolidated Stockholders’ EquityYear ended December 31 Unearned Accumulated

Additional ESOP OtherPreferred Common Capital Retained Preferred Treasury Comp.

In millions, except per share Stock Stock Invested Earnings Stock Stock Income Other Total

Balance at December 31, 1997 $– $1 $2,876 $ 309 $(177) $ (663) $ (2) $(7) $2,337

1998 Net earnings – – – 821 – – – – 821Other comprehensive income, net:

Unrealized gains on securities, net – – – – – – 1 – 1Minimum pension liability adjustment – – – – – – (1) – (1)

Total comprehensive income – – – 821 – – – – 821Cash dividends on preferred stock

($1.44 per Series B share) – – – (10) – – – – (10)Common stock repurchases – – – – – (459) – – (459)Issuance and amortization of ESOP

preferred stock – – 823 – 6 – – – 829ESOP dividend ($8.89 per share) – – 42 (92) 50 – – – –Preferred stock committed to

Supplemental ESOP – – (177) – – – – – (177)Other – – (47) – – (18) – 5 (60)

Balance at December 31, 1998 – 1 3,517 1,028 (121) (1,140) (2) (2) 3,281

1999 Net earnings – – – 1,235 – – – – 1,235Other comprehensive income, net:

Unrealized gains on securities, net – – – – – – 354 – 354Total comprehensive income – – – 1,235 – – 354 – 1,589Cash dividends on preferred stock

($1.44 per Series B share) – – – (10) – – – – (10)Common stock repurchases – – – – – (261) – – (261)Issuance and amortization of ESOP

preferred stock – – 740 – 16 – – – 756ESOP dividend ($8.89 per share) – – 38 (115) 77 – – – –Preferred stock committed to

Supplemental ESOP – – (201) – – – – – (201)Other – – 5 – – (1) – (7) (3)

Balance at December 31, 1999 – 1 4,099 2,138 (28) (1,402) 352 (9) 5,151

2000 Net earnings – – – 50 – – – – 50

Other comprehensive income, net:

Unrealized losses on securities, net – – – – – – (196) – (196)

Minimum pension liability adjustment – – – – – – (4) – (4)

Total comprehensive income – – – 50 – – (200) – (150)

Cash dividends on preferred

stock ($1.44 per Series B share) – – – (10) – – – – (10)

Cash dividends on common

stock ($1.25 per share) – – – (144) – – – – (144)

Common stock repurchases – – – – – (81) – – (81)

Issuance and amortization of ESOP

preferred stock – – 147 – – – – – 147

ESOP dividend ($8.89 per share) – – 8 (36) 28 – – – –

Preferred stock committed to

Supplemental ESOP – – 322 – – – – – 322

Other – – (46) – – (1) – 2 (45)

Balance at December 31, 2000 $– $1 $4,530 $1,998 $ – $(1,484) $ 152 $(7) $5,190



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1. Summary of SignificantAccounting Policies

a. Basis of PresentationUAL Corporation (“UAL”) is aholding company whose princi-pal subsidiary is United AirLines, Inc. (“United”). The con-solidated financial statementsinclude the accounts of UALand all of its majority-ownedaffiliates (collectively the “Com-pany”). All significant intercom-pany transactions are eliminated.Certain prior-year financialstatement items have beenreclassified to conform to thecurrent year’s presentation.

b. Use of EstimatesThe preparation of financialstatements in conformity withgenerally accepted accountingprinciples requires manage-ment to make estimates andassumptions that affect thereported amounts of assetsand liabilities and disclosure ofcontingent assets and liabilitiesat the date of the financialstatements and the reportedamounts of revenues andexpenses during the reportingperiod. Actual results could differ from those estimates.

c. Airline RevenuesPassenger fares and cargo revenues are recorded as operating revenues when thetransportation is furnished. The value of unused passen-ger tickets is included in current liabilities.

d. Cash and Cash Equivalentsand Short-term InvestmentsCash in excess of operatingrequirements is invested inshort-term, highly liquid, income-producing investments. Invest-ments with a maturity of threemonths or less on their acquisi-tion date are classified as cashand cash equivalents. Otherinvestments are classified asshort-term investments.

From time to time, United lendscertain of its securities classifiedas cash and cash equivalentsand short-term investments tothird parties. United requires

collateral in an amount exceed-ing the value of the securitiesand is obligated to reacquirethe securities at the end of thecontract. United accounts forthese transactions as securedborrowings rather than salesand so does not remove thesecurities from the balancesheet. At December 31, 2000,United is obligated to repur-chase $39 million of securitieslent to third parties.

e. Derivative FinancialInstrumentsForeign Currency – United mayenter into Japanese yen forwardexchange contracts to minimizegains and losses on the revalu-ation of short-term yen-denom-inated liabilities. The yen forwardstypically have short-term matu-rities and are marked to fairvalue at the end of each ac-counting period. The unrealizedmark-to-market gains and losseson the yen forwards generallyoffset the losses and gainsrecorded on the yen liabilities.

United has also entered intoforwards and swaps to reduceexposure to currency fluctuationson Japanese yen-, euro- andFrench franc-denominatedcapital lease obligations. Thecash flows of the forwards andswaps mirror those of the capi-tal leases. The premiums onthe forwards and swaps, asmeasured at inception, arebeing amortized over theirrespective lives as componentsof interest expense. Any gainsor losses realized upon earlytermination of these forwardsand swaps are deferred andrecognized in income over the remaining life of the underly-ing exposure.

The Company hedges some of the risks of exchange ratevolatility on its anticipatedfuture Japanese yen, euro,Australian dollar and Britishpound revenues by purchasingput options with little or nointrinsic value and on HongKong dollar revenues by enter-ing into forward contracts. Theamount and duration of theseoptions are synchronized withthe expected revenues, andthus, the put options have beendesignated as a hedge. Thepremiums on purchased option

contracts are amortized overthe lives of the contracts. Un-realized gains on purchasedput option contracts are de-ferred until contract expirationand then recognized as a com-ponent of passenger revenue.To reduce hedging costs, theCompany sells a correlationoption in the first four curren-cies referred to above.

Interest Rates – United may,from time to time, enter intoswaps to reduce exposure tointerest rate fluctuations in con-nection with certain debt, capi-tal leases and operating leases.The cash flows of the swapsmirror those of the underlyingexposures. The premiums onthe swaps, as measured atinception, are amortized overtheir respective lives as compo-nents of interest expense. Anygains or losses realized upon theearly termination of these swapsare deferred and recognized inincome over the remaining lifeof the underlying exposure.

Aircraft Fuel – Under favorablemarket conditions, Uniteduses purchased call options to hedge a portion of its pricerisk related to aircraft fuel pur-chases. The purchased calloptions have been designatedas a hedge. Gains or losses onhedge positions are recognizedupon contract expiration as a component of aircraft fuel inventory. In addition, to a limited extent, United tradesshort-term heating oil futurescontracts. Unrealized losses on these contracts are record-ed currently in income, whileunrealized gains are deferreduntil contract expiration. Bothgains and losses are recordedas a component of aircraft fuel expense.

f. Aircraft Fuel, Spare Parts and SuppliesAircraft fuel and maintenanceand operating supplies are stated at average cost. Flightequipment spare parts are stated at average cost less anobsolescence allowance.

Condensed Notes to ConsolidatedFinancial Statements

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g. Operating Property andEquipmentOwned operating property andequipment is stated at cost.Property under capital leases,and the related obligation forfuture lease payments, are initially recorded at an amountequal to the then present valueof those lease payments.

Depreciation and amortizationof owned depreciable assets is based on the straight-linemethod over their estimatedservice lives. Leasehold improve-ments are amortized over theremaining period of the lease orthe estimated service life of therelated asset, whichever is less.Aircraft are depreciated to esti-mated salvage values, generallyover lives of 4 to 30 years; build-ings are depreciated over livesof 25 to 45 years; other propertyand equipment are depreciatedover lives of 3 to 15 years.

During 2000, UAL recorded a $139 million charge related to the planned early retirementof various aircraft and to write-down certain non-operating equipment to netrealizable value.

During 1999, United recorded a $17 million charge to depreci-ation expense to reduce the carrying value of two non-oper-ating B747-200 aircraft to netrealizable value.

Properties under capital leasesare amortized on the straight-linemethod over the life of the leaseor, in the case of certain aircraft,over their estimated service lives.Lease terms are 10 to 30 yearsfor aircraft and flight simulatorsand 25 years for buildings. Am-ortization of capital leases isincluded in depreciation andamortization expense.

Maintenance and repairs,including the cost of minorreplacements, are charged tomaintenance expense accounts.Costs of additions to and re-newals of units of property arecharged to property and equip-ment accounts.

h. IntangiblesIntangibles consist primarily ofroute acquisition costs and in-tangible pension assets. Routeacquisition costs are amortizedover 40 years.

i. Mileage Plus AwardsUnited accrues the estimatedincremental cost of providingfree travel awards earned underits Mileage Plus frequent flyerprogram when such award levels are reached. United,through its wholly owned sub-sidiary Mileage Plus Holdings,Inc., sells mileage credits toparticipating partners in theMileage Plus program.

Effective January 1, 2000, theCompany changed its methodof accounting for the sale ofmileage to participating partnersin its Mileage Plus program, in

accordance with Staff Account-ing Bulletin No. 101, “RevenueRecognition in Financial State-ments.” Under the new ac-counting method, a portion of revenue from the sale ofmileage (previously recognizedin other revenue) is deferredand recognized as passengerrevenue when the transporta-tion is provided. Accordingly,UAL has recorded a charge of $209 million, net of tax, for thecumulative effect of a change inaccounting principle to reflectthe application of the account-ing method to prior years. Thischange resulted in a reductionto revenues of approximately$38 million for 2000 and wouldhave reduced 1999 revenues by$45 million.

The pro forma effect of the ac-counting change on net incomeand earnings per share as previ-ously reported for 1999 andprior years is as shown above.

j. Deferred GainsGains on aircraft sale andleaseback transactions aredeferred and amortized overthe lives of the leases as areduction of rental expense.

k. AdvertisingAdvertising costs, which areincluded in other operatingexpenses, are expensed asincurred. Advertising expensewas $269 million, $232 millionand $213 million for the yearsended December 31, 2000,1999 and 1998, respectively.

2. Commitments

At December 31, 2000, com-mitments for the purchase ofproperty and equipment, princi-pally aircraft, approximated$4.7 billion after deductingadvance payments. An esti-mated $2.5 billion is due to bespent in 2001, $1.7 billion in2002 and $0.5 billion in 2003.The major commitments are forthe purchase of B767, B777,A319 and A320 aircraft, whichare scheduled to be deliveredthrough 2003. The above num-bers include a recent conversionof 15 option aircraft to firmorders to be delivered in 2003.

Pro Forma Earnings Information (Note 1i) 1999 1998 1997 1996 1995

Earnings before extraordinary items (in millions)As reported $1,238 $ 821 $ 958 $ 600 $ 378Pro forma $1,209 $ 774 $ 931 $ 553 $ 348

Earnings per share before extraordinary itemsBasic As reported $21.26 $12.71 $14.98 $8.76 $6.98

Pro forma $20.71 $11.87 $14.52 $7.92 $6.37Diluted As reported $ 9.97 $ 6.83 $ 9.04 $5.85 $5.23

Pro forma $ 9.71 $ 6.38 $ 8.76 $5.29 $4.81

Net earnings (in millions)As reported $1,235 $ 821 $ 949 $ 533 $ 349Pro forma $1,206 $ 774 $ 922 $ 486 $ 319

Net earnings per shareBasic As reported $21.20 $12.71 $14.83 $7.57 $6.39

Pro forma $20.65 $11.87 $14.37 $6.73 $5.78Diluted As reported $ 9.94 $ 6.83 $ 8.95 $5.06 $4.82

Pro forma $ 9.68 $ 6.38 $ 8.67 $4.50 $4.40

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The Company leases aircraft,airport passenger terminalspace, aircraft hangars andrelated maintenance facilities,cargo terminals, other airportfacilities, real estate, office and computer equipment andvehicles. Leases which areclassified as capital leases ap-pear on the Company’s balancesheet while those classified asoperating leases do not.

Future minimum lease paymentsas of December 31, 2000, underoperating leases having initialremaining noncancelable leaseterms of more than one year, areshown in the table above.

3. Employee InvestmentTransaction andRecapitalization

On July 12, 1994, the stock-holders of UAL approved a planof recapitalization to provide anapproximately 55 percent equityinterest in UAL to certain em-ployees of United in exchangefor wage concessions andwork-rule changes. The em-ployees’ equity interest wasallocated to individual employ-ees through the year 2000under Employee Stock Owner-ship Plans (“ESOPs”) whichwere created as a part of therecapitalization.

“ESOP compensation expense”represents the estimated fairvalue of ESOP convertible pre-ferred stock committed to bereleased to employees for theperiod, net of amounts used tosatisfy dividend requirementsfor previously allocated ESOPconvertible preferred shares,under the ESOPs. The fairvalue of ESOP convertible pre-ferred stock is estimated basedon the market value of UAL’scommon stock.

4. Investments

During 2000, UAL invested ap-proximately $24 million in Orbitz,an entity which is developing anInternet travel website. UALowns approximately 25 percentof Orbitz and accounts for thisinvestment using the equitymethod of accounting.

During 1998 and 1999, Unitedinvested approximately $51million in GetThere.com (a lead-ing provider of Internet-basedtravel planning products tailoredto individual, corporate, travelsupplier and travel agency customers), resulting in a 28percent minority interest consisting of common stock,warrants and options. Unitedaccounted for its investment inGetThere.com using the equitymethod of accounting.

On October 6, 2000, SabreHoldings Corporation acquiredall the outstanding shares ofGetThere.com common stockfor $17.75 per share. Accord-ingly, after converting its optionsand warrants, United tenderedall of its shares for net proceedsof $147 million, resulting in again of approximately $69 million, net of tax.

During 2000, United recordedan impairment loss of $38 million, net of tax, related to itswarrants held in Priceline.com.

In June 1999, United sold17,500,000 common shares of Galileo International, Inc.(“Galileo”) in a secondary offer-ing for $766 million, resulting in a gain of approximately $428million, net of tax. This salereduced United’s holdings in

Galileo from 32 percent toapproximately 15 percent,requiring United to discontinuethe equity method of account-ing for its investment in Galileo.

United owns depositary certifi-cates in Equant N.V. (“Equant”),a provider of international datanetwork services to multina-tional businesses and a singlesource for global desktop com-munications. Each depositarycertificate represents a beneficialinterest in an Equant commonshare. In December 1999, Unitedsold 709,000 shares of commonstock in Equant in a secondaryoffering by Equant for $62 mil-lion. At December 31, 2000,the estimated fair value ofUnited’s remaining 1,391,791depositary certificates in Equantwas approximately $36 million.

5. Segment Information

United has a global route net-work designed to transportpassengers and cargo betweenand among destinations inNorth America, the Pacific, the Atlantic and Latin America.These regions constitute United’sfour reportable segments.

The accounting policies for eachof these segments are the sameas those described in Note 1,“Summary of Significant Ac-counting Policies,” except thatsegment financial informationhas been prepared using a management approach that isconsistent with how the Com-pany’s management internallydisaggregates financial infor-mation for the purpose of

Future Minimum Operating Lease PaymentsIn millions Aircraft Non-aircraft

Payable during 2001 $ 941 $ 6122002 922 5742003 972 5412004 1,008 5142005 1,022 504After 2005 9,445 7,279Total minimum lease payments $14,310 $10,024

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making internal operating decisions. UAL evaluates per-formance based on United’searnings before income taxesand gains on sales. Revenuesare attributed to each report-able segment based on theallocation guidelines providedby the U.S. Department ofTransportation, which classifiesflights between the U.S. and

foreign destinations as part of each respective region. Areconciliation of the totalamounts reported by report-able segments to the applica-ble amounts in the financialstatements is shown in thetable above.

UAL’s operations involve aninsignificant level of dedicatedrevenue-producing assets byreportable segment. The over-whelming majority of UAL’srevenue-producing assets canbe deployed in any of the fourreportable segments. UAL hassignificant intangible assetsrelated to the acquisition of itsAtlantic and Latin Americanroute authorities.

6. Per Share Amounts

Earnings per share are pre-sented on both a basic and adiluted basis. Basic earningsper share were computed bydividing net income beforeextraordinary item and cumulative effect by theweighted average number of shares of common stockoutstanding during the year. In addition, diluted per shareamounts include potentialcommon shares, includingcommon shares issuable uponconversion of ESOP sharescommitted to be released.

Segment Information ReportableYear Ended December 31 North Latin Segment ConsolidatedIn millions America Pacific Atlantic America Total Other Total

2000

Revenue $13,094 $3,161 $2,260 $816 $19,331 $ 21 $19,352

Interest income 55 23 16 5 99 2 101

Interest expense 234 95 66 21 416 (14) 402

Equity in losses of affiliates (5) (2) (1) – (8) (4) (12)

Depreciation and amortization 630 176 141 43 990 68 1,058

Earnings before income taxes, investment

impairment and gains on sales 204 60 102 10 376 7 383

1999Revenue $12,516 $2,691 $1,973 $787 $17,967 $ 60 $18,027Interest income 40 14 10 4 68 – 68Interest expense 217 79 55 21 372 (10) 362Equity in earnings of affiliates 21 9 5 2 37 – 37Depreciation and amortization 550 145 115 42 852 15 867Earnings before income taxes and gains on sales 889 81 164 20 1,154 57 1,211

1998Revenue $11,997 $2,843 $1,846 $832 $17,518 $ 43 $17,561Interest income 33 14 8 3 58 1 59Interest expense 207 84 49 22 362 (7) 355Equity in earnings of affiliates 41 17 10 4 72 – 72Depreciation and amortization 520 145 95 45 805 (12) 793Earnings (loss) before income taxes 1,118 (105) 185 22 1,220 36 1,256

2000 1999 1998Total earnings for reportable segments $376 $1,154 $1,220

Gains on sales 109 731 –Investment impairment (61) – –UAL subsidiary earnings 7 57 36

Total earnings before income taxes, distributions on preferred securities,extraordinary item and cumulative effect $431 $1,942 $1,256

Earnings Per Share Calculation 2000 1999 1998

Earnings attributable to common stockholders (in millions)Net income before extraordinary item and cumulative effect $ 265 $ 1,238 $ 821Preferred stock dividends and other adjustments (46) (125) (102)Earnings attributable to common stockholders

(basic and diluted) $ 219 $ 1,113 $ 719

Shares (in millions)Average shares outstanding (basic) 51.3 52.3 56.5Convertible ESOP preferred stock 64.5 58.0 47.1Other 0.7 1.3 1.6Average number of shares (diluted) 116.5 111.6 105.2

Earnings per shareBasic $ 4.29 $21.26 $12.71Diluted $ 1.89 $ 9.97 $ 6.83

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Management Statement onAccounting Controls

The integrity of UALCorporation’s financialrecords, from which thefinancial statements are pre-pared, is largely dependenton the Company’s system ofinternal accounting controls.The purpose of the system isto provide reasonable assur-ance that transactions areexecuted in accordance withmanagement’s authorization;that transactions are appro-priately recorded in order topermit preparation of financialstatements which, in all mate-rial respects, are presented inconformity with generallyaccepted accounting princi-ples consistently applied; and that assets are properlyaccounted for and safe-guarded against loss fromunauthorized use. Underlyingthis concept of reasonableassurance is the fact that limitations exist in any systemof internal accounting con-trols based on the premisethat the cost of such controlsshould not exceed the bene-fits derived therefrom.

To enhance the effectiveachievement of internalaccounting controls, theCompany carefully selectsand trains its employees,gives due emphasis to appropriate division of clearlydefined lines of responsibilityand develops and communi-cates written policies andprocedures. Based on areview and monitoring ofinternal accounting controls,

augmented by an internalauditing function and theoversight responsibilities ofthe outside directors com-prising the Audit Committeeof the Company’s Board ofDirectors, managementbelieves that the Company’sinternal accounting controlsystem is adequate and ap-propriately balances therelationship between the cost of the system and thebenefits it provides.

James E. GoodwinChairman and CEO

Douglas A. HackerExecutive Vice Presidentand CFO

Report of IndependentPublic Accountants

To the Stockholders andBoard of Directors, UALCorporation:

We have audited, in accor-dance with auditing standardsgenerally accepted in theUnited States, the statementsof consolidated financial posi-tion of UAL Corporation (aDelaware corporation) andsubsidiary companies as ofDecember 31, 2000 and 1999,and the related statements of consolidated operations,consolidated cash flows, andconsolidated stockholders’equity for each of the threeyears in the period endedDecember 31, 2000, appear-ing in the appendix to theproxy statement for the 2001Annual Meeting of Stock-holders of the Company (not presented herein). In ourreport dated February 22,2001, also appearing in that proxy statement, weexpressed an unqualifiedopinion on those consolidatedfinancial statements.

In our opinion, the informationset forth in the accompanyingconsolidated statements offinancial position as of Dec-ember 31, 2000 and 1999,and the related statements of consolidated operations,consolidated cash flows andconsolidated stockholders’equity for each of the threeyears in the period endedDecember 31, 2000, is fairlystated, in all material respects,in relation to the consolidatedfinancial statements fromwhich it has been derived.

As explained in Note 1 of theCondensed Notes to Consoli-dated Financial Statements,effective January 1, 2000, theCompany changed certain ofits accounting principles forrevenue recognition as a re-sult of the adoption of StaffAccounting Bulletin No. 101“Revenue Recognition inFinancial Statements.”

Chicago, IllinoisFebruary 22, 2001

United

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Eleven-Year SummaryIn millions, except per share, rates and number of aircraft 2000 1999

Earnings data Operating revenues $ 19,352 $ 18,027Operating earnings (loss) 654 1,391Earnings (loss) before extraordinary item and cumulative effect of

accounting changes 265 1,238Net earnings (loss) $ 50 $ 1,235

Share data Per share –Earnings (loss) before extraordinary item and cumulative effect of

accounting changes, diluted $ 1.89 $ 9.97Net earnings (loss), diluted $ 0.04 $ 9.94

Book value of common stock at year-end $ 97.25 $ 100.92Common shares outstanding at year-end (in thousands) 52,539 50,777

Financial position Assets –at year-end Current assets $ 4,779 $ 2,935

Operating property and equipment, net 16,343 14,865Other assets 3,233 3,163Total assets $ 24,355 $ 20,963

Liabilities and stockholders’ equity –Current liabilities $ 6,781 $ 5,411Long-term debt and long-term obligations under capital leases 6,949 4,987Other liabilities and deferred credits and redeemable preferred stock 4,864 4,521Preferred stock committed to Supplemental ESOP 571 893Stockholders’ equity 5,190 5,151Total liabilities and stockholders’ equity $ 24,355 $ 20,963

Other financial data Depreciation and amortization $ 1,058 $ 867Salaries and related costs (excluding ESOP compensation expense) $ 6,730 $ 5,670

Operating data Revenue passengers 85 87Revenue passenger miles 126,933 125,465Available seat miles 175,485 176,686Passenger load factor 72.3% 71.0%Passenger revenue per passenger mile (yield) 13.3¢ 12.5¢Average price per gallon of jet fuel 81.0¢ 57.9¢Number of aircraft in operating fleet at year-end 604 594Average full-time equivalent employees (in thousands) 98 96

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1998 1997 1996 1995 1994 1993 1992 1991 1990

$ 17,561 $ 17,378 $ 16,362 $ 14,943 $ 13,950 $ 13,325 $ 11,853 $ 10,706 $ 10,2961,478 1,259 1,123 889 521 263 (538) (494) (36)

821 958 600 378 77 (31) (417) (332) 94$ 821 $ 949 $ 533 $ 349 $ 51 $ (50) $ (957) $ (332) $ 94

$ 6.83 $ 9.04 $ 5.85 $ 5.23 $ 0.19 $ (0.66) $ (4.34) $ (3.58) $ 1.08$ 6.83 $ 8.95 $ 5.06 $ 4.82 $ (0.15) $ (0.85) $ (9.94) $ (3.58) $ 1.08$ 61.79 $ 39.35 $ 15.52 $ (9.06) $ (24.99) $ 6.14 $ 7.28 $ 16.80 $ 19.09

51,805 57,320 58,817 50,718 49,756 98,276 96,952 95,032 87,540

$ 2,908 $ 2,948 $ 2,682 $ 3,043 $ 3,192 $ 3,713 $ 3,298 $ 2,882 $ 2,64013,054 10,774 8,243 7,021 6,723 7,206 7,111 5,995 4,749

2,597 1,742 1,752 1,577 1,849 1,921 1,848 999 594$ 18,559 $ 15,464 $ 12,677 $ 11,641 $ 11,764 $ 12,840 $ 12,257 $ 9,876 $ 7,983

$ 5,668 $ 5,248 $ 5,003 $ 4,433 $ 4,906 $ 4,896 $ 4,845 $ 4,083 $ 3,7574,971 3,771 2,986 3,913 3,617 3,529 3,613 2,423 1,2383,948 3,594 3,528 3,474 3,557 3,212 3,093 1,773 1,317

691 514 165 60 – – – – –3,281 2,337 995 (239) (316) 1,203 706 1,597 1,671

$ 18,559 $ 15,464 $ 12,677 $ 11,641 $ 11,764 $ 12,840 $ 12,257 $ 9,876 $ 7,983

$ 793 $ 724 $ 759 $ 664 $ 725 $ 764 $ 726 $ 604 $ 560$ 5,341 $ 5,018 $ 4,719 $ 4,526 $ 4,679 $ 4,760 $ 4,562 $ 4,057 $ 3,550

87 84 82 79 74 70 67 62 58124,609 121,426 116,697 111,811 108,299 101,258 92,690 82,290 76,137174,008 169,110 162,843 158,569 152,193 150,728 137,491 124,100 114,995

71.6% 71.8% 71.7% 70.5% 71.2% 67.2% 67.4% 66.3% 66.2%12.4¢ 12.6¢ 12.4¢ 11.8¢ 11.3¢ 11.6¢ 11.3¢ 11.5¢ 11.8¢59.0¢ 69.5¢ 72.2¢ 59.5¢ 58.8¢ 63.6¢ 66.4¢ 71.6¢ 80.4¢577 575 564 558 543 544 536 486 462

91 88 84 80 77 81 80 77 73

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Directors

John W. Creighton, Jr.Retired Chief Executive Officerand PresidentWeyerhaeuser Company(Forest products)Independent Director, Elected 1998(1) (2) (3) (6) (7) (10)

Captain Frederick C. DubinskyUnited Airlines Pilots MasterExecutive Council Chairman Air Line Pilots AssociationInternational(Labor union)Employee Director, Elected 2000(2) (4) (5) (6) (9)

Rono J. DuttaPresidentUAL CorporationPublic Director, Elected 1999(9)

James E. GoodwinChairman and Chief Executive OfficerUAL CorporationPublic Director, Elected 1998(2) (4) (5) (7)

Richard D. McCormickChairman EmeritusUS WEST, Inc. (Telecommunications)Independent Director, Elected 1994(1) (2) (3) (5) (6) (10)

John F. McGillicuddyRetired Chairman and ChiefExecutive OfficerChemical Banking Corporation(Banking and finance)Public Director, Elected 1984(1) (4) (5) (8) (10)

James J. O’ConnorRetired Chairman and Chief Executive OfficerUnicom Corporation(Electric utility holding company)Public Director, Elected 1984(1) (2) (3) (4) (8) (9) (10)

Hazel R. O’LearyPresident and Chief Operating OfficerBlaylock & Partners(Investment banking)Independent Director, Elected 1999(1) (4) (6) (9) (10)

Deval L. PatrickExecutive Vice Presidentand General Counsel*The Coca-Cola Company, Inc.(Beverage company)*Effective April 2, 2001Employee Director,Elected 1997(2) (6) (9)

John F. PeterpaulRetired General Vice PresidentInternational Association of MachinistsDistrict #141(Labor union)Employee Director, Elected 1994(2) (4) (5) (6) (9)

Paul E. Tierney, Jr.General Partner,Darwin Capital Partners andManaging MemberDevelopment Capital, LLC(Investment management)Public Director, Elected 1990(1) (4) (7) (8) (10)

John K. Van de KampPresidentThoroughbred Owners of California(Trade association)Independent Director, Elected 1994(1) (4) (5) (6) (9) (10)

Officers

James E. GoodwinChairman and Chief Executive Officer

Rono J. DuttaPresident

Douglas A. HackerExecutive Vice President and Chief Financial Officer

Andrew P. StuddertExecutive Vice President and Chief Operating Officer

William P. HobgoodSenior Vice President

Francesca M. MaherSenior Vice President, GeneralCounsel and Secretary

Committee Legend:(1) Audit Committee(2) Compensation Committee(3) Compensation Administra-

tion Committee(4) CAP (Competitive Action

Plan) Committee(5) Executive Committee(6) Independent Director

Nomination Committee(7) Labor Committee(8) Outside Public Director

Nomination Committee(9) Pension and Welfare Plans

Oversight Committee(10) Transaction Committee

UAL CorporationDirectors and Officers

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Directors and Officers

James E. Goodwin*Chairman and Chief Executive Officer

Rono J. Dutta*President

Douglas A. Hacker*Executive Vice President Finance and Planning and Chief Financial Officer

Andrew P. Studdert*Executive Vice President and Chief Operating Officer

Graham W. AtkinsonSenior Vice PresidentMarketing

Christopher D. Bowers*Senior Vice President North America

Frederic F. BraceSenior Vice PresidentFinance and Treasurer

Eric C. DeanSenior Vice PresidentInformation Services and Chief Information Officer

Sara A. FieldsSenior Vice President Onboard Service

Captain Stephen A. ForteSenior Vice President Flight Operations

William P. Hobgood*Senior Vice President People

Shelley A. LongmuirSenior Vice PresidentGovernmental Affairs

Francesca M. MaherSenior Vice President, General Counsel andSecretary

Stuart I. Oran*Senior Vice PresidentInternational

Ronald D. UtechtSenior Vice President Maintenance Operations

Dennis A. AroucaVice President People Services

Stephen M. BeatusVice President Latin America

Judith A. BishopVice President Atlantic

James C. BrennanVice President Pacific-South

Montie R. BrewerVice PresidentAlliances - United Shuttle -United Express

Larry D. DeShonVice President Customer Satisfaction

Roger A. GibsonVice President North America

James J. Hartigan, Jr.Vice President Worldwide Cargo

M. Lynn HughittVice President and Controller

Gary S. JeffersonVice President Public Affairs

Richard S. JusterVice President Purchasing

Amos S. KazzazVice President Corporate Real Estate

John D. KikerVice President Advertising andCommunications

Kevin N. KnightVice President Resource Planning

Joseph F. LaughlinVice President North America-Sales

Mark S. LibermanVice President North America

Captain Rick A. MaloneyVice President Flight Operations

Louis J. ManciniVice President Engineering and TechnicalSupport

Patricia A. MashVice President Revenue Management

Peter D. McDonaldVice President Operational Services

William R. NormanVice President Line Maintenance

M. Scott PravenVice President E-Commerce

Mark F. SchwabVice President Pacific-North

Captain Edmond L. SolidayVice President Corporate Safety, QualityAssurance and Security

Daniel C. WalshVice President North America

Michael G. WhitakerVice President International Affairs

Glenn S. WrightVice President North America

*Director, United Airlines

United Airlines Directors and Officers

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World Headquarters1200 E. Algonquin RoadElk Grove Township, IL 60007(847) 700-4000

Mailing AddressesUAL CorporationP.O. Box 66919Chicago, IL 60666

United AirlinesP.O. Box 66100Chicago, IL 60666

Stock ListingUAL Corporation’s commonstock is listed, under the sym-bol UAL, on the followingexchanges: New York StockExchange, Chicago StockExchange and Pacific Stock Exchange.

Stockholder QuestionsInformation relating to a stockholder’s dividends, thedividend reinvestment anddirect stock purchase plans,transfer requirements, lost certificates and other relatedmatters may be obtained fromthe transfer agent:

Computershare InvestorServices2 N. LaSalle StreetChicago, IL 60602(800) 647-4488

The transfer agent’s “TelephoneResponse Center” is openMonday through Friday.(Account information is avail-able from 8:30 a.m. CSTthrough 5:30 p.m. CST.)

Stockholders will be asked for their tax identification number, the name(s) in whichthe shares are registered andtheir record address. Alterna-tively, stockholders may writeto the office of the CorporateSecretary, UAL Corporation.

Availability of QuarterlyResultsUAL Corporation’s 2001 quarterly results will be available on approximately the following dates:

1st Quarter April 18, 20012nd Quarter July 18, 20013rd Quarter October 17, 20014th Quarter January 18, 2002

Financial InformationA copy of UAL Corporation’sannual report to the Securitiesand Exchange Commission onForm 10-K, as well as otherfinancial information, may beobtained without charge from:

Investor RelationsUAL CorporationP.O. Box 66919Chicago, IL 60666(847) 700-7365

This information is also avail-able on United’s web site(www.united.com) in the“Investor Relations” sectionunder “Company Information.”

General InformationGeneral background informationon the company or informationregarding the United AirlinesFoundation may be obtainedfrom Worldwide Communica-tions, United Airlines.

Independent AccountantsUAL Corporation’s independentaccountants are ArthurAndersen LLP.

UAL Corporation Common Stock Market Prices and Dividend Information (per share)Dividends

High Low Paid

2000 First Quarter $79 $45 3/4

Second Quarter 65 1/8 49 $0.3125

Third Quarter 61 5/8 40 1/4 $0.3125

Fourth Quarter 43 15/16 34 1/16 $0.3125

1999 First Quarter $80 1/4 $57 9/16Second Quarter 87 3/8 60 1/16

Third Quarter 69 3/8 58 3/16Fourth Quarter 78 3/4 60 1/8

The company instituted a quarterly dividend during the second quarter of 2000. The payment of any future dividendson the common stock, and the amount of any future dividends, will be determined by the directors of the companybased on earnings, the financial condition of the company and other relevant factors. At March 1, 2001, therewere 23,559 common stockholders of record.

StockholderInformation

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