SECURITIES AND EXCHANGE COMMISSION
                          Washington, DC  20549
                                    
                                    
                                FORM 8-K
                                    
                                    
                             CURRENT REPORT


                 Pursuant to Section 13 or 15(d) of the
                     Securities Exchange Act of 1934


                   Date of Report:  February 28, 1995
                    (Date of earliest event reported)


                          UAL CORPORATION
         (Exact name of registrant as specified in its charter)


            Delaware               1-6033              36-2675207
(State or other jurisdiction     (Commission     (I.R.S. Employer
     of incorporation)           File Number)        Identification No.)


1200 Algonquin Road, Elk Grove Township, Illinois       60007
 (Address of principal executive offices)             (Zip Code)


Registrant's telephone number, including area code  (708) 952-4000


                             Not Applicable
      (Former name or former address, if changed since last report)





ITEM 5.                 OTHER EVENTS.

    UAL Corporation is filing herewith Selected Financial Data,
Management's Discussion and Analysis of Financial Condition and
Results of Operations and audited financial statements as
Exhibits 99.1, 99.2 and 99.3, respectively, each of which is
incorporated herein by reference.



ITEM 7.         FINANCIAL STATEMENTS AND EXHIBITS


Exhibit No.     Description

    11              Calculation of fully diluted net earnings per
                    share.

    12.1            Computation of Ratio of Earnings to Fixed Charges.

    12.2            Computation of Ratio of Earnings to Fixed Charges
                    and Preferred Stock Dividend Requirements.

    23.1            Consent of Arthur Andersen LLP.

    99.1            Selected Financial Data.

    99.2            Management's Discussion and Analysis of Financial
                    Condition and Results of Operations.

    99.3            Audited financial statements.






                               SIGNATURES


        Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly authorized.



                                     UAL CORPORATION



                                      By:    /s/ Douglas A. Hacker

                                      Name:  Douglas A. Hacker
                                      Title: Senior Vice President -
                                             Finance






Dated:  February 27, 1995





                              EXHIBIT INDEX


Exhibit
Number             Description

    11              Calculation of fully diluted net earnings per
                    share.

    12.1            Computation of Ratio of Earnings to Fixed Charges.

    12.2            Computation of Ratio of Earnings to Fixed Charges
                    and Preferred Stock Dividend Requirements.

    23.1            Consent of Arthur Andersen LLP.

    99.1            Selected Financial Data.

    99.2            Management's Discussion and Analysis of Financial
                    Condition and Results of Operations.

    99.3            Audited financial statements.







<TABLE>
<CAPTION>
                                                                      Exhibit 11
                      UAL Corporation and Subsidiary Companies

                Calculation of Fully Diluted Net Earnings Per Share
                          (In Millions, Except Per Share)


                                                     Year Ended December 31    
                                                 1994(1)    1993(1)    1992(1)
<S>                                              <C>        <C>        <C>
Earnings or loss:
  Earnings (loss) before extraordinary item and
    cumulative effect of accounting changes      $   14     $  (31)    $  (417)
  Interest on Air Wis convertible debentures,
    net of income tax                                -           2           2 
  Earnings (loss) before cumulative effect of
    accounting changes for fully diluted
    calculation                                      14        (29)       (415)
  Extraordinary loss on early
    extinguishment of debt                           -         (19)         - 
  Cumulative effect of accounting changes           (25)        -         (540)
  Net loss for fully diluted calculation         $  (11)    $  (48)    $  (955)

Shares:
  Average number of shares of common
    stock outstanding during the year              18.8       24.3        24.1
  Average number of shares of ESOP preferred 
    stock outstanding during the year               0.3         -           - 
  Additional shares assumed issued at the date
    of issuance for conversion of convertible
    preferred stock                                  -         3.4          - 
  Additional shares assumed issued at the
    beginning of the year (or at the date of
    merger) for conversion of Air Wis
    convertible debentures                           -         0.1         0.1
  Additional shares assumed issued at the
    beginning of the year (or at the date of
    issuance) for exercises of dilutive stock
    options and stock award plans (after
    deducting
 shares assumed purchased 
    under the treasury stock method)                0.3        0.6         0.3
  Average number of shares for fully 
    diluted calculation                            19.4       28.4        24.5

Fully diluted per share amounts:
  Earnings (loss) before extraordinary item and
    cumulative effect of accounting changes      $ 0.74     $(1.02)    $(16.96)
  Extraordinary loss on early
    extinguishment of debt                           -       (0.66)         - 
  Cumulative effect of accounting changes         (1.33)        -       (22.00)
  Net loss                                       $(0.59)    $(1.68)    $(38.96)

               
(1)   This calculation is submitted in accordance with Regulation S-K item 
      601(b)(11), although it is contrary to paragraph 40 of APB Opinion No. 15 
      because it produces an antidilutive result.
</TABLE>





<TABLE>
<CAPTION>

                                                               Exhibit 12.1

                 UAL Corporation and Subsidiary Companies

             Computation of Ratio of Earnings to Fixed Charges

                                         Year Ended December 31         
                               1994      1993     1992     1991    1990 
                                             (In Millions)
<S>                           <C>       <C>      <C>      <C>     <C>
Earnings:

  Earnings (loss) before
    income taxes and
    extraordinary items       $  170    $  (47)  $ (656)  $(508)  $164
  Fixed charges,
    from below                 1,052     1,104    1,001     749    592 
  Interest capitalized           (41)      (51)     (92)    (91)   (71)

    Earnings                  $1,181    $1,006   $  253   $ 150   $685


Fixed charges:

  Interest expense            $  372    $  358   $  329   $ 211   $193

  Portion of rental expense
    representative of the
    interest factor              680       746      672     538    399

      Fixed charges           $1,052    $1,104   $1,001   $ 749   $592


Ratio of earnings to
  fixed charges                 1.12       (a)      (a)     (a)   1.16


             
(a)   Earnings were inadequate to cover fixed charges by $98 million in 1993, 
      $748 million in 1992 and $599 million in 1991.
</TABLE>







<TABLE>
<CAPTION>
                                                               Exhibit 12.2

                 UAL Corporation and Subsidiary Companies

             Computation of Ratio of Earnings to Fixed Charges

                 and Preferred Stock Dividend Requirements

                                         Year Ended December 31         
                               1994      1993     1992     1991    1990 
                                             (In Millions)
<S>                           <C>       <C>      <C>      <C>     <C>
Earnings:

  Earnings (loss) before
    income taxes and
    extraordinary items       $  170    $  (47)  $ (656)  $(508)  $164
  Fixed charges and
    preferred stock
    dividend requirements,
    from below                 1,184     1,154    1,001     749    592 
  Interest capitalized           (41)      (51)     (92)    (91)   (71)

    Earnings                  $1,313    $1,056   $  253   $ 150   $685


Fixed charges:

  Interest expense            $  372    $  358   $  329   $ 211   $193

  Preferred stock dividend
    requirements                 132       50       -        -      -

  Portion of rental expense
    representative of the
    interest factor              680       746      672     538    399

  Fixed charges and
    preferred stock
    dividend requirements     $1,184    $1,154   $1,001   $ 749   $592

Ratio of earnings to
  fixed charges and
  preferred stock
  dividend requirements         1.11       (a)     (a)      (a)   1.16


             
(a)   Earnings were inadequate to cover fixed charges and preferred stock 
      dividend requirements by $98 million in 1993, $748 million in 1992 and 
      $599 million in 1991.
</TABLE>






                                             Exhibit 23.1



          Consent of Independent Public Accountants
                              
                              
As independent public accountants, we hereby consent to the
incorporation of our report included in this Form 8-K dated
February 28, 1995, into the Company's previously filed Post-
Effective Amendment No. 1 to Form S-8 Registration Statement
(File No.  2-67368) and Post-Effective Amendment No. 2 to
Form S-8 Registration Statement (File No. 33-37613) for the
Employees' Stock Purchase Plan of UAL Corporation; Post-
Effective Amendment No. 1 to Form S-8 Registration Statement
(File No. 33-38613) for the United Air Lines, Inc.
Management and Salaried Employees' 401(k) Retirement Savings
Plan; Form S-8 Registration Statement (File No. 33-57331)
and Post-Effective Amendment No. 1 to Form S-8 Registration
Statement (File No. 33-44552) for the United Air Lines, Inc.
Ground Employees' 401(k) Retirement Savings Plan; Post-
Effective Amendment No. 1 to Form S-8 Registration Statement
(File No. 33-44553) for the United Air Lines, Inc., Flight
Attendant Employees' 401(k) Retirement Savings Plan; Post-
Effective Amendment No. 2 to Form S-8 Registration Statement
(File No. 33-41968) and Form S-8 Registration Statement 
(File No. 33-10206) for the UAL Corporation 1981 Incentive
Stock Plan; Form S-3 Registration
 Statement (File No. 33-
57192), as amended; Post-Effective Amendment No. 1 to Form S-
8 Registration Statement (File No. 33-59950) for the United
Air Lines, Inc. Pilots' Directed Account Retirement Income
Plan; and Form S-4 Registration Statement (File No. 33-
57579), as amended.

                                   /s/ Arthur Andersen LLP
                                   Arthur Andersen LLP


Chicago, Illinois,
February 28, 1995



                                                            Exhibit 99.1
SELECTED FINANCIAL DATA

<TABLE>
<CAPTION>
                                          Year Ended December 31            
                                1994      1993      1992     1991     1990  
                                      (In Millions, Except Per Share)
<S>                            <C>       <C>       <C>      <C>      <C>
Operating revenues             $13,950   $13,325   $11,853  $10,706  $10,296
Earnings (loss) before
  extraordinary item and
  cumulative effect of
  accounting changes                77       (31)     (417)   (332)      94
Extraordinary loss on early
  extinguishment of debt,
  net of tax                        -        (19)       -       -        - 
Cumulative effect of
  accounting changes               (26)       -       (540)     -        - 
Net earnings (loss)                 51       (50)     (957)   (332)      94
Per share amounts:
  Earnings (loss) before
    extraordinary item and
    cumulative effect of
    accounting changes            0.76     (2.64)   (17.34) (14.31)    4.33
  Extraordinary loss on early
    extinguishment of debt          -      (0.76)       -       -        - 
  Cumulative effect of
    accounting changes           (1.37)       -     (22.41)     -        - 
  Net earnings (loss)            (0.61)    (3.40)   (39.75) (14.31)    4.33
Total assets at year end        11,764    12,840    12,257   9,876    7,983
Long-term debt and capital
  lease obligations, including
  current portion, and
  redeemable preferred stock
  at year end                    4,077     3,735     3,783   2,533    1,329
</TABLE>






                                                           Exhibit 99.2


MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS


EMPLOYEE INVESTMENT TRANSACTION AND RECAPITALIZATION

      On July 12, 1994, the shareholders of UAL Corporation ("UAL") approved 
a plan of recapitalization that provides an approximately 55% equity and 
voting interest in UAL to certain employees of United Air Lines, Inc. 
("United") in exchange for wage concessions and work-rule changes.  The 
employees' equity interest will be allocated to individual employee accounts 
through the year 2000 under Employee Stock Ownership Plans ("ESOPs") which 
were created as a part of the recapitalization.  Since the ESOP shares will 
be allocated over time, the current ownership interest held by employees is 
substantially less than 55%.  The entire 55% ESOP voting interest is 
currently exercisable, which generally will be voted by the ESOP trustee at 
the direction of, and on behalf of, the employees participating in the 
ESOPs.  The employee interest may increase to up to 63%, depending on the 
average market value of UAL common stock in the year after the transaction 
closed.  Based on the average market value of UAL common stock through 
February 23, 1995, the market value of UAL common stock
 for the remainder of 
the measuring period would have to average at least $204 for any adjustment 
to be made in the ESOP percentage interest.  Pursuant to the terms of the 
plan of recapitalization, holders of old UAL common stock received 
approximately $2.1 billion in cash and the remaining 45% (subject to a 
possible reduction to not less than 37%) of the equity in the form of new 
common stock.  The conversion of certain convertible securities and the 
exercise of certain stock options could result in additional cash 
distributions of up to $428 million.  Distributions on account of stock 
option exercises would be reduced by cash proceeds on the exercise of the 
options.  In connection with the recapitalization, United issued $370 
million of 10.67% debentures due in 2004 and $371 million of 11.21% 
debentures due in 2014 and UAL issued Series B 12 1/4% preferred stock with 
an aggregate liquidation preference of $410 million.  Approximately $169 
million of pretax costs were incurred in connection with the 
recapitalization, including transaction costs and severance payments to 
certain former United employees.

      The employee investment transaction has put in place a lower cost 
structure which allows United to compete more effectively against low-cost 
carriers and improve UAL's long-term financial viability.  The transaction 
also facilitated the creation of a low-cost short-haul operation, Shuttle by 
United ("Shuttle"), which began operating on October 1, 1994.  This service 
achieves lower costs through special work rules and wage rates for pilots, 
high station and aircraft utilization and minimal service amenities.  Based 
on its initial operations, the Shuttle has been well accepted by the 
marketplace and its costs are within expectations.  As a result, United 
expects the Shuttle will be able to sustain a competitive presence in the 
short-haul markets against low cost competitors.

      As a result of the recapitalization, UAL's capital structure became 
more highly leveraged, as UAL's equity decreased by approximately $1.7 
billion and debt increased $741 million at the time of the transaction.  
With the increase in debt and reduction in equity resulting from the 
recapitalization, UAL's exposure to certain industry risks could be greater 
than might have been the case prior to the recapitalization.  In addition, 
the transaction resulted in new labor agreements for certain employee groups 
and a new corporate governance structure, which was designed to achieve 
balance between the various employee-owner groups and public shareholders.  
The new labor agreements and governance structure could inhibit management's 
ability to alter strategy in a volatile, competitive industry by restricting 
certain operating and financing activities, including the sale of assets and 
the issuance of equity securities and the ability to furlough employees.  
UAL's ability to react to competition may be hampered further by the fixed 
long-term nature of these various agreements.  The success of the 
recapitalization is dependent upon a number of factors, including the state 
of the competitive environment in the airline industry, competitive 
responses to United's efforts, United's ability to achieve enduring cost 
savings through productivity improvements and the renegotiation of labor 
agreements at the end of the investment period.

      The employee investment transaction and recapitalization had an 
initial adverse effect on UAL's cash position as a result of the cash 
consideration paid to holders of old UAL common stock and certain other 
recapitalization costs.  However, the transaction is expected to result in 
an improvement to cash flow through the term of the employee investment.  
This improvement is expected to result from the employee concessions which 
reduce cash expenses, partially offset by the additional interest expense on 
the debentures, dividends on the preferred stock and foregone interest on 
the cash consideration distributed to holders of old UAL common stock.

      The employee investment transaction will reduce UAL's cash operating 
expenses due to wage and benefit reductions and work-rule changes.  These 
cash expense reductions will be offset by non-cash compensation charges for 
stock periodically committed to be released to employees under the ESOPs, 
additional interest expense on the debentures and foregone interest on the 
cash distributed to shareholders.  The amount of the non-cash compensation 
expense cannot be predicted, because it is based on the future fair value of 
UAL's stock.

      The ESOPs consist of two tax-qualified plans, as defined under the 
Internal Revenue Code, and one plan that is not tax qualified.  Tax 
deductions related to the ESOPs are partially based on factors unrelated to 
the future fair value of UAL's stock.  Accordingly, it is anticipated that 
tax provisions (credits) in future periods could be impacted by permanent 
differences between tax deductions and book expenses related to the ESOPs.  
Additionally, timing differences between tax deductions and book expenses 
related to the ESOPs could impact the balance of the net deferred tax asset 
in the future.


LIQUIDITY AND CAPITAL RESOURCES

Liquidity -

      UAL's total of cash and cash equivalents and short-term investments 
was $1.532 billion at December 31, 1994, compared to $1.828 billion at 
December 31, 1993.  Cash flows during the year were considerable.  The most 
significant was the distribution of $2.1 billion to holders of old UAL 
common stock under the recapitalization, which was partially funded by net 
proceeds of $735 million on the issuance of debentures and $400 million on 
the issuance of Series B preferred stock.  Subsequent to issuance, UAL 
repurchased $87 million of the Series B preferred stock to be held in 
treasury.  Other financing activities included principal payments under debt 
and capital lease obligations of $305 million and $87 million, respectively, 
and a $46 million reduction of short-term borrowings.  Cash flows from 
operating activities amounted to $1.334 billion.  Investing activities 
resulted in cash flows of $198 million.

      In 1994, United took delivery of 16 A320 aircraft and two B747 
aircraft.  With the exception of one B747, these aircraft were acquired 
under operating leases.  Property additions, including the B747 and spare 
parts, amounted to $636 million.  Property dispositions, including the sale 
and leaseback of the B747 aircraft purchased in 1994, five B737 aircraft and 
one B757 aircraft, resulted in proceeds of $432 million.

      As of December 31, 1994, UAL had a working capital deficit of $1.714 
billion as compared to $1.183 billion at December 31, 1993.  Historically, 
UAL has operated with a working capital deficit and, as in the past, UAL 
expects to meet all of its obligations as they become due.

      During 1993, UAL's balance of cash and cash equivalents decreased $85 
million while short-term investments increased $430 million.  Operating 
activities resulted in cash flows of $858 million, which more than offset 
cash used for net property additions and financing activities.  Investing 
activities, including the short-term investment increase and net property 
additions, used $740 million.  Property additions amounted to $1.496 
billion, including the purchase of 34 aircraft, and property dispositions 
resulted in proceeds of $1.165 billion, including the sale and leaseback of 
18 aircraft.  In all, 10 B737 aircraft, 16 B757 aircraft, four B747 
aircraft, eight B767 aircraft and five A320 aircraft were acquired, 
including purchases and leases.  Financing activities used $203 million.  
Reductions in short-term borrowings, capital lease obligations and long-term 
debt, including the early extinguishment of $500 million of senior 
subordinated notes, more than offset cash proceeds from the issuance of 
Series A preferred stock and long-term debt. 

      Operating activities in 1992 generated cash flows of $575 million, 
which more than offset cash used for net additions to property, resulting in 
a $306 million increase in cash, cash equivalents and short-term 
investments.  During the year, $2.519 billion was spent on property 
additions, principally aircraft.  United acquired 25 B737 aircraft, 25 B757 
aircraft, 10 B767 aircraft and six B747 aircraft in 1992.  Of these, 18 
aircraft were purchased, 38 were purchased and then sold and leased back and 
10 were acquired in capital lease transactions.  Property dispositions 
provided cash proceeds of $2.367 billion.  In 1992, United also acquired 
certain Latin American route authorities and other related assets from Pan 
American World Airways, Inc.

Capital Commitments -

      At December 31, 1994, commitments for the purchase of property and 
equipment, principally aircraft, approximated $3.9 billion, after deducting 
advance payments.  An estimated $1.2 billion will be spent in 1995, $0.7 
billion in 1996, $1.3 billion in 1997, $0.5 billion in 1998 and $0.2 billion 
in 1999 and thereafter.  The major commitments are for the purchase of 
thirty-four B777 aircraft which are expected to be delivered between 1995 
and 1999.

      In addition to the B777 order, United has arrangements with Airbus 
Industrie and International Aero Engines to lease 29 A320 aircraft, which 
are scheduled for delivery through 1998.  At December 31, 1994, United also 
had options for an additional 162 B737 aircraft, 39 B757 aircraft, 34 B777 
aircraft, 49 B747 aircraft, 8 B767 aircraft and 50 A320 aircraft.  Under the 
terms of certain of these options which are exercisable during the period 
1995 through 1997, United would forfeit significant deposits on such options 
it does not exercise.  United continually reviews its fleet to determine 
whether aircraft acquisitions will be used to expand the fleet or to replace 
older aircraft, depending on market and regulatory conditions at the time of 
delivery.

Capital Resources -

      Funds necessary to finance aircraft acquisitions are expected to be 
obtained from internally generated funds, irrevocable external financing 
arrangements or other external sources.

      At December 31, 1994, UAL and United had an effective shelf 
registration statement on file with the Securities and Exchange Commission 
to offer up to $1.035 billion of securities, including secured and unsecured 
debt, equipment trust and pass through certificates, equity or a combination 
thereof.  UAL's ability to issue equity securities is limited by its 
certificate of incorporation, which was restated in connection with the 
recapitalization.  

      United's senior unsecured debt is rated BB by Standard and Poor's ("S 
& P") and Baa3 by Moody's Investors Service Inc. ("Moody's").  UAL's Series 
A and Series B preferred stocks are rated B+ by S & P and ba3 by Moody's.

      On February 3, 1995, UAL filed a registration statement with the 
Securities and Exchange Commission offering to exchange up to $600 million 
aggregate principal amount of convertible subordinated debentures, due 2025, 
for up to all shares of the outstanding Series A cumulative 6.25% 
convertible preferred stock.  Each $1,000 principal amount of debentures 
issued would be convertible into a combination of cash in the amount of 
$541.90 and approximately 3.192 shares of UAL common stock (equivalent to a 
conversion price of $143.50 per share of common stock).  To the extent that 
shares of Series A preferred stock are exchanged for the debentures, UAL's 
shareholders' equity will be reduced on a net basis by the aggregate fair 
value of the debentures issued.  A reduction in shareholders' equity will 
reduce surplus as defined under Delaware General Corporation Law ("DGCL").  
DGCL requires that dividends on outstanding capital stock may only be made 
from surplus or the net profits of the Company for the fiscal year in which 
the dividend is declared and/or the preceding fiscal year.

RESULTS OF OPERATIONS

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

Summary of Results and Impact of Recapitalization -

      UAL's results of operations improved in 1994 as compared to 1993.  In 
1994, UAL recorded net earnings of $51 million, representing a loss per 
share of $0.61 after preferred stock dividends, compared to a 1993 net loss 
of $50 million, or $3.40 per share after preferred stock dividends.  
Included in 1994 were $169 million of pretax expenses incurred in connection 
with the recapitalization, of which $48 million were recorded in operating 
expenses.  The 1994 results also include an after tax charge of $26 million 
($1.37 per share) for the cumulative effect of adopting Statement of 
Financial Accounting Standards No. 112, "Employers' Accounting for 
Postemployment Benefits," which UAL adopted effective January 1, 1994.  The 
1993 results include an extraordinary loss of $19 million, $0.76 per share, 
on the early extinguishment of debt. 

      In connection with the recapitalization, each share of old common 
stock was converted to one half share of new common stock (and cash in lieu 
of fractional shares) and $84.81 in cash.  As a result, the number of 
outstanding shares was reduced proportionately.  Accordingly, the weighted 
average shares in the earnings per share calculations are based on the 
number of old common shares outstanding prior to the recapitalization and 
the reduced number of new common shares outstanding subsequent to the 
transaction.  Thus, a direct comparison of the earnings per share in 1994 
versus 1993 is not meaningful.  The earnings per share calculations 
subsequent to the transaction also include those ESOP shares which have been 
committed to be released to employees, if doing so is dilutive.  

      Management believes that a more complete understanding of UAL's 
results can be gained by viewing them on a pro forma, "fully distributed" 
basis.  This approach considers all ESOP shares which will ultimately be 
distributed to employees throughout the ESOP (rather than just the shares 
committed to be released) to be immediately outstanding and thus fully 
distributed.  Consistent with this method, the ESOP compensation expense and 
the one-time costs associated with the completion of the transaction, are 
excluded from fully distributed expenses.  On a fully distributed basis, 
UAL's net earnings for the 1994 third and fourth quarters would have been 
$233 million ($6.86 per share) and $67 million ($1.47 per share), 
respectively.  UAL's net earnings for the 1994 third and fourth quarters, as 
reported under generally accepted accounting principles, were $82 million 
($4.21 per share fully diluted) and $11 million (loss of $0.98 per share), 
respectively.

Other Factors Affecting Comparability -

      In 1994, United began recording certain air transportation price 
adjustments, which were previously recorded as commissions, as adjustments 
to revenue.  Operating revenue and expense amounts and related operating 
statistics for 1993 and prior periods have been adjusted to conform with the 
current presentation.

      Prior to the September 1993 merger of the Covia Partnership ("Covia") 
and Galileo Ltd., United's investments in these companies were carried on 
the equity basis.  United now owns 77% of Apollo Travel Services Partnership 
("ATS"), one of the companies formed in the merger, and its accounts are 
consolidated with those of United.  As a result, United's consolidated 
operating revenues and expenses have increased.  In 1993, UAL also 
transferred the operations of Air Wisconsin, Inc. to other parties, the 
effect of which was to reduce UAL's gross operating revenues and expenses.  
In addition, the sales of flight kitchen assets in late 1993 and early 1994 
had the effect of reducing United's salaries and related costs and 
increasing, to a lesser degree, food and beverage expense.  These changes 
have affected the 1994 comparisons to 1993 as indicated in the discussion 
which follows.

1994 Compared with 1993 - 

      Operating Revenues.   Operating revenues increased $625 million (5%).  
United's revenue per available seat mile increased 4% to 9.12 cents.  
Passenger revenues increased $337 million (3%) due primarily to a 7% 
increase in United's revenue passenger miles, partially offset by a 3% 
decrease in yield to 11.31 cents.  Domestic revenue passenger miles 
increased by 4.1 billion (7%) while international increased by 2.9 billion 
(8%).  Available seat miles increased 1% systemwide, as increases of 6% in 
the Pacific and 2% in the Atlantic were partially offset by decreases of 1% 
on domestic routes and 3% in Latin America.  As a result, United's system 
passenger load factor increased 4.0 points to 71.2%.  In addition, Air 
Wisconsin, Inc., which accounted for $159 million of passenger revenues in 
1993, accounted for no passenger revenue in 1994 as previously discussed.

      Cargo revenues increased $26 million (4%), due to increased freight 
revenues partially offset by decreased mail revenues.  Freight and mail 
revenue ton miles increased 3%; however, freight yield increased 5% while 
mail yield decreased 8%.  Other operating revenues increased $262 million 
(37%) primarily as a result of the consolidation of ATS, revenues resulting 
from the lease of Air Wisconsin, Inc. assets to other parties and an 
increase in fuel sales.

      Operating Expenses.   Operating expenses increased $367 million (3%).  
United's cost per available seat mile also increased 3% from 8.54 cents to 
8.79 cents, which includes certain one-time costs relating to the 
recapitalization and ESOP compensation expense.  Without these costs, 
United's cost per available seat mile would have been 8.64 cents.  Food and 
beverages increased $162 million (51%) due to the new catering arrangements 
resulting from the flight kitchen sales as discussed above.  Commissions 
increased $96 million (7%) due principally to increased commissionable 
revenues.  An increase of $50 million (3%) in rentals and landing fees 
reflects rent associated with a higher number of aircraft on operating 
leases, including new aircraft acquired in the past year.  Aircraft 
maintenance increased $25 million (6%) as a result of increased 
vendor-provided maintenance due to the timing of maintenance cycles.  Other 
operating expenses increased $169 million (20%) due to the consolidation of 
ATS, depreciation in 1994 on Air Wisconsin, Inc. assets leased to others and 
higher fuel sales.

      Aircraft fuel expense decreased $148 million (9%), due to an 8% 
decrease in United's average price per gallon of fuel to 58.8 cents and a 
slight decrease in United's consumption.  Salaries and related costs 
decreased $81 million (2%) primarily due to lower wage rates for employees 
participating in the ESOPs and a lower number of employees as a result of 
the flight kitchen sales, partially offset by higher average wage rates for 
other employee groups, higher costs associated with medical benefits and $48 
million of one-time costs related to the recapitalization.  Depreciation and 
amortization decreased $39 million (5%) due principally to the transfer of 
Air Wisconsin, Inc. assets to other parties and the subsequent 
classification of depreciation on those assets in other expenses.  Purchased 
services decreased $36 million (4%), as certain services, principally 
computer reservations and communications, have been provided by ATS since 
the time of the merger.

      Other Income and Expense.   Other expense amounted to $350 million in 
1994 compared to $310 million in 1993.  Interest expense increased $14 
million (4%) due to higher average interest rates resulting from the 
debentures issued in July 1994, partially offset by the benefit of the 
extinguishment of $500 million of subordinated debt in 1993.  Interest 
capitalized decreased $10 million (20%) as a result of lower average advance 
payments on new aircraft and lower capitalized interest rates.  Interest 
income decreased $13 million (13%) due primarily to interest received in 
1993 in connection with the final settlement of certain pension benefits.  
United's equity in results of affiliates changed from a loss of $30 million 
in 1993 to earnings of $23 million in 1994 due primarily to a charge 
recorded by Galileo International in 1993 for the cost of eliminating 
duplicate facilities and operations after the merger of Covia and Galileo 
Ltd.  Included in "Miscellaneous, net" in 1994 were charges of $121 million 
for fees and costs incurred in connection with the employee investment 
transaction and recapitalization, a $22 million charge for minority 
interests in ATS and foreign exchange gains of $15 million.  Included in 
1993 was a $59 million charge to reduce the net book value of 15 DC-10 
aircraft to estimated realizable value, a $17 million gain resulting from 
the final settlement of certain pension benefits and foreign exchange losses 
of $20 million.

      Income Tax Provision.   The income tax provision for 1994 was 
significantly impacted by the nondeductibility of certain recapitalization 
costs and the statutory change in the deductibility of other expenses.

1993 Compared with 1992 -

      Operating Revenues.   Operating revenues increased $1.472 billion 
(12%).  Passenger revenues increased $1.280 billion (12%) due to a 9% 
increase in United's revenue passenger miles and a 3% increase in yield to 
11.61 cents.  United's domestic revenue passenger miles increased 6% on an 
increase of 8% in domestic available seat miles, resulting in a decrease of 
1.0 point in domestic passenger load factor to 65.2%.  International revenue 
passenger miles increased 14%.  Passenger traffic increased in substantially 
all international markets, especially in Latin America, where United began 
service in the first quarter of 1992.  Passenger load factors increased in 
Latin America, the Atlantic and the Pacific.  On a system basis, United's 
available seat miles increased 10% and passenger load factor decreased 0.2 
points to 67.2%.

      Cargo revenues increased $54 million (9%), due to increases of $31 
million in freight revenues and $23 million in mail revenues.  The freight 
revenue increase reflects volume increases largely attributable to increased 
international operations.  Contract services and other revenues increased 
$138 million (24%) primarily as a result of revenues generated by ATS in the 
1993 period subsequent to the merger.

      Operating Expenses.   Operating expenses increased $671 million (5%).  
United's cost per available seat mile decreased 4% to 8.54 cents.  The 
decrease in unit cost was largely due to the implementation of a cost 
reduction program in early 1993.  Salaries and related costs increased $198 
million (4%) primarily due to higher average wage rates and higher costs 
associated with pensions and health insurance.  Rentals and landing fees 
increased $163 million (12%) primarily reflecting rent associated with a 
larger number of aircraft on operating leases.  Commissions increased $136 
million (11%) due to increased revenues and slightly higher cargo commission 
rates.  Aircraft maintenance increased $55 million (17%) due principally to 
higher outside maintenance costs.  Purchased services increased $47 million 
(5%) due principally to higher computer reservations fees and higher costs 
associated with international operations, such as communications, navigation 
charges and security.  Depreciation and amortization increased $38 million 
(5%) due principally to newly acquired aircraft.  Aircraft fuel expense 
increased $34 million, as a 7% increase in fuel consumption was partially 
offset by a 4% decrease in the average price per gallon of fuel to 63.6 
cents.  Other operating expenses increased $85 million (11%) due principally 
to the consolidation of ATS after the merger.  Advertising and promotion 
decreased $52 million (24%) and food and beverages decreased $25 million 
(7%) due to cost reduction efforts.

      Other Income and Expense.   Other expense amounted to $310 million in 
1993 compared to $118 million in 1992.  Interest expense increased $30 
million due primarily to increased debt and capital lease obligations 
incurred in connection with aircraft financings.  Interest capitalized 
decreased $41 million (45%) due to lower advance payments on new aircraft.  
United's equity in the results of affiliates shifted from income of $42 
million in 1992, representing United's share of Covia earnings, to losses of 
$30 million in 1993, primarily due to a charge recorded by Galileo 
International for the cost of eliminating duplicate facilities and 
operations after the merger of Covia and Galileo Ltd.  Included in 
"Miscellaneous, net" were foreign exchange losses of $20 million in 1993 
compared to gains of $2 million in 1992.  Also included in 1993 was a charge 
of $59 million to reduce the net book value of 15 DC-10 aircraft to 
estimated net realizable value and a $17 million gain resulting from the 
final settlement for overpayment of annuities purchased in 1985 to cover 
certain vested pension benefits.  Interest income increased $29 million due 
principally to interest received in connection with the same settlement.  In 
1992, "Miscellaneous, net" also included gains on disposition of property of 
$32 million, a charge of $13 million to record the cash settlement of class 
action claims resulting from litigation relating to the use of airline fare 
data and charges of $8 million related to other litigation.

OTHER INFORMATION

Deferred Tax Asset -

      UAL's consolidated balance sheet at December 31, 1994 includes a net 
cumulative deferred tax asset of $631 million, compared to $714 million at 
December 31, 1993.  The net deferred tax asset is composed of approximately 
$1.9 billion of deferred tax assets and approximately $1.3 billion of 
deferred tax liabilities.  The deferred tax assets include, among other 
things, $537 million related to obligations for postretirement and other 
employee benefits, $472 million related to gains on sales and leasebacks, 
$262 million related to alternative minimum tax ("AMT") credit carryforwards 
and $58 million of federal and state net operating loss ("NOL") 
carryforwards.  The AMT credit carryforwards do not expire; the federal NOL 
carryforwards begin to expire in 2006 if not utilized prior to that time.  

      The majority of the deferred tax assets will be realized through 
reversals of existing deferred tax liabilities with similar reversal 
patterns.  To realize the benefits of the remaining deferred tax assets 
relating to temporary differences, UAL needs to generate approximately $1.2 
billion in future taxable income.

      Although United experienced book and tax losses in both 1993 and 1992, 
1994 resulted in book and taxable income.

<TABLE>
<CAPTION>

Following is a summary of UAL's pretax book income and taxable income, and 
the significant differences between them, for the last three years (in 
millions):
                                        1994        1993        1992 
<S>                                    <C>         <C>         <C>
Pretax book income (loss)              $ 171       $ (47)      $(656)
  Gains on sale and leasebacks            79          15         304 
  Depreciation, capitalized interest
    and transfers of tax benefits       (300)       (348)       (319)
  Rent expense                           122         142         127  
  Nondeductible employee meals            57          22          22
  Pension expense                        (46)       (156)        (95)
  Other employee benefits                 91          37          36 
  Gains on asset dispositions             (4)        (34)         (3)
  ESOP transaction costs                  55          -           - 
  Other, net                              19          54          33 
Taxable income (loss)                  $ 244       $(315)      $(551)
                                                   
</TABLE>

     While the losses in 1992 and 1993 were largely attributable to events 
beyond management's control, including the unanticipated duration of the 
recession in both the U. S. and other areas of the world and the 
proliferation of numerous low-cost air carriers, UAL has taken several steps 
to reduce costs and improve profitability.  Most notably, the employee 
investment transaction and recapitalization was partially responsible for 
UAL's improved operating results in 1994 versus 1993, and is expected to 
continue to improve the financial stability and profitability of the 
company.  The recapitalization put in place a lower cost structure which is 
designed to allow United to compete effectively against low-cost carriers.  
The transaction also facilitated the creation of a low-cost short-haul 
operation, Shuttle by United, the benefits of which are expected to increase 
as it expands into additional markets.  Other actions taken by UAL to 
improve profitability include the discontinuance of service at 15 
unprofitable domestic and international stations and the planned reduction 
of capacity in 1995 on certain unprofitable routes such as those to Hawaii.  
Resources are expected to be re-allocated to areas that currently benefit 
the company the most - the Shuttle and expanding Denver hub.

     Severe competition in the airline industry, particularly by new entry 
and low-fare carriers, and the general economic outlook could continue to 
negatively affect United's operating results.  However, the benefits 
expected to be derived from the recapitalization and the new era of employee 
ownership, should further improve UAL's financial results.

     UAL's ability to generate sufficient amounts of taxable income from 
future operations is dependent upon numerous factors, including general 
economic conditions, inflation, oil prices, the state of the industry and 
other factors beyond management's control.  There can be no assurances that 
UAL will meet its expectation of future taxable income.  However, based on 
the above factors, including the extended period over which postretirement 
benefits will be recognized, and the indefinite carryforward period for AMT 
credits, management believes it is more likely than not that future taxable 
income will be sufficient to utilize the cumulative deferred tax assets at 
December 31, 1994.

Contingencies -

     United has been named as a Potentially Responsible Party at certain 
Environmental Protection Agency ("EPA") cleanup sites which have been 
designated as Superfund Sites.  At sites where the EPA has commenced 
remedial litigation, potential liability is joint and several.  United's 
alleged proportionate contributions at the sites are minimal.  Additionally, 
United has participated and is participating in remediation actions at 
certain other sites, primarily airports.  The estimated cost of these 
actions is accrued when it is determined that it is probable that United is 
liable.  Such accruals have not been material.  Environmental regulations 
and remediation processes are subject to future change, and determining the 
actual cost of remediation will require further investigation and 
remediation experience.  Therefore, the ultimate cost cannot be determined 
at this time.  However, while such cost may vary from United's current 
estimate, United believes the difference between its accrued reserve and the 
ultimate liability will not be material.

     UAL has certain other contingencies resulting from litigation and 
claims incident to the ordinary course of business.  Management believes, 
after considering a number of factors, including (but not limited to) the 
views of legal counsel, the nature of such contingencies and prior 
experience, that the ultimate disposition of these contingencies is not 
likely to materially affect UAL's financial condition, operating results or 
liquidity.

Energy Tax - 

     The Omnibus Budget Reconciliation Act of 1993 signed into law on August 
10, 1993, imposes a 4.3 cent per gallon tax on commercial aviation jet fuel 
purchased for use in domestic operations.  This new fuel tax is scheduled to 
become effective October 1, 1995, and continue until October 1, 1998.  Based 
on United's 1994 domestic fuel consumption of 1.7 billion gallons, the new 
fuel tax, when effective, is expected to increase United's operating 
expenses by approximately $75 million annually.  United, through the Air 
Transportation Association, is actively lobbying for repeal of this tax.

Foreign Currency Transactions -

     United generates revenues and incurs expenses in numerous foreign 
currencies; however, United mitigates its exposure to foreign exchange rate 
fluctuations by converting excess local currencies generated to U.S. 
dollars.  In addition, United has exposure to transaction gains and losses 
resulting from rate fluctuation.  The foreign exchange gains and losses 
recorded by UAL result from the impact of exchange rate changes on foreign 
currency-denominated assets and liabilities, primarily Japanese 
yen-denominated balances.  To the extent such balances are predictable, 
United attempts to minimize transaction gains and losses by investing in 
yen-denominated time deposits to offset the impact of rate changes on 
certain liabilities.  In addition, United entered into a foreign currency 
swap contract in 1994 to reduce exposure to currency fluctuations in 
connection with other long-term yen-denominated obligations.  Foreign 
currency gains and losses on the swap contract are included in income 
currently, exactly offsetting the foreign currency losses and gains on the 
obligations being hedged.

Changes Expected to Impact 1995 -

     In October 1994, United announced that it will discontinue service to 
15 unprofitable destinations by early 1995 and will reallocate resources 
elsewhere, including the Shuttle.  United will incur certain route 
restructuring costs, which are expected to be immaterial.  However, this 
restructuring is expected to result in improvements to operating earnings of 
approximately $25 million annually.  Also in October 1994, UAL announced an 
agreement to sell for $119 million ten Dash 8 aircraft and spare parts owned 
by Air Wisconsin, Inc. to Mesa Airlines, and United agreed to a ten year 
extension of its United Express marketing agreement with Mesa Airlines.  The 
sales are expected to take place in the first quarter of 1995.  In addition, 
increased rent associated with new airport facilities in Denver and Osaka is 
expected to increase 1995 operating expenses by approximately $140 million.

     In February 1995, United announced that it would put in place a new 
travel agency commission payment plan that offers a maximum of $50 for 
round-trip domestic tickets and a maximum of $25 for one-way domestic 
tickets.  The new commission plan will be implemented in the first quarter 
of 1995, and will apply to all tickets issued by U. S. travel agents for 
travel within and between the continental United States, Alaska, Hawaii, 
Puerto Rico and the U. S. Virgin Islands.  Litigation has been initiated 
challenging this payment plan.



                                                         Exhibit 99.3

AUDITED FINANCIAL STATEMENTS


                 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


To the Shareholders and Board of Directors,
      UAL Corporation:

      We have audited the accompanying statement of consolidated financial 
position of UAL Corporation (a Delaware corporation) and subsidiary 
companies as of December 31, 1994 and 1993, and the related statements of 
consolidated operations, consolidated cash flows and consolidated 
shareholders' equity for each of the three years in the period ended 
December 31, 1994.  These financial statements are the responsibility of 
the Company's management.  Our responsibility is to express an opinion on 
these financial statements based on our audits.

      We conducted our audits in accordance with generally accepted 
auditing standards.  Those standards require that we plan and perform the 
audit to obtain reasonable assurance about whether the financial 
statements are free of material misstatement.  An audit includes 
examining, on a test basis, evidence supporting the amounts and 
disclosures in the financial statements.  An audit also includes assessing 
the accounting principles used and significant estimates made by 
management, as well as evaluating the overall
 financial statement 
presentation.  We believe that our audits provide a reasonable basis for 
our opinion.

      In our opinion, the consolidated financial statements referred to 
above present fairly, in all material respects, the financial position of 
UAL Corporation and subsidiary companies as of December 31, 1994 and 1993, 
and the results of their operations and their cash flows for each of the 
three years in the period ended December 31, 1994, in conformity with 
generally accepted accounting principles.

      As discussed in notes 7 and 16 to the consolidated financial 
statements, effective January 1, 1992, the Company changed its methods of 
accounting for income taxes and postretirement benefits other than 
pensions.


                                             /s/ Arthur Andersen LLP

                                             ARTHUR ANDERSEN LLP
Chicago, Illinois
February 23, 1995



<TABLE>
<CAPTION>

                   UAL CORPORATION AND SUBSIDIARY COMPANIES

                     STATEMENT OF CONSOLIDATED OPERATIONS

                       (In Millions, Except Per Share)

                                                  Year Ended December 31   

                                               1994       1993       1992  
<S>                                          <C>        <C>         <C>
Operating revenues:
  Passenger                                   $12,295    $11,958    $10,678 
  Cargo                                           685        659        605 
  Other operating revenues                        970        708        570 

                                               13,950     13,325     11,853 
Operating expenses:
  Salaries and related costs                    4,679      4,760      4,562 
  ESOP compensation expense                       182         -          -  
  Aircraft fuel                                 1,585      1,733      1,699 
  Rentals and landing fees                      1,555      1,505      1,342 
  Commissions                                   1,426      1,330      1,194 
  Purchased services                              947        983        936 
  Depreciation and amortization                   725        764        726 
  Food and beverages                              479        317        342 
  Aircraft maintenance                            410        385        330 
  Personnel expenses                              248        263        271 
  Advertising and promotion                       165        163        215 
  Other operating expenses                      1,028        859        774 

                                               13,429     13,062     12,391 

Earnings (loss) from operations                   521        263       (538)
       
Other income (expense):       
  Interest expense                               (372)      (358)      (328)
  Interest capitalized                             41         51         92 
  Interest income                                  85         98         69 
  Equity in earnings (loss) of affiliates          20        (30)        42 
  Miscellaneous, net                             (124)       (71)         7 

                                                 (350)      (310)      (118)

Earnings (loss) before income taxes,
  extraordinary item and cumulative
  effect of accounting changes                    171        (47)      (656)

Provision (credit) for income taxes                94        (16)      (239)

Earnings (loss) before extraordinary item and
  cumulative effect of accounting changes          77        (31)      (417)
Extraordinary loss on early
  extinguishment of debt, net of tax               -         (19)        -  
Cumulative effect of accounting changes           (26)        -        (540)

Net earnings (loss)                           $    51    $   (50)   $  (957)

Per share:
  Earnings (loss) before extraordinary
    item and cumulative effect of
    accounting changes                        $  0.76    $ (2.64)   $(17.34)
  Extraordinary loss on early
    extinguishment of debt, net of tax             -       (0.76)        - 
  Cumulative effect of accounting changes       (1.37)        -      (22.41)

  Net loss                                    $ (0.61)   $ (3.40)   $(39.75)


              The accompanying notes to consolidated financial
            statements are an integral part of these statements.
</TABLE>



<TABLE>
<CAPTION>
                   UAL CORPORATION AND SUBSIDIARY COMPANIES

                 STATEMENT OF CONSOLIDATED FINANCIAL POSITION
                                (In Millions)


                                                           December 31     
Assets                                                 1994          1993  
<S>                                                   <C>           <C>
Current assets:                                                     
  Cash and cash equivalents                           $   500       $   437
  Short-term investments                                1,032         1,391
  Receivables, less allowance for doubtful                          
    accounts (1994 - $22; 1993 - $22)                     889         1,095
  Aircraft fuel, spare parts and supplies, less
    obsolescence allowance (1994 - $44;
    1993 - $70)                                           285           278
  Refundable income taxes                                  -             26 
  Deferred income taxes                                   151           124
  Prepaid expenses                                        335           362
                                                        3,192         3,713

                                                                    
Operating property and equipment:                                   
  Owned -                                                           
    Flight equipment                                    7,480         7,899
    Advances on flight equipment                          713           589
    Other property and equipment                        2,631         2,673
                                                       10,824        11,161
    Less - Accumulated depreciation and amortization    4,786         4,691
                                                        6,038         6,470
  Capital leases -                                                  
    Flight equipment                                    1,028         1,027
    Other property and equipment                          104           104
                                                        1,132         1,131
    Less - Accumulated amortization                       447           395
                                                          685           736
                                                        6,723         7,206

Other assets:                                                       
  Intangibles, less accumulated amortization                        
    (1994 - $267; 1993 - $213)                            814           866
  Deferred income taxes                                   480           590
  Other                                                   555           465
                                                        1,849         1,921

                                                                    
                                                      $11,764       $12,840


               The accompanying notes to consolidated financial
             statements are an integral part of these statements.
</TABLE>



<TABLE>
<CAPTION>
                   UAL CORPORATION AND SUBSIDIARY COMPANIES

                 STATEMENT OF CONSOLIDATED FINANCIAL POSITION
                       (In Millions, Except Share Data)

                                                           December 31     
Liabilities and Shareholders' Equity                   1994          1993  
<S>                                                   <C>           <C>
Current liabilities:
  Short-term borrowings                               $   269       $   315
  Long-term debt maturing within one year                 384           144
  Current obligations under capital leases                 76            62
  Advance ticket sales                                  1,020         1,036
  Accounts payable                                        651           599
  Accrued salaries, wages and benefits                    843           943
  Accrued aircraft rent                                   825           893
  Other accrued liabilities                               838           904
                                                        4,906         4,896
Long-term debt                                          2,887         2,702
Long-term obligations under capital leases                730           827
Other liabilities and deferred credits:
  Deferred pension liability                              520           571
  Postretirement benefit liability                      1,148         1,058
  Deferred gains                                        1,363         1,400
  Other                                                   477           148
                                                        3,508         3,177
Minority interest                                          49            35
Shareholders' equity:
  Preferred stock (Note 12) -
    Series A convertible preferred stock,
      $600 million aggregate liquidation value             -             30
    Series B preferred stock, $327 million
      aggregate liquidation value                          -             - 
    Class 1 ESOP convertible preferred stock,
      $227 million aggregate liquidation value             -             - 
  Common stock, $0.01 par value in 1994 and $5 par
    value in 1993; authorized, 100,000,000 shares;
    issued, 13,013,217 shares in 1994 and
    25,489,745 shares in 1993                              -            127 
  Additional capital invested                           1,287           932
  Retained earnings (deficit)                          (1,335)          249
  Unearned ESOP preferred stock                           (83)           - 
  Stock held in treasury-
    Preferred (Note 12)                                   (87)           - 
    Common, 574,111 shares in 1994 and 920,808
      shares in 1993                                      (74)          (65)
  Other                                                   (24)          (70)
                                                         (316)        1,203
Commitments and contingent liabilities (Note 19)                           
                                                      $11,764       $12,840

                The accompanying notes to consolidated financial
              statements are an integral part of these statements.
</TABLE>



<TABLE>
<CAPTION>

                     UAL CORPORATION AND SUBSIDIARY COMPANIES
                       STATEMENT OF CONSOLIDATED CASH FLOWS
                                   (In Millions)
                                                      Year Ended December 31   
                                                     1994      1993      1992  
<S>                                                 <C>       <C>       <C>
Cash and cash equivalents at beginning of year      $   437   $   522   $   449
Cash flows from operating activities:
  Net earnings (loss)                                    51       (50)     (957)
  Adjustments to reconcile to net cash provided by
    operating activities -
      ESOP compensation expense                         182        -         - 
      Cumulative effect of accounting change             26        -        540
      Extraordinary loss on debt extinguishment          -         19        - 
      Deferred pension expense                          276       242       165 
      Deferred postretirement benefit expense           145        89        75
      Depreciation and amortization                     725       764       726 
      Provision (credit) for deferred income taxes       78       (67)     (146)
      Undistributed (earnings) losses of affiliates     (19)       42       (27)
      Decrease (increase) in receivables                207        11      (133)
      Decrease (increase) in other current assets        40        24       (67)
      Increase (decrease) in advance ticket sales       (16)      (31)      183 
      Increase (decrease) in accrued income taxes       (11)        8       164 
      Increase (decrease) in accounts payable
        and accrued liabilities                        (389)     (163)      142 
      Amortization of deferred gains                    (85)      (83)      (82)
      Other, net                                        124        53        (8)
                                                      1,334       858       575
Cash flows from investing activities:
  Additions to property and equipment                  (636)   (1,496)   (2,519)
  Proceeds on disposition of property and equipment     432     1,165     2,367
  Decrease (increase) in short-term investments         376      (414)     (238)
  Acquisition of intangibles                             -          -      (150)
  Other, net                                             26         5         3
                                                        198      (740)     (537)
Cash flows from financing activities:
  Issuance of preferred stock                           400       591        - 
  Reacquisition of preferred stock                      (87)       -         - 
  Proceeds from issuance of long-term debt              735        99       198
  Repayment of long-term debt                          (305)     (695)     (115)
  Principal payments under capital leases               (87)      (55)      (50)
  Recapitalization distribution                      (2,070)       -          - 
  Increase (decrease) in short-term borrowings          (46)     (135)        1
  Cash dividends                                        (53)      (27)       - 
  Other, net                                             44        19         1
                                                     (1,469)     (203)       35 
Increase (decrease) in cash and cash equivalents
  during the year                                        63       (85)       73 

Cash and cash equivalents at end of year            $   500   $   437   $   522

                 The accompanying notes to consolidated financial
               statements are an integral part of these statements.
</TABLE>



<TABLE>
<CAPTION>
                                        UAL CORPORATION AND SUBSIDIARY COMPANIES
                                     STATEMENT OF CONSOLIDATED SHAREHOLDERS' EQUITY
                                             (In Millions, Except Per Share)

                                                                                 Unearned                            
                                                          Additional               ESOP                       
                                       Preferred  Common   Capital    Retained   Preferred  Treasury                
                                         Stock    Stock    Invested   Earnings    Stock      Stock     Other      Total 
<S>                                       <C>      <C>      <C>       <C>         <C>        <C>       <C>       <C>
Balance at December 31, 1991              $ -      $126     $  304    $ 1,289     $   -      $(105)    $(17)     $ 1,597
Year ended December 31, 1992:
 Net loss                                   -         -          -       (957)        -          -        -         (957)
 Exercises of stock options                 -         -          5          -         -          -        -            5 
 Issuance of treasury stock pursuant
  to Air Wis acquisition                    -         -         33          -         -         31        -           64
 Pension liability adjustment               -         -          -          -         -          -       (8)          (8)
 Other                                      -         -         (1)         -         -          -         6           5
Balance at December 31, 1992                -       126        341        332         -        (74)      (19)        706

Year ended December 31, 1993:
 Net loss                                   -         -          -        (50)        -          -        -          (50)
 Cash dividends declared on preferred
  stock ($5.54 per share)                   -         -          -        (33)        -          -        -          (33)
 Issuance of Series A preferred stock      30         -        561          -         -          -        -          591 
 Exercises of stock options                 -         1         25          -         -          -        -           26 
 Issuance of treasury stock
  under restricted stock plan               -         -          6          -         -         10      (16)           -
 Pension liability adjustment               -         -          -          -         -          -      (45)         (45)
 Other                                      -         -         (1)         -         -         (1)      10            8 
Balance at December 31, 1993               30       127        932        249         -        (65)     (70)       1,203

Year ended December 31, 1994:
 Net earnings                               -         -          -         51         -          -        -           51 
 Cash dividends declared on preferred
  stock ($6.25 per Series A share,
  $1.44 per Series B share)                 -         -          -        (59)        -          -        -          (59)
 Change in Series A stated value          (30)        -         30          -         -          -        -            - 
 Issuance of ESOP preferred stock           -         -        227          -      (227)         -        -            - 
 Issuance of Series B preferred stock       -         -        400          -         -          -        -          400 
 Exercises of stock options                 -         1         46          -         -          -        -           47 
 Issuance of treasury stock
  under restricted stock plan               -         -         (7)         -         -         17      (10)           -
 Acquisition of treasury shares             -         -          -          -         -       (113)       -         (113)
 Amortization of unearned compensation
  under ESOPs and restricted stock plan     -         -         38          -       144          -       21          203 
 Recapitalization                           -      (128)      (378)    (1,576)        -          -        -       (2,082)
 Pension liability adjustment               -         -          -          -         -          -       37           37 
 Other                                      -         -         (1)         -         -          -       (2)          (3)
Balance at December 31, 1994              $ -      $  -     $1,287    $(1,335)    $ (83)     $(161)    $(24)     $  (316)

          The accompanying notes to consolidated financial statements are an integral part of these statements.
</TABLE>



                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



(1) Summary of Significant Accounting Policies

      (a) Basis of Presentation-

      UAL Corporation ("UAL") is a holding company whose principal 
subsidiary is United Air Lines, Inc. ("United").  The consolidated financial 
statements include the accounts of UAL and all of its subsidiaries 
(collectively "the Company").  All significant intercompany transactions are 
eliminated.  Investments in affiliates are carried on the equity basis.

      (b) Accounting Changes-

      Effective January 1, 1994, the Company adopted Statement of Financial 
Accounting Standards ("SFAS") No. 112, "Employers' Accounting for 
Postemployment Benefits," resulting in a cumulative after-tax charge of $26 
million (see Note 16) and SFAS No. 115, "Accounting for Certain Investments 
in Debt and Equity Securities" (see Note 17).

      Effective January 1, 1992, the Company adopted SFAS No. 106, 
"Employers Accounting for Postretirement Benefits Other Than Pensions" (see 
Note 16) and SFAS No. 109, "Accounting for Income Taxes" (see Note 7).

      (c) Reclassification-

      In 1994, United began recording certain air transportation price 
adjustments, which were previously recorded as commissions, as adjustments 
to revenue.  Certain amounts in the Statements of Consolidated Operations 
for 1993 and 1992 and these Notes to Consolidated Financial Statements have 
been reclassified to conform with the current presentation.

      (d) Airline Revenues-

      Passenger fares and cargo revenues are recorded as operating revenues 
when the transportation is furnished.  The value of unused passenger tickets 
is included in current liabilities.

      (e) Foreign Currency Transactions-

      Monetary assets and liabilities denominated in foreign currencies are 
converted at exchange rates in effect at the balance sheet date.  The 
resulting foreign exchange gains and losses are charged or credited directly 
to income.  United has entered into a foreign currency swap contract to 
reduce exposure to certain currency fluctuations.  Foreign currency gains 
and losses on the contract are included in income currently, exactly 
offsetting the foreign currency losses and gains on the obligations.  
Foreign exchange gains and losses on foreign currency call options which 
were previously used to hedge foreign currency obligations were also charged 
or credited directly to income.

      (f) Cash and Cash Equivalents and Short-term Investments-

      Cash in excess of operating requirements is invested in short-term, 
highly liquid, income-producing investments.  Investments with an original 
maturity of three months or less on their acquisition date are classified as 
cash and cash equivalents.  Other investments are classified as short-term 
investments.

      (g) Aircraft Fuel, Spare Parts and Supplies-

      Aircraft fuel and maintenance and operating supplies are stated at 
average cost.  Flight equipment spare parts are stated at average cost less 
an obsolescence allowance.

      (h) Operating Property and Equipment-  

      Owned operating property and equipment is stated at cost.  Property 
under capital leases, and the related obligation for future minimum lease 
payments, are initially recorded at an amount equal to the then present 
value of those lease payments.

      Depreciation and amortization of owned depreciable assets is based on 
the straight-line method over their estimated service lives.  Leasehold 
improvements are amortized over the remaining period of the lease or the 
estimated service life of the related asset, whichever is less.  Aircraft 
are depreciated to estimated salvage values, generally over lives of 10 to 
25 years; buildings are depreciated over lives of 25 to 45 years; and other 
property and equipment are depreciated over lives of three to 15 years.

      Properties under capital leases are amortized on the straight-line 
method over the life of the lease, or in the case of certain aircraft, over 
their estimated service lives.  Lease terms are 10 to 19 years for aircraft 
and flight simulators and 25 years to 40 years for buildings.  Amortization 
of capital leases is included in depreciation and amortization expense.

      Maintenance and repairs, including the cost of minor replacements, are 
charged to maintenance expense accounts.  Costs of additions to and renewals 
of units of property are charged to property and equipment accounts.

      (i) Intangibles-

      Intangibles consist primarily of route acquisition costs, slots and 
intangible pension assets (see Note 15).  Route acquisition costs and slots 
are amortized over 40 years and 5 years, respectively.

      (j) Mileage Plus Awards-

      United accrues the estimated incremental cost of providing free travel 
awards earned under its Mileage Plus frequent flyer program when such award 
levels are reached.

      (k) Deferred Gains-  

      Gains on aircraft sale and leaseback transactions are deferred and 
amortized over the lives of the leases as a reduction of rental expense.

      (l) Interest Rate Swap Agreements-

      United enters into interest rate swap agreements to hedge interest 
rate exposure on certain obligations.  The differential to be paid or 
received under the swap agreements is charged or credited to interest 
expense or rental expense depending on the obligation.

(2) Employee Investment Transaction and Recapitalization

      On July 12, 1994, the shareholders of UAL approved a plan of 
recapitalization to provide an approximately 55% equity interest in UAL to 
certain employees of United in exchange for wage concessions and work-rule 
changes.  The employees' equity interest will be allocated to individual 
employees through the year 2000 under Employee Stock Ownership Plans 
("ESOPs") which were created as a part of the recapitalization.  The 
employee interest may increase to up to 63%, depending on the average market 
value of UAL common stock in the year after the transaction closed.  Based 
on the average market value of UAL common stock through February 23, 1995, 
the market value of UAL common stock for the remainder of the measuring 
period would have to average at least $204 for any adjustment to be made in 
the ESOP percentage interest.  Pursuant to the terms of the plan of 
recapitalization, holders of old UAL common stock received approximately 
$2.1 billion in cash and the remaining 45% (subject to decrease down to 37%) 
of the equity in the form of new common stock, which was issued at the rate 
of one half share of new common stock for each share of old common stock.  
The cash distribution was recorded as a $1.6 billion reduction in retained 
earnings, a $0.4 billion reduction in additional capital invested and a $0.1 
billion reduction in common stock.  In connection with the recapitalization, 
United issued $370 million of 10.67% debentures due in 2004 and $371 million 
of 11.21% debentures due in 2014 and UAL issued Series B 12 1/4% preferred 
stock with an aggregate liquidation preference of $410 million.  Pretax 
costs of $169 million were incurred in connection with the recapitalization, 
including transaction costs and severance payments to certain former United 
employees.  Of these costs, $48 million were recorded as operating expenses 
while the remaining $121 million were recorded in "Miscellaneous, net."

(3) Employee Stock Ownership Plans

      The ESOPs established as part of the recapitalization cover the 
pilots, U.S. management and salaried employees, and U.S. union ground 
employees.  The ESOPs include a "Leveraged ESOP", a "Non-Leveraged ESOP" and 
a "Supplemental ESOP".  Both the Leveraged ESOP and the Non-Leveraged ESOP 
are tax qualified plans while the Supplemental ESOP is not a tax qualified 
plan.  The purpose of having the three ESOPs is to deliver the agreed-upon 
shares to employees in a manner which utilizes the tax incentives available 
to tax qualified ESOPs to the greatest degree possible.  Accordingly, shares 
are delivered to employees primarily through the Leveraged ESOP, secondly, 
through the Non-Leveraged ESOP, and lastly, through the Supplemental ESOP.  

      The equity interests are being delivered to employees through two 
classes of preferred stock (Class 1 and Class 2 ESOP Preferred Stock, 
collectively "ESOP Preferred Stock") and the voting interests are being 
delivered through three separate classes of preferred stocks (Class P, M and 
S Voting Preferred Stock, collectively "Voting Preferred Stock").  The Class 
1 ESOP Preferred Stock will be issued to an ESOP trust in seven separate 
sales through January 1, 2000 under the Leveraged ESOP, one of which took 
place at the time of the recapitalization.  Based on Internal Revenue Code 
limitations, shares of the Class 2 ESOP Preferred Stock will either be 
contributed to the Non-Leveraged ESOP or allocated as "book-entry shares" to 
the Supplemental ESOP, annually through the year 2000.  The classes of 
preferred stock are described more fully in Note 12, Preferred Stock.

      The Leveraged ESOP and Non-Leveraged ESOP are being accounted for 
under AICPA Statement of Position 93-6, "Employers' Accounting for Employee 
Stock Ownership Plans" ("SOP").  For the Leveraged ESOP, as shares of the 
Class 1 ESOP Preferred Stock are sold to an ESOP trust, the Company reports 
the issuance as a credit to additional capital invested and a corresponding 
charge to unearned ESOP preferred stock.  As the shares are earned by 
employees in exchange for services performed, the shares are committed to be 
released.  ESOP compensation expense is recorded for the average fair value 
of the shares committed to be released during the period with a 
corresponding credit to unearned ESOP preferred stock for the cost of the 
shares.  Any difference between the fair value of the shares and the cost of 
the shares is charged or credited to additional capital invested.  For the 
Non-Leveraged ESOP, the Class 2 ESOP Preferred Stock is recorded as 
additional capital invested as the shares are committed to be contributed in 
exchange for employee services, with the offsetting entry to ESOP 
compensation expense.  The ESOP compensation expense is based on the average 
fair value of the shares committed to be contributed, in accordance with the 
SOP.  The Supplemental ESOP is being accounted for under Accounting 
Principle Board Opinion 25, "Accounting for Stock Issued to Employees."

      For the Class 2 ESOP Preferred Stock committed to be contributed to 
employees under the Supplemental ESOP, employees can elect to receive their 
"book entry" shares in cash upon termination of employment.  The fair value 
of such shares at December 31, 1994 was insignificant. 

      Shares of ESOP Preferred Stock are legally released or allocated to 
employee accounts as of year end.  Dividends on the ESOP Preferred Stock are 
also paid at the end of the year.  Dividends on unallocated shares are used 
by the ESOP to pay down the loan from UAL and are not considered dividends 
for financial reporting purposes.  Dividends on allocated shares are 
satisfied by releasing shares from the ESOP's suspense account to the 
employee accounts and are charged to equity.

      During 1994, the Company recorded $182 million of ESOP compensation 
expense for the period July 13 through December 31, 1994.  At December 31, 
1994, the year-end allocation of Class 1 ESOP Preferred Stock to employee 
accounts had not yet been completed.  There were 1,131,912 shares of Class 1 
ESOP Preferred Stock committed to be released and 657,673 shares held in 
suspense by the ESOP as of December 31, 1994.  For the Class 2 ESOP 
Preferred Stock, 316,472 shares were committed to be contributed to 
employees at December 31, 1994.  The fair value of the unearned ESOP shares 
recorded on the balance sheet at December 31, 1994 was $79 million.

(4) Affiliates

      United owns 38% of the Galileo International Partnership ("Galileo") 
through a wholly-owned subsidiary.  United's investment in Galileo, which 
owns the Apollo and Galileo computer reservations systems, is carried on the 
equity basis.  United also owns 77% of the Apollo Travel Services 
Partnership ("ATS"), which markets the Apollo computer reservations systems 
to travel agencies in the U. S. and Mexico, and its accounts are 
consolidated.  Prior to a September 1993 merger, United owned 50% of the 
Covia Partnership ("Covia") and 25.6% of Galileo Ltd., Galileo's and ATS's 
predecessor companies, which were accounted for on the equity basis.  The 
consolidation of ATS resulted in non-cash increases of $78 million in 
assets, $46 million in liabilities and $34 million in minority interests as 
of the date of the merger.

      Under operating agreements with Covia prior to the merger, United 
provided certain computer support services for, and purchased computer 
reservation services, communications and other information from, Covia.  
Revenues derived from the sale of services to Covia amounted to 
approximately $21 million in 1993 and $22 million in 1992.  The cost to 
United of services purchased from Covia amounted to approximately $168 
million in 1993 and $219 million in 1992.  Under operating agreements with 
Galileo subsequent to the merger, United purchases computer reservation 
services from Galileo and provides marketing, sales and communication 
services to Galileo.  Revenues derived from the sale of services to Galileo 
amounted to approximately $233 million in 1994 and $58 million in 1993.  The 
cost to United of services purchased from Galileo amounted to approximately 
$94 million in 1994 and $47 million in 1993.

<TABLE>
<CAPTION>

Summarized financial information of Galileo follows (in millions):

                                         December 31,     
                                     1994            1993 
<S>                                <C>           <C>
Current assets                       $134            $141
Non-current assets                    421             467
  Total assets                        555             608
Current liabilities                   195             173
Long-term liabilities                 321             440
  Total liabilities                   516             613
    Net assets                       $ 39            $ (5)


                                                 Period From
                                 Twelve Months   September 16,
                                     Ended       1993 Through
                                  December 31,   December 31,
                                      1994           1993    

Services revenues                     $801           $ 186
Costs and expenses                     752             327
Net earnings (loss)                   $ 49           $(141)
</TABLE>


During 1993, Galileo recorded $114 million of charges which included the 
cost of eliminating duplicate facilities and operations.

(5) Other Income (Expense) - Miscellaneous
<TABLE
[CAPTION]

Other income (expense) - miscellaneous, net consisted of the following:

                                              1994      1993     1992 
                                                   (In Millions) 
[S]                                          [C]       [C]      [C]
     Foreign exchange gains or losses        $  15     $(20)    $  2 
     Amortization of hedge
       transaction costs                        (6)      (6)      (5)
     Net gains on disposition of property 
       or rights                                10        3       41
     Minority interests                        (22)      (1)      - 
     Recapitalization transaction costs       (121)      -        - 
     Write down of aircraft to
       net realizable value                     -       (59)      - 
     Gain on settlement of 1985
       annuity purchases                        -        17       - 
     Settlement of class action claims
       regarding airline fare data              -        -       (13)
     Other                                      -        (5)     (18)

                                             $(124)    $(71)    $  7 
[/TABLE]


(6) Per Share Amounts

      Per share amounts were based on weighted average common shares 
outstanding - 18,791,587 in 1994, 24,345,857 in 1993 and 24,069,786 in 
1992.  Common stock equivalents, including ESOP shares committed to be 
released, were not included in the computations as they did not have a 
dilutive effect.  Per share amounts were calculated after providing for 
preferred stock dividends of $59 million in 1994 and $33 million in 1993.  
Earnings available to common stockholders were also reduced by $3 million 
in 1994 for the excess of amounts paid to reacquire UAL preferred stock 
over the liquidation preference of such stock.

      In connection with the July 1994 recapitalization, each old common 
share was exchanged for one half new common share.  As required under 
generally accepted accounting principles for transactions of this type, 
the historical weighted average shares outstanding have not been restated. 
 Thus, direct comparisons between 1994 and prior years' per share amounts 
are not meaningful.

(7) Income Taxes

      In 1994, the Company was subject to the alternative minimum tax 
("AMT").  The federal income tax liability is the greater of the tax 
computed using the regular tax system or the tax under the AMT system.  
Certain preferences, mainly depreciation adjustments, have caused 
alternative minimum taxable income and the resulting AMT liability to 
exceed regular taxable income and the regular tax liability.  The excess 
of the AMT liability over the regular tax liability produces AMT credits 
which are carried forward indefinitely.

<TABLE>
<CAPTION>

The provision (credit) for income taxes is summarized as follows:

                                  1994         1993        1992 
                                            (In Millions) 
             <S>                 <C>          <C>         <C>
             Current-
              Federal            $  12        $  52       $ (90)
              State                  4           (1)         (3)
                                    16           51         (93)
             Deferred-
              Federal               73          (75)       (129)
              State                  5            8         (17)
                                    78          (67)       (146)

                                 $  94        $ (16)      $(239)
</TABLE>


The income tax provision (credit) differed from amounts computed at the 
statutory federal income tax rate, as follows:

<TABLE>
<CAPTION>

                                           1994         1993       1992 
                                                    (In Millions)   
<S>                                      <C>          <C>        <C>
Income tax provision (credit)
  at statutory rate                      $  60        $ (17)     $(223)
State income taxes, net of
  federal income tax benefit                 6            5        (13)
Nondeductible employee meals                22            8          8 
Nondeductible ESOP transaction costs        21            -          - 
Foreign sales corporation benefit           (1)          (1)        (6)
Foreign tax credits                         (3)          (3)        (2)
Rate change effect                         (14)          (9)        -  
Other, net                                   3            1         (3)

Income tax provision (credit)
  as reported                            $  94        $ (16)     $(239)
</TABLE>


      The Company adopted SFAS No. 109 "Accounting for Income Taxes," 
effective January 1, 1992.  This statement provides for an asset and 
liability approach to accounting for income taxes.  The Company recognized 
a tax benefit of $40 million for the cumulative effect of adopting SFAS 
No. 109.  Deferred income taxes (credit) reflect the impact of "temporary 
differences" between amounts of assets and liabilities for financial 
reporting purposes and such amounts as measured by tax laws.  These 
temporary differences are determined in accordance with SFAS No. 109 and 
are more inclusive in nature than "timing differences" as determined under 
previously applicable accounting principles.

Temporary differences and carryforwards which give rise to a significant 
portion of deferred tax assets and liabilities for 1994 and 1993 are as 
follows:

<TABLE>
<CAPTION>
                                        1994                    1993          
                                Deferred    Deferred    Deferred    Deferred
                                  Tax         Tax         Tax         Tax
                                 Assets    Liabilities   Assets    Liabilities
                                               (In Millions)
<S>                             <C>        <C>          <C>        <C>
Employee benefits, including
  postretirement medical        $  537      $   13      $  599      $   31
Prepaid commissions                 -           52          -           49
Depreciation, capitalized
  interest and transfers of
  tax benefits                      -        1,074          -        1,119
Gains on sale and leasebacks       472          -          480          - 
Rent expense                       254          -          207          - 
AMT credit carryforward            262          -          195          - 
Foreign exchange
  gains and losses                  98          -           84          - 
Frequent flyer accrual              70          -           72          - 
Net operating loss
  carryforwards                     58          -           74          - 
Other                              134         115         272          70

                                $1,885      $1,254      $1,983      $1,269
</TABLE>



     The Company has determined, based on its history of operating 
earnings and expectations of future taxable income, that it is more likely 
than not that the deferred tax assets at December 31, 1994 will be 
realized.

     At December 31, 1994, UAL and its subsidiaries had $262 million of 
federal AMT credit carryforwards available for an indefinite period, $4 
million of general business credit carryforwards which expire between 2004 
and 2009, $40 million of state tax benefit from net operating loss 
carryforwards expiring between 1997 and 2009 and $18 million of federal 
tax benefit from net operating loss carryforwards expiring between 2006 
and 2009.

(8) Short-Term Borrowings

     At December 31, 1994 and 1993, United had outstanding $269 million 
and $315 million, respectively, in short-term borrowings, bearing average 
interest rates of 5.63% and 3.34%, respectively.  Receivables amounting to 
$426 million at December 31, 1994 and $367 million at December 31, 1993 
were pledged by United to secure repayment of such outstanding borrowings. 
 The maximum available amount of borrowings under this arrangement is $360 
million.

(9) Long-Term Debt

A summary of long-term debt, excluding current maturities, as of 
December 31 is as follows (interest rates are as of December 31, 1994):

<TABLE>
<CAPTION>

                                                      1994          1993  
                                                          (In Millions)
  <S>                                                <C>           <C>
  Secured notes, 5.525% to 11.54%, averaging
    8.38%, due through 2014                          $ 1,087       $ 1,462
  Debentures, 6.75% to 11.21%, averaging 10.03%,
    due 1997 to 2021                                   1,591         1,000
  Deferred purchase certificates, Japanese yen-
    denominated, 7.75%, due through 1998                 169           178
  Convertible debentures, 7.75%, due 2000
    through 2010                                          26            36
  Promissory notes, 5.83% to 6.82%, averaging
    6.04%, due through 1998                               34            41
                                                       2,907         2,717
  Unamortized discount on debt                           (20)          (15)
                                                     $ 2,887       $ 2,702
</TABLE>



      In connection with the July 1994 recapitalization, United issued 
$370 million of 10.67% debentures due in 2004 and $371 million of 11.21% 
debentures due in 2014.  The debentures are unsecured obligations.

      In the second quarter of 1993, United retired $500 million of senior 
subordinated notes.  The notes were scheduled to mature in 1995 ($150 
million) and 1998 ($350 million).  An extraordinary loss of $19 million, 
after tax benefits of $9 million, was recorded in the first quarter of 
1993, based on United's stated intention to retire the notes.

      The convertible debentures, which are obligations of Air Wis 
Services, Inc. ("Air Wis"), are convertible into shares of old UAL common 
stock, at the conversion price of $259.08 (equivalent to approximately 
$348.54 per share of new UAL common stock).  In addition, $4 million of 
these debentures and $3 million of similar debentures with a conversion 
price of $198.02 (equivalent to approximately $226.42 per share of new UAL 
common stock) are classified in current maturities.  In 1994, Air Wis 
reacquired $3 million of these debentures, resulting in an insignificant 
loss.

      In addition to scheduled principal payments, in 1994 the Company 
repaid secured notes in the principal amount of $218 million.  In January 
and February 1995, United repaid an additional $101 million in principal 
amount of secured notes and $150 million in principal amount of 
debentures, respectively, resulting in an insignificant loss.  At December 
31, 1994, United had outstanding a total of $316 million of long-term debt 
bearing interest at rates 85 to 128 basis points over the London interbank 
offered rate ("LIBOR").  In connection with certain of these debt 
financings, United has entered interest rate swap agreements to 
effectively fix interest rates at December 31, 1994 between 8.554% and 
8.6% on $71 million of notional amount (See Note 18).

      Maturities of long-term debt for each of the four years after 1995 
are:  1996 -- $119 million; 1997 -- $220 million; 1998 -- $188 million; 
and 1999 -- $48 million.  Various assets, principally aircraft, having an 
aggregate book value of $1.409 billion at December 31, 1994, were pledged 
under various loan agreements.

      At December 31, 1994, UAL and United had an effective shelf 
registration statement on file with the Securities and Exchange Commission
to offer up to $1.035 billion of securities, including secured and
unsecured debt, equipment trust and pass through certificates, equity or a 
combination thereof.  UAL's ability to issue equity securities is limited 
by its certificate of incorporation, which was restated in connection with 
the recapitalization.

(10) Lease Obligations

      The Company leases aircraft, airport passenger terminal space, 
aircraft hangars and related maintenance facilities, cargo terminals, 
other airport facilities, real estate, office and computer equipment and 
vehicles.

Future minimum lease payments as of December 31, 1994, under capital 
leases and operating leases having initial or remaining noncancelable 
lease terms of more than one year are as follows:

<TABLE>
<CAPTION>

                                                Operating       Capital
                                                  Leases         Leases 
                                                     (In Millions)
      <S>                                       <C>             <C>
      Payable during-
         1995                                   $ 1,337         $  142
         1996                                     1,358            144
         1997                                     1,343            139
         1998                                     1,377            144
         1999                                     1,199            119
         After 1999                              20,099            558

      Total minimum lease payments              $26,713          1,246
      Imputed interest (at rates of 5.3%
        to 12.2%)                                                 (440)

      Present value of minimum lease payments                      806

      Current portion                                              (76)

      Long-term obligations under capital leases                $  730
</TABLE>


      As of December 31, 1994, United leased 315 aircraft, 45 of which 
were under capital leases.  These leases have terms of four to 26 years, 
and expiration dates range from 1996 through 2018.  Under the terms of 
leases for 306 of the aircraft, United has the right of first refusal to 
purchase, at the end of the lease term, certain aircraft at fair market 
value and others at either fair market value or a percentage of cost.  
United has 21 Airbus A320-200 aircraft under 24-year operating leases 
which are cancelable upon eleven months notice during the initial 10 years 
of the leases.

      Amounts charged to rent expense, net of minor amounts of sublease 
rentals, were $1.230 billion in 1994, $1.208 billion in 1993, and $1.060 
billion in 1992.  Included in rent expense were insignificant amounts of 
contingent rentals, resulting from changes in interest rates for operating 
leases under which the rent payments are based on variable interest rates. 
 In connection with certain of these leases, United has entered interest 
rate swap agreements (See Note 18).

(11) Foreign Operations

      United conducts operations in various foreign countries, principally 
in the Pacific, Europe and Latin America.  Operating revenues from foreign 
operations were approximately $4.920 billion in 1994, $4.500 billion in 
1993 and $3.890 billion in 1992.

(12) Preferred Stock

      UAL is authorized to issue up to 16,000,000 shares of serial 
preferred stock, 25,000,000 shares each of Class 1 and Class 2 ESOP 
Preferred Stock, and an aggregate 25,100,000 shares of Class P, M, and S 
Voting Preferred Stock.

      At December 31, 1994, there were outstanding 5,999,900 shares of 
Series A cumulative 6.25% convertible preferred stock.  Effective March 
31, 1994, UAL changed the stated capital of the Series A preferred stock 
from $30 million ($5.00 per preferred share) to $60,000 ($0.01 per 
preferred share), with the difference being attributed to additional 
capital invested.  Subsequent to the recapitalization, each share of 
Series A preferred stock is convertible into $54.19 in cash and 
approximately 0.3195 shares of UAL common stock (equivalent to a 
conversion price of $143.38 per common share).  In December 1994, 100 
shares of Series A preferred stock were converted, resulting in the 
issuance of 31 shares of UAL common stock.  Under its terms, any portion 
of the convertible preferred stock is redeemable after April 30, 1996, at 
UAL's option, at $100 per share plus a premium which begins at 4.375% 
declining to zero ratably over seven years.  The Series A shares have an 
aggregate liquidation preference of $600 million, or $100 per share.

      On February 3, 1995, the Company filed a registration statement with 
the Securities and Exchange Commission offering to exchange up to $600 
million aggregate principal amount of convertible subordinated debentures, 
due 2025, for up to all shares of the outstanding Series A cumulative 
6.25% convertible preferred stock.  Each $1,000 principal amount of 
debentures issued would be convertible into a combination of cash in the 
amount of $541.90 and approximately 3.192 shares of new UAL common stock 
(equivalent to a conversion price of $143.50 per share of new common 
stock).  To the extent that shares of Series A preferred stock are 
exchanged for the debentures, the Company's shareholders' equity will be 
reduced on a net basis by the aggregate fair value of the debentures 
issued.  A reduction in shareholders' equity will reduce surplus as 
defined under Delaware General Corporation Law ("DGCL").  DGCL requires 
that dividends on outstanding capital stock may only be made from surplus 
or the net profits of the Company for the fiscal year in which the 
dividend is declared and/or the preceding fiscal year.

      In connection with the July 1994 recapitalization, UAL issued 
16,416,000 depositary shares, each representing 1/1000 of one share of 
Series B 12 1/4% preferred stock, resulting in net proceeds of $400 
million, which was recorded as additional capital invested.  The shares 
issued had an aggregate liquidation preference of $410 million, or $25 per 
depositary share ($25,000 per Series B preferred share), and a stated 
capital of $164 ($0.01 per Series B preferred share).  Under its terms, 
any portion of the Series B preferred stock or the depositary shares is 
redeemable for cash after July 11, 2004, at UAL's option, at the 
equivalent of $25 per depositary share, plus accrued dividends.  The 
Series B preferred stock is not convertible into any other securities, has 
no stated maturity and is not subject to mandatory redemption.  In the 
fourth quarter of 1994, UAL repurchased 3,336,400 depositary shares, 
representing 3,336.4 shares of Series B preferred stock, at an aggregate 
cost of $87 million to be held in treasury.  At December 31, 1994, there 
were outstanding 13,079,600 depositary shares representing 13,079.6 shares 
of Series B preferred stock.

      The Series A and B preferred stocks rank senior to all other 
preferred and common stocks as to receipt of dividends and amounts 
distributed upon liquidation.  The Series A and B preferred stocks have 
voting rights only to the extent required by law and with respect to 
charter amendments that adversely affect the preferred stock or the 
creation or issuance of any security ranking senior to the preferred 
stock.  Additionally, if dividends are not paid for six cumulative 
quarters, the Series A and Series B preferred shareholders together are 
entitled to elect two additional members to the UAL Board of Directors 
until all dividends are paid in full.

      At December 31, 1994, 1,789,585 shares of Class 1 ESOP Preferred 
Stock and no shares of Class 2 ESOP Preferred Stock were issued.  An 
aggregate of 17,675,345 shares of Class 1 and Class 2 ESOP Preferred Stock 
will be issued in connection with the recapitalization and establishment 
of the ESOPs (see notes 2 and 3).  Each share of ESOP Preferred Stock is 
convertible into one share of UAL common stock, subject to adjustment 
under certain conditions.  The stock has a par value of $0.01 per share, 
is nonvoting, and has a liquidation value of $126.96 per share plus all 
accrued and unpaid dividends.  The Class 1 ESOP Preferred Stock provides a 
fixed annual dividend of $8.8872 per share, which ceases on March 31, 
2000; the Class 2 does not pay a fixed dividend.

      Class P, M, and S Voting Preferred Stocks were established to 
provide the voting power to the employee groups participating in the 
ESOPs.  As of December 31, 1994, one share each of Class P, M and S Voting 
Preferred Stock were outstanding.  Additional Voting Preferred Stock will 
be issued as shares of the Class 1 and Class 2 ESOP Preferred Stock are 
allocated to employees.  In the aggregate, 17,675,345 shares of Voting 
Preferred Stock will be issued through the year 2000.  The Voting 
Preferred Stock at any time outstanding commands voting power for 
approximately 55% (subject to increase to up to 63%) of the vote of all 
classes of capital stock in all matters requiring a shareholder vote, 
other than for the election of members of the Board of Directors.  The 
Voting Preferred Stock will generally continue to represent approximately 
55% (subject to increase to up to 63%) of the aggregate voting power until 
the "Sunset".  The "Sunset" will occur when the common shares issuable 
upon conversion of the outstanding Class 1 and Class 2 ESOP Preferred 
Stock, plus any common equity and available unissued ESOP shares held in 
the ESOPs or any other employee benefit plans sponsored by the Company for 
the benefit of its employees, represent, in the aggregate less than 20% of 
the common equity and available unissued ESOP shares of the Company.  
Under current actuarial assumptions, the Company estimates that the 
"Sunset" will occur in the year 2016 if no additional purchases are made 
by eligible employee retirement plans.  The Voting Preferred Stock has a 
par value and liquidation preference of $0.01 per share.  The stock is not 
entitled to receive any dividends and is convertible into one 
ten-thousandth of a share of UAL common stock. 

(13) Common Shareholders' Equity

      In connection with the July 1994 recapitalization, each share of old 
common stock was converted to one half share of new common stock (and cash 
in lieu of fractional shares) and $84.81 in cash.  As a result, the number 
of outstanding shares was reduced proportionately.

<TABLE>
<CAPTION>

Changes in the number of shares of UAL common stock outstanding during the 
years ended December 31 were as follows:

                                         1994         1993         1992   
<S>                                  <C>           <C>          <C>
Old shares -
Shares outstanding at
  beginning of year                   24,568,937   24,238,482   23,758,106
Shares issued in connection
  with Air Wis merger                       -            -         443,593
Stock options exercised                   79,764      205,075       40,464
Shares issued from treasury
  under compensation arrangements          1,100      142,003        3,165
Shares acquired for treasury             (88,261)      (7,623)        (346)
Forfeiture of restricted stock            (9,800)      (9,000)      (6,500)
Other                                       (379)        -            -   
                                      24,551,361   24,568,937   24,238,482
Effect of recapitalization           (12,275,680)        -            -

New shares -
Stock options exercised                  237,505         -            -
Shares issued from treasury under 
  compensation arrangements              112,767         -            -
Shares acquired for treasury            (186,898)        -            -
Other                                         51         -            -   
Shares outstanding at end of year     12,439,106   24,568,937   24,238,482
</TABLE>



      At December 31, 1994 and 1993, UAL held 574,111 and 920,808 shares, 
respectively, of common stock in treasury.

      There is a preferred share purchase right associated with each share 
of outstanding UAL common stock.  As long as the rights are associated 
with the shares of UAL common stock, each new share of common stock issued 
by UAL, including shares of common stock into which the ESOP convertible 
preferred stock and the Series A preferred stock are convertible, will 
include one right.  Upon the occurrence of certain events, each right will 
entitle its holder to purchase one one-hundredth of a share of Series C 
junior participating preferred stock, without par value, for $185 (subject 
to antidilution provisions).  The rights will become exercisable ten 
business days after any person or group announces its beneficial ownership 
of 15% or more of UAL common stock, or announces an offer for 30% or more 
of UAL common stock.  If any person or group acquires 15% or more of UAL 
common stock (other than the ESOP trustee, ALPA, the IAM and the 
beneficial owners of UAL common stock eligible to report and reporting on 
Schedule 13G under the Securities Exchange Act of 1934), each right will 
entitle its holder (except the acquiring party) to buy common stock of UAL 
having a market value of three times the exercise price of the right.  If, 
after the rights become exercisable, UAL is involved in a merger or sells 
more than 50% of its assets or earning power, each right will entitle its 
holder to buy common stock of the surviving entity having a market value 
of three times the exercise price of the right.  UAL has the right to 
redeem the rights for $0.05 per right prior to the time they become 
exercisable.  The rights expire on December 31, 1996.  The rights 
agreement provides that the transactions associated with the 
recapitalization did not and will not cause the rights to become 
exercisable as a result thereof.

(14) Stock Options and Awards

      The Company has granted options to purchase common stock to various 
officers and employees.  The option price for all stock options is at 
least 100% of the fair market value of UAL common stock at the date of 
grant.  Options generally vest and become exercisable in up to five equal, 
annual installments beginning one year after the date of grant, and 
generally expire in 10 years.

      Prior to 1992, stock appreciation rights ("SARs") were granted in 
tandem with certain stock options.  On exercise of these SARs, holders 
would receive, in cash, 100% of the appreciation in fair market value of 
the shares subject to the SAR.  The estimated payment value of SARs, net 
of market value adjustments, was charged to earnings over the vesting 
period.  In 1992, all active officers relinquished their SARs but retained 
the tandem stock options.  As a result of the 1994 recapitalization, all 
outstanding options became fully vested at the time of the transaction and 
the holders of such options became eligible to exercise the cashless 
exercise features of stock options.  Under a cashless exercise, the 
Company withholds, at the election of the optionee, from shares that would 
otherwise be issued upon exercise that number of shares having a fair 
market value equal to the exercise price and related income taxes.  For 
outstanding options eligible for cashless exercise, changes in the market 
price of the stock are charged to earnings currently.  At December 31, 
1994, 12,927 SARs were outstanding with an average exercise price of 
$75.70 per old share and option holders were eligible for cashless 
exercise in connection with 1,068,173 outstanding options with an average 
exercise price of $133.76 per old share.  The expense (credit) recorded 
for SARs and cashless exercises was $15 million in 1994, $1 million in 
1993 and $(1) million in 1992.

      Stock options which were outstanding at the time of the 
recapitalization are exercisable for shares of old common stock, each of 
which is in turn converted into one half share of new common stock and 
$84.81 in cash upon exercise.  Subsequent to the recapitalization, the 
Company granted stock options which are exercisable for shares of new 
common stock.

<TABLE>
<CAPTION>

Stock option activity for the past three years was as follows:

                             New Share
                              Options            Old Share Options        
                                1994        1994        1993        1992  
<S>                          <C>         <C>         <C>         <C>

Outstanding at beginning
  of year                         -      1,673,782   1,864,555   1,318,603
Granted                       959,500          -        65,750     686,500
Exercised                         -       (554,771)   (205,075)    (40,464)
Surrendered upon
  exercise of SARs                -         (1,000)    (16,198)     (8,334)
Terminated                    (13,500)     (36,911)    (35,250)    (91,750)
Outstanding at end
  of year                     946,000    1,081,100   1,673,782   1,864,555

Exercisable at 
  end of year                 150,000    1,081,100     733,782     603,180
Reserved for future
  grants at end of year       454,000          -       300,111     330,611

Average option price:
Per old share -
  Exercised                      N/A     $   95.32   $   87.61   $   88.16
  Outstanding at end of year     N/A     $  132.77   $  120.21   $  116.11

Per new share -
  Exercised                       -      $   21.02 (1)    N/A         N/A 
  Outstanding at end of year $  90.36    $   95.92 (1)    N/A         N/A 

(1)  Represents the new share equivalent of the old share options.
</TABLE>


      The expiration dates for options outstanding as of December 31, 1994 
ranged from January 12, 1995 to December 15, 2004.  At December 31, 1994, 
outstanding options were held by 199 officers and key employees.

      The Company has also awarded shares of restricted stock to key officers 
and employees.  These restricted shares generally vest over a five-year 
period.  Unvested shares are subject to certain transfer restrictions and 
forfeiture under certain circumstances.  Unearned compensation, representing 
the fair market value of the stock on the date of award, is amortized to 
salaries and related costs over the vesting period.  During 1993, 138,500 
restricted shares were issued from treasury stock and awarded to employees.  
No restricted shares were issued during 1992.  In 1994, 1993 and 1992, 9,800, 
9,000 and 6,500 shares, respectively, were forfeited and returned to treasury 
stock.  As a result of the 1994 recapitalization, all outstanding restricted 
shares became vested at the time of the transaction and $12 million of 
compensation expense was recorded for the remaining balance of unearned 
compensation attributable to the outstanding shares.  In 1994, subsequent to 
the recapitalization, 112,767 restricted shares of new common stock were 
issued from treasury, of which 66,500 were still restricted as of December 
31, 1994.  Additionally, 29,733 shares were reserved for future award.

(15) Retirement Plans

      The Company has various retirement plans which cover substantially all 
employees.  Defined benefit plans covering certain employees (primarily union 
ground employees) provide a stated benefit for specified periods of service, 
while defined benefit plans for other employees provide benefits based on 
employees' years of service and average compensation for a specified period 
of time before retirement.  Pension costs are funded to at least the minimum 
level required by the Employee Retirement Income Security Act of 1974.  The 
company also provides several defined contribution plans which cover 
substantially all U. S. employees who have completed one year of service.  
For certain groups of employees (primarily pilots), the company contributes 
an annual amount on behalf of each participant, calculated as a percentage of 
the participants' earnings or a percentage of the participants' contributions.

<TABLE>
<CAPTION>

      The following table sets forth the defined benefit plans' funded status 
and amounts recognized in the statement of consolidated financial position as 
of December 31:
                                             1994             1993    
                                          Accumulated      Accumulated
                                            Benefits         Benefits 
                                            Exceed           Exceed   
                                            Assets           Assets   
                                                  (In Millions)
<S>                                         <C>              <C>

Actuarial present value of
  accumulated benefit obligation            $4,191           $4,200

Actuarial present value of
  projected benefit obligation              $4,577           $5,025
Plan assets at fair value                    3,785            3,589

Projected benefit obligation
  in excess of plan assets                     792            1,436
Unrecognized net gain (loss)                   (13)            (624)
Prior service cost not yet recognized
  in net periodic pension cost                (523)            (455)
Remaining unrecognized net asset                (3)              16
Adjustment required to
  recognize minimum liability                  302              346
Pension liability recognized in the
  statement of consolidated financial
  position                                  $  555           $  719
</TABLE>



      For the valuation of pension obligations as of December 31, 1994 and 
1993, the weighted average discount rates used were 8.75% and 7.5%, 
respectively, and the rates of increase in compensation were 3.15% and 
4.0%, respectively.  Substantially all of the accumulated benefit 
obligation is vested.

      Total pension expense for all retirement plans (including defined 
contribution plans) was $350 million in 1994, $346 million in 1993, and 
$324 million in 1992.

      Plan assets are invested primarily in governmental and corporate 
debt instruments and corporate equity securities.  The expected average 
long-term rate of return on plan assets at December 31 was 9.75% for 1994, 
9.75% for 1993 and 10.25% for 1992.  

<TABLE>
<CAPTION>

      The net periodic pension cost of defined benefit plans included the 
following components:
                                         1994        1993        1992 
                                                 (In Millions)
<S>                                     <C>         <C>         <C>
      Service cost - benefits earned
        during the year                 $ 216       $ 186       $ 180
      Interest cost on projected 
        benefit obligation                379         356         320
      Actual (return) loss on
        plan assets                        28        (310)       (289)
      Net amortization and deferral      (351)         19          24 

      Net periodic pension cost         $ 272       $ 251       $ 235
</TABLE>



(16) Other Employee Benefits

      The Company provides certain health care benefits, primarily in the 
U. S., to retirees and eligible dependents.  Benefits are generally funded 
from company assets on a current basis, although amounts sufficient to pay 
claims incurred, but not yet paid, are held in trust.  Certain plan 
benefits are subject to co-payments, deductibles and other limits 
described in the plans and the benefits are reduced once a retiree becomes 
eligible for Medicare.  The Company also provides certain life insurance 
benefits to retirees.  The assets to fund retiree life insurance benefits 
are being held in a deposit trust administration fund with a major 
insurance company.  The Company has reserved the right, subject to 
collective bargaining agreements, to modify or terminate the health care 
and life insurance benefits for both current and future retirees.

      Effective January 1, 1992, the Company adopted SFAS No. 106, 
"Employers' Accounting for Postretirement Benefits Other Than Pensions".  
This standard requires that the expected cost of postretirement benefits 
be charged to expense during the years in which employees render service.  
Upon adoption, the Company recorded a one-time pretax charge of $925 
million ($580 million after tax) as the cumulative effect of accounting 
change.


<TABLE>
<CAPTION>
Information on the plans' funded status, on an aggregate basis at 
December 31, follows (in millions):

                                             1994       1993 
<S>                                         <C>        <C>
Accumulated postretirement
  benefit obligation:
    Retirees                                $  383     $  416
    Other fully eligible participants          183        236
    Other active participants                  590        679

  Total accumulated postretirement
    benefit obligation                       1,156      1,331
  Unrecognized net gain (loss)                 138       (149)
  Fair value of plan assets                    (95)       (91)

Accrued postretirement benefit obligation   $1,199     $1,091
</TABLE>



<TABLE>
<CAPTION>
Net postretirement benefit costs included the following components (in 
millions):

                                             1994       1993       1992 
<S>                                         <C>        <C>        <C>
Service cost - benefits attributed to
  service during the period                 $ 46       $ 38       $ 28
Amortization of unrecognized net loss          3          3          -
Interest cost on benefit obligation           95         92         83

Net postretirement benefit costs            $144       $133       $111
</TABLE>



      The discount rate used to estimate the accumulated postretirement 
benefit obligation as of December 31, 1994 and 1993 was 8.75% and 7.5%, 
respectively.  The assumed health care cost trend rate was 10% and 11% for 
1994 and 1993, respectively, declining annually to a rate of 4% by the year 
2001 and remaining level thereafter.  The effect of a 1% increase in the 
assumed health care cost trend rate would increase the accumulated 
postretirement benefit obligation at December 31, 1994, by $150 million and 
the aggregate of the service and interest cost components of net 
postretirement benefit cost for 1994 by $22 million.

      The Company adopted SFAS No. 112, "Employers' Accounting for 
Postemployment Benefits," effective January 1, 1994.  SFAS No. 112 requires 
recognition of the liability for postemployment benefits during the period 
of employment.  Such benefits include company paid continuation of group 
life insurance and medical and dental coverage for certain employees after 
employment but before retirement.  The effect of adopting SFAS No. 112 was a 
cumulative charge for recognition of the transition liability of $42 
million, before tax benefits of $16 million.  The ongoing expenses related 
to postemployment benefits will vary based on actual claims experience.

(17) Investments in Debt Securities

      The Company adopted SFAS No. 115, "Accounting for Certain Investments 
in Debt and Equity Securities," effective January 1, 1994.  The Company's 
investments in such securities are included in "Cash and cash equivalents" 
and "Short-term investments."  The following information pertains to the 
Company's investments in such securities at December 31, 1994 (in millions):

<TABLE>
<CAPTION>

                                           Gross
                              Aggregate  Unrealized             Average
                                Fair      Holding     Cost      Maturity
                                Value      Losses     Basis     (Months)

<S>                           <C>        <C>         <C>        <C>
Available-for-sale:
  U.S. government agency
   debt securities             $  334      $ 2        $  336       9
  Corporate debt securities    $  341      $ 2        $  343      10
  Other debt securities        $  146      $ 1        $  147       8

Held-to-maturity:
  U.S. government agency
   debt securities             $   97      $ -        $   97       6
  Corporate debt securities    $  222      $ -        $  222       4
  Other debt securities        $  384      $ -        $  384       2
</TABLE>


      The net unrealized holding loss on available-for-sale securities 
of $5 million has been recorded as a component of shareholders' equity, 
net of related tax benefits.  The proceeds from sales of 
available-for-sale securities were $255 million in 1994.  Such sales 
resulted in insignificant gross realized gains and losses, based on the 
cost of the specific securities sold.  These gains and losses were 
included in interest income for the year.

(18) Financial Instruments and Off-Balance-Sheet Risk

      Balance Sheet Financial Instruments: Fair Values

      The carrying amounts reported in the consolidated balance sheets 
for cash and cash equivalents, short-term investments classified as 
"held-to-maturity", and short-term borrowings approximate fair value due 
to the immediate or short-term maturities of these financial 
instruments.  Investments in debt securities classified as 
"available-for-sale" are stated at fair value based on the quoted market 
prices for the securities (see note 17).  

      The fair value of long term debt, including debt due within one 
year, is primarily based on the quoted market prices for the same or 
similar issues or on the then current rates offered for debt with 
similar terms and maturities.  The fair value of long-term debt, 
including debt due within one year, at December 31, 1994 and 1993 was 
$2.983 billion and $3.041 billion, respectively, compared with carrying 
values of $3.271 billion and $2.846 billion.

      Off Balance Sheet Financial Instruments:  Risks and Fair Values

      United has entered interest rate swap agreements in order to 
manage the interest rate exposure associated with certain variable rate 
debt and leases.  The swap agreements have remaining terms averaging 16 
years, corresponding to the terms of the related debt or lease 
obligations.  Under the agreements, United makes payments to 
counterparties at fixed rates and in return receives payments based on 
LIBOR.  United's theoretical risk in the swaps is the cost of replacing 
the contracts at current market interest rates in the event of default 
by any of the counterparties; however, United does not anticipate such 
default since the counterparties are major financial institutions with 
investment grade ratings by all rating agencies.  In addition, the risk 
of such default is mitigated by provisions in the contracts which 
require either party to post increasing amounts of collateral as the 
value of the contract moves against them.  Counterparty credit risk is 
further minimized by periodic settlements throughout the duration of the 
contract.  At December 31, 1994, a notional amount of $479 million of 
interest rate swap agreements effectively fixed interest rates between 
8.02% and 8.65% on such obligations.  The fair values to United of 
interest rate swap agreements at December 31, 1994 and 1993 were $26 
million and $(8) million, respectively, taking into account interest 
rates in effect at the time.

      In the first quarter of 1994, United entered into a ten-year 
foreign currency swap contract to reduce exposure to currency 
fluctuations in connection with 29 billion of Japanese yen-denominated 
obligations.  The currency swap contract, which was designated as a 
hedge, effectively fixed, at then current exchange rates, future 
principal, interest and lease payments.  The currency swap contract 
exactly matches the cash flows and maturities of the obligations it 
hedges.  At December 31, 1994, the swap contract had a notional amount 
of $293 million, which will reduce periodically as payments are made.  
The fair value of the currency swap contract to United at December 31, 
1994 was approximately $23 million based on the reduction in the yen to 
dollar exchange rate since United entered into the contract.

      United's theoretical risk in the currency swap is the cost of 
replacing the contract at current market rates in the event of default 
by the counterparty; however, United does not anticipate such default 
since the counterparty is a major money center bank with an investment 
grade rating by all rating agencies.  Furthermore, the risk of such 
default is mitigated by provisions in the contract which require either 
party to post increasing amounts of collateral as either their credit 
rating deteriorates or the value of the contract moves against them.  
Counterparty credit risk is minimal since currency is exchanged 
simultaneously throughout the duration of the contract.

      The currency swap replaced short-term foreign currency call 
options and forward contracts which expired under their own terms, 
resulting in an insignificant loss that was included in income, 
offsetting the insignificant gain recorded from the related obligations 
that were being hedged.  In October 1994, United terminated the portion 
of the foreign currency swap contract hedging future interest payments 
in connection with the Japanese yen-denominated obligations.  While this 
portion of the contract was in effect, foreign currency gains and losses 
on it were deferred and included in interest as it accrued.  The gain 
resulting from the contract termination, net of losses previously 
deferred in connection with the interest payments, is being deferred and 
amortized over the remaining life of the obligations.

      Financial Guarantees

      As of December 31, 1994, United had guaranteed $77 million of 
indebtedness of affiliates.

      Special facility revenue bonds have been issued by certain 
municipalities to build or improve airport facilities leased by United.  
Under the lease agreements, United is required to make rental payments 
in amounts sufficient to pay the maturing principal and interest 
payments on the bonds.  At December 31, 1994, $860 million principal 
amount of such bonds was outstanding.  As of December 31, 1994, UAL and 
United had jointly guaranteed $35 million of such bonds and United had 
guaranteed $834 million of such bonds, including accrued interest.  
Included in this amount are bonds issued by the City of Denver in 
connection with the construction of certain United facilities at Denver 
International Airport, which will replace Stapleton International 
Airport in 1995.

      Transfers of the tax benefits of accelerated depreciation and 
investment tax credits associated with the acquisition of certain 
equipment have been made previously by United to various tax lessors 
through tax lease transactions.  Proceeds from tax benefit transfers 
were recognized as income in the year the lease transactions were 
consummated.  The subject equipment is being depreciated for book 
purposes.  United has agreed to indemnify (guaranteed in some cases by 
UAL) the tax lessors against loss of such benefits in certain 
circumstances and has agreed to indemnify others for loss of tax 
benefits in limited circumstances for certain used aircraft purchased by 
United subject to previous tax lease transactions.  Certain tax lessors 
have required that letters of credit be issued in their favor by 
financial institutions as security for United's indemnity obligations 
under the leases.  The outstanding balance of such letters of credit 
totaled $58 million at December 31, 1994.  At that date, United had 
granted mortgages on aircraft and engines having a total book value of 
$238 million as security for indemnity obligations under tax leases and 
letters of credit.

      Concentration of Credit Risk

      The Company does not believe it is subject to any significant 
concentration of credit risk.  Most of the Company's receivables result 
from sales of tickets to individuals through travel agents, company 
outlets or other airlines, often through the use of major credit cards.  
These receivables are short term, generally being settled shortly after 
the sale.

(19) Commitments and Contingent Liabilities

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

      At December 31, 1994, commitments for the purchase of property and 
equipment, principally aircraft, approximated $3.9 billion after 
deducting advance payments.  An estimated $1.2 billion is expected to be 
expended during 1995, $0.7 billion in 1996, $1.3 billion in 1997, $0.5 
billion in 1998 and $0.2 billion in 1999 and thereafter.  The major 
commitments are for the purchase of thirty-four B777 aircraft, which are 
expected to be delivered between 1995 and 1999.

      In addition to the B777 order, United has arrangements with Airbus 
and International Aero Engines to lease an additional 29 A320 aircraft, 
which are scheduled for delivery through 1998.  Under the agreement, 
United is making advance payments through 1998 which are refundable upon 
delivery of each aircraft.

      At December 31, 1994, United also had purchase options for 162 
B737 aircraft, 39 B757 aircraft, 34 B777 aircraft, 49 B747 aircraft, 8 
B767 aircraft and 50 A320 aircraft.  Under the terms of certain of these 
options which are exercisable during the period 1995 through 1997, 
United would forfeit significant deposits on such options it does not 
exercise.  Consistent with its revised capital spending plan, United has 
recently cancelled options on certain aircraft.

      United's Indianapolis Maintenance Center began operation in March 
1994, initially performing maintenance on B737 aircraft.  In December 
1994, the UAL Board of Directors approved the relocation of B757 and 
B767 airframe maintenance to the Indianapolis Maintenance Center.  
Construction of certain B737 airframe facilities is still in process and 
construction of facilities for the other fleet types will begin in 1995. 
 The facilities are being financed primarily with tax-exempt bonds and 
other capital sources.  In connection with incentives received, United 
has agreed to reach an $800 million capital spending target and employ 
at least 7,500 individuals.


(20) Statement of Consolidated Cash Flows - Supplemental Disclosures


<TABLE>
<CAPTION>
      Supplemental disclosures of cash flow information and non-cash 
investing and financing activities were as follows:

                                            1994       1993      1992 
                                                  (In Millions)
    <S>                                    <C>        <C>       <C>
    Cash paid during the year for:
      Interest (net of amounts 
        capitalized)                       $302       $330      $200
      Income taxes                         $ 69       $135      $ 30

    Non-cash transactions:
      Capital lease obligations
        incurred                           $ -        $ 70      $276
      Long-term debt incurred in
        connection with additions
        to equipment                       $ 21       $487      $755
      Increase in pension intangible       $ 20       $ 19      $  8
      Net unrealized loss on investments   $  3       $ -       $ - 
      Issuance of treasury stock in
        exchange for Air Wis common
        stock                              $ -        $ -         64
</TABLE>


(21) Other Matters

      In April 1993, UAL transferred the Air Wisconsin, Inc. operations at 
Dulles to Atlantic Coast Airlines.  In September 1993, UAL transferred 
certain Air Wisconsin, Inc. operations at O'Hare to United Feeder 
Services.  In December 1993, UAL transferred the jet operations of Air 
Wisconsin, Inc. to CJT Holdings.  These operations are being conducted by 
the counterparties in these agreements under the United Express trade 
name.  In October 1994, UAL announced an agreement to sell for $119 
million ten Dash 8 aircraft and spare parts owned by Air Wisconsin, Inc. 
to Mesa Airlines, and United agreed to a ten year extension of its United 
Express marketing agreement with Mesa Airlines.  The sales will take place 
in the first quarter of 1995. 

      In 1993, United reached agreements to sell assets related to the 
operation of 16 of its flight kitchens to Dobbs International Services, 
Inc. and Caterair International Corp. for $119 million.  These asset sales 
were completed by June 1994 and resulted in an insignificant gain.  Under 
the agreements, the purchasers are providing catering services for United 
at the airports served by the flight kitchens for seven years.

(22) Selected Quarterly Financial Data (Unaudited)

<TABLE>
<CAPTION>

                                  1st       2nd       3rd       4th
                                Quarter   Quarter   Quarter   Quarter    Year  
                                             (In Millions)
<S>                             <C>       <C>       <C>       <C>       <C>

1994:
  Operating revenues            $3,195    $3,502    $3,814    $3,439    $13,950
  Earnings (loss) from
    operations                     (36)      167       312        78        521 
  Earnings (loss) before
    cumulative effect of
    accounting changes             (71)       55        82        11         77 
  Cumulative effect of
    accounting changes             (26)       -         -          -        (26)
  Net earnings (loss)           $  (97)   $   55    $   82    $   11    $    51 
  Per share amounts, primary:
    Earnings (loss) before
      cumulative effect of
      accounting changes        $(3.31)   $ 1.89    $ 4.24    $(0.98)   $  0.76 
    Cumulative effect of
      accounting changes         (1.06)       -         -         -       (1.37)
    Net earnings (loss)         $(4.37)   $ 1.89    $ 4.24    $(0.98)   $ (0.61)
  Net earnings (loss)
    per share, fully diluted    $(4.37)   $ 1.89    $ 4.21    $(0.98)   $ (0.61)

1993:
  Operating revenues            $3,053    $3,296    $3,629    $3,347    $13,325
  Earnings (loss) from
    operations                    (121)       84       281        19        263 
  Earnings (loss) before
    extraordinary item            (138)       22       149       (64)       (31)
  Extraordinary loss on
    early extinguishment
    of debt                        (19)       -         -          -        (19)
  Net earnings (loss)           $ (157)   $   22    $  149    $  (64)   $   (50)
  Per share amounts, primary:
    Earnings (loss) before
      extraordinary item        $(5.92)   $ 0.54    $ 5.74    $(3.02)   $ (2.64)
    Extraordinary loss on
      early extinguishment
      of debt                    (0.77)       -         -         -       (0.76)
    Net earnings (loss)         $(6.69)   $ 0.54    $ 5.74    $(3.02)   $ (3.40)
  Net earnings (loss)
    per share, fully diluted    $(6.69)   $ 0.54    $ 5.21    $(3.02)   $ (3.40)
</TABLE>



      In 1994, United began recording certain air transportation price 
adjustments, which were previously recorded as commissions, as adjustments 
to revenue.  The revenue amounts for 1993 above have been reclassified to 
conform with the current presentation.

      The Company adopted SFAS No. 112, "Employers' Accounting for 
Postemployment Benefits," effective January 1, 1994.  The effect of 
adopting SFAS No. 112 was a cumulative charge for recognition of the 
transition liability of $42 million, before tax benefits of $16 million.

      In connection with the July 1994 recapitalization, the Company 
incurred pretax costs of $19 million, $22 million and $128 million in the 
first, second and third quarters, respectively, including transaction 
costs and severance payments to certain former United employees.  Of these 
costs, $48 million were recorded as operating expenses in the third 
quarter, while the remaining costs were recorded in "Miscellaneous, net."

      In the second quarter of 1993, United retired $500 million of senior 
subordinated notes.  An extraordinary loss of $19 million, net of tax 
benefits of $8 million, was recorded in the first quarter of 1993, based 
on United's stated intention to retire the notes.

      In the third quarter of 1993, United recorded a charge of $59 
million to reduce the net book value of 15 DC-10 aircraft to estimated net 
realizable value.  In addition, third quarter earnings included a $17 
million gain and interest income of $27 million resulting from the final 
settlement for overpayment of annuities purchased in 1985 to cover certain 
vested pension benefits.  The 1993 fourth quarter included $53 million of 
equity in the loss of Galileo, which primarily reflects United's share of 
a charge recorded by Galileo for the cost of eliminating duplicate 
facilities and operations.

<TABLE>
<CAPTION>

      Earnings per share were calculated after providing for the following 
preferred stock dividend requirements (in millions):

                              1st       2nd       3rd       4th
                            Quarter   Quarter   Quarter   Quarter    Year  
<S>                           <C>       <C>       <C>       <C>      <C>

1994                          $ 9       $ 9       $20       $21      $59
1993                          $ 6       $ 9       $ 9       $ 9      $33
</TABLE>


      Earnings available to common stockholders were also reduced by $3 
million in the 1994 fourth quarter and twelve-month period for the excess 
of amounts paid to reacquire UAL preferred stock over the liquidation 
preference of such stock.  In the 1994 and 1993 third quarters, primary 
per share amounts were based on weighted average common shares and common 
equivalents outstanding, including ESOP shares committed to be released.  
Fully diluted per share amounts assume the exercise of stock options and 
vesting of restricted stock at the beginning of the periods and, for the 
1993 third quarter, the conversion of convertible preferred stock and 
elimination of related dividends.  The fully diluted per share amount for 
the 1994 third quarter does not assume conversion of convertible preferred 
stock since the effect is antidilutive.  In the computations for the 1994 
and 1993 first, second and fourth quarters and year, common stock 
equivalents were not included as they did not have a dilutive effect.

      In connection with the July 1994 recapitalization, each old common 
share was exchanged for one half new common share.  As required under 
generally accepted accounting principles for transactions of this type, 
the historical weighted average shares outstanding have not been restated. 
 Thus, direct comparisons between 1994 and 1993 per share amounts are not 
meaningful.

      The sum of quarterly earnings per share amounts is not the same as 
annual earnings per share amounts because of changing numbers of shares 
outstanding.