<PAGE>

                            SCHEDULE 14A INFORMATION

                  Proxy Statement Pursuant to Section 14(a) of the
                          Securities Exchange Act of 1934
                                (Amendment No. )

Filed by the Registrant [x]
Filed by a Party other than the Registrant [  ]

Check the appropriate box:

[x] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)
    (2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12

                                 UAL Corporation
------------------------------------------------------------------------------
                (Name of Registrant as Specified In Its Charter)


------------------------------------------------------------------------------
     (Name of Person(s) Filing Proxy Statement if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[x]  No fee required.
[ ]  Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

     1) Title of each class of securities to which transaction applies:

     -------------------------------------------------------------------------

     2) Aggregate number of securities to which transaction applies:

     -------------------------------------------------------------------------

     3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):

     -------------------------------------------------------------------------

     4) Proposed maximum aggregate value of transaction:

     -------------------------------------------------------------------------

     5) Total fee paid:

     -------------------------------------------------------------------------

[ ] Fee paid previously with preliminary materials.

[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.

     1)  Amount Previously Paid:
     ----------------------------------------------------
     2)  Form, Schedule or Registration Statement No.:
     ----------------------------------------------------
     3)  Filing Party:
     ----------------------------------------------------
     4)  Date Filed:
     ----------------------------------------------------



<PAGE>
                             [UAL CORPORATION LOGO]
 
                                                                  March 23, 2000
 
DEAR FELLOW OWNER:
 
    Our company ended 1999 with record fourth-quarter financial results, capping
a year of milestones. We unveiled Our United Commitment, a renewed promise to
provide our customers with safe, efficient travel and quality service every time
they fly United. We achieved all of our on-time goals. And, we launched service
improvements, such as Economy Plus-SM-, that enhance customer comfort and build
loyalty.
 
    We also took significant actions to help our stockholders realize the full
value of their investments. We completed the third in a series of share buy-back
programs. We announced plans, to pay stockholder dividends (see details inside).
 
    The coming months will not be without their challenges. As the ESOP
allocation period ends, we must find ways to minimize the impact of
substantially increased compensation-related expenses. Fuel costs continue to
rise. And in a spirit of candor and cooperation, we must reach a successful
conclusion to contract discussions with key segments of our represented
employees. I'm confident that the people of our company, now 100,000 strong, are
united in their dedication to meet these challenges while positioning us for
continuing growth and profitability.
 
    On behalf of the Board of Directors, I'm pleased to invite you to the 2000
Annual Meeting of Stockholders. A notice of the 2000 annual meeting and proxy
statement follows. You will also find your proxy or voting direction card and
the 1999 annual report. This year I am pleased to inform you that you have three
ways to vote your proxy or voting direction card.
 
    1.  VOTE BY INTERNET at http://www.harrisbank.com/wproxy
 
    2.  VOTE BY PHONE by using the 1-888 number on your proxy or voting
       direction card
 
    3.  Vote by mail, by signing and dating the PROXY/VOTING DIRECTION CARD
       enclosed in this package and returning it in the postage paid envelope
       that is provided
 
    Your vote is important. Please take a moment now to vote, even if you plan
to attend the meeting. I encourage you to use the new "vote by internet" option.
 
                                          Sincerely,
 
                                          [SIGNATURE]
 
                                          James E. Goodwin

<PAGE>
                    NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
                              AND PROXY STATEMENT
 

<TABLE>
<S>       <C>
DATE:     Thursday, May 18, 2000
TIME:     10:00 a.m.
PLACE:    The Auditorium, 8th Floor
          Harris Trust and Savings Bank
          111 West Monroe Street
          Chicago, IL 60690
</TABLE>

 
MATTERS TO BE VOTED ON:
 
1.  Election of the following members of the Board of Directors:
 
    - Five Public Directors, to be elected by holders of Common Stock
 
    - Four Independent Directors, to be elected by holders of Class I Junior
      Preferred Stock
 
    - One ALPA Director, to be elected by holders of Class Pilot MEC Junior
      Preferred Stock
 
    - One IAM Director, to be elected by holders of Class IAM Junior Preferred
      Stock
 
    - One Salaried/Management Employee Director, to be elected by holders of
      Class SAM Junior Preferred Stock
 
2.  Approval of amendments to our Restated Certificate of Incorporation for
    purposes of dividends
 
3.  Approval of the United Employees Performance Incentive Plan
 
4.  Approval of the UAL Corporation 2000 Incentive Stock Plan
 
5.  Ratification of appointment of independent public accountants
 
6.  Any other matters that may be properly brought before the meeting
 
                                          Francesca M. Maher
                                          SENIOR VICE PRESIDENT,
                                          GENERAL COUNSEL AND SECRETARY
 
Chicago, Illinois
March 23, 2000

<PAGE>
                               TABLE OF CONTENTS
 

<TABLE>
<CAPTION>
                                                                PAGE
                                                              --------
<S>                                                           <C>
GENERAL INFORMATION.........................................      3
 
VOTING RIGHTS AND PROXY INFORMATION.........................      3
 
PROPOSAL NO. 1--ELECTION OF DIRECTORS.......................      7
  Directors to be Elected by Common Stock...................      7
  Directors to be Elected by Other Classes of Stock.........      8
 
CERTAIN INFORMATION CONCERNING OUR BOARD OF DIRECTORS.......     10
  Committees................................................     10
  Compensation Committee Interlocks and Insider
    Participation; Certain Relationships and Related
    Transactions............................................     12
  Director Compensation.....................................     12
 
BENEFICIAL OWNERSHIP OF SECURITIES..........................     14
  Certain Beneficial Owners.................................     14
  Directors and Executive Officers..........................     16
 
UAL CORPORATION RELATIVE MARKET PERFORMANCE.................     17
 
EXECUTIVE COMPENSATION......................................     18
  UAL Corporation Compensation and Compensation
    Administration Committees Report........................     18
  Summary Compensation Table................................     22
  Option Grants in 1999.....................................     23
  Aggregated Option Exercises in 1999 and Fiscal Year-End
    Option Values...........................................     24
  Pension Plan Table........................................     24
  Employment Contracts and Arrangements.....................     25
 
PROPOSAL NO. 2--APPROVAL OF AMENDMENTS TO OUR RESTATED
  CERTIFICATE OF INCORPORATION FOR PURPOSES OF DIVIDENDS....     26
 
PROPOSAL NO. 3--APPROVAL OF THE UNITED EMPLOYEES PERFORMANCE
  INCENTIVE PLAN FOR PURPOSES OF IRC SECTION 162 (m)........     27
 
PROPOSAL NO. 4--APPROVAL OF UAL CORPORATION 2000 INCENTIVE
  STOCK PLAN................................................     31
 
PROPOSAL NO. 5--APPOINTMENT OF INDEPENDENT PUBLIC
  ACCOUNTANTS...............................................     34
 
SUBMISSION OF STOCKHOLDER PROPOSALS.........................     34
 
ANNUAL REPORT...............................................     34
 
APPENDIX A--CHARTER AMENDMENT...............................    A-1
 
APPENDIX B--FINANCIAL INFORMATION...........................    B-1
</TABLE>

 
                                       2

<PAGE>
                                PROXY STATEMENT
                              GENERAL INFORMATION
 
    This Proxy Statement is furnished to you by our Board of Directors in
connection with the solicitation of your proxy to be voted at the annual meeting
of stockholders to be held on Thursday, May 18, 2000. This proxy statement and
the proxy or voting direction card are being mailed to you approximately
March 23, 2000.
 
                      VOTING RIGHTS AND PROXY INFORMATION
 
HOW DO I VOTE?
 
  -  VOTE BY INTERNET
 
    This year we are pleased to offer you the choice of voting via the internet
by logging into WWW.HARRISBANK.COM/WPROXY and following the prompts using your
six digit control number located on your proxy or voting direction card. This
vote will be counted immediately and there is no need to send in your proxy or
voting direction card.
 
  -  VOTE BY TELEPHONE
 
    The telephone voting procedure is simple and fast. Dial the 1-888 number on
your proxy or voting direction card and listen for further directions. You must
have a touch-tone phone in order to respond to the questions. This vote will be
counted immediately and there is no need to send in your proxy card.
 
YOU SAVE OUR COMPANY MONEY IF YOU USE THE VOTE BY INTERNET OR TELEPHONE OPTIONS.
 
  -  VOTE BY PROXY OR VOTING DIRECTION CARD
 
    Shares eligible to be voted, and for which a properly-signed proxy or
direction card is returned, will be voted in accordance with the instructions
specified on the proxy or voting direction card. If you do not mark any
instructions, your shares will be voted in favor of proposals 1, 2, 3, 4 and 5
for those holding a proxy and in favor of proposals 2, 3, 4 and 5 for those
holding a voting direction card.
 
WHO IS ENTITLED TO VOTE?
 
    You are entitled to vote if our records show that you held your shares at
the close of business on March 20, 2000. This is known as the record date for
determining who gets notice of the meeting and who gets to vote.
 
    The following chart shows the number of shares of each class of our voting
stock outstanding as of the record date, the number of holders of each class as
of the record date entitled to vote at the
 
                                       3

<PAGE>
meeting, the aggregate and per share votes for shares of each class for all
matters on which the shares vote, and the class of directors the class is
entitled to elect.
 

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------
<S>                             <C>         <C>        <C>               <C>        <C>
                                            AGGREGATE                     VOTES         VOTING
                                 SHARES      NUMBER       HOLDERS OF       PER            FOR
TITLE OF CLASS                  OUTSTANDING OF VOTES        RECORD        SHARE        DIRECTORS
---------------------------------------------------------------------------------------------------
Common Stock                    [      ]    [      ]   [      ]             1       Class elects 5
                                                                                    Public
                                                                                    Directors
---------------------------------------------------------------------------------------------------
Class P ESOP Voting Junior      [      ]    [      ]   1 (ESOP Trustee)   [   ]     --
  Preferred Stock
---------------------------------------------------------------------------------------------------
Class M ESOP Voting Junior      [      ]    [      ]   1 (ESOP Trustee)   [   ]     --
  Preferred Stock
---------------------------------------------------------------------------------------------------
Class S ESOP Voting Junior      [      ]    [      ]   1 (ESOP Trustee)   [   ]     --
  Preferred Stock
---------------------------------------------------------------------------------------------------
Class Pilot MEC Junior              1          1       1 (ALPA-MEC)         1       Class elects 1
  Preferred Stock                                                                   ALPA Director
---------------------------------------------------------------------------------------------------
Class IAM Junior Preferred          1          1       1 (IAM)              1       Class elects 1
  Stock                                                                             IAM Director
---------------------------------------------------------------------------------------------------
Class SAM Junior Preferred          3          3       2 (SAM Director      1       Class elects 1
  Stock                                                and Senior Vice              SAM Director
                                                       President-People)
---------------------------------------------------------------------------------------------------
Class I Junior Preferred Stock      4          4       4 (Independent       1       Class elects 4
                                                       Directors)                   Independent
                                                                                    Directors
---------------------------------------------------------------------------------------------------
</TABLE>

 
HOW DO ESOP PARTICIPANTS VOTE?
 
    Special voting rules will apply to ESOP participants who hold voting
preferred stock through the ESOP Trustee. The same voting methods apply to ESOP
participants: vote by internet, telephone or mail. Please consult your
accompanying materials for information concerning the voting of these shares.
 
    The Class P, M and S ESOP voting preferred stocks, held by a trust
established under a tax-qualified employee stock ownership plan (called the
qualified ESOP) that have been allocated to individual participants in the ESOP,
will be voted by participants, as named fiduciaries under the Employee
Retirement Income Security Act of 1974 on a confidential pass-through basis. The
ESOP Trustee generally is obligated to vote as instructed by the participants to
whom the voting preferred stock has been allocated, and the outstanding shares
command the entire voting power of each class of voting preferred stock. The
Class P voting stock allocated to former employees who were members of ALPA will
be voted by the ESOP Trustee. The ESOP Trustee will (except as may be required
by law) vote the unallocated or otherwise unvoted shares in this qualified ESOP
in proportions directed by participants who give instructions to the ESOP
Trustee for these shares. Each participant who is an employee has the right to
give directions to the ESOP Trustee in the proportion that the participant's
allocated shares bears to the allocated shares of all participants giving
directions.
 
    Shares held by the ESOP Trustee under a non-qualified employee stock
ownership plan (called the supplemental ESOP) will be voted as instructed by the
administrative committee appointed under the supplemental ESOP. The
administrative committee will consider the views of participants concerning the
vote, but is not required to take any particular action in response to those
views.
 
                                       4

<PAGE>
WHAT CLASSES OF STOCK VOTE FOR WHICH MATTERS AND WHAT IS THE VOTE REQUIRED?
 
    The holders of common stock; the Class S, M and P voting preferred stocks;
and the Class Pilot MEC, IAM and SAM stocks will vote together as a single class
on all items at the annual meeting except the election of directors. The
presence in person or by proxy of the holders of a majority of the total voting
power of the shares of all the classes outstanding at the record date is
necessary to constitute a quorum at the meeting for all items of business other
than the election of directors. The Class I stock does not vote on any matter
other than the election of the Independent Directors (as defined in our
charter).
 
    The presence in person or by proxy of the holders of a majority of the total
voting power of the outstanding shares entitled to vote on the election of a
particular class of director(s) is necessary to constitute a quorum at the
meeting for voting on that matter.
 
    Under the Delaware General Corporation Law and our charter (1) the
affirmative vote of the holders of the shares of capital stock present in person
or by proxy at the meeting representing a plurality of the votes cast on the
matter will be required to elect the directors to be elected by the applicable
class of capital stock, (2) the affirmative vote of the holders of the shares of
capital stock outstanding on the record date representing a majority of the
votes entitled to be cast on the matter will be required to approve and adopt
the proposed amendments to our charter, and (3) the affirmative vote of the
holders of the shares of capital stock representing a majority of the votes
present in person or by proxy at the meeting and entitled to be cast on the
matter will be required to approve or adopt the other matters in this notice of
meeting and proxy statement.
 
HOW DO ABSTENTIONS AND BROKER NON-VOTES WORK?
 
    Abstentions will have the effect of a vote against the matters presented for
a vote of the stockholders (other than the election of directors). This is
because abstaining shares are considered present and unvoted, which means they
have the same effect as votes against the matter. Abstentions have no effect on
the election of directors. Broker non-votes will have no effect on the outcome
of the vote on any of the matters presented for your vote, other than the
charter amendments, and will not be counted for purposes of establishing a
quorum. The required vote for the charter amendment is based on the voting power
of total shares outstanding, rather that the shares present or voted, so broker
non-votes will have the effect of a vote against the charter amendment.
 
HOW DOES THE PROXY VOTING PROCESS WORK?
 
    If the enclosed proxy is voted properly by using the internet or telephone
procedures specified or is properly returned by dating, signing and mailing, the
proxy will be voted at the annual meeting in accordance with the instructions
indicated by it. Our Board does not know of any matters, other than as described
in this notice of annual meeting and proxy statement, that are to come before
the annual meeting. If a proxy is given, the persons named in the proxy will
have authority to vote in accordance with their best judgment on any other
matter that is properly presented at the meeting for action, including any
proposal to adjourn or concerning the conduct of the meeting.
 
    If a quorum is not present at the time the annual meeting is convened for
any particular purpose, or if for any other reason we believe that additional
time should be allowed for the solicitation of proxies, we may adjourn the
meeting with your vote then present. The persons named in the proxy may vote any
shares of capital stock for which they have voting authority in favor of an
adjournment.
 
HOW IS MY PROXY VOTED IF I DO NOT INDICATE HOW TO VOTE?
 
    If no instructions are indicated, proxies will be voted for (1) the election
of directors of the class on which the shares represented by the proxy are
entitled to vote, (2) the amendments to our Restated
 
                                       5

<PAGE>
Certificate of Incorporation, (3) United Employees Performance Incentive Plan,
(4) the UAL Corporation 2000 Incentive Stock Plan, and (5) the appointment of
Arthur Andersen LLP.
 
HOW DO I REVOKE A PROXY?
 
    Any proxy may be revoked by the person giving it at any time before it is
voted. We have not established any specified formal procedure for revoking. A
proxy may be revoked by a later proxy delivered using the internet or telephone
voting procedures or by mail to the Secretary. A proxy may also be revoked by
written notice mailed to the Secretary. Attendance at the Annual Meeting will
not automatically revoke a proxy, but a holder of common stock in attendance may
request a ballot and vote in person, which revokes a prior granted proxy.
 
HOW ARE PROXIES BEING SOLICITED AND WHO PAYS SOLICITATION EXPENSES?
 
    Proxies are being solicited by and on behalf of the Board. All expenses of
the solicitation, including the cost of preparing and mailing this proxy
statement, will be borne by us. In addition to solicitation by use of mails,
proxies may be solicited by our directors, officers and employees in person or
by telephone or other means of communication. These individuals will not be
additionally compensated, but may be reimbursed for out-of-pocket expenses
associated with solicitation. Arrangements will also be made with custodians,
nominees and fiduciaries for forwarding of proxy solicitation material to
beneficial owners of common stock and voting preferred stock held of record, and
we may reimburse these individuals for their reasonable expenses. To assure the
presence in person or by proxy of the largest number of stockholders possible,
we have engaged Georgeson Shareholder Communications Inc. to solicit proxies on
our behalf. We are paying them a proxy solicitation fee of $7,500 and
reimbursing them for reasonable out-of-pocket expenses.
 
WHAT DO I NEED TO GET INTO THE ANNUAL MEETING?
 
  -  SHAREHOLDERS OF RECORD
 
    If you are a shareholder of record on March 20, 2000 (or your duly appointed
proxy holder), you are entitled to vote and attend the meeting. Certain
procedures have been adopted to ensure that no inconvenience or delays are
caused to the company's shareholders when entering the meeting.
 
    If you are a record holder and do not have an admittance card with you at
the meeting, you will be admitted upon verification of ownership at the
shareholders' registration desk. The admission ticket is located on the lower
portion of your proxy or voting direction card.
 
  -  SHAREHOLDERS THROUGH INTERMEDIARIES
 
    Persons who own stock through brokers, trustees, plans or in "street name"
and not directly through ownership of stock certificates are considered
beneficial owners. Beneficial owners of record on March 20, 2000 can obtain
admittance cards only at the shareholders' registration desk by presenting
evidence of common stock ownership. This evidence could be a proxy from the
institution that is the record holder of the stock or your most recent bank or
brokerage firm account statement, along with proper identification.
 
    Requests for proxies or voting direction from brokers, trustees or
fiduciaries should be processed as described in the accompanying materials.
 
                                       6

<PAGE>
                                 PROPOSAL NO. 1
                             ELECTION OF DIRECTORS
 
    Except where you withhold authority, your proxy will be voted at our 2000
Annual Meeting of Stockholders or any adjournments or postponements for the
election of the nominee(s) named below for a term of one year and until their
successors are duly elected and qualified. Incumbent directors will hold office
until the Annual Meeting and until their successors are elected and qualified,
subject to the director's earlier death, retirement or removal. Our Board of
Directors expects all nominees named below to be available for election. "We",
"our", "us" and the "Company" each refers to UAL Corporation.
 
DIRECTORS TO BE ELECTED BY COMMON STOCK
 
PUBLIC DIRECTORS
 
    Five Public Directors are to be elected by the holders of Common Stock, par
value $.01 per share. Each nominee was previously elected by the holders of the
common stock (other than Mr. Dutta) and has served continuously as a public
director since the date of his election. The term Public Director is used as
defined in our Restated Certificate of Incorporation (also called our charter).
 
    If a nominee unexpectedly becomes unavailable before election, proxies from
holders of common stock will be voted for the person designated by the Board or
the appropriate Board Committee as required by our charter. No person other than
our directors is responsible for the naming of nominees.
 

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------
<S>                     <C>     <C>                                                   <C>        <C>
                                       (1) PRINCIPAL OCCUPATION OR EMPLOYMENT                    DIRECTOR
NOMINEE                                   (2) OTHER BUSINESS AFFILIATIONS              AGE        SINCE
---------------------------------------------------------------------------------------------------------
Rono J. Dutta              (1)  President (7/99) of the company and its wholly owned     48      7/13/99
                                subsidiary, United Air Lines, Inc. Senior Vice
                                President--Planning of United (1994-7/99).
                           (2)  Trustee, The Marsico Investment Fund
---------------------------------------------------------------------------------------------------------
James E. Goodwin           (1)  Chairman and Chief Executive Officer (7/99),             55         1998
                                President and Chief Operating Officer (1998) of the
                                company and United. Senior Vice President--North
                                America (1995-1998). Senior Vice
                                President--International (1992-1995).
---------------------------------------------------------------------------------------------------------
John F. McGillicuddy       (1)  Retired Chairman and Chief Executive Officer,            69         1984
                                Chemical Banking Corporation (banking and finance),
                                for the past five years.
                           (2)  Director, Southern Peru Copper Corporation, USX
                                Corporation and Young & Rubicam Inc.
---------------------------------------------------------------------------------------------------------
James J. O'Connor          (1)  Retired Chairman and Chief Executive Officer (1998),     63         1984
                                Unicom Corporation (holding company) and its wholly
                                owned subsidiary, Commonwealth Edison Company
                                (supplier of electricity). Chairman and Chief
                                Executive Officer, Unicom (1994-1998) and
                                Commonwealth Edison (1980-1998).
                           (2)  Director, American National Can Group, Inc., Corning
                                Incorporated, Smurfit-Stone Container Corporation
                                and Tribune Company.
---------------------------------------------------------------------------------------------------------
Paul E. Tierney, Jr.       (1)  General Partner, Darwin Capital Partners (1999) and      57         1990
                                Managing Member, Development Capital, LLC
                                (investment management) (1997). Managing Director,
                                Gollust, Tierney and Oliver, Inc. (investment
                                banking) (1992-1996).
                           (2)  Director, Liz Claiborne, Inc. and C & B Publishing
                                PLC.
---------------------------------------------------------------------------------------------------------
</TABLE>

 
                                       7

<PAGE>
DIRECTORS TO BE ELECTED BY OTHER CLASSES OF STOCK
 
    The following classes of directors are to be elected by the holder of
certain classes of our stock other than common stock. THE HOLDERS OF COMMON
STOCK DO NOT VOTE ON THE ELECTION OF THESE DIRECTORS. Each nominee was
previously elected by the holders of the applicable class of our stock and has
served continuously as a director since the first date of his election. If a
nominee unexpectedly becomes unavailable before election, or we are notified
that a substitute nominee has been selected, votes will be cast pursuant to the
authority granted by the proxies from the respective holder(s) for the person
who may be designated as a substitute nominee.
 
INDEPENDENT DIRECTORS--ELECTED BY HOLDERS OF CLASS I STOCK
 
    Four Independent Directors (as defined in our charter) are to be elected by
the four Independent Directors as the holders of our Class I stock. Each nominee
has been nominated by the Independent Director Nomination Committee and under a
stockholders agreement among the holders of Class I Stock, ALPA, the IAM and us,
each holder has agreed to vote in favor of the nominees. No person, other than
the Independent Director Nomination Committee, is responsible for the naming of
nominees.
 

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------
<S>                    <C>     <C>                                               <C>        <C>
                                    (1) PRINCIPAL OCCUPATION OR EMPLOYMENT                  DIRECTOR
NOMINEE                                (2) OTHER BUSINESS AFFILIATIONS            AGE        SINCE
----------------------------------------------------------------------------------------------------
John W. Creighton,        (1)  Retired Chief Executive Officer and President        67         1998
Jr.                            (1997), Weyerhaeuser Company (forest products).
                               President (1988-1997) and Chief Executive
                               Officer (1991-1997), Weyerhaeuser.
                          (2)  Director, Unocal Corporation.
----------------------------------------------------------------------------------------------------
Richard D. McCormick      (1)  Chairman Emeritus (1999) and Chairman                59         1994
                               (1992-1999), US WEST, Inc. (telecommunications).
                               President (1986-1998) and Chief Executive
                               Officer (1991-1998),
                               US WEST.
                          (2)  Director, Wells Fargo & Company and United
                               Technologies Corporation.
----------------------------------------------------------------------------------------------------
Hazel R. O'Leary          (1)  Chief Operating Officer (3/1/00), Blaylock &         62         1999
                               Partners (investment banking). President (1997 -
                               2/29/00), O'Leary & Associates (energy services
                               and investment strategy). Secretary (1993-1997),
                               U.S. Department of Energy (government).
                          (2)  Director, The AES Corporation and ICF Kaiser
                               International, Inc.
----------------------------------------------------------------------------------------------------
John K. Van de Kamp       (1)  President, Thoroughbred Owners of California         64         1994
                               (trade association) (1996). Partner, Dewey
                               Ballantine (law firm) (1991-1996).
----------------------------------------------------------------------------------------------------
</TABLE>

 
                                       8

<PAGE>
ALPA DIRECTOR--ELECTED BY CLASS PILOT MEC STOCK
 
    One ALPA Director (as defined in our charter) is to be elected by the United
Airlines Pilots Master Executive Council, ALPA, the holder of our Class Pilot
MEC stock. The ALPA-MEC has nominated and intends to re-elect Frederick C.
Dubinsky as the ALPA Director.
 

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------
<S>                    <C>                                                      <C>        <C>
                               (1) PRINCIPAL OCCUPATION OR EMPLOYMENT                      DIRECTOR
NOMINEE                            (2) OTHER BUSINESS AFFILIATIONS               AGE        SINCE
---------------------------------------------------------------------------------------------------
Frederick C. Dubinsky  (1) Chairman, ALPA-MEC (labor union) (2000). Captain,       57       1/1/00
                           B747-400, United, for the past five years.
---------------------------------------------------------------------------------------------------
</TABLE>

 
IAM DIRECTOR--ELECTED BY CLASS IAM STOCK
 
    One IAM Director (as defined in our charter) is to be elected by the
International Association of Machinists and Aerospace Workers, the holder of our
Class IAM stock. The IAM has nominated and intends to re-elect John F. Peterpaul
as the IAM Director.
 

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------
<S>                     <C>                                                           <C> <C>
                                   (1) PRINCIPAL OCCUPATION OR EMPLOYMENT                 DIRECTOR
NOMINEE                               (2) OTHER BUSINESS AFFILIATIONS                 AGE  SINCE
-------------------------------------------------------------------------------------------------
John F. Peterpaul       (1) Retired General Vice President, IAM (labor union), for    64     1994
                            the past five years.
-------------------------------------------------------------------------------------------------
</TABLE>

 
SALARIED/MANAGEMENT EMPLOYEE DIRECTOR--ELECTED BY CLASS SAM STOCK
 
    One Salaried/Management Employee Director (as defined in our charter) is to
be elected by the holders of our Class SAM stock, who are Deval L. Patrick, the
Salaried/Management Employee Director, and William P. Hobgood, our Senior Vice
President-People. Mr. Patrick has been nominated for re-election by the "System
Roundtable," a body of salaried and management employees of United empowered to
review issues relating to us and their effect on salaried and management
employees. Under a Stockholders Agreement among the holders of Class SAM stock
and us, each holder has agreed to vote in favor of the System Roundtable
nominee.
 

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
<S>                         <C>                                                                  <C> <C>
                                          (1) PRINCIPAL OCCUPATION OR EMPLOYMENT                     DIRECTOR
NOMINEE                                      (2) OTHER BUSINESS AFFILIATIONS                     AGE  SINCE
------------------------------------------------------------------------------------------------------------
Deval L. Patrick            (1) Vice President & General Counsel, Texaco Inc. (oil/ energy       43     1997
                                company) (1999). Partner, Day, Berry & Howard (law firm)
                                (1997-1999). Assistant Attorney General, Civil Rights
                                Division, U.S. Department of Justice (law enforcement)
                                (1994-1997).
------------------------------------------------------------------------------------------------------------
</TABLE>

 
                                       9

<PAGE>
             CERTAIN INFORMATION CONCERNING OUR BOARD OF DIRECTORS
 
    Our Board of Directors held a total of 12 meetings in 1999. All directors
attended 75 percent or more of the Board meetings and Board committee meetings
of which they were members.
 
COMMITTEES
 
    The Board of Directors has Executive, Audit, Compensation, Compensation
Administration, CAP, Labor, Independent Director Nomination, Outside Public
Director Nomination, Pension and Welfare Plans Oversight and Transaction
Committees. Below is a brief description of the functions performed, the number
of meetings held and the names of committee members.
 

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------
<S>                                                                                                   <C>
                                  NAME AND FUNCTIONS OF COMMITTEE                                     MEETINGS IN 1999
-------------------------------------------------------------------------------------------------------------------------
EXECUTIVE
- authorized to exercise the powers of the Board in management of our business and affairs, with               7
  certain exceptions
- responsible for safety and security oversight for United
- reviews Board effectiveness and oversees compensation arrangements for non-employee directors
- administers the directors plan
- reviews management succession planning for certain senior positions
- acts as a search committee and recommends to Board appointment of a successor CEO (requires four
  votes, excluding Mr. Goodwin)
-------------------------------------------------------------------------------------------------------------------------
AUDIT
- reviews and discusses with management and independent auditors our annual financial statements               2
  prior to publication, financial reporting practices and results of annual external audit
- reviews work of the independent auditors, scope of annual external audit and the auditor's
  independence
- makes annual recommendations to our Board for appointment of independent public accountants for
  the coming year
- reviews the effectiveness of our financial and accounting functions, organization, operations and
  management and adequacy of internal accounting controls
- reviews major accounting policies and significant judgments affecting the financial statements
- establishes and reviews the adequacy of our code of business conduct and corporate compliance
  programs
- reviews and reassesses adequacy of this committee's charter on an annual basis
-------------------------------------------------------------------------------------------------------------------------
COMPENSATION
- reviews and approves compensation and benefits of our officers                                              12
- reviews general policy matters relating to compensation and benefits of our non-union employees
- administers our equity incentive compensation plans, except for responsibilities reserved for the
  Compensation Administration Committee
-------------------------------------------------------------------------------------------------------------------------
COMPENSATION ADMINISTRATION
- administers our stock option plans and executive compensation programs to the extent these                  12
  functions cannot or are not appropriate to be performed by the Compensation Committee in light of
  any provision of the Internal Revenue Code of 1986, as amended, securities laws or other
  applicable laws or regulations
-------------------------------------------------------------------------------------------------------------------------
</TABLE>

 
                                       10

<PAGE>
 

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------
<S>                                                                                                   <C>
                                  NAME AND FUNCTIONS OF COMMITTEE                                     MEETINGS IN 1999
-------------------------------------------------------------------------------------------------------------------------
CAP
- oversees implementation of our Competitive Action Plan to improve United's competitiveness on                3
  short-haul routes under which United Shuttle(-Registered Trademark-) was established
- approves on our behalf any modifications to the Competitive Action Plan, other than those matters
  reserved to the Labor Committee
- approves modifications to Salaried and Management Employee Investment (as defined in our charter)
  (vote must include two union directors and all Outside Public Directors, as defined in our
  charter)
-------------------------------------------------------------------------------------------------------------------------
LABOR
- reviews and approves the entering into of, and modifications and amendments to, collective                   6
  bargaining agreements to which we are a party, with certain exceptions
-------------------------------------------------------------------------------------------------------------------------
INDEPENDENT DIRECTOR NOMINATION
- nominates candidates to become Independent Director members of the Board                                     8
- fills vacancies in Independent Director positions
- appoints Independent Directors to serve on Board Committees (nominations and appointments require
  vote of majority of Independent Directors plus one union director)
-------------------------------------------------------------------------------------------------------------------------
OUTSIDE PUBLIC DIRECTOR NOMINATION
- nominates candidates to become Outside Public Director members of the Board                                  2
- fills vacancies in Outside Public Director positions
- appoints Outside Public Directors to serve on Board Committees
-------------------------------------------------------------------------------------------------------------------------
PENSION AND WELFARE PLANS OVERSIGHT
- oversees our compliance with laws governing employee benefit plans that we maintain                          2
-------------------------------------------------------------------------------------------------------------------------
TRANSACTION
- evaluates and advises the Board on any proposed merger or consolidation of us with or into, the              0
  sale, lease or exchange of all or substantially all of our property or assets to, or a significant
  business transaction with, any Labor Affiliate (as defined in our charter)
-------------------------------------------------------------------------------------------------------------------------
</TABLE>

 
                                       11

<PAGE>
 

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------
<S>                   <C>    <C>  <C>   <C>    <C>        <C>          <C>    <C>         <C>        <C>
                                              COMMITTEE MEMBERSHIP
----------------------------------------------------------------------------------------------------------------
                                                                               OUTSIDE     PENSION
                                                          INDEPENDENT           PUBLIC    & WELFARE
                                        COMP               DIRECTOR            DIRECTOR     PLANS
                      AUDIT  CAP  COMP  ADMIN  EXECUTIVE  NOMINATION   LABOR  NOMINATION  OVERSIGHT  TRANSACTION
----------------------------------------------------------------------------------------------------------------
John W. Creighton,
Jr.                     x          x      x                   Ch         x                                x
----------------------------------------------------------------------------------------------------------------
Frederick C.
Dubinsky                      x    x               x           x                              x
----------------------------------------------------------------------------------------------------------------
Rono J. Dutta                                                                                 x
----------------------------------------------------------------------------------------------------------------
James E. Goodwin              x    x              Ch                    Ch
----------------------------------------------------------------------------------------------------------------
Richard D. McCormick    x          Ch    Ch        x           x                                          x
----------------------------------------------------------------------------------------------------------------
John F. McGillicuddy    x     x                    x                              x                      Ch
----------------------------------------------------------------------------------------------------------------
James J. O'Connor       x     x    x      x                                       Ch          x           x
----------------------------------------------------------------------------------------------------------------
Hazel R. O'Leary        x     x                                x                              x           x
----------------------------------------------------------------------------------------------------------------
Deval L. Patrick                   x                           x                              x
----------------------------------------------------------------------------------------------------------------
John F. Peterpaul             x    x               x           x                              x
----------------------------------------------------------------------------------------------------------------
Paul E. Tierney, Jr.   Ch     x                                          x        x                       x
----------------------------------------------------------------------------------------------------------------
John K. Van de Kamp     x    Ch                    x           x                             Ch           x
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
Key:  x  =  Current Committee Assignment
     Ch =  Chairman
----------------------------------------------------------------------------------------------------------------
</TABLE>

 
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION; CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
 
    Mr. Goodwin and Capt. Dubinsky serve on the Compensation Committee, but not
the Compensation Administration Committee. Mr. Goodwin and Capt. Dubinsky are
employees of ours. Capt. Dubinsky is also the Chairman of the ALPA-MEC and an
officer of ALPA. We and ALPA are parties to a collective bargaining agreement
for our pilots represented by ALPA.
 
DIRECTOR COMPENSATION
 
    We do not pay directors who are employees of the company additional
compensation for their services as directors. In 1999, compensation for
non-employee directors included the following:
 
    - annual retainer of $18,000
 
    - $900 for each Board and Board committee meeting attended
 
    - annual retainer of $2,700 to committee chairmen (other than chair of
      Compensation Administration Committee)
 
    - expenses of attending Board and committee meetings
 
    - 400 shares of common stock each year
 
    - 189 deferred stock units representing common stock each year
 
    Under our stock ownership guidelines, our directors are to keep the 400
shares while they are on the Board. They may also elect to receive some or all
of their cash retainer and fees in common stock, as well as defer their stock
and cash compensation for tax purposes. The deferred stock units are unfunded
and are not settled until after he or she leaves the Board.
 
    We consider it important for our directors to understand our business and
have exposure to our operations and employees. For this reason, we provide free
transportation and free cargo shipment on
 
                                       12

<PAGE>
United to our directors and their spouse and eligible dependent children. We
reimburse our directors for income taxes resulting from actual use of the travel
and shipment privileges. A director who retires from the Board with at least
five years of company creditable service will receive free travel and cargo
benefits for life, subject to certain exceptions.
 
    The cost of this policy in 1999 for each director, including cash payments
made in February 2000 for income tax liability, was as follows:
 

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------
<S>                                   <C>        <C>                                   <C>
NAME                                  COST($)    NAME                                  COST($)
-----------------------------------------------------------------------------------------------
John W. Creighton, Jr.                 13,163    James J. O'Connor                      41,408
-----------------------------------------------------------------------------------------------
Frederick C. Dubinsky                       0    Hazel R. O'Leary                            0
-----------------------------------------------------------------------------------------------
Rono J. Dutta                          12,115    Deval L. Patrick                       35,819
-----------------------------------------------------------------------------------------------
James E. Goodwin                            0    John F. Peterpaul                      11,462
-----------------------------------------------------------------------------------------------
Richard D. McCormick                   56,946    Paul E. Tierney, Jr.                   62,661
-----------------------------------------------------------------------------------------------
John F. McGillicuddy                   23,984    John K. Van de Kamp                    30,716
-----------------------------------------------------------------------------------------------
</TABLE>

 
                                       13

<PAGE>
                       BENEFICIAL OWNERSHIP OF SECURITIES
 
CERTAIN BENEFICIAL OWNERS
 
    The following table shows the number of shares of our voting securities
owned by any person or group known to us as of March 20, 2000, to be the
beneficial owner of more than 5% of any class of our voting securities.
 

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
<S>                                           <C>                       <C>             <C>         <C>
                                                                                                    PERCENT OF
                                                                                                    TOTAL VOTING
                                                                         AMOUNT AND                   POWER
                                                                           NATURE       PERCENT     OUTSTANDING
                                                                        OF BENEFICIAL      OF       FOR PROPOSALS
NAME AND ADDRESS OF BENEFICIAL OWNER               TITLE OF CLASS       OWNERSHIP(1)     CLASS         2-5
------------------------------------------------------------------------------------------------------------------
State Street Bank and Trust Company, Trustee  Common Stock              52,631,479(2)      50.7%
  225 Franklin Street                         Class P ESOP Voting        5,692,987(2)       100%        25.4%
  Boston, MA 02110                              Junior Preferred Stock
                                              Class M ESOP Voting        4,800,892(2)       100%        20.4%
                                                Junior Preferred Stock
                                              Class S ESOP Voting        2,131,443(2)       100%         9.2%
                                                Junior Preferred Stock
------------------------------------------------------------------------------------------------------------------
AXA Conseil Vie Assurance Mutuelle            Common Stock               8,348,850(3)      15.6%           7%
  100-101 Terrasse Boieldieu
  92042 Paris La Defense France
 
AXA Assurances I.A.R.D. Mutuelle &
AXA Assurances Vie Mutuelle
  21, rue de Chateaudun
  75009 Paris France
 
AXA Courtage Assurance Mutuelle
  26, rue Louis le Grand
  75002 Paris France
 
AXA
  9 Place Vendome
  75001 Paris France
 
AXA Financial, Inc.
  1290 Avenue of the Americas
  New York, NY 10104
------------------------------------------------------------------------------------------------------------------
Oppenheimer Capital                           Common Stock               3,541,655(4)       6.6%           3%
  1345 Avenue of the Americas
  New York, NY 10105
------------------------------------------------------------------------------------------------------------------
Marsico Capital Management, LLC               Common Stock               2,710,726(5)    5.0645%         2.3%
  1200 17th Street, Suite 1300
  Denver, CO 80202
------------------------------------------------------------------------------------------------------------------
United Airlines Pilots Master Executive       Class Pilot MEC Junior               1        100%           --
  Council                                       Preferred Stock
  Air Line Pilots Association,
  International
  6400 Shafer Court, Suite 700
  Rosemont, IL 60018
------------------------------------------------------------------------------------------------------------------
International Association of                  Class IAM Junior                     1        100%           --
  Machinists and Aerospace Workers              Preferred Stock
  District #141
  9000 Machinists Place
  Upper Marlboro, MD 20772
------------------------------------------------------------------------------------------------------------------
Deval L. Patrick                              Class SAM Junior                     2      66.67%           --
  Texaco Inc.                                   Preferred Stock
  2000 Westchester Avenue
  White Plains, NY 10650
------------------------------------------------------------------------------------------------------------------
</TABLE>

 
                                       14

<PAGE>
 

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
<S>                                           <C>                       <C>             <C>         <C>
                                                                                                    PERCENT OF
                                                                                                    TOTAL VOTING
                                                                         AMOUNT AND                   POWER
                                                                           NATURE       PERCENT     OUTSTANDING
                                                                        OF BENEFICIAL      OF       FOR PROPOSALS
NAME AND ADDRESS OF BENEFICIAL OWNER               TITLE OF CLASS       OWNERSHIP(1)     CLASS         2-5
------------------------------------------------------------------------------------------------------------------
William P. Hobgood                            Class SAM Junior                     1      33.33%           --
  Senior Vice President-People                  Preferred Stock
  United Airlines
  P.O. Box 66100
  Chicago, IL 60666
------------------------------------------------------------------------------------------------------------------
John W. Creighton, Jr.                        Class I Junior Preferred             1         25%           --
  Madrona Investments                           Stock
  1000 Second Avenue
  Suite 3700
  Seattle, WA 98104
------------------------------------------------------------------------------------------------------------------
Richard D. McCormick                          Class I Junior Preferred             1         25%           --
  US WEST, Inc.                                 Stock
  3200 Cherry Creek South Drive
  Denver, CO 80209
------------------------------------------------------------------------------------------------------------------
Hazel R. O'Leary                              Class I Junior Preferred             1         25%           --
  Blaylock & Partners                           Stock
  609 5th Avenue
  New York, NY 10017
------------------------------------------------------------------------------------------------------------------
John K. Van de Kamp                           Class I Junior Preferred             1         25%           --
  Dewey Ballantine                              Stock
  333 S. Hope Street
  Los Angeles, CA 90071-3003
------------------------------------------------------------------------------------------------------------------
</TABLE>

 
(1) Shares of Class Pilot MEC, Class IAM and Class SAM stock elect one ALPA, IAM
    and Salaried/Management Employee Director, respectively, and have one vote
    on all matters submitted to the holders of common stock other than the
    election of directors. Shares of Class I stock elect four Independent
    Directors and do not vote on other matters except as required by law.
 
(2) Based on Schedule 13G dated February 10, 2000 filed with the SEC, in which
    reporting person reported that as of December 31, 1999, (1) as trustee under
    the ESOP, it had shared voting power over 5,692,987 shares of Class P ESOP
    Voting Junior Preferred Stock representing 25.4% of our voting power,
    4,800,892 shares of Class M ESOP Voting Junior Preferred Stock representing
    20.4% of our voting power, and 2,131,443 shares of Class S ESOP Voting
    Junior Preferred Stock (Class S, P and M voting stocks referred to as the
    voting preferred stocks) representing 9.2% of our voting power, and shared
    dispositive power over 12,100,463 shares of Class 1 ESOP Convertible
    Preferred Stock and 948,036 shares of Class 2 ESOP Convertible Preferred
    Stock, each convertible into quadruple that number of shares of common
    stock, as well as 5,050 shares of common stock issuable upon conversion of
    the voting preferred stocks, and (2) as trustee acting in various fiduciary
    capacities, it had sole dispositive power over 226,986 shares of common
    stock and sole voting power for 205,446 shares. The reporting person
    disclaims beneficial ownership of all shares reported. Voting power of
    voting preferred stocks is limited to matters other than the vote for
    directors.
 
(3) Based on Schedule 13G/A (Amendment No. 12) dated February 10, 2000 filed
    with the SEC, in which AXA Conseil Vie Assurance Mutuelle, AXA Assurances
    I.A.R.D. Mutuelle, AXA Assurances Vie Mutuelle, and AXA Courtage Assurance
    Mutuelle, as a group, AXA and AXA Financial, Inc. (formerly known as The
    Equitable Companies Incorporated) reported, as of January 31, 2000, sole
    voting power for 1,752,840 shares, shared voting power for 4,301,800 shares
    and sole dispositive power for 8,348,850 shares.
 
(4) Based on Schedule 13G/A (Amendment No. 2) dated February 10, 2000 filed with
    the SEC, in which reporting person, on behalf of itself and/or certain
    investment advisory clients or discretionary accounts, reported shared
    voting and dispositive power for the shares.
 
(5) Based on Schedule 13G dated February 14, 2000 filed with the SEC, in which
    reporting person reported sole voting and dispositive power for the shares.
 
                                       15

<PAGE>
DIRECTORS AND EXECUTIVE OFFICERS
 
    The following table sets forth the number of shares of common stock and of
voting preferred stock held in the ESOP owned as of March 20, 2000, by our
directors, and executive officers included in the Summary Compensation Table,
and by our directors and executive officers as a group. Unless we say otherwise
in a footnote, the owner exercises sole voting and investment power over the
securities (other than unissued securities which ownership we have imputed to
the owner). Some of our directors and executive officers also own shares of
other classes of our preferred stock as shown in the table above.
 

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------
<S>                                             <C>                        <C>                     <C>
NAME OF DIRECTOR OR EXECUTIVE OFFICER AND             COMMON STOCK                PERCENT          VOTING PREFERRED STOCK
GROUP                                            BENEFICIALLY OWNED(1)           OF CLASS          BENEFICIALLY OWNED(2)
-------------------------------------------------------------------------------------------------------------------------
John W. Creighton, Jr.                                         [4,028]                        *                         0
-------------------------------------------------------------------------------------------------------------------------
Frederick C. Dubinsky                                          [4,406]                        *                    [1,102]
-------------------------------------------------------------------------------------------------------------------------
Rono J. Dutta                                                [136,496]                     [  ]                      [975]
-------------------------------------------------------------------------------------------------------------------------
James E. Goodwin                                             [280,035]                     [  ]                    [1,151]
-------------------------------------------------------------------------------------------------------------------------
Gerald Greenwald                                              232,688                      [  ]                    [3,085]
-------------------------------------------------------------------------------------------------------------------------
Richard D. McCormick                                           [7,690]                        *                         0
-------------------------------------------------------------------------------------------------------------------------
John F. McGillicuddy                                            8,297                         *                         0
-------------------------------------------------------------------------------------------------------------------------
James J. O'Connor                                               7,950                         *                         0
-------------------------------------------------------------------------------------------------------------------------
Hazel R. O'Leary                                                  910                         *                         0
-------------------------------------------------------------------------------------------------------------------------
Deval L. Patrick                                               [2,466]                        *                         0
-------------------------------------------------------------------------------------------------------------------------
John F. Peterpaul                                               3,224                         *                         0
-------------------------------------------------------------------------------------------------------------------------
Paul E. Tierney, Jr.                                           38,758                         *                         0
-------------------------------------------------------------------------------------------------------------------------
John K. Van de Kamp                                             3,212                         *                         0
-------------------------------------------------------------------------------------------------------------------------
Douglas A. Hacker                                            [259,244]                        *                    [1,350]
-------------------------------------------------------------------------------------------------------------------------
Francesca M. Maher                                            [68,744]                        *                      [782]
-------------------------------------------------------------------------------------------------------------------------
Andrew P. Studdert                                           [113,150]                        *                      [631]
-------------------------------------------------------------------------------------------------------------------------
Directors and Executive Officers as a Group
  (16 persons)                                                 [    ]                      [  ]                    [8,110]
-------------------------------------------------------------------------------------------------------------------------
</TABLE>

 
*   Less than 1%
 
(1) This number includes (a) deferred stock units for Creighton [1,892];
    McCormick [5,492]; McGillicuddy 5,697; O'Connor 2,150; O'Leary 510; Patrick
    [2,465]; Peterpaul 824; Tierney 2,942; and Van de Kamp 3,212 (which reflects
    beneficial ownership of common stock represented by deferred stock units
    (representing deferred receipt of stock until Board participation ceases)
    under the UAL Corporation 1995 Directors Plan); (b) options exercisable
    within 60 days of March 20, 2000 for Dutta 90,773; Goodwin 187,424;
    Greenwald 1,044,923; Hacker 195,823; Maher 57,825; Studdert 71,998; and for
    the group [1,685,741]; (c) common stock issuable upon conversion of ESOP
    preferred for Dubinsky [4,406]; Dutta [3,898]; Goodwin [4,603]; Greenwald
    [12,342]; Hacker [5,400]; Maher [3,129]; Studdert [2,526]; and for the group
    [36,846] (see footnote 2); (d) for Mr. Goodwin, 10,000 held indirectly by
    his wife; (e) for Mr. Dutta, [85] held indirectly by a United 401(k) plan
    (as of December 31, 1999); and (f) for Ms. Maher, 4,320 held indirectly by
    her husband.
 
(2) Reflects beneficial ownership through the ESOP of (a) Class P Voting Stock
    for Mr. Dubinsky, and (b) Class S Voting Stock for Messrs. Dutta, Goodwin,
    Hacker, Maher and Studdert, and for directors and executive officers as a
    group. Represents less than 1% for each person reported and       % for the
    group.
 
                                       16

<PAGE>
                                                        UAL CORPORATION
                                                  RELATIVE MARKET PERFORMANCE
                                                    TOTAL RETURN 1995-1999
 
                                                      [PERFORMANCE GRAPH]
 

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
<S>                                                    <C>        <C>        <C>        <C>        <C>        <C>
                                                       1994        1995       1996       1997       1998       1999
----------------------------------------------------------------------------------------------------------------------
UAL Corp                                                 100       204.29     286.12     423.46     273.25     355.07
S&P 500 Index                                            100       137.58     169.17     225.60     290.08     351.12
D-J Airline Group (1)                                    100       144.87     160.57     267.85     261.84     257.76
----------------------------------------------------------------------------------------------------------------------
</TABLE>

 
                                                      Source: Compustat Database
 
------------------------
 
(1) Alaska Air, AMR, Delta, Southwest, USAirways
 
                                       17

<PAGE>
                             EXECUTIVE COMPENSATION
 
                        UAL CORPORATION COMPENSATION AND
                 COMPENSATION ADMINISTRATION COMMITTEES REPORT
 
WHAT WAS THE COMPANY'S COMPENSATION PHILOSOPHY FOR 1999?
 
    The company's executive compensation program is designed to:
 
    - attract, retain and motivate top quality and experienced officers
 
    - provide industry competitive compensation opportunities
 
    - support a pay-for-performance culture and
 
    - emphasize pay-at-risk.
 
    The company's compensation program provides, among other matters, that it
will be administered in a manner consistent with the philosophy of an
employee-owned company.
 
WHAT IS THE STRUCTURE OF THE COMPENSATION PROGRAM?
 
    There are three components to the executive compensation program:
 
    - Base salary
 
    - Annual incentive bonuses
 
    - Stock compensation
 
    The compensation program is designed to set total compensation opportunity
(base salary plus annual bonus plus stock options) at the median level, adjusted
for the company's size, of total compensation paid to similarly positioned
executives at the four largest U.S. air carriers (AMR Corporation, Delta Air
Lines, Inc., Northwest Airlines Corporation, and US Airways Group, Inc.).
 
    The program is heavily oriented toward incentive compensation tied to the
annual and longer-term financial performance of the company and to its
longer-term return to stockholders.
 
HOW ARE BASE SALARIES DETERMINED?
 
    Consistent with the salary increase policy for management employees under
the terms of the ESOP, officers were not awarded salary increases in 1999,
unless an officer was promoted to a position with greater responsibilities. With
the reorganization of officer positions in 1999, four of the officer positions
received promotional increases designed to bring their base salaries into line
with competitive airline industry salaries for their new position. The officers
that received promotional increases are: Jim Goodwin, CEO; Rono Dutta,
President; Doug Hacker, Executive Vice President, Finance and Planning and CFO;
and Andy Studdert, Executive Vice President and COO.
 
HOW ARE BONUSES DETERMINED?
 
    Under the annual incentive program, an incentive pool is created based upon
the company's earnings. Each year the Compensation Committee approves a schedule
of annual incentive pool funding relative to specified earnings targets.
 
    The CEO recommends to the Compensation Committee incentive awards for each
officer based upon an assessment of the officer's contribution over the
preceding year, taking into account the total funded pool. The assessment is
based upon, among other things, an annual appraisal for each officer of his or
her managerial skills and the performance by him or her of assigned
responsibilities. The CEO also considers corporate performance and industry
competitive data. Awards for the executive officers are made by the Compensation
Committee based on a pre-established formula under the incentive plan. The
non-management members of the Board prepare an evaluation of the CEO that is
discussed
 
                                       18

<PAGE>
with him, and the Compensation Committee used this evaluation as part of making
the final determination of the CEO's award.
 
    In 2000 each of the executive officers received an incentive compensation
award for 1999 performance, which was granted pursuant to the normal incentive
compensation plan terms according to the formula described above, and for
Mr. Goodwin, pursuant to his employment agreement.
 
HOW ARE STOCK OPTIONS DETERMINED?
 
    The normal stock compensation program is comprised entirely of annual stock
options. While there are no specific target award levels or weighting of factors
considered in determining stock grants, option grants are determined in
consideration of individual performance and contribution and airline industry
practice, using the same group referred to above for base salary and annual
incentive compensation. The CEO recommends stock option grants for each officer
to the Compensation Administration Committee. This Committee determines stock
awards for the CEO based upon a comparable process and makes a final
determination on stock awards for all other officers.
 
    Stock options may not be granted at less than fair market value on the date
of grant. Stock options carry a 10-year term and typically vest ratably over a
four-year period. The company's stock option plan includes provisions to
preserve, to the maximum extent possible, the deductibility by the company of
amounts awarded under the plan.
 
    The officer compensation program in total is primarily focused on promoting
pay-for-performance and emphasizing pay-at-risk, and heavily oriented toward
stockholder interests through the use of long-term incentives that create a
direct linkage between officer rewards and increased stockholder value. The
long-term incentive component, which is composed totally of stock-based
incentives, represents over half the total income opportunity for the officers.
 
    In 1999, base salaries were below market due to the restrictions imposed by
the ESOP. Stock option awards were therefore increased to provide competitive
total compensation opportunities (i.e., base salary plus annual bonus plus stock
options).
 
    The company's executive officers received a stock option grant in 1999,
subject to the company's normal vesting schedule, in full compliance with
Section 162(m) of the Internal Revenue Code.
 
DOES THE COMPANY USE RESTRICTED STOCK AS AN ELEMENT OF THE COMPENSATION PROGRAM?
 
    The company has eliminated restricted stock as a component of its normal
compensation program. However, to enable the company to attract high quality
management at the most senior officer levels, sign-on compensation packages for
these officers at the time of hiring may include cash and restricted or other
stock awards in addition to compensation of the types described above. In
addition, restricted stock may be used for a limited number of United employees
in response to compelling business requirements, such as for recruitment,
retention or promotion of key management employees.
 
    Each of Messrs. Dutta, Hacker and Studdert received a restricted stock grant
in 1999 in connection with their promotions. To encourage retention, the
restricted stock vests 100% five years from the grant date.
 
HOW HAS THE COMPANY RESPONDED TO IRS LIMITS ON DEDUCTIBILITY OF COMPENSATION?
 
    Section 162(m) of the Internal Revenue Code limits the tax deductibility of
compensation in excess of $1 million paid to certain executive officers, unless
the payments are made under plans that satisfy the technical requirements of the
Code and qualify as performance-based pay. The Committee believes that
performance-based pay over $1 million is sometimes required to attract and
retain executives in a competitive marketplace. Stock options are designed so
that the compensation paid will be tax deductible by the company. Incentive
compensation awards for 1999 performance are not tax deductible to the extent
such awards cause the Section 162(m) $1 million compensation limit to be
exceeded. In this proxy statement, stockholders are being asked to approve a
plan for additional shares
 
                                       19

<PAGE>
for future stock option grants and a plan for incentive awards to maximize our
ability to deduct future incentive compensation paid to the officers covered by
Section 162(m).
 
    To date, there has been no compensation exceeding $1 million in
non-Section 162(m) qualified compensation for any proxy-named officer (other
than for Mr. Goodwin). However, the Committee reserves the right to determine
when and if it is in the company's best interest to forego deductibility.
 
DOES THE COMPANY REQUIRE ITS OFFICERS TO HOLD STOCK IN THE COMPANY?
 
    To encourage accumulation and retention of common stock by officers,
guidelines have been adopted providing for the minimum ownership of common stock
at the multiples of annual salary ranging from two to five times for the
executive officers. Officers are also expected to retain a portion of the stock
received upon exercise of options or vesting of restricted stock awards until
the value of their holdings equals the specified minimums. Unexercised stock
options, unvested restricted stock and ESOP stock ownership are not recognized
for purposes of these guidelines.
 
    To promote the retention of common stock, receipt of Mr. Goodwin's
restricted share units described below is deferred until his retirement from the
company.
 
WHAT WAS THE BASIS FOR MR. GREENWALD'S 1999 COMPENSATION?
 
    The compensation package for Mr. Greenwald was established in a five year
employment agreement negotiated by Mr. Greenwald with ALPA and the IAM in 1994.
Due to his retirement effective July 1, 1999, Mr. Greenwald was not eligible for
any increase in base salary, which remained at the July 1998 annual level of
$719,463 for the first half of the year. A pro-rated bonus of $383,356 was paid
to him in 1999 in accordance with his employment agreement.
 
    In connection with Mr. Greenwald's retirement, the company amended his
employment agreement so that his remaining restricted stock award vested
immediately as of the date of his retirement. As a retired CEO, Mr. Greenwald is
being provided with office and secretarial support for five years and club
membership fees for three years.
 
WHAT WAS THE BASIS FOR MR. GOODWIN'S 1999 COMPENSATION?
 
    The company entered into a five year employment agreement with Mr. Goodwin
effective July 13, 1999.
 
    BASE SALARY.  Under his employment agreement, Mr. Goodwin received an
increase in base salary to $725,000 as a result of his promotion to CEO in
July 1999. This increase was awarded to reflect airline industry compensation
commensurate with the new roles and responsibilities he assumed.
 
    ANNUAL BONUS.  Under his employment agreement, Mr. Goodwin is eligible to
receive an annual bonus, as CEO, as determined by the Compensation Committee
under the company's annual incentive plan. His target percentage can be no less
than the maximum percentage permitted under the incentive plan (called the
target bonus). He will be entitled to an additional 20% over this target bonus
amount under the plan for superior performance, which may be paid outside the
plan. Mr. Goodwin received an incentive compensation award in 2000 for 1999
performance, which was awarded under the incentive compensation plan terms
according to the formula described above. Mr. Goodwin's incentive award was
based on two components: company performance and individual performance
consistent with the incentive compensation plan. The Compensation Committee
approved the pre-tax profit margin target that the company needed to achieve to
pay incentive compensation awards under the plan. Company earnings for 1999 were
such that allowed for an award under the plan subject to individual performance.
The Committee considered Mr. Goodwin's strong performance in his first year as
CEO of the company and an award was made.
 
    STOCK OPTIONS.  Under his employment agreement, Mr. Goodwin received a stock
option grant in 1999 for 167,500 shares of common stock that vests in four equal
annual installments. The amount of
 
                                       20

<PAGE>
the grant was determined to provide Mr. Goodwin with a total compensation
opportunity in line with the packages received by other CEOs at the major
airlines.
 
    RESTRICTED STOCK.  At the time Mr. Goodwin became CEO, in recognition of his
promotion, he was granted 50,000 restricted share units under his employment
agreement that will vest 20% over the next five years. Each unit represents a
right to receive one share of common stock. These restricted share units are
intended to provide additional incentive to Mr. Goodwin, to further align his
interests with stockholders, and to provide him with a total compensation
opportunity in line with the packages received by other CEOs at the major
airlines. Receipt of Mr. Goodwin's restricted share units is deferred until his
retirement from the company.
 
DO THE COMMITTEES SEEK OUTSIDE, INDEPENDENT ADVICE ON COMPENSATION MATTERS?
 
    The Compensation Committee and Compensation Administration Committee consult
with independent compensation advisors on executive compensation matters. The
Committees also have access to competitive data on compensation levels for
officer positions.
 
ARE THERE ANY CHANGES TO THE COMPENSATION PROGRAM EXPECTED GOING FORWARD?
 
    The Committee undertook a review of how the company's executive compensation
programs should be revised to better support the future organization, including
the ability to attract and retain highly qualified employees. As a result of
this review, a number of changes were made to the senior management compensation
program for 2000. These changes include:
 
    - Targeting each element of total compensation (i.e., base salary, annual
      bonus, stock options) at median levels paid by other major industrial
      corporations including but not limited to the other major airlines
      comparable to the company in revenue size and scope of operations. For
      those executive positions deemed to be unique to the airline industry, the
      company will target the median, adjusted for size, of the other major
      airlines.
 
    - Enhancing the annual incentive program to include financial, operational,
      customer satisfaction and employee satisfaction goals, which will provide
      cash compensation opportunities that are aligned with the company's core
      objectives.
 
    - Enhancing the deferral program to encourage deferrals of cash compensation
      into company stock.
 
    - Maximizing the tax deductibility of compensation paid to our employees
      covered by Section 162(m) by submitting to stockholders a new common stock
      incentive plan and performance incentive plan.
 
    These changes result in increased base salaries and reduced stock option
awards for the named executive officers for 2000. The Committee believes these
changes reflect the needs of the future organization and will provide a
competitive level of fixed cash compensation, while offering a significant level
of performance-based cash and stock incentive compensation. The overall
objective of the program is to drive performance that leads to an above average
return for all stockholders.
 
                     UAL CORPORATION COMPENSATION COMMITTEE
 

<TABLE>
<S>                                    <C>
Richard D. McCormick, Chairman         James J. O'Connor
John W. Creighton, Jr.                 Deval L. Patrick
Frederick C. Dubinsky                  John F. Peterpaul
James E. Goodwin
 
           UAL CORPORATION COMPENSATION ADMINISTRATION COMMITTEE
 
Richard D. McCormick, Chairman         James J. O'Connor
John W. Creighton, Jr.
</TABLE>

 
                                       21

<PAGE>
                                                      SUMMARY COMPENSATION TABLE
 

<TABLE>
<CAPTION>
                                                    ANNUAL COMPENSATION                        LONG TERM COMPENSATION
                                         -----------------------------------------   -------------------------------------------
                                                                                     RESTRICTED    SECURITIES
                                                                      OTHER ANNUAL     STOCK       UNDERLYING       ALL OTHER
          NAME AND                        SALARY         BONUS        COMPENSATION     AWARDS     OPTIONS/SARS    COMPENSATION
     PRINCIPAL POSITION         YEAR       ($)            ($)            ($)(1)        ($)(2)         (#)            ($)(3)
----------------------------  --------   --------   ---------------   ------------   ----------   ------------   ---------------
<S>                           <C>        <C>        <C>               <C>            <C>          <C>            <C>
Greenwald                       1999     385,710            383,356      99,685              0       173,500            [183,303]
                                1998     697,629            725,000      79,723              0        91,550             205,322
                                1997     670,490            725,000      94,839              0        47,550             427,048
 
Goodwin                         1999     572,843            580,000         446      3,912,500       251,700             [74,824]
                                1998     306,374            309,500       4,586              0        49,500              76,963
                                1997     249,712            183,391         904              0        15,250             108,597
 
Dutta                           1999     351,596            280,000      29,542      1,581,250        65,300             [10,522]
 
Hacker                          1999     344,546            245,000       9,001      1,581,250        65,300             [15,397]
                                1998     311,449            227,400       9,001              0        32,150              85,301
                                1997     299,470            220,000      10,333              0        15,250             122,116
 
Studdert                        1999     294,311            210,000       7,628      1,581,250        45,800             [12,021]
                                1998     240,514            186,200       6,135              0        24,150              63,809
 
Maher                           1999     242,338            150,000       9,592              0        42,100             [11,555]
</TABLE>

 
------------------------
 

<TABLE>
<S>        <C>  <C>
Greenwald   =   Gerald Greenwald, Former Chairman and Chief Executive Officer
Goodwin     =   James E. Goodwin, Chairman and Chief Executive Officer
Dutta       =   Rono J. Dutta, President
Hacker      =   Douglas A. Hacker, Executive Vice President and Chief Financial Officer
Studdert    =   Andrew P. Studdert, Executive Vice President and Chief Operating Officer
Maher       =   Francesca M. Maher, Senior Vice President, General Counsel and Secretary
</TABLE>

 
------------------------
 
(1) For Mr. Greenwald, amount includes $22,868 in 1999, $42,120 in 1998, $41,868
    in 1997 for term life insurance benefits and $59,302 in 1999, $20,024 in
    1998, $15,000 in 1997 for automobile benefits.
 
(2) The number of shares of restricted stock or units awarded and the number and
    value of restricted stock holdings at December 31, 1999 is: Mr. Goodwin,
    50,000 units (each unit represents the right to receive a share of common
    stock), $3,878,125; each of Messrs. Dutta, Hacker and Studdert, 25,000
    shares, $1,939,063. Mr. Goodwin's grant vests in five equal annual
    installments beginning July 13, 2000; the others vest 100% five years from
    the date of grant. His award is valued as of April 12, 1999 and the others
    are valued as of July 13, 1999. No dividends have been paid on the
    restricted shares, but the holders have the right to receive any dividends
    paid.
 
(3) Amounts include value of shares of ESOP preferred stock allocated to the
    officer's account for 1999, 1998 and 1997 (as applicable) as follows, based
    upon the applicable year-end closing price of common stock multiplied by the
    number of shares of common stock issuable upon conversion of ESOP preferred
    stock: Mr. Greenwald, $      , $105,826, $309,598; Mr. Goodwin, $      ,
    $66,253, $97,958; Mr. Dutta, $      ; Mr. Hacker, $      , $71,625,
    $115,163; Mr. Studdert, $      , $52,764; and Ms. Maher, $      . Balance
    represents compensation for split dollar insurance program premiums and for
    Mr. Greenwald, $74,410 of accrued but unused vacation.
 
                                       22

<PAGE>
                             OPTION GRANTS IN 1999
 
    This table gives information about stock options we granted during 1999 to
the officers named in the Summary Compensation Table. The hypothetical present
values of stock options granted in 1999 are calculated under a modified
Black-Scholes model, a mathematical formula used to value options. The actual
amount realized upon exercise of stock options will depend upon the amount by
which the market price of common stock on the date of exercise is greater than
the exercise price. The officers will not be able to realize a gain from the
stock options granted unless, during the exercise period, the market price of
common stock is above the exercise price of the options.
 

<TABLE>
<CAPTION>
                              NUMBER OF      % OF TOTAL
                             SECURITIES       OPTIONS      EXERCISE                  HYPOTHETICAL
                             UNDERLYING      GRANTED TO    OR BASE                 PRESENT VALUE AT
                               OPTIONS      EMPLOYEES IN    PRICE     EXPIRATION    DATE OF GRANT
NAME                        GRANTED(#)(1)   FISCAL YEAR     ($/SH)       DATE            $(2)
----                        -------------   ------------   --------   ----------   ----------------
<S>                         <C>             <C>            <C>        <C>          <C>                <C>
Gerald Greenwald               173,500           8.3       62.7188      2/23/09        3,778,830
 
James E. Goodwin                84,200           4.0       62.7188      2/23/09        1,833,876
                               167,500           8.0       78.4688      4/11/09        4,564,375
 
Rono J. Dutta                   65,300           3.1       62.7188      2/23/09        1,422,234
 
Douglas A. Hacker               65,300           3.1       62.7188      2/23/09        1,422,234
 
Andrew P. Studdert              45,800           2.2       62.7188      2/23/09          997,524
 
Francesca M. Maher              42,100           2.0       62.7188      2/23/09          916,938
</TABLE>

 
------------------------
 
(1) All options become exercisable in four equal annual installments commencing
    February 24, 2000, one year from the date of grant, with the exception of
    Mr. Goodwin's option granted April 12, 1999, which becomes exercisable in
    four equal annual installments beginning July 13, 2000. The options are
    transferable, at the officer's election, to certain family members.
 
(2) To realize hypothetical present values upon the exercise of the options, the
    market price would have increased to $84.50 and $105.72 for the
    February 24, 1999 and April 12, 1999 grants, respectively. The modified
    Black-Scholes model used to calculate the hypothetical values at date of
    grant considers a number of factors to estimate the option's present value,
    including the stock's historic volatility calculated using the monthly
    closing price of common stock over a 55 month period ending February 1999,
    the estimated average holding period of the option, interest rates and the
    stock's expected dividend yield. The assumptions used in the valuation of
    the options were: stock price volatility--.34, holding period--4 years,
    interest rate--5.25%, and dividend yield--0%.
 
    THERE IS NO ASSURANCE THAT THE HYPOTHETICAL PRESENT VALUES OF STOCK OPTIONS
PRESENTED IN THE TABLE ABOVE REPRESENT THE ACTUAL VALUES OF THE OPTIONS, AND THE
HYPOTHETICAL VALUES SHOWN SHOULD NOT BE VIEWED AS OUR PREDICTIONS OF THE FUTURE
VALUE OF COMMON STOCK.
 
                                       23

<PAGE>
                    AGGREGATED 1999 FY-END OPTION VALUES(1)
 

<TABLE>
<CAPTION>
                                                 NUMBER OF SECURITIES      VALUE OF UNEXERCISED IN-THE-
                                                UNDERLYING UNEXERCISED           MONEY OPTIONS AT
                                                 OPTIONS AT FY-END (#)              FY-END ($)
NAME                                           EXERCISABLE/UNEXERCISABLE    EXERCISABLE/UNEXERCISABLE
----                                           -------------------------   ----------------------------
<S>                                            <C>                         <C>                            <C>
Gerald Greenwald                                     945,661/298,939           46,410,118/3,370,434
 
James E. Goodwin                                     148,999/306,451            6,758,243/1,633,265
 
Rono Dutta                                            83,911/108,539            2,688,494/1,246,357
 
Douglas A. Hacker                                    159,961/108,539            6,934,243/1,246,357
 
Andrew P. Studdert                                     49,761/78,139              1,370,818/794,281
 
Francesca M. Maher                                     38,800/73,600              1,192,315/915,952
</TABLE>

 
------------------------
 
(1) Options granted prior to July 12, 1994 are exercisable for two shares of
    common stock and $84.81 (after adjustment for the 1996 four-for-one stock
    split). The value of those options includes the cash amount to be delivered
    when exercised. Values measured using common stock closing price on
    December 31, 1999 of $77.5625.
 
                               PENSION PLAN TABLE
 

<TABLE>
<CAPTION>
                                             YEARS OF PARTICIPATION
        FINAL           -----------------------------------------------------------------
     AVERAGE PAY           15         20         25         30         35          40
---------------------   --------   --------   --------   --------   ---------   ---------
<S>                     <C>        <C>        <C>        <C>        <C>         <C>
200,00$0........        $48,000    $64,000    $80,000    $96,000    $ 112,000   $ 128,000
400,000........          96,000    128,000    160,000    192,000      224,000     256,000
600,000........         144,000    192,000    240,000    288,000      336,000     384,000
800,000........         192,000    256,000    320,000    384,000      448,000     512,000
1,000,000......         240,000    320,000    400,000    480,000      560,000     640,000
1,200,000......         288,000    384,000    480,000    576,000      672,000     768,000
1,400,000......         336,000    448,000    560,000    672,000      784,000     896,000
1,600,000......         384,000    512,000    640,000    768,000      896,000   1,024,000
1,800,000......         432,000    576,000    720,000    864,000    1,008,000   1,152,000
2,000,000......         480,000    640,000    800,000    960,000    1,120,000   1,280,000
</TABLE>

 
    This table is based on retirement at age 65 and selection of a straight life
annuity (other annuity options are available, which would reduce the amounts
shown). The amount of the normal retirement benefit under the plan is the
product of 1.6% times years of credited participation in the plan times final
average pay (highest five of last 10 years of covered compensation). The
retirement benefit amount is not offset by the participant's social security
benefit. Compensation used in calculating benefits under the plan includes base
salary and amounts shown as bonus in the Summary Compensation Table. Under the
qualified plan, years of participation for persons named in the compensation
table are as follows: Mr. Goodwin--32 years; Mr. Dutta--14 years;
Mr. Hacker--6 years; Mr. Studdert--4 years; and Ms. Maher--6 years. The amounts
shown do not reflect limitations imposed by the Internal Revenue Code on
retirement benefits that may be paid under plans qualified under the code.
United has agreed to provide under non-qualified plans the portion of the
retirement benefits earned under the pension plan that would otherwise be
subject to code limitations.
 
    We agreed to supplement Mr. Hacker's benefit by granting him credit for one
additional year of service.
 
                                       24

<PAGE>
EMPLOYMENT CONTRACTS AND ARRANGEMENTS
 
GREENWALD'S TERMINATION AGREEMENT
 
    In connection with Mr. Greenwald's retirement in 1999, we amended his
employment agreement so that his remaining restricted stock award immediately
vested on July 12, 1999, the end of his employment with us. We agreed to provide
him with office and secretarial support for five years so that he may assist us
as needed with issues originating when he was CEO.
 
    We also agreed to reimburse Mr. Greenwald for three years for club
membership fees and give him title to two cars we provided him and to pay off
lease amounts on those cars. Unless our Board consents otherwise, Mr. Greenwald
agreed for two years not to take a competitive position with a competitor, which
includes advising or consulting with any airline regarding negotiations with us.
If he takes a competitive position, he stops receiving the benefits described
above.
 
    Under his employment agreement, Mr. Greenwald's option grants will continue
to vest under the normal vesting schedules in the option agreements.
 
GOODWIN'S EMPLOYMENT AGREEMENT
 
    We entered into a five year employment agreement with Mr. Goodwin effective
July 13, 1999. This agreement provides for an annual base salary of $725,000
subject to increases as part of the normal salary program for our senior
executives. Under his employment agreement, Mr. Goodwin is eligible to receive
an annual bonus under the company's Incentive Compensation Plan or other annual
incentive plan. Mr. Goodwin's target percentage can be no less than the maximum
percentage permitted under the incentive plan (called the target bonus). He is
entitled to an additional 20% over this target bonus amount under the plan for
superior performance; provided this extraordinary bonus will be paid outside the
plan.
 
    Under the employment agreement, if the incentive plan is amended or replaced
with a new plan, Mr. Goodwin's incentive award will be determined under the
terms of the new plan; provided that his target percentage and maximum
percentage will be no less than 100% of his base salary with an additional 20%
over the target percentage for superior performance.
 
    As part of the employment agreement, Mr. Goodwin received an option grant of
167,500 shares and 50,000 restricted share units as described in the
Compensation Committee report.
 
    If Mr. Goodwin's employment is terminated by us without "cause," or by him
for "good reason," we will pay him his base salary, any annual bonus and any
earned and vested benefits he may be due through the termination date. We will
also pay Mr. Goodwin a lump sum payment equal to his base salary and target
bonus multiplied by the greater of (1) the remaining term of his agreement or
(2) three years. Mr. Goodwin's participation in United's benefit plans will also
continue for this period. All long term incentive awards will immediately vest
on the termination date and any unvested stock options will continue to vest in
accordance with their terms. With respect to the retirement plan, he will be
credited with additional years of participation, if necessary, so that his years
of participation equal 40 and any benefit payments will not be subject to any
actuarial reduction for early payment.
 
OFFICER SEVERANCE AGREEMENTS
 
    Each of the proxy-named officers (other than Mr. Goodwin) is party to a
Severance Agreement with the company and United that provides for certain
benefits if the executive's employment with United is (1) involuntarily
terminated without "cause", or (2) constructively terminated due to, among other
things, a substantial adverse alteration of the nature or status of the
officer's responsibilities or a reduction in compensation or benefits. Upon
termination, the officer will be entitled to receive (1) two years base salary
and bonus continuation, (2) benefits continuation for the term, and
(3) continued vesting and exercisability of outstanding stock option grants. The
Severance Agreements terminate on January 13, 2001.
 
                                       25

<PAGE>
                                 PROPOSAL NO. 2
 
APPROVAL OF AMENDMENTS TO OUR RESTATED CERTIFICATE OF INCORPORATION FOR PURPOSES
                                  OF DIVIDENDS
 
    The Board of Directors unanimously approved amendments to our Restated
Certificate of Incorporation on October 28, 1999, which allow for the Class 1
and 2 ESOP Preferred Stocks to participate in any dividend on common stock in
the same manner as common stockholders.
 
    THE BOARD UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR APPROVAL OF THE
CHARTER AMENDMENTS.
 
    A summary of the material provisions of the charter amendments is set forth
below and is qualified in its entirety by reference to the full text of the
attached as Appendix A.
 
    We have announced our intention to begin a dividend program for cash
dividends on common stock beginning in the 2nd quarter of 2000, subject to the
stockholders approving amendments to our charter. Under our charter, the
Class 1 and 2 ESOP Preferred Stocks participate in any dividend on common stock.
However, the Class 1 preferred stock would be paid annually as opposed to the
frequency in which the common stock dividend would be paid.
 
    Our Board thought it was in the best interests of both common stockholders
and employee shareholders that dividends on common stock be paid on the same
dividend payment dates to all stockholders. The amendments facilitate the
administration of the dividend payments. Under the charter amendments, if the
Board declares a quarterly cash dividend on common stock, the common
stockholders would receive the dividend quarterly and the employee shareholders
would participate in the dividend on the same quarterly payment dates. Without
the amendment, the common stockholders would be paid quarterly and the holders
of the Class 1 preferred would be paid annually. Our Board felt it beneficial to
amend our charter to allow the Class 1 and 2 preferred stocks to participate in
any common stock dividend in the same manner as common stockholders (in other
words, to be paid in the same frequency).
 
    We have amended our ESOP to provide, subject to stockholder approval of the
charter amendments, for the pass through to ESOP participants of any cash
dividend on common stock as a participating dividend on ESOP stock. We are
seeking a favorable determination letter from the IRS as to the continued tax
qualified status of the ESOP as a result of the amendment. Subject to our
receipt of the letter and stockholder approval of the charter amendments, if the
Board declared and paid a cash dividend on common stock, we would be able to
take a tax deduction in the amount of the dividend passed through to ESOP
participants. In this regard, if a cash dividend of $1.25 per common share were
paid, we would benefit from a tax deduction of approximately $85 million per
year.
 
    The payment of dividends is contingent upon stockholder approval of the
charter amendments.
 
    THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR THE APPROVAL OF AMENDMENTS TO
OUR RESTATED CERTIFICATE OF INCORPORATION.
 
                                       26

<PAGE>
                                 PROPOSAL NO. 3
 
  APPROVAL OF UNITED EMPLOYEES PERFORMANCE INCENTIVE PLAN FOR PURPOSES OF IRC
                                 SECTION 162(M)
 
    On December 16, 1999 our Board unanimously adopted the United Employees
Performance Incentive Plan, effective January 1, 2000. This plan replaces our
prior UAL Corporation Incentive Compensation and Profit Sharing Plan and covers
all U. S. management and administrative, and designated international employees
of United and our designated subsidiaries. At the annual meeting our
stockholders will vote on whether to approve the plan as it relates to certain
awards described below.
 
    THE BOARD UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR APPROVAL OF THE
PLAN. A vote in favor of the Plan will constitute approval under Section 162(m)
of each of the material terms of the Plan, including the performance objectives
described below, for purposes of paying certain designated incentive awards to
covered employees.
 
BACKGROUND--SECTION 162(M) EXEMPTION
 
    We are asking our stockholders to vote on the plan in order to satisfy the
requirements of Section 162(m) of the Internal Revenue Code.
 
    Section 162(m) limits our ability to deduct compensation that we pay to
certain of our executive employees when determining our federal tax liability.
These limitations apply to compensation in excess of $1 million per year that we
pay to our chief executive officer and each of our four other highest paid
executive officers.
 
    Certain types of compensation are excluded from the calculation of the
$1 million limit in Section 162(m). These include compensation under plans that
are "performance based" and are approved by our stockholders. "Performance
based" compensation under Section 162(m) is compensation based on the attainment
of one or more objective performance goals, the material terms of which are
approved by stockholders.
 
    In order to maximize our ability to deduct compensation (covered awards)
paid to our employees covered by Section 162(m) (covered employees), our Board
requests that the stockholders approve the plan as it relates to payment of
certain designated incentive awards to covered employees. These covered awards
will not be paid to the covered employees if the stockholders do not approve
this proposal at the annual meeting.
 
SUMMARY DESCRIPTION OF THE UNITED EMPLOYEES PERFORMANCE INCENTIVE PLAN
 
    The following summarizes the material terms of the plan applying to
incentive awards designated by the Compensation Administration Committee
(referred to as the committee) of our Board as covered awards payable to
employees covered by Section 162(m). This summary is qualified in its entirety
by reference to the actual text of the plan.
 
PURPOSE
 
    The plan is designed to promote our financial interests by providing a means
of attracting and retaining highly qualified employees, motivating these
employees through performance related incentives, and providing incentive
compensation opportunities that are competitive with those of other major
corporations.
 
                                       27

<PAGE>
ADMINISTRATION
 
    Awards to covered employees that are to be deductible under Section 162(m)
will be administered by the committee, which must consist solely of two or more
"outside directors" within the meaning of Section 162(m).
 
ELIGIBLE EMPLOYEES
 
    On an annual basis, the committee will select the covered employees who are
eligible to receive a covered award under the plan.
 
    To be entitled to receive an award in a given year, the covered employee
must be actively employed at the time the incentive award is paid, or, in the
case of deferred awards, at the time the award would have been paid but for the
covered employee's deferral election. In its sole discretion, the committee may
pay an award to a terminated covered employee.
 
LIMITATIONS ON INCENTIVE AWARDS
 
    For each year, the committee will establish a threshold level of pre-tax
profit margin (pre-tax earnings divided by gross revenues) which must be
obtained before awards are made to any covered employees.
 
    In establishing the threshold, pre-tax earnings are determined under
generally accepted accounting principles, but adjusted to exclude items relating
to (a) the UAL Corporation ESOP, (b) our restricted stock plans, (c) for those
years in which we enter into labor contracts with ALPA or the IAM to replace
contracts becoming amendable in 2000, any differential between our projected
labor costs and our actual labor attributable to such contract(s), and (d) any
event or occurrence that, in the judgment of the committee, was not directly
related to our operations or within the reasonable control of our management.
Gross revenues for purposes of calculating the threshold are also determined
under generally accepted accounting principles, but adjusted to exclude any
event or occurrence that, in the judgement of the committee, was not directly
related to our operations or within the reasonable control of our management.
 
    In any event, a covered award payable to a covered employee may not exceed
$3 million for any year.
 
DETERMINATION OF INCENTIVE AWARDS; PERFORMANCE OBJECTIVES
 
    A covered award payable to a covered employee will be based on performance
objectives established by the committee at the beginning of the year and on the
covered employee's performance for the year.
 
    Prior to the beginning of each year, the committee will establish an
"incentive opportunity" for each covered employee, expressed as a percentage of
their base compensation. The incentive opportunity will be subject to the
attainment of one or more objectively determinable performance objectives
established by the committee for the year. The committee will establish
performance objectives from one or more of the following measures:
 
    - specified levels of growth in, or peer company performance in, or relating
      to, customer satisfaction as measured by a company-sponsored customer
      survey;
 
    - employee engagement, as measured by a company-sponsored employee survey;
 
    - employee safety;
 
    - employee diversity;
 
                                       28

<PAGE>
    - financial performance, as measured by sales, net income, profits (pre-tax
      and after-tax), adjusted pre-tax margin, earnings before interest and
      taxes, cash flow, earnings per share, reduction of fixed costs, economic
      value added, return on assets, return on capital, return on equity,
      shareholder return, cost of capital, debt reductions, productivity
      improvements; and
 
    - operational performance, as measured by load factor, passenger yield
      management, lost time incidents, baggage handling performance, or on-time
      performance.
 
    Performance objectives may be described in terms of company, subsidiary,
major business segment, division or departmental performance. If more than one
performance objective is selected, then the committee will weight each
performance objective for the year. The performance objective(s) may be assigned
specific factors for the attainment of threshold, target or maximum levels of
performance.
 
    Each covered employee is also assigned an individual performance modifier of
120%, subject to reduction by the committee following the end of the year based
on his or her individual performance for the year.
 
    The covered employee's individual performance modifier, together with the
attained performance objective factors, will establish the extent to which each
covered employee is entitled to their incentive opportunity. Because the
performance objective factors and an individual performance modifier may exceed
100%, a covered employee may be entitled to an incentive award in excess of his
or her incentive opportunity for the year.
 
    At the beginning of an award year, the committee may also establish a
covered award for covered employees based solely on attainment of a single
financial performance objective. However, the committee will have complete
discretion to reduce the amount of any such award.
 
    Because covered awards under the plan are subject to the discretion of the
committee and subject to the attainment of the performance objectives, the
benefits or amounts that will be allocated to covered employees under the plan
are not determinable at this time.
 
PAYMENT OF COVERED AWARDS; ELECTION TO DEFER RECEIPT AND RECEIVE COMMON STOCK
 
    Covered awards will be paid to covered employees in cash as soon as
practicable following the end of each year. Covered employees will be given the
option to defer the receipt of an award to a future year. The deferred award
will be credited with interest at prime, determined and compounded at the end of
each calendar quarter.
 
    Payment of a covered employee's deferred award will be accelerated upon
termination of employment. Payment may also be accelerated upon request in the
event of an unforeseeable emergency, or with a forfeiture of 10% of the amount
distributed.
 
    Each covered employee who elects to defer receipt of his or her award will
have a right to elect to have the award paid in shares of our common stock. The
amount of stock to be distributed will equal the amount of stock that would have
been paid if the award had not been deferred, as adjusted for dividends, stock
splits and changes in fair market value during the deferral period.
 
20% INDUCEMENT TO ELECT TO RECEIVE UAL CORPORATION STOCK
 
    Each covered employee who (1) elects to defer receipt of an award for at
least five years following the award year, (2) elects to receive that award in
the form of stock, and (3) actually receives the award more than five years
following the award year, will receive an additional stock payment equal to 20%
of the award at the time the deferred award is distributed.
 
                                       29

<PAGE>
AMENDMENT OR TERMINATION
 
    Our Board may amend or terminate the plan, in whole or in part, from time to
time. With respect to covered employees, the Board or the committee may also
amend the performance objectives selected for a year and may modify the time and
manner for payment of any award prior to its payment, as long as the
modifications are not detrimental to the covered employee.
 
RECOMMENDATION
 
    Our Board of Directors recommends that you vote FOR approval of the plan as
it relates to the issuance by the committee of covered awards to covered
employees. A vote in favor of the plan will constitute approval, for purposes of
the exemption from Section 162(m), of each of the material terms of the plan,
including the performance objectives described above, and will authorize the
committee to issue designated, "performance based" awards under the plan to
covered employees.
 
    THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL OF THE UNITED EMPLOYEES
PERFORMANCE INCENTIVE PLAN.
 
                                       30

<PAGE>
                                 PROPOSAL NO. 4
 
             APPROVAL OF UAL CORPORATION 2000 INCENTIVE STOCK PLAN
 
    The grant of stock options is an integral part of our executive incentive
program. As of March 3, 2000, 84,781 shares of our common stock were available
for future grants and awards under the UAL Corporation 1981 Incentive Stock
Plan.
 
    Our Board of Directors has determined that, as a publicly held company, we
need a new incentive stock plan in order to provide incentives to attract and
retain outstanding individuals who are officers or other key executives of the
company and its subsidiaries. On February 24, 2000, our Board unanimously
adopted the UAL Corporation 2000 Incentive Stock Plan. At the annual meeting our
stockholders will vote on whether to approve the plan.
 
    The 2000 plan will become effective only and immediately upon approval by
our stockholders and will continue in effect until terminated by our Board. If
the new plan is approved by stockholders, the 1981 plan will be discontinued,
except as to outstanding grants.
 
    THE BOARD UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR APPROVAL OF THE
UAL CORPORATION 2000 INCENTIVE STOCK PLAN.
 
COMPENSATION PHILOSOPHY
 
    We believe it is very important to align the economic well-being of our
senior management with yours and our long-term interests. For this reason, stock
options represent a significant component of compensation for senior management
employees. We believe that our continued ability to offer stock options is
critical to attracting and retaining talented individuals for our senior
management ranks.
 
ADMINISTRATION
 
    The 2000 plan will be administered by the Compensation Committee or, for
grants intended to be qualified under Section 162(m) of the Internal Revenue
Code or exempt under Section 16 of the securities exchange act, the Compensation
Administration Committee of our Board. Both committees are referred to as the
committee. The form and amount of any grant or award, as well as the time and
conditions of exercise or vesting (as well as any acceleration of the time of
exercise or vesting) are subject to the discretion of the committee.
 
SHARES SUBJECT TO THE 2000 PLAN
 
    The total number of shares reserved for issuance under the 2000 plan is the
sum of the following:
 
(1) 8,000,000 newly issued or treasury shares;
 
(2) 84,781 shares remaining under the 1981 plan; and
 
(3) any shares represented by options forfeited, cancelled or expired under the
    1981 plan or the 2000 plan or which are used to satisfy tax withholding
    obligations.
 
    The total amount reserved under this plan will gradually reduce as options
are granted. A grantee may pay the option price with cash or with common stock
that is already owned. When shares are used to pay the option purchase price,
only the net number of shares issued will reduce the amount of shares reserved
under the 2000 plan.
 
    The maximum number of shares issuable under this plan and the number and/or
price of shares subject to any outstanding award may be appropriately adjusted
by the committee to reflect changes in our capitalization by stock dividends,
stock rights, recapitalizations, reorganizations, mergers,
 
                                       31

<PAGE>
consolidations, combinations, exchanges or other relevant changes in corporate
structure or capitalization.
 
PARTICIPATION
 
    Based on the recommendations of management, the committee will make grants
to certain officers and key employees (including officers who may also be
directors) of the company or any of its subsidiaries. The number of shares with
respect to which grants may be made under the 2000 plan to any individual during
any one calendar year period is limited to 250,000 (500,000 with respect to
grants made to any employee as a condition of employment), subject to adjustment
for changes in our capitalization.
 
TERMS OF AWARDS
 
    At the discretion of the committee, participants in the 2000 plan may
receive grants of incentive stock options under IRC Section 422, non-qualified
stock options that are not intended to qualify under Section 422, stock
appreciation rights, or any combination. The committee may allocate up to
8,000,000 shares for issuance of incentive stock options.
 
    Except for stock option awards to certain members of senior management and
as the committee otherwise provides, awards under this plan are generally not
transferable, other than by will or the laws of descent and distribution.
 
    The option price for incentive stock options and non-qualified stock options
may not be less than 100% of the fair market value of our common stock on the
date of grant. The closing price of common stock as reported by the NYSE
composite transaction tape for [MARCH   , 2000] was [$      ]. The duration of
options granted under the 2000 plan cannot exceed 10 years.
 
    Stock appreciation rights that may be granted may be exercisable in cash, in
common stock, or in a combination of cash and common stock. These rights may be
granted to any participant in the 2000 plan in connection with or independent of
a non-qualified stock option. Upon exercise, the holder of a stock appreciation
right will receive up to 100% of the appreciation in fair market value of the
shares subject to the stock appreciation right. In the case of a stock
appreciation right that has been granted in connection with a non-qualified
stock option, the appreciation is measured from the option price. Exercise of a
stock appreciation right reduces the number of shares reserved for issuance
under this plan by the number of shares as to which the stock appreciation right
is exercised. There are no stock appreciation rights outstanding.
 
AMENDMENT AND TERMINATION OF PROGRAM
 
    Our Board may amend the 2000 plan from time to time or terminate it at any
time. However, our Board may not, without the participant's consent, adversely
affect the rights of a participant under any option or stock appreciation right
granted. Unless our Board later extends the 2000 plan, it will automatically
terminate on May 18, 2010 except as to awards outstanding at that date.
 
FEDERAL INCOME TAX CONSEQUENCES
 
    The Federal income tax consequences to participants in this plan and the
company under the Internal Revenue Code and the regulations thereunder as now in
effect are substantially as follows.
 
    With respect to non-qualified stock options and stock appreciation rights, a
grantee is not deemed to receive any income at the time of grant, nor is his or
her employer entitled to a deduction at that
 
                                       32

<PAGE>
time. However, when any part of a non-qualified stock option or stock
appreciation right is exercised, the grantee is deemed to have received ordinary
income to the extent of:
 
(1) in the case of non-qualified stock options, in an amount equal to the
    difference between the option price and the fair market value of the shares
    acquired upon exercise, and
 
(2) in the case of stock appreciation rights, in an amount equal to the sum of
    the fair market value of the shares and any cash received.
 
    The grantee's employer generally is entitled to a tax deduction in an amount
equal to the amount of ordinary income realized by the optionee.
 
    With respect to incentive stock options, an optionee is not deemed to
receive any income at the time of grant or exercise, and the employer is not
entitled to any deduction. If the grantee disposes of the stock prior to the
expiration of the holding period required by Section 422 of the Internal Revenue
Code, he or she will have ordinary income in the year of disposition equal to
the lesser of:
 
(1) the excess of the value of the shares on the exercise date over the option
    price, or
 
(2) the excess of the amount received for the shares over the option price.
 
    The employer generally is entitled to a tax deduction at such time in an
amount equal to the amount of ordinary income realized by the grantee. If the
grantee disposes of the stock after expiration of the holding period required by
Section 422 of the Internal Revenue Code, the excess of the amount received for
the shares over the option price will be taxed as long-term capital gain and no
deduction will be available to the employer.
 
    A deduction otherwise available to us for any year with respect to
compensation payable to an executive officer may be denied to the extent that it
exceeds $1,000,000. For these purposes, it is anticipated the grants of options
and stock appreciation rights will generally qualify for an exemption to that
limitation for eligible performance-based compensation.
 
    THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE APPROVAL OF THE
UAL CORPORATION 2000 INCENTIVE STOCK PLAN.
 
                                       33

<PAGE>
                                 PROPOSAL NO. 5
 
                 APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
 
    Our Board, at the recommendation of the Audit Committee, has appointed,
subject to your approval, the firm of Arthur Andersen LLP as independent public
accountants, to examine our financial statements for 2000. It is anticipated
that a representative of Arthur Andersen LLP will be present at the meeting and
will have the opportunity to make a statement, if he or she desires to do so,
and will be available to respond to appropriate questions at that time. If you
do not approve the appointment of Arthur Andersen LLP, our Board will reconsider
the selection of independent public accountants.
 
    THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR THE APPROVAL OF THE APPOINTMENT
OF ARTHUR ANDERSEN LLP AS OUR INDEPENDENT PUBLIC ACCOUNTANTS FOR 2000.
 
                      SUBMISSION OF STOCKHOLDER PROPOSALS
 
    If a stockholder of record wishes to submit a proposal for inclusion in next
year's proxy statement and proxy card for our 2001 annual meeting, the proposal
must be submitted no later than November 23, 2000 and comply with SEC rules.
Failure to comply with SEC rules will cause your proposal to be excluded from
the proxy materials. All notices must be submitted to Francesca M. Maher,
Secretary, UAL Corporation, P.O. Box 66919, Chicago, Illinois 60666 and must
comply with the SEC rules.
 
    To propose business or nominate a Public Director (as defined in our
charter) at the 2001 annual meeting, proper notice must be submitted by a
stockholder of record no later than January 18, 2001 in accordance with our
by-laws. The notice must contain the information required by the by-laws. No
business proposed by a stockholder can be transacted at the annual meeting, and
no nomination by a stockholder will be considered, unless the notice satisfies
the requirements of the by-laws. If we do not receive notice of any other matter
that you wish to raise at the annual meeting in 2001 on or before January 18,
2001, our bylaws provide that the matter shall not be transacted and the
nomination shall not be considered.
 
    The Outside Public Director Nomination committee considers Public Director
nominees you recommend if submitted in writing to the Committee Chairman at UAL
Corporation, P. O. Box 66919, Chicago, IL 60666. Qualification requirements are
specified in our charter.
 
                                 ANNUAL REPORT
 
    A copy of our summary Annual Report for the year ended December 31, 1999,
has been mailed to you on or about March 23, 2000 with this proxy statement. Our
audited financial statements, along with other financial information, are
included in the Appendix B to this proxy statement.
 
    Additional copies of the summary Annual Report and this notice of annual
meeting and proxy statement, including the appendix, and accompanying proxy may
be obtained from Georgeson Shareholder Communications Inc., 17 State Street, New
York, New York 10004 or from our Secretary.
 
    A COPY OF OUR FORM 10-K TO THE SEC MAY BE OBTAINED WITHOUT CHARGE BY WRITING
TO FRANCESCA M. MAHER, SECRETARY, UAL CORPORATION, P.O. BOX 66919, CHICAGO,
ILLINOIS 60666. YOU CAN ALSO OBTAIN A COPY OF OUR FORM 10-K AND OTHER PERIODIC
FILINGS FROM THE SEC'S EDGAR DATABASE AT WWW.SEC.GOV.
 
                                       34

<PAGE>
                                                                      APPENDIX A
 
                            CERTIFICATE OF AMENDMENT
                                     OF THE

                     RESTATED CERTIFICATE OF INCORPORATION
                                       OF
                                UAL CORPORATION
 
    UAL CORPORATION, a corporation organized and existing under and by virtue of
the General Corporation Law of the State of Delaware, DOES HEREBY CERTIFY:
 
    FIRST: That as of October 28, 1999, the Board of Directors of the
Corporation adopted resolutions proposing and declaring advisable that the
Restated Certificate of Incorporation of this Corporation (the "Restated
Certificate") be amended as follows:
 
    (1) that Section 2.18 of Article FOURTH, Part II of the Restated Certificate
shall be amended to read in its entirety as follows:
 
    2.18 "DIVIDEND PAYMENT DATE"  means a date on which Participating Dividends
are paid on the Class 1 ESOP Preferred Stock or on the Common Stock.
 
    (2) that Section 2.19 of Article FOURTH, Part II of the Restated Certificate
shall be amended to read in its entirety as follows:
 
    2.19 "DIVIDEND PERIOD"  shall mean the period commencing March 31, 2000 or,
if later, the most recent Dividend Payment Date of the Class 1 ESOP Preferred
Stock.
 
    (3) that Section 2.22 of Article FOURTH, Part II of the Restated Certificate
shall be amended to read in its entirety as follows:
 
    2.22 "EXTRAORDINARY DISTRIBUTION"  shall mean any single dividend or other
distribution (including by reclassification of shares or recapitalization of the
Corporation, as well as any such dividend or distribution made in connection
with a merger or consolidation in which the Corporation is the continuing
corporation and the Common Stock is not changed or exchanged) to holders of
Common Stock (effected while any of the shares of Class 1 ESOP Preferred Stock
are outstanding) (i) of cash, where the aggregate amount of such single cash
dividend or distribution together with the amount of all cash dividends and
distributions made to holders of Common Stock during the period from the most
recent Extraordinary Distribution Measuring Date until the payment date for such
cash dividend or distribution to holders of Common Stock, when combined with the
aggregate amount of all previous Pro Rata Repurchases during such period (for
this purpose, including only that portion of the aggregate purchase price of
each such Pro Rata Repurchase which is in excess of the Fair Market Value of the
Common Stock repurchased as determined on the Business Day prior to the public
announcement of such Pro Rata Repurchase made during such period), exceeds
twelve and one-half percent (12 1/2%) of the aggregate Fair Market Value of all
shares of Common Stock outstanding on the record date for determining the
shareholders entitled to receive such Extraordinary Distribution and (ii) of any
shares of capital stock of the Corporation (other than shares of Common Stock),
other securities of the Corporation (other than securities of the type referred
to in Sections 6.4(b) and 6.4(c) hereof), evidences of indebtedness of the
Corporation or any other person or any other property (including, without
limitation, shares of capital stock of any subsidiary of the Corporation), or
any combination thereof. The Fair Market Value of any such single dividend or
other distribution that, pursuant to clause (i), constitutes an Extraordinary
Distribution shall for purposes of the first paragraph of Section 6.4(d) hereof
be the sum of the Fair Market Value of such Extraordinary Distribution plus the
amount of any other cash dividends and distributions made within the relevant
period referred to above to holders of Common Stock to the extent such other
dividends and
 
                                      A-1

<PAGE>
distributions were not previously included in the calculation of an adjustment
pursuant to the first paragraph of Section 6.4(d) hereof within such period.
 
    (4) that the following Section 2.22.1 shall be added to Article FOURTH,

Part II of the Restated Certificate:
 
    2.22.1 "EXTRAORDINARY DISTRIBUTION MEASURING DATE"  shall mean the
penultimate Business Day in each year, commencing on such penultimate Business
Day in 1999.
 
    (5) that Section 3 of Article FOURTH, Part II of the Restated Certificate
shall be amended to read in its entirety as follows:
 
    SECTION 3. DIVIDENDS.
 
    3.1 The holders of shares of the Class 1 ESOP Preferred Stock shall be
entitled to receive, when, as and if declared by the Board of Directors out of
assets legally available for that purpose, dividends payable in cash at the rate
(per outstanding share of Common Stock) equal to the dividends which would have
been received during the applicable Dividend Period with respect to the shares
of Common Stock which would have been issued upon conversion of the Class 1 ESOP
Preferred Stock had the Class 1 ESOP Preferred Stock been outstanding as Common
Stock at each relevant time in order to receive such dividends (but only to the
extent such dividends do not constitute an Extraordinary Distribution under
clause (i) of the definition thereof), which dividends (hereinafter referred to
as "Participating Dividends") shall be paid in cash, pro-rata to each holder of
Class 1 ESOP Preferred Stock. Such Participating Dividends shall be cumulative
from March 31, 2000, whether or not in any Dividend Period or Periods there
shall be assets of the Corporation legally available for the payment of such
Participating Dividends and whether or not the Board of Directors shall have
declared such Participating Dividends, and shall be payable when, as and if
declared by the Board of Directors, in arrears on Dividend Payment Dates. Each
such Participating Dividend shall be payable in arrears to the holders of record
of shares of the Class 1 ESOP Preferred Stock, as they appear on the stock
records of the Corporation at the close of business on such record dates, which
shall not be more than 60 days nor less than 10 days preceding the Dividend
Payment Dates thereof, as shall be fixed by the Board of Directors. Accrued and
unpaid Participating Dividends for any past Dividend Periods may be declared and
paid at any time, without reference to any Dividend Payment Date, to holders of
record on such date, not exceeding 45 days preceding the payment date thereof,
as may be fixed by the Board of Directors. Holders of the Class 1 ESOP Preferred
Stock shall be entitled to the cumulative Participating Dividend provided in
this Section 3.1 and shall not be entitled to any other dividends in excess
thereof. In the event that an adjustment is made pursuant to the second
paragraph of Section 6.4(d) with respect to shares of Class 1 ESOP Preferred
Stock converted during the applicable Dividend Period, the amount of
Participating Dividend to be paid in accordance with the preceding sentence
shall be reduced by an amount equal to the product of (x) the number of shares
of Common Stock into which such converted shares of Class 1 ESOP Preferred Stock
would have been converted in the absence of such adjustment and (y) the amount
of the cash dividend or distributions per share of Common Stock in respect of
which such adjustment was made.
 
    3.2 Except as provided in Section 3.1, holders of shares of Class 1 ESOP
Preferred Stock shall not be entitled to any dividends, whether payable in cash,
property or stock, in excess of cumulative Participating Dividends, as herein
provided, on the Class 1 ESOP Preferred Stock. No interest, or sum of money in
lieu of interest, shall be payable in respect of any Participating Dividend
payment or payments on the Class 1 ESOP Preferred Stock that may be in arrears
 
    3.3 So long as any shares of the Class 1 ESOP Preferred Stock are
outstanding, no dividends, except as described in the next succeeding sentence,
shall be declared or paid or set apart for payment on any other class or series
of stock of the Corporation ranking on a parity with the Class 1 ESOP Preferred
Stock as to the payment of dividends for any period unless full cumulative
Participating
 
                                      A-2

<PAGE>
Dividends have been or contemporaneously are declared and paid or declared and a
sum sufficient for the payment thereof set apart for such payment on the
Class 1 ESOP Preferred Stock for all Dividend Periods terminating on or prior to
the date of payment of the dividends on such class or series of parity stock.
When Participating Dividends are not paid in full or a sum sufficient for such
payment is not set apart, as aforesaid, all dividends declared upon the Class 1
ESOP Preferred Stock and such parity stock shall be declared ratably in
proportion to the respective amounts of Participating Dividends accumulated and
unpaid on the Class 1 ESOP Preferred Stock and dividends accumulated and unpaid
on such parity stock.
 
    3.4 So long as any shares of the Class 1 ESOP Preferred Stock are
outstanding, no dividends (other than (i) the Rights and (ii) dividends or
distributions paid in shares of, or options, warrants, or rights to subscribe
for or purchase shares of, any class or series of stock of the Corporation that
is junior to the Class 1 ESOP Preferred Stock as to the payment of dividends)
shall be declared or paid or set apart for payment or other distribution
declared or made upon any class or series of stock of the Corporation that is
junior to the Class 1 ESOP Preferred Stock as to the payment of dividends, nor
shall any other class or series of stock of the Corporation ranking on a parity
with or junior to the Class 1 ESOP Preferred Stock as to the payment of
dividends or as to distributions upon liquidation, dissolution or winding up of
the Corporation, be redeemed, purchased or otherwise acquired (other than a
redemption, purchase or other acquisition of shares of Common Stock made for
purposes of an employee incentive or benefit plan of the Corporation or any
subsidiary) for any consideration (or any moneys be paid to or made available
for a sinking fund for the redemption of any shares of any such stock) by the
Corporation, directly to the Class 1 ESOP Preferred Stock as to the payment of
dividends and as to distributions upon liquidation, dissolution or winding up of
the Corporation), unless in each case the full cumulative Participating
Dividends on all outstanding shares of the Class 1 ESOP Preferred Stock shall
have been paid or set apart for payment for all past Dividend Periods with
respect to the Class 1 ESOP Preferred Stock and such parity stock.
 
    (6) that Section 6.4(d) of Article FOURTH, Part II of the Restated
Certificate shall be amended to read in its entirety as follows:
 
    (d) In case the Corporation shall, at any time or from time to time while
any of the shares of Class 1 ESOP Preferred Stock are outstanding, make an
Extraordinary Distribution in respect of the Common Stock or effect a Pro Rata
Repurchase of Common Stock, the Conversion Rate in effect immediately prior to
such Extraordinary Distribution or Pro Rata Repurchase shall be adjusted by
multiplying such Conversion Rate by a fraction, the numerator of which shall be
the product of (i) the number of shares of Common Stock outstanding immediately
before such Extraordinary Dividend or Pro Rata Repurchase (minus, in the case of
a Pro Rata Repurchase, the number of shares of Common Stock repurchased by the
Corporation) multiplied by (ii) the Fair Market Value of a share of Common Stock
on the record date with respect to such Extraordinary Distribution or on the
Trading Day immediately preceding the first public announcement by the
Corporation or any of its Affiliates of the intent to effect a Pro Rata
Repurchase, as the case may be, and the denominator of which shall be (i) the
product of (x) the number of shares of Common Stock outstanding immediately
before such Extraordinary Distribution or Pro Rata Repurchase multiplied by
(y) the Fair Market Value of a share of Common Stock on the record date with
respect to such Extraordinary Distribution, or on the Trading Day immediately
preceding the first public announcement by the Corporation or any of its
Affiliates of the intent to effect a Pro Rata Repurchase, as the case may be,
minus (ii) the Fair Market Value of the Extraordinary Distribution or the
aggregate purchase price of the Pro Rata Repurchase, as the case may be
(provided that such denominator shall never be less than 1.0); PROVIDED,
HOWEVER, that no Pro Rata Repurchase shall cause an adjustment to the Conversion
Rate unless the amount of all cash dividends and distributions made to holders
of Common Stock during the period from the most recent Extraordinary
Distribution Measuring Date preceding the Effective Date of such Pro Rata
Repurchase, when combined with the aggregate amount of all Pro Rata Repurchases,
including such
 
                                      A-3

<PAGE>
Pro Rata Repurchase (for all purposes of this Section 7.4(d), including only
that portion of the Fair Market Value of the aggregate purchase price of each
Pro Rata Repurchase which is in excess of the Fair Market Value of the Common
Stock repurchased as determined on the Trading Day immediately preceding the
first public announcement by the Corporation or any of its Affiliates of the
intent to effect each such Pro Rata Repurchase), the Effective Dates of which
fall within such period, exceeds twelve and one-half percent (12 1/2%) of the
aggregate Fair Market Value of all shares of Common Stock outstanding on the
Trading Day immediately preceding the first public announcement by the
Corporation or any of its Affiliates of the intent to effect such Pro Rata
Repurchase. Such adjustment shall become effective immediately after the record
date for the determination of stockholders entitled to receive such
Extraordinary Distribution or immediately after the Effective Date of such Pro
Rata Repurchase.
 
    Solely as an adjustment applicable to shares of Class 1 ESOP Preferred Stock
that are being converted into Common Stock as of a given date, and not as a
permanent adjustment to the Conversion Rate, the Conversion Rate in effect
immediately prior to such conversion shall be adjusted by multiplying such
Conversion Rate by a fraction, the numerator of which shall be the product of
(i) the number of shares of Common Stock outstanding immediately before such
conversion multiplied by (ii) the Fair Market Value of a share of Common Stock
on the date of such conversion, and the denominator of which shall be (i) the
product of (x) the number of shares of Common Stock outstanding immediately
before such conversion multiplied by (y) the Fair Market Value of a share of
Common Stock on the date of such conversion minus (ii) the Fair Market Value of
the cash dividends and distributions made on or before the date of such
conversion with a record date after the most recent Extraordinary Distribution
Measuring Date upon which Participating Dividends were paid in full, but only to
the extent that such cash dividends and distributions (a) would entitle the
holders of the shares of Class 1 ESOP Preferred Stock outstanding on such
conversion date to a dividend under Section 3.1 that has not been paid and
(b) would not constitute an Extraordinary Distribution (provided that such
denominator shall never be less than 1.0).
 
    (7) that Section 8.2 of Article FOURTH, Part II of the Restated Certificate
shall be amended to read in its entirety as follows:
 
    8.2 The Series A Preferred Stock and the Series B Preferred Stock shall each
be deemed to rank prior to the Class 1 ESOP Preferred Stock both as to the
payment of dividends and as to the distribution of assets upon liquidation,
dissolution or winding up. The Series D Preferred Stock shall be deemed to rank
prior to the Class 1 ESOP Preferred Stock as to the distribution of assets upon
liquidation, dissolution, or winding up. The Class 2 ESOP Preferred Stock shall
be deemed to rank on a parity with the Class 1 ESOP Preferred Stock as to the
payment of dividends and as to amounts distributable upon liquidation,
dissolution or winding up. The Common Stock, the Director Preferred Stocks, the
Voting Preferred Stocks and the Series C Preferred Stock shall each be deemed to
rank junior to the Class 1 ESOP Preferred Stock both as to the payment of
dividends and as to the distribution of assets upon liquidation, dissolution or
winding up.
 
    (8) that Section 2.18 of Article FOURTH, Part III of the Restated
Certificate shall be amended to read in its entirety as follows:
 
    2.18 "DIVIDEND PAYMENT DATE"  means a date on which Participating Dividends
are paid on the Class 2 ESOP Preferred Stock or on the Common Stock.
 
    (9) that Section 2.19 of Article FOURTH, Part III of the Restated
Certificate shall be amended to read in its entirety as follows:
 
    2.19 "DIVIDEND PERIOD"  shall mean the period commencing March 31, 2000 or,
if later, the most recent Dividend Payment Date of the Class 2 ESOP Preferred
Stock.
 
                                      A-4

<PAGE>
    (10) that Section 2.22 of Article FOURTH, Part III of the Restated
Certificate shall be amended to read in its entirety as follows:
 
    2.22 "EXTRAORDINARY DISTRIBUTION"  shall mean any single dividend or other
distribution (including by reclassification of shares or recapitalization of the
Corporation, as well as any such dividend or distribution made in connection
with a merger or consolidation in which the Corporation is the continuing
corporation and the Common Stock is not changed or exchanged) to holders of
Common Stock (effected while any of the shares of Class 2 ESOP Preferred Stock
are outstanding) (i) of cash, where the aggregate amount of such single cash
dividend or distribution together with the amount of all cash dividends and
distributions made to holders of Common Stock during the period from the most
recent Extraordinary Distribution Measuring Date until the payment date for such
cash dividend or distribution to holders of Common Stock, when combined with the
aggregate amount of all previous Pro Rata Repurchases during such period (for
this purpose, including only that portion of the aggregate purchase price of
each such Pro Rata Repurchase which is in excess of the Fair Market Value of the
Common Stock repurchased as determined on the Business Day prior to the public
announcement of such Pro Rata Repurchase made during such period), exceeds
twelve and one-half percent (12 1/2%) of the aggregate Fair Market Value of all
shares of Common Stock outstanding on the record date for determining the
shareholders entitled to receive such Extraordinary Distribution and (ii) of any
shares of capital stock of the Corporation (other than shares of Common Stock),
other securities of the Corporation (other than securities of the type referred
to in Sections 6.4(b) and 6.4(c) hereof), evidences of indebtedness of the
Corporation or any other person or any other property (including, without
limitation, shares of capital stock of any subsidiary of the Corporation), or
any combination thereof. The Fair Market Value of any such single dividend or
other distribution that, pursuant to clause (i), constitutes an Extraordinary
Distribution shall for purposes of the first paragraph of Section 6.4(d) hereof
be the sum of the Fair Market Value of such Extraordinary Distribution plus the
amount of any other cash dividends and distributions made within the relevant
period referred to above to holders of Common Stock to the extent such other
dividends and distributions were not previously included in the calculation of
an adjustment pursuant to the first paragraph of Section 6.4(d) hereof within
such period.
 
    (11) that the following Section 2.22.1 shall be added to Article FOURTH,

Part III of the Restated Certificate in its entirety:
 
    2.22.1 "EXTRAORDINARY DISTRIBUTION MEASURING DATE"  shall mean the
penultimate Business Day in each year, commencing on such penultimate Business
Day in 1999.
 
    (12) that Section 3 of Article FOURTH, Part III of the Restated Certificate
shall be amended to read in its entirety as follows:
 
    SECTION 3. DIVIDENDS.
 
    3.1 The holders of shares of the Class 2 ESOP Preferred Stock shall be
entitled to receive, when, as and if declared by the Board of Directors out of
assets legally available for that purpose, dividends payable in cash at the rate
(per outstanding share of Common Stock) equal to the dividends which would have
been received during the applicable Dividend Period with respect to the shares
of Common Stock which would have been issued upon conversion of the Class 2 ESOP
Preferred Stock had the Class 2 ESOP Preferred Stock been outstanding as Common
Stock at each relevant time in order to receive such dividends (but only to the
extent such dividends do not constitute an Extraordinary Distribution under
clause (i) of the definition thereof), which dividends (hereinafter referred to
as "Participating Dividends") shall be paid in cash, pro-rata to each holder of
Class 2 ESOP Preferred Stock. Such Participating Dividends shall be cumulative
from March 31, 2000, whether or not in any Dividend Period or Periods there
shall be assets of the Corporation legally available for the payment of such
Participating Dividends and whether or not the Board of Directors shall have
declared such Participating Dividends, and shall be payable when, as and if
declared by the Board of Directors, in
 
                                      A-5

<PAGE>
arrears on Dividend Payment Dates. Each such Participating Dividend shall be
payable in arrears to the holders of record of shares of the Class 2 ESOP
Preferred Stock, as they appear on the stock records of the Corporation at the
close of business on such record dates, which shall not be more than 60 days nor
less than 10 days preceding the Dividend Payment Dates thereof, as shall be
fixed by the Board of Directors. Accrued and unpaid Participating Dividends for
any past Dividend Periods may be declared and paid at any time, without
reference to any Dividend Payment Date, to holders of record on such date, not
exceeding 45 days preceding the payment date thereof, as may be fixed by the
Board of Directors. Holders of the Class 2 ESOP Preferred Stock shall be
entitled to the cumulative Participating Dividend provided in this Section 3.1
and shall not be entitled to any other dividends in excess thereof. In the event
that an adjustment is made pursuant to the second paragraph of Section 6.4(d)
with respect to shares of Class 2 ESOP Preferred Stock converted during the
applicable Dividend Period, the amount of Participating Dividend to be paid in
accordance with the preceding sentence shall be reduced by an amount equal to
the product of (x) the number of shares of Common Stock into which such
converted shares of Class 2 ESOP Preferred Stock would have been converted in
the absence of such adjustment and (y) the amount of the cash dividend or
distributions per share of Common Stock in respect of which such adjustment was
made.
 
    3.2 Except as provided in Section 3.1, holders of shares of Class 2 ESOP
Preferred Stock shall not be entitled to any dividends, whether payable in cash,
property or stock, in excess of cumulative Participating Dividends, as herein
provided, on the Class 2 ESOP Preferred Stock. No interest, or sum of money in
lieu of interest, shall be payable in respect of any Participating Dividend
payment or payments on the Class 2 ESOP Preferred Stock that may be in arrears
 
    3.3 So long as any shares of the Class 2 ESOP Preferred Stock are
outstanding, no dividends, except as described in the next succeeding sentence,
shall be declared or paid or set apart for payment on any other class or series
of stock of the Corporation ranking on a parity with the Class 2 ESOP Preferred
Stock as to the payment of dividends for any period unless full cumulative
Participating Dividends have been or contemporaneously are declared and paid or
declared and a sum sufficient for the payment thereof set apart for such payment
on the Class 2 ESOP Preferred Stock for all Dividend Periods terminating on or
prior to the date of payment of the dividends on such class or series or parity
stock. When Participating Dividends are not paid in full or a sum sufficient for
such payment is not set apart, as aforesaid, all dividends declared upon the
Class 2 ESOP Preferred Stock and such parity stock shall be declared ratably in
proportion to the respective amounts of Participating Dividends accumulated and
unpaid on the Class 2 ESOP Preferred Stock and dividends accumulated and unpaid
on such parity stock.
 
    3.4 So long as any shares of the Class 2 ESOP Preferred Stock are
outstanding, no dividends (other than (i) the Rights and (ii) dividends or
distributions paid in shares of, or options, warrants, or rights to subscribe
for or purchase shares of, any class or series of stock of the Corporation that
is junior to the Class 2 ESOP Preferred Stock as to the payment of dividends)
shall be declared or paid or set apart for payment or other distribution
declared or made upon any class or series of stock of the Corporation that is
junior to the Class 2 ESOP Preferred Stock as to the payment of dividends, nor
shall any other class or series of stock of the Corporation ranking on a parity
with or junior to the Class 2 ESOP Preferred Stock as to the payment of
dividends or as to distributions upon liquidation, dissolution or winding up of
the Corporation, be redeemed, purchased or otherwise acquired (other than a
redemption, purchase or other acquisition of shares of Common Stock made for
purposes of an employee incentive or benefit plan of the Corporation or any
subsidiary) for any consideration (or any moneys be paid to or made available
for a sinking fund for the redemption of any shares of any such stock) by the
Corporation, directly to the Class 2 ESOP Preferred Stock as to the payment of
dividends and as to distributions upon liquidation, dissolution or winding up of
the Corporation), unless in each case the full cumulative Participating
Dividends on all outstanding shares of the Class 2 ESOP
 
                                      A-6

<PAGE>
Preferred Stock shall have been paid or set apart for payment for all past
Dividend Periods with respect to the Class 2 ESOP Preferred Stock and such
parity stock.
 
    (13) that Section 6.4(d) of Article FOURTH, Part III of the Restated
Certificate shall be amended to read in its entirety as follows:
 
    (d) In case the Corporation shall, at any time or from time to time while
any of the shares of Class 2 ESOP Preferred Stock are outstanding, make an
Extraordinary Distribution in respect of the Common Stock or effect a Pro Rata
Repurchase of Common Stock, the Conversion Rate in effect immediately prior to
such Extraordinary Distribution or Pro Rata Repurchase shall be adjusted by
multiplying such Conversion Rate by a fraction, the numerator of which shall be
the product of (i) the number of shares of Common Stock outstanding immediately
before such Extraordinary Dividend or Pro Rata Repurchase (minus, in the case of
a Pro Rata Repurchase, the number of shares of Common Stock repurchased by the
Corporation) multiplied by (ii) the Fair Market Value of a share of Common Stock
on the record date with respect to such Extraordinary Distribution or on the
Trading Day immediately preceding the first public announcement by the
Corporation or any of its Affiliates of the intent to effect a Pro Rata
Repurchase, as the case may be, and the denominator of which shall be (i) the
product of (x) the number of shares of Common Stock outstanding immediately
before such Extraordinary Distribution or Pro Rata Repurchase multiplied by
(y) the Fair Market Value of a share of Common Stock on the record date with
respect to such Extraordinary Distribution, or on the Trading Day immediately
preceding the first public announcement by the Corporation or any of its
Affiliates of the intent to effect a Pro Rata Repurchase, as the case may be,
minus (ii) the Fair Market Value of the Extraordinary Distribution or the
aggregate purchase price of the Pro Rata Repurchase, as the case may be
(provided that such denominator shall never be less than 1.0); PROVIDED,
HOWEVER, that no Pro Rata Repurchase shall cause an adjustment to the Conversion
Rate unless the amount of all cash dividends and distributions made to holders
of Common Stock during the period from the most recent Extraordinary
Distribution Measuring Date preceding the Effective Date of such Pro Rata
Repurchase, when combined with the aggregate amount of all Pro Rata Repurchases,
including such Pro Rata Repurchase (for all purposes of this Section 7.4(d),
including only that portion of the Fair Market Value of the aggregate purchase
price of each Pro Rata Repurchase which is in excess of the Fair Market Value of
the Common Stock repurchased as determined on the Trading Day immediately
preceding the first public announcement by the Corporation or any of its
Affiliates of the intent to effect each such Pro Rata Repurchase), the Effective
Dates of which fall within such period, exceeds twelve and one-half percent
(12 1/2%) of the aggregate Fair Market Value of all shares of Common Stock
outstanding on the Trading Day immediately preceding the first public
announcement by the Corporation or any of its Affiliates of the intent to effect
such Pro Rata Repurchase. Such adjustment shall become effective immediately
after the record date for the determination of stockholders entitled to receive
such Extraordinary Distribution or immediately after the Effective Date of such
Pro Rata Repurchase.
 
    Solely as an adjustment applicable to shares of Class 2 ESOP Preferred Stock
that are being converted into Common Stock as of a given date, and not as a
permanent adjustment to the Conversion Rate, the Conversion Rate in effect
immediately prior to such conversion shall be adjusted by multiplying such
Conversion Rate by a fraction, the numerator of which shall be the product of
(i) the number of shares of Common Stock outstanding immediately before such
conversion multiplied by (ii) the Fair Market Value of a share of Common Stock
on the date of such conversion, and the denominator of which shall be (i) the
product of (x) the number of shares of Common Stock outstanding immediately
before such conversion multiplied by (y) the Fair Market Value of a share of
Common Stock on the date of such conversion minus (ii) the Fair Market Value of
the cash dividends and distributions made on or before the date of such
conversion with a record date after the most recent Extraordinary Distribution
Measuring Date upon which Participating Dividends were paid in full, but only to
the extent that such cash dividends and distributions (a) would entitle the
holders of the
 
                                      A-7

<PAGE>
shares of Class 2 ESOP Preferred Stock outstanding on such conversion date to a
dividend under Section 3.1 that has not been paid and (b) would not constitute
an Extraordinary Distribution (provided that such denominator shall never be
less than 1.0).
 
    (14) that Section 8.2 of Article FOURTH, Part III of the Restated
Certificate shall be amended to read in its entirety as follows:
 
    8.2 The Series A Preferred Stock and the Series B Preferred Stock, shall
each be deemed to rank prior to the Class 2 ESOP Preferred Stock both as to the
payment of dividends and as to the distribution of assets upon liquidation,
dissolution or winding up. The Series D Preferred Stock shall be deemed to rank
prior to the Class 2 ESOP Preferred Stock as to the distribution of assets upon
liquidation, dissolution or winding up. The Class 1 ESOP Preferred Stock shall
be deemed to rank on a parity with the Class 2 ESOP Preferred Stock as to the
payment of dividends and as to amounts distributable upon liquidation,
dissolution or winding up. The Common Stock, the Director Preferred Stocks, the
Voting Preferred Stocks and the Series C Preferred Stock shall each be deemed to
rank junior to the Class 2 ESOP Preferred Stock both as to the payment of
dividends and as to the distribution of assets upon liquidation, dissolution or
winding up.
 
    SECOND: That the foregoing amendment has been duly adopted in accordance
with the provisions of Section 242 of the Delaware General Corporation Law by
the affirmative vote of a majority of the shares of stock of the Corporation
entitled to vote thereon at the annual meeting of stockholders held on
            , voting together as a single class.
 
    IN WITNESS WHEREOF, UAL Corporation has caused this Certificate to be signed
and attested by the Corporation's duly authorized officer this    day of
          , 200 .
 

<TABLE>
<S>                                                    <C>  <C>
                                                       UAL CORPORATION
 
                                                       By:
                                                            -----------------------------------------
                                                            Name:
                                                            Title:
</TABLE>

 

<TABLE>
<S>  <C>                                       <C>
ATTEST:
 
By:
     ---------------------------------------
     Name:
     Title:
</TABLE>

 
                                      A-8

<PAGE>

                                                                      APPENDIX B
 
                    UAL CORPORATION AND SUBSIDIARY COMPANIES
      CONSOLIDATED FINANCIAL STATEMENTS AND RELATED FINANCIAL INFORMATION
                                     INDEX
 

<TABLE>
<CAPTION>
                                                                PAGE
                                                              --------
<S>                                                           <C>
Selected Financial Data and Operating Statistics............  B-2
Management's Discussion and Analysis of Financial Condition
  and Results of Operations.................................  B-3
Quantitative and Qualitative Disclosures About Market
  Risk......................................................  B-12
Report of Independent Public Accountants....................  B-14
Statements of Consolidated Operations.......................  B-15
Statements of Consolidated Financial Position...............  B-16
Statements of Consolidated Cash Flows.......................  B-18
Statements of Consolidated Stockholders' Equity.............  B-19
Notes to Consolidated Financial Statements..................  B-20
</TABLE>

 
                                      B-1

<PAGE>
SELECTED FINANCIAL DATA AND OPERATING STATISTICS
 

<TABLE>
<CAPTION>
                                                           YEAR ENDED DECEMBER 31
                                            ----------------------------------------------------
                                              1999       1998       1997       1996       1995
                                            --------   --------   --------   --------   --------
                                                 (IN MILLIONS, EXCEPT PER SHARE AND RATES)
<S>                                         <C>        <C>        <C>        <C>        <C>
Operating revenues........................  $ 18,027   $ 17,561   $ 17,378   $ 16,362   $ 14,943
Earnings before extraordinary item........     1,238        821        958        600        378
Extraordinary loss on early extinguishment
  of debt, net of tax.....................        (3)        --         (9)       (67)       (29)
Net earnings..............................     1,235        821        949        533        349
Per share amounts, diluted:
  Earnings before extraordinary item......      9.97       6.83       9.04       5.85       5.23
  Extraordinary loss on early
    extinguishment of debt................     (0.03)        --      (0.09)     (0.79)     (0.41)
  Net earnings............................      9.94       6.83       8.95       5.06       4.82
Total assets at year-end..................    20,963     18,559     15,464     12,677     11,641
Long-term debt and capital lease
  obligations, including current portion,
  and redeemable preferred stock..........     5,369      5,345      4,278      3,385      4,102
 
Revenue passengers........................        87         87         84         82         79
Revenue passenger miles...................   125,465    124,609    121,426    116,697    111,811
Available seat miles......................   176,686    174,008    169,110    162,843    158,569
Passenger load factor.....................      71.0%      71.6%      71.8%      71.7%      70.5%
Breakeven passenger load factor...........      64.9%      64.9%      66.0%      66.0%      66.1%
Passenger revenue per passenger mile......      12.5 CENTS     12.4 CENTS     12.6 CENTS     12.4 CENTS     11.8 CENTS
Operating revenue per available seat
  mile....................................      10.2 CENTS     10.1 CENTS     10.3 CENTS     10.0 CENTS      9.4 CENTS
Operating expense per available seat
  mile....................................       9.4 CENTS      9.2 CENTS      9.5 CENTS      9.3 CENTS      8.9 CENTS
Operating expense per available seat mile
  excluding ESOP charges..................       9.0 CENTS      8.8 CENTS      8.9 CENTS      8.9 CENTS      8.6 CENTS
Fuel gallons consumed.....................     3,065      3,029      2,964      2,883      2,822
Average price per gallon of jet fuel......      57.9 CENTS     59.0 CENTS     69.5 CENTS     72.2 CENTS     59.5 CENTS
</TABLE>

 
                                      B-2

<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
  OPERATIONS
--------------------------------------------------------------------------------
    This section contains various forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E of
 the Securities Exchange Act of 1934, as amended, which are identified with an
 asterisk (*). Forward-looking statements represent the Company's expectations
 and beliefs concerning future events, based on information available to the
 Company on the date of the filing of this Form 10-K. The Company undertakes no
 obligation to publicly update or revise any forward-looking statements,
 whether as a result of new information, future events or otherwise. Factors
 that could significantly impact the expected results referenced in the
 forward-looking statements are listed in the last paragraph of the section,
 "Outlook for 2000."
 
    On July 12, 1994, the stockholders 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 is being allocated to individual employee accounts through the year
2000 under Employee Stock Ownership Plans ("ESOPs") which were created as part
of the recapitalization. Since the ESOP shares are being allocated over time,
the current ownership interest held in the ESOPs is less than 55%. The entire
ESOP voting interest is currently exercisable, which is voted by the ESOP
trustee at the direction of, and on behalf of, the holders of the ESOP stock.
 
LIQUIDITY AND CAPITAL RESOURCES
 
LIQUIDITY--
 
    UAL's total of cash and cash equivalents and short-term investments was
$689 million at December 31, 1999, compared to $815 million at December 31,
1998. Operating activities during the year generated $2.421 billion and the
Company's sale of part of its investments in Galileo International, Inc.
("Galileo") and Equant N.V. ("Equant") provided $828 million in cash proceeds
(see Note 6 "Investments" in the NOTES TO CONSOLIDATED FINANCIAL STATEMENTS).
Cash was used primarily to fund net additions to property and equipment.
 
    Property additions, including aircraft, aircraft spare parts, facilities and
ground equipment, amounted to $2.389 billion, while property dispositions
resulted in proceeds of $154 million. In 1999, United took delivery of eight
A319, five A320, seven B747, two B757, five B767 and six B777 aircraft.
Twenty-one of these aircraft were purchased and twelve were acquired under
capital leases. In addition, United acquired two B727 aircraft off-lease during
1999 and retired ten DC10 and six B747 aircraft.
 
    During 1999, the Company made payments of $261 million for the repurchase of
3.8 million shares of common stock. In January 2000, the Company completed its
$300 million 1999 stock repurchase program after acquiring a total of
4.4 million shares. Financing activities also included principal payments under
debt and capital lease obligations of $513 million and $248 million,
respectively. Additionally, the Company issued, and subsequently retired,
$286 million in debt to finance the acquisition of aircraft.
 
    Included in cash and cash equivalents at December 31, 1999 were $89 million
of securities held by third parties under securities lending agreements, as well
as collateral in the amount of 102% of the value of the securities lent. United
is obligated to reacquire the securities at the end of the contract.
 
    As of December 31, 1999, UAL had a working capital deficit of
$2.476 billion as compared to $2.760 billion at December 31, 1998. 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. In addition, UAL may from
time to time repurchase on the open market, in privately negotiated purchases or
otherwise, its debt and equity securities.
 
                                      B-3

<PAGE>
    United has available approximately $1.7 billion in short-term revolving
credit facilities, as well as a separate $227 million short-term borrowing
facility, as described in Note 8 "Short-Term Borrowings" in the NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS.
 
    PRIOR YEARS.  Operating activities in 1998 generated cash flows of
$3.194 billion. Cash was used primarily to fund net additions to property and
equipment of $2.380 billion and to repurchase common stock in the amount of
$459 million. Financing activities also included repayments of long-term debt
totaling $271 million and payments under capital leases of $322 million, as well
as aircraft lease deposits of $154 million. Additionally, the Company issued
$928 million in debt and used part of the proceeds to purchase $693 million in
equipment certificates under Company operating leases.
 
    Operating activities in 1997 generated cash flows of $2.567 billion and the
Company's sale of its interest in the Apollo Travel Services Partnership ("ATS")
provided $539 million in cash proceeds. Cash was used primarily to fund net
additions to property and equipment of $2.729 billion and to repurchase common
stock in the amount of $250 million. Financing activities included the early
extinguishment of $151 million in principal amount of various debt securities,
mandatory repayments of long-term debt totaling $150 million and payments under
capital leases of $147 million. In addition, the Company made payments of
$112 million in aircraft lease deposits and issued $597 million of enhanced pass
through certificates.
 
CAPITAL COMMITMENTS--
 
    At December 31, 1999, commitments for the purchase of property and
equipment, principally aircraft, approximated $4.4 billion, after deducting
advance payments. Of this amount, an estimated $2.0 billion is due to be spent
in 2000. For further details, see Note 18 "Commitments, Contingent Liabilities
and Uncertainties" in the NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
 
CAPITAL RESOURCES--
 
    Funds necessary to finance aircraft acquisitions are expected to be obtained
from internally generated funds, external financing arrangements or other
external sources.
 
    At December 31, 1999, United's senior unsecured debt was rated BB+ by
Standard and Poor's ("S & P") and Baa3 by Moody's Investors Service Inc.
("Moody's"). UAL's Series B preferred stock and redeemable preferred securities
were rated B+ by S & P and Ba3 by Moody's.
 
RESULTS OF OPERATIONS
 
SUMMARY OF RESULTS--
 
    UAL's earnings from operations were $1.391 billion in 1999, compared to
operating earnings of $1.478 billion in 1998. UAL's net earnings in 1999 were
$1.235 billion ($9.94 per share, diluted), compared to net earnings of
$821 million in 1998 ($6.83 per share, diluted).
 
    The 1999 earnings include an extraordinary loss of $3 million, after tax, on
early extinguishment of debt, an after-tax gain on the sale of certain of the
Company's investments as described in Note 6 "Investments" in the NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS of $468 million ($4.19 per share, diluted), as
well as a one-time after-tax charge of $11 million associated with the
write-down of two non-operating B747-200 aircraft ($0.09 per share, diluted).
 
    Management believes that a more complete understanding of UAL's results may
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 period (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 is excluded from
Fully Distributed net earnings, and
 
                                      B-4

<PAGE>
ESOP convertible preferred stock dividends are not deducted from earnings
attributable to common stockholders. No adjustments are made to Fully
Distributed earnings to reflect future salary increases. A comparison of results
reported on a Fully Distributed basis to results reported under generally
accepted accounting principles (GAAP) is as follows:
 

<TABLE>
<CAPTION>
                                                           DECEMBER 31, 1999         DECEMBER 31, 1998
                                                        -----------------------   -----------------------
                                                          GAAP         FULLY        GAAP         FULLY
                                                        (DILUTED)   DISTRIBUTED   (DILUTED)   DISTRIBUTED
                                                        ---------   -----------   ---------   -----------
<S>                                                     <C>         <C>           <C>         <C>
Net Income (in millions)..............................   $1,235       $1,665        $ 821       $1,308
                                                         ------       ------        -----       ------
Per Share:
  Earnings before B747 write-down, gains on sales and
    extraordinary loss................................   $ 5.87       $10.06        $6.83       $10.24
  B747 write-down.....................................    (0.09)       (0.08)          --           --
  Gains on sales, net.................................     4.19         3.75           --           --
  Extraordinary loss, net.............................    (0.03)       (0.02)          --           --
                                                         ------       ------        -----       ------
                                                         $ 9.94       $13.71        $6.83       $10.24
                                                         ======       ======        =====       ======
</TABLE>

 
    The current relationship of earnings and earnings per share as computed on a
GAAP basis versus a Fully Distributed basis may not be representative of the
relationship in future periods because of various factors. These factors
include: the dependence of ESOP compensation expense on the common stock price;
trends and commitments with respect to wages; and the increasing number of
shares assumed outstanding under the GAAP basis during the remainder of the ESOP
period. During the year 2000, the shares assumed outstanding under the GAAP
basis will approach the number of shares assumed outstanding under the Fully
Distributed basis.
 
1999 COMPARED WITH 1998--
 
    OPERATING REVENUES.  Operating revenues increased $466 million (3%) and
United's revenue per available seat mile (unit revenue) increased 1% to 10.17
cents. Passenger revenues increased $264 million (2%) due to a 1% increase in
United's revenue passenger miles and a 1% increase in yield to 12.48 cents.
Available seat miles across the system were up 2% year over year; however,
passenger load factor decreased 0.6 points to 71.0% as traffic only increased 1%
system-wide. The following analysis by market is based on information reported
to the U.S. Department of Transportation:
 

<TABLE>
<CAPTION>
                                                                 INCREASE (DECREASE)
                                         -------------------------------------------------------------------
                                          AVAILABLE SEAT    REVENUE PASSENGER MILES    REVENUE PER REVENUE
                                         MILES (CAPACITY)          (TRAFFIC)          PASSENGER MILE (YIELD)
                                         ----------------   -----------------------   ----------------------
<S>                                      <C>                <C>                       <C>
Domestic...............................          4%                    2%                       1%
Pacific................................        (12%)                 (11%)                      3%
Atlantic...............................         14%                   14%                      (7%)
Latin America..........................         (7%)                  (3%)                     (3%)
  System...............................          2%                    1%                       1%
</TABLE>

 
    Pacific yields improved as the Asian economies continue to recover. Yields
in other international markets have been impacted by a negative pricing
environment resulting from excess industry capacity.
 
    Cargo revenues decreased $7 million (1%) despite increased freight ton miles
of 5%, as a 4% decline in freight yield combined with a 3% decline in mail
yield. Other operating revenues increased $209 million (19%) due to increases in
frequent flyer program partner related revenues, fuel sales to third parties and
additional revenue related to the Galileo services agreement (see Note 6
"Investments" in the NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
 
                                      B-5

<PAGE>
    OPERATING EXPENSES.  Operating expenses increased $553 million (3%) and
United's cost per available seat mile increased 2% from 9.24 to 9.41 cents,
including ESOP compensation expense. Excluding ESOP compensation expense,
United's 1999 cost per available seat mile would have been 8.98 cents, an
increase of 3% from 1998. ESOP compensation expense decreased $73 million (9%),
reflecting the decrease in the estimated average fair value of ESOP stock
committed to be released to employees as a result of UAL's lower common stock
price. Salaries and related costs increased $329 million (6%) as a result of
increased staffing in customer-contact positions, as well as salary increases
for most labor groups which took effect July 1, 1998. Commissions decreased
$186 million (14%) due to a change in the commission structure implemented in
the third quarter 1998 as well as a slight decrease in commissionable revenues.
In addition, in October 1999, the Company reduced the base commissions for
tickets purchased in the U.S. and Canada to 5%, subject to roundtrip caps of $50
domestic and $100 international. Purchased services increased $70 million (5%)
due to increases in computer reservations fees and year 2000-related expenses.
Depreciation and amortization increased $74 million (9%) due to an increase in
the number of owned aircraft and losses on disposition of aircraft partially
offset by changes in depreciable lives of certain aircraft. In addition, during
the fourth quarter, United wrote-down two B747-200 aircraft to net realizable
value. Aircraft maintenance increased $65 million (10%) due to in increase in
heavy maintenance visits. Other operating expenses increased $235 million (11%)
primarily due to costs associated with fuel sales to third parties.
 
    OTHER INCOME AND EXPENSE.  Other income (expense) amounted to $551 million
in income in 1999 compared to $222 million in expense in 1998. Interest
capitalized, primarily on aircraft advance payments, decreased $30 million
(29%). Interest income increased $9 million (15%) due to higher investment
balances. In addition, 1999 included a $669 million gain on the sale of Galileo
stock and a $62 million gain on the sale of Equant stock.
 
    1998 COMPARED WITH 1997--
 
    OPERATING REVENUES.  Operating revenues increased $183 million (1%) while
United's revenue per available seat mile (unit revenue) decreased 2% to 10.07
cents. Passenger revenues increased $178 million (1%) due to a 3% increase in
United's revenue passenger miles despite a 1% decrease in yield from 12.55 to
12.36 cents. Available seat miles across the system were up 3% year over year;
however, passenger load factor decreased 0.2 point to 71.6%. The following
analysis by market is based on information reported to the U.S. Department of
Transportation:
 

<TABLE>
<CAPTION>
                                                                 INCREASE (DECREASE)
                                         -------------------------------------------------------------------
                                          AVAILABLE SEAT    REVENUE PASSENGER MILES    REVENUE PER REVENUE
                                         MILES (CAPACITY)          (TRAFFIC)          PASSENGER MILE (YIELD)
                                         ----------------   -----------------------   ----------------------
<S>                                      <C>                <C>                       <C>
Domestic...............................          4%                    5%                        2%
Pacific................................         (9%)                 (10%)                     (13%)
Atlantic...............................         15%                   11%                       (3%)
Latin America..........................         17%                    9%                       (8%)
  System...............................          3%                    3%                       (1%)
</TABLE>

 
    Pacific yields were negatively impacted by the weakness of the Japanese yen
compared to the dollar during the first nine months of 1998, and the continued
effects of the Asian economic turmoil on demand for travel. Yields in other
international markets were impacted by a negative pricing environment resulting
from excess industry capacity and weakened economies.
 
    Cargo revenues increased $21 million (2%) on increased freight ton miles of
6%. A relatively flat freight yield together with a 1% lower mail yield,
resulted in a 1% decrease in cargo yield for the year. Other operating revenues
decreased $16 million (1%) due to the sale of ATS in July 1997, partially offset
by increases in frequent flyer program partner-related revenues and contract
sales to third parties.
 
                                      B-6

<PAGE>
    OPERATING EXPENSES.  Operating expenses decreased $36 million (0.2%) and
United's cost per available seat mile including ESOP compensation expense
decreased 3%, from 9.53 cents to 9.24 cents. Without the ESOP compensation
expense, United's cost per available seat mile would have been 8.76 cents, a
decrease of 2% from 1997. ESOP compensation expense decreased $158 million (16%)
reflecting the decrease in the estimated average fair value of stock committed
to the Supplemental ESOP due to UAL's lower common stock price. Purchased
services increased $220 million (17%) due to increases in computer reservations
fees, credit card discounts, communications expense and year 2000-related
spending. Depreciation and amortization increased $69 million (10%) due to an
increase in the number of owned aircraft and an $11 million decrease in gains on
asset sales, from $23 million in 1997 to $12 million in 1998. Salaries and
related costs increased $323 million (6%) due to two mid-term wage adjustments
for ESOP participants which took place in July of 1998 and 1997 and increased
staffing in customer-contact positions. Aircraft fuel decreased $273 million
(13%) as a result of a 15% decrease in the average cost of fuel from 69.5 cents
to 59.0 cents a gallon. Commissions decreased $183 million (12%) due to a change
in the commission structure implemented in the third quarter of 1997 as well as
a slight decrease in commissionable revenues. Aircraft rent decreased
$49 million (5%) as a result of refinancing aircraft under operating lease.
 
    OTHER INCOME AND EXPENSE.  Other income (expense) amounted to $222 million
in expense in 1998 compared to $265 million in income in 1997. Interest expense
increased $69 million (24%) in 1998 due to the issuance of long-term debt in
1997 and 1998. Interest income increased $7 million (13%) due to higher
investment balances. In 1998, foreign exchange losses increased $65 million.
Because not all economic hedges qualify as accounting hedges, unrealized gains
and losses may be recognized in income in advance of the actual foreign currency
cash flows. This mismatch of accounting gains and losses and foreign currency
cash flows was especially pronounced during the fourth quarter of 1998 as a
result of the appreciation in value of the Japanese yen, relative to the U.S.
dollar. This mismatch resulted in a pre-tax charge of $52 million which is
included in foreign exchange losses. In addition, 1997 included a $275 million
gain on the sale of ATS and a $103 million gain on the initial public offering
of Galileo stock.
 
OTHER INFORMATION
 
LABOR AGREEMENTS AND WAGE ADJUSTMENTS--
 
    On May 27, 1999, United's public contact employees (primarily customer
service and reservations sales and service representatives) ratified the
tentative agreement between the Company and the International Association of
Machinists and Aerospace Workers ("IAM"). The contract provides for an
across-the-board wage increase of 5.5 percent effective April 13, 2000. In
addition, certain employees hired after July 12, 1994 received an immediate
14.5% pay increase and benefits comparable to other affected employees.
 
    The Company's contracts with the Air Line Pilots' Association International
("ALPA") and the IAM become amendable in April and July 2000, respectively. The
Company is currently in the process of negotiating new contracts with ALPA and
the IAM. Wage rates for U.S.-based non-union employees will be adjusted in
April 2000 as well. It is the Company's objective through this wage adjustment
process to provide compensation for its employees that, on average over the life
of the labor contracts, is competitive with peer group compensation. In this
regard, wages for airline employees over the last year have increased at faster
than historical rates.
 
    Coupled with increased staffing levels, these negotiations and wage rate
adjustments are expected to increase the Company's salaries and related costs by
over $750 million (14%) above 1999 levels.* At the same time, once the final
ESOP shares are committed to be released in April 2000, the Company will no
longer record ESOP compensation expense.
 
                                      B-7

<PAGE>
FOREIGN OPERATIONS--
 
    United generates revenues and incurs expenses in numerous foreign
currencies. These expenses include aircraft leases, commissions, catering,
personnel costs, reservation and ticket office services, customer service
expenses and aircraft maintenance. Changes in foreign currency exchange rates
impact operating income through changes in foreign currency-denominated
operating revenues and expenses. Despite the adverse (favorable) effects a
strengthening (weakening) foreign currency may have on U.S. originating traffic,
a strengthening (weakening) of foreign currencies tends to increase (decrease)
reported revenue and operating income because United's foreign
currency-denominated operating revenue generally exceeds its foreign
currency-denominated operating expense for each currency.
 
    By carrying passengers and cargo in both directions between the U.S. and
almost every major economic region in the world and by selling its services in
each local country, United attempts to mitigate its exposure to fluctuations in
any single foreign currency. The Company's biggest net exposures are typically
for Japanese yen, Hong Kong dollars, Australian dollars and British pounds.
During 1999, yen-denominated operating revenue net of yen-denominated operating
expense was approximately 26 billion yen (approximately $206 million), Hong Kong
dollar-denominated operating revenue net of Hong Kong dollar-denominated
operating expense was approximately 1,299 million Hong Kong dollars
(approximately $166 million), Australian dollar-denominated operating revenue
net of Australian dollar-denominated operating expense was approximately
208 million Australian dollars (approximately $134 million) and British
pound-denominated operating revenue net of British pound-denominated operating
expense was approximately 67 million British pounds (approximately
$109 million).
 
    To reduce the impact of exchange rate fluctuations on United's financial
results, the Company hedges some of the risk of exchange rate volatility on its
anticipated future foreign currency revenues by purchasing put options
(consisting of yen, Euro, Australian dollars and British pounds) and selling
Hong Kong dollar forwards. To reduce hedging costs, the Company sells a
correlation basket option in the four currencies referred to above. United also
attempts to reduce its exposure to transaction gains and losses by converting
excess local currencies generated to U.S. dollars and by entering into currency
forward or exchange contracts. The total notional amount of outstanding currency
options and forward exchange contracts, and their respective fair market values
as of December 31, 1999, are summarized in QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK on page B-12.
 
    United's foreign operations involve insignificant amounts of physical
assets; however, there are sizable intangible assets related to acquisitions of
Atlantic and Latin America route authorities. Operating authorities in
international markets are governed by bilateral aviation agreements between the
United States and foreign countries. Changes in U.S. or foreign government
aviation policies can lead to the alteration or termination of existing air
service agreements that could adversely impact the value of United's
international route authority. Significant changes in such policies could also
have a material impact on UAL's operating revenues and results of operations.
 
AIRPORT RENTS AND LANDING FEES--
 
    United is charged facility rental and landing fees at virtually every
airport at which it operates. In recent years, many airports have increased or
sought to increase rates charged to airlines as a means of compensating for
increasing demands upon airport revenues. Airlines have challenged certain of
these increases through litigation and in some cases have not been successful.
The Federal Aviation Administration ("FAA") and the DOT have instituted an
administrative hearing process to judge whether rate increases are legal and
valid. However, to the extent the limitations on such charges are relaxed or the
ability of airlines to challenge such charges is restricted, the rates charged
by airports may increase substantially. Management cannot predict the magnitude
of any such increase.
 
                                      B-8

<PAGE>
ENVIRONMENTAL AND LEGAL 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. United's alleged proportionate contributions at the sites
are minimal; however, at sites where the EPA has commenced litigation, potential
liability is joint and several. 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. 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 this and other 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.*
 
YEAR 2000--
 
    UAL completed a successful transition to the Year 2000 as systems performed
without interruption during the rollover from December 31, 1999 to January 1,
2000. As of December 31, 1999, the Company had incurred $81 million in project
costs ($50 million in expense and $31 million in capital.) During 1999, the
Company incurred $52 million in project costs ($26 million in expense and
$26 million in capital.)
 
AIR CANADA--
 
    On October 19, 1999, the Company announced its intentions, along with
Deutsche Lufthansa AG ("Lufthansa"), to provide a financial package of up to
730 million Canadian dollars for Air Canada. In November, United invested
93 million Canadian ($64 million) in Air Canada's non-voting convertible
preferred shares through an investment partnership owned by UAL (40%) and
Lufthansa (60%).
 
    The remaining UAL investment in Air Canada consists of the purchase from and
subsequent leaseback to Air Canada of three Airbus A330 aircraft, two of which
occurred in 1999, and a commitment by the Company to guarantee a 160 million
Canadian dollar line of credit.
 
COMMON STOCK DIVIDENDS--
 
    On November 1, 1999, UAL's Board of Directors announced its intention to
begin a dividend program for common stock dividends totaling $1.25 per share in
the year 2000. The payment of dividends is contingent upon stockholder approval
of amendments to the Company's charter, which will be voted on at the UAL annual
meeting in May 2000. If the charter amendment is approved and the Board declares
a dividend, participants in the Company's ESOP plan will be eligible to receive
dividends ($5.00 per year per ESOP share, as each ESOP share is convertible into
four common shares) in the same manner as public stockholders.
 
NEW ACCOUNTING PRONOUNCEMENTS--
 
    In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities" ("SFAS No. 133"), which establishes accounting and
reporting standards requiring that every derivative instrument be
 
                                      B-9

<PAGE>
recorded in the balance sheet as either an asset or liability measured at its
fair value. SFAS No. 133 requires that changes in the derivative's fair value be
recognized currently in earnings unless specific hedge accounting criteria are
met. Special accounting for qualifying hedges allows a derivative's gains and
losses to offset related results on the hedged item in the income statement, and
requires that a company must formally document, designate and assess the
effectiveness of transactions that receive hedge accounting.
 
    The effective date of SFAS No. 133 has been delayed one year, to fiscal
years beginning after June 15, 2000. The Company plans on adopting SFAS No. 133
in the first quarter of 2001. United is in the process of reviewing its various
contracts to determine which contracts meet the requirements of SFAS No. 133 and
would need to be reflected as derivatives under the standard and accounted for
at fair value. The Company has not yet quantified the impacts of adopting SFAS
No. 133 on the financial statements. However, it could increase volatility in
earnings and other comprehensive income.
 
    In September 1999, the Financial Accounting Standard Board's ("FASB")
Emerging Issues Task Force ("EITF") issued EITF Issue No. 99-13, "Application of
Issue No. 97-10, "The Effect of Lessee Involvement in Asset Construction" and
FASB Interpretation No. 23, Leases of Certain Property Owned by a Governmental
Unit or Authority, to Entities that Enter into Leases with Governmental
Entities" ("EITF 99-13"). EITF 99-13 discusses the application of lease
accounting for property owned by governmental authorities, such as airport
facilities. Historically, airlines have received operating lease treatment for
assets funded by governmental units and separately disclosed the bond guarantee
and lease commitment in the footnotes to the financial statements. EITF 99-13
would require United to apply different guidelines for determining the
accounting treatment for special facility bonds and may result in United's
recording the property and related financing on the balance sheet for future
transactions. The EITF is effective for transactions entered into after
September 23, 1999.
 
    In December 1999, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial
Statements", ("SAB 101"), which provides guidance on the recognition,
presentation and disclosure of revenue in financial statements. Although
SAB 101 does not change existing accounting rules on revenue recognition,
changes in accounting to apply the guidance in SAB 101 may be accounted for as a
change in accounting principle. In the first quarter of 2000, United intends to
change the method it uses to account for the sale of mileage to participating
partners in its Mileage Plus program. Under the new accounting method, a portion
of the revenue from the sale of mileage will be deferred and recognized when
transportation is provided. In accordance with the provisions of SAB 101, United
will recognize a charge for the cumulative effect of a change in accounting
principle in the first quarter of 2000, to reflect application of the accounting
method to prior years.
 
OUTLOOK FOR 2000--
 
    The Company's revenue performance is expected to benefit from stronger
global economic growth in 2000, as well as the full implementation of Economy
Plus. Total unit revenues are estimated to range between 2% and 4% higher than
1999, driven by improvement in three of the company's four global regions: North
America, Atlantic, Pacific and Latin America.
 
    The Company expects to face two major cost challenges during the year. The
first involves material wage increases consistent with its commitment to provide
competitive compensation to its employees after the ESOP allocation period comes
to a close. In addition, fuel prices are expected to average 71 CENTS per
gallon, including taxes and hedging activity, or 23% above 1999 levels. Fully
distributed unit costs excluding ESOP compensation expense are estimated to be
about 6% higher than 1999, based on system capacity growth just under 3%.
 
    In summary, the Company anticipates 2000 earnings should range between $7.00
and $9.00 per fully distributed share.
 
                                      B-10

<PAGE>
    During the first quarter, the Company expects to benefit from its fuel
hedging activity. Fully distributed unit costs are expected to rise 5%, 2%
excluding fuel. Total unit revenue is expected to increase 2 to 4%, based
primarily on continued healthy demand for travel in the United States and
continued economic recovery in the Pacific. Therefore, the Company expects fully
distributed earnings per share in the first quarter to range from $0.80 to
$1.20.
 
    The information included in the above outlook section, as well as certain
statements made throughout the Management's Discussion and Analysis of Financial
Condition and Results of Operations that are identified by an asterisk (*) is
forward looking and involves risks and uncertainties that could result in actual
results differing materially from expected results. It is not reasonably
possible to itemize all of the many factors and specific events that could
affect the outlook of an airline operating in the global economy. Some factors
that could significantly impact expected capacity, unit revenues, wages, fully
distributed unit costs, fuel prices and fully distributed earnings per share
include: the success of the Company's cost-control efforts, the outcome of
negotiations on new contracts with the union groups, industry capacity
decisions, the airline pricing environment, the economic environment of the
airline industry, fuel prices, actions of the U.S., foreign and local
governments, the Asian economic environment and travel patterns, foreign
currency exchange rate fluctuations and the general economic environment. With
respect to the forward-looking statements set forth in the "Environmental and
Legal Contingencies" section, some of the factors that could affect the ultimate
disposition of these contingencies are changes in applicable laws, the
development of facts in individual cases, settlement opportunities and the
actions of plaintiffs, judges and juries.
 
                                      B-11

<PAGE>
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 
    INTEREST RATE RISK--  United's exposure to market risk associated with
changes in interest rates relates primarily to its debt obligations and
short-term investments. United does not use derivative financial instruments in
its investments portfolio. United's policy is to manage interest rate risk
through a combination of fixed and floating rate debt and entering into swap
agreements, depending upon market conditions. A portion of the borrowings are
denominated in foreign currencies which exposes the Company to risks associated
with changes in foreign exchange rates. To hedge against some of this risk, the
Company has placed foreign currency deposits (primarily for Japanese yen, French
francs, German marks and Euros) to meet foreign currency lease obligations
designated in the respective currencies. Since unrealized mark-to-market gains
or losses on the foreign currency deposits are offset by the losses or gains on
the foreign currency obligations, the Company reduces its overall exposure to
foreign currency exchange rate volatility. The fair value of these deposits is
determined based on the present value of future cash flows using an appropriate
swap rate. The fair value of long-term debt is based on the quoted market prices
for the same or similar issues or the present value of future cash flows using a
U.S. Treasury rate that matches the remaining life of the instrument, adjusted
by a credit spread.

<TABLE>
<CAPTION>
                                                           EXPECTED MATURITY DATES                                    1999
                                    ----------------------------------------------------------------------    --------------------
                                                                                                                            FAIR
          (IN MILLIONS)               2000        2001        2002        2003        2004      THEREAFTER     TOTAL       VALUE
          -------------             --------    --------    --------    --------    --------    ----------    --------    --------
<S>                                 <C>         <C>         <C>         <C>         <C>         <C>           <C>         <C>
ASSETS
Cash equivalents
  Fixed rate......................   $ 231        $ --       $  --       $  --       $  --        $  --        $  231      $  231
    Avg. interest rate............    5.27%         --          --          --          --           --          5.27%
    Variable rate.................   $  79        $ --       $  --       $  --       $  --        $  --        $   79      $   79
    Avg. interest rate............    6.23%         --          --          --          --           --          6.23%
Short term investments
  Fixed rate......................   $ 298        $ --       $  --       $  --       $  --        $  --        $  298      $  298
    Avg. interest rate............    5.96%         --          --          --          --           --          5.96%
  Variable rate...................   $  81        $ --       $  --       $  --       $  --        $  --        $   81      $   81
    Avg. interest rate............    6.42%         --          --          --          --           --          6.42%
 
Foreign currency deposits
  Fixed rate--yen deposits........   $  --        $ --       $  --       $  --       $  --        $ 378        $  378      $  423
    Avg. interest rate............      --          --          --          --          --         3.07%         3.07%
  Fixed rate-FF deposits..........   $  --        $ --       $  --       $  --       $  --        $  10        $   10      $    9
    Avg. interest rate............      --          --          --          --          --         5.61%         5.61%
  Fixed rate-DM deposits..........   $   1        $  1       $   1       $   1       $   1        $ 162        $  167      $  177
    Avg. interest rate............    6.49%       6.49%       6.49%       6.49%       6.49%        6.49%         6.49%
  Fixed rate-EUR deposits.........   $  --        $ --       $  --       $  --       $  --        $  27        $   27      $   23
    Avg. interest rate............      --          --          --          --          --         4.14%         4.14%
 
LONG TERM DEBT
U.S. Dollar denominated
  Fixed rate debt.................   $  26        $ 27       $  30       $ 159       $ 279        $ 912        $1,433      $1,542
    Avg. interest rate............    8.18%       8.42%       8.41%       9.47%      10.66%        7.31%         8.26%
  Variable rate debt..............   $  54        $ 56       $ 567       $ 522       $  23        $  85        $1,307      $1,307
    Avg. interest rate............    6.28%       6.28%       6.35%       6.12%       6.47%        6.52%         6.26%
 
Japanese Yen denominated
  Fixed rate debt.................   $  12        $ --       $  --       $  --       $  --        $  --        $   12      $   12
    Avg. interest rate............    7.50%         --          --          --          --           --          7.50%
 
<CAPTION>
                                            1998
                                    --------------------
                                                  FAIR
          (IN MILLIONS)              TOTAL       VALUE
          -------------             --------    --------
<S>                                 <C>         <C>
ASSETS
Cash equivalents
  Fixed rate......................   $  301      $  301
    Avg. interest rate............     4.94%
    Variable rate.................   $   89      $   89
    Avg. interest rate............     5.32%
Short term investments
  Fixed rate......................   $  386      $  386
    Avg. interest rate............     5.48%
  Variable rate...................   $   39      $   39
    Avg. interest rate............     5.47%
Foreign currency deposits
  Fixed rate--yen deposits........   $  330      $  354
    Avg. interest rate............     3.05%
  Fixed rate-FF deposits..........   $   11      $   13
    Avg. interest rate............     5.61%
  Fixed rate-DM deposits..........   $  193      $  198
    Avg. interest rate............     6.49%
  Fixed rate-EUR deposits.........   $   --      $   --
    Avg. interest rate............       --
LONG TERM DEBT
U.S. Dollar denominated
  Fixed rate debt.................   $1,491      $1,729
    Avg. interest rate............     8.80%
  Variable rate debt..............   $1,456      $1,456
    Avg. interest rate............     5.67%
Japanese Yen denominated
  Fixed rate debt.................   $   21      $   23
    Avg. interest rate............     7.50%
</TABLE>

 
    FOREIGN CURRENCY RISK--  United has established a foreign currency hedging
program using currency forwards and currency options to hedge exposure to the
yen, Euro, Australian dollar, British pound and Hong Kong dollar. The goal of
the hedging program is to effectively manage risk associated
 
                                      B-12

<PAGE>
with fluctuations in the value of the foreign currency, thereby making financial
results more stable and predictable. United does not use currency forwards or
currency options for trading purposes.
 

<TABLE>
<CAPTION>
                                                             NOTIONAL      AVERAGE        ESTIMATED
       (IN MILLIONS, EXCEPT AVERAGE CONTRACT RATES)           AMOUNT    CONTRACT RATE     FAIR VALUE
       --------------------------------------------          --------   -------------   --------------
                                                                                        (PAY)/RECEIVE*
<S>                                                          <C>        <C>             <C>
Forward exchange contracts
  Japanese Yen-Purchased forwards..........................    $144        101.69            $ (1)
      -Sold forwards.......................................    $ 62        102.30            $ --
  Hong Kong Dollar-Sold forwards...........................    $ 91          7.83            $ --
  French Franc-Purchased forwards..........................    $ 50          5.05            $ (1)
  Euro-Purchased forwards..................................    $117          1.37            $ (5)
 
Currency options
  Japanese Yen-Purchased put options.......................    $402        105.07            $  7
  Australian Dollar-Purchased put options..................    $114          0.61            $ --
  British Pound-Purchased put options......................    $ 62          1.53            $ --
  Euro-Purchased put options...............................    $106          0.98            $  1
Correlation Basket Option-Sold.............................    $684           N/A            $ (3)
</TABLE>

 
    As of December 31, 1998, United had $215 million of Japanese yen forwards
outstanding with a fair value of $3 million, $315 million yen put options with a
fair value of $4 and $317 million yen call options with a fair value of
$(50) million.
 
    PRICE RISK (AIRCRAFT FUEL)--  At December 31, 1999, the Company had
contracted to purchase approximately 6% of the Company's 2000 fuel requirements
at an average fixed price of $0.51 per gallon. In addition, to a limited extent
United trades short-term heating oil futures and option contracts, which are
immaterial. When market conditions indicate risk reduction is achievable, United
enters into fuel option contracts to reduce its price risk exposure to jet fuel.
As market conditions change, so may United's hedging program. Currently United
purchases call options to provide protection against sharp increases in the
price of aircraft fuel. Through this approach, at December 31, 1999, United had
hedged 75% of the Company's expected 2000 fuel purchases. It is the Company's
intent to be fully hedged for probable jet fuel purchases for year 2000 by the
end of the first quarter.
 

<TABLE>
<CAPTION>
                                                            NOTIONAL      AVERAGE        ESTIMATED
       (IN MILLIONS, EXCEPT AVERAGE CONTRACT RATES)          AMOUNT    CONTRACT RATE     FAIR VALUE
       --------------------------------------------         --------   -------------   --------------
                                                                                       (PAY)/RECEIVE*
<S>                                                         <C>        <C>             <C>
Purchased call contracts--Crude oil (WTI).................   $1,121    $  21.78/bbl         $120
</TABLE>

 
    At December 31, 1998, United had $496 million in purchased call contracts
for crude oil with an estimated fair value of $13 million and $202 million in
sold put contracts for crude oil with an estimated fair value of $(50) million.
 
*ESTIMATED FAIR VALUES REPRESENT THE AMOUNT UNITED WOULD PAY/RECEIVE ON
DECEMBER 31, 1999 TO TERMINATE THE CONTRACTS.
 
                                      B-13

<PAGE>

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
 
To the Stockholders and
Board of Directors, UAL Corporation:
 
    We have audited the accompanying statements of consolidated financial
position of UAL Corporation (a Delaware corporation) and subsidiary companies as
of December 31, 1999 and 1998, and the related statements of consolidated
operations, consolidated cash flows and consolidated stockholders' equity for
each of the three years in the period ended December 31, 1999. 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, 1999 and 1998, and the
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1999, in conformity with generally accepted
accounting principles.
 
                                          /s/ Arthur Andersen LLP
 
                                          ARTHUR ANDERSEN LLP
 
Chicago, Illinois
February 24, 2000

 
                                      B-14

<PAGE>
                    UAL CORPORATION AND SUBSIDIARY COMPANIES
 
                     STATEMENTS OF CONSOLIDATED OPERATIONS
 
                        (IN MILLIONS, EXCEPT PER SHARE)
 

<TABLE>
<CAPTION>
                                                                  YEAR ENDED DECEMBER 31
                                                              ------------------------------
                                                                1999       1998       1997
                                                              --------   --------   --------
<S>                                                           <C>        <C>        <C>
Operating revenues:
  Passenger.................................................  $15,784    $15,520    $15,342
  Cargo.....................................................      906        913        892
  Other operating revenues..................................    1,337      1,128      1,144
                                                              -------    -------    -------
                                                               18,027     17,561     17,378
                                                              -------    -------    -------
Operating expenses:
  Salaries and related costs................................    5,670      5,341      5,018
  ESOP compensation expense.................................      756        829        987
  Aircraft fuel.............................................    1,776      1,788      2,061
  Commissions...............................................    1,139      1,325      1,508
  Purchased services........................................    1,575      1,505      1,285
  Aircraft rent.............................................      876        893        942
  Landing fees and other rent...............................      949        881        863
  Depreciation and amortization.............................      867        793        724
  Aircraft maintenance......................................      689        624        603
  Other operating expenses..................................    2,339      2,104      2,128
                                                              -------    -------    -------
                                                               16,636     16,083     16,119
                                                              -------    -------    -------
Earnings from operations....................................    1,391      1,478      1,259
                                                              -------    -------    -------
 
Other income (expense):
  Interest expense..........................................     (362)      (355)      (286)
  Interest capitalized......................................       75        105        104
  Interest income...........................................       68         59         52
  Equity in earnings of affiliates..........................       37         72         66
  Gain on sale of partnership interest......................       --         --        275
  Gain on sale of investments...............................      731         --        103
  Miscellaneous, net........................................        2       (103)       (49)
                                                              -------    -------    -------
                                                                  551       (222)       265
                                                              -------    -------    -------
Earnings before income taxes, distributions on preferred
  securities and extraordinary item.........................    1,942      1,256      1,524
Provision for income taxes..................................      699        429        561
                                                              -------    -------    -------
Earnings before distributions on preferred securities and
  extraordinary item........................................    1,243        827        963
Distributions on preferred securities, net..................       (5)        (6)        (5)
Extraordinary loss on early extinguishment of debt, net.....       (3)        --         (9)
                                                              -------    -------    -------
Net earnings................................................  $ 1,235    $   821    $   949
                                                              =======    =======    =======
Per share, basic:
  Earnings before extraordinary item........................  $ 21.26    $ 12.71    $ 14.98
  Extraordinary loss on early extinguishment of debt, net...    (0.06)        --      (0.15)
                                                              -------    -------    -------
  Net earnings..............................................  $ 21.20    $ 12.71    $ 14.83
                                                              =======    =======    =======
Per share, diluted:
  Earnings before extraordinary item........................  $  9.97    $  6.83    $  9.04
  Extraordinary loss on early extinguishment of debt, net...    (0.03)        --      (0.09)
                                                              -------    -------    -------
  Net earnings..............................................  $  9.94    $  6.83    $  8.95
                                                              =======    =======    =======
</TABLE>

 
          See accompanying notes to consolidated financial statements.
 
                                      B-15

<PAGE>
                    UAL CORPORATION AND SUBSIDIARY COMPANIES
 
                 STATEMENTS OF CONSOLIDATED FINANCIAL POSITION
 
                                 (IN MILLIONS)
 

<TABLE>
<CAPTION>
                                                                  DECEMBER 31
                                                              -------------------
ASSETS                                                          1999       1998
------                                                        --------   --------
<S>                                                           <C>        <C>
Current assets:
    Cash and cash equivalents...............................  $   310    $   390
    Short-term investments..................................      379        425
    Receivables, less allowance for doubtful accounts
      (1999--$13; 1998--$22)................................    1,284      1,138
    Aircraft fuel, spare parts and supplies, less
      obsolescence allowance (1999--$45; 1998--$39).........      340        384
    Income tax receivables..................................       32         --
    Deferred income taxes...................................      222        256
    Prepaid expenses and other..............................      368        315
                                                              -------    -------
                                                                2,935      2,908
                                                              -------    -------
Operating property and equipment:
Owned--
    Flight equipment........................................   13,518     12,006
    Advances on flight equipment............................      809        985
    Other property and equipment............................    3,368      3,134
                                                              -------    -------
                                                               17,695     16,125
    Less--Accumulated depreciation and amortization.........    5,207      5,174
                                                              -------    -------
                                                               12,488     10,951
                                                              -------    -------
Capital leases--
    Flight equipment........................................    2,929      2,605
    Other property and equipment............................       93         97
                                                              -------    -------
                                                                3,022      2,702
    Less--Accumulated amortization..........................      645        599
                                                              -------    -------
                                                                2,377      2,103
                                                              -------    -------
                                                               14,865     13,054
                                                              -------    -------
Other assets:
    Investments in affiliates...............................      533        304
    Intangibles, less accumulated amortization (1999--$279;
      1998--$265)...........................................      568        676
    Aircraft lease deposits.................................      594        545
    Prepaid rent............................................      585        631
    Other...................................................      883        441
                                                              -------    -------
                                                                3,163      2,597
                                                              -------    -------
                                                              $20,963    $18,559
                                                              =======    =======
</TABLE>

 
          See accompanying notes to consolidated financial statements.
 
                                      B-16

<PAGE>
                    UAL CORPORATION AND SUBSIDIARY COMPANIES
 
                 STATEMENTS OF CONSOLIDATED FINANCIAL POSITION
 
                                 (IN MILLIONS)
 

<TABLE>
<CAPTION>
                                                                  DECEMBER 31
                                                              -------------------
LIABILITIES AND STOCKHOLDERS' EQUITY                            1999       1998
------------------------------------                          --------   --------
<S>                                                           <C>        <C>
Current liabilities:
    Notes payable...........................................  $    61    $   184

    Long-term debt maturing within one year.................       92         98
    Current obligations under capital leases................      190        176
    Advance ticket sales....................................    1,412      1,429
    Accounts payable........................................      967      1,151
    Accrued salaries, wages and benefits....................    1,002        952
    Accrued aircraft rent...................................      783        793
    Other accrued liabilities...............................      904        885
                                                              -------    -------
                                                                5,411      5,668
                                                              -------    -------
Long-term debt..............................................    2,650      2,858
                                                              -------    -------
Long-term obligations under capital leases..................    2,337      2,113
                                                              -------    -------
Other liabilities and deferred credits:
    Deferred pension liability..............................       70         89
    Postretirement benefit liability........................    1,489      1,424
    Deferred gains..........................................      986      1,180
    Accrued aircraft rent...................................      395        371
    Deferred income taxes...................................    1,147        398
    Other...................................................      334        354
                                                              -------    -------
                                                                4,421      3,816
                                                              -------    -------
Company-obligated mandatorily redeemable
  preferred securities of a subsidiary trust................      100        100
                                                              -------    -------
Equity put options..........................................       --         32
                                                              -------    -------
Preferred stock committed to Supplemental ESOP..............      893        691
                                                              -------    -------
Stockholders' equity:
    Serial preferred stock (Note 12)........................       --         --
    ESOP preferred stock (Note 13)..........................       --         --
    Common stock at par, $0.01 par value; authorized
     200,000,000 shares; issued 65,771,802 shares at
     December 31, 1999 and 63,005,869 shares at December 31,
     1998...................................................        1          1
    Additional capital invested.............................    4,099      3,517
    Retained earnings.......................................    2,138      1,028
    Unearned ESOP preferred stock...........................      (28)      (121)
    Stock held in treasury, at cost--
    Preferred, 10,213,519 depositary shares at December 31,
     1999 and December 31, 1998 (Note 12)...................     (305)      (305)
    Common, 14,995,219 shares at December 31, 1999 and
     11,201,216 shares at December 31, 1998.................   (1,097)      (835)
    Accumulated other comprehensive income..................      352         (2)
    Other...................................................       (9)        (2)
                                                              -------    -------
                                                                5,151      3,281
                                                              -------    -------
 
Commitments and contingent liabilities (Note 18)............
                                                              -------    -------
                                                              $20,963    $18,559
                                                              =======    =======
</TABLE>

 
          See accompanying notes to consolidated financial statements.
 
                                      B-17

<PAGE>
                    UAL CORPORATION AND SUBSIDIARY COMPANIES
 
                     STATEMENTS OF CONSOLIDATED CASH FLOWS
 
                                 (IN MILLIONS)
 

<TABLE>
<CAPTION>
                                                                  YEAR ENDED DECEMBER 31
                                                              ------------------------------
                                                                1999       1998       1997
                                                              --------   --------   --------
<S>                                                           <C>        <C>        <C>
Cash and cash equivalents at beginning of year..............  $   390    $   295    $   229
                                                              -------    -------    -------
Cash flows from operating activities:
    Net earnings............................................    1,235        821        949
    Adjustments to reconcile to net cash provided by
      operating
      activities--
      ESOP compensation expense.............................      756        829        987
      Extraordinary loss on debt extinguishment, net of
        tax.................................................        3         --          9
      Gain on sale of partnership interest..................       --         --       (275)
      Gain on sale of investments...........................     (731)        --       (103)
      Pension funding less than expense.....................       94        101         43
      Deferred postretirement benefit expense...............       65        149        139
      Depreciation and amortization.........................      867        793        724
      Provision for deferred income taxes...................      590        307        194
      Undistributed earnings of affiliates..................      (20)       (62)       (16)
      Increase in receivables...............................     (146)       (97)      (222)
      Decrease in other current assets......................        2        105         --
      Increase (decrease) in advance ticket sales...........      (17)       162         78
      Increase (decrease) in accrued income taxes...........      (76)        38         20
      Increase (decrease) in accounts payable and accrued
        liabilities.........................................      (86)        69         16
      Amortization of deferred gains........................      (66)       (64)       (64)
      Other, net............................................      (49)        43         88
                                                              -------    -------    -------
                                                                2,421      3,194      2,567
                                                              -------    -------    -------
Cash flows from investing activities:
      Additions to property and equipment...................   (2,389)    (2,832)    (2,812)
      Proceeds on disposition of property and equipment.....      154        452         83
      Proceeds on disposition of partnership interest.......       --         --        539
      Proceeds on sale of investments.......................      828         --         --
      Decrease (increase) in short-term investments.........       46        125        (82)
      Other, net............................................     (263)       (63)       (29)
                                                              -------    -------    -------
                                                               (1,624)    (2,318)    (2,301)
                                                              -------    -------    -------
Cash flows from financing activities:
      Reacquisition of preferred stock......................       --         (3)        --
      Repurchase of common stock............................     (261)      (459)      (250)
      Proceeds from issuance of long-term debt..............      286        928        597
      Repayment of long-term debt...........................     (513)      (271)      (301)
      Principal payments under capital leases...............     (248)      (322)      (147)
      Purchase of equipment certificates under Company
        operating leases....................................      (47)      (693)        --
      Increase (decrease) in short-term borrowings..........     (123)       184         --
      Aircraft lease deposits...............................      (20)      (154)      (112)
      Cash dividends........................................      (10)       (10)       (10)
      Other, net............................................       59         19         23
                                                              -------    -------    -------
                                                                 (877)      (781)      (200)
                                                              -------    -------    -------
Increase (decrease) in cash and cash equivalents during the
  year......................................................      (80)        95         66
                                                              -------    -------    -------
Cash and cash equivalents at end of year....................  $   310    $   390    $   295
                                                              =======    =======    =======
</TABLE>

 
          See accompanying notes to consolidated financial statements.
 
                                      B-18

<PAGE>
                    UAL CORPORATION AND SUBSIDIARY COMPANIES
 
                STATEMENTS OF CONSOLIDATED STOCKHOLDERS' EQUITY
 
                        (IN MILLIONS, EXCEPT PER SHARE)

<TABLE>
<CAPTION>
                                                                                    UNEARNED               ACCUMULATED
                                                           ADDITIONAL   RETAINED      ESOP                    OTHER
                                    PREFERRED    COMMON     CAPITAL     EARNINGS    PREFERRED   TREASURY       COMP
                                      STOCK      STOCK      INVESTED    (DEFICIT)     STOCK      STOCK        INCOME       OTHER
                                    ---------   --------   ----------   ---------   ---------   --------   ------------   --------
<S>                                 <C>         <C>        <C>          <C>         <C>         <C>        <C>            <C>
Balance at December 31, 1996......  $    --        $1        $2,160      $ (566)      $(202)    $  (385)       $ --         $(13)
                                    ---------      --        ------      ------       -----     -------        ----         ----
Year ended December 31, 1997:
  Net earnings....................       --        --            --         949          --          --          --           --
  Other comprehensive income, net:
    Minimum pension liability
      adj.........................       --        --            --          --          --          --          (2)          --
                                                                         ------                                ----
  Total comprehensive income......       --        --            --         949          --          --          (2)          --
                                                                         ------                                ----
  Cash dividends on preferred
    stock ($1.44 per Series B
    share)........................       --        --            --         (10)         --          --          --           --
  Common stock repurchases........       --        --            --          --          --        (250)         --           --
  Issuance and amortization of
    ESOP preferred stock..........       --        --           993          --          (6)         --          --           --
  ESOP dividend ($8.89 per
    share)........................       --        --            36         (67)         31          --          --           --
  Preferred stock committed to
    Supplemental ESOP.............       --        --          (349)         --          --          --          --           --
  Other...........................       --        --            36           3          --         (28)         --            6
                                    ---------      --        ------      ------       -----     -------        ----         ----
Balance at December 31, 1997......       --         1         2,876         309        (177)       (663)         (2)          (7)
                                    ---------      --        ------      ------       -----     -------        ----         ----
Year ended December 31, 1998:
  Net earnings....................       --        --            --         821          --          --          --           --
  Other comprehensive income, net:
    Unrealized gains on
      securities, net.............       --        --            --          --          --          --           1           --
    Minimum pension liability
      adj.........................       --        --            --          --          --          --          (1)          --
                                                                         ------                                ----
  Total comprehensive income......       --        --            --         821          --          --          --           --
                                                                         ------                                ----
  Cash dividends on preferred
    stock ($1.44 per Series B
    share)........................       --        --            --         (10)         --          --          --           --
  Common stock repurchases........       --        --            --          --          --        (459)         --           --
  Issuance and amortization of
    ESOP preferred stock..........       --        --           823          --           6          --          --           --
  ESOP dividend ($8.89 per
    share)........................       --        --            42         (92)         50          --          --           --
  Preferred stock committed to
    Supplemental ESOP.............       --        --          (177)         --          --          --          --           --
  Other...........................       --        --           (47)         --          --         (18)         --            5
                                    ---------      --        ------      ------       -----     -------        ----         ----
Balance at December 31, 1998......       --         1         3,517       1,028        (121)     (1,140)         (2)          (2)
                                    ---------      --        ------      ------       -----     -------        ----         ----
Year ended December 31, 1999
  Net earnings....................       --        --            --       1,235          --          --          --           --
  Other comprehensive income, net:
    Unrealized gains on
      securities, net.............       --        --            --          --          --          --         354           --
    Minimum pension liability
      adj.........................       --        --            --          --          --          --          --           --
                                                                         ------                                ----
  Total comprehensive income......       --        --            --       1,235          --          --         354           --
                                                                         ------                                ----
  Cash dividends on preferred
    stock ($1.44 per Series B
    share)........................       --        --            --         (10)         --          --          --           --
  Common stock repurchases........       --        --            --          --          --        (261)         --           --
  Issuance and amortization of
    ESOP preferred stock..........       --        --           740          --          16          --          --           --
  ESOP dividend ($8.89 per
    share)........................       --        --            38        (115)         77          --          --           --
  Preferred stock committed to
    Supplemental ESOP.............       --        --          (201)         --          --          --          --           --
  Other...........................       --        --             5          --          --          (1)         --           (7)
                                    ---------      --        ------      ------       -----     -------        ----         ----
Balance at December 31, 1999......  $    --        $1        $4,099      $2,138       $ (28)    $(1,402)       $352         $ (9)
                                    =========      ==        ======      ======       =====     =======        ====         ====
 
<CAPTION>
 
                                     TOTAL
                                    --------
<S>                                 <C>
Balance at December 31, 1996......   $  995
                                     ------
Year ended December 31, 1997:
  Net earnings....................      949
  Other comprehensive income, net:
    Minimum pension liability
      adj.........................       (2)
                                     ------
  Total comprehensive income......      947
                                     ------
  Cash dividends on preferred
    stock ($1.44 per Series B
    share)........................      (10)
  Common stock repurchases........     (250)
  Issuance and amortization of
    ESOP preferred stock..........      987
  ESOP dividend ($8.89 per
    share)........................       --
  Preferred stock committed to
    Supplemental ESOP.............     (349)
  Other...........................       17
                                     ------
Balance at December 31, 1997......    2,337
                                     ------
Year ended December 31, 1998:
  Net earnings....................      821
  Other comprehensive income, net:
    Unrealized gains on
      securities, net.............        1
    Minimum pension liability
      adj.........................       (1)
                                     ------
  Total comprehensive income......      821
                                     ------
  Cash dividends on preferred
    stock ($1.44 per Series B
    share)........................      (10)
  Common stock repurchases........     (459)
  Issuance and amortization of
    ESOP preferred stock..........      829
  ESOP dividend ($8.89 per
    share)........................       --
  Preferred stock committed to
    Supplemental ESOP.............     (177)
  Other...........................      (60)
                                     ------
Balance at December 31, 1998......    3,281
                                     ------
Year ended December 31, 1999
  Net earnings....................    1,235
  Other comprehensive income, net:
    Unrealized gains on
      securities, net.............      354
    Minimum pension liability
      adj.........................       --
                                     ------
  Total comprehensive income......    1,589
                                     ------
  Cash dividends on preferred
    stock ($1.44 per Series B
    share)........................      (10)
  Common stock repurchases........     (261)
  Issuance and amortization of
    ESOP preferred stock..........      756
  ESOP dividend ($8.89 per
    share)........................       --
  Preferred stock committed to
    Supplemental ESOP.............     (201)
  Other...........................       (3)
                                     ------
Balance at December 31, 1999......   $5,151
                                     ======
</TABLE>

 
          See accompanying notes to consolidated financial statements.
 
                                      B-19

<PAGE>
                   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
majority-owned affiliates (collectively "the Company"). All significant
intercompany transactions are eliminated. Investments in affiliates are carried
on the equity basis. Certain prior-year financial statement items have been
reclassified to conform to the current year's presentation.
 
    (B) USE OF ESTIMATES--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
 
    (C) 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.
 
    (D) 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 a 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.
 
    From time to time, United lends certain of its securities classified as cash
and cash equivalents and short-term investments to third parties. United
requires collateral in an amount exceeding the value of the securities and is
obligated to reacquire the securities at the end of the contract. United
accounts for these transactions as secured borrowings rather than sales and does
not remove the securities from the balance sheet. At December 31, 1999, United
was obligated to repurchase $89 million of securities lent to third parties.
 
    At December 31, 1999 and 1998, $406 million and $418 million, respectively,
of investments in debt securities included in cash and cash equivalents and
short-term investments were classified as available-for-sale, and $177 million
and $241 million, respectively, were classified as held-to-maturity. Investments
in debt securities classified as available-for-sale are stated at fair value
based on the quoted market prices for the securities, which does not differ
significantly from their cost basis. Investments classified as held-to-maturity
are stated at cost which approximates market due to their short-term maturities.
The proceeds from sales of available-for-sale securities are included in
interest income for each respective year.
 
(E) DERIVATIVE FINANCIAL INSTRUMENTS--
 
    FOREIGN CURRENCY--From time to time, United enters into Japanese yen forward
exchange contracts to minimize gains and losses on the revaluation of short-term
yen-denominated liabilities. The yen forwards typically have short-term
maturities and are marked to fair value at the end of each accounting period.
The unrealized mark-to-market gains and losses on the yen forwards generally
offset the losses and gains recorded on the yen liabilities.
 
    United has also entered into forwards and swaps to reduce exposure to
currency fluctuations on yen-, Euro- and French franc-denominated capital lease
obligations. The cash flows of the forwards and swaps mirror those of the
capital leases. The premiums on the forwards and swaps, as measured at
inception, are being amortized over their respective lives as components of
interest expense. Any gains
 
                                      B-20

<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
or losses realized upon early termination of these forwards and swaps are
deferred and recognized in income over the remaining life of the underlying
exposure.
 
    The Company hedges some of the risks of exchange rate volatility on its
anticipated future yen, Euro, Australian dollar and British pound revenues by
purchasing put options with little or no intrinsic value and on Hong Kong dollar
revenues by entering into forward contracts. The amount and duration of these
options are synchronized with the expected revenues, and thus, the put options
have been designated as a hedge. The premiums on purchased option contracts are
amortized over the lives of the contracts. Unrealized gains on purchased put
option contracts are deferred until contract expiration and then recognized as a
component of passenger revenue. To reduce hedging costs, the Company sells a
correlation basket option in the four currencies referred to above. The
unrealized mark-to-market gains and losses on the correlation options are
included in "Miscellaneous, net", net of premiums received.
 
    INTEREST RATES--United may from time to time, enter into swaps to reduce
exposure to interest rate fluctuations in connection with certain debt, capital
leases and operating leases. The cash flows of the swaps mirror those of the
underlying exposures. The premiums on the swaps, as measured at inception, are
amortized over their respective lives as components of interest expense. Any
gains or losses realized upon the early termination of these swaps are deferred
and recognized in income over the remaining life of the underlying exposure.
 
    AIRCRAFT FUEL--United uses purchased call options to hedge a portion of its
price risk related to aircraft fuel purchases. The purchased call options have
been designated as a hedge. Gains or losses on hedge positions, net of premiums
paid, are recognized upon contract expiration as a component of aircraft fuel
inventory. In addition, to a limited extent, United trades short-term heating
oil futures contracts. Unrealized losses on these contracts are recorded
currently in income while unrealized gains are deferred until contract
expiration. Both gains and losses are recorded as a component of aircraft fuel
expense.
 
    (F) 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.
 
    (G) OPERATING PROPERTY AND EQUIPMENT--Owned operating property and equipment
is stated at cost. Property under capital leases, and the related obligation for
future 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 4 to 30 years; buildings are
depreciated over lives of 25 to 45 years; and other property and equipment are
depreciated over lives of 3 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 30 years for aircraft and flight
simulators and 25 years for buildings. Amortization of capital leases is
included in depreciation and amortization expense.
 
                                      B-21

<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
    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.
 
    (H) INTANGIBLES--Intangibles consist primarily of route acquisition costs
and intangible pension assets (see Note 16, "Retirement and Postretirement
Plans"). Route acquisition costs are amortized over 40 years.
 
    (I) MILEAGE PLUS AWARDS--United accrues the estimated incremental cost of
providing free travel awards earned under its Mileage Plus frequent flyer
program (including awards earned from mileage credits sold) when such award
levels are reached. United, through its wholly owned subsidiary, Mileage Plus
Holdings, Inc., sells mileage credits to participating partners in the Mileage
Plus program. The resulting revenue is recorded in other operating revenues
during the period in which the credits are sold. Effective January 1, 2000, the
Company intends to change the method of accounting for the sale of mileage. See
"New Accounting Pronouncements" in MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
 
    (J) 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.
 
(2) EMPLOYEE STOCK OWNERSHIP PLANS 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 is being allocated to individual
employees through the year 2000 under Employee Stock Ownership Plans ("ESOPs")
which were created as a part of the recapitalization.
 
    The ESOPs cover employees represented by the Air Line Pilots' Association,
International, the International Association of Machinists and Aerospace Workers
and U.S. management and salaried 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. Shares are delivered to employees primarily through
the Leveraged ESOP, then through the Non-Leveraged ESOP, and finally, 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 is
being delivered to an ESOP trust in seven separate sales under the Leveraged
ESOP, the last of which occurred on January 5, 2000. Based on Internal Revenue
Code Limitations, shares of the Class 2 ESOP Preferred Stock are either
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 13, "ESOP 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 Class 1 ESOP
Preferred Stock are sold to an ESOP trust, the Company reports the issuance as a
credit to additional capital invested and records a corresponding charge to
 
                                      B-22

<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
(2) EMPLOYEE STOCK OWNERSHIP PLANS AND RECAPITALIZATION (CONTINUED)
unearned ESOP preferred stock. 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, with the
offsetting charge to ESOP compensation expense. The ESOP compensation expense is
based on the average fair value of the shares committed to be contributed. The
Supplemental ESOP is being accounted for under Accounting Principles Board
Opinion 25, "Accounting for Stock Issued to Employees."
 
    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 1999, 2,334,370 shares of Class 1 ESOP Preferred Stock, 123,841
shares of Class 2 ESOP Preferred Stock and 2,453,337 shares of Voting Preferred
Stock were allocated to employee accounts, and another 615,757 shares of
Class 2 ESOP Preferred Stock were allocated in the form of "book entry" shares,
effective December 31, 1998. Another 100,180 shares of Class 2 ESOP Preferred
Stock previously allocated in book entry form were issued and either contributed
to the qualified plan or converted and sold on behalf of terminating employees.
At December 31, 1999, the year-end allocation of Class 1 ESOP Preferred Stock to
employee accounts had not yet been completed. There were 2,390,935 shares of
Class 1 ESOP Preferred Stock committed to be released and 130,643 shares held in
suspense by the ESOP as of December 31, 1999. For the Class 2 ESOP Preferred
Stock, 683,038 shares were committed to be contributed to employees at
December 31, 1999. The fair value of the unearned ESOP shares recorded on the
balance sheet at December 31, 1999 and 1998 was $41 million and $141 million,
respectively.
 
    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 estimated fair
value of such shares at December 31, 1999 and 1998 was $954 million and
$600 million, respectively.
 
(3) OTHER INCOME (EXPENSE)--MISCELLANEOUS
 
    Other income (expense)--"Miscellaneous, net" consisted of the following:
 

<TABLE>
<CAPTION>
(IN MILLIONS)                                                   1999       1998       1997
-------------                                                 --------   --------   --------
<S>                                                           <C>        <C>        <C>
Foreign exchange gains (losses).............................     $4       $ (84)      $(19)
Minority interests..........................................     --          --        (15)
Other.......................................................     (2)        (19)       (15)
                                                                 --       -----       ----
                                                                 $2       $(103)      $(49)
                                                                 ==       =====       ====
</TABLE>

 
                                      B-23

<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
(4) OTHER COMPREHENSIVE INCOME
 
    The following table presents the tax effect of those items included in other
comprehensive income:
 

<TABLE>
<CAPTION>
                                                                     YEAR ENDED DECEMBER 31,
                                 ------------------------------------------------------------------------------------------------
                                              1999                             1998                             1997
                                 ------------------------------   ------------------------------   ------------------------------
                                              TAX       NET OF                 TAX       NET OF                 TAX       NET OF
(IN MILLIONS)                    PRE-TAX     EFFECT      TAX      PRE-TAX     EFFECT      TAX      PRE-TAX     EFFECT      TAX
-------------                    --------   --------   --------   --------   --------   --------   --------   --------   --------
<S>                              <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>
Unrealized gains on securities
  Unrealized holding gains
    arising during period......    $547      $(193)      $354       $  1      $  --       $  1       $ --      $  --       $ --
  Minimum pension liability....      --         --         --         (1)        --         (1)        (4)         2         (2)
                                   ----      -----       ----       ----      -----       ----       ----      -----       ----
Total other comprehensive
  income.......................    $547      $(193)      $354       $ --      $  --       $ --       $ (4)     $   2       $ (2)
                                   ====      =====       ====       ====      =====       ====       ====      =====       ====
</TABLE>

 
    The components of accumulated other comprehensive income consist of the
following items:
 

<TABLE>
<CAPTION>
                                                 UNREALIZED             MINIMUM         ACCUMULATED OTHER
(IN MILLIONS)                                GAINS ON SECURITIES   PENSION LIABILITY   COMPREHENSIVE INCOME
-------------                                -------------------   -----------------   --------------------
<S>                                          <C>                   <C>                 <C>
December 31, 1996..........................         $ --               $      --               $ --
  Current period change....................           --                      (2)                (2)
                                                    ----               ---------               ----
December 31, 1997..........................           --                      (2)                (2)
  Current period change....................            1                      (1)                --
                                                    ----               ---------               ----
December 31, 1998..........................            1                      (3)                (2)
  Current period change....................          354                      --                354
                                                    ----               ---------               ----
December 31, 1999..........................         $355               $      (3)              $352
                                                    ====               =========               ====
</TABLE>

 
    Unrealized gains on securities primarily represents gains on the Company's
investments in Galileo International, Inc. and Equant N.V. as discussed in
Note 6 "Investments".
 
(5) PER SHARE AMOUNTS
 
    Basic earnings per share were computed by dividing net income before
extraordinary item by the weighted-average number of shares of common stock
outstanding during the year. In addition, diluted
 
                                      B-24

<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
(5) PER SHARE AMOUNTS (CONTINUED)
earnings per share amounts include potential common shares, including common
shares issuable upon conversion of ESOP shares committed to be released.
 

<TABLE>
<CAPTION>
EARNINGS ATTRIBUTABLE TO COMMON SHAREHOLDERS (MILLIONS)         1999       1998       1997
-------------------------------------------------------       --------   --------   --------
<S>                                                           <C>        <C>        <C>
Net income before extraordinary item........................   $1,238     $  821     $  958
Preferred stock dividends...................................     (125)      (102)       (77)
                                                               ------     ------     ------
Earnings attributable to common shareholders (Basic and
  Diluted)..................................................   $1,113     $  719     $  881
                                                               ======     ======     ======
 
SHARES (MILLIONS)
------------------------------------------------------------
Weighted average shares outstanding (Basic).................     52.3       56.5       58.8
Convertible ESOP preferred stock............................     58.0       47.1       35.9
Other.......................................................      1.3        1.6        2.7
                                                               ------     ------     ------
Weighted average number of shares (Diluted).................    111.6      105.2       97.4
                                                               ======     ======     ======
 
EARNINGS PER SHARE
------------------------------------------------------------
Basic.......................................................   $21.26     $12.71     $14.98
Diluted.....................................................   $ 9.97     $ 6.83     $ 9.04
</TABLE>

 
    At December 31, 1999, stock options to purchase 1,334,722 shares of common
stock were outstanding, but were not included in the computation of diluted
earnings per share because the options' exercise price was greater than the
average market price of the common shares.
 
(6) INVESTMENTS
 
    In June 1999, United sold 17,500,000 common shares of Galileo
International, Inc. ("Galileo") in a secondary offering for $766 million,
resulting in a pre-tax gain of approximately $669 million. This sale reduced
United's holdings in Galileo from 32 percent to approximately 15 percent,
requiring United to discontinue the equity method of accounting for its
investment in Galileo. United has classified its remaining 15,940,000 shares of
Galileo common stock as available-for-sale. The market value of these shares at
December 31, 1999 ($477 million) is reflected in Investments in Affiliates on
the balance sheet and the market value in excess of United's investment is
classified net-of-tax ($253 million) in accumulated other comprehensive income.
The market value of United's investment in Galileo at December 31, 1998 was
$1,455 million. Included in the Company's retained earnings is approximately
$240 million of undistributed earnings of Galileo and its predecessor companies.
 
    In July 1997, United completed the sale of its interest in the Apollo Travel
Services Partnership ("ATS") a 77% owned affiliate whose accounts were
consolidated, to Galileo for $539 million in cash. This transaction resulted in
a pre-tax gain of approximately $405 million. Of this amount, $275 million was
recognized in 1997, $7 million in 1998 and $4 million in 1999. The remaining
balance ($119 million) reduced the basis of the Company's investment in Galileo.
 
    Under operating agreements with Galileo, United purchases computer
reservations services from Galileo and during 1999 and 1998 provided
communications services to Galileo, while during 1997 provided marketing, sales
and communication services to Galileo. Revenues derived from the sale of
services to Galileo amounted to approximately $4 million in 1999, $13 million in
1998 and $159 million in 1997. The cost to United of services purchased from
Galileo amounted to approximately
 
                                      B-25

<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
(6) INVESTMENTS (CONTINUED)
$170 million in 1999, $170 million in 1998 and $134 million in 1997. In
connection with the sale of ATS, United entered into an additional services
agreement with Galileo under which the Company provides certain marketing and
other services designed to increase the competitiveness of Galileo's business
and to generate additional bookings and revenues for Galileo. In December 1999,
United recognized $14 million in other operating revenues related to the
achievement of improvements in Galileo's air booking revenues as specified in
the agreements.
 
    Prior to the sale to Galileo, ATS contributed the following amounts to the
Company's consolidated results, net of intercompany eliminations and minority
interests:
 

<TABLE>
<CAPTION>
(IN MILLIONS)                                        YEAR ENDED DECEMBER 31, 1997
-------------                                        ----------------------------
<S>                                                  <C>
Operating revenues.................................              $147
Operating income...................................              $ 63
Earnings before income taxes.......................              $ 50
</TABLE>

 
    United owns depositary certificates in Equant N.V. ("Equant"), a provider of
international data network services to multinational businesses and a single
source for global desktop communications. Each depositary certificate represents
a beneficial interest in an Equant common share. During the fourth quarter of
1999, transferability restrictions on these shares were removed and the
investment was classified as available-for-sale. The market value in excess of
United's investment is classified net-of-tax ($100 million) in accumulated other
comprehensive income. In December 1999, United sold 709,000 shares of common
stock in Equant in a secondary offering by Equant for $62 million. At
December 31, 1999, the estimated fair value of United's remaining investment in
Equant was approximately $156 million.
 
    GetThere.com is a leading provider of internet-based travel planning
products tailored to individual, corporate, travel supplier and travel agency
customers. During 1999, United invested approximately $51 million in
GetThere.com, resulting in a 28% minority interest in GetThere.com consisting of
common stock, warrants and options. United accounts for its investment in
GetThere.com using the equity method of accounting.
 
    In July 1999, United and Buy.com agreed to form a joint venture
(BuyTravel.com) to sell travel on all major airlines, as well as hotels, car
rentals and cruises via the Internet. Both United and Buy.com will have a
50 percent interest in BuyTravel.com. United also received warrants exercisable
for 2.0 million shares of Buy.com common stock. United will account for its
investment in BuyTravel.com using the equity method of accounting.
 
    In November 1999, United entered into a participation agreement with
Priceline.com to provide inventory to Priceline.com. In exchange, United
received 5.5 million warrants for Priceline.com common stock exercisable in five
years. The participation agreement contains early exercise provisions allowing
United to exercise the warrants if in three years specific performance criteria
are met. The warrants have been valued at $61 million by an investment bank and
are being recognized as passenger revenue over a three-year period. In 1999, the
total revenue recognized was $6 million.
 
                                      B-26

<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
(7) INCOME TAXES
 
    In 1999, the alternative minimum tax ("AMT") liability of the Company
exceeded the regular tax liability resulting in additional AMT credits. The
federal income tax liability is the greater of the tax computed using the
regular tax system or the tax under the AMT system. If the regular tax liability
exceeds the AMT liability and AMT credits are available, then AMT credits are
used to reduce the net tax liability to the amount of the AMT liability.
 
    The provision for income taxes is summarized as follows:
 

<TABLE>
<CAPTION>
(IN MILLIONS)                                                   1999       1998       1997
-------------                                                 --------   --------   --------
<S>                                                           <C>        <C>        <C>
Current--
    Federal.................................................    $ 93       $113       $312
    State...................................................      16          9         55
                                                                ----       ----       ----
                                                                 109        122        367
                                                                ----       ----       ----
Deferred--
    Federal.................................................     536        270        178
    State...................................................      54         37         16
                                                                ----       ----       ----
                                                                 590        307        194
                                                                ----       ----       ----
                                                                $699       $429       $561
                                                                ====       ====       ====
</TABLE>

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

<TABLE>
<CAPTION>
(IN MILLIONS)                                                   1999       1998       1997
-------------                                                 --------   --------   --------
<S>                                                           <C>        <C>        <C>
Income tax provision at statutory rate......................    $680       $440       $533
State income taxes, net of federal income tax benefit.......      46         30         46
ESOP dividends..............................................     (40)       (33)       (25)
Nondeductible employee meals................................      24         24         26
Tax credits.................................................      --         (7)        (2)
Other, net..................................................     (11)       (25)       (17)
                                                                ----       ----       ----
                                                                $699       $429       $561
                                                                ====       ====       ====
</TABLE>

 
    Temporary differences and carryforwards that give rise to a significant
portion of deferred tax assets and liabilities for 1999 and 1998 are as follows:
 

<TABLE>
<CAPTION>
                                                           1999                          1998
                                                ---------------------------   ---------------------------
                                                DEFERRED TAX   DEFERRED TAX   DEFERRED TAX   DEFERRED TAX
(IN MILLIONS)                                      ASSETS      LIABILITIES       ASSETS      LIABILITIES
-------------                                   ------------   ------------   ------------   ------------
<S>                                             <C>            <C>            <C>            <C>
Employee benefits, including postretirement
  medical and ESOP............................     $  990         $  135         $  964         $  130
Depreciation, capitalized interest and
  transfers of tax benefits...................         --          2,489             --          1,937
Gains on sale and leasebacks..................        335             --            368             --
Rent expense..................................        435             --            411             --
AMT credit carryforwards......................        210             --            198             --
Other.........................................        758          1,029            773            789
                                                   ------         ------         ------         ------
                                                   $2,728         $3,653         $2,714         $2,856
                                                   ======         ======         ======         ======
</TABLE>

 
                                      B-27

<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
(7) INCOME TAXES (CONTINUED)
    At December 31, 1999, UAL and its subsidiaries had $210 million of federal
AMT credits which may be carried forward to reduce the tax liabilities of future
years.
 
(8) SHORT-TERM BORROWINGS
 
    United has an agreement with a syndicate of banks for a $750 million
revolving credit facility expiring in 2002. Interest on drawn amounts under the
facility is calculated at floating rates based on the London interbank offered
rate ("LIBOR") plus a margin which is subject to adjustment based on certain
changes in the credit ratings of United's long-term senior unsecured debt. Among
other restrictions, the credit facility contains a covenant that restricts
United's ability to grant liens on or otherwise encumber certain identified
assets with a market value of approximately $1.1 billion.
 
    Additionally, United has available $900 million in short-term secured
aircraft financing facilities. Interest on drawn amounts under the facilities is
calculated at floating rates based on LIBOR plus a margin.
 
    At December 31, 1999, United had outstanding $61 million under a separate
short-term borrowing facility, bearing an average interest rate of 5.72%.
Receivables amounting to $233 million were pledged by United to secure repayment
of such outstanding borrowings. The maximum available borrowing amount under
this arrangement is $227 million.
 
(9) LONG-TERM DEBT
 
    A summary of long-term debt, including current maturities, as of
December 31 is as follows (interest rates are as of December 31, 1999):
 

<TABLE>
<CAPTION>
(IN MILLIONS)                                                   1999       1998
-------------                                                 --------   --------
<S>                                                           <C>        <C>
  Secured notes, 5.71% to 8.99%, averaging 6.38%, due
    through 2014............................................   $1,229     $1,389
  Debentures, 9.00% to 11.21%, averaging 9.98%, due through
    2021....................................................      762        785
  Promissory notes, 11.00%, due 2000........................        1         13
  Commercial paper, 6.10%, due through 2003.................      571        591
  Special facility bonds, 5.63%, due 2034...................      190        190
                                                               ------     ------
                                                                2,753      2,968
                                                               ------     ------
  Less: Unamortized discount on debt........................      (11)       (12)
       Current maturities...................................      (92)       (98)
                                                               ------     ------
                                                               $2,650     $2,858
                                                               ======     ======
</TABLE>

 
    In addition to scheduled principal payments, in 1999 the Company repaid
$23 million in principal amount of debentures prior to maturity. The debentures
were scheduled to mature through 2021. An extraordinary loss of $3 million, net
of tax benefits of $2 million was recorded reflecting amounts paid in excess of
the debt carrying value.
 
    In March 1998, the Company, through a special-purpose financing entity that
is consolidated, issued $604 million of commercial paper to refinance certain
lease commitments. Although the issued commercial paper has short maturities,
the Company expects to continually rollover this obligation throughout the
5-year life of its supporting liquidity facility or bank standby facility. As
such, the commercial paper is classified as a long-term obligation in the
Company's statement of financial position.
 
                                      B-28

<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
(9) LONG-TERM DEBT (CONTINUED)
    In 1997, the California Statewide Communities Development Authority (the
"Authority") issued $190 million in special facilities revenue bonds to finance
the acquisition and construction of certain facilities at the Los Angeles
International Airport which United guarantees payment of under a payment
agreement with the Authority. The bond proceeds are restricted to expenditures
on the Los Angeles facilities and unspent amounts are classified as other assets
in the balance sheet.
 
    At December 31, 1999, United had outstanding a total of $1.307 billion of
long-term debt bearing interest rates at 22 to 47.5 basis points over LIBOR.
 
    Maturities of long-term debt for each of the four years after 2000 are:
2001--$83 million; 2002--$597 million; 2003--$681 million; and
2004--$302 million. Various assets, principally aircraft, having an aggregate
book value of $1.348 billion at December 31, 1999, were pledged as security
under various loan agreements.
 
(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, 1999, under capital leases
(substantially all of which are for aircraft) and operating leases having
initial or remaining noncancelable lease terms of more than one year are as
follows:
 

<TABLE>
<CAPTION>
                                                                 OPERATING LEASES
                                                              -----------------------   CAPITAL
(IN MILLIONS)                                                 AIRCRAFT   NON-AIRCRAFT    LEASES
-------------                                                 --------   ------------   --------
<S>                                                           <C>        <C>            <C>
Payable during --
    2000....................................................  $   912       $  458      $   350
    2001....................................................      884          442          445
    2002....................................................      871          401          385
    2003....................................................      912          389          286
    2004....................................................      946          376          296
    After 2004..............................................    9,874        5,628        1,906
                                                              -------       ------      -------
Total minimum lease payments................................  $14,399       $7,694        3,668
                                                              =======       ======
Imputed interest (at rates of 5.3% to 12.2%)................                             (1,141)
                                                                                        -------
Present value of minimum lease payments.....................                              2,527
Current portion.............................................                               (190)
                                                                                        -------
Long-term obligations under capital leases..................                            $ 2,337
                                                                                        =======
</TABLE>

 
                                      B-29

<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
(10) LEASE OBLIGATIONS (CONTINUED)
    As of December 31, 1999, United leased 317 aircraft, 76 of which were under
capital leases. These leases have terms of 10 to 26 years, and expiration dates
range from 2000 through 2020.
 
    In connection with the financing of certain aircraft accounted for as
capital leases, United had on deposit at December 31, 1999 an aggregate
39 billion yen ($379 million), 326 million German marks ($167 million),
64 million French francs ($10 million), 27 million Euro ($27 million) and
$11 million in certain banks and had pledged an irrevocable security interest in
such deposits to certain of the aircraft lessors. These deposits will be used to
pay off an equivalent amount of recorded capital lease obligations.
 
    Amounts charged to rent expense, net of minor amounts of sublease rentals,
were $1.412 billion in 1999, $1.385 billion in 1998 and $1.416 billion in 1997.
Included in 1999 rental expense was $11 million in contingent rentals, resulting
from changes in interest rates for operating leases under which the rent
payments are based on variable interest rates.
 
(11) COMPANY-OBLIGATED MANDATORILY REDEEMABLE PREFERRED SECURITIES OF A
    SUBSIDIARY TRUST
 
    In December 1996, UAL Corporation Capital Trust I (the "Trust") issued
$75 million of its 13 1/4% Trust Originated Preferred Securities (the "Preferred
Securities") in exchange for 2,999,304 depositary shares, each representing
1/1000 of one share of Series B 12 1/4% preferred stock (see Note 12).
Concurrent with the issuance of the Preferred Securities and the related
purchase by UAL of the Trust's common securities, the Company issued to the
Trust $77 million aggregate principal amount of its 13 1/4% Junior Subordinated
Debentures (the "Debentures") due 2026. The Debentures are and will be the sole
assets of the Trust. The interest and other payment dates on the Debentures
correspond to the distribution and other payment dates on the Preferred
Securities. Upon maturity or redemption of the Debentures, the Preferred
Securities will be mandatorily redeemed. The Debentures are redeemable at UAL's
option, in whole or in part, on or after July 12, 2004, at a redemption price
equal to 100% of the principal amount to be redeemed, plus accrued and unpaid
interest to the redemption date. Upon the repayment of the Debentures, the
proceeds thereof will be applied to redeem the Preferred Securities.
 
    There is a full and unconditional guarantee by UAL of the Trust's
obligations under the securities issued by the Trust. However, the Company's
obligations are subordinate and junior in right of payment to certain other of
its indebtedness. UAL has the right to defer payments of interest on the
Debentures by extending the interest payment period, at any time, for up to 20
consecutive quarters. If interest payments on the Debentures are so deferred,
distributions on the Preferred Securities will also be deferred. During any
deferral, distributions will continue to accrue with interest thereon. In
addition, during any such deferral, UAL may not declare or pay any dividend or
other distribution on, or redeem or purchase, any of its capital stock.
 
    The fair value of the Preferred Securities at December 31, 1999 and 1998 was
$83 and $90 million, respectively.
 
(12) SERIAL PREFERRED STOCK
 
    At December 31, 1999, UAL had outstanding 3,203,177 depositary shares, each
representing 1/1000 of one share of Series B 12 1/4% preferred stock, with a
liquidation preference of $25 per depositary share ($25,000 per Series B
preferred share) and a stated capital of $0.01 per Series B preferred share.
 
                                      B-30

<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
(12) SERIAL PREFERRED STOCK (CONTINUED)
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.
 
    The Series B preferred stock ranks senior to all other preferred and common
stock, except the Preferred Securities, as to receipt of dividends and amounts
distributed upon liquidation. The Series B preferred stock has 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 B preferred stockholders are entitled to
elect two additional members to the UAL Board of Directors until all dividends
are paid in full. Pursuant to UAL's restated certificate of incorporation, UAL
is authorized to issue a total of 50,000 shares of Series B preferred stock.
 
    During 1998, UAL repurchased 64,300 depositary shares, at an aggregate cost
of $3 million, to be held in treasury.
 
    UAL is authorized to issue up to 15,986,584 additional shares of serial
preferred stock.
 
(13) ESOP PREFERRED STOCK
 
    The following activity related to UAL's outstanding ESOP preferred stocks
(see Note 2 for a description of the ESOPs):
 

<TABLE>
<CAPTION>
                                                         CLASS 1 ESOP   CLASS 2 ESOP   ESOP VOTING
                                                         ------------   ------------   -----------
<S>                                                      <C>            <C>            <C>
Balance December 31, 1996..............................    6,950,462       644,510      4,422,436
                                                          ----------      --------     ----------
    Shares issued......................................    1,848,629       242,877      3,073,969
    Converted to common................................     (146,473)      (81,127)      (229,999)
                                                          ----------      --------     ----------
Balance December 31, 1997..............................    8,652,618       806,260      7,266,406
                                                          ----------      --------     ----------
    Shares issued......................................    2,011,812       177,166      3,073,969
    Converted to common................................     (213,061)     (116,104)      (331,620)
                                                          ----------      --------     ----------
Balance December 31, 1998..............................   10,451,369       867,322     10,008,755
                                                          ----------      --------     ----------
    Shares issued......................................    1,955,756       227,689      3,073,969
    Converted to common................................     (306,662)     (146,975)      (457,401)
                                                          ----------      --------     ----------
Balance December 31, 1999..............................   12,100,463       948,036     12,625,323
                                                          ==========      ========     ==========
</TABLE>

 
    An aggregate of 17,675,345 shares of Class 1 and Class 2 ESOP Preferred
Stock will be issued to employees under the ESOPs. Each share of ESOP Preferred
Stock is convertible into four shares of UAL common stock and shares are
converted to common as employees retire or otherwise leave the Company. The
stock has a par value of $0.01 per share and is nonvoting. The Class 1 ESOP
Preferred Stock has a liquidation value of $126.96 per share plus all accrued
and unpaid dividends; the Class 2 does not have a liquidation value. 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. Additional
Voting Preferred Stock is issued as shares of the Class 1 and Class 2 ESOP
Preferred Stock are allocated to employees. In the aggregate, 17,675,345
 
                                      B-31

<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
(13) ESOP PREFERRED STOCK (CONTINUED)
shares of Voting Preferred Stock will be issued through the year 2000. The
Voting Preferred Stock outstanding at any time commands voting power for
approximately 55% of the vote of all classes of capital stock in all matters
requiring a stockholder vote, other than for the election of members of the
Board of Directors. 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 .0004 shares of UAL common stock.
 
    Class Pilot MEC, IAM, SAM and I junior preferred stock (collectively
"Director Preferred Stocks") were established to effectuate the election of one
or more members to UAL's Board of Directors. One share each of Class Pilot MEC
and Class IAM junior preferred stock is authorized and issued. The Company is
authorized to issue ten shares each of Class SAM and Class I junior preferred
stock. There are three shares of Class SAM and four shares of Class I issued.
Each of the Director Preferred Stocks has a par value and liquidation preference
of $0.01 per share. The stock is not entitled to receive any dividends and
Class I will be redeemed automatically upon the transfer of the shares to any
person not elected to the Board of Directors or upon the occurrence of the
"Sunset."
 
(14) COMMON STOCKHOLDERS' EQUITY
 
    Changes in the number of shares of UAL common stock outstanding during the
years ended December 31 were as follows:
 

<TABLE>
<CAPTION>
                                                              1999         1998         1997
                                                           ----------   ----------   ----------
<S>                                                        <C>          <C>          <C>
Shares outstanding at beginning of year..................  51,804,653   57,320,486   58,817,480
Stock options exercised..................................     939,262      382,136      840,100
Shares issued from treasury under compensation
  arrangements...........................................      89,745       11,944       28,224
Shares acquired for treasury.............................  (3,877,912)  (7,237,975)  (3,269,393)
Forfeiture of restricted stock...........................      (5,800)      (7,600)     (25,120)
Conversion of ESOP preferred stock.......................   1,814,731    1,316,786      911,300
Other....................................................      11,904       18,876       17,895
                                                           ----------   ----------   ----------
Shares outstanding at end of year........................  50,776,583   51,804,653   57,320,486
                                                           ==========   ==========   ==========
</TABLE>

 
    During 1999, 1998 and 1997, the Company repurchased 3,754,802, 7,061,109 and
2,881,092 shares of common stock, respectively, at a total purchase price of
$261 million, $459 million and $250 million, respectively.
 
(15) 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 four equal, annual installments beginning one
year after the date of grant, and generally expire in ten years.
 
    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 utilize 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/or related
income taxes. For outstanding options eligible for cashless exercise, changes in
the market price of the stock are charged (credited) to earnings currently. The
expense (credit) recorded for such eligible options was $4 million in 1999, $(7)
million in 1998 and $14 million in 1997.
 
                                      B-32

<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
    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 two shares 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.
 
    The Company has also awarded shares of restricted stock to officers and key
employees. These shares generally vest over a five-year period and are subject
to certain transfer restrictions and forfeiture under certain circumstances
prior to vesting. Unearned compensation, representing the fair market value of
the stock at the measurement date for the award, is amortized to salaries and
related costs over the vesting period. During 1999 and 1997, respectively,
75,000 and 5,000 shares of restricted stock were issued from treasury. No shares
were issued in 1998. As of December 31, 1999, 154,400 shares were restricted and
still nonvested. Additionally, 277,250 shares were reserved for future awards
under the plan.
 
    SFAS No. 123 ("Accounting for Stock-Based Compensation") establishes a fair
value based method of accounting for stock options. The Company has elected to
continue using the intrinsic value method of accounting prescribed in APB 25, as
permitted by SFAS No. 123. Had compensation cost for awards been determined
based on the fair value at the grant dates consistent with the method of SFAS
No. 123, the Company's net income and earnings per share would have instead been
reported as the pro forma amounts indicated below:
 

<TABLE>
<CAPTION>
                                                                        1999       1998       1997
                                                                      --------   --------   --------
<S>                                                      <C>          <C>        <C>        <C>
Net income (millions)..................................  As reported   $1,235     $  821     $  949
                                                         Pro forma     $1,219     $  812     $  944
 
Basic earnings per share...............................  As reported   $21.20     $12.71     $14.83
                                                         Pro forma     $20.89     $12.55     $14.75
 
Diluted earnings per share.............................  As reported   $ 9.94     $ 6.83     $ 8.95
                                                         Pro forma     $ 9.79     $ 6.74     $ 8.94
</TABLE>

 
    The weighted-average grant date fair value of restricted shares issued was
$69.51 for shares issued in 1999 and $87.44 for shares issued in 1997. The fair
value of each option grant was estimated on the date of grant using the
Black-Scholes option-pricing model with the following assumptions:
 

<TABLE>
<CAPTION>
                                                                1999        1998        1997
                                                              --------    --------    --------
<S>                                                           <C>         <C>         <C>
Risk-free interest rate.....................................     5.2%        5.6%        6.4%
Dividend yield..............................................     0.0%        0.0%        0.0%
Volatility..................................................    34.0%       32.0%       32.0%
Expected life (years).......................................     4.0         4.0         4.0
</TABLE>

 
                                      B-33

<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
    Stock option activity for the past three years was as follows:
 

<TABLE>
<CAPTION>
                                                    1999                    1998                    1997
                                            ---------------------   ---------------------   ---------------------
                                                        WTD AVG                 WTD AVG                 WTD AVG
                                             SHARES    EXER PRICE    SHARES    EXER PRICE    SHARES    EXER PRICE
                                            --------   ----------   --------   ----------   --------   ----------
<S>                                         <C>        <C>          <C>        <C>          <C>        <C>
Old Share Options:
 
Outstanding at beginning of year..........  118,475      $121.64    168,393      $121.65     356,118     $120.80
Exercised.................................  (42,125)     $130.53    (49,918)     $121.67    (187,725)    $120.03
                                            -------                 -------                 --------
Outstanding at end of year................   76,350      $116.74    118,475      $121.64     168,393     $121.65
 
Options exercisable at year-end...........   76,350      $116.74    118,475      $121.64     168,393     $121.65
</TABLE>

 

<TABLE>
<CAPTION>
                                                 1999                     1998                     1997
                                        ----------------------   ----------------------   ----------------------
                                                     WTD AVG                  WTD AVG                  WTD AVG
                                         SHARES     EXER PRICE    SHARES     EXER PRICE    SHARES     EXER PRICE
                                        ---------   ----------   ---------   ----------   ---------   ----------
<S>                                     <C>         <C>          <C>         <C>          <C>         <C>
New Share Options:
 
Outstanding at beginning of year......  5,411,836     $45.07     4,749,612     $36.27     4,828,990     $31.64
  Granted.............................  2,081,600     $64.29     1,064,200     $81.40       449,100     $77.86
  Exercised...........................   (855,012)    $25.67      (282,300)    $28.79      (464,650)    $25.58
  Terminated..........................   (124,715)    $70.74      (119,676)    $57.12       (63,828)    $57.45
                                        ---------                ---------                ---------
Outstanding at end of year............  6,513,709     $53.27     5,411,836     $45.07     4,749,612     $36.27
 
Options exercisable at year-end.......  3,240,210     $38.26     3,400,607     $29.97     2,518,238     $26.63
 
Reserved for future grants at
  year-end............................  1,466,019                3,422,904                4,397,428
 
Wtd avg fair value of options granted
  during the year.....................                $22.31                   $27.95                   $27.40
</TABLE>

 
    The following information related to stock options outstanding as of
December 31, 1999:
 

<TABLE>
<CAPTION>
                                          OPTIONS OUTSTANDING                             OPTIONS EXERCISABLE
                        -------------------------------------------------------   ------------------------------------
                                            WEIGHTED-AVERAGE
       RANGE OF          OUTSTANDING AT        REMAINING       WEIGHTED-AVERAGE    EXERCISABLE AT     WEIGHTED-AVERAGE
   EXERCISE PRICES      DECEMBER 31, 1999   CONTRACTUAL LIFE    EXERCISE PRICE    DECEMBER 31, 1999    EXERCISE PRICE
----------------------  -----------------   ----------------   ----------------   -----------------   ----------------
<S>                     <C>                 <C>                <C>                <C>                 <C>
Old Share Options:
  $91 to 153..........         76,350          2.0 years          $  116.74              76,350          $  116.74
New Share Options:
  $20 to 29...........      1,940,940          4.6 years          $   22.88           1,940,940          $   22.88
  $37 to 57...........      1,175,747          6.3 years          $   52.69             877,248          $   52.37
  $60 to 69...........      1,918,800          9.2 years          $   62.75              30,000          $   63.29
  $70 to 88...........      1,478,222          8.3 years          $   81.33             392,022          $   80.96
                            ---------                                                 ---------
                            6,513,709                                                 3,240,210
</TABLE>

 
(16) RETIREMENT AND POSTRETIREMENT PLANS
 
    The Company has various retirement plans, both defined benefit and defined
contribution, which cover substantially all employees. The Company also provides
certain health care benefits, primarily in the U.S., to retirees and eligible
dependents, as well as certain life insurance benefits to retirees. 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.
 
                                      B-34

<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
(16) RETIREMENT AND POSTRETIREMENT PLANS (CONTINUED)
    The following table sets forth the reconciliation of the beginning and
ending balances of the benefit obligation and plan assets, the funded status and
the amounts recognized in the statement of financial position for the defined
benefit and other postretirement plans as of December 31:
 

<TABLE>
<CAPTION>
                                                             PENSION BENEFITS       OTHER BENEFITS
                                                            -------------------   -------------------
                                                              1999       1998       1999       1998
                                                            --------   --------   --------   --------
<S>                                                         <C>        <C>        <C>        <C>
(IN MILLIONS)
----------------------------------------------------------
CHANGE IN BENEFIT OBLIGATION
Benefit obligation at beginning of year...................  $ 8,038     $7,272    $ 1,626    $ 1,706
Service cost..............................................      295        276         53         48
Interest cost.............................................      583        533        116        109
Plan participants' contributions..........................        1          1          7         --
Amendments................................................        1          1         --         --
Actuarial (gain) loss.....................................   (1,161)       274       (254)      (169)
Foreign currency exchange rate changes....................       12         13         --
Benefits paid.............................................     (388)      (332)       (83)       (68)
                                                            -------     ------    -------    -------
Benefit obligation at end of year.........................  $ 7,381     $8,038    $ 1,465    $ 1,626
                                                            =======     ======    =======    =======
CHANGE IN PLAN ASSETS
Fair value of plan assets at beginning of year............  $ 7,654     $6,859    $   112    $   107
Actual return on plan assets..............................    1,255        934          6          8
Employer contributions....................................      175        187         71         --
Plan participants' contributions..........................        1          1          7         --
Foreign currency exchange rate changes....................        4          5         --         --
Benefits paid.............................................     (388)      (332)       (83)        (3)
                                                            -------     ------    -------    -------
Fair value of plan assets at end of year..................  $ 8,701     $7,654    $   113    $   112
                                                            =======     ======    =======    =======
Funded status.............................................  $ 1,320     $ (384)   $(1,352)   $(1,514)
Unrecognized actuarial (gains) losses.....................   (1,870)      (122)      (228)        19
Unrecognized prior service costs..........................      604        660         --         --
                                                            -------     ------    -------    -------
Net amount recognized.....................................  $    54     $  154    $(1,581)   $(1,495)
                                                            =======     ======    =======    =======
AMOUNTS RECOGNIZED IN THE STATEMENT OF FINANCIAL POSITION
  CONSIST OF:
Prepaid (accrued) benefit cost............................  $    54     $  154    $(1,581)   $(1,495)
Accrued benefit liability.................................     (151)      (274)        --         --
Intangible asset..........................................      148        271         --         --
Accumulated other comprehensive income....................        3          3         --         --
                                                            -------     ------    -------    -------
Net amount recognized.....................................  $    54     $  154    $(1,581)   $(1,495)
                                                            =======     ======    =======    =======
WEIGHTED-AVERAGE ASSUMPTIONS
Discount rate.............................................     8.25%      7.00%      7.00%      7.00%
Expected return on plan assets............................     9.75%      9.75%      8.00%      8.00%
Rate of compensation increase.............................     4.10%      4.05%        --         --
</TABLE>

 
    The assumed health care cost trend rates for gross claims paid were 4.0% and
5.0% for 1999 and 1998, respectively.
 
                                      B-35

<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
(16) RETIREMENT AND POSTRETIREMENT PLANS (CONTINUED)
    The net periodic benefit cost included the following components:
 

<TABLE>
<CAPTION>
                                                                     PENSION BENEFITS                  OTHER BENEFITS
                                                              ------------------------------   ------------------------------
                                                                1999       1998       1997       1999       1998       1997
                                                              --------   --------   --------   --------   --------   --------
<S>                                                           <C>        <C>        <C>        <C>        <C>        <C>
(IN MILLIONS)
------------------------------------------------------------
Service cost................................................    $295       $276       $232       $ 53       $ 48       $ 44
Interest cost...............................................     583        533        477        116        109        107
Expected return on plan assets..............................    (665)      (581)      (531)        (9)        (8)        (8)
Amortization of prior service cost including transition
  obligation/ (asset).......................................      57         57         36         --         --         --
Recognized actuarial (gain)/loss............................       1          9          1         (5)        (4)        (5)
                                                                ----       ----       ----       ----       ----       ----
Net period benefit costs....................................    $271       $294       $215       $155       $145       $138
                                                                ====       ====       ====       ====       ====       ====
</TABLE>

 
    Total pension expense for all retirement plans (including defined
contribution plans) was $285 million in 1999, $304 million in 1998 and
$229 million in 1997.
 
    The projected benefit obligation, accumulated benefit obligation, and fair
value of plan assets for the plans with accumulated benefit obligations in
excess of plan assets were $500 million, $444 million, and $47 million,
respectively, as of December 31, 1999, and $1.688 billion, $1.510 billion, and
$1.118 billion, respectively, as of December 31, 1998.
 
    Assumed health care cost trend rates have a significant effect on the
amounts reported for the health care plan. A one-percentage-point change in
assumed health care trend rate would have the following effects:
 

<TABLE>
<CAPTION>
                                                        1% INCREASE   1% DECREASE
                                                        -----------   -----------
<S>                                                     <C>           <C>
(IN MILLIONS)
------------------------------------------------------
Effect on total service and interest cost.............      $ 28          $ 23
Effect on postretirement benefit obligation...........      $186          $154
</TABLE>

 
    Changes in interest rates or rates of inflation may impact the assumptions
used in the valuation of pension obligations and postretirement obligations
including discount rates and rates of increase in compensation, resulting in
increases or decreases in United's pension and postretirement liabilities and
pension and postretirement costs.
 
(17) FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
 
    See QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK ("Market Risk
Disclosures") for a discussion of the Company's foreign currency and fuel price
risk management activities, and the fair value of all significant financial
instruments.
 
CREDIT EXPOSURES OF DERIVATIVES
 
    The Company's theoretical risk in the derivative financial instruments
described in Market Risk Disclosures is the cost of replacing the contracts at
current market rates in the event of default by any of the counterparties.
However, the Company does not anticipate such default as counterparties are
selected based on credit ratings and the relative market positions with each
counterparty are monitored.
 
                                      B-36

<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
(17) FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (CONTINUED)
FINANCIAL GUARANTEES
 
    Special facility revenue bonds have been issued by certain municipalities to
build or improve airport and maintenance 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, 1999, $1.274 billion principal amount of such bonds was
outstanding. As of December 31, 1999, UAL and United had jointly guaranteed
$35 million of such bonds and United had guaranteed $1.258 billion of such
bonds, including accrued interest. The payments required to satisfy these
obligations are included in the future minimum lease payments disclosed in
Note 10, "Lease Obligations."
 
CONCENTRATIONS 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 geographically dispersed 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.
 
(18) COMMITMENTS, CONTINGENT LIABILITIES AND UNCERTAINTIES
 
    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. UAL records liabilities for legal
and environmental claims against it in accordance with generally accepted
accounting principles. These amounts are recorded based on the Company's
assessments of the likelihood of their eventual settlements. The amounts of
these liabilities could increase or decrease in the near term, based on
revisions to estimates relating to the various claims.
 
    At December 31, 1999, commitments for the purchase of property and
equipment, principally aircraft, approximated $4.4 billion, after deducting
advance payments. An estimated $2.0 billion will be spent in 2000, $1.8 billion
in 2001 and $0.6 billion in 2002. The major commitments are for the purchase of
A319, A320, B747, B767, and B777 aircraft, which are scheduled to be delivered
through 2002. These commitments, combined with aircraft retirements, are part of
the Company's plan to eventually increase the fleet to an expected 645 aircraft
at the end of 2001.
 
    In connection with the construction of the Indianapolis Maintenance Center,
United agreed to spend an aggregate $800 million on capital investments by the
year 2001 and employ at least 7,500 individuals by the year 2004. In the event
such targets are not reached, United may be required to make certain payments to
the city of Indianapolis and state of Indiana.
 
    Approximately 79% of United's employees are represented by various labor
organizations. The labor contracts with the Air Line Pilots' Association and the
International Association of Machinists and Aerospace Workers become amendable
in April and July 2000, respectively. The Company is currently in the process of
negotiating these contracts. The contract with the Association of Flight
Attendants becomes amendable in 2006. See OTHER INFORMATION, "Labor Agreements
and Wage Adjustments" in MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS for details.
 
                                      B-37

<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
(19) SEGMENT INFORMATION
 
    United has a global route network designed to transport passengers and cargo
between destinations in North America, the Pacific, Latin America and Europe.
These regions constitute United's four reportable segments. The accounting
policies for each of these segments are the same as those described in Note 1,
"Summary of Significant Accounting Policies," except that segment financial
information has been prepared using a management approach which is consistent
with how the Company's management internally disaggregates financial information
for the purpose of making internal operating decisions. UAL evaluates
performance based on United's fully distributed earnings before income taxes.
Revenues are attributed to each reportable segment based on the allocation
guidelines provided by the U.S. Department of Transportation, which classifies
flights between the U.S. and foreign designations as part of each respective
region. A reconciliation of the total amounts reported by reportable segments to
the applicable amounts in the financial statements follows:
 

<TABLE>
<CAPTION>
                                                                   YEAR ENDED DECEMBER 31, 1999
                                         --------------------------------------------------------------------------------
                                                                                     REPORTABLE
                                                                LATIN                 SEGMENT                CONSOLIDATED
                                         DOMESTIC   PACIFIC    AMERICA    ATLANTIC     TOTAL       OTHER        TOTAL
                                         --------   --------   --------   --------   ----------   --------   ------------
<S>                                      <C>        <C>        <C>        <C>        <C>          <C>        <C>
(IN MILLIONS)
---------------------------------------
Revenue................................  $12,516     $2,691      $787      $1,973      $17,967      $60         $18,027
Interest income........................       40         14         4          10           68       --              68
Interest expense.......................      217         79        21          55          372      (10)            362
Equity in earnings of affiliates.......       21          9         2           5           37       --              37
Depreciation and amortization..........      550        145        42         115          852       15             867
Fully distributed earnings before
  income taxes & gains on sales........    1,460        171        49         230        1,910       57           1,967
</TABLE>

 

<TABLE>
<CAPTION>
                                                                   YEAR ENDED DECEMBER 31, 1998
                                         --------------------------------------------------------------------------------
                                                                                     REPORTABLE
                                                                LATIN                 SEGMENT                CONSOLIDATED
                                         DOMESTIC   PACIFIC    AMERICA    ATLANTIC     TOTAL       OTHER        TOTAL
                                         --------   --------   --------   --------   ----------   --------   ------------
<S>                                      <C>        <C>        <C>        <C>        <C>          <C>        <C>
(IN MILLIONS)
---------------------------------------
Revenue................................  $11,997     $2,843      $832      $1,846      $17,518      $43         $17,561
Interest income........................       33         14         3           8           58        1              59
Interest expense.......................      207         84        22          49          362       (7)            355
Equity in earnings of affiliates.......       41         17         4          10           72       --              72
Depreciation and amortization..........      520        145        45          95          805      (12)            793
Fully distributed earnings before
  income taxes.........................    1,641         63        68         277        2,049       36           2,085
</TABLE>

 
                                      B-38

<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
(19) SEGMENT INFORMATION (CONTINUED)
 

<TABLE>
<CAPTION>
                                                                   YEAR ENDED DECEMBER 31, 1997
                                         --------------------------------------------------------------------------------
                                                                                     REPORTABLE
                                                                LATIN                 SEGMENT                CONSOLIDATED
                                         DOMESTIC   PACIFIC    AMERICA    ATLANTIC     TOTAL       OTHER        TOTAL
                                         --------   --------   --------   --------   ----------   --------   ------------
<S>                                      <C>        <C>        <C>        <C>        <C>          <C>        <C>
(IN MILLIONS)
---------------------------------------
Revenue................................  $11,214     $3,552      $824      $1,745      $17,335      $43         $17,378
Interest income........................       29         13         3           6           51        1              52
Interest expense.......................      166         73        15          36          290       (4)            286
Equity in earnings of affiliates.......       38         17         3           8           66       --              66
Depreciation and amortization..........      474        159        38          76          747      (23)            724
Fully distributed earnings before
  income taxes & gains on sales........    1,189        512       109         287        2,097       36           2,133
</TABLE>

 

<TABLE>
<CAPTION>
                                                                1999       1998       1997
                                                              --------   --------   --------
<S>                                                           <C>        <C>        <C>
(IN MILLIONS)
------------------------------------------------------------
Total fully distributed earnings for reportable segments....   $1,910     $2,049     $2,097
  Gains on sales............................................      731         --        378
  UAL subsidiary earnings...................................       57         36         36
  Less: ESOP compensation expense...........................      756        829        987
                                                               ------     ------     ------
Total earnings before income taxes, distributions on
  preferred securities and extraordinary item...............   $1,942     $1,256     $1,524
                                                               ======     ======     ======
</TABLE>

 
    UAL's operations involve an insignificant level of dedicated revenue
producing assets by reportable segment. The overwhelming majority of UAL's
revenue producing assets can be deployed in any of the four reportable segments.
UAL has significant intangible assets related to the acquisition of its Atlantic
and Latin America route authorities.
 
(20) STATEMENT OF CONSOLIDATED CASH FLOWS--SUPPLEMENTAL DISCLOSURES
 
    Supplemental disclosures of cash flow information and non-cash investing and
financing activities were as follows:
 

<TABLE>
<CAPTION>
                                                                1999       1998       1997
                                                              --------   --------   --------
<S>                                                           <C>        <C>        <C>
(IN MILLIONS)
------------------------------------------------------------
Cash paid during the year for:
  Interest (net of amounts capitalized).....................    $260       $234       $152
  Income taxes..............................................     296        160        362
 
Non-cash transactions:
  Capital lease obligations incurred........................     482        701        643
  Long-term debt incurred in connection with additions to
    equipment...............................................      --         --        185
  Note receivables recorded in connection with the sale of
    equipment and leasehold improvements....................      --         --         61
  Increase (decrease) in pension intangible assets..........    (126)       (15)       200
  Net unrealized gain on investment in affiliates...........     356         --         --
</TABLE>

 
                                      B-39

<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
(21) SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
 

<TABLE>
<CAPTION>
                                                       1ST        2ND        3RD        4TH
                                                     QUARTER    QUARTER    QUARTER    QUARTER      YEAR
                                                     --------   --------   --------   --------   --------
<S>                                                  <C>        <C>        <C>        <C>        <C>
(IN MILLIONS)
---------------------------------------------------
1999:
Operating revenues.................................   $4,160     $4,541     $4,845     $4,481    $18,027
Earnings from operations...........................      146        433        619        193      1,391
Earnings before extraordinary item.................       78        672        359        129      1,238
Extraordinary loss on early extinguishment of
  debt.............................................       --         (3)        --         --         (3)
Net earnings.......................................   $   78     $  669     $  359     $  129    $ 1,235
Per share amounts, basic:
  Earnings before extraordinary item...............   $ 0.91     $12.26     $ 6.18     $ 1.85    $ 21.26
  Extraordinary loss on early extinguishment of
    debt...........................................       --      (0.05)        --         --      (0.06)
  Net earnings.....................................   $ 0.91     $12.21     $ 6.18     $ 1.85    $ 21.20
Net earnings per share, diluted....................   $ 0.44     $ 5.78     $ 2.89     $ 0.84    $  9.94
 
1998:
Operating revenues.................................   $4,055     $4,442     $4,783     $4,281    $17,561
Earnings from operations...........................      123        470        695        191      1,478
Net earnings.......................................   $   61     $  282     $  425     $   54    $   821
Earnings per share, basic..........................   $ 0.60     $ 4.43     $ 6.91     $ 0.53    $ 12.71
Earnings per share, diluted........................   $ 0.34     $ 2.44     $ 3.71     $ 0.27    $  6.83
</TABLE>

 
    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.
 
    During the second quarter of 1999, UAL recognized a pre-tax gain of
$669 million on the sale of a portion of its investment in Galileo.
Additionally, in the fourth quarter 1999, UAL recognized a pre-tax gain of
$62 million on the sale of a portion of its investment in Equant. (See Note 6,
"Investments").
 
                                      B-40

<PAGE>
                                                         EDGAR ONLY APPENDIX

                   UNITED EMPLOYEES PERFORMANCE INCENTIVE PLAN

I.   PURPOSE

     A.    GENERAL. In an effort to maintain a position of leadership in the 
           fast-growing and highly competitive business segments in which UAL 
           Corporation (the "Company") competes, it is necessary to promote 
           the financial interests of the Company and its Subsidiaries, 
           including its growth, by attracting and retaining certain highly 
           qualified employees possessing outstanding ability, motivating 
           such employees by means of performance related incentives, and 
           providing incentive compensation opportunities which are 
           competitive with those of major corporations. The United Employees 
           Performance Incentive Plan (the "Plan") hereinafter described is 
           designed to assist the Company in attaining these objectives.

     B.    PERFORMANCE-BASED COMPENSATION. With respect to Covered Awards, 
           the Plan is intended to constitute a qualified performance-based 
           compensation plan under Section 162(m)(4)(C) of the Code and shall 
           be construed and administered so as to ensure such compliance.

     C.    DEFERRED AWARDS. With respect to the Plan as it relates to the 
           payment of Incentive Awards on a deferred basis pursuant to 
           Paragraph VI(B), such portion of the Plan is intended to be (and 
           shall be construed and administered as) an employee pension 
           benefit plan that is unfunded and is maintained by the Company for 
           a select group of management or highly compensated employees 
           within the meaning of ERISA.

     D.    CASH BONUS PLAN. With respect to the Plan as it relates to the 
           current payment of Incentive Awards pursuant to Paragraph VI(A), 
           such cash bonus portion of the Plan is not intended to be (and 
           shall not be construed and administered as) an employee benefit 
           plan within the meaning of ERISA. Incentive Awards under this Plan 
           are intended to be discretionary and shall not constitute a part 
           of an employee's regular rate of pay.

II.  PLAN ADMINISTRATION

     A.    PLAN ADMINISTRATION. The Company or its delegate has the authority 
           and responsibility to manage and control the general 
           administration of the Plan, except as to matters expressly 
           reserved in this Plan to either the Compensation Committee or the 
           Compensation Administration Committee of the Board of Directors of 
           the Company (as applicable, the "Committee"). This Plan is not 
           intended to modify or limit the powers, duties or responsibilities 
           of either the Board or the Committees as set forth under the UAL 
           Corporation Restated Certificate of Incorporation. Determinations, 
           decisions and actions of the Company or, if applicable, the 
           Committee, in connection with the construction, interpretation, 
           administration, or application of the Plan will be final, 
           conclusive, and binding upon any Participant and any person 
           claiming under or through the Participant. No employee of an 
           Employer, any member of the Board, any delegate of the Board, or 
           any member of the Committee will be liable for any determination, 
           decision, or action made in good faith with respect to the Plan or 
           any Incentive Award made under the Plan.

     B.    COMPENSATION COMMITTEE. The Compensation Committee shall have the 
           sole authority and responsibility to review annually management's 
           recommendations for the Selected Performance


                                       1

<PAGE>


           Objectives and Selected Performance Factors under the Plan, to 
           select the Selected Performance Objectives and Selected 
           Performance Factors for an Award Year; and to otherwise administer 
           Incentive Awards (other than Covered Awards) payable to Officers.

     C.    COMPENSATION ADMINISTRATION COMMITTEE. The Compensation 
           Administration Committee shall have the sole authority and 
           responsibility under the Plan to establish and administer any 
           Covered Award under the Plan, including establishment of the 
           Selected Performance Objectives and Selected Performance Factors 
           for an Award Year.

     D.    NON-ASSIGNABILITY. A Participant's rights and interests in and to 
           payment of any Incentive Award under the Plan may not be assigned, 
           transferred, encumbered or pledged other than by will or the laws 
           of descent and distribution; and are not subject to attachment, 
           garnishment, execution or other creditor's processes.

     E.    AMENDMENT OR TERMINATION. Subject to the UAL Corporation Restated 
           Certificate of Incorporation, the Plan may at any time be amended, 
           modified, or terminated, as the Board in its discretion 
           determines. Such amendment, modification, or termination of the 
           Plan will not require the consent, ratification, or approval of 
           any party, including any Participant. The Board or the 
           Compensation Committee (and the Compensation Administration 
           Committee in the case of a Covered Award) may amend the Selected 
           Performance Objectives and/or the Selected Performance Factors as 
           well as any Incentive Award (including increasing, decreasing or 
           eliminating any or all Incentive Awards for an Award Year) prior 
           to the payment of the Award (or the date payment would have been 
           made but for a Participant's election to defer receipt) to the 
           extent it deems appropriate for any reason, including compliance 
           with applicable securities laws, local laws outside the U.S. if 
           and to the extent international employees are Participants, the 
           requirements of Section 162(m) of the Code and the pooling of 
           interests requirements in connection with a merger. 
           Notwithstanding the foregoing, to the extent the Compensation 
           Administration Committee has expressly designated an Incentive 
           Award as a Covered Award, the Compensation Administration 
           Committee will not have any authority to amend or modify the terms 
           of any Covered Award in any manner which would impair its 
           deductibility under Section 162(m) of the Code.

     F.    NO CONTRACT OF EMPLOYMENT. Neither the Plan, nor any Incentive 
           Award, constitutes a contract of employment, and participation in 
           the Plan will not give any employee the right to be retained in 
           the service of the Company or any Subsidiary or continue in any 
           position or at any level of compensation.

     G.    CONTROLLING LAW. This Plan and all determinations made and actions 
           taken pursuant hereto to the extent not preempted by ERISA or 
           other federal laws, will be governed and construed by the internal 
           laws of the State of Illinois, except its laws with respect to 
           choice of law.

     H.    BENEFICIARY UPON DEATH. An Incentive Award which has been deferred 
           pursuant to the provisions of Paragraph VI(B) shall be 
           transferable at the Participant's death to the beneficiary 
           designated by the Participant on forms prescribed by and filed 
           with the Company. If no designation of a beneficiary has been made 
           or is in effect, an Incentive Award payable to a Participant 
           following his or her death shall be paid to the Participant's 
           legal representative and shall be transferable by will or pursuant 
           to the laws of descent and distribution.


                                       2

<PAGE>


     I.    COMPLIANCE WITH SECTION 162(m) OF THE CODE. To the extent any 
           provision of the Plan or an Incentive Award or any action of the 
           Compensation Committee or the Company as it relates to a Covered 
           Award, may result in the application of Section 162(m)(1) of the 
           Code to compensation payable to a Covered Employee, such provision 
           or action shall be deemed null and void to the extent permitted by 
           law and deemed advisable to the Compensation Administration 
           Committee.

     J.    UNFUNDED, UNSECURED OBLIGATION. A Participant's only interest 
           under the Plan shall be the right to receive either a cash or 
           Stock payment for an Incentive Award pursuant to the terms of the 
           Incentive Award and the Plan. No portion of the amount payable to 
           a Participant under this Plan shall be held by the Company or any 
           Subsidiary in trust or escrow or any other form of asset 
           segregation. To the extent that a Participant acquires a right to 
           receive a cash or Stock payment under the Plan, such right shall 
           be no greater than the right of any unsecured, general creditor of 
           the Company, and no trust in favor of any Participant will be 
           implied.

     H.    INTERNATIONAL EMPLOYEES. The Company may in its sole discretion 
           extend participation in the Plan to international employees who do 
           not satisfy the definition of Administrative Employee or 
           Management Employee under this Plan. The terms of the Plan as 
           applied to such employees shall be as set forth in an Exhibit to 
           this Plan.

III. DEFINITIONS

Unless the context requires otherwise, the following terms when used with
initial capitalization have the following meanings:

     A.    ACCOUNT -- A bookkeeping account maintained by the Company in the 
           name of each Participant, which account shall consist of two 
           subaccounts, one known as the "Cash Subaccount" and the other as 
 
          the "Company Stock Subaccount."

     B.    ADMINISTRATIVE EMPLOYEE -- An individual (i) who is classified by 
           an Employer (without regard to any retroactive judicial or 
           administrative reclassification of such individual) as an 
           Administrative Employee (on other than a temporary 
           reclassification basis), (ii) whose employment is for an 
           indefinite period, (iii) who is employed in an Employer 
           established job classification not covered by a collective 
           bargaining agreement, and (iv) who is on the Employer's U.S. 
           payroll and working regularly in the U.S.

     C.    AWARD YEAR -- The calendar year for which Incentive Awards, if
           any, are calculated under the Plan.

     D.    BOARD -- The Board of Directors of the Company.

     E.    CODE -- The Internal Revenue Code of 1986, as from time to
           time amended including any related regulations.

     F.    COMMITTEE - Committee means separately or collectively as 
           applicable the Compensation Administration Committee and the 
           Compensation Committee.

     G.    COMPANY -- UAL Corporation.


                                       3

<PAGE>


     H.    COMPENSATION -- Compensation means:

           1.    With respect to a Participant who is not a Key and Senior 
                 Management Employee, the amount of a Participant's taxable 
                 wages for the Award Year, increased by the amount of his or 
                 her pre-tax elective contributions under any qualified Code 
                 Section 401(k) plan or Code Section 125 cafeteria plan 
                 (including any HMO premium deductions) for the Award Year, 
                 and decreased by any Incentive Award received under the Plan 
                 or comparable incentive compensation plan and the amount of 
                 any extraordinary payments such as moving expense 
                 reimbursements, Pride Awards and Code Section 125 cafeteria 
                 plan taxable reimbursements for the Award Year.

           2.    With respect to a Key and Senior Management Employee,
                 such Participant's annual base salary actually
                 received for the Award Year, increased by the amount
                 of his or her pre-tax elective contributions under
                 any qualified Code Section 401(k) Plan or Code
                 Section 125 cafeteria plan (including any HMO premium
                 deductions), prorated for a partial year's
                 participation.

     I.    COMPENSATION ADMINISTRATION COMMITTEE -- The Compensation 
           Administration Committee is the Compensation Administration 
           Committee of the Board as set forth in the UAL Corporation 
           Restated Certificate of Incorporation, or such other committee 
           appointed by the Board, in accordance with the requirements of the 
           UAL Corporation Restated Certificate of Incorporation, to exercise 
           the powers and perform the duties assigned to the Compensation 
           Administration Committee under this Plan.

     J.    COMPENSATION COMMITTEE - The Compensation Committee is the 
           Compensation Committee of the Board as set forth in the UAL 
           Corporation Restated Certificate of Incorporation, or such other 
           committee appointed by the Board, in accordance with the 
           requirements of the UAL Corporation Restated Certificate of 
           Incorporation, to exercise the powers and perform the duties 
           assigned to the Compensation Committee under this Plan.

     K.    COVERED AWARD -- An Incentive Award (i) which will be paid to a 
           Covered Employee, (ii) which the Compensation Administration 
           Committee expressly designates as performance-based compensation 
           intends to be fully deductible under Section 162(m) of the Code, 
           and (iii) which will be paid following the shareholder approval 
           required by Section 162(m)(4)(C)(ii) of the Code.

     L.    COVERED EMPLOYEE -- An individual who is a "covered employee" 
           within the meaning of Section 162(m)(3) of the Code.

     M.    EMPLOYER -- The Company, United Air Lines, Inc., and any other 
           Subsidiary which, with the approval of the Chief Executive Officer 
           of the Company, has adopted this Plan.

     N.    ERISA -- The Employee Retirement Income Security Act of 1974, as 
           from time to time amended, including any related regulations.

     O.    FAIR MARKET VALUE. The Fair Market Value of a share of Stock on 
           any date shall be equal to the five-day average of the average of 
           the high and low prices of a share of Stock reported for New York 
           Stock Exchange Composite Transactions for the applicable date or, 
           if there are no such


                                       4

<PAGE>


           reported trades for such date, for the last previous date for 
           which trades were reported, and the four previous dates for which 
           trades were reported.

     P.    INCENTIVE AWARD -- The dollar value of an award made to a 
           Participant as determined under the Plan.

     Q.    INCENTIVE OPPORTUNITY -- The amount, stated as a percentage of a 
           Participant's Compensation, determined with respect to an Award 
           Year (or partial Award Year in the case of participation for a 
           partial year), that will be included in a Participant's Incentive 
           Award formula under Paragraph V(A) of the Plan. If a Participant 
           held more than one eligible position during the Award Year, his or 
           her Incentive Opportunity will be separately determined based on 
           each corresponding period of participation. The Incentive 
           Opportunity for Participants who are Officers will be determined 
           by the Compensation Committee, subject to the requirement under 
           Paragraph IX(A) that the Compensation Administration Committee 
           establish the Incentive Opportunity upon which a Covered Award is 
           based.

     R.    INDIVIDUAL PERFORMANCE GOAL -- The performance criteria or 
           objectives established for a Participant for an Award Year for 
           purposes of assisting the Company or the Compensation Committee in 
           determining whether and to what extent an Incentive Award has been 
           earned by such Participant for such Award Year.

     S.    INDIVIDUAL PERFORMANCE MODIFIER -- The numerical modifier 
           (expressed as a percentage) determined for a Participant with 
           respect to an Award Year, as follows:

           1.    In the case of a Participant other than a Key and Senior 
                 Management Employee, the Individual Performance Modifier 
                 shall be 100%, provided the Company may reduce such 
                 Individual Performance Modifier based upon an evaluation of 
                 the Participant's performance during the Award Year.

           2.    In the case of a Participant who is a Key and Senior 
                 Management Employee other than an Officer, the Individual 
                 Performance Modifier shall be determined by the Company and 
                 may be based, in whole or in part, upon an evaluation of the 
                 extent to which such Participant achieved his or her 
                 Individual Performance Goals established for that Award Year.

           3.    In the case of a Participant who is an Officer other than an 
                 Officer who is to receive a Covered Award, the Individual 
                 Performance Modifier shall be determined by the Compensation 
                 Committee and may be based, in whole or in part, upon an 
                 evaluation of the extent to which such Participant achieved 
                 his or her Individual Performance Goals established for that 
                 Award Year.

           4.    In the case of a Participant who is to receive a Covered 
                 Award, the Individual Performance Modifier shall in all 
                 cases be 120%, subject to the Compensation Administration 
                 Committee's discretionary authority under Paragraph IX(C) to 
                 reduce the amount of a Covered Award.


                                       5

<PAGE>


           A Participant's evaluation under Paragraphs III(S)(l), III(S)(2) 
           and III(S)(3) above is wholly discretionary and subjective on the 
           part of the Company or the Compensation Committee as applicable.

     T.    KEY AND SENIOR MANAGEMENT EMPLOYEE -- Each Covered Employee, each 
           Officer and each Management Employee who is designated by the 
           Company as a Key and Senior Management Employee with respect to 
           the Plan for an Award Year. Designation as a Key and Senior 
           Management Employee will apply only for the Award Year for which 
           the designation is made.

     U.    MANAGEMENT EMPLOYEE -- An individual (i) who is classified by the 
           Employer (without regard to any retroactive judicial or 
           administrative reclassification of such individual) as a 
           Management Employee (on other than a temporary reclassification 
           basis), (ii) whose employment is for an indefinite period, (iii) 
           who is employed in an Employer established job classification not 
           covered by a collective bargaining agreement, and (iv) who is on 
           the Employer's U.S. payroll and working regularly in the U.S.

     V.    OFFICER -- Each officer of the Company, each officer of United 
           Airlines Inc. reporting directly to the Chairman and Chief 
           Executive Officer of the Company, and each senior officer of the 
           Company's Subsidiaries designated by the Board.

     W.    PARTICIPANT -- Each Administrative Employee, Management Employee 
           or other international employee of an Employer who is designated 
           as a Participant for an Award Year by the Company or the Committee.

     X.    PERFORMANCE OBJECTIVES -- One or more objectively determinable 
           measures established at the beginning of an Award Year related to 
           specified levels of growth in, or peer company performance in, or 
           relating to, customer satisfaction as measured by a Company 
           sponsored customer survey; employee engagement or employee 
           relations as measured by a Company sponsored employee survey; 
           employee safety; employee diversity; financial performance as 
           measured by sales, net income, profits (pre-and after-tax), 
           adjusted pre-tax margin, earnings before interest and taxes, cash 
           flow, earnings per share, reduction of fixed costs, economic value 
           added, return on assets, return on capital, return on equity, 
           shareholder return, cost of capital, debt reduction, productivity 
           improvements; and operational performance as measured by load 
           factor, passenger yield management, lost time incidents, baggage 
           handling performance, or on-time performance. Performance 
           Objectives may be described in terms of Company, Subsidiary, major 
           business segments, division or departmental performance. 
           Performance Objectives shall be stated in terms of Threshold, 
           Target and Maximum levels. For other than Covered Awards, the 
           Company may add other Performance Objectives not specifically 
           listed above.

     Y.    PLAN -- The United Employees Performance Incentive Plan, as 
           evidenced by this written instrument as may be amended from time 
           to time.

     Z.    PRE-TAX EARNINGS -- UAL Corporation's pre-tax earnings as 
           determined under generally accepted accounting principles adjusted 
           to exclude any items (whether gains or losses) otherwise included 
           therein relating to (i) the UAL Corporation Employee Stock 
           Ownership Plan, the UAL Corporation Supplemental ESOP, or the 
           trusts relating thereto, (ii) the Company's 1988 and 1998 
           Restricted Stock Plans, (iii) for those Award Years in which the 
           Company enters into labor contracts with ALPA or the IAM to 
           replace contracts becoming amendable in 2000, any


                                       6

<PAGE>


           differential between the projected labor costs to the Company 
           attributable to such contract(s) as determined by the Company 
           prior to such Award Year and the actual labor costs to the Company 
           attributable to such labor contract(s) and (iv) any event or 
           occurrence that the Committee determines to be either not directly 
           related to the operations of the Company or not within the 
           reasonable control of the Company's management, but only to the 
           extent such determination would not cause a Covered Award to not 
           be deductible under Code Section 162(m).

     AA.   PRE-TAX PROFIT MARGIN -- Pre-Tax Earnings divided by UAL 
           Corporation's gross revenues as determined under generally 
           accepted accounting principles adjusted to exclude any items 
           otherwise included therein relating to any event or occurrence 
           that the Committee determines to be either not directly related to 
           the operations of the Company or not within the reasonable control 
           of the Company's management, but only to the extent such 
           determination would not cause a Covered Award to not be deductible 
           under Code Section 162(m).

     BB.   SELECTED PERFORMANCE FACTORS -- The numerical factors (expressed 
           as a percentage) established by the Company relating to the Plan's 
           Selected Performance Objectives for the Award Year and which 
           correspond to the actual achievement of the Threshold, Target and 
           Maximum Selected Performance Objectives for such Award Year. 
           Subject to the provisions of Article IX with respect to a Covered 
           Award, the Selected Performance Factors as they relate to Officers 
           shall be established by the Compensation Committee. If the actual 
           achievement of the Selected Performance Objective for an Award 
           Year, as determined by the Company (or by the Compensation 
           Administration Committee in the case of a Covered Award and the 
           Compensation Committee as it relates to the Incentive Awards for 
           Officers other than with respect to a Covered Award) shortly after 
           the Award Year, is between the Threshold and Target or Target and 
           Maximum Objectives, the Selected Performance Factor will be the 
           amount determined by linear interpolation between the two 
           corresponding Threshold, Target or Maximum Selected Performance 
           Factors.

     CC.   SELECTED PERFORMANCE OBJECTIVES -- One or more Performance 
           Objectives selected for an Award Year. Subject to the provisions 
           of Article IX with respect to a Covered Award, the Compensation 
           Committee shall establish at the beginning of an Award Year the 
           Selected Performance Objectives, including the Threshold, Target 
           and Maximum levels for Officers, other than with respect to a 
           Covered Award.

     DD.   STOCK -- Shares of Common Stock of the Company par value $.01 per 
           share, or any shares into which such shares are changed as 
           contemplated in Paragraph VI(E)(2)(b).

     EE.   SUBSIDIARY -- Any entity, corporate or otherwise, in which the 
           Company, directly or indirectly, owns or controls a greater than 
           50% interest.

IV.  PARTICIPATION

     A.    PARTICIPANTS. Participants will be determined annually by the 
           Company or the Committee from among the Management Employees, 
           Administrative Employees, and other international employees of an 
           Employer. Designation as a Participant will apply only for the 
           Award Year for which the designation is made and may include a 
           partial year.


                                       7

<PAGE>


     B.    TERMINATION OF EMPLOYMENT. In order to be entitled to receive an 
           Incentive Award for an Award Year, a Participant must be actively 
           employed at the time the Incentive Award is paid or, in the case 
           of a deferred Incentive Award, at the time such Award would have 
           been paid but for the Participant's election to defer receipt of 
           the Award; however, the Company (or the Committee, if applicable) 
           may in its sole discretion pay an Incentive Award to a Participant 
           who has terminated employment.

V.   COMPUTATION OF INCENTIVE AWARDS

     A.    FORMULA. Subject to Paragraph B, a Participant's Incentive Award 
           for an Award Year will be an amount equal to the Base Incentive 
           Award under (1) and, if applicable, the Match Incentive Award 
           under (2):

           1.    BASE INCENTIVE AWARD.  The Participant's Base Incentive 
                 Award is equal to the product of the following:

                 (a)    The Participant's Incentive Opportunity;

                 (b)    The Participant's Compensation;

                 (c)    The sum of the Selected Performance Factors
                        for the Award Year; and

                 (d)    The Participant's Individual Performance Modifier.

           2.    MATCH INCENTIVE AWARD. For any portion of an Incentive 
                 Award, the receipt of which has been deferred pursuant to 
                 Paragraph VI(B) for a period of at least five years 
                 following the Award Year and which is payable in the form of 
                 Stock, the Participant's Incentive Award will include a 
                 Match Incentive Award equal to 20% of such portion of the 
                 Participant's Base Incentive Award determined under (1) 
                 above.

     B.    COVERED AWARDS. A Covered Award shall be the greater of the 
           Incentive Award determined under Paragraph A or an Incentive Award 
           determined solely on the basis of a formula and one or more 
           financial Performance Objectives as established by the 
           Compensation Administration Committee prior to the Award Year (or 
           at such later date as may be permissible under Code Section 
           162(m)), subject to the Compensation Administration Committee's 
           discretionary authority under Paragraph IX(C) to reduce the amount 
           of a Covered Award.

     C.    CLASSIFICATION CHANGES. Appropriate adjustments and computations, 
           including computations for a partial Award Year, may be made to 
           reflect changes in a Participant's job classification, Individual 
           Performance Modifier, or Selected Performance Factors during an 
           Award Year. Subject to the provisions of Article IX with respect 
           to Covered Awards, the Compensation Committee shall determine all 
           such adjustments and computations relating to Incentive Awards for 
           Officers.

     D.    THRESHOLD LIMIT. With respect to each Award Year, the Compensation 
           Committee will determine before such Award Year a threshold level 
           of Pre-Tax Profit Margin which must be obtained before any 
           Incentive Award (other than a Covered Award) may be made to any 
           Participant for such Award Year. The Compensation Administration 
           Committee will establish such threshold


                                       8

<PAGE>


           level of Pre-Tax Profit Margin which must be obtained before any 
           Covered Award may be made to a Covered Employee for such Award 
           Year.

VI.  PAYMENT OF INCENTIVE AWARDS

     A.    CASH PAYMENT. Subject to Paragraph B below, payment of Incentive 
           Awards will be made in cash as soon as practicable following the 
           end of the Award Year, without interest.

     B.    ELECTION TO DEFER. A Participant who is a Key and Senior 
           Management Employee and who is determined by the Company to be 
           member of a select group of management or highly compensated 
           employees ("top-hat group") as such group is determined under 
           Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA may make an 
           irrevocable election, on or before the earlier of a date 
           established by the Company or June 30 of the Award Year, to defer 
           receipt of all or any portion of his or her Incentive Award to a 
           subsequent calendar year. A Participant's deferred Incentive Award 
           will be credited to his or her Account as of the date it would 
           otherwise have been paid in cash and will be adjusted as provided 
           in Paragraph E below. A Participant's election to defer will 
           include an election to receive payment of all or a portion of such 
           deferred Incentive Award in the form of cash or shares of Stock. 
           If the Company reasonably determines that a Participant no longer 
           qualifies as a member of a "top-hat group," the Company shall have 
           the right, in its sole discretion, to (i) terminate any future 
           deferrals by such Participant under this Plan, and/or (ii) 
           immediately distribute the Participant's Account balance under the 
           Plan.

     C.    TIME FOR PAYMENT OF DEFERRED INCENTIVE AWARD. A Participant who 
           has made an election to defer his or her Incentive Award will 
           receive payment of his or her entire Account balance (except as 
           limited by (3) below) on the earliest of the following:

           1.    In the calendar year selected by the Participant in
                 his or her irrevocable written election.

           2.    As soon as practicable in the calendar year after the 
                 Participant's termination of employment with the Company and 
                 its Subsidiaries for any reason or no reason, provided that 
                 a transfer of employment among the Company or its 
                 Subsidiaries will not be considered a termination of 
                 employment.

           3.    At the Participant's request and upon the occurrence of an 
                 "Unforeseeable Emergency", provided that a distribution 
                 pursuant to this clause shall not exceed the amount 
                 reasonably needed to satisfy the emergency need. For 
                 purposes of this paragraph, "Unforeseeable Emergency" shall 
                 mean a severe financial hardship to the Participant 
                 resulting from a sudden and unexpected illness or accident 
                 of the Participant or of his or her dependent (as defined in 
                 Section 152(a) of the Code), loss of the Participant's 
                 property due to casualty, or other similar extraordinary and 
                 unforeseeable circumstances arising as a result of events 
                 beyond the control of the Participant. The circumstances 
                 that will constitute an Unforeseeable Emergency will depend 
                 upon the facts of each case, but in no case will payment be 
                 made to the extent that such hardship is or may be relieved 
                 (i) through reimbursement or compensation by insurance or 
                 otherwise, (ii) by liquidation of the Participant's assets, 
                 to the extent the liquidation of such assets would not 
                 itself cause severe financial hardship, or (iii) by 
                 cessation of deferrals under the Plan.


                                       9

<PAGE>


           4.    Any other time elected by the Participant, provided that 
                 upon making such an election, the Participant shall be 
                 entitled to receive only 90% of the amounts then credited to 
                 his or her Account under the Plan and shall forfeit the 
                 remaining 10% of such amount.

     D.    MODIFICATION OF TIME AND MANNER OF PAYMENT. Notwithstanding 
           anything herein to the contrary and subject to the provisions of 
           Article IX with respect to a Covered Award, the Compensation 
           Committee shall have the right, in its discretion, to vary the 
           manner (including payment in cash in lieu of shares of Stock) and 
           time for making the distributions provided in Paragraph C above 
           (but not defer any amount otherwise due), and may make such 
           distributions in a lump sum or other payment method as it may deem 
           appropriate, taking into account the Participant's or any 
           beneficiary's age, health, physical or mental condition, 
           dependents or lack of dependents, other sources of income or lack 
           of same, and any other factors deemed relevant, provided, however, 
           that such accelerated payment is not detrimental to the 
           Participant. Nothing herein shall be construed to grant the 
           Participant or any beneficiary the right to elect a modification 
           of the time for receiving payments hereunder.

     E.    CREDITING AND ADJUSTMENT OF ACCOUNT BALANCE. The amount of any 
           Incentive Award a Participant has elected to defer and has elected 
           to receive in shares of Stock shall be credited to his or her 
           Company Stock Subaccount by crediting a number of stock units 
           equal to such amount of the Incentive Award divided by the Fair 
           Market Value of a share of Stock on the date the Incentive Award 
           would otherwise have been paid in cash. The balance of the amount 
           of the deferred Incentive Award shall be credited to his or her 
           Cash Subaccount. A Participant's Account shall be adjusted as 
           follows:

           1.    As of the last day of each calendar quarter (each such date 
                 referred to herein as an "Accounting Date"), the 
                 Participant's Cash Subaccount shall be adjusted as follows:

                 (a)    first, the amount of any distributions made since the 
                        last preceding Accounting Date and attributable to 
                        the Cash Subaccount shall be charged to the Cash 
                        Subaccount;

                 (b)    next, the balance of the Cash Subaccount after 
                        adjustment in accordance with subparagraph (a) above, 
                        shall be credited with interest for the period since 
                        the last preceding Accounting Date computed at the 
                        prime rate as reported by THE WALL STREET JOURNAL in 
                        effect at the end of each calendar quarter during the 
                        deferral period ending on the current Accounting 
                        Date, or if such date is not a business day, for the 
                        next preceding business day, except that, any credit 
                        which occurs after the Accounting Date shall be 
                        credited with interest for only the period following 
                        the credit.

           2.    The Participant's Company Stock Subaccount shall be
                 adjusted as follows:

                 (a)    as of the date on which shares of Stock are 
                        distributed to the Participant, the Company Stock 
                        Subaccount shall be charged with an equal number of 
                        stock units; and

                 (b)    as of the payment date for any dividend paid on 
                        Stock, the Company Stock Subaccount shall be credited 
                        with that number of additional stock units which is 


                                       10

<PAGE>

                        equal to the number obtained by multiplying the 
                        number of stock units credited to the Company Stock 
                        Subaccount on the dividend record date by the amount 
                        of the cash dividend or the fair market value (as 
                        determined by the Board of Directors) of any dividend 
                        in kind payable on a share of Stock and dividing that 
                        product by the then Fair Market Value of a share of 
                        Stock.

                        In the event of any merger, consolidation, 
                        reorganization, recapitalization, liquidation, 
                        reclassification, divestiture (including spinoff), 
                        stock split, reverse stock split, combination of 
                        shares, rights offering, exchange, or any other 
                        similar change in the corporate structure or 
                        capitalization of the Company affecting the Stock, 
                        each Participant's Company Stock Subaccount shall be 
                        equitably adjusted in such manner as the Committee 
                        shall determine in its sole judgment. In determining 
                        what adjustment, if any, is appropriate the Committee 
                        may rely on the advice of such experts as it deems 
                        appropriate, including counsel, investment bankers 
                        and the accountants of the Company.

           (3)   A Participant entitled to a Match Incentive Award under 
                 Paragraph V(A)(2) will receive a credit to his or her 
                 Company Stock Subaccount equal to such Match Incentive 
                 Award, but only if actual receipt of the related Base 
                 Incentive Award is deferred for a period of at least five 
                 years following the Award Year. Such credit will be 
                 effective as of the date the related Base Incentive Award is 
                 credited to the Participant's Company Stock Subaccount and 
                 will be paid to the Participant in the manner and at the 
                 time provided under Paragraph F below.

     F.    PAYMENT OF ACCOUNT BALANCE. Except as otherwise provided in 
           Paragraphs II(D) or VI(D), and subject to Article VIII, the 
           Participant's Account shall be payable to the Participant, as 
           follows:

           1.    The cash portion of the Participant's payment shall
                 be equal to the balance of the Cash Subaccount.

           2.    The Stock portion of the Participant's payment shall be a 
                 number of shares of Stock equal to the number of Stock units 
                 then credited to the Participant's Company Stock Subaccount, 
                 provided that the Fair Market Value of any fractional share 
                 of Stock shall be paid to the Participant in cash.

     G.    CLAIM PROCEDURE. For deferred Incentive Awards payable under the 
           Plan, the Compensation Committee shall establish a claims 
           procedure consistent with the requirements of ERISA.

     H.    LIMITATION ON ACTIONS. Unless ERISA specifically provides 
           otherwise, no civil action arising out of or relating to the 
           payment of Incentive Awards under this Plan may be commenced by a 
           Participant or beneficiary after three years from the occurrence 
           of the facts or circumstances that give rise to, or form the basis 
           for, such action.

VII. PAYMENT IN SHARES OF STOCK

     A.    SOURCE OF SHARES OF STOCK. The shares of Stock which shall be 
           available for payment to Participants pursuant to the Plan shall 
           be treasury shares (including, in the discretion of the Company, 
           shares purchased in the open market).


                                       11

<PAGE>


     B.    COMPLIANCE WITH APPLICABLE LAWS. Notwithstanding any other 
           provision of the Plan, the Company shall have no obligation to 
           deliver any shares of Stock under the Plan unless such delivery 
           would comply with all applicable laws and the applicable 
           requirements of any securities exchange or similar entity, and, in 
           such event, payment shall be made in the form of cash. Prior to 
           the delivery of any shares of Stock under the Plan, the Company 
           may require, among other things, a written statement that the 
           recipient is acquiring the shares for investment and not for the 
           purpose of, or with the intention of, distributing the shares. If 
           the redistribution of shares of Stock is restricted pursuant to 
           this Paragraph B, the certificates representing such shares may 
           bear a legend referring to such restrictions.

     C.    NO SHAREHOLDER RIGHTS. The election to defer receipt of an 
           Incentive Award and to receive payment in the form of shares of 
           Stock does not entitle a Participant to any rights (including, 
           without limitation, voting, transfer and rights to distributions) 
           of an owner of shares of Stock which relate to the stock units 
           credited to the Participant's Company Stock Subaccount.

VIII. WITHHOLDING TAXES
      
      Notwithstanding any of the foregoing provisions hereof, an Employer 
      shall withhold from any payment to be made hereunder such amounts as it 
      reasonably determines it may be required to withhold under any 
      applicable federal, state or other law, and transmit such withheld 
      amounts to the appropriate authorities. If cash payments under this Plan 
      are not available to meet the withholding requirement, the Participant 
      shall make available sufficient funds to meet the requirements of such 
      withholding, and the Employer shall be entitled and authorized to take 
      such steps as it may deem advisable, including but not limited to, 
      withholding out of any funds or property due or to become due to the 
      Participant, in order to have such funds made available to the Employer.

  IX. SPECIAL RULES FOR COVERED AWARDS

      Notwithstanding any other provision of this Plan to the contrary, the 
      following provisions shall control with respect to any Covered Award:

     A.    PREESTABLISHED INCENTIVE OPPORTUNITY AND PERFORMANCE OBJECTIVES. 
           The Selected Performance Factors, Selected Performance Objectives, 
           Incentive Opportunity, and the Threshold Limit under Paragraph 
           V(D) upon which a Covered Award is based or subject shall be 
           established by the Compensation Administration Committee in 
           writing not later than 90 days after the commencement of the Award 
           Year (or period of service as the case may be), provided that the 
           outcome is substantially uncertain at the time the Compensation 
           Administration Committee actually establishes such factors and the 
           objectives upon which they are based (or at such earlier time as 
           may be required or such later time as may be permissible under 
           Section 162(m) of the Code). The Compensation Administration 
           Committee shall not make Covered Awards based on Selected 
           Performance Objectives not specifically provided under this Plan 
           if it determines that use of such Performance Objectives would 
           cause a Covered Award to not be deductible under Code Section 
           162(m).

     B.    CERTIFICATION OF PERFORMANCE OBJECTIVES. The Compensation 
           Administration Committee shall determine and certify in writing 
           prior to the payment or deferral of a Covered Award whether and


                                       12

<PAGE>


           to what extent the Selected Performance Objectives referred to in 
           Paragraph A have been satisfied.

     C.    DISCRETIONARY REDUCTION OF COVERED AWARD. Notwithstanding the 
           foregoing, the Compensation Administration Committee may, in its 
           sole discretion, reduce a Covered Award otherwise determined 
           pursuant to the Plan.

     D.    LIMITED ADJUSTMENTS OF SELECTED PERFORMANCE OBJECTIVES. In the 
           event of (a) any merger, consolidation, reorganization, 
           recapitalization, liquidation, reclassification, stock dividend, 
           stock split, reverse stock split, combination of shares, rights 
           offering, extraordinary dividend or divestiture (including a 
           spin-off), exchange, or any other similar change in the corporate 
           structure or capitalization of the Company affecting the Stock, or 
           (b) any purchase, acquisition, sale or disposition of a 
           significant amount of assets or a significant business, in each 
           case with respect to the Company or any other entity whose 
           performance is relevant to the achievement of any Selected 
           Performance Objective included in a Covered Award, the 
           Compensation Administration Committee (or, if the Company is not 
           the surviving corporation in any such transaction, a committee of 
           the board of directors of the surviving corporation consisting 
           solely of two or more "outside directors" within the meaning of 
           Section 162(m)(4)(C)(i) of the Code) may, without the consent of 
           any affected Participant, amend or modify the terms of any 
           outstanding Award that includes any Selected Performance 
           Objectives based in whole or in part on the financial performance 
           of the Company (or any Subsidiary or division thereof) or such 
           other entity so as equitably to reflect such event, such that the 
           criteria for evaluating such financial performance of the Company 
           or such other entity (and the achievement of the corresponding 
           Selected Performance Objectives) will be substantially the same 
           (as determined by the Compensation Administration Committee or 
           such committee of the board of directors of the surviving 
           corporation) following such event as prior to such event; 
           provided, however, that any such change to any outstanding Covered 
           Award pursuant to this Paragraph D must be made in such a manner 
           that it is independently determinable by a hypothetical third 
           party having knowledge of the relevant facts, and the Compensation 
           Administration Committee shall take no action pursuant to this 
           Paragraph D which would constitute an impermissible exercise of 
           discretion within the meaning of Section 162(m) of the Code, or 
           would otherwise cause the Covered Award to not be deductible under 
           Section 162(m) of the Code.

     E.    CHANGES AFFECTING TIMING. No change shall be made to accelerate 
           the payment of a Covered Award unless the amount of the Covered 
           Award is discounted to reasonably reflect the time value of money. 
           Further, no change shall be made to defer the payment of a Covered 
           Award unless an increase in the amount paid with respect to such 
           award is based on a reasonable rate of interest or on the actual 
           returns on one or more predetermined actual investments (whether 
           or not assets associated with the amount originally owed are 
           actually invested therein).

     F.    MAXIMUM AMOUNT. The maximum amount of any Covered Award, including 
           the Match Incentive Award under Paragraph (V)(A)(2), payable to 
           any Covered Employee with respect to an Award Year determined as 
           of the time the Covered Award is paid or would have been paid 
           absent an election to defer receipt, shall not exceed $3,000,000.


                                       13

<PAGE>
                                                     EDGAR ONLY APPENDIX

                                 UAL CORPORATION

                            2000 INCENTIVE STOCK PLAN

     1.    PURPOSE. The purpose of the UAL Corporation 2000 Incentive Stock 
Plan (the "Plan") is to attract and retain outstanding individuals as 
officers and key employees of UAL Corporation (the "Company") and its 
subsidiaries, to further align participants' interests with those of the 
Company's shareholders through compensation that is based on shares of the 
Company's common stock, par value $.01 per share ("Common Stock") and to 
furnish incentives to such persons by providing such persons opportunities to 
acquire shares of Common Stock or monetary payments based on the value of 
such shares or both, on advantageous terms as herein provided.

     2.    ADMINISTRATION. All benefits granted under the Plan shall be 
granted by either the Compensation Administration Committee or the 
Compensation Committee of the Board of Directors of the Company (such 
committee, as applicable, herein called the "Committee"). The Plan shall be 
administered by the Compensation Administration Committee for (I) all grants 
with respect to any "officer" as such term is defined in Rule 16a-1(f) under 
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or (II) 
any other grant to covered employees for purposes of Section 162(m) of the 
Internal Revenue Code of 1986, as amended and the regulations promulgated 
thereunder (the "Code"), to the extent necessary or proper to preserve 
deductibility of the compensation expense associated with such grant under 
Section 162(m); and by the Compensation Committee for all grants to 
participants who are not covered employees under the Code or officers under 
Rule 16-1(f) of the Exchange Act. However, a benefit granted under the Plan 
shall not be ineffective solely because it is granted by the Compensation 
Administration Committee or the Compensation Committee not in accordance with 
the preceding sentence. The Committee is authorized to interpret the 
provisions of the Plan, to determine the terms and conditions of benefits to 
be granted under the Plan and to make all other determinations necessary or 
advisable for the administration of the Plan, but only to the extent not 
contrary to or inconsistent with the express provisions of the Plan. 
Determinations, decisions and actions of the Committee, in connection with 
the construction, interpretation, administration, or application of the Plan 
will be final, conclusive, and binding upon any participant and any person 
claiming under or through the participant. No member of the Committee will be 
liable for any determination, decision, or action made in good faith with 
respect to the Plan or any benefits granted under the Plan. To the extent 
that the Committee determines that the restrictions imposed by the Plan 
preclude the achievement of the material purposes of the benefits in 
jurisdictions outside the United States, the Committee will have the 
authority and discretion to modify those restrictions as the Committee 
determines to be necessary or appropriate to conform to applicable 
requirements or practices of jurisdictions outside of the United States. This 
Plan is not intended to modify or limit the powers, duties or 
responsibilities of either the Board of Directors or the Committee as set 
forth under the UAL Corporation Restated Certificate of Incorporation.

     3.    PARTICIPANTS. Participants in the Plan will consist of such 
officers or other key employees of the Company and its subsidiaries as the 
Committee in its sole discretion may designate from time to time to receive 
benefits hereunder. The Committee shall consider such factors as it deems 
pertinent in selecting participants and in determining the type and amount of 
their respective benefits, including without limitation (i) the financial 
condition of the Company; (ii) anticipated profits for the current or future 
years; (iii) contributions of participants to the profitability and 
development of the Company; and (iv) other compensation provided to 
participants.


                                       1

<PAGE>


     4.    TYPES OF BENEFITS. Benefits under the Plan may be granted in any 
one or a combination of (a) Incentive Stock Options, (b) Nonqualified Stock 
Options, and (c) Stock Appreciation Rights, all as described below.

     5.    SHARES RESERVED UNDER THE PLAN. There is hereby reserved for 
issuance under the Plan the sum of: (i) 8,000,000 shares of Common Stock, 
which may be newly issued or treasury shares, (ii) any shares of Common Stock 
available for future awards under any prior plan of the Company (the "Prior 
Plans") as of May 18, 2000; and (iii) any shares of Common Stock that are 
represented by benefits granted under the Plan or any Prior Plans which are 
forfeited, expired or canceled without delivery of shares of Common Stock or 
which are used to satisfy the applicable tax withholding obligations. All of 
such shares described in (i) above may, but need not be issued pursuant to 
the exercise of Incentive Stock Options. If the purchase price of any option 
granted under the Plan is satisfied by tendering shares of Common Stock to 
the Company (either by actual delivery or by attestation), only the number of 
shares of Common Stock issued net of the shares of Common Stock tendered 
shall be deemed delivered for purposes of determining the maximum number of 
shares of Common Stock available for delivery under the Plan. Subject to 
Section 15, in no event may the aggregate number of shares of Common Stock, 
with respect to which options or Stock Appreciation Rights are granted to any 
individual, exceed 250,000 during any one calendar year period; provided, 
however, that grants made to any new employee as a condition of employment 
may not exceed two times such annual limit during the first year of 
employment.

     6.    INCENTIVE STOCK OPTIONS. Incentive Stock Options will consist of 
options to purchase shares of Common Stock that are intended to satisfy the 
requirements applicable to "incentive stock options" described in Section 
422(b) of the Code or any successor provision. The purchase price for 
Incentive Stock Options will not be less than one hundred percent (100%) of 
the fair market value of such shares on the date of grant. Incentive Stock 
Options will be exercisable over not more than ten (10) years after the date 
of grant. The aggregate fair market value (determined on the date of grant) 
of the shares of Common Stock with respect to which Incentive Stock Options 
are exercisable for the first time in any calendar year (under all option 
plans of the Company and its parent and subsidiary corporations) shall not 
exceed $100,000.

     7.    NONQUALIFIED STOCK OPTIONS. Nonqualified Stock Options will 
consist of options to purchase shares of Common Stock that are not intended 
to satisfy the requirements applicable to "incentive stock options" described 
in Section 422(b) of the Code or any successor provision. The purchase price 
for Nonqualified Stock Options will not be less than one hundred percent 
(100%) of the fair market value of shares on the date of grant. Nonqualified 
Stock Options will be exercisable over not more than ten (10) years after the 
date of grant.

     8.    STOCK APPRECIATION RIGHTS. The Committee may, in its discretion,
grant a Stock Appreciation Right to the holder of any Nonqualified Stock Option
granted hereunder. In addition, a Stock Appreciation Right may be granted
independently of and without relation to any stock option. Stock Appreciation
Rights shall be subject to such terms and conditions consistent with the Plan as
the Committee shall impose from time to time, including the following:

     (a)   A Stock Appreciation Right may be granted with respect to a 
           Nonqualified Stock Option at the time of its grant or at any time 
           thereafter up to six (6) months prior to its expiration.

     (b)   Each Stock Appreciation Right will entitle the holder to elect to 
           receive in cash up to 100% of the appreciation in fair market 
           value of the shares subject thereto up to the date the right is 
           exercised. In the case of a Stock Appreciation Right


                                       2

<PAGE>


           issued in relation to a Nonqualified Stock Option, such 
           appreciation shall be measured from the option price. In the case 
           of a Stock Appreciation Right issued independently of any stock 
           option, the appreciation shall be measured from not less than the 
           fair market value of the Common Stock on the date the right is 
           granted.

     (c)   The Committee shall have the discretion to satisfy a participant's 
           right to receive the amount of cash determined under subparagraph 
           (b) hereof, in whole or in part, by the delivery of shares of 
           Common Stock valued as of the date of the participant's election.

     (d)   In the event of the exercise of a Stock Appreciation Right, the 
           number of shares reserved for issuance hereunder (and the shares 
           subject to the related option, if any) shall be reduced by the 
           number of shares with respect to which the right is exercised.

     9.    NONTRANSFERABILITY. Except as otherwise provided by the Committee, 
each benefit granted under this Plan shall not be transferable other than by 
will or the laws of descent and distribution, and shall be exercisable, 
during the holder's lifetime, only by the holder.

     10.   OTHER PROVISIONS. The award of any benefit under the Plan may also
be subject to other provisions (whether or not applicable to the benefit awarded
to any other participant) as the Committee determines appropriate, including,
without limitation, provisions requiring that grants of benefits under the Plan
be evidenced by an agreement (in writing or other form deemed appropriate by the
Committee); provisions concerning vesting; provisions concerning exercise
periods following termination of employment; provisions for the payment of the
purchase price of shares under stock options by delivery of other shares of the
Company having a then market value equal to the purchase price of such shares;
restrictions on resale or other disposition; such provisions as may be
appropriate to comply with federal or state securities laws and stock exchange
requirements; and understandings or conditions as to the participant's
employment in addition to those specifically provided for under the Plan.

     11.   TERM OF PLAN. Subject to the approval of the shareholders of the
Company at the Company's annual meeting of its shareholders, the Plan shall be
effective as of May 18, 2000 and shall remain in effect as long as any benefits
under it remain outstanding. No benefit shall be granted after May 18, 2010.

     12.   TAXES. The Company shall be entitled to withhold the amount of any 
tax attributable to any amount payable or shares deliverable under the Plan 
after giving the person entitled to receive such amount or shares notice as 
far in advance as practicable, and the Company may defer making payment or 
delivery if any such tax may be pending unless and until indemnified to its 
satisfaction.

     13.   FAIR MARKET VALUE. Unless otherwise determined by the Committee, 
the fair market value of the Company's shares of Common Stock as of any date 
shall be the mean between the lowest and highest reported sale prices of the 
Common Stock on that date on the New York Stock Exchange.

     14.   LIMITATION OF IMPLIED RIGHTS.

     (a)   Neither a participant nor any other person shall, by reason of 
           participation in the Plan, acquire any right in or title to any 
           assets, funds or property of the Company or any subsidiary 
           whatsoever, including, without limitation, any specific funds, 
           assets, or other property which the Company or any subsidiary, in 
           its sole discretion, may set aside in anticipation of a liability 
           under the Plan. A participant shall have only a contractual right 
           to the shares of Common Stock or amounts, if any, payable under 
           the Plan, unsecured by any assets of the Company or any 
           subsidiary, and nothing


                                       3

<PAGE>


           contained in the Plan shall constitute a guarantee that the assets 
           of the Company or any subsidiary shall be sufficient to pay any 
           amounts to any person.

     (b)   The Plan does not constitute a contract of employment, and 
           selection as a participant will not give any participating 
           employee the right to be so retained in the employ of the Company 
           or any subsidiary, nor any right or claim to any benefit under the 
           Plan, unless such right or claim has specifically accrued under 
           the terms of the Plan. Except as otherwise provided in the Plan, 
           no benefit under the Plan shall confer upon the holder thereof any 
           rights as a shareholder of the Company prior to the date on which 
           the individual fulfills all conditions for receipt of such rights.

     15.   ADJUSTMENT PROVISIONS. In the event of a corporate transaction 
involving the Company (including, without limitation, any Common Stock 
dividend, Common Stock split, extraordinary cash dividend, recapitalization, 
reorganization, merger, consolidation, split-up, spin-off, combination or 
exchange of shares), the Committee may adjust awards without enlargement or 
diminution to preserve the benefits or potential benefits of the awards 
intended to be made available under the Plan. Action by the Committee may 
include: (i) adjustment of the number and kind of shares which may be 
delivered under the Plan; (ii) adjustment of the number and kind of shares 
subject to outstanding Awards; (iii) adjustment of the exercise price of 
outstanding options and Stock Appreciation Rights; and (iv) any other 
adjustments that the Committee determines to be equitable or appropriate.

     16.   AMENDMENT AND TERMINATION OF PLAN. The Board may amend the Plan 
from time to time or terminate the Plan at any time, but no such action, 
without the participant's consent, shall adversely affect the rights of a 
participant under any option or Stock Appreciation Right granted.


                                       4

<PAGE>


                                 UAL CORPORATION


                      THIS PROXY IS SOLICITED ON BEHALF OF
                    THE BOARD OF DIRECTORS OF UAL CORPORATION

P    The undersigned, having received the Notice of Annual Meeting and Proxy
     Statement, hereby appoints James E. Goodwin, John F. McGillicuddy and
     James J. O'Connor, and each of them, as proxies with full power of
R    substitution, for and in the name of the undersigned, to vote all shares of
     Common Stock of UAL Corporation owned of record by the undersigned on the
O    matters listed in this proxy and, in their discretion, on such other
     matters as may properly come before the Annual Meeting of Stockholders to
     be held at Harris Trust and Savings Bank, 111 West Monroe Street, Chicago,
X    IL 60690 on May 18, 2000 at 10:00 a.m. and any adjournments or
     postponements thereof, unless otherwise specified herein.

Y    This card, or the telephonic or internet voting procedures, when properly
     completed, also constitutes voting instructions to the respective Trustees
     of the Employees' Stock Purchase Plan, 401(k) Plans and International
     Employee Stock Ownership Plans of UAL Corporation or United Air Lines, Inc.
     to vote, in person or by proxy, all shares of Common Stock of UAL
     Corporation allocated to the accounts of the undersigned held by the
     Trustees.

     You are encouraged to specify your choices by marking the appropriate oval
     SEE REVERSE SIDE, BUT YOU NEED NOT MARK ANY OVALS IF YOU WISH TO VOTE IN
     ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. THE PROXIES CANNOT
     VOTE YOUR SHARES UNLESS YOU VOTE BY PHONE, INTERNET OR SIGN AND RETURN THIS
     CARD.

                                                                SEE REVERSE SIDE



4967--UAL CORPORATION




--------------------------------------------------------------------------------
                   (TRIANGLE) FOLD AND DETACH HERE (TRIANGLE)

                     YOU CAN VOTE BY TELEPHONE OR INTERNET!
                    AVAILABLE 24 HOURS A DAY - 7 DAYS A WEEK
Instead of mailing your proxy, you may choose one of the two voting methods
outlined below to vote your proxy. Have this proxy card in hand when you vote.

               TO VOTE BY PHONE (WITHIN THE U.S. AND CANADA ONLY)
               ----------------
-        Call toll free 1-888-457-2964 from a touch tone telephone.  There is NO
         CHARGE for this call.
-        Enter the six-digit Control Number located below your name and address.
         OPTION 1: If you choose to vote as the Board of Directors recommends
                   on ALL proposals, press 1. When asked, please confirm your
                   vote by pressing 1 again.
         OPTION 2: If you choose to vote on EACH proposal SEPARATELY, press 0
                   and follow the recorded instructions. Your vote selections
                   will be repeated and you will have an opportunity to
                   confirm them.

                             TO VOTE ON THE INTERNET
                             -----------------------
-    Go to the following website: www.harrisbank.com/wproxy

-    Enter the information requested on your computer screen, including your
     six-digit Control Number located below your name and address, then follow
     the voting instructions on the screen.
              IF YOU VOTE BY TELEPHONE OR THE INTERNET, DO NOT MAIL
           BACK THIS PROXY CARD. PROXIES SUBMITTED BY TELEPHONE OR THE
                  INTERNET MUST BE RECEIVED BY 12:00 MIDNIGHT,
                     CENTRAL DAYLIGHT TIME, ON MAY 16, 2000.

                              THANK YOU FOR VOTING!


<PAGE>


                                 UAL CORPORATION
      PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY.

[                                                                           ]
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED. IF NO
DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS 1, 2, 3, 4 AND 5. IF
THIS CARD CONSTITUTES VOTING INSTRUCTIONS TO A PLAN TRUSTEE, THE TRUSTEE WILL
VOTE AS DESCRIBED IN THE PLAN DOCUMENTS AND ANY ACCOMPANYING MATERIALS. IN THEIR
DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON OTHER BUSINESS AS MAY
PROPERLY COME BEFORE THE ANNUAL MEETING.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2, 3, 4 AND 5.

<TABLE>
<CAPTION>
<S>  <C>                                         <C>  <C>        <C>      <C>                             <C>    <C>       <C>
                                                                                                          FOR    AGAINST   ABSTAIN
1.   ELECTION OF FIVE PUBLIC DIRECTOR NOMINEES:  FOR  WITHHOLD   FOR ALL  2.  APPROVAL OF AMENDMENTS TO   
     01-Rono J. Dutta, 02- James E. Goodwin,     ALL      ALL    EXCEPT       UAL CORPORATION RESTATED
     03-John F. McGillicuddy,                                                 CERTIFICATE  OF
     04-James J. O'Connor,                                                    INCORPORATION FOR
     05-Paul E. Tierney, Jr.                                                  PURPOSES OF DIVIDENDS.
                                                                                                          FOR    AGAINST   ABSTAIN
     FOR, EXCEPT VOTE WITHHELD FROM THE FOLLOWING NOMINEE(S):             3.  APPROVAL OF THE UNITED
                                                                              EMPLOYEES PERFORMANCE
                                                                              INCENTIVE PLAN.
     -------------------------------------------------------                                              FOR    AGAINST   ABSTAIN
                                                                          4.  APPROVAL OF THE UAL
                                                                              CORPORATION 2000 INCENTIVE
                                                                              STOCK PLAN.
                                                                                                          FOR    AGAINST   ABSTAIN
                                                                          5.  RATIFICATION OF
                                                                              THE APPOINTMENT
                                                                              OF ARTHUR ANDERSEN
                                                                              LLP AS INDEPENDENT
                                                                              ACCOUNTANTS.
                                                                                                             YES    NO
                                                                          IF PROXY MATERIALS
                                                                          WERE AVAILABLE
                                                                          TO YOU ELECTRONICALLY
                                                                          WOULD YOU USE THIS
                                                                          OPTION TO RECEIVE
                                                                          YOUR MATERIALS?

                                                                                             DATED:                          , 2000

                                                                          SIGNATURE(S) -------------------------------------------
                                                                          --------------------------------------------------------
                                                                          Please sign  exactly as your name appears on this proxy.
                                                                          For joint accounts,  each owner should  sign.  When
                                                                          signing as attorney, executor, administrator,  trustee or
                                                                          guardian,  please give your full title.  You revoke all
                                                                          proxies  heretofore  given  to  vote  at the Annual
                                                                          Meeting or any adjournments or postponements.
</TABLE>



         TO VOTE BY PHONE OR INTERNET SEE REVERSE SIDE FOR INSTRUCTIONS



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                   (TRIANGLE) FOLD AND DETACH HERE (TRIANGLE)

       ADMISSION TICKET             MEETING OF STOCKHOLDERS 
       ------------------------     OF UAL CORPORATION
                                    MAY 18, 2000
                                    10:00 A.M.
       [UNITED AIRLINES             THE AUDITORIUM, 8TH FLOOR
             LOGO]                  HARRIS TRUST AND SAVINGS BANK
                                    111 WEST MONROE STREET
                                    CHICAGO, IL
                                    -----------------------------


                           ----------------------------------------------------
4967--UAL CORPORATION       You must present this ticket to the UAL Corporation
                              representative at the entrance to the Auditorium
                                 to be admitted to the Annual Meeting.