UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC  20549

FORM 8-K

CURRENT REPORT

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

Date of Report: October 20, 2005

(Date of earliest event reported)

UAL CORPORATION

(Exact name of registrant as specified in its charter)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 8.01.  Other Events.

On October 21, 2005, the United States Bankruptcy Court for the Northern District of Illinois (the “Bankruptcy Court”) approved the adequacy of information in the First Amended Disclosure Statement for Reorganizing Debtors’ First Amended Joint Plan of Reorganization Pursuant to Chapter 11 of the United States Bankruptcy Code (the “First Amended Disclosure Statement”) filed with the Bankruptcy Court on October 20, 2005 by UAL Corporation (“UAL”) and twenty-seven of its U.S.-based direct and indirect subsidiaries, including United Air Lines, Inc. (collectively, the “Debtors”) and authorized UAL to send the First Amended Disclosure Statement, the First Amended Joint Plan of Reorganization Pursuant to Chapter 11 of the United States Bankruptcy Code (the “First Amended Plan”) and ballots to creditors entitled to vote on the First Amended Plan.  The deadline for voting on the First Amended Plan is December 19, 2005 and the hearing on confirmation of the First Amended Plan is scheduled for January 18, 2006.

Copies of the First Amended Disclosure Statement and the First Amended Plan as filed with the Bankruptcy Court are attached hereto as Exhibits 99.1 and 99.2, respectively.  The First Amended Disclosure Statement contains certain projections (the “Projections”) of financial performance for fiscal years 2005 through 2010.  The Debtors do not, as a matter of course, publish their business plans, budgets or strategies, or make external projections or forecasts of their anticipated financial position or results of operations.  UAL has filed the First Amended Disclosure Statement as an exhibit hereto because such First Amended Disclosure Statement has been filed with the Bankruptcy Court in connection with the Debtors’ reorganization proceedings.  UAL refers to the limitations and qualifications included in the First Amended Disclosure Statement, including without limitation those set forth under the captions “Statutory Requirements for Confirmation of the Plan — Best Interests of Creditors Test/Liquidation Analysis and Valuation Analysis,” “— Financial Feasibility” and “Certain Factors to be Considered Prior to Voting — Factors Affecting the Value of the Securities to be Issued Under the Plan” with respect to the Projections.  All information contained in the First Amended Disclosure Statement is subject to change, whether as a result of amendments to the First Amended Plan, actions of third parties or otherwise.

This announcement is not intended to be, nor should it be construed as, a solicitation for a vote on the First Amended Plan.  The First Amended Plan will become effective only if it receives the requisite stakeholder approval and is confirmed by the Bankruptcy Court.

ITEM 9.01.  Financial Statements and Exhibits

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SIGNATURES

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

Dated: October 25, 2005

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EXHIBIT INDEX

* Filed herewith electronically.

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Exhibit 99.1

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

FIRST AMENDED DISCLOSURE STATEMENT FOR REORGANIZING DEBTORS’ FIRST

AMENDED JOINT PLAN OF REORGANIZATION PURSUANT TO CHAPTER 11 OF THE

UNITED STATES BANKRUPTCY CODE

•                  Record Date: October 20, 2005

•                  Voting Deadline: December 19, 2005 at 4:30 p.m. prevailing Pacific time

•                  Date by which objections to Confirmation of the Plan must be filed and served: December 12, 2005 at 4:00 p.m. prevailing Central time

•                  Hearing on Confirmation of the Plan: January 18, 2006 at 10:30 a.m. prevailing Central time

(1)                                  The Debtors are the following entities: Air Wisconsin, Inc., Air Wis Services, Inc., BizJet Charter, Inc., BizJet Fractional, Inc., BizJet Services, Inc., Ameniti Travel Clubs, Inc., Cybergold, Inc., Domicile Management Services, Inc., Four Star Leasing, Inc., itarget.com, inc., Kion Leasing, Inc., Mileage Plus, Inc., Mileage Plus Holdings, Inc., Mileage Plus Marketing, Inc., MyPoints.com, Inc., MyPoints Offline Services, Inc., Premier Meeting and Travel Services, Inc., UAL Benefits Management, Inc., UAL Company Services, Inc., UAL Corporation, UAL Loyalty Services, LLC, United Air Lines, Inc., United Aviation Fuels Corporation, United BizJet Holdings, Inc., United Cogen, Inc., United GHS, Inc., United Vacations, Inc., and United Worldwide Corporation.

TABLE OF CONTENTS

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THIS DISCLOSURE STATEMENT CONTAINS A SUMMARY OF CERTAIN PROVISIONS OF THE DEBTORS’ PLAN OF REORGANIZATION AND CERTAIN OTHER DOCUMENTS AND FINANCIAL INFORMATION.  THE INFORMATION INCLUDED HEREIN IS FOR PURPOSES OF SOLICITING ACCEPTANCE OF THE PLAN AND SHOULD NOT BE RELIED UPON FOR ANY PURPOSE OTHER THAN TO DETERMINE HOW AND WHETHER TO VOTE ON THE PLAN.  THE DEBTORS BELIEVE THAT THESE SUMMARIES ARE FAIR AND ACCURATE.  THE SUMMARIES OF THE FINANCIAL INFORMATION AND THE DOCUMENTS WHICH ARE ATTACHED HERETO OR INCORPORATED BY REFERENCE HEREIN ARE QUALIFIED IN THEIR ENTIRETY BY REFERENCE TO SUCH INFORMATION AND DOCUMENTS.  IN THE EVENT OF ANY INCONSISTENCY OR DISCREPANCY BETWEEN A DESCRIPTION IN THIS DISCLOSURE STATEMENT AND THE TERMS AND PROVISIONS OF THE PLAN, OR THE OTHER DOCUMENTS AND FINANCIAL INFORMATION INCORPORATED HEREIN BY REFERENCE, THE PLAN OR THE OTHER DOCUMENTS AND FINANCIAL INFORMATION, AS THE CASE MAY BE, SHALL GOVERN FOR ALL PURPOSES.

THE STATEMENTS AND FINANCIAL INFORMATION CONTAINED HEREIN HAVE BEEN MADE AS OF THE DATE HEREOF UNLESS OTHERWISE SPECIFIED.  HOLDERS OF CLAIMS AND INTERESTS REVIEWING THIS DISCLOSURE STATEMENT SHOULD NOT INFER AT THE TIME OF SUCH REVIEW THAT THERE HAVE BEEN NO CHANGES IN THE FACTS SET FORTH HEREIN SINCE THE DATE HEREOF.  EACH HOLDER OF A CLAIM OR INTEREST ENTITLED TO VOTE ON THE PLAN SHOULD CAREFULLY REVIEW THE PLAN, THIS DISCLOSURE STATEMENT, AND THE PLAN SUPPLEMENT IN THEIR ENTIRETY BEFORE CASTING A BALLOT.  THIS DISCLOSURE STATEMENT DOES NOT CONSTITUTE LEGAL, BUSINESS, FINANCIAL, OR TAX ADVICE.  ANY PERSONS DESIRING ANY SUCH ADVICE OR OTHER ADVICE SHOULD CONSULT WITH THEIR OWN ADVISORS.

NO PARTY IS AUTHORIZED TO GIVE ANY INFORMATION WITH RESPECT TO THE PLAN OTHER THAN THAT WHICH IS CONTAINED IN THIS DISCLOSURE STATEMENT.  NO REPRESENTATIONS CONCERNING THE DEBTORS OR THE VALUE OF THEIR PROPERTY HAVE BEEN AUTHORIZED BY THE DEBTORS OTHER THAN AS SET FORTH IN THIS DISCLOSURE STATEMENT. ANY INFORMATION, REPRESENTATIONS OR INDUCEMENTS MADE TO OBTAIN AN ACCEPTANCE OF THE PLAN WHICH ARE OTHER THAN AS, OR INCONSISTENT WITH, THE INFORMATION CONTAINED HEREIN AND IN THE PLAN SHOULD NOT BE RELIED UPON BY ANY HOLDER OF A CLAIM OR INTEREST.

WITH RESPECT TO CONTESTED MATTERS, ADVERSARY PROCEEDINGS, AND OTHER PENDING, THREATENED OR POTENTIAL LITIGATION OR ACTIONS, THIS DISCLOSURE STATEMENT DOES NOT CONSTITUTE AND MAY NOT BE CONSTRUED AS AN ADMISSION OF FACT, LIABILITY, STIPULATION OR WAIVER, BUT RATHER AS A STATEMENT MADE IN SETTLEMENT NEGOTIATIONS.

THE SECURITIES DESCRIBED HEREIN WILL BE ISSUED WITHOUT REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, OR ANY SIMILAR FEDERAL, STATE OR LOCAL LAW, GENERALLY IN RELIANCE ON THE EXEMPTIONS SET FORTH IN SECTION 1145 OF THE BANKRUPTCY CODE.

THIS DISCLOSURE STATEMENT HAS NOT BEEN APPROVED OR DISAPPROVED BY THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION, NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THE STATEMENTS CONTAINED HEREIN.

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ALTHOUGH THE DEBTORS HAVE USED THEIR BEST EFFORTS TO ENSURE THE ACCURACY OF THE FINANCIAL INFORMATION PROVIDED IN THIS DISCLOSURE STATEMENT, THE FINANCIAL INFORMATION CONTAINED IN, OR INCORPORATED BY REFERENCE INTO, THIS DISCLOSURE STATEMENT HAS NOT BEEN AUDITED, EXCEPT FOR THE FINANCIAL STATEMENTS INCLUDED IN THE PLAN SUPPLEMENT WHERE INDICATED.

THE PROJECTIONS PROVIDED IN THIS DISCLOSURE STATEMENT HAVE BEEN PREPARED BY THE MANAGEMENT OF THE DEBTORS AND THEIR FINANCIAL ADVISORS. THESE PROJECTIONS, WHILE PRESENTED WITH NUMERICAL SPECIFICITY, ARE NECESSARILY BASED ON A VARIETY OF ESTIMATES AND ASSUMPTIONS WHICH, THOUGH CONSIDERED REASONABLE BY MANAGEMENT, MAY NOT BE REALIZED AND ARE INHERENTLY SUBJECT TO SIGNIFICANT BUSINESS, ECONOMIC, COMPETITIVE, INDUSTRY, REGULATORY, MARKET AND FINANCIAL UNCERTAINTIES, AND CONTINGENCIES, MANY OF WHICH ARE BEYOND THE DEBTORS’ CONTROL. THE DEBTORS CAUTION THAT NO REPRESENTATIONS CAN BE MADE AS TO THE ACCURACY OF THESE PROJECTIONS OR TO THE ABILITY TO ACHIEVE THE PROJECTED RESULTS.  SOME ASSUMPTIONS INEVITABLY WILL NOT MATERIALIZE.  FURTHER, EVENTS AND CIRCUMSTANCES OCCURRING SUBSEQUENT TO THE DATE ON WHICH THESE PROJECTIONS WERE PREPARED MAY BE DIFFERENT FROM THOSE ASSUMED OR, ALTERNATIVELY, MAY HAVE BEEN UNANTICIPATED, AND THUS THE OCCURRENCE OF THESE EVENTS MAY AFFECT FINANCIAL RESULTS IN A MATERIALLY ADVERSE OR MATERIALLY BENEFICIAL MANNER. THE PROJECTIONS, THEREFORE, MAY NOT BE RELIED UPON AS A GUARANTY OR OTHER ASSURANCE OF THE ACTUAL RESULTS THAT WILL OCCUR.

SEE ARTICLE VI OF THIS DISCLOSURE STATEMENT, ENTITLED “CERTAIN FACTORS TO BE CONSIDERED PRIOR TO VOTING,” FOR A DISCUSSION OF CERTAIN CONSIDERATIONS IN CONNECTION WITH A DECISION BY A HOLDER OF AN IMPAIRED CLAIM OR IMPAIRED INTEREST TO ACCEPT THE PLAN.

THE BANKRUPTCY COURT HAS SCHEDULED THE CONFIRMATION HEARING TO COMMENCE ON JANUARY 18, 2006 AT 10:30 A.M. BEFORE THE HONORABLE EUGENE R. WEDOFF, UNITED STATES BANKRUPTCY JUDGE, IN THE UNITED STATES BANKRUPTCY COURT FOR THE NORTHERN DISTRICT OF ILLINOIS, EASTERN DIVISION, LOCATED AT THE EVERETT MCKINLEY DIRKSEN BUILDING, 219 S. DEARBORN, CHICAGO, ILLINOIS 60604.  THE CONFIRMATION HEARING MAY BE ADJOURNED FROM TIME TO TIME BY THE BANKRUPTCY COURT WITHOUT FURTHER NOTICE EXCEPT FOR AN ANNOUNCEMENT OF THE ADJOURNED DATE MADE AT THE CONFIRMATION HEARING OR ANY ADJOURNMENT THEREOF.

OBJECTIONS TO CONFIRMATION OF THE PLAN MUST BE FILED AND SERVED ON OR BEFORE DECEMBER 12, 2005, IN ACCORDANCE WITH THE SOLICITATION NOTICE FILED AND SERVED ON CREDITORS, EQUITY INTEREST HOLDERS, AND OTHER PARTIES IN INTEREST. UNLESS OBJECTIONS TO CONFIRMATION ARE TIMELY SERVED AND FILED IN COMPLIANCE WITH THE SOLICITATION NOTICE, THEY MAY NOT BE CONSIDERED BY THE BANKRUPTCY COURT.

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ARTICLE I.
SUMMARY

The following summary is qualified in its entirety by the more detailed information contained in the Plan and elsewhere in this Disclosure Statement.  Capitalized terms used but not otherwise defined herein have the meaning given to such terms in the Plan.

UAL Corporation (“UAL”) is a holding company whose principal, wholly-owned subsidiary is United Air Lines, Inc. (“United”).  United’s operations, which consist primarily of the transportation of persons, property, and mail throughout the U.S. and abroad, accounted for most of UAL’s revenues and expenses in 2004.  United is one of the largest scheduled passenger airlines in the world with over 1,500 daily departures to more than 120 destinations in 26 countries and two U.S. territories.  Through United’s global route network, United serves virtually every major market around the world, either directly or through the Star Alliance, which is the world’s largest airline network.  In addition to the Star Alliance, United provides regional service into United’s domestic hubs through marketing relationships with “United Express^®” carriers.  In 2004, United added a new low-fare brand, called Ted, designed to serve select leisure markets and to more effectively compete with low-fare carriers.

As discussed more fully below, on December 9, 2002 (the “Petition Date”), UAL, United, and 26 other direct and indirect wholly-owned subsidiaries filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Northern District of Illinois, Eastern Division (the “Bankruptcy Court”). The foregoing entities are sometimes referred to collectively as the “Debtors” and each individually as a “Debtor” and, on or after the Effective Date, collectively as the “Reorganized Debtors” and each individually as a “Reorganized Debtor.”

This Disclosure Statement is being furnished by the Debtors as proponents of the Debtors’ Joint Plan of Reorganization pursuant to Chapter 11 of the United States Bankruptcy Code (as may be amended from time to time, the “Plan,” a copy of which is attached hereto as Appendix A), pursuant to Section 1125 of the Bankruptcy Code and in connection with the solicitation of votes for the acceptance or rejection of the Plan, as it may be amended or supplemented from time to time in accordance with the Bankruptcy Code and the Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”).

This Disclosure Statement describes certain aspects of the Plan, including the treatment of Holders of Claims against, and Interests in, the Debtors, and also describes certain aspects of the Debtors’ operations, projections and other related matters.

A.                                   The Purpose of the Plan

The Debtors have concluded, after careful review of their current business operations, their prospects as ongoing business enterprises, and the estimated recoveries of Creditors in various liquidation scenarios, that the recovery of Holders of Allowed Claims will be maximized by the Debtors’ continued operation as a going concern.  The Debtors believe that their businesses and assets have significant value that would not be realized in a liquidation scenario, either in whole or in substantial part.  According to the liquidation analysis described herein (the “Liquidation Analysis”) and the other analyses prepared by the Debtors and their advisors, the value of the Debtors’ Estates is considerably greater as a going concern than if they were liquidated.

The New UAL Common Stock will be distributed to the Debtors’ employee and creditor constituents through the distribution provisions in the Plan and settlements with certain of these

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constituents implemented through the Plan, as described in greater detail below, after accounting for stock set aside for the Management Equity Incentive Plan and Director Equity Incentive Plan.

The Debtors believe that the Plan provides the best recoveries possible for the Holders of Allowed Claims and strongly recommend that, if you are entitled to vote, you vote to accept the Plan.  The Debtors believe that any alternative to Confirmation of the Plan, such as liquidation or attempts by another party in interest to file a plan of reorganization, could result in significant delays, litigation, and additional costs.  For more information, see ARTICLE V hereof and the Liquidation Analysis set forth as Appendix B hereto and in the Plan Supplement to the Debtors’ Joint Plan of Reorganization Pursuant to Chapter 11 of the Bankruptcy Code (the “Plan Supplement”), as Exhibit 27.(2)

B.                                     Debtors’ Principal Assets and Indebtedness

UAL’s principal asset is the stock of United and the other Debtor-subsidiaries.  UAL’s principal indebtedness is: (i) its guarantee of the indebtedness under the DIP Facility; (ii) guarantees of certain aircraft-related indebtedness of Air Wisconsin; (iii) guarantees of two municipal bond issuances (the Regional Airports Improvement Corporation (“RAIC”) Adjustable-Rate Facilities Lease Refunding Revenue Bonds, Issue of 1984, United Air Lines, Inc. (Los Angeles International Airport) and RAIC Facilities Lease Refunding Revenue Bonds, Issue of 1992, United Air Lines, Inc. (Los Angeles International Airport)); and (iv) its indebtedness with respect to the TOPrS.

For the 12 months ended December 2004, United accounted for approximately 95.1% of the Debtors’ operating revenues on a consolidated basis.  United’s principal assets are its airline business and the stock of its subsidiaries.  United’s principal indebtedness is: (i) its indebtedness under the DIP Facility; (ii) its aircraft-related indebtedness; (iii) its indebtedness under the Unsecured Debentures; and (iv) its indebtedness in connection with issuances of municipal bonds.

C.                                     Treatment of Claims and Interests

The Plan divides all Claims and Interests against each Debtor into various Classes.  As the Plan contemplates substantive consolidation of the United Debtors (i.e., all Debtors other than UAL), the United Debtor Classes will be consolidated as set forth in ARTICLE I.E below.  Except as such Classes may be consolidated under the Plan, each Class of Claims and Interests will be treated separately in the Plan.  Certain Classes may receive distributions under the Plan, and substantive consolidation will not affect the treatment and distributions received by the various Classes.  The following tables summarize the Classes of Claims and Interests under the Plan, the treatment of such Classes and the projected recovery under the Plan, if any, for such Classes.  The projected recoveries are based upon certain assumptions contained in the valuation analysis set forth as Appendix C hereto and in the Plan Supplement, as Exhibit 29 (the “Valuation Analysis”), including an assumed reorganization value of the New UAL Common Stock equal to approximately $15 per share.  As more fully described herein, the assumed reorganization values of the New UAL Common Stock were derived from commonly accepted valuation techniques and are not estimates of trading values for such securities.  The range listed below of a 4-8 percent recovery for the Holders of most Classes of Unsecured Claims is based on various assumptions, including, but not limited to (i) final Unsecured Claims ranging between $20-35 billion and (ii) an equity value of the Debtors of $1.9 billion.

(2)                                  Several documents that are included in the Plan Supplement are described herein, but these summaries are not a substitute for a complete understanding of the underlying documents.  You are urged to review the full text of all such documents in the Plan Supplement.

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Claims against all of the Debtors:

UAL Corporation:  Summary of Classification and Treatment of Claims and Interests

(3)                                  Failure by the Bankruptcy Court to order substantive consolidation of the United Debtors does not affect the projected recoveries under the Plan.

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United Air Lines, Inc.: Summary of Classification and Treatment of Claims and Interests

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Air Wisconsin, Inc.: Summary of Classification and Treatment of Claims and Interests

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Air Wis (Classes 4A, 4B, 4C, 4D, 4E, and 4H), Ameniti Travel Clubs, Inc. (Classes 5A, 5B, 5C, 5D, 5E, and 5H), BizJet Charter (Classes 6A, 6B, 6C, 6D, 6E, and 6H), BizJet Fractional (Classes 7A, 7B, 7C, 7D, 7E, and 7H), BizJet Services (Classes 8A, 8B, 8C, 8D, 8E, and 8H), Cybergold (Classes 9A, 9B, 9C, 9D, 9E, and 9H), DMS (Classes 10A, 10B, 10C, 10D, 10E, and 10H), Four Star (Classes 11A, 11B, 11C, 11D, 11E, and 11H), itarget (Classes 12A, 12B, 12C, 12D, 12E, and 12H), Kion Leasing (Classes 13A, 13B, 13C, 13D, 13E, and 13H), Mileage Plus Holdings (Classes 14A, 14B, 14C, 14D, 14E, and 14H), Mileage Plus, Inc. (Classes 15A, 15B, 15C, 15D, 15E, and 15H), Mileage Plus Marketing (Classes 16A, 16B, 16C, 16D, 16E, and 16H), MyPoints.com (Classes 17A, 17B, 17C, 17D, 17E, and 17H), MyPoints Offline (Classes 18A, 18B, 18C, 18D, 18E, and 18H), Premier Marketing (Classes 19A, 19B, 19C, 19D, 19E, and 19H), UAFC (Classes 20A, 20B, 20C, 20D, 20E, and 20H), UAL BMI (Classes 21A, 21B, 21C, 21D, 21E, and 21H), UAL Company Services (Classes 22A, 22B, 22C, 22D, 22E, and 22H), ULS (Classes 23A, 23B, 23C, 23D, 23E, and 23H), United BizJet (Classes 24A, 24B, 24C, 24D, 24E, and 24H), United Cogen (Classes 25A, 25B, 25C, 25D, 25E, and 25H), United GHS (Classes 26A, 26B, 26C, 26D, 26E, and 26H), United Vacations (Classes 27A, 27B, 27C, 27D, 27E, and 27H), and United Worldwide (Classes 28A, 28B, 28C, 28D, 28E, and 28H)

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D.                                    Intercompany Claims and Contracts

Except as otherwise set forth in the Plan, there shall be no distributions on account of Intercompany Claims.  Pursuant to Sections 1126(f) and 1126(g) of the Bankruptcy Code, Holders of Intercompany Claims are not entitled to vote to accept or reject the Plan.  Notwithstanding the foregoing, the Reorganized Debtors reserve the right to Reinstate, extinguish, or cancel, as applicable, all Intercompany Claims, including, without limitation, all relevant agreements, instruments, and documents underlying such Intercompany Claims as of the Effective Date or such other date as is appropriate.

Except as set forth in the Plan, however, each Intercompany Contract to which any Debtor is a party shall be deemed automatically assumed in accordance with the provisions and requirements of Sections 365 and 1123 of the Bankruptcy Code as of the Effective Date to the extent such contracts and leases are executory.

E.                                      Substantive Consolidation

The Plan contemplates substantive consolidation of the Estates of the United Debtors into the United Estate. The foregoing non-UAL Classes shall be consolidated as follows.

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F.                                      Claims Estimates

As of September 1, 2005, the Debtors’ Claims Agent had received approximately 44,716 Proofs of Claim.  As of September 1, 2005, the total amounts of remaining Claims filed against one or more of the Debtors were as follows:  319 Secured Claims in the total amount of $13,545,350,698.99; 95 Administrative Claims in the total amount of $319,766,767.14; 256 Claims asserting Priority Claims in the total amount of $10,470,875,378.18; and 6,208 Unsecured Claims in the total amount of $20,422,648,792.51.  The Debtors believe that many of the filed Proofs of Claim are invalid, untimely, duplicative, overstated, and therefore are in the process of objecting to such Claims.  Through such objections, the Bankruptcy Court has to date disallowed a total of approximately $3.618 trillion in Claims (including reduced retroactive pay claims of $3.375 trillion (the “Retroactive Pay Claims”)).(4)

The Debtors estimate that at the conclusion of the Claims objection, reconciliation and resolution process, the aggregate amount of estimated Allowed Secured Claims against the Debtors will aggregate approximately $8 billion, estimated Allowed Priority Tax Claims against the Debtors will aggregate approximately $60 million, and estimated Allowed Unsecured Claims against the Debtors will aggregate approximately $28 billion.(5)  These estimates are based upon a number of assumptions made by the Debtors.  There is no guarantee that the ultimate amount of each of such categories of Claims will conform to the estimates stated herein, and most of the Claims underlying such estimates are subject to challenge, including, but not limited to, an objection by the Creditors’ Committee to the Unsecured PBGC Claim and a potential objection to the SAM Distribution and the SAM Notes, as defined in Article III.C.4.b.ii.b below.(6)  The Creditors’ Committee’s position is that it can object to the SAM Notes and the Sam Distribution outside of the context of the Plan Confirmation process.  The Debtors disagree with the Creditors’ Committee’s position.

The Debtors estimate that at the conclusion of the Claims objection, reconciliation and resolution process, the aggregate amount of estimated Allowed Administrative Claims against the Debtors will aggregate approximately $81 million.  The estimate of Allowed Administrative Claims includes, inter alia, Claims associated with the cure of assumed executory contracts and unexpired leases,  Claims related to aircraft subject to Section 1110(a) elections and/or Section 1110(b) stipulations (but not any Claims asserted by parties seeking allowance of administrative claims under Sections 503(b) and 365(d)(10) of the Bankruptcy Code for aircraft), Claims arising from a right of reclamation, and certain Administrative Claim requests reflected on the Claims Register and docket for which the Debtors reasonably expect there to be a recovery.  The estimate of Allowed Administrative Claims does not include ordinary course obligations incurred post-petition such as trade payables, the Debtors’ key employee retention plans, or Professional fees.

(4)                                  Certain of the Debtors’ IAM and AMFA-represented employees were entitled to an effective wage increase, retroactive from July 12, 2000, to mid-March 2002 (herein, the “Retroactive Pay”).  Retroactive Pay, which was secured by the Debtors’ corporate headquarters and certain aircraft simulators, was payable in eight quarterly installments at 6% interest, compounded annually.  United made the first installment payment on December 13, 2002, and the final payment on October 15, 2004.

(5)                                  The estimate of Allowed Unsecured Claims includes, among other things, proposed distributions to the Debtors’ employee groups as discussed in Article III.C.4 herein.

(6)                                  The total estimated amount of the Allowed Unsecured Claims includes estimated Allowed Unsecured Claims for damages based on the rejection of executory contracts and unexpired leases under Section 365 of the Bankruptcy Code.  Therefore, the amount of such estimated Allowed Unsecured Claims likely will increase if the Debtors decide to reject additional executory contracts and unexpired leases, including leases of various airport facilities that the Debtors currently intend to assume.

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G.                                     Reorganized Debtors and the Post-Confirmation Estate

Except as otherwise provided in the Plan, each Debtor shall continue to exist as a Reorganized Debtor after the Effective Date as a separate entity with all the powers of a corporation or a limited liability company under the laws of the respective state of incorporation or formation and without prejudice to any right to alter or terminate such existence (whether by merger, dissolution, or otherwise) under such applicable state law.  Except as otherwise provided in the Plan, on or after the Effective Date, all property in each Estate and any property acquired by each of the Debtors under the Plan shall vest in each respective Reorganized Debtor, free and clear of all Liens, Claims, charges, or other encumbrances.  On and after the Effective Date, each Reorganized Debtor may operate its business and may use, acquire or dispose of property, and compromise or settle any Claims or Interests without supervision or approval of the Bankruptcy Court and free of any restrictions of the Bankruptcy Code or Bankruptcy Rules, other than those restrictions expressly imposed by the Plan and the Confirmation Order.

H.                                    Restructuring Transactions Contemplated By the Plan

The Plan provides that on or prior to the Effective Date, or as soon as reasonably practicable thereafter, the Debtors or Reorganized Debtors, as applicable, may undertake all actions as may be necessary or appropriate to affect any transaction described in, approved by, contemplated by, or necessary to effectuate the Plan, including without limitation, the Roll-Up Transactions.  The Roll-Up Transactions include: a dissolution or winding up of the corporate existence of a Reorganized Debtor under applicable state law; or the consolidation, merger, contribution of assets, or other transaction in which a Reorganized Debtor merges with or transfers substantially all of its assets and liabilities to another Reorganized Debtor or one or more of their Affiliates, on or after the Effective Date as defined below.  The Debtors do not anticipate that such transactions would have any impact on the recoveries of Creditors under the Plan.

I.                                         Permanent Injunction

From and after the Effective Date, all Persons and Entities are permanently enjoined from commencing or continuing in any manner, any suit, action, or other proceeding, on account of or respecting any Claim, obligation, debt, right, Cause of Action, remedy, or liability discharged, exculpated, released, or to be released pursuant to Article X of the Plan.

J.                                        Consummation of the Plan

Following Confirmation of the Plan, the Plan will be consummated on the date (the “Effective Date”) selected by the Debtors after consulting with the Plan Oversight Committee, which is a Business Day after the Confirmation Date on which (a) no stay of the Confirmation Order is in effect, and (b) all conditions to Consummation of the Plan have been satisfied or waived.  Distributions to be made under the Plan will be made on or as soon as reasonably practicable after the Effective Date.

K.                                    Liquidation and Valuation Analyses

The Debtors believe that the Plan will produce a greater recovery for Holders of Allowed Claims than would be achieved in a Chapter 7 liquidation because, among other things, of the administrative and postpetition claims generated by a conversion to a Chapter 7 case, plus the administrative costs of liquidation and associated delays in connection with a Chapter 7 liquidation that likely would diminish the assets available for distribution to such Holders.  Also, the value of the equity in the Reorganized Debtors upon the Debtors’ exit from bankruptcy as a reorganized going concern, as reflected in the Plan, is projected to be greater than the recovery realized from a liquidation of the Debtors’ assets.  In fact, the

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projected hypothetical liquidation of the Debtors results in a recovery for Holders of Unsecured Claims far less than that proposed under the Plan, if any at all.  Rothschild, Inc., the Debtors’ financial advisors (“Rothschild”), and Huron Consulting Group (“Huron”), the Debtors’ restructuring consultants, have prepared, respectively, a Valuation Analysis and a Liquidation Analysis on behalf of the Debtors to assist Holders of Claims in determining whether to accept or reject the Plan.  These Liquidation and Valuation Analyses together compare the proceeds to be realized if the Debtors were to be liquidated in a case under Chapter 7 of the Bankruptcy Code with their recovery under the Plan as currently proposed.  The analyses are based upon the value of the Debtors’ assets and liabilities as of a date certain, and incorporate estimates and assumptions developed by the Debtors, including a hypothetical conversion to a Chapter 7 liquidation as of a date certain, that are subject to potentially material changes with respect to economic and business conditions and legal rulings.  Therefore, the actual liquidation value of the Debtors could vary materially from the estimates provided therein.

L.                                      Certain Factors to Be Considered Prior to Voting

There are a variety of factors that all Holders of Claims entitled to vote on the Plan should consider prior to accepting or rejecting the Plan.  Some of these factors, which are described in more detail in ARTICLE VI hereof, are as follows and may impact recoveries under the Plan:

1.     The financial information contained in this Disclosure Statement has not been audited (except for the financial statements included in the Plan Supplement that indicate as such) and is based on an analysis of data available at the time of the preparation of the Plan and Disclosure Statement.

2.     ARTICLE VII hereof describes certain significant federal tax consequences of the transactions contemplated by the Plan that affect the Debtors and others.  Such consequences may include: (i) the realization of cancellation of indebtedness income; (ii) the reduction of net operating loss carryforwards and unrealized built-in losses; and (iii) the recognition of taxable income by the Holders of Claims and Interests. The Valuation Analysis set forth as Appendix C hereto and in the Plan Supplement as Exhibit 29 concludes that a material portion of the Debtors’ valuation is derived from the Debtors’ net operating losses.  ARTICLE VII discusses the limitations that may apply to the Debtors’ usage of those net operating losses.  ARTICLE VII also discusses certain restrictions under the Plan and the UAL restated certificate of incorporation on transfer of New UAL Common Stock to preserve the Debtors’ net operating losses.  Holders of Claims and Interests are urged to consult with their own tax advisors regarding the federal, state, local, and foreign tax consequences of the Plan.

3.     Although the Debtors believe that the Plan complies with all applicable provisions of the Bankruptcy Code, the Debtors cannot assure such compliance or that the Bankruptcy Court will confirm the Plan.

4.     The Debtors may be required to request Confirmation of the Plan without the acceptance of all Impaired Classes entitled to vote, in accordance with Section 1129(b) of the Bankruptcy Code.

5.     Any delays of either Confirmation or the Effective Date of the Plan could result in, among other things, increased Claims of Professionals.

6.     The Plan contemplates substantive consolidation of all Debtors other than UAL into United.  The Debtors can provide no assurance, however, that the Bankruptcy Court will order substantive consolidation of any or all of the United Debtors.  The Debtors reserve the right, however, to request Confirmation and Consummation of the Plan, even if the Court rejects substantive consolidation of the United Debtors, or approves substantive consolidation of less than all of the United Debtors. Failure to substantively consolidate the United Debtors into one entity will not affect the distribution of property

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currently proposed in the Plan.  In the event that one or more of the United Debtors are not substantively consolidated, such failure will not affect the validity of the vote taken by Impaired Classes to accept or reject the Plan or require any sort of re-vote or re-solicitation of the Impaired Classes.

The occurrence or non-occurrence of any or all such contingencies, which could affect distributions available to Holders of Allowed Claims under the Plan, will not necessarily affect the validity of the vote taken by the Impaired Classes to accept or reject the Plan or necessarily require a re-vote by the Impaired Classes.

M.                                 Voting and Confirmation

Each Holder of a Claim in the following Classes is entitled to vote either to accept or reject the Plan.

The Classes entitled to vote shall have accepted the Plan if (i) the Holders of at least two-thirds in dollar amount of the Allowed Claims actually voting in each such Class, as applicable, have voted to accept the Plan and (ii) the Holders of more than one-half in number of the Allowed Claims actually voting in each such Class, as applicable, have voted to accept the Plan.  Assuming the requisite acceptances are obtained, the Debtors intend to seek Confirmation of the Plan at the Confirmation Hearing scheduled to commence on January 18, 2006 at 10:30 a.m. prevailing central time, before the Bankruptcy Court. Section 1129(a)(10) of the Bankruptcy Code shall be satisfied for purposes of Confirmation by acceptance of the Plan by at least one Class of Claims that is Impaired under the Plan.  Notwithstanding the foregoing, the Debtors will seek Confirmation of the Plan under Section 1129(b) of the Bankruptcy Code with respect to any Impaired Classes presumed to reject the Plan, and reserve the right to do so with respect to any other rejecting Class or to modify the Plan.

The Bankruptcy Court has established October 20, 2005 (the “Record Date”) as the date for determining which Holders of Claims and Interests are eligible to vote on the Plan.  Ballots, along with a CD-Rom containing the Disclosure Statement, the Plan, and the Solicitation Procedures Order, will be mailed to all registered Holders of Claims or Interests as of the Record Date that are entitled to vote to accept or reject the Plan.  An appropriate return envelope will be included with your Ballot, if necessary.  Beneficial Holders of Claims or Interests who receive a return envelope addressed to their bank, brokerage firm, or other nominee (or its agent) (each, a “Nominee”) should allow sufficient time for their

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votes to be received by the Nominee and processed on a Master Ballot before the Voting Deadline, as defined below.

The Debtors have engaged Poorman-Douglas Corporation as their Solicitation Agent to assist in the voting process.  The Solicitation Agent will answer questions regarding the procedures and requirements for voting to accept or reject the Plan and for objecting to the Plan, provide additional copies of all materials, and oversee the voting tabulation.  The Solicitation Agent will also process and tabulate ballots for each Class entitled to vote to accept or reject the Plan.  The Solicitation Agent is located at the following addresses:

If you have any questions on voting procedures, please call the Solicitation Agent at the following toll free number: (877) 752-5527.

TO BE COUNTED, YOUR BALLOT (OR MASTER BALLOT OF YOUR NOMINEE HOLDER, IF APPLICABLE) INDICATING ACCEPTANCE OR REJECTION OF THE PLAN MUST BE RECEIVED BY THE SOLICITATION AGENT NO LATER THAN 4:30 P.M., PREVAILING PACIFIC TIME, ON DECEMBER 19, 2005 (THE “VOTING DEADLINE”). ANY BALLOT RECEIVED AFTER THE VOTING DEADLINE SHALL NOT BE COUNTED.

THE DEBTORS BELIEVE THAT THE PLAN IS IN THE BEST INTEREST OF ALL OF THEIR CREDITORS.  THE DEBTORS RECOMMEND THAT ALL HOLDERS OF CLAIMS AGAINST, AND INTERESTS IN, THE DEBTORS WHOSE VOTES ARE BEING SOLICITED SUBMIT BALLOTS TO ACCEPT THE PLAN.

N.                                    Ongoing Negotiations with Committee

In their ongoing efforts to reach a consensual Plan, the Debtors and the Creditors’ Committee continue to discuss certain terms of such Plan and related documents.  The areas under discussion include:

•                  The Debtors’ proposed charter, bylaws and other corporate documents, regarding shareholder protections, board governance, additional equity issuances and other matters.

•                  The composition of the Reorganized UAL Board and its committees, including the terms and identity of directors, and other related matters.

•                  The trigger, grant, vesting and certain other terms of the Management Equity Incentive Program and the Director Equity Incentive Program, including the overall percentages of equity to be allocated under such Plans.

•                  The Creditors’ Committee has requested that certain additional recoveries be assigned to the Other Unsecured Claim Classes (Classes 1E-3, 2E-6, 3E-3, and 4E through 28E), including, without limitation, (i) the remaining unassigned portion of the 45% of the PBGC Claim, (ii) the SAM Distribution and SAM Notes, and (iii) repurchased Unsecured Debentures currently held by United.

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•                  Mechanisms for the sale of UAL Common Stock and distributions of net Cash proceeds to Holders of Unsecured Convenience Class Claims and Unsecured Retiree Convenience Class Claims, as well as mechanisms for satisfying the Debtors’ withholding tax obligations.

•                  Scope and duration of the Plan Oversight Committee.

•                  Trading restrictions on the New UAL Plan Securities.

Certain of the Plan Supplement documents may be modified prior to Confirmation as a result of these discussions, and certain additional documents may be prepared to reflect any potential resolutions.  If these and other Confirmation issues are not resolved to the Creditors’ Committee’s satisfaction, all parties reserve their rights, including the right to address them at the Confirmation Hearing.

ARTICLE II.
GENERAL INFORMATION

UAL Corporation, UAL Loyalty Services, LLC, Ameniti Travel Clubs, Inc., Mileage Plus Holdings, Inc., Mileage Plus Marketing, Inc., MyPoints.com, Inc., Cybergold, Inc., itarget.com, inc., MyPoints Offline Services, Inc., UAL Company Services, Inc., Four Star Leasing, Inc., Air Wis Services, Inc., Air Wisconsin, Inc., Domicile Management Services, Inc., UAL Benefits Management, Inc., United BizJet Holdings, Inc., BizJet Charter, Inc., BizJet Fractional, Inc., BizJet Services, Inc., United Air Lines, Inc., Kion Leasing, Inc., Premier Meeting and Travel Services, Inc., United Aviation Fuels Corporation, United Cogen, Inc., Mileage Plus, Inc., United GHS, Inc., United Worldwide Corporation and United Vacations, Inc. (collectively, the “Debtors”) submit this Disclosure Statement pursuant to Section 1125 of the Bankruptcy Code, for use in the solicitation of votes on the Plan dated October 20, 2005 which is attached as Appendix A hereto.

This Disclosure Statement sets forth certain information regarding the Debtors’ prepetition history, significant events that have occurred during the Chapter 11 Cases, and the anticipated reorganization and post-reorganization operations and financing of the Reorganized Debtors.  This Disclosure Statement also describes the terms and provisions of the Plan, including certain alternatives to the Plan, certain effects of Confirmation of the Plan, certain risk factors associated with securities to be issued under the Plan, and the manner in which distributions will be made under the Plan.  In addition, this Disclosure Statement discusses the Confirmation process and the Voting Procedures that Holders of Claims must follow for their votes to be counted.

FOR A DESCRIPTION OF THE PLAN AND VARIOUS FACTORS TO BE CONSIDERED PERTAINING TO THE PLAN AS IT RELATES TO HOLDERS OF CLAIMS AGAINST, AND INTERESTS IN, THE DEBTORS, PLEASE SEE ARTICLE IV AND ARTICLE VI.

THIS DISCLOSURE STATEMENT CONTAINS SUMMARIES OF CERTAIN PROVISIONS OF THE PLAN, CERTAIN STATUTORY PROVISIONS, CERTAIN DOCUMENTS RELATED TO THE PLAN, CERTAIN EVENTS IN THE DEBTORS’ CHAPTER 11 CASES, AND CERTAIN FINANCIAL INFORMATION.  ALTHOUGH THE DEBTORS BELIEVE THAT SUCH SUMMARIES ARE FAIR AND ACCURATE, SUCH SUMMARIES ARE QUALIFIED IN THEIR ENTIRETY TO THE EXTENT THAT THEY DO NOT SET FORTH THE ENTIRE TEXT OF SUCH DOCUMENTS OR STATUTORY PROVISIONS.  FACTUAL INFORMATION CONTAINED IN THIS DISCLOSURE STATEMENT HAS BEEN PROVIDED BY THE DEBTORS’ MANAGEMENT EXCEPT WHERE OTHERWISE SPECIFICALLY NOTED.  THE DEBTORS DO NOT WARRANT OR REPRESENT THAT THE INFORMATION CONTAINED HEREIN, INCLUDING THE FINANCIAL INFORMATION, IS WITHOUT ANY MATERIAL INACCURACY OR OMISSION.

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A.                                   Description of UAL’s Business

1.     Corporate Structure

As mentioned above in ARTICLE I, the Debtors consist of UAL, a Delaware corporation, United, a Delaware corporation, and the 26 other direct and indirect wholly-owned subsidiaries named above.  Five other direct and indirect wholly-owned subsidiaries were not included in the Debtors’ Chapter 11 Cases: United Air Lines Ventures, Inc.; Four Star Insurance Co. Ltd.; ULS Ventures, Inc.; Kion de Mexico, S.A. de C.V.; and Covia LLC.  Each of these non-filing entities is continuing normal business operations.  The Debtors also have minority equity interests in a number of non-wholly owned subsidiaries, none of which are included in the Debtors’ Chapter 11 petitions for relief.  Included in the Plan Supplement as Exhibit 30 are three organizational charts of UAL and its subsidiaries.  The first chart shows the Debtors’ corporate structure as of the Petition Date.  The second chart shows the Debtors’ corporate structure as of the date that this Disclosure Statement is filed.  The third chart shows the Debtors’ proposed post-Effective Date corporate structure.

2.     The Debtors’ Business

a.     Introduction

United is one of the largest scheduled passenger airlines in the world.  In 2004, United flew approximately 115 billion mainline revenue passenger miles and carried approximately 71 million passengers on more than 1,500 daily departures to more than 120 destinations in 26 countries and two U.S. territories.  Operating revenues attributed to the North American segment were $10.5 billion in 2004, $10.0 billion in 2003 and $10.4 billion in 2002.  Operating revenues attributed to international segments were $5.1 billion in 2004, $4.2 billion in 2003, and $4.7 billion in 2002.  Through the first six months of 2005, operating revenues were $8.3 billion.  Operating revenues for the first six months of 2005 attributable to the North American segment were $5.1 billion.  $2.8 billion is attributable to international segments.(7)  In 2004, United added a new low-fare brand, called Ted, designed to serve select leisure markets to more effectively compete with low-fare carriers.

The Debtors have entered into a number of bilateral and multilateral alliances with other airlines to provide their customers more choices and to participate in markets worldwide that the Debtors do not serve directly.  These collaborative marketing arrangements typically include one or more of the following features: joint frequent flyer participation; code sharing of flight operations (whereby one carrier’s flights can be marketed under the two-letter airline designator code of another carrier); coordination of reservations, baggage handling, and flight schedules; and other resource-sharing activities.

The most significant of the Debtors’ alliances is Star Alliance.  Star Alliance was co-founded in 1997 by the Debtors as the first truly global airline alliance to offer customers global reach and a smooth travel experience. The members are Air Canada, Air New Zealand, ANA, Asiana Airlines, Austrian, bmi, LOT Polish Airlines, Lufthansa, Scandinavian Airlines, Singapore Airlines, Spanair, TAP Portugal, Thai Airways International, United, US Airways and VARIG Brazilian Airlines. As of September 1, 2005, the member carriers offer more than 15,000 daily flights to 795 destinations in 139 countries.

Recently, Star Alliance was named the world’s best airline alliance by independent research conducted by SkyTrax. This comes as part of the 2005 World Airline Awards and is also the second time

(7)           The remaining $0.4 billion is attributable to the UAL Loyalty Services segment, as described below.

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in three years that the alliance has been given this honor.   Winning this award strengthens Star Alliance’s commitment in further improving the travel experience for customers.  Future growth for Star Alliance includes the expansion of the network to approximately 846 destinations in 151 countries, through the future integration of South African Airways and SWISS in 2006.   Lastly, the Star Alliance continues to extend its product and customer advantages through initiatives such as interline electronic ticketing links between all member carriers and co-location projects at key airports such as the new Bangkok airport, London – Heathrow, Paris – Charles De Gaulle, and Tokyo – Narita.

Within North America, United also offers a network of connecting flights through its contractual arrangements with regional U.S. carriers operating under the brand name “United Express.”  United Express offers one-stop check-in, advance seat assignments, and miles flown on United Express receive full credit in the “Mileage Plus” frequent flyer program.  United Express has approximately 2,000 scheduled daily departures to over 150 destinations.  Together, United and United Express serve more than 200 worldwide destinations and offer more than 3,400 daily departures.  In 2004, United added two additional United Express partners, Chautauqua Airlines and Shuttle America, to United’s regional carrier network which includes Skywest Airlines, Air Wisconsin Airlines Corporation (“AWAC”), Trans States Airlines (“Trans State”) and Mesa Airlines (“Mesa”).  In August 2004, United terminated its partnership with Atlantic Coast Airlines (“ACA”), and in 2005 United will be adding aircraft provided by GoJet, a sister company to Trans States.  In 2006 United will terminate its flying partnership with AWAC.  In addition, United recently announced an agreement with Colgan Air to start providing United Express service.

In February 2004, United launched the first phase of Ted in Denver to eight destinations.  Today, Ted provides service from all of United’s hubs to 16 destinations in the U.S. and 2 in Mexico.  Ted operates over 200 daily departures with a fleet of 47 Airbus A320 aircraft.  On March 3, 2005, United announced that it plans to expand its Ted fleet of aircraft from 47 to 56 aircraft by converting nine mainline Airbus A320 aircraft to the Ted configuration.  The additional Ted aircraft will bring Ted service to new destinations of West Palm Beach, Florida and Cancun, Mexico and will provide additional departures out of Ted’s hubs in Denver, Washington Dulles, and Chicago to markets in Florida, Mexico, and the Caribbean.

UAL reports its results through five reporting segments:  North America, the Pacific, the Atlantic, Latin America, and UAL Loyalty Services.  United’s network provides comprehensive transportation service within its North American segment and to international destinations within its Pacific, Atlantic, and Latin American segments.  Each of these reporting segments is described in further detail below.

North America. Today, United serves approximately 86 destinations throughout North America and operates hubs in Chicago, Denver, Los Angeles, San Francisco, and Washington, D.C.  United’s North American operations, including United Express, accounted for 64% of the Debtors’ operating revenues in 2004.

Pacific.  Today, United serves the Pacific from its U.S. gateway cities of Chicago, Honolulu, Los Angeles, New York, San Francisco, and Seattle.  United provides nonstop service to Beijing, Hong Kong,  Nagoya (new service started March 26th), Osaka, Shanghai, Sydney, and Tokyo.  United also provides direct service to Bangkok, Ho Chi Minh City, Melbourne (Australia), Seoul (resumes as nonstop service in April 2006), Singapore, and Taipei. In 2004, United’s Pacific operations accounted for 16% of the Debtors’ operating revenues.

Atlantic.  Washington, D.C. is United’s primary gateway to Europe, serving Amsterdam, Brussels, Frankfurt, London, Munich, Zurich, and Paris.  Today, Chicago is United’s secondary gateway to Europe, with nonstop service to and from Amsterdam (seasonal), Frankfurt, London, Munich (new

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service started June 7th), and Paris.  United also provides nonstop service between San Francisco and each of Paris (until October 29, 2005), London, and Frankfurt, and between London and each of Los Angeles and New York.  In addition, United provides seasonal service between Chicago and Bermuda.  In 2004, United’s Atlantic operations accounted for 12% of the Debtors’ operating revenues.

Latin America.  United serves Latin America from its five hubs and provides nonstop service to Aruba, Buenos Aires, Cancun, Cozumel, Guatemala City, Mexico City, Montego Bay, Puerto Vallarta, Punta Cana, , San Jose Del Cabo, San Juan (Puerto Rico), San Salvador, Sao Paulo, St. Maarten, St. Thomas (U.S. Virgin Islands), and Zihuatanejo/Ixtapa.  United also provides direct service to San Jose (Costa Rica) via Guatemala City – through December 14, 2005), Rio de Janeiro (via Sao Paulo) and Montevideo (via Buenos Aires).  Beginning in December 2006, United will start service to Liberia (Costa Rica) and Nassau (Bahamas) and on February 5, 2006 to St. Lucia.  In 2004, United’s Latin American operations accounted for almost 3% of the Debtors’ operating revenues.

UAL Loyalty Services.  For financial reporting purposes, the “UAL Loyalty Services” segment relates to the Debtors’ non-core marketing businesses (and relates to operations provided by UAL Loyalty Services, LLC, MyPoints.com, Inc., and Ameniti Travel Clubs, Inc.).  This segment operates substantially all United-branded travel distribution and customer loyalty e-commerce activities, such as united.com.  In addition, this segment includes certain aspects of the Mileage Plus frequent flyer program, including sales of miles, member relationships, communications, and account management.  This segment also includes certain other United-branded customer programs as well as the MyPoints.com online loyalty program, under which registered consumers earn points for goods and services purchased from participating vendors.

b.     Operations

The air travel business is subject to seasonal fluctuations.  The Debtors’ operations can be adversely impacted by severe weather.  In addition, the Debtors’ first- and fourth-quarter results normally reflect reduced travel demand.  Historically, operating results are better in the second and third quarters.  From 2001 to 2003, however, the typical seasonal relationships were distorted by the events of September 11, 2001, the fear of terrorism, the Iraq war, the outbreak of Severe Acute Respiratory Syndrome, fluctuations in fuel prices, and general economic conditions.  The Debtors experienced a more typical seasonal pattern of financial results in 2004 and to date in 2005.

In addition to the Debtors’ global passenger services, there are several other important components of the Debtors’ operations.

United Express.  The Debtors’ “hub and spoke” business model calls for the transportation of large numbers of passengers on generally long-haul flights using larger-capacity aircraft, but it is not profitable for the Debtors’ mainline fleet to fly everywhere.  As a result, the Debtors’ mainline flights are supplemented by flights transporting small numbers of passengers on generally short-haul flights using small aircraft.  Generally, these “feeder” flights are outsourced to regional air carriers.  These regional carriers fly regional jet and turbo-prop aircraft owned by the regional carrier but operating under United’s reservation code and under the brand name “United Express.”  Passengers flying in United Express aircraft make reservations and purchase tickets through United (with all revenue accruing to United), and United subsequently pays the regional carrier a fee.  The fee has two components: reimbursement of the carrier’s costs per flight between specified city pairs; and a variable portion based on the carriers’ monthly operating performance against certain objective standards.

United Cargo.  United Cargo offers both domestic and international shipping through a variety of services including Small Package Delivery, T.D. Guaranteed^®, First Freight, International Freight, and

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Global SP.  Freight accounts for approximately 77% of United Cargo’s shipments, with mail accounting for the remaining 23%.  During 2004, United Cargo accounted for 4% of the Debtors’ revenues by generating over $704 million in freight and mail revenue, a 12% increase versus 2003.  Since United Cargo is not a separate reporting segment, cargo revenues are allocated to the North America, Pacific, Atlantic and Latin America reporting segments of the Debtors.  The majority of United Cargo revenues are earned in the international segments of the Debtors’ operations.

Fuel.  Fuel is United’s second largest cost behind labor.  United’s fuel costs and consumption for the years 2004, 2003, and 2002 were as follows:

The price and availability of jet fuel significantly affects the Debtors’ operations.  In addition to being at high levels, oil prices continue to see large swings in both intra-day trading and over time.  This phenomenon is well-illustrated by the fact that oil prices rose to historic highs in mid-October 2004, fell by several dollars during December 2004, and then steadily built up again to hit new record highs in August 2005.  The prices of crude oil and jet fuel recently reached all-time highs.  As of August 31, 2005, for example, the prices were $68.94 per barrel of crude oil and $2.323 per gallon of jet fuel.  Moreover, every $1.00 increase in the price of a barrel of oil increases the Debtors’ annual fuel expenses by approximately $60 million.  The lack of useable excess supply to meet demand, coupled with speculation by investors in the commodities futures markets, have been key components of this volatility.

A significant rise in crude oil prices was the primary reason that the Debtors’ fuel expense increased $871 million in 2004 over the Debtors’ 2003 fuel costs and that operating expenses attributable to aircraft fuel costs were 36 percent higher in the first half of 2005 than in the first half of 2004.  Due to the highly competitive nature of the airline industry, the Debtors’ ability to pass on increased fuel costs to their customers in the form of higher ticket prices has been limited.

To ensure adequate supplies of fuel and to provide a measure of control over fuel costs, the Debtors arrange to have fuel shipped on major pipelines and store fuel close to their major hub locations.  Although the Debtors do not currently anticipate a significant reduction in the availability of jet fuel, a number of factors make predicting fuel prices and fuel availability difficult, including increased world demand due to the improving global economy, geopolitical uncertainties in oil-producing nations, threats of terrorism directed at oil supply infrastructure, and changes in relative demand for other petroleum products that may impact the quantity and price of jet fuel produced from period to period.

On September 19, 2003, the Bankruptcy Court approved a Jet Fuel Supply Agreement (the “Fuel Supply Agreement”) with Morgan Stanley Capital Group Inc. (“Morgan Stanley”).  Under the Fuel Supply Agreement, Morgan Stanley will supply jet fuel to the Debtors and maintain minimum levels of fuel inventory for the Debtors at various airports for a term of three years, with a two-year renewal period.  In connection with this arrangement, Morgan Stanley has subleased certain of the Debtors’ terminaling and throughput agreements for storage of jet fuel at the airports.  The Debtors have also assigned to Morgan Stanley certain third-party sale agreements, bulk supply agreements, and local supply agreements.  In addition, the Debtors transferred their historic capacity on common carrier pipelines to Morgan Stanley pursuant to an agency agreement.  This arrangement allows the Debtors to meet their jet fuel needs, while lowering their working capital requirements for fuel.

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During the second quarter of 2004, the Debtors began to implement a strategy to hedge a portion of their price risk related to projected jet fuel requirements, primarily using collar options which involved the purchase of fuel call options with the simultaneous sale of fuel put options with identical expiration dates.  As of June 30, 2005, the Debtors had hedged approximately 8% of their remaining 2005 projected fuel requirements at an average price of $1.24 per gallon, excluding taxes.  The Debtors currently have hedges in place through December 31, 2005.  The fair market value of the Debtors’ designated hedge position was approximately $21 million as of June 30, 2005 and is included in other comprehensive income.  The Debtors expect that this entire amount, to the extent it remains effective, will be recognized into earnings within the next six months as a reduction to fuel expense.  The Debtors plan to continue to hedge future fuel purchases as circumstances and market conditions allow.

Insurance.  United carries hull and liability insurance of a type customary in the air transportation industry, in amounts deemed adequate, covering passenger liability, public liability, and damage to aircraft and other physical property.  Since the September 11, 2001 terrorist attacks, United’s premiums have increased significantly. Additionally, after September 11, 2001, commercial insurers cancelled United’s liability insurance for losses resulting from war and associated perils (terrorism, sabotage, hijacking, and other similar events), but United obtained replacement coverage through the federal government.

The Homeland Security Act, which became effective in February 2003, mandated the Federal Aviation Administration (“FAA”) to provide third-party, passenger and hull war-risk insurance to commercial air carriers through August 31, 2003, and permitted such coverage to be extended to December 31, 2004.  The Consolidated Appropriations Act 2005, signed into law on December 8, 2004, extended this war risk insurance to commercial air carriers through August 31, 2005, which was subsequently extended until December 31, 2005.  Should the government discontinue this coverage, obtaining comparable coverage from commercial underwriters could result in substantially higher premiums and more restrictive terms, if it is available at all.

United also maintains other types of insurance such as property, directors and officers, cargo, automobile, and the like, with limits and deductibles that are standard within the industry.  These premiums also have risen substantially since September 11, 2001.

c.     Competition

The domestic airline industry is highly competitive and volatile.  In domestic markets, new and existing carriers deemed fit by the Department of Transportation (the “DOT”) are free to initiate service between any two points in the U.S.  United’s domestic competitors are primarily the other U.S. airlines, a number of which are low-fare carriers, commonly known as LCCs, which have significantly lower cost structures than United’s, and, to a lesser extent, other forms of transportation.

United faces significantly more domestic competition now than it did in the past.  This increase is largely attributable to the growth of LCCs, whose share of domestic passengers is now over 30 percent.  Accordingly, in excess of 75 percent of United’s domestic revenue is now exposed to LCCs, which is approximately double the percentage from a decade ago.  United anticipates that competition from LCCs and other U.S. airlines will continue to intensify in the future.

Domestic pricing decisions are largely affected by the need to meet competition from other U.S. airlines.  Fare discounting by competitors historically has had a negative effect on United’s financial results because United generally finds it necessary to match competitors’ fares to maintain passenger traffic.  Periodic attempts by United and other network airlines to raise fares have often failed due to lack of competitive matching by LCCs.  Because of vastly different cost structures, low-ticket prices that

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generate a profit for an LCC usually have a negative effect on United’s financial results.  The introduction of Ted by United in early 2004 is designed to provide United with a lower-cost operation in selected leisure markets, under which United can be more economically competitive with its LCC rivals.

In its international networks, United competes not only with U.S. airlines but also with foreign carriers.  United’s competition on specified international routes is subject to varying degrees of governmental regulations (see “Industry Regulation” below).  As the U.S. is the largest market for air travel worldwide, United’s ability to generate U.S. originating traffic from its integrated domestic route systems provides United with an advantage over non-U.S. carriers.  Foreign carriers are prohibited by U.S. law from carrying local passengers between two points in the U.S., and United experiences comparable restrictions in foreign countries.  In addition, U.S. carriers are often constrained from carrying passengers to points beyond designated international gateway cities due to limitations in air service agreements or restrictions imposed unilaterally by foreign governments.  To compensate for these structural limitations, U.S. and foreign carriers have entered into alliances and marketing arrangements that allow the carriers to feed traffic to each other’s flights.

d.     Industry Regulation

Domestic Regulation.  All carriers engaged in air transportation in the U.S. are subject to regulation by the DOT.  Among its responsibilities, the DOT has authority to issue certificates of public convenience and necessity for domestic air transportation (and no air carrier, unless exempted, may provide air transportation without a DOT certificate of public convenience and necessity), grant international route authorities, approve international code share agreements, regulate methods of competition, and enforce certain consumer protection regulations, such as those dealing with advertising, denied boarding compensation and baggage liability.  United operates under a certificate of public convenience and necessity issued by the DOT.  This certificate may be altered, amended, modified, or suspended by the DOT if public convenience and necessity so require, or may be revoked for intentional failure to comply with the terms and conditions of the certificate.

Airlines are also regulated by the FAA, a division of the DOT, primarily in the areas of flight operations, maintenance, and other safety and technical matters.  The FAA has authority to issue air carrier operating certificates and aircraft airworthiness certificates, prescribe maintenance procedures, and regulate pilot and other employee training, among other responsibilities.  From time to time, the FAA issues rules that require air carriers to take certain actions, such as the inspection or modification of aircraft and other equipment, that may cause United to incur substantial, unplanned expenses.  United is also subject to inquiries by these and other U.S. and international regulatory bodies.

The airline industry is also subject to various other federal, state, and local laws and regulations.  The Department of Homeland Security has jurisdiction over virtually all aspects of civil aviation security.  See “Recent Domestic Legislation” below.  The Department of Justice has jurisdiction over certain airline competition matters.  The U.S. Postal Service has authority over certain aspects of the transportation of mail.  Labor relations in the airline industry are generally governed by the Railway Labor Act.

In addition, access to landing and take-off rights, or “slots,” at three major U.S. airports and certain foreign airports served by United are subject to government regulation.  The FAA has designated John F. Kennedy International Airport (“JFK”) and LaGuardia Airport (“La Guardia”) in New York, and Ronald Reagan Washington National Airport in Washington, D.C., as “high density traffic airports” and has limited the number of departure and arrival slots at those airports.  Slot restrictions at O’Hare International Airport in Chicago (“O’Hare”) were eliminated in July 2002 and are slated to be eliminated at JFK and LaGuardia by 2007.  From time to time, the elimination of slot restrictions has impacted United’s operational performance and reliability.  To address congestion concerns and delays at O’Hare,

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United and American Airlines reached an agreement with the FAA in January 2004 to reduce each of their flight schedules at O’Hare.  Furthermore, United reduced its schedule at O’Hare beginning February 2004 between the peak hours of 1:00 p.m. and 8:00 p.m.  In addition, effective March 2004, United again depeaked its flight schedule by 5%.  Subsequently, United, American Airlines, and certain other carriers complied with the FAA’s request to further depeak afternoon operations at O’Hare resulting in a slight reduction in operations overall beginning in November 2004.  On July 18, 2005 the FAA issued an order to show cause why the current operating restrictions at O’Hare should not remain in place through April, 2006.  The FAA has initiated a formal rulemaking process to address O’Hare congestion after April, 2006.

Recent Domestic Legislation.  Since September 11, 2001, aviation security has been and continues to be a subject of frequent legislative action, requiring changes to United’s security processes and increasing the economic cost of security procedures at United.  The Aviation and Transportation Security Act (the “Aviation Security Act”), enacted in November 2001, has had wide-ranging effects on United’s operations.  The Aviation Security Act makes the federal government responsible for virtually all aspects of civil aviation security, creating a new Transportation Security Administration (“TSA”), which is a part of the Department of Homeland Security pursuant to the Homeland Security Act of 2002.  Under the Aviation Security Act, substantially all security screeners at airports are now federal employees and significant other aspects of airline and airport security are now overseen by the TSA.  Pursuant to the Aviation Security Act, funding for airline and airport security is provided in part by a passenger security fee of $2.50 per flight segment (capped at $10.00 per round trip), which is collected by the air carriers and remitted to the government.  In addition, air carriers are required to submit to the government an additional security fee equal to the amount the air carrier paid for screening passengers and property in 2000.

On April 16, 2003, the Emergency Wartime Supplemental Appropriations Act was signed into law.  The legislation included approximately $3 billion of direct compensation for U.S. airlines.  Of the total, $2.4 billion compensates air carriers for lost revenues and costs related to aviation security.  Additionally, passenger and air carrier security fees were suspended from June 1 through September 30, 2003, and government-provided war risk insurance was extended for one year to August 2004.  The Consolidated Appropriations Act 2005, signed into law on December 8, 2004, extended this war risk insurance to commercial air carriers through August 31, 2005, which was subsequently extended until December 31, 2005.  It is expected that aviation security laws and processes will continue to be under review and subject to change by the federal government in the future.

International Regulation.  International air transportation is subject to extensive government regulation.  In connection with United’s international services, it is regulated by both the U.S. government and the governments of the foreign countries it serves.  In addition, the availability of international routes to U.S. carriers is regulated by treaties and related aviation agreements between the U.S. and foreign governments, and in some cases, fares and schedules require the approval of the DOT and/or the relevant foreign governments.

Historically, access to foreign markets has been tightly controlled through bilateral agreements between the U.S. and the relevant foreign country.  These agreements regulate the number of markets served, the number of carriers allowed to serve the market, and the frequency of their flights.  Since the early 1990s, the U.S. has pursued a policy of “Open Skies” (meaning all carriers have access to the destination), under which the U.S. government has negotiated a number of bilateral agreements allowing unrestricted access to foreign markets.

Further, United’s ability to serve some countries and expand into certain others is limited by the absence altogether of aviation agreements between the U.S. and the relevant governments.  Shifts in U.S.

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or foreign government aviation policies can lead to the alteration or termination of air service agreements between the U.S. and other countries.  Depending on the nature of the change, the value of United’s route authorities may be enhanced or diminished.

The U.S. and the European Commission are continuing their attempts to negotiate a single air services agreement to replace the existing bilateral agreements between the U.S. and the European Union (“EU”) member states.  The European Commission has called upon the EU member states to renounce the air services agreements with the U.S. because they allegedly do not comply with EU law.  To date, no EU member state has indicated a willingness to renounce its air services agreement with the U.S.  If EU member states do renounce such agreements, the status of United’s existing antitrust immunity with its European partners would be in doubt because the immunity is based upon an open skies agreement between the U.S. and the applicable EU member states.

In late 2004, the European Commission commenced a consultation process that seeks stakeholder input on the introduction of market-based mechanisms for slot allocation at EU airports.  The Commission proposes to introduce a highly regulated form of secondary slot trading.  The availability of such slots is not assured and the inability of United to obtain or retain needed slots could inhibit its efforts to compete in certain international markets.

Environmental Regulations. The airline industry is subject to increasingly stringent federal, state, local, and foreign environmental laws and regulations concerning emissions to the air, discharges to surface and subsurface waters, safe drinking water, and the management of hazardous substances, oils, and waste materials. The airline industry is also subject to other environmental laws and regulations, including those that require the Debtors to remediate soil or groundwater to meet certain objectives. It is the Debtors’ policy to comply with all environmental laws and regulations, which often require expenditures. Under the federal Comprehensive Environmental Response, Compensation and Liability Act (sometimes commonly known as “Superfund”) and similar environmental cleanup laws, waste generators, and owners or facility operators, including the Debtors, can be subject to liability for investigation and remediation costs at facilities that have been identified as requiring response actions. The Debtors also conduct voluntary remediation actions. Such cleanup obligations arise from, among other circumstances, the operation of fueling facilities and primarily involve airport sites.

Two other regulatory programs that will require an expenditure of capital costs in the next few years are: (1) petroleum storage upgrades required to comply with recent changes to the Spill Prevention Countermeasures and Control law; and (2) new California regulations and/or an industry-wide voluntary agreement, reducing air emissions from ground support equipment utilized in California.

The Debtors are subject to known and potential environmental cleanup Claims and obligations at current and former operating locations. Such Claims and obligations arose from, among other circumstances, past discharges from fueling facilities. Among known Claims, there is litigation among United, American Airlines, and other companies concerning the responsibility for payment of certain cleanup costs for groundwater and soil contamination at JFK. The litigation is currently stayed because of the Chapter 11 Cases, and may be addressed through adjudication by the Bankruptcy Court.  In addition, in accordance with a June 1999 order issued by the California Regional Water Quality Control Board (“CRWQCB”), United, along with most of the other tenants of the San Francisco International Airport, has been investigating potential environmental contamination at the airport and conducting certain remediation. Among these projects is investigation and remediation at United’s San Francisco Maintenance Center. This project is being conducted in accordance with CRWQCB approvals. In addition to the matters discussed above, from time to time the Debtors become aware of potential non-compliance with environmental regulations that have been identified either by the Debtors (through their internal environmental compliance auditing program) or by a governmental entity. In some instances, these

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matters could potentially become the subject of an administrative or judicial proceeding and could potentially involve material monetary penalties of $100,000 or more.

e.     Employees

As of June 30, 2005, the Debtors had approximately 58,000 active employees, of which approximately 80% are represented by various labor organizations.

The employee groups, number of employees, labor organization, and current contract status for each of United’s collective bargaining groups, as of June 30, 2005, were as follows:

Collective bargaining agreements (“CBAs”) are negotiated under the Railway Labor Act, which governs labor relations in the transportation industry, and typically do not contain an expiration date.  Instead, they specify an amendable date, upon which the CBA is considered “open for amendment.”  Prior to the amendable date, neither party is required to agree to modifications to the CBA.  Nevertheless, nothing prevents the parties from agreeing to start negotiations or to modify the CBA in advance of the amendable date.  Contracts remain in effect while new CBAs are negotiated.  During the negotiating period, both the Debtors and the negotiating union are required to maintain the status quo.

For additional information about the Debtors’ business operations, please refer to UAL’s Annual Report on Form 10-K for the fiscal year ended December 31, 2004, and UAL’s Quarterly Reports on Form 10-Q for the first quarter ending March 31, 2005 and the second quarter ending June 30, 2005 and any other recent UAL Annual and Quarterly Report.  These filings are available by visiting the Securities and Exchange Commission’s website at http://www.sec.gov or the Debtors’ website at http://www.ual.com.

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B.                                     Existing Capital Structure of the Debtors

1.     UAL

a.     Aircraft-Related Guarantees

In connection with United’s financing of 22 Boeing 757s and one Boeing 737 through U.S. leveraged leases (“USLLs”), UAL guaranteed United’s obligations.  Also, in connection with UAL’s acquisition of Air Wisconsin in 1992, UAL guaranteed Air Wisconsin’s obligations for nine regional aircraft.  As of September 1, 2005, the aggregate amount of asserted Claims based on such guarantees is approximately $828 million.  The Debtors, however, anticipate that the aggregate amount of such Claims that will be allowed will be less and the Debtors reserve all rights with respect to such Claims.

b.     Serial Preferred Stock

As of December 31, 2004, UAL had outstanding 3,203,177 depositary shares, each representing 1/1000 of one share of Series B 12¹/₄% preferred stock (the “Old Series B Preferred Stock” or an “Old Series B Preferred Share”), with a liquidation preference of $25 per depositary share ($25,000 per Old Series B Preferred Share) and a stated capital of $0.01 per Old Series B Preferred Share. Under its terms, any portion of the Old 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 Old Series B Preferred Stock is not convertible into any other securities, has no stated maturity and is not subject to mandatory redemption.

The Old Series B Preferred Stock ranks senior to all other preferred and common stock outstanding, except the TOPrS Preferred Securities, as to receipt of dividends and amounts distributed upon liquidation. The Old 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.

On September 30, 2002, UAL announced that it was suspending the payment of dividends on the Old Series B Preferred Stock. As a result of the Chapter 11 filing, UAL is no longer accruing dividends on the Old Series B Preferred Stock.  The amount of dividends in arrears is approximately $27 million as of June 30, 2005.

c.     ESOP and Employee/Independent Director Preferred Stock

In July 1994, the stockholders of UAL approved a plan of recapitalization that provided an approximately 55% equity and voting interest in UAL to certain employees of United, in exchange for wage concessions and work-rule changes.  As part of the recapitalization, UAL’s stockholders also approved an elaborate governance structure, which was set forth principally in UAL’s prior restated certificate of incorporation (the “Old UAL Charter”) and the employee stock ownership plans (the “ESOPs”).  Among other matters, the revised governance structure provided that UAL’s board of directors (the “Old UAL Board”) was to consist of five public directors, four independent directors, and three employee directors.

Under the ESOPs, an aggregate of 17,675,345 shares of Old Class 1 and Class 2 Preferred Stock were allocated to individual employee accounts from 1994 to 2000.   The Old Class 1 and Class 2 Preferred Stock represented the employees’ equity interest in UAL.  Each share of Old Class 1 and Class 2 Preferred Stock was convertible into four shares of Old UAL Common Stock.  Because the shares of Old Class 1 and Class 2 Preferred Stock were convertible into shares of freely tradable Old UAL

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Common Stock, Old Class P, M, and S Preferred Stocks (the “Voting Preferred Stock”) were established to provide a fixed level of voting power to the ALPA, IAM, and SAM employee groups participating in the ESOPs.  In the aggregate, 17,675,345 shares of Voting Preferred Stock were issued from 1994 to 2000.  The Voting Preferred Stock had a par value and liquidation preference of $0.01 per share.  The stock was not entitled to receive any dividends and was convertible into .0004 shares of Old UAL Common Stock.

To effectuate the election of independent and employee directors to the Old UAL Board, the Old Class Pilot, Old Class IAM, Old Class SAM, and Old Class I Junior Preferred Stocks (collectively the “Director Preferred Stocks”) were established.  One share each of Old Class Pilot and Old Class IAM Preferred Stock was authorized and issued, respectively, to the United Airlines master executive councils of ALPA and IAM 141.  Three shares of Old Class SAM Preferred Stock and four shares of Old Class I Junior Preferred Stock were issued on December 31, 2002 to the persons designated by the SAMs pursuant to the terms of a stockholders agreement and to UAL’s independent directors respectively.  Each of the Director Preferred Stocks has a par value and liquidation preference of $0.01 per share. The Holders of the Old Class Pilot Preferred Stock, the Old Class IAM Preferred Stock, and the Old Class SAM Preferred Stock are each entitled to vote as a separate class to elect one director to the Old UAL Board.  The Director Preferred Stocks are not entitled to receive any dividends and are non-transferable.

The Voting Preferred Stock represented approximately 55% of the aggregate voting power until “Sunset,” even though the Old UAL Common Stock issuable upon conversion from time to time represented more or less than 55% of the fully diluted Old UAL Common Stock.  Sunset occurred when the Old UAL Common Stock issuable upon conversion of Old Class 1 and Class 2 Preferred Stock, plus (i) all other Old UAL Common Stock held by all other Debtor-sponsored employee benefit plans and (ii) all available unissued Old Class 1 and Class 2 Preferred Stock held in the ESOPs, in the aggregate, fell to below 20% of the aggregate number of shares of common equity and all available unissued Old Class 1 and Class 2 Preferred Stock of UAL.  As a result of certain sales of Old UAL Common Stock by State Street Bank & Trust (“State Street”), an independent fiduciary for the ESOPs, employee ownership was reduced to less than 20% on March 7, 2003, thus triggering Sunset.

Upon the occurrence of Sunset, the 55% voting power of the ESOPs represented by the Voting Preferred Stock was reduced to the actual percentage represented by the outstanding Old Class 1 and Class 2 Preferred Stock held by the ESOPs on an as-converted basis.  In addition, the provisions in the Old UAL Charter with respect to the following matters became inoperative: (i) the qualification, nomination, and vacancy of public and independent directors; (ii) the special super-majority voting provisions relating to, among others, charter amendments, change of control, sales of assets, dissolution, and labor-related business transactions; and (iii) the memberships, functions, and powers of various committees.  Concurrently with Sunset, all shares of the Old Class I Preferred Stock were redeemed automatically.  As a result of the foregoing changes, the Old UAL Board was comprised of:  (a) nine Directors to be elected by the Holders of the outstanding Old UAL Common Stock, (b) one director to be elected by ALPA, (c) one director to be elected by IAM, and (d) one Director to be elected by the SAMs.

On June 26, 2003, the ESOP was terminated following the publication of a regulation by the Internal Revenue Service (the “IRS”) that would permit the distribution of the remaining ESOP shares to plan participants without jeopardizing UAL’s ability to utilize its net operating losses.  On June 28, 2004, all remaining ESOP shares were converted to Old UAL Common Stock and either distributed to participants at their request or “rolled over” to an account in their name.

d.     UAL Common Stock

As of June 30, 2005, UAL had 116,220,959 shares of Old UAL Common Stock outstanding.

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e.               TOPrS

In December 1996, UAL Corporation Capital Trust I (the “TOPrS Trust”) completed a voluntary exchange offer to exchange its 13¹/₄% Trust Originated Preferred Securities (the “TOPrS Preferred Securities”) for any and all outstanding depositary shares, each representing 1/1000 of one share of Series B 12¹/₄% preferred stock.  After the expiration of the exchange offer, the TOPrS Trust issued $75 million of TOPrS Preferred Securities in exchange for the 2,999,304 depository shares that were tendered in the exchange.  Along with the issuance of the TOPrS Preferred Securities and the related purchase by UAL of the TOPrS Trust’s common securities, UAL issued to the TOPrS Trust $77 million aggregate principal amount of its 13¹/₄% Junior Subordinated Debentures (the “TOPrS Debentures”) due 2026.  The TOPrS Debentures are the sole assets of the TOPrS Trust.  The interest and other payment dates on the TOPrS Debentures correspond to the distribution and other payment dates on the TOPrS Preferred Securities.  Pursuant to the operative agreements of the TOPrS Trust, upon maturity or redemption of the TOPrS Debentures, the TOPrS Preferred Securities are to be redeemed on a mandatory basis.  The TOPrS Debentures were 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 TOPrS Debentures, the proceeds thereof are to be applied to redeem the TOPrS Preferred Securities.  The payment of the principal and interest on the TOPrS Debentures is subordinate and junior to all indebtedness of UAL (unless such indebtedness by its terms is subordinate in right of payment to or pari passu with the TOPrS Debentures), but is senior to all capital stock.

Pursuant to the operative agreements of the TOPrS Trust, UAL has the right to defer payments of interest on the TOPrS Debentures by extending the interest payment period, at any time, for up to 20 consecutive quarters.  If interest payments on the TOPrS Debentures are so deferred, distributions on the TOPrS Preferred Securities also will 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 payment of distributions out of moneys held by the TOPrS Trust is guaranteed by UAL on a subordinated basis to the extent not paid by the TOPrS Trust but only to the extent that UAL has made a payment to the trustee of principal and interest on the TOPrS Debentures deposited in the TOPrS Trust as trust assets.  UAL’s guaranty of the TOPrS Trust’s obligations under the TOPrS Preferred Securities constitutes an unsecured obligation of UAL that is subordinate and junior in right of payment to all other liabilities of UAL (except obligations made pari passu or subordinate by their terms) but is senior to all capital stock issued by UAL.

As a result of the Chapter 11 filing, UAL is no longer making interest payments on the TOPrS Debentures. As a result, the TOPrS Trust no longer has the funds available to pay distributions on the TOPrS Preferred Securities and stopped accruing and paying such dividends in October 2002.

2.               United

a.               Secured Aircraft Financing

As of the Petition Date, United operated a fleet of 567 aircraft, approximately 95 of which had been unencumbered and thus became pledged to the Debtors’ debtor-in-possession financing lenders (the “DIP Lenders”) to secure its debtor-in-possession credit facilities.(8)  463 aircraft and related engines in

(8)                                  The 567 aircraft operated by United as of the Petition Date do not include certain regional and other aircraft leased by United to Air Wisconsin and Federal Express and certain aircraft parked as of the Petition Date.

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United’s fleet (the “Section 1110 Fleet”) were leased or financed and eligible for Section 1110 protection and consist of the following array of model types:(9)

The Section 1110 Fleet was owned or leased by United pursuant to a broad variety of financing, including, without limitation, mortgages, operating leases, capital leases, single investor leases, leveraged leases, Japanese leveraged leases (“JLLs”), German leveraged leases (“GLLs”), and French leveraged leases (“FLLs”).  Out of the Section 1110 Fleet, 158 aircraft served as collateral for issues of public debt, including certain pass-through certificates (“PTCs”), equipment trust certificates (“ETCs”), and enhanced equipment trust certificates (“EETCs”).  The balance of the aircraft in the Section 1110 Fleet were financed or leased pursuant to private transactions.  Of these private transactions, 58 aircraft were financed through JLL, GLL, or FLL cross-border financing arrangements, approximately 97 were financed by manufacturers such as Boeing, Airbus, General Electric, and Intlaero Leasing, and the remainder of the private transactions were financed through U.S. leveraged leases or other leasing and secured debt techniques.  As discussed more fully below, the Debtors have downsized their Section 1110 Fleet and substantially reduced their financing costs for their remaining aircraft through refinancing.

As of the Petition Date, an aggregate of approximately $7.0 billion in aircraft-related debt was outstanding.  Of that amount, the Debtors had approximately $3.1 billion of various aircraft-backed mortgages outstanding (the “Aircraft Mortgage Notes”).  There was an aggregate of approximately $32 million of unpaid interest on the aircraft-backed mortgages as of the Petition Date.  In December 1997, July 2000, December 2000, and August 2001, the Debtors issued $674 million, $801 million, $1.51 billion, and $1.47 billion, respectively, of EETCs to refinance certain owned aircraft and aircraft under operating leases which are also included in the aircraft-related debt.  There was an aggregate of approximately $70 million of unpaid interest on the EETCs as of the Petition Date.

(9)                                  The remaining nine aircraft in United’s fleet are not subject to Section 1110 of the Bankruptcy Code, as more fully described herein, and thus not subject to the same restructuring process as the other aircraft in the fleet.

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b.              Senior Notes

United issued six series of unsecured notes due between 2003 and 2021 (the “Unsecured Debentures”) pursuant to an indenture dated as of July 1, 1991, between United and The Bank of New York, as trustee:

Each of the series of Unsecured Debentures is an unsecured and unsubordinated obligation of United, which ranks pari passu with all existing senior unsecured indebtedness of United and senior to subordinated indebtedness.  As of the Petition Date, there was in aggregate $17.6 million of accrued and unpaid interest on the Unsecured Debentures.

As a result of repurchases of Unsecured Debentures by United, there is currently approximately $646 million principal amount outstanding of Unsecured Debentures not held by United.  The Creditors’ Committee have informed the Debtors that they would like the repurchased Unsecured Debentures assigned to the Holders of Allowed Other Unsecured Claims on a pro rata basis.

c.               Municipal Bonds

Eighteen series of special facilities revenue bonds due through 2035 have been issued to finance the acquisition and construction of certain facilities in Los Angeles, San Francisco, Miami, Chicago, and certain other locations (the “Municipal Bonds”):

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