The following description of the United Airlines Pilot Directed Account Plan (the "Plan") is for general information purposes only. Participants should refer to the Plan Document for more complete benefit information.

General and Plan Participants - The Plan is a defined contribution plan covering all employees of United Air Lines, Inc. ("United" or the "Company") who are represented by the Air Line Pilots Association, International ("ALPA"). United pilots are eligible to become participants in the Plan on their date of hire. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 ("ERISA").

Effective January 1, 2002, the name of the plan changed to United Airlines Pilot Directed Account Plan from United Air Lines, Inc. Pilots' Directed Account Retirement Income Plan.

Bankruptcy of Plan Sponsor - The accompanying financial statements have been prepared assuming that the Plan will continue as a going concern. On December 9, 2002, United Air Lines, Inc. (the "Plan Sponsor" or the "Debtor") filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Northern District of Illinois, Eastern Division.

The Debtor continues to operate its business as a "debtor-in-possession" under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code, the Federal Rules of Bankruptcy Procedure and applicable court orders. In general, as a debtor-in-possession, the Debtor is authorized under Chapter 11 to continue to operate as an ongoing business, but may not engage in transactions outside the ordinary course of business without the prior approval of the Bankruptcy Court.

Should the Plan be terminated, the Plan would be liquidated subject to the terms of ERISA (see Note 6, Plan Termination). The Plan assets are not subject to creditor claims.

Contributions - United makes a contribution in an amount equivalent to 11% of a pilot's earnings to the Plan. Company contributions on behalf of a participant are allocated directly to each participant's account. Eligible employees may elect to contribute to the Plan, in multiples of 1%, any percentage of their covered pretax earnings, up to 60% (50% prior to April 1, 2002), subject to a maximum of $11,000 in 2002. Lower limits may apply to certain highly compensated participants if the Plan does not pass certain nondiscrimination tests required by law. Section 415(c) of the Internal Revenue Code limits the total amount of contributions from all qualified defined contribution retirement plans to the lesser of 100% of annual taxable earnings or $40,000.

Rollover Contributions - Rollover contributions include $1,845,008 for the year ended December 31, 2002 which were transferred from other qualified plans as rollovers under the Internal Revenue Code Sections 402(c) and 408(d).

Upon retirement, a participant may elect to receive a portion of their defined benefit plan as a lump sum payment, which is known as a partial lump sum amount ("PLSA"), and make a rollover into the Plan. PLSA transfers in were $8,290,000 for the year ended December 31, 2002, and are considered rollovers under the IRC Code Sections 402(c) and 408(d).

Participant Accounts - Individual accounts are maintained for each Plan participant. Each participant's account is credited with the participant's contribution, the Company's contribution and Plan earnings, and charged with withdrawals and an allocation of Plan losses and administrative expenses. Allocations are based on account balances, as defined. The benefit to which a participant is entitled is the benefit that can be provided from the participant's account.

Investments - Participants direct the investment of their contributions and account balances into the following various investment options offered by the Plan: the Money Market Fund, the UAL Stock Fund, the Short-Term Securities Fund, the Diversified Bond Fund, the Value Equity Fund, the Growth Equity Fund, the Small Cap Equity Fund, the International Equity Fund, the S&P 500 Index Fund, the Individual Brokerage Account Option and five balanced funds, which are funds that are comprised of different combinations of the above mentioned funds. If a participant does not allocate his account balance among the investment funds, his balance will be invested in the Money Market Fund. Participants may reallocate their fund balances or change their future contribution allocation daily.

Until September 27, 2002, participants had the option to also invest in the UAL Stock Fund, which was invested in UAL Corporation stock. Participants may invest in the UAL Stock Fund only through transfers from the Money Market Fund. Existing balances from Company contributions, 401(k) contributions, after-tax contributions, rollover contributions from qualified defined contribution plans and earnings from all money types may be invested in the UAL Stock Fund.Effective September 27, 2002, Aon Fiduciary Counselors, Inc. ("Aon") was appointed by United to act as a named fiduciary of the UAL Stock Fund. Effective December 5, 2002, assets of the UAL Stock Fund were frozen to incoming contributions and exchanges. Aon directed the sale of all units of the UAL Stock Fund. Effective December 5, 2002, the assets of the UAL Stock Fund were transferred to the Money Market Fund and the UAL Stock Fund was closed.

Vesting - Participants are vested immediately in their contributions and the Company's contributions, plus actual earnings thereon, and the balance of a participant's account is nonforfeitable at all times.

Participant Loans - Participants may borrow from their fund accounts up to a maximum of $50,000, or 50 percent of their account balance, whichever is less. The minimum that may be borrowed is $1,000. Loans will be funded by charging the participant's interest (interest ranged from 5.25% to 5.75% at December 31, 2002) in the Money Market Fund. No loan will be funded from any investment fund other than the Money Market Fund and applications which designate an amount, which cannot be fully funded from this fund will be denied. The loan is secured by the participant's account balance and is generally repaid through payroll deductions on an after-tax basis for the term of the loan, which is a minimum of six months to a maximum of sixty months. The term of the loan may be extended to a period longer than sixty months of up to 15 years if the loan is used to acquire a principal residence. Prepayment of the full balance of the loan is allowed after six months from the date of the loan without penalty. Participants may only have one loan outstanding at any time and are able to take out another loan after twelve months from the date the old loan is retired. An administrative fee of $90 is charged to each participant taking a loan and is automatically deducted from the participant's account loan proceeds.

Payment of Benefits - Withdrawals from the Plan may be made as follows, as applicable to the participant's eligibility, amount requested, and existing balances:
 

Generally, withdrawals are allocated pro rata to the balances of each of the investment funds in the participant's account. Distributions from the UAL Stock Fund, may be made in cash.

Plan Administration - The Frank Russell Trust Company serves as Plan trustee. The Northern Trust Company serves as the asset custodian of the Plan. PFPC Inc. Retirement Services serves as the recordkeeper.

2. SIGNIFICANT ACCOUNTING POLICIES

Basis of Accounting - The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America.

Going Concern - The accompanying financial statements have been prepared assuming that the Plan will continue as a going concern. On December 9, 2002, United, the Plan Sponsor, filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code as described in Note 1.

Use of Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amount of net assets available for plan benefits and changes therein. Actual results could differ from those estimates. Investment securities, in general, are exposed to various risks, such as interest rate, credit and overall market volatility. Due to the level of risk associated with certain investment securities, it is reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect the amounts reported in the financial statements.

Investment Valuation and Income Recognition - The Plan's domestic investments are stated at fair value, generally, as determined by market prices quoted on U.S. securities exchanges. The fair value of foreign securities and foreign currency deposits is based on market prices quoted on foreign securities exchanges and this value is converted to U.S. dollars using the exchange rate in effect at plan year-end. Investments are shown in the statement of net assets available for benefits net of offsets, which include foreign currency, forward contract payables and receivables and various futures. Assets in the UAL Stock Fund are invested in UAL Corporation common stock and are valued at market prices quoted on the New York Stock Exchange ("NYSE"). Transfers into the UAL Stock Fund are made as of the close of the NYSE on a daily basis

The pending trade payables are recorded net of related receivables and represent net amounts due from investment managers arising from security trading activities settled subsequent to year-end.

Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date.

Other investment loss in the statement of changes in net assets available for benefits includes loss on the individual brokerage account, income from swaps, commission recapture and short term investment fund income earned.

Net Appreciation (Depreciation) in Value of Investments - - Net appreciation (depreciation) in value of investments includes realized and unrealized gains and losses. Realized and unrealized gains and losses are calculated as the difference between fair value at January 1, or date of purchase if subsequent to January 1, and fair value at date of sale or the current year-end. The unrealized gain or loss on investments in the International Equity Fund represents the difference between fair value at January 1, or date of purchase, and the fair value at the date of sale or the current year-end plus, where applicable, the change in the exchange rate between the U.S. dollar and the foreign currency in which the assets are denominated from January 1, or the date of purchase, to the date of sale or the current year-end.

Administrative Expenses - Management fees, which are paid by the Plan, are paid to the trustee based upon investment fund balances. Brokerage and other investment fees are included as a reduction of the net appreciation (depreciation) in fair value of investments. United performs certain administrative functions for the Plan without charge.

Payment of Benefits - Benefit payments to participants are recorded upon distribution. There were no amounts allocated to accounts of persons who have elected to withdraw from the plan but had not yet been paid at December 31, 2002.

3. INVESTMENTS

The Plan's investments that represented five percent or more of the Plan's net assets available for benefits as of December 31, 2002 and 2001 (in thousands) are as follows:

Plan assets are invested by a group of investment managers. The investment managers buy or sell securities on behalf of the Plan, in accordance with the investment objectives and guidelines established for each of the investment funds.

As of December 31, 2002, the investment managers were as follows:

As noted in Note 1, the plan invested in UAL Corporation common stock during the year ended December 31, 2002.

6. PLAN TERMINATION

Although it has not expressed any intent to do so, the Company has the right under the Plan to terminate the Plan subject to the provisions set forth in ERISA and its contract with ALPA. If the Plan is terminated, employer contributions would cease and all amounts credited to a participant's account at the time of termination shall be retained in the Plan and will be distributed in accordance with the normal distribution rules of the Plan.

7. FEDERAL INCOME TAX STATUS

The Internal Revenue Service has determined and informed the Company by letter dated June 18, 1996, that the Plan and related trust are designed in accordance with applicable regulations of the Internal Revenue Code. The Plan has been amended, restated, and submitted to the IRS on February 28, 2002 for a determination letter. The Plan administrator and the Plan's counsel believe that the Plan is currently designed and operated in compliance with the applicable provisions of the Internal Revenue Code and the Plan and related trust continue to be tax-exempt. Therefore, no provision for income taxes has been included in the Plan's financial statements.

Effective January 6, 2003, a participant can make a supplemental election to contribute between 1% and 90% of their net pay. Participants age 50 or older at any time during the Plan Year, can make additional pre-tax catch-up contributions to the Plan. This catch-up contribution is only available to the extent the participant has contributed the maximum catch-up amount of 401(k) contributions permitted under the Plan and the participant has not exceeded the annual catch-up contribution limit. For calender year 2003, the maximum amount is $2,000. This amount is scheduled to increase $1,000 each year until 2006 when it will be $5,000. Thereafter, it will be subject to cost of living increases (in $500 increments) as announced by the IRS.

Effective February 1, 2003, the UAL Stock Fund was eliminated as an investment option to participants.

Effective with compensation received on or after June 1, 2003, the Company's contribution to the PDAP will decrease from 11% to 9% based on the participant's actual eligible earnings.

Effective July 1, 2003, the minimum six months period for loan repayments will be eliminated as well as the twelve-month waiting period to apply for a new loan. Loans will be funded prorata from all investment funds.