CHICAGO, January 31, 2003—UAL Corporation (NYSE: UAL), the holding company whose primary subsidiary is United Airlines, reported its fourth-quarter financial results today.

The company incurred a fourth-quarter loss of $1.5 billion, or a loss per basic share of $20.70 (see Note: EPS Calculation).  This loss includes $77 million in special items and a non-cash tax expense described in the notes to the financial tables.  This performance compares to a fourth-quarter 2001 loss of $308 million, or a loss per basic share of $5.68, including special items.

UAL`s loss for the full year, including the special items, totals $3.2 billion, or a loss of $53.55 per basic share.  This compares to a full-year 2001 loss of $2.1 billion, or a loss of $40.04 per basic share.

The company`s results reflect an effective tax rate of zero for 2002.  At a statutory tax rate of 36%, the net loss for the quarter would have been $686 million, or a loss per basic share of $9.65, and a net loss for the full year of $2.1 billion or a loss of $34.56 per basic share, excluding special items.

“The biggest single challenge United faced in 2002 was to reduce its costs, the highest in the industry, as the essential underpinning of becoming a competitive, sustainable airline,” said Glenn Tilton, chairman, president and chief executive officer.  “And United did everything within its control, slashing costs in every aspect of the business—without sacrificing reliability and safety—including reducing capital investments, reducing airline capacity, furloughing employees, obtaining concessions from vendors and more.  Those initiatives were simply not sufficient to address United’s immediate and long-term issues.  We now have the opportunity in Chapter 11 to make significant additional changes by working with our unions and others.  By making the difficult but critical changes necessary to create a cost-competitive business, United can succeed consistently over time.

“As we move forward in 2003, United will continue to compete aggressively through smart initiatives that take us toward a more compelling customer value proposition,” Tilton continued.  “We`ll achieve that by focusing on areas such as superb operational performance, simplicity of fares, attractive routes, good connectivity and more.  Our employees have clearly demonstrated their ability to focus relentlessly on operational excellence and customer service even as we go through the Chapter 11 process.  Despite the distractions of this process, United’s people delivered record operational results, including record-breaking on-time performance.  I am grateful for this continued, outstanding effort by our employees as they seek to provide exceptional service to our customers.”

Operational Performance - During 2002, United’s employees set company records and turned in industry-leading performance in a number of areas of critical importance to customers.  Highlights from the quarter include:

—The U.S. Department of Transportation ranked United #1 in on-time performance for the first 11 months of 2002.
—United`s flight completion rate for 2002 was 99.3 % - an average of only 13 flights per day were cancelled out of approximately 1,700, compared to 99 flights cancelled per day in 2001.—United successfully transitioned to 100 % inspection of all checked baggage with virtually no direct impact on customers.—United experienced excellent load factors in 2002, including a record 90.7 % on Monday,
Dec. 30.

“I can`t say enough about the outstanding work our employees are doing,”  said Pete McDonald, executive vice president - Operations.  “United`s people are stepping up to a tremendous challenge every day.  United`s operational performance is at the top of the industry and it has not gone unnoticed by our customers.  I thank our employees for showing our customers that we are committed not only to their safety, but to their comfort as well.”

Financial Results: UAL`s fourth-quarter 2002 operating revenues were $3.5 billion, up 18 % compared to fourth-quarter 2001.  Passenger revenue for the quarter was up 12% from last year on a 6% capacity increase.  System passenger unit revenue was up 5% year-over-year, as yields were 2% lower and load factor increased by 4 points.

United’s load factor for the quarter was 72%, about a point higher than the average for other network carriers and more than four points higher than fourth quarter 2001.

Operating expenses for the quarter were up 16 %.  Excluding special items, operating expenses of $4.4 billion were up 15% and the company’s unit cost, excluding its fuel subsidiary, was up 5 %.  The unit cost increase was largely a result of the effects of new labor agreements and contractual increases and higher fuel expense.  Average fuel price for the quarter was 86.5 cents per gallon, up more than 10% year-over-year.  For the full-year, fuel averaged 78.2 cents per gallon, down 10% year-over-year.  The company does not have fuel hedges in place for 2003.

During the fourth quarter, UAL recorded a special charge of $67 million for severance related to furloughs announced for various employee groups.  UAL also recorded $10 million in reorganization items related to its bankruptcy filing, primarily consisting of professional fees.  The company recorded $326 million in additional non-cash tax expense to achieve a zero effective tax rate for the year.  At year end, the company recorded a significant minimum pension liability, resulting in an approximate $2.4 billion non-cash charge to shareholder`s equity.  The company`s current tax situation does not allow this charge to be made net of tax.  At a statutory tax rate of 36%, the pension equity charge would have been $1.5 billion.

UAL ended the quarter with a cash balance of $1.9 billion.  UAL`s cash balance includes $579 million in restricted cash, including $117 million in long-term restricted cash.  During the quarter, the company received $700 million in cash from its Debtor-In-Possession (DIP) financing arrangements.

Complete details at www.ual.com
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