UAL

--Issuer Default Rating (IDR) to 'CCC' from 'B-'.

United

--IDR to 'CCC' from 'B-';

--Secured bank credit facility (Term Loan and Revolving Credit Facility) to 'B+/RR1' from 'BB-/RR1';

--Senior unsecured debt to 'C'/RR6 from 'CCC'/RR6.

The credit facility rating applies to approximately $1.3 billion of term loan debt, and the unsecured rating applies to approximately $876 million of outstanding convertible notes. Fitch no longer maintains a Rating Outlook for UAL and United.

The downgrade reflects Fitch's view that the airline's credit profile is likely to weaken further, as extreme pressure in the revenue environment continues to undermine the positive cash flow impact of lower jet fuel prices in 2009. Despite preliminary signs of a moderation of year-over-year deterioration in passenger yields and revenue per available seat mile (RASM) in April, the revenue picture appeared to worsen again in May as H1N1 flu concerns depressed industry bookings further. Although domestic leisure-oriented demand is holding up reasonably well as the recession continues, passenger yield and RASM trends in premium business travel markets will likely improve only slowly as the economy strengthens somewhat moving into 2010.

Fitch expects United's operating results and free cash flow generation to remain weak through the remainder of the year, largely as a result of its heavy exposure to premium business markets that have seen the steepest declines in passenger yields and RASM following the rapid pull-back in corporate travel spending that accelerated late in 2008 and into the first quarter of 2009. Trans-Atlantic and trans-Pacific RASM trends are expected to be especially weak this summer as carriers discount seats aggressively to maintain good load factors on a lower available seat mile (ASM) capacity base. Even in domestic markets, revenue pressure is likely to continue on higher-yielding trans-continental routes where United has significant exposure. In spite of the early and significant rationalization of capacity undertaken by United and the rest of the industry in 2008, unit revenue pressure has remained intense this year as the full impact of the global recession on premium travel demand has become clear.

Passenger RASM declines in excess of 19% reported by both Continental and US Airways for the month of May suggest that the industry revenue environment is not stabilizing in line with other consumer spending and macroeconomic indicators. Rather, Fitch is increasingly concerned that a continuation of weak revenue patterns through the summer could erode much of the industry's cash flow generation potential for 2009.