SIGPR-A-22-003-3 — Independent Review: Alaska Airlines Validation Memo (March 2022)

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Report Number SIGPR-A-22-003-3, dated March 29, 2022, from the Assistant Inspector General for Auditing of the Special Inspector General for Pandemic Recovery (SIGPR) to the Treasury Chief Recovery Officer, reviewing the Validation Memo Treasury completed for Alaska Airlines, Inc.'s loan application under Section 4003 of the CARES Act. The report states that Alaska applied on April 17, 2020, that a $1.301 billion loan was agreed to on September 28, 2020, and that the amended agreement raised the anticipated loan amount to $1.928 billion. It finds no material modifications needed for the memo to comply with Treasury's Underwriting Guide. It lists three discrepancies it considered inconsequential, including inconsistent statements on whether Alaska is publicly traded and a required field left blank. Appendices set out the objective, scope and methodology and the report distribution.

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SIGPR-A-22-003-3 
Independent Review of 4003(b) Loan Recipient’s 
Validation Memo – Alaska Airlines, Inc.  
Report Number: SIGPR-A-22-003-3 
March 29, 2022 

SIGPR-A-22-003-3 
i 
March 29, 2022 
TO: 
Jacob D. Leibenluft   
Chief Recovery Officer 
U.S. Department of the Treasury 
FROM: 
Theodore R. Stehney 
Assistant Inspector General for Auditing 
Special Inspector General for Pandemic Recovery (SIGPR) 
SUBJECT: 
Independent Review of 4003(b) Loan Recipient’s 
Validation Memo – Alaska Airlines, Inc.   
This report presents the results of our review of the Validation Memo associated with 
Alaska Airlines, Inc.’s (Alaska) application submission to the Department of Treasury 
(Treasury). Alaska received a $1.928 billion loan guarantee under Section 4003, 
Division A, Title IV, Subtitle A of the Coronavirus Aid, Relief, and Economic Security Act 
of 2020 (the “CARES Act”).  
On April 17, 2020, Alaska applied for a loan under Application Number LA-2004170453. 
All applicants had to provide specific documentation along with their applications to be 
further considered to receive a loan, as outlined in Treasury’s Underwriting Guide. 
Treasury completed a Validation Memo once it received and reviewed an applicant’s 
document submissions. Once the Validation Memo was completed, Treasury forwarded 
the application to the next level of the underwriting process.   
Based on our review, we are not aware of any material modifications that should be 
made to the Validation Memo that Treasury completed for Alaska to comply with 
Treasury’s Underwriting Guide.   
Please address questions regarding this report to Michael Sinclair at (202) 923-8021 or 
Michael.Sinclair@sigpr.gov. 

SIGPR-A-22-003-3 
1 
Introduction 
Section 4003 of the CARES Act authorizes the Treasury to make loans, loan 
guarantees, and other investments to provide liquidity to eligible businesses related to 
losses incurred as a result of the coronavirus pandemic. Sections 4003(b)(1)-(3) 
appropriated $46 billion to help stabilize the airline industry and businesses critical to 
maintaining national security.   
The breakdown of available funding was as follows: 
1. Up to $25 billion for passenger air carriers; businesses certified to perform
inspection, repair, replace or overhaul services; and ticket agents;
2. Up to $4 billion for cargo air carriers; and
3. Up to $17 billion for businesses critical to maintaining national security.
Section 4003 loans were further categorized by the loan amount requested. The Air 
Carrier Loan Program is categorized into tiers as follows: Tier 1 loans were above 
$300 million, Tier 2 loans were between $20 million and $300 million, and Tier 3 
loans were under $20 million.   
Background 
On April 17, 2020, Alaska applied for a for $1.128 billion loan under Section 4003 of 
the CARES Act. A $1.301 billion loan was agreed to on September 28, 2020. As a 
result of additional CARES Act funding availability, the loan agreement was 
amended on October 30, 2020, and Alaska’s total anticipated loan amount was 
increased to $1.928 billion. Based on its loan amount, Alaska is classified as a Tier 
1 borrower.  
During the application period, applicants were required to submit documents 
through a Treasury web portal. For each applicant to move forward in the loan 
process, they had to provide a financial plan, IRS Form 941s, and financial 
statements, among other documentation. Depending on the applicant’s type of 
business additional documentation was also required. For instance, air carriers had 
to provide their Department of Transportation certification as such under Section 
40102(a) of Title 49, United States Code. All documentation provided was to be 
maintained by Treasury.   
Once the required documentation was compiled, Treasury verified and recorded it 
using a Validation Memo. A completed and signed Validation Memo allowed the 
applicant to move forward to the loan underwriting process.   

SIGPR-A-22-003-3 
2 
Results in Brief 
Based on our review, we are not aware of any material modifications that should be 
made to the Validation Memo Treasury completed for Alaska to comply with Treasury’s 
Underwriting Guide. 
However, we identified several discrepancies in the completion of the Validation Memo 
that we considered inconsequential. For your information, these discrepancies are as 
follows:  
(1) One section of the Validation Memo indicates that Alaska is a publicly traded
company; a different section identifies Alaska as a private company with the
Reviewer noting that Alaska is “not a publicly traded company, but parent is.”
(2) The Reviewer asserts that Alaska did not “receive, apply for, or expect to apply
for loans provided or guaranteed pursuant to other programs under the CARES
Act.” However, documents provided by Treasury show that Alaska indicated that
it did receive, apply for, or expect to apply for CARES Act loans and the
Validation Memo itself provides a few details about Alaska’s Payroll Support
Program loan application.
(3) Treasury’s Underwriting Guide states that Reviewers must ensure “that all fields
within the [application] are completed, as applicable” but we identified a required
field that was not completed.
Compliance Statement 
We conducted our review in accordance with generally accepted government auditing 
standards for attestation engagements. Those standards require that we plan and perform 
the review to obtain limited assurance that the Validation Memo is fairly presented in all 
material respects and completed according to Treasury’s Underwriting Guide. A review is 
substantially less in scope than an examination, the objective of which is to obtain 
reasonable assurance and express an opinion on the subject matter. Accordingly, we do 
not express such an opinion. We believe that our review provides a reasonable basis for 
our conclusion.   
Audit Team 
This review was conducted the individuals listed below: 
Michael Sinclair 
Audit Manager   
Reynaldo Gonzales 
Auditor-in-Charge 

SIGPR-A-22-003-3 
A-1
Appendix A – Objective, Scope and Methodology 
We have reviewed Alaska Airlines Inc.’s submission of loan documents under 
Application Number LA-2004170453. Treasury was responsible for obtaining Alaska’s 
loan documentation and completing the Validation Memo in accordance with its 
Underwriting Guide prior to moving the application further in the loan process. Our 
responsibility is to express a conclusion about whether any material modification should 
be made to the Validation Memo for it to be in accordance with Treasury’s Underwriting 
Guide and be fairly stated.  
The objective of this review is to evaluate whether Treasury’s Validation Memo for 
Alaska was completed according to Treasury’s Underwriting Guide and other applicable 
criteria, and fairly presents the supporting documentation provided by Alaska in all 
material respects. Treasury’s efforts culminated in the completion of the Validation 
Memo. Additionally, this review is an offshoot of the overall examination of the 4003(b) 
loan program.  
We primarily performed this review remotely due to the ongoing telework situation 
dictated by the pandemic. We therefore relied on mostly electronic records for our 
review.  
To accomplish the review objective, our fieldwork included, but was not limited to, the 
following procedures: 
•
Reviewed Treasury’s Underwriting Guide and determined the documents
required by all applicants;
•
Reviewed Alaska’s Validation Memo for completeness and accuracy;
•
Determined if the document submissions were complete and accurate;
•
Requested additional documentation from Treasury officials when needed; and
•
Held discussions with Treasury officials when applicable.
The review was conducted in accordance with generally accepted government auditing 
standards for attestation engagements.  

SIGPR-A-22-003-3 
B-1
Appendix B – Report Distribution 
Chief Recovery Officer – U.S. Department of the Treasury  
Office of General Counsel – U.S. Department of the Treasury  
Inspector General – Special Inspector General for Pandemic Recovery 
Asst. Inspector General for Auditing – Special Inspector General for Pandemic 
Recovery 
Office of General Counsel – Special Inspector General for Pandemic Recovery

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