SIGPR-A-22-003-7 — Independent Review: United Airlines Validation Memo (June 2022)

Record facts

Summary

Report Number SIGPR-A-22-003-7, dated June 22, 2022, from the Special Inspector General for Pandemic Recovery's Assistant Inspector General for Auditing to Treasury Chief Recovery Officer Jacob D. Leibenluft, reviewing Treasury's Validation Memo for United Airlines, Inc. The report states United applied on April 17, 2020 for a $4.483 billion loan under Section 4003 of the CARES Act and that Treasury finalized a loan amount of $7.491 billion on December 8, 2020, making United a Tier 1 borrower. SIGPR states it is not aware of any material modifications needed to the Validation Memo. It notes one discrepancy it considered inconsequential: the reviewer's answer that United had not applied for other CARES Act loans, although the memo itself identifies United as a Payroll Support Program applicant. Appendices cover objective, scope and methodology and report distribution.

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SIGPR-A-22-003-7 
   
 
 
 
 
Independent Review of 4003(b) Loan Recipient’s  
Validation Memo – United Airlines, Inc. 
 
Report Number: SIGPR-A-22-003-7 
June 22, 2022 
 
 
 
 

 
SIGPR-A-22-003-7 
i 
  
June 22, 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 – United Airlines, Inc. 
 
This report presents the results of our review of the Validation Memo associated with 
United Airlines, Inc.’s  (United) application submission to the Department of the 
Treasury (Treasury). United received a $7.491 billion loan 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, United applied for a loan under Application Number LA-2004170442. 
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 United 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-22-003-7 
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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 loan amounts were 
$300 million or greater, Tier 2 loans were less than $300 million and greater than 
$20 million, and Tier 3 loans were up to $20 million and no less than $250 
thousand.   
 
Background 
On April 17, 2020, United applied for a $4.483 billion loan under Section 4003 of the 
CARES Act. Treasury finalized the loan amount of $7.491 billion on December 8, 
2020. Based on its loan amount, United 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.  
  
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 United to comply with Treasury’s 
Underwriting Guide. However, we identified the following discrepancy in the completion 
of the Validation Memo that we considered inconsequential:   
(1) The Reviewer asserts that United did not “receive or apply for, or…expect to 
apply for, loans provided or guaranteed pursuant to other programs under the 

 
SIGPR-A-22-003-7 
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CARES Act.” However, according to Treasury’s Validation Memo processes and 
applicant provided information, United did indicate that it had received, applied 
for, or expected to apply for loans provided or guaranteed pursuant to other 
programs under the CARES Act. Furthermore, the Validation Memo itself 
indicates that United is a Payroll Support Program applicant.   
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 by the individuals listed below: 
Kevin Gallagher 
Audit Manager   
Emily Brown 
Management Analyst 
 
 

 
SIGPR-A-22-003-7 
A-1 
 
Appendix A – Objective, Scope and Methodology 
 
We have reviewed United’s submission of loan documents under Application Number 
LA-2004170442. Treasury was responsible for obtaining United’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 
United was completed according to Treasury’s Underwriting Guide and other applicable 
criteria, and fairly presents the supporting documentation provided by United 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 United’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-22-003-7 
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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