By David Shepardson and Valerie Insinna
WASHINGTON (Reuters) -The Federal Aviation Administration (FAA) said on Wednesday that inspections of an initial group of 40 Boeing (NYSE:BA) 737 MAX 9 jets had been completed, a key hurdle to eventually ungrounding the model after a mid-air cabin panel blowout on Jan. 5.
The FAA had said last week that 40 of 171 grounded planes needed to be re-inspected before the agency would review the results and determine if it is safe to allow the MAX 9s to resume flying following the incident on an eight-week old Alaska Airlines jet.
The FAA said on Wednesday it would "thoroughly review the data" and was convening a Corrective Action Review Board before deciding if the planes could resume flights. The agency put no timetable on a decision.
Alaska Airlines and United Airlines, the two U.S. carriers that use the aircraft and completed the inspections, have had to cancel thousands of flights this month. Both airlines said on Wednesday they would cancel all MAX 9 flights through Friday.
The incident has shaken confidence in Boeing's planes nearly five years after a pair of crashes killed 346 people and sparked questions about the company's production processes.
The heads of Boeing and supplier Spirit AeroSystems (NYSE:SPR), which made the panel, met with Spirit employees in Kansas on Wednesday, while regulators answered questions from U.S. senators in a closed-door briefing in Washington.
Boeing shares have lost roughly 20% of their value since the start of the year.
The National Transportation Safety Board (NTSB) and FAA briefed senators on the Commerce Committee for more than an hour on the investigation into why the MAX 9 cabin panel - a door plug for an unused emergency exit on those planes - blew out, leaving a gaping hole.
FAA Administrator Mike Whitaker said on Friday that Boeing had experienced production problems for years and his agency planned an audit of the company's production starting with the MAX 9.
"This has been going on for a while and whatever's happening isn't fixing the problem," Whitaker told Reuters.
ACCIDENT INVESTIGATION
NTSB Chair Jennifer Homendy said the accident investigator still did not know what went wrong, but was casting a wide net for potential issues, and said it would be looking at numerous records related to the door plug.
Homendy said the door plug on the MAX 9 was produced by a Spirit facility in Malaysia.
The NTSB is looking at the door plug transfer from Malaysia to Wichita, Kansas, and then onto the fuselage, along with the shipment by rail to Boeing's Renton, Washington, facility and the planemaker's "quality assurance" work, she said.
Senate Commerce Committee Chair Maria Cantwell said she plans to hold a hearing on the issue and wants to make sure the FAA is ensuring strong oversight of Boeing. She had pressed the FAA to conduct an audit of Boeing safety issues.
"This investigation needs to find out where the mistake was, what caused this accident, and critically what needs to be done to make sure it doesn't happen again," said Senator Ted Cruz, the top Republican on the Commerce Committee.
CEOS IN KANSAS
Boeing CEO Dave Calhoun visited Spirit's production facilities in Wichita on Wednesday for an employee town hall alongside that company's CEO, Pat Shanahan.
Speaking to about 270 factory workers, engineers and other staff, Shanahan said Spirit would "make changes and improvements" and "will restore confidence.”
Calhoun said, according to Boeing: "We're going to get better, not because the two of us are talking, but because (of) the engineers at Boeing, the mechanics at Boeing, the inspectors at Boeing, the engineers at Spirit, the mechanics at Spirit, the inspectors at Spirit."
The two executives answered several questions from employees, ranging from how lessons from the incident could influence future airplane designs, and whether Spirit and Boeing were united on a path forward, said a source in the room.
Calhoun and Shanahan also toured the Wichita production plant, a Spirit spokesperson said.
The idea for the town hall stemmed from Calhoun, who suggested speaking directly with Spirit's workforce, two sources with knowledge of the situation told Reuters. Boeing declined to comment.
Boeing on Tuesday named retired U.S. Navy Admiral Kirkland H. Donald to advise the planemaker's CEO on improving quality control.