(Adds American Airlines and Allegiant statements)
By Alana Wise and David Shepardson
NEW YORK, May 9 (Reuters) - A U.S. watchdog will examine how well the Federal Aviation Administration handled maintenance oversight at American Airlines and Allegiant Air , a budget carrier whose safety standards have come under scrutiny.
The review by the Department of Transportation's inspector general announced on Wednesday follows a CBS "60 Minutes" report that questioned Allegiant's safety standards and the FAA's oversight of the airline. U.S. Senator Bill Nelson of Florida called for an investigation after the report.
"The traveling public deserves to know the whole story when it comes to the FAA’s oversight of airline maintenance," Nelson said in a statement. "I expect the inspector general to leave no stone unturned."
American Airlines said it would work with the inspector general.
"American Airlines was shocked to learn of the Office of Inspector General’s review and we stand by our strong safety record," spokesman Ross Feinstein said in a statement. "Our team is working to understand why we are part of its review."
The Transportation Department in a memo said it had launched the audit after finding that the FAA had moved from "emphasizing enforcement actions to working with carriers to address the root causes for noncompliance of safety regulations."
The department said it also found significant discrepancies in the relationships and information-sharing practices between airlines and their FAA oversight offices.
"Our objectives now are to assess FAA's processes for investigating allegations of improper maintenance practices at two carriers, Allegiant Airlines and American Airlines," the memo read.
Allegiant Air in a statement said it follows federal safety mandates and welcomes the audit.
"We welcome any analysis of our operation and safety culture, at any time. It will show what we know to be true, that Allegiant operates at the highest level of safety, in strict adherence with all FAA regulations and guidelines," spokeswoman Hilarie Grey said.
The FAA said it will work with the inspector general. After the "60 Minutes" report the FAA said: "The FAA has zero tolerance for intentional, reckless behavior, flagrant violations, or refusal to cooperate in corrective action by air carriers. When warranted, the agency routinely takes legal enforcement action against violators."
Shares of Allegiant were down 2.65 percent in afternoon trading. American's share price slipped 2.4 percent, extending a 19.11 percent year-to-date decline. (Reporting by Alana Wise and David Shepardson Editing by Bill Trott and Lisa Shumaker)