By Allison Lampert and Victoria Bryan
MONTREAL/BERLIN (Reuters) - Canadian planemaker Bombardier (TO:BBDb) delivered five CSeries jets in the first quarter and is making progress in tackling delays separate from previously disclosed engine hold-ups in producing its flagship CSeries jets, sources familiar with the matter told Reuters.
The delivery data and comments from executives on progress come as Bombardier nears regulatory approval for its planned sale of the delayed CSeries programme to Europe's Airbus (PA:AIR).
But the Montreal-based company could still face snags in coming months after delivering 17 CSeries in 2017, down from an initial target of 30 - a delay the plane-and-train maker has previously attributed to delays at engine supplier Pratt & Whitney.
Bombardier has not publicly discussed separate delays stemming from general challenges as workers learn to make the 110-to-130 seat jet more efficiently.
These include "quality issues" at French interiors and seat maker Zodiac Aerospace, three sources familiar with the matter said, echoing similar problems affecting other planemakers.
It is not clear when Bombardier experienced these delays, but it delivered four planes in March, up from one during the first two months of the first quarter, one of the sources said. Another said there had been no new Zodiac delays.
All of the sources spoke on condition of anonymity because of commercial sensitivities.
"It is well known across the industry that Zodiac is currently experiencing some production delays," Rob Dewar, vice president of Bombardier's CSeries programme, told Reuters in a statement.
"We are collaborating closely with their team, and we are making great progress, as reflected in our production rate of four aircraft last month," he added.
Zodiac, recently acquired by France's Safran (PA:SAF), the world's third-largest aerospace supplier, is emerging from a three-year manufacturing crisis that drew criticism from planemakers Airbus (PA:AIR) and Boeing (N:BA).
"We are very happy with the CSeries that are already flying with Swiss," Carsten Spohr, chief executive of Germany's Lufthansa Group (DE:LHAG), the parent company of CSeries launch customer Swiss International Air Lines.
"What we are not so happy about are the continuing delays to deliveries. The reason is not the engines but other difficulties at Bombardier," Spohr told Reuters.
He declined to specify the reasons.
Bombardier has not changed its target to deliver 40 CSeries in 2018. It is expected to make first-quarter delivery data public in May.
Investors closely watch figures on aircraft orders and deliveries to help them accurately estimate revenues since airlines make the bulk of payments when planes are delivered.
Investors in Europe are also monitoring Zodiac's recovery as France's Safran prepares to dive into its operations after repeated profit warnings by the seat maker. Safran, which recently completed its Zodiac purchase, declined to comment on whether Bombardier had suffered delays.
The CSeries is itself at a crossroads as Airbus is poised to take a majority stake in the jetliner programme, likely ahead of the aviation industry's flagship Farnborough Airshow in July.
Bombardier executives are counting on Airbus to cut CSeries supply chain costs and boost production volumes through higher sales by using its procurement and marketing muscle.