(Reuters) - United Technologies Corp (>> United Technologies Corporation) raised its full-year forecasts for the second time this year on Tuesday and said it was making progress in resolving issues with engines at its Pratt & Whitney business, allaying concerns of key aircraft customers.

Quarterly sales and profit beat Street estimates despite problems with its new fuel-saving geared turbofan (GTF) engines, which caused its customers to delay deliveries of planes.

United Technologies was forced to take a $196 million charge in the quarter after it held back some shipments of GTF engines and offered spares to airlines, which had been facing problems with engines already in service.

Shares of United Technologies initially rose nearly 2 percent, before retreating to stand just under 1 percent. Airbus, the biggest customer of GTF engines, rose 2.4 percent to a record.

"It was unfortunate we couldn't meet our commitments to Airbus (>> Airbus SE) and Bombardier (>> Bombardier, Inc.), but they understood the need to keep the customers flying," Chief Executive Greg Hayes said on a conference call.

Easing a months-long standoff over delays in supplying engines, Hayes said the company also planned to make some design changes to improve engine durability.

Reuters reported on Monday that Airbus had seen evidence of progress on technical problems at Pratt & Whitney and was more confident in the pace of shipments despite losing some engines to the spares pool: a shift confirmed by United Technologies on Tuesday..

United Technologies is spending more money to speed up production of its GTF engines that power Airbus' newest narrow-body jet, the A320neo, and Bombardier's CSeries aircraft.

The company said it shipped 254 GTF engines year-to-date, and remained on track to build 350-400 GTF engines in 2017. United Technologies had delivered 138 of these engines in 2016.

Hayes also defended United Technologies' $23 billion proposal to buy Rockwell Collins (>> Rockwell Collins, Inc.) to forge a giant new aerospace supplier after criticism from Boeing (>> Boeing Company (The)), saying the U.S. planemaker had benefited from United Technologies' earlier purchase of aero parts maker Goodrich.

United Technologies raised its 2017 adjusted earnings per share forecast to $6.58-$6.63 from $6.45-$6.60. The company also increased the lower end of its sales forecast range to $59.0 billion from $58.5 billion, but kept the top end at $59.5 billion.

Adjusted earnings per share fell to $1.73 in the third quarter ended Sept. 30, from $1.76, but beat analysts' expectations of $1.69, according to Thomson Reuters I/B/E/S.

Net sales jumped about 5 percent to $15.06 billion, topping the Street estimate of $14.98 billion.

(Additional reporting by Tim Hepher; Editing by Martina D'Couto)

By Ankit Ajmera