* Q3 op profit 94.5 mln euros, up 14 pct on a year ago
* Says cost cuts balancing high fuel and airport charges
* Says expects relatively fast progress on pension deficit
DUBLIN, Nov 3 (Reuters) - Irish airline Aer Lingus expects to post full-year operating profit of around 40 million euros ($55.2 million) and hopes to make progress in talks over a huge pension deficit early next year, its chief executive said on Thursday.
Aer Lingus shares have fallen 37 percent since January, on concerns about its large pension obligations and a first-half loss on weak Irish demand and growing costs. Rival Ryanair's share price fell 11 percent in the same period.
"We are very optimistic for the remainder of the year," Chief Executive Christoph Mueller said in a conference call, forecasting an operating profit before exceptionals "at the upper end" of analyst forecasts of 30-42 million euros ($41 million to $58 million).
The share price climbed 5 percent to 69 euro cent after the trading update, in which the airline announced a third-quarter operating profit of 94.5 million euros ($130.4 million).
Aer Lingus has returned to profitability by refocusing its fleet away from delivering Irish holidaymakers to beaches and ski slopes and towards inbound travel from higher growth areas in continental Europe like the Netherlands and Belgium.
It has also increased its focus on retail sales, which climbed 6 percent in the third quarter, outpacing passenger volume growth of 2 percent. Yields -- the keenly watched measure showing average revenue gained per mile per passenger -- climbed 4 percent.
The airline is targetting an increase in ancillary sales -- charges for services like checking bags -- of 1-2 euros per passenger next year.
But it warned that higher fuel and airport charges would mean it would post a large operating loss in last three months of the year, compared to a year earlier.
The airline's fuel bill will increase by 50 million euros, or 5 euros per passenger next year, Chief Commercial Officer Stephen Kavanagh said.
"This is another set of solid operational numbers from Aer Lingus although the yield progression is slowing," NCB stockbrokers said in a note.
"Unfortunately the operational side of things is only one part of the story in Aer Lingus. The pensions issue continues to overhang the stock."
Aer Lingus says it has no obligation to fund a shortfall of approximately 400 million euros ($554 million) in an employee pension scheme, but has warned that this position could be open to a legal challenge.
The scheme's trustees are due to provide an update of the deficit before the end of the year and propose actions to cut it.
"We believe once talks commence a solution does not necessarily take a long time," Mueller said, forecasting progress in the first three months of 2012.
Mueller said he had no new information on the Irish government's efforts to sell its 25 percent stake in Aer Lingus and said there was unlikely to be any sale before first quarter of 2012.