* Chrysler CEO Marchionne tells employees to "stay focused"
* Fiat to report earnings, update strategy on Tuesday
* Chrysler sees Q4 net income of about $210 million
* Chrysler sees Q4 revenue of $16.4 billion
DETROIT, Oct 29 (Reuters) - Chrysler Group LLC posted an 80 percent rise in quarterly net income on Monday on stronger new vehicle sales, continuing the U.S. automaker's comeback from its 2009 bankruptcy.
Chrysler, majority owned by Italy's Fiat SpA, also reaffirmed its outlook for the year. Fiat will issue its earnings on Tuesday.
Net income in the third quarter rose to $381 million from $212 million a year earlier. Net revenue increased 18 percent to $15.48 billion.
Globally, Chrysler's auto sales rose 12 percent to 556,000 vehicles in the quarter.
"We've changed the conversation at Chrysler Group," said Sergio Marchionne, chief executive of both Chrysler and Fiat.
Chrysler reaffirmed its 2012 forecast that calls for net income of about $1.5 billion on net revenue of about $65 billion.
Accounting for the full-year outlook, Chrysler expects fourth-quarter net income of about $210 million on revenue of $16.4 billion.
Chrysler's free cash flow will be "well in excess" of $1 billion for the year, Marchionne said.
In an e-mail to Chrysler employees, Marchionne said, "The third-quarter financial results that we released today represent another pillar in the platform of accountability that we are building."
In addition to the earnings report on Tuesday, Fiat has pledged to give an update on its strategy, particularly in Europe.
Europe's debt crisis, government spending cuts and high unemployment have hit consumer budgets and sent demand plunging, with new car registrations in the region showing the sharpest contraction in 12 months in September.
This year, Chrysler's balance sheet has become much stronger than Fiat's, primarily because of strong sales in its primary North American market.
While Chrysler has revamped what was a stale product lineup when Fiat took over management control in 2009, Marchionne urged employees to "stay focused."
Chrysler's competitors, he said, "are not showing signs of vulnerability, and we will have to continue fighting for our share. But we are going in the right direction."
Marchionne said that the two most important new products for the company this year, the compact Dodge Dart and its new Ram 1500 pickup truck, are getting positive reviews from auto critics.
However, the influential U.S. magazine, Consumer Reports, on Monday said three of Chrysler's brands, Dodge, Chrysler and Jeep, each fell in its reliability ratings of 28 auto brands sold in the United States.
In the first nine months of the year, Chrysler's global sales were 1.86 million, up 12 percent from the same period in 2011.
In the first nine months of the year, Chrysler's U.S. sales rose 24 percent to 1.25 million vehicles, according to Autodata Corp. Chrysler is the No. 4 automaker by sales in the U.S. market, trailing, in order, General Motors Co, Ford Motor Co and Toyota Motor Corp.
Fiat owns 58.5 percent of Chrysler. The remaining 41.5 percent is owned by a United Auto Workers union healthcare trust for retired Chrysler workers, which is a voluntary employees beneficiary association.
Each half year beginning in the current six-month period, Fiat is allowed to exercise a call option for up to 3.3 percent more of Chrysler Group at a price determined by a formula set up in 2009. Fiat can buy up to 16.58 percent of Chrysler in this fashion.
Fiat sued the healthcare trust in September because the trust did not sell the 3.3 percent share in July as Fiat had requested. The two sides differ on the price that Fiat is to pay for the increased share. Fiat offered $139.7 million.
The matter is pending at a court in Delaware.
Marchionne said this month that plans to merge Chrysler and Fiat will not be affected by the lawsuit.