UPDATE 2-Avis Budget posts Q3 profit, shares rise

* Q3 EPS $0.54 vs loss/shr $9.91 year ago

* Q3 revenue falls 14 pct

* Shares up 7 pct in after-mkt trade (Recasts; Adds details)

Nov 2 (Reuters) - Car rental company Avis Budget Group Inc (CAR.N) posted a quarterly profit, helped by strong pricing and fleet management, but said rental volumes will remain lower in the fourth quarter as the macroeconomic climate continues to be challenging.

Domestic fleet costs are expected to increase 4 percent to 6 percent on a per-unit basis in 2009, the company said.

Avis Budget, which competes with Dollar Thrifty (DTG.N) and Hertz Global Holdings Inc (HTZ.N), said demand for vehicle rentals appears to have stabilized.

Based on rental and reservation activity, the company expects favorable year-over-year pricing comparisons will continue in the fourth quarter.

For the third quarter, net income was $57 million, or 54 cents a share, compared with a net loss of $1.01 billion, or $9.91 a share, a year ago. Excluding items, it earned 65 cents a share.

The company's year-ago quarter was hurt by a $1.26 billion restructuring charge.

Revenue for the company fell 14 percent to $1.47 billion.

"The strength of the used car market definitely provided some wind at our back during the quarter, allowing us to actively manage the fleet in concert with demand to optimize pricing," Chief Executive Ronald Nelson said in a statement.

Car rental revenue was down 14 percent, due mainly to a 21 percent drop in rental days.

Truck rental revenue fell due to a 9 percent decline in rental days and a slight decrease in time and mileage revenue per rental day.

However, the company -- whose two brands are Avis Rent A Car System and Budget Rent A Car System -- said domestic leisure pricing was up 13 percent year-over-year. Car fleet costs fell 25 percent.

Analysts on average were expecting earnings of 55 cents a share, according to Thomson Reuters I/B/E/S. Avis Budget's rival, Hertz Global, which recently reported its third-quarter results, topped market expectations and said advanced bookings are holding up in the United States in the seasonally weak fourth quarter. The other rival, Dollar Thrifty, also reported a 59 percent jump in third-quarter profit and said it may have seen the worst of the rental revenue declines for this business cycle.

Shares of the Parsippany, New Jersey-based Avis Budget were up 7 percent at $9 in trading after the bell. They closed at $8.45 on the New York Stock Exchange. (Reporting by Bhaswati Mukhopadhyay in Bangalore; Editing by Pradeep Kurup, Unnikrishnan Nair)