UPDATE 3-Strong real lifts TAM net; fares may be hiked 2010

* TAM reverses year-earlier loss, posts profit in Q3

* Gains pricing power; may raise fares early 2010-CEO

* Surge of real leads to financial gains, lower costs

* Shares fall 2.2 percent (Adds possible increase in airfare prices, shares)

By Guillermo Parra-Bernal

SAO PAULO, Nov 12 (Reuters) - TAM Linhas Aereas (TAMM4.SA)(TAM.N), Brazil's biggest airline, posted a third-quarter net profit on Thursday as a rally in the local currency helped put a lid on costs.

The Sao Paulo-based carrier, controlled by the Amaro family, reported net income of 348 million reais ($202 million), compared with a year-earlier net loss of 663.6 million, according to a securities filing.

A strengthening real (BRBY), which rallied about 11 percent in the quarter, allowed TAM to reduce fuel, maintenance and selling expenses by 23.5 percent, as measured by available seats per kilometer. That gauge, known as CASK, fell to 0.14 reais from 0.19 reais.

Total costs and expenses fell 14.8 percent to 2.32 billion reais. About 40 percent to 50 percent of operational costs at the company are linked to foreign currencies.