UPDATE 1-Singapore Airlines quarterly profit surges seven-fold

(Adds details on results, industry background)

Feb 21 (Reuters) - Singapore Airlines Ltd (SIA) reported an over seven-fold jump in third-quarter net profit on Tuesday, boosted by a strong recovery in demand in key markets.

The carrier said demand for air travel is expected to be robust in the fourth quarter following a recovery in East Asia after easing of travel restrictions across China, Hong Kong, Japan and Taiwan.

SIA, which is set to emerge as a 25.1% owner of Air India following a merger of its Vistara joint venture with the Tata Group-controlled airline, projected group capacity to reach an average of around 77% of pre COVID-19 levels in the fourth quarter.

However, it warned that the airline industry continues to face headwinds due to high cost inflation and elevated fuel prices and flagged that competition is likely to intensify as airlines inject more capacity on international routes.

The airline's net profit jumped to S$628 million ($469 million) in the three months ended Dec. 31, from S$85 million a year ago. The net profit also rose 12.7% over the previous quarter.

Total revenue rose 8% from the second quarter to S$4.85 billion.

SIA said it also expects demand for air freight to face headwinds due a slowdown in new orders as importers trim inventory levels.

($1 = 1.3389 Singapore dollars) (Reporting by Himanshi Akhand and Sameer Manekar in Bengaluru; Editing by Savio D'Souza and Maju Samuel)