LONDON, Oct 26 (Reuters) - Europe's major airlines are set for another bumper quarterly earnings season after a summer of record post-pandemic travel, but turmoil in Israel, the spillover impact on oil prices and worries about a global recession may cloud the outlook.

Strong earnings growth for the third quarter will be driven by a busy summer and strong demand projected for the rest of the year even as inflation remains high and fuel prices rise, analysts say.

"The Atlantic has been very strong in particular .... Intra-European travel has been doing very well," said aviation analyst James Halstead, adding that limited planes meant ticket prices could stay high.

"You've got a squeeze on capacity at the same time as strong underlying demand."

Britain's easyJet said earlier this month it wanted to more than double profits and expand its fleet, even though fuel prices could mean higher ticket prices.

But heightened geopolitical instability following attacks by Palestinian group Hamas in Israel on Oct. 7, which has led to flight cancellations, higher oil prices and worries over consumer sentiment in Europe, could weigh on airlines' outlooks.

For the third quarter, Air France-KLM is expected to report operating income of 1.37 billion euros ($1.45 billion), up 33% from last year, according to a company-provided consensus. Revenue is tipped to rise 7% to 8.7 billion.

IAG's operating results before exceptional items are seen at 1.55 billion euros, up 28% from a year ago, while Lufthansa is expected to report adjusted earnings before interest and tax of 1.4 billion euros, up 24%, while revenue is seen rising 8% to 10.84 billion, according to consensus figures provided by the companies.

Air France and IAG report on Friday and Lufthansa on Nov. 2.

Brent crude oil almost hit $94 a barrel shortly after the Hamas attack. It has since eased to around $88.

Spot Northwest European jet fuel prices were at $957 per metric ton on Wednesday, up 5% from before the assault. That's off an all-time high of $1,471 in June 2022 after Russia's invasion of Ukraine.

JET FUEL

Some airlines have already warned that rising fuel costs will drive up ticket prices or dampen future earnings.

Earlier this month, Ryanair CEO Michael O'Leary said the discount carrier paid $65 a barrel for jet fuel last year while it is now hedged at $89 a barrel. He said ticket prices could go up by a mid-single digit percentage ahead of Christmas.

Finnair on Tuesday reported a slight earnings hit due to fuel costs.

"We haven't hit the ceiling in terms of fares if jet fuel prices continue to be higher for a prolonged period of time," said Topi Manner, Finnair's chief executive.

Much will depend on how well hedged airlines are. "This could be a key differentiator of prices and profitability this winter," said one investor.

But it's also unclear if higher prices will curb people's desire to travel.

"We have already had commentary from the U.S. that suggests summer transatlantic pricing trends are continuing into winter, so it shouldn't surprise the market if the European carriers say the same thing," said analyst Neil Glynn, the managing director of Air Control Tower.

Unless the economic and geopolitical outlook worsens, 2024 could very well be another strong year.

"A year ago, there was fear of a consumer downturn that never came," said Alexander Irving, an analyst at Bernstein.

($1 = 0.9435 euros)

($1 = 0.8214 pounds)

(Additional reporting by Agata Rybska in Gdansk and Natalie Grover in London Editing by Josephine Mason and Mark Potter)