Record prices for both crude oil and jet fuel are threatening to send U.S. air carriers spiraling toward deep losses, drastic service cutbacks, job cuts and, perhaps by year's end, an industrywide cash crunch.

A year ago, airline managers were talking about the return of a profits cycle in 2007 that would grow larger this year and extend into 2009 or even 2010. Now, they're grounding and selling planes, trimming service on marginal routes and eliminating it on others where there's no hope of making money. They are cutting jobs, rolling out more service charges and raising fares almost weekly by amounts never seen before. They're also watching their cash balances closely — and nervously.

Prolonged oil prices above $110 a barrel could do what all the airlines' long list of problems in the last seven years have not — drive one or more out of business. That's a worst-case scenario, however. The government's Energy Information Administration forecasts crude oil prices will average $94 a barrel. And airlines have a well-established record of surviving the most horrible business conditions.

But even if expectations of prolonged triple-digit oil prices prove wrong, no one expects them to fall back near last year's painfully high average of $72 a barrel. So U.S. carriers are certain to spend much more on fuel this year than they did last year — $2 billion more in Delta's case at current oil prices, for example.

That means U.S. air carriers appear headed toward the kind of huge losses they rang up in the post-9/11 years before earning very modest profits in 2006 and 2007. In recent reports, several industry analysts have projected those losses could range from $1 billion to $9 billion.

Analyst Michael Derchin at FTN Midwest Securities said airlines are entering "another Darwinian period of survival of the fittest."

Not only must capacity be reduced, "Fares will have to be a lot higher," he said. And fuel surcharges like those now in place on most international tickets sold must be "adopted domestically as part of the pricing system."

That's already happening. There have been at least seven major fare increases this year involving the big network carriers.

Eleven days ago, United led the industry in adding up to $50 to the price of round-trip domestic tickets, a huge increase by airline standards in any era.

Five days later, Delta followed with a $10 boost to domestic fares, and American and Northwest added $20 to most trans-Atlantic fares.

Even Skybus, the tiny year-old discounter that offers a few seats on all its flights for $10 one way, is reducing flights and scaling back its growth plans in the face of high oil prices.