For many airlines, the golden years of the travel boom that brought a steady stream of passengers and fat profits are fading fast. Talk of recession, or something very like it, is swirling around the boardrooms of some of the world's biggest carriers.

Weighed down by the heavy cost of fuel and falling passenger levels, some air transport companies are looking for a path through the darkening clouds of economic gloom to avoid bankruptcy. Others, like British Airways, are involved in merger talks with rivals.

The global airline industry is heading for losses that may exceed $6.1bn (£3.3bn), as high fuel prices and slowing economies lift costs and hurt sales, according to the International Air Transport Association, which represents more than 240 airlines.

Consolidation and closer co-operation may help carriers avert bankruptcy and reduce capacity to spur demand. British Airways said on August 1 that it would raise ticket prices and cut seating after first-quarter profit plunged 90% to £27m.

At least 24 carriers have stopped flying or filed for bankruptcy in recent months because of higher fuel expenses, according to IATA.

"We expect BA to be a survivor in the medium term, but for the near term, news flow will be tough," Dresdner Kleinwort analysts in London said in a recent note to investors.

The list of airlines reporting losses or reduced profits is a long one.

Singapore Airlines, the world's second-largest airline by market value, last month posted a 15% fall in profit while Thai Airways International, the south-east Asian nation's biggest carrier, last week reported its biggest quarterly loss since 1997.

Thai Air reported a second-quarter loss of 9.3 billion baht (about £140m) after spending 64% more on fuel than a year earlier and booking a currency loss. The loss was the biggest for the Bangkok-based carrier since the Asian financial crisis 11 years ago.

Even the discount fare sector, which has enjoyed a rapid period of expansion, has not escaped the pain, with Ryanair, Europe's largest low-cost carrier, recently posting an 85% fall in net profit at the end of July and warning of a full-year loss if oil prices stayed high and fares fell.

The dire economic conditions have forced some big flagcarriers to take drastic measures. AMR Corporation, parent of American Airlines, said it would trim domestic capacity by up to 12% in the fourth quarter. UAL Corporation, parent of United Airlines, has said it would cut its fourth-quarter mainline capacity by up to 16.5%.

Other carriers planned comparable cuts and issued an avalanche of fees for items and services that previously were complimentary. American Airlines, for example, has started to charge its customers for using their own frequent-flier miles.

Meanwhile, BA and Iberia Lineas Aereas de Espana have announced they intend to merge to create a new company with two fleets. The Spanish carrier's network complements that of its larger UK competitor because of Iberia's dominance in Latin-America.

American Airlines, British Airways and Iberia Airlines said on Thursday that they had signed a joint business agreement for flights between the United States and Europe.

The airlines said they planned to apply for anti-trust approval from the US Department of Transportation and would notify European Union authorities. The step comes a dozen years after American and British Airways' first effort to join their operations in a network stretching around the world.

The three airlines want immunity from anti-trust charges for an alliance which will allow them close co-operation on pricing, scheduling and marketing.

Virgin Atlantic, which offers competing flights between London's Heathrow and New York's John F Kennedy airports, opposes the plan and has said its billionaire owner Richard Branson had written to US presidential candidates Barack Obama and John McCain expressing that view.

"Airlines everywhere are struggling with the current price of oil, but the solution to their problems should not lie in an anti-competitive agreement, which will inevitably lead to less competition and higher fares," Branson wrote in an open letter.

The Dutch airline KLM and Air France have already merged, and in the United States Delta Airlines is working on a tie-up with Northwest Airlines to create the world's largest carrier, Anda Corneille, the corporate affairs director of Dublin-based Aer Lingus, told The Herald in a recent interview that he sees more mergers and bankruptcies on the way. Aer Lingus is resisting a takeover by Ryanair, which owns 29.4% of its rival.

"Trading is difficult," he said, adding that some airlines faced a "bloodbath" after the lucrative summer travelling season ended.

"I think you will see some carriers going out of business," he added. However, he said the Scottish travel market remains strong and Aer Lingus will increase flights from Edinburgh to Dublin in November.

Although oil prices have retreated from record levels above $147 a barrel in July, it is too early to say the fuel crisis is over for the airline industry.

"It's also too early for airlines to rethink their downsizing strategies, said US Airways Group spokeswoman Elise Eberwein.

"It seems like memories are short, and it was only three weeks ago when all you saw on the CNN breaking news banner was record high fuel - $140, $141, $142, and so on," Eberwein said.

"Knowing we are one global incident, weather event or other related issue away from an oil price spike means sticking to the long-term strategy is more important than ever," she said. "We simply can't let our guard down."

The chairman of Hong Kong-based Cathay Pacific delivered a similar warning a few weeks ago. Speaking as his airline announced its first loss in five years, Christopher Pratt said the aviation industry will not be able to "survive in its current form" and carriers must cut their costs or die.