(FORTUNE Magazine) – THE WORLD'S airlines have been buffeted by inclement economic weather for more than two years. Now they seem to be flying into a monsoon. The deregulation that caused such havoc for U.S. carriers is spreading to Europe, and ferocious fare wars are battering all. Last year marked the second year of record multibillion-dollar losses for the industry around the world. At least 21 of the 50 largest airlines on this list put parentheses around the figure that normally appears in the profit column. Worse, the outlook for 1992 is every bit as dismal. Ah, the romance of flight! A note about our methodology. To make this list more current, figures for companies with fiscal years ending March 31 are as of 1992, and growth rates are based on comparisons with their March 1991 fiscal years. Also, Korean Air this year replaces its parent, Hanjin Group. Hanjin's trucking, container shipping, and other businesses outstripped the carrier's growth last year, and as a result the airline no longer represents more than 50% of Hanjin's revenues. Without profits to fuel them, the money-losing airlines are using up their financial reserves staying aloft. In desperation many are trying to merge with stronger companies, but some of these hasty unions look more like midair collisions. The late Pan Am never recovered from its rushed acquisition of % National just as U.S. deregulation was getting off the ground. Northwest is only now living down the problems that resulted from its takeover of Republic six years ago; the deal caused disgruntled passengers to denounce it as Northworst Airlines. The forces driving consolidation are nonetheless powerful. While the weaker players are especially desperate for strong allies, everyone fears the clout of the U.S. megacarriers: American, United, and Delta. Even giants British Airways and Japan Airlines lack the big advantage of their U.S. rivals -- a huge domestic market with many hub airports to channel passengers into their overseas routes. And so this summer Australia's Qantas, which specializes in long international flights, acquired Australian Airlines, the other government- owned carrier that flies domestically. PWA, the parent of Canadian International, which is big over the Pacific, is being rescued by its competitor Air Canada, which has more transatlantic routes. By 1998 the North American Free Trade Agreement could eliminate many of the barriers that now prevent U.S. carriers from flying in formation to Canadian cities. But Nafta works both ways, and a Canadian airline or a European carrier that might merge with one could find itself with easy access to U.S. airports. Many troubled companies are looking for other arrangements short of outright merger. Some are trying to hook up as junior partners to the handful of companies profitable enough or simply big enough to keep flying. Belgium's Sabena is selling nearly 40% of itself to Air France, while British Airways is planning to pump some cash into USAir Group through a pending deal that has U.S. carriers shrieking at their Congressmen to stop it. Continental could leave bankruptcy court soon, refueled by a new part-owner; Lufthansa, Air Canada, Mexicana, and Aeromexico have put in their bids, and SAS is in the wings. The newly enlarged Qantas is being privatized in a sell-off starting next month that will invite one or more foreign lines to take a stake. Spain's Iberia has lined up a flock of affiliated smaller players from Latin America. It has a controlling interest in Aerolineas Argentinas and airlines in Chile and Venezuela, and it has been bidding for more. The plan is to use these smaller lines to feed international traffic into Iberia's routes, giving it a kind of Spanish-American hub-and-spoke system to help it compete against the Norteamericanos.

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