(MONEY Magazine) – The meek will not inherit the skies. After 12 years of fierce fare wars, the airline industry seems headed for a crash landing, triggered largely by the recession and last year's Iraqi-inspired 90% surge in jet-fuel prices. Continental and Pan Am filed for Chapter 11 bankruptcy after 1990 losses estimated at $222 million and $469 million, respectively. TWA has sold some profitable foreign routes, and even sturdy American has had to eliminate its Los Angeles-San Francisco shuttle because of labor problems. The survivors, analysts predict, will be the three largest and strongest carriers, American, Delta and United, which will scoop up the weaklings' routes and other assets and dominate air travel for the next decade. Of these three, analysts believe, United is the best bet for the 1990s. ''The company has less total debt than either Delta or American and the best overall balance sheet,'' says Candace Browning of Merrill Lynch. And while fragile carriers have been selling assets, United has been buying. Last year the airline ordered or optioned 135 wide-body jets from Boeing at a potential cost of $22 billion. Moreover, with international air travel expected to increase by 9% annually during the 1990s, compared with growth of 4% or less in the U.S., United is seeking to expand in the most profitable areas overseas. To enter the London market, the company has offered to pay $290 million for Pan Am's five U.S.-London Heathrow routes. This move would add at least $450 million to its annual revenues, says Browning. In the Pacific, where United is already the largest carrier, its business has been growing at an annual rate of 25%. ''By the end of this year,'' predicts Browning, ''one-third of United's capacity and revenues will be in international markets.'' Last year the company's unions attempted a leveraged buy-out at $200 a share for UAL, the parent company of United, and UAL stock traded above $160 on the NYSE. When Iraq invaded Kuwait in August and fuel prices soared, however, airline stocks plummeted. After the proposed buy-out failed in October, UAL sank to $84 and recently traded at $111.50, or about 11 times analysts' estimates of 1991 earnings. Although the stock is already down, analysts warn that UAL shareholders may face extreme turbulence -- especially if war in the Persian Gulf pushes the price of oil higher. By the end of 1991, though, with the economy rebounding -- as analysts predict it will -- UAL stock could be taking off steeply. Says Becker: ''We're expecting the price to reach $200 a share in the next 18 to 24 months.''

BOX: UNITED

Recent price $111.50 52-week range $170 to $84

Est. earnings per share P/E ratio 1991 $10.00 11.2 1992 $24.00 4.6