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Oil prices surged to a record level of more than $139 a barrel last Friday, following analysts’ predictions that the price will soon hit $150 and could go as high as $200.

Ryanair boss Michael O’Leary said he expected several European airlines to go out of business thanks to high oil prices.The industry would restructure into a handful of strong players, he said. O’Leary predicts that just three European “network” airlines - British Airways, Lufthansa and Air France/KLM - will survive, and one low-cost airline, Ryanair. Budget rival Easyjet would be bought by one of the big three, he said.

United Airlines, a unit of UAL symbol, said Wednesday it will close Ted, a low-fare airline within an airline, in 2009 and reconfigure its 56 A320 aircraft with first-class seats. Ted serves leisure destinations from Denver and other United hubs.

Continental Airlines said Thursday that it would cut 3,000 jobs and retire 67 Boeing aircraft, becoming the latest airline to announce capacity reductions in the face of high prices for jet fuel. This announcement came a day after United Airlines said it was discontinuing Ted, its low-fare airline, cutting 1,100 more jobs on top of previously announced cuts and retiring a total of 100 aircraft. Delta Air Lines and American Airlines have announced similar steps. “The airline industry is in a crisis,” Continental’s chief executive Lawrence W. Kellner and president Jeffery A. Smisek said in a message to employees.

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Photos courtesy of Times Online, Mark Lennihan/Associated Press, and Justin Sullivan/Getty

Original Source: Times Online, TheStreets.com and NY Times