CHICAGO -- U.S. airlines are leaner and healthier after years of cost cutting, but with massive reorganizations complete and competition at least as fierce as was in 2001, carriers are struggling to find fat to trim.

Airlines that have slashed debt and labor costs in bankruptcy, such as Northwest Airlines Corp., Delta Air Lines Inc. and UAL Corp.'s United Airlines, must now dig deeper into operations to find elusive savings.

It is a simple and permanent fact of life for embattled airlines, experts say.

"It will continue in the airline industry until we're all comfortably dead," said airline consultant Darryl Jenkins. "The days when we could be cavalier about our costs are long, long gone."

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Last week, Northwest exited bankruptcy having cut its costs by $2.4 billion. The No. 5 U.S. carrier emerged from Chapter 11 behind rivals Delta, which left bankruptcy in April, and United, which exited bankruptcy last year.

Even airlines that did not opt for Chapter 11, such as AMR Corp.'s American Airlines, have wrung substantial savings from employees by renegotiating contracts.

But despite their best efforts, long-term survival is not guaranteed for the top airlines.

NICKEL AND DIME

The U.S. air travel industry was thrown into turmoil more than five years ago, partly by a surge in low-cost competition, as the likes of Southwest Airlines Co. and JetBlue Airways Corp. began to threaten the older, so-called "legacy" carriers.

Since then, competition has only grown more vigorous and soaring jet fuel prices have become a crippling burden.

Jenkins said debt and labor expenses are low-hanging fruit for an airline in need of savings. From this point on, carriers must look to their day-to-day operations for waste.

"The operations are enormous and very complex," he said, noting that an obvious target for savings is in schedules.

Airlines have done a poor job putting the right plane on the right route to ensure the highest possible load factor, Jenkins said.

Last year, airlines cut capacity on less profitable routes, enabling them to fly fuller aircraft and boost fares. Attempts at fare increases in 2007 have been less successful, however, and airline executives warn of weakening domestic revenue.

It is a cycle without end, said Morningstar equity analyst Brian Nelson. He said carriers must constantly cut costs to compete when fare increases have so little traction.

"Cutting costs is the name of the game in the commodified airline business," Nelson said. "Those things have to continue to progress. Competition is going to continue to get tougher."

GET CREATIVE OR CONSOLIDATE

Operational tweaks are only part of the survival puzzle, according to Stuart Klaskin at KKC Aviation consulting. Carriers also should identify new revenue sources, he said.

Klaskin noted a recent trend of selling snacks and services on flights. Many of these perks used to be complimentary. Northwest even charges extra for aisle seats.

The trick is to learn which services and perks customers will pay for, he said.

"How do you do that without diminishing the brand or the brand experience?" he said. "I think that it's going to require a much more aggressively entrepreneurial approach."

He said creative thinking will help major airlines avoid another round of bankruptcies. But still there may not be enough untapped revenue available to airlines for all the top carriers to remain independent.

The industry this year sidestepped a wave of consolidation that some experts had forecast. In January, Delta rejected a takeover offer from US Airways Group Inc., saying it had more value as a stand-alone carrier.

Klaskin and other industry watchers, however, say airlines continue to suffer from overcapacity and mergers are the only way to alleviate it.

"I think there will be some consolidation going forward," he added.

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