UAL Corp.'s United filed for the airline industry's biggest Chapter 11 reorganization today after being denied a U.S. loan guarantee because the carrier's planned $5.2 billion in labor cost savings and 6 percent reduction in flight capacity weren't enough to satisfy a federal review board.

In a reversal from two years ago, when United and AMR Corp.'s American Airlines were seeking takeovers to cement their status as the world's largest airlines, the focus now is on cutting expenses to the level of profitable Southwest Airlines Co. and JetBlue Airways Corp. Carriers will be dropping routes, switching to smaller planes and cutting more jobs to adjust to travel demand that never recovered from the Sept. 11 attacks, analysts said.

"Everything is about cost now," said Richard Aboulafia, director of aircraft consulting at the Teal Group in Fairfax, Va. "You're much better off being someone in a smaller market position, like JetBlue or Southwest, than you are having some critical mass and fortress hubs."

United, which operates 1,800 flights with major bases in Chicago, Denver, Los Angeles, San Francisco and Dulles, Va., may reduce its seat capacity by 12 percent next year, double what it had planned, according to J.P. Morgan analyst Jamie Baker. Dulles may see the steepest reductions, he said.

AMR's American, the world's biggest airline, said this week it will cut another 1,100 flight-attendant jobs by February on top of 7,000 announced in August. The Fort Worth, Texas-based carrier plans to trim first-quarter seating capacity by 3.3 percent in the U.S. and Canada because of unexpectedly weak demand.

AMR quadrupled its goal for annual cost cuts to $4 billion, in the space of four months. The airline on Friday asked its unions to forgo previously agreed upon wage increases next year. Other major carriers are likely to use a UAL bankruptcy as leverage to win more concessions from their unions, said Terry Trippler, an industry analyst in Minneapolis.

Delta Air Lines Inc., Northwest Airlines Corp. and US Airways Group Inc., which already is in bankruptcy protection, also are reducing jobs and flights.

"The airline industry is $15 billion smaller" in sales than it was before Sept. 11, said Michael Boyd, an aviation consultant in Evergreen, Colo. "There's got to be less capacity. The smallest communities may lose their air service, and you'll see much smaller- sized aircraft."

For U.S. passengers, it's likely to mean less choice of routes, more crowded planes and fewer cheap tickets on the major carriers, said George Hamlin, senior vice president of Global Aviation Associates, a Washington consulting firm.

"Anyone who is looking fondly at some of the bargain fares out there now should avail themselves of them quickly," he said.

US Airways sought to increase fares twice since it entered bankruptcy protection in August. Ticket prices at major carriers rose in September and October after declining for 18 months, according to the Air Transport Association, a trade group that includes major U.S. carriers.

The average October fare was still 19 percent less than the amount charged in 2000 by major carriers. Some analysts said the U.S. recession and competition from low-cost rivals such as Southwest Airlines Co. and JetBlue Airways Corp. will keep a lid on any fare increases.

The template for U.S. carriers may be British Airways Plc, which began flying smaller, more cost-efficient planes and pulling out of some markets under pressure from low-cost rivals in 2000. The U.K. airline said last month that it expects to return to profit this fiscal year.

UAL Chief Executive Glenn Tilton told employees earlier this year that Boeing Co.'s 747-400, its biggest plane, is the most vulnerable if the fleet is reduced. United has 40 of those planes, some leased from lenders including GATX Corp. and FleetBoston Financial Corp., according to Airclaims Ltd., a U.K. aircraft tracking service.

Airlines already have parked 2,000 jets, many of them relatively new, in desert storage centers, lowering the value of all aircraft. Since most of the debt that UAL's creditors hold is backed by aircraft, lenders such as John Hancock Financial Services Inc. and Pacific Investment Management Co. may be left with assets that have diminished value.