If the airlines were in pain at $100 a barrel oil, they're in agony at $130 a barrel. 

Some analysts believe American Airlines (AMR) and the other big legacy carriers--like Delta, Northwest and United--will need to raise revenue fast to cover their mammoth fuel costs or face bankruptcy by the end of the year. 

Unlike 2001, the last time airlines faced bankruptcy in the wake of the Sept. 11 terrorist attacks, some airlines could actually be forced out of business.

“There’s really not much left to cut,” said Roger King, an airline industry analyst with CreditSights.

King said if a legacy airline goes into bankruptcy this year, the economy and record fuel costs would mean the court filing would only stall the company from going out of business and eventually liquidating their assets.

JPMorgan analyst Jamie Baker said with current fuel prices the chance of legacy airlines filing for bankruptcy or merging this year is “a question of when, not if, in our minds.”

American, the nation’s largest airline, said Wednesday it would cut its 2008 flight schedule by as much as 12% and remove 75 of its 954 aircraft from its fleet because of high fuel costs. The cut in capacity and fleet numbers will also lead to job cuts or layoffs, the airline said.

Further, the airline said it would start charging each passenger $15 for the first checked bag starting June 15. Other airlines, such as United (UAUA) and Delta (DAL), charge passengers $25 to check a second bag.

"The airline industry as it is constituted today was not built to withstand oil prices at $125 a barrel, and certainly not when record fuel expenses are coupled with a weak U.S. economy," said AMR Chairman and Chief Executive Gerard Arpey in a statement.

While passengers may complain about being nickeled and dimed by the airlines, industry executives and experts have said they have no choice. The cost of jet fuel is up 63% from a year ago, according to the Air Transport Association, a trade group.

“The race is on to see if airlines can raise fares high enough to cover the fuel bills before they run out of cash,” King said.

Northwest and Delta executives said last month that fares must increase by as much as 20% this year to break even. That was when oil was $115 a barrel.

All cost-cutting measures airlines could have taken "have now largely been exhausted," Northwest CEO Doug Steenland said last month during a press conference.

“Current fuel prices pose an earnings challenge to the industry that actually exceeds the economic impact of 9/11 in our view,” JPMorgan's Baker added.

Another factor hurting the airlines is the ongoing credit crunch. Airlines are raising fees because they have no other way of getting cash right now, experts said. Airlines are trying to build up a storehouse of cash to keep them afloat in hopes that the price of oil will fall.

“Raising capital is finite,” Baker said. “Once opportunities are exhausted, we believe management will have accomplished little other than buying time. It’s time for fuel to recede … or merely time to wait for others to die and greatly reduce capacity in the process.”