The idea is, It was an insulated market, barriers to entry were high, prices were high and wages were high. Deregulation happens, new players come in paying lower wages, and undercutting the established players. They need to cut wages, but it's whether the union lets them. If they don't, the airline goes bust, and the staff have to take lower paying jobs at the upstart airlines anyway. Ofcourse the unions point of view could be that stock holder/corporate compensation is too high, and that should be trimmed instead of/ in addition to cutting staff wages.

From the unions perspective, a bankruptcy isnt welcome, nevertheless it could easily bring one about.