2 comments here:
1) U lost CA to Southwest. Period. AWA? Alaska? No, it was LUV.
2) U went from a very high cost (12cents) to a high CASM (10cents). Last I heard they expected to get it down to 9.5 cents or so, which is still 20% higher than LUV at 7.5. So U has a ways to go before they can compete successfully head to head with LUV, IMO.
Besides, I expect AA will stay in all the major markets... look at history... They no longer operate hubs RDU, BNA, nor SJC. Yet they still fly (although recently downgraded to Eagle) RDU-BOS, BNA-LGA, and SJC-LAX. Point being, just because they give up the hub, doesn''t mean they give up the big markets... So if AA pulls out of STL-CID, and U wants to go for it, fine have at it. If AA does scale back STL (and at this point, its still an if), does U really want to go against AA on STL-LGA/BOS/LAX/SFO/etc? Especially with all the AA Frequent Flyers in STL? I would have to think that if U thought they could compete with AA on STL-LGA, they would already be doing it.