Legacy airlines with seniority systems do go bust. Pan Am, Swissair, Sabena.
There are two seats in the front of an aeroplane. One for the Captain, one for the First Officer. That means that on average a pilot spends half of his/her career as a First Officer and half as a Captain. As the airline industry is expanding, the odds are for more time as a Captain. With or without seniority.
With seniority, the Captains in airlines that go bust are effectively thrown on the rubbish dump with other pilots sitting smug with their 'number' thinking "I'm alright, Jack".
Without seniority, those Captains could get jobs elsewhere. Yes, it might put back some First Officer's promotion, but that First Officer will know that when he eventually gets his command he/she will be doing so with the knowledge that if their airline went bust one day they could also have the opportunity to try for a Captain position elsewhere, rather than being thrown out on the rubbish dump.
With seniority, a Captain's position in this industry is extremely precarious.
And Pilots do move from airlines with seniority to airlines without. Some have got to realise that seniority is not the 'B'-all-and-end-all in this industry. Lifestyle, job satisfaction, being treated to show that you are valued, etc., etc., etc., are all more important and the airlines who will take them on without the boot of seniority holding them down will gain from having those pilots.
Seniority is a selfish system.