It's a hangover from the years when the legacy carriers could charge what they wanted and p!ss money away like it grew on trees.
Look at what it took in the States to get legacy airlines like United back to a position where they now have a chance of survival. Bancruptcy protection and the ability of management to go to a Judge and have all the binding agreements torn up. United started again and maybe they will get it right this time. The employees and creditors grumbled and moaned but knew they had to accept the good times were over and in return they got a fighting chance to keep their jobs.
Airlines like BA don't have this luxury of chapter 11 reorganisation. Don't you think Wille Walsh would rip up all the agreements if he could? He is stuck with a militant workforce from top to bottom and little power to do a Ryanair. O'Leary on the other hand got to learn from looking at the BA's in this world, and set up a company where he has negotiated very favourable terms with employees and suppliers. That's not to say his employees and suppliers are not doing well out of the system, just that they have to work harder under his regime, and if things go bad for the company the company has the ability to trim costs in a way that BA doesn't.
Ah, I see. So the legacy, long-established airlines are unprofitable because they are saddled with legacy of debts and unfavourable contracts with their employees, retirees and suppliers. Whereas the new airlines - whether low-cost or non-low-cost? - can have much more favourable terms. And also, perhaps the case is that their employees have not yet retired, and they intend never to pay their pensions, but go bankrupt before the time comes for that?
But would not a new full-service carrier have the same advantages in form of being able to start with favourable supplier and labour contracts as a new low-cost does? For example, take Virgin. Who is a more dangerous competitor to Ryanair, BA or Virgin? And who is the more dangerous competitor to BA, Ryanair or Virgin?