The owners decided that KLMs offer for the company was better than continuing standalone. They were probably right. The Amsterdam feeder routes continue successfully, they would not have done nearly as well as an independent operation.
I used Stansted to Edinburgh quite a bit as well. Fares 15 years ago about double what I pay Easyjet nowadays. It wouldn't have lasted.
Everything Stansted became Buzz, which eventually was bought by Ryanair for more than could have ever been made continuing as an independent operation. Ryanair of course continue very successfully at Stansted.
All the Air UK Leisure side was sold to Air 2000 and things like the the First Choice 767 operation came from here. This continues successfully.
London City - no LCY-based operator has ever succeeded. Before AirUK there were Brymon and London City Airways. After AirUK there was the same experience with FlyBe. It doesn't work for based airlines, only for inward operators. And they don't make a fortune there, demand is too peaky, midday flights operate with low loads and there's nothing profitable at weekends.