It's really all up to Cathay. If they are prepared to partially back down and employ the ex-CP as a line pilot, fine. (That would seem to be the fairest outcome.) But if the ex-CP gets legal, he'll run into a big problem: the court/tribunal won't substitute its own opinion for that of Cathay. All they will look at as whether dismissal was an option that was open to a reasonable employer. In other words, even if the court/tribunal thinks dismissal was unfair and that demotion would have a more appropriate punishment, it won't interfere as long as dismissal was a option that was open to a reasonable employer.