In fact you are right; pride has nothing to do with it. CityJet simply would not have existed anymore if it wasn't for Air France. They are flying on Air France slots on pretty much every route they operate so as soon as Air France pulls out WX is non-existant. They wouldn't have anywhere to fly and, , I doubt anybody could even find them because the brandname CityJet is completely unknown to most people. (90% of their passengers buy tickets for an AIR FRANCE flight.)
It is quite clear that AF is trying to move CityJet out of Paris, most likely because of pressure from BritAir and Regional. At least Air France is giving them a chance to stay in business as the AF-provider out of the UK and Dublin. To be courteous to its neighbour, British Airways, Air France has decided to not start an Air France-base in London and call it CityJet for AF. Makes perfect sense to me...
That it might not be a commercially viable option is a different matter. but they could have just pull the plug .