Jumbo, Etihad will be flying 4 times weekly A320s. But it won't affect UL much thanks to the codeshare deal.
What you state is not wrong at all, but will not help UL in the long run.
Let me clarify, UL is a mess from the top down. Those political Board of Directors aren't working for free, right ?
UL had 8 aircraft under ownership when GoSL took over which is now down to one and will shortly be none following 4R-ABE's return.
UL is lost in time. The management does not have a plan or a sense on what to do. Their meaning of expansion is clear from routes like CMB-CDG-MXP which are unlikely to break even. Serving a destination is not what matters, but doing it right. UL now has a golden opportunity in front of them - which UL should exploit and is the main reason why I am saying UL should expand. It is not as hard as one might think. Stringent financial measures need to be taken and are a must, which successful airline does not have ? Use some US Ex-Im financing and bonds to lease any aircraft ( should UL need ). Increase the utilization of the A320s that fall less than 8h daily. And finally appoint a management that 'can'. Downsizing is not an option because UL has nothing left to cut. The current routes are the most important. If one expects to run an airline which has routes that all break even, he better not go international. Figure out the strategy for UL. UL has a national responsibility as a national carrier of a country where private airlines are not allowed to fly international. Hence the long-hauls are important. What should not have happened is cutting down the Indian routes which could have formed a great feeder network. Selling six aircraft increased the employees per aircraft ratio. Finally cutting down will be a giving up as UL will never be able to regain that market share with the likes of EK, QR, EY and WY. This is why UL should not downsize. UL does not need to be the one hiding head in sand someday ( if it survives, of course ).
P.S: The worst thing UL management did was taking BA and AI as examples of great airlines that are in trouble.