No you are wrong Officeboy. In an official statement released by the company CC it states clearly that "all demoted Captains are going to be paid on the FO payscale, in line with their length of service." Yes you may not believe it but it's true.
You are correct in assuming that the majority of redundancies are FO's, but that's what you get with LIFO and seniority lists. And the cost saving you talk about is achieved with this paycut for the guys being demoted. Not amazing but it's what's happened.
And furthermore, if these guys take career breaks or go to Qatar or FlyDubai, they still have their jobs back after a specified time period, at the same point on the Seniority list. I think a fairly good deal to be honest, considering the circumstances.