Unfortunately I fear that 1A is dead right. I think that AJ's thought is that he can't lose. Either the PIA's are terminated and he wins, or he "loses" the FWA case but keeps QF grounded - replacing capacity with Jetstar.
I think that we all pretty much agree that has been his long term goal anyway - so what if he loses 25% of the corporate market, he'll operate a v large lcc.