These in house airlines have mostly merged into what is left today due to the slow retraction of the package holiday market. However the pilots, especially those near the top of the seniority tree, continue to receive benefits applicable to the good old days. It is unsustainable and will eventually lead to the return of the independent charter airline, or purchase of low fare seats, and demise of the in-house airline.
Well Zoareth has shown an unusually oblique understanding of the charter holiday industry. The OPERATORS merged, that was the driving force that meant that their associated airlines merged. The OPERATORS failed to sell holidays at sufficient profit, hence the whole of the OPERATOR's company is in trouble, not just the airline. Ts & Cs of pilots as a cause of decline are a red herring (unless of course you are are managing a declining company, in which case they are a smokescreen.)