One of the things happening at US AIrways is de-peaking of hubs. You lose a few connects but airplanes, flying crews, and ground personnel spend more time doing their job rather than waiting. (suprise - you need fewer people, gates, & planes. Look at Southwest's gate utilization and compare it to everyone else and you will see one of the reasons they have the most money in the bank) Another change is less routing passengers through hubs. Would you rather fly BOS-PHL-FLL or BOS-FLL? This also ups average stage length which is a major driver of lower cost per ASM. Another change is making a choice between PHL & PIT. No airline needs 2 hubs in the same state. Given the fact that PHL has a large enough population to provide a good traffic base, the choice was pretty obvious.
Wolfe and Gangwal did little to respond to SW. Their response was MetroJet. There was a relatively small reduction in pay associated with flying the 737-200s. The airplanes appeared to be still scheduled the same way as the rest of the system with lots of time on the ground due to significant connect times. The cost level of MetroJet was pretty close to that of mainline. As a result, US Airways couldn't compete with SW on fares.