Two thoughts. Firstly, Northern and ATW will usually get second hand stock. When we then talk about them being loss-making, we are attributing the cost of the (less-profitable) trains to them, so that the South East can get new trains. There's nothing wrong with this, of course, and it makes good business sense for the trains to migrate north in the later years, but there are some of these 'losses' which would exist elsewhere if the trains didn't have regional railways to migrate to?
I don't see Northern in a catch 22 situation. If more/longer (I know, lots of platforms are currently short) trains generate more customers, that shares out many of the fixed costs (driver, guard, station staff, to some extent infrastructure). This should lower the cost-per-mile subsidy, which is a good thing, and be good for the economy. The fact that the absolute cost is higher shouldn't be a real worry.