There's no good way to rationalise that huge number, IMO. Even being enormously generous with the complement of an Orion, that figure of 504 pilots is at least two or three entire Orion complements, with a more realistic interpretation of the tech description for the Orion, it's more likely somewhere around 5 entire complements.
And that's everything from interceptors and scouts to heavy bombers wiped out completely, which doesn't seem likely - realistically, to lose 500 pilots, you'd expect partial losses from 6 or 7 destroyers, and those kinds of numbers just don't tally with what we see in FS 1 or 2, unless this was a mire it less whole-of-fleet operation... which is possible, but you'd think an operation like that failing would deserve more than a few lines in a briefing.
If you were desperate to use the number and wanted to fanfic or FRED around it though, there are some possibilities.
1. Significantly more pilots died than airframes.
If the GTA have multiple pilots available on a given airframe on a given ship, then you can imagine an event that kills significant numbers of pilots outside of direct combat. Possibly a transport or convoy carrying replacement pilots was destroyed, or possibly a barracks or something on an Orion was destroyed in battle, killing a lot of pilots without them ever getting into fighters.
2. A big, unknown carrier class was involved.
If there was a large carrier in use at the time that we simply never encountered in FS1, it's possible that a lot of airframes might have been destroyed without requiring vast numbers of destroyers to be committed. Seems like something that might have been mentioned in FS1 though if something that large existed within the fleet.
3. It went on a very long time.
If Operation Thresher was a long term thing, like the way the US names things like "Operation Enduring Freedom" that last years, that casualty rate is more understandable. Granted, the way the briefing is delivered makes it sound like an event rather than a long term thing, but that's never confirmed explicitly. 504 pilots lost over a year long engagement is far more realistic.
That said, I don't like it, partially because of the way it's delivered, but largely because I just don't see the TV war working that way, as a full-time, 14 year long high intensity hot war. I've always thought of it as more like a semi cold war punctuated by major operations. I just can't see that kind of casualty rate being maintained for 14 years straight.
Short answer, it's a bad figure that's difficult (but not quite impossible) to justify.
