How does altitude affect power output?

A couple of years ago I took a vacation to Colorado and spent a week bicycling in the mountains. I had my SRM equipped road bike along. I can personally attest, there is a noticeable loss of power at altitude.

At first I felt like I had no power at all. It seemed like any effort anywhere near FTP left me gasping for air. After a few days' acclimation the riding got better - power came up to respectable levels and I re-calibrated my own sense of what exertion level would send me into the red zone.

When I returned home I did some research about loss of power in the mountains. I wanted to know what happened to functional threshold power at altitude. Obviously it went down. But I wanted to understand whether there was a mathematical relationship between my wattage at different altitudes.

What I found is there are a handful of studies where exercise physiologists have tried to quantify power loss as a function of altitude. The results of the studies were all within a few percentage points of each other. Because I'm an engineer and not a scientist, I figured I'd just average them all together. After all, how exact does it need to be?

Here is the table I created from the data I found. It shows approximately what kind of wattage you should be able to produce at any given altitude.

   Altitude		
 Feet	Meters  % FTP
     0       0    100%
  1000     300     99%
  2000     610     98%
  3000     910     96%
  4000    1220     95%
  5000    1520     93%
  6000    1830     92%
  7000    2130     90%
  8000    2440     88%
  9000    2740     86%
10,000    3050     83%
11,000    3350     81%
12,000    3660     78%
13,000    3960     75%
14,000    4270     72%

You can use this table to figure out what wattage you can produce, or what your FTP will be, for whatever altitude you're headed for. Just divide your current FTP wattage by the %FTP percentage corresponding to the altitude you live at. Then multiply that number by the %FTP percentage for the altitude you'll be riding at.

An example
Suppose you live at 3000ft. and you'll be riding at 10,000ft. Your FTP is 300watts. To get your equivalent FTP for your ride at altitude, the first thing you do is divide FTP by the %FTP for 3000ft.:
300 / 96% = 312.5
Now multiply this number by the %FTP for 10,000ft.:
312.5 * 83% = 259watts
Your power output at altitude will roughly correspond to an FTP equivalent of 259 watts.