The body's adaptation to high altitude helps significantly but doesn't fully compensate for the lack of oxygen. I know that this is a difficult concept to believe because so many programs have touted the benefits of high altitude training. To fully appreciate this realize that there aren't any world record times at high altitudes. Think about this a moment. The air density is much lower, thus wind resistance is much lower.
Wind resistance is the cyclists biggest barrier to speed.
If all other factors were equal, then there must be faster times at higher altitudes. Because there aren't, means that something else must have decreased. Furthermore, while adaptation to high altitude makes you better at high altitude it hasn't proved useful for making you faster at sea level. There is a lot of mysticism that surrounds the belief of enhanced sea-level performance after altitude training, but the current scientific evidence is lacking. The reason is that some of the adaptive responses at high altitude are actually a hindrance at lower altitude.