Why does capacity “cutting” lead to a firm’s recovery from losses? 

by on December 6, 2010

Q: The other day I was looking at an article and after reading and doing some research I still don’t understand, why capacity “cutting” leads to a firm’s recovery from losses?

For example when Delta Airlines posted big profit but shares fell…here is a link to the article
http://www.nytimes.com/2010/07/20/business/20air.html

Thanks for your help!