Devon May
Chief Financial Officer at American Airlines Group
Thank you, Robert. I would also like to thank the team for delivering another outstanding quarter. During the third quarter, the average price of jet fuel increased sharply. While the rapid increase in fuel prices resulted in lower earnings in the quarter, we continue to stay focused on our priorities. As Robert mentioned, in the third quarter, we delivered a fantastic operation for our customers, we finalized the new contract for our pilots and we took further action to strengthen our balance sheet.
Excluding net special items, we reported third quarter net income of $263 million or adjusted earnings per diluted share of $0.38. This is above the high-end of our most recent guidance update, driven by slightly higher capacity and better ex-fuel unit cost performance in the quarter. American produced record third quarter revenue of approximately $13.5 billion. This revenue performance led to adjusted operating income of nearly $730 million, resulting in a third quarter adjusted operating margin of 5.4%.
Our strong operational performance in the third quarter resulted in capacity that was 6.9% higher year-over-year at the high-end of our guidance range. Revenue for the quarter was in line with what we had shared in July and unit revenue was down 6.3% versus a historically strong 2022. Unit cost, excluding net special items and fuel, was up 3.3% year-over-year, nearly a point better than the low-end of our prior guidance range. This outcome was driven by higher capacity and some expenses that were pushed to the fourth quarter.
Our significant fleet investments over the past decade allows for relatively modest aircraft capex this decade. Year-to-date, we have taken delivery of 17 mainline aircraft and we expect for more aircraft to be delivered by year end. Two narrow-body aircraft deliveries have been delayed into 2024. So we now anticipate taking delivery of a total of 21 aircraft in 2023. All of our 2023 deliveries have been financed.
Given the continued supply chain challenges the OEMs are managing, we have been in the used market for younger vintage narrow-body aircraft. We have signed an agreement with Alaska Airlines to purchase 10 Airbus A321neo aircraft that we expect to join the fleet in the fourth quarter of this year and the first quarter of 2024. Our 2023 aircraft capex is now expected to be approximately $1.9 billion, which includes a portion of the Alaska A321neo deliveries. Our 2023 non-aircraft capex is still expected to be approximately $800 million. We anticipate our 2024 total capex to be between $3 billion and $3.3 billion, slightly below our prior guide as we finalize our 2024 delivery schedules.
Looking beyond 2024, we continue to review our medium and long-term fleet needs. And we are currently engaged with Boeing and Airbus for narrow-body aircraft deliveries in the latter half of this decade and beyond. Due to the young age of our fleet, we do not have any planned aircraft retirements this decade. As a result, we continue to expect aircraft capex to average approximately $3.5 billion per year through 2030. We are very pleased to have built our fleet in a low interest rate environment and at a time when the supply chain wasn't as challenged as it is today.
A relatively low capital requirements along with our free cash flow production has allowed for significant progress in strengthening the balance sheet. We've now reduced total debt by approximately $10.9 billion from peak levels in 2021 and we're more than 70% of the way to our goal of reducing total debt by $15 billion by the end of 2025. By year end, we expect to have paid down approximately $11.5 billion and we'll be 77% of the way to our total debt reduction goal.
In addition to paying down regularly scheduled debt, year-to-date, we have proactively decreased our 2025 maturities by $2.3 billion through both the refinancing of the $1.8 billion South American term loan in the first quarter and more than $550 million of open market repurchases over the past two quarters. All three credit rating agencies recognize our progress with upgrades in the third quarter. And we expect further ratings improvements in the coming years as we continue to reduce total debt levels.
We ended the third quarter with approximately $13.5 billion of total available liquidity. And for the full year, we now expect free cash flow to approach $2 billion. The reduction from our prior free cash flow estimate is due to slightly higher aircraft capex related to the Alaska A321s and lower earnings, largely due to the recent run-up in fuel expense.
Now on to the outlook for the fourth quarter. Post Labor Day bookings have been in line with expectations. We have seen steady improvement in business travel with encouraging signs from both managed and unmanaged corporate customers, strong international demand and historically high premium revenue, both domestically and internationally. Consistent with recent trends, we expect steady demand during the upcoming peak holiday travel season. However, the strong unit revenue environment in 2022 continues to be a difficult comparison.
As a result, we expect fourth quarter TRASM to be down 5.5% to 7.5% on 4.5% to 6.5% more capacity year-over-year. We expect fourth quarter CASM-ex to be up 5% to 7% year-over-year. This step-up in sequential year-over-year CASM-ex is driven by the shift of some expenses from the third quarter to the fourth quarter and less year-over-year capacity growth. Our full year CASM-ex guide remains unchanged, up approximately 3% versus 2022. Our current forecast for the fourth quarter assumes a fuel price of between $3.01 and $3.11 per gallon. Based on our current demand assumptions and fuel price forecast, we expect to produce an adjusted operating margin of between 2% and 4% in the fourth quarter.
We continue to expect our full year capacity to be up approximately 6.5% versus 2022. Our full year forecast for TRASM is to be up approximately 1% year-over-year. And as I just mentioned, we expect our full year CASM-ex to be up approximately 3% versus 2022. Our capacity, TRASM and CASM-ex expectations for the year are all consistent with the guidance we provided in January of this year. This result speaks to the planning, focus and determination of our team. Based on our demand and fuel cost assumptions, we now expect to produce at full year adjusted operating margin of approximately 7% and adjusted EPS of between $2.25 and $2.50.
Looking ahead to 2024, we continue to expect our capacity to be up mid-single-digits year-over-year, largely driven by better overall asset utilization. Increases in capacity will be oriented to our strengths with our global partnerships complementing our own flying. In 2024, we will have the assets and resources to finally grow beyond our 2019 capacity levels, but we will be nimble and adjust capacity based on the fuel and demand environment we are operating in. We are pleased with the progress the American Airlines team has made in 2023 and we remain focused on delivering results and pursue inefficiencies to unlock additional value in 2024 and beyond.
Now, I will turn it back to Robert for closing remarks.