Devon May
Chief Financial Officer at American Airlines Group
Thank you, Robert, and thank you to the American Airlines team for continuing to produce outstanding results.
In the fourth quarter and for the full year, we delivered a fantastic operation for our customers. We took further action to strengthen our balance sheet. And early this year, we finalized a new contract for our customer service team members. In the fourth quarter, excluding net special items, we reported net income of $192 million or adjusted earnings per diluted share of $0.29, and earnings results above our guidance for the quarter, driven by strong operational performance and better ex-fuel unit cost performance.
For the full year, we delivered on our stated objectives and produced results in line with the guidance we provided last January, including on-capacity production, unit revenue, CASMx and earnings per share. Excluding net special items, we generated full-year net income of $1.9 billion, or adjusted earnings per diluted share of $2.65. And importantly, for the full year, we generated free cash flow of $1.8 billion.
In 2023, American produced record revenue of approximately $53 billion. We generated an adjusted EBITDAR margin of 14.5%, and an adjusted operating margin of 7.6%. In the fourth quarter, revenue was more than $13 billion. Our adjusted EBITDAR margin was 12%, and we produced an adjusted operating margin of 5.1%. Our strong operational performance in the fourth quarter resulted in capacity that was 5.8% higher year-over-year, slightly above the midpoint of our guidance range.
Unit revenue for the quarter was in line with the midpoint of our previous guidance, down 6.4% year-over-year. Unit cost, excluding net special items and fuel, was up 4.2% year-over-year, nearly 1 point better than the low end of our prior guidance range. This outcome was driven in part by the strength of our operation, resulting in more capacity, lower overtime and premium pay and lower interrupted trip expense.
Turning now to our fleet. We have modest aircraft capex requirements this decade due to the fleet investments we made over the past decade. In 2023, we took delivery of 23 new mainline aircraft. This year, we expect to take delivery of 28 new mainline aircraft, including 20 737 MAX 8, six 787-9 and two A321neo aircraft. Our 2024 aircraft capex is expected to be approximately $2.3 billion, and our 2024 non-aircraft capex is expected to be approximately $850 million. We continue to have discussions with manufacturers for additional aircraft to deliver later this decade and into the 2030s.
Due to the young age of our fleet, we have very modest aircraft replacement needs. As a result, we expect aircraft capex to average less than $3.5 billion per year from 2025 through 2030. A relatively low capital requirements, along with our free cash flow production has allowed for significant progress in strengthening the balance sheet. We have now reduced total debt by approximately $11.4 billion from peak levels in 2021. And by the end of this year, we expect to have reduced total debt by approximately $13 billion from peak levels in 2021, which is over 85% of the way towards our $15 billion total debt reduction goal.
Now onto the outlook for 2024. Our focus this year will be to continue to deliver industry-leading reliability and to reengineer our business to ensure we run the airline as efficiently as possible while enhancing the customer experience. This year, we'll finally be producing more capacity than we did in 2019. Consistent with our prior expectations, we plan to grow capacity mid-single digits year-over-year in 2024. This growth will be enabled by improved asset utilization and new aircraft deliveries.
Based on current assumptions, we expect full-year TRASM to be flat to down 3% year-over-year. For the full year, we expect CASMx to be up approximately 0.5% to 3.5% versus 2023. This unit cost guidance reflects approximately 2.5 points of year-over-year CASMx pressure due to collective bargaining agreements ratified in 2023 and early 2024, and anticipated agreement with our flight attendants in 2024. Our ability to achieve this full-year unit cost result is due to our focus on operating more efficiently and improving our asset utilization.
In 2024, we expect aircraft utilization to be up 2% to 2.4%, and we expect to deliver approximately $400 million in cost savings through the use of digital solutions, reengineering processes and transforming procurement. We have spent the last 18 months sizing the opportunity and developing plans to reengineer our business to be more productive, while improving the customer and team member experience. We are excited about the early results, and we will spend more time discussing these opportunities in greater detail at our upcoming Investor Day. This year, we expect to produce adjusted earnings per diluted share of between $2.25 and $3.25. Using the midpoint of that guidance, we are forecasting free cash flow production of over $2 billion.
Looking at the first quarter, we expect TRASM to be down approximately 3.5% to 5.5% on 6.5% to 8.5% more capacity year-over-year. We expect first quarter CASMx to be up approximately 2% to 4% year-over-year. Recall that we did not have the cost impact of our new pilot agreement accrued in the first quarter of 2023. Our year-over-year CASMx performance improved throughout the year as we lap the pilot agreement increases.
Our current forecast for the first quarter assumes a fuel price of between $2.65 and $2.85 per gallon. Based on our current demand assumptions and fuel price forecast, we expect to produce an adjusted operating margin of between 0% and 2% in the firs -quarter, and an adjusted loss per share between $0.15 and $0.35. We are pleased with the progress the American Airlines team has made in 2023, and we remain focused on delivering results to unlock additional value in 2024 and beyond.
Now back to Robert for closing remarks.
