This photograph kind of makes you realize just how close we are to the first airplane rollout and first flight later this year. Production of this forward section is an important step, and an exciting milestone, too.

This all-composite 787 section is 21 feet (6.4 m) in diameter, and 42 feet (12.8m) long. The photo, taken at Spirit AeroSystems in Wichita, Kansas, gives a good sense of the size and scale of the airplane.

Spirit AeroSystems is a program partner on the Dreamliner program, and is not only producing the forward section in Wichita, but is designing and manufacturing the 787’s pylons – which hold the engines to the airplane. And in Tulsa, Spirit is designing and building the leading edges of the wings.

As I’m sure you know, we’re pioneering some new manufacturing techniques to build the composite fuselage sections of the 787. On this piece, Spirit employs state-of-the-art fiber placement equipment to apply composite “plies” over the complex contours of the airplane. Then the forward section is wrapped and prepared for curing in a giant autoclave. The heat of the autoclave transforms the composite material into an extremely strong and reliable structure.

The forward section has also successfully completed a non-destructive inspection process, using high-frequency sound waves to scan for imperfections in the composite skin. The tests confirmed the structural integrity of the section – and set the stage for delivery of the first forward sections for final assembly.

Before you know it, forward sections will be on their way from Wichita to Everett on the Dreamlifter. Like I said, we’re getting close.

But what about all the pilots we’re going to need to fly those airplanes? It’s an angle that doesn’t get a lot of attention. By our estimates there’s a need for 17,000 new pilots a year to operate the aircraft entering the market - and even more will be needed to fill the seats of retiring pilots.

For example, more than 35,000 pilots will be needed in the huge growth market of China alone over the next 20 years - just to support new airplane deliveries.

Coming soon to Alteon Training centers around the world: a 787 Dreamliner simulator.

So there’s a good deal of pressure right now to train more pilots. You may have read in the news last month that Alteon Training, a Boeing subsidiary and the world’s largest airline training company, has just opened a new training center in Singapore. We think this new center will greatly expand our ability to meet the demand for aviation training in the region.

At this new facility, and the other 22 centers in the world, Alteon’s staff of more than 400 instructors is going to be very busy training new pilots on Boeing models, and on Airbus and Fokker airplanes. The facility can train more than 6,000 pilot crews a year - as well as maintenance and cabin crews.

Another key piece of the story is the new pilot program (no pun intended) to provide jet-ready, airline qualified pilots to the airlines. In Australia we’re beginning tests on the Multi-Crew Pilot License (MPL) program which is aimed at developing airline-qualified pilots more efficiently and effectively.

The Alteon MPL program focuses on developing the skills, knowledge, and competencies a crew member will need in order to perform their role at the airline. Cadets will learn in a multi-crew environment right from the start, integrating theory and practice in both aircraft and simulators. This helps prepare them for a First Officer position in about 15 months instead of the current two to three year process.

Now keep in mind, reduced training time doesn’t mean the program will be any less comprehensive or rigorous. The mandate of the program and the beta test is that training will achieve the same or better results than traditional training methods.

The time savings are actually the result of improvements in training techniques. The MPL program maximizes simulator training and minimizes the amount of “negative training” - the learning and unlearning found in some traditional training methods. And of course, safety is of utmost importance.

Airlines, regulators and flight schools are invited to participate throughout the program. Sharing lessons learned is an important part of developing and delivering this beta training to the industry.

What I like about the Alteon story overall is that it’s a good example of listening to customers. When airlines said they needed more training facilities closer to where they operate, Alteon took note - and now operates more than 80 simulators in 13 countries.

This kind of working together saves our customers time and money. And that’s always a good thing.

My colleague Blake Emery, who has the unique title of Director, Differentiation Strategy, is your host on the audio/visual tour.

You might also want to revisit the 747-8 Website. We've refreshed this site with new imagery on the home page and a "Step Onboard the 747-8" interactive video. The video has "hotspot" links, that when you click on them, take you further inside the airplane - including a look at the upper deck, the entry stairway, views out the windows, and an interactive peek inside the new overhead luggage spaces.

The -8 Website also has been updated with new photos and other multimedia. You might have seen some of the images recently because the new interior has gotten quite of bit of media attention in the past few weeks.

What's coming up for the Intercontinental? Well, we're working on a few podcasts, which promise to provide even more insight into this "dashing" new airplane.

Well, here we are, having just released our performance report for the fourth quarter and full-year 2006, and I'd say a lot of the "measures for success" we talked about last year have borne fruit.

Speaking of "gaining altitude," 787 Dreamliner major assembly is well underway as we work toward rollout and first flight later this year. Here, section 43, built by our partner KHI, waits to be shipped to Global Aeronautica in Charleston, South Carolina. The first shipment arrived in Charleston on January 15.

And 2007 promises to be another exciting year. But I'm getting ahead of myself.

We've already talked here a bit about the many accomplishments of 2006. As CEO Jim McNerney put it very succinctly yesterday, "2006 was a very good year for Boeing." Indeed the company set records in revenue, cash flow and backlog. We also overcame some meaningful challenges.

Some of the highlights:

• BCA deliveries rose 37% to 398 airplanes
• BCA revenue rose 33% to $28.5 billion
• Net orders for 2006 were a record 1,044 airplanes
• The 737 program achieved a another record tally - 729 net orders
• 787 Dreamliner now has 452 firm orders from 36 customers

And thanks to a second straight year of record commercial airplane orders, BCA's contractual backlog rose to a record $174 billion. So obviously things are looking up.

Last January I noted that 2005 was a "great ride." And as I've said before, who knew at that time that 2006 would be an even greater ride?

But as each year becomes an even tougher act to follow, it just means we have to concentrate all the more on developing and providing the products and services that our customers and the market demand.

Good results don't let us off the hook for our obligations for tomorrow. We all have to continue to work hard - and meet our commitments to our customers, and also to our employees, investors, and communities.

And as you might expect, we've set the bar high for 2007 and 2008. BCA's 2007 delivery guidance remains 440 - 445 airplanes and is completely sold out. Airplane deliveries in 2008 are expected to rise to between 515 and 520 airplanes and are essentially sold out. And we foresee deliveries to be higher still in 2009.

What else is ahead? The first deliveries for the 737-700ER and 737-900ER later this year; continued orders and deliveries of the 767; the 787 rollout and first flight - leading up to first delivery in 2008; four customers taking their first 777 deliveries this year; firm configuration of the 747-8 Intercontinental; and of course the Air Force tanker competition.

Yes, it's going to be very busy. A lot to accomplish. It's all about keeping our focus as we continue gaining altitude.

One of the big stories, I think, is that the last two years have really been unprecedented for our industry - with about 2,000 commercial airplane orders each year between Boeing and Airbus.

Another big point is that single-aisles are selling like gangbusters. The Next-Generation 737 program again set a record for sales, but the A320 is a strong competitor, and we see this as continuing to be about a 50/50 market.

But looking at the widebody market, in the below 400-seat category, once again the 767, 777, and 787 families have significantly outsold the A330/A340/A350 families. It's a continued validation of Boeing's twin-aisle strategy - which we embarked on about four or five years ago.

The decision at that time, you may remember, was to concentrate our twin-aisle focus on that below 400-seat segment, which is about 90% of our forecast widebody deliveries over the next 20 years.

For two years in a row, Boeing has garnered at least 70% of the widebody market share, once again confirming the Boeing product strategy.

And when you get into the larger airplanes, the 747 and A380, the 747 had an outstanding year with 72 orders, including the 747-8 Intercontinental order from Lufthansa, validating the need for a good replacement airplane for the 747-400 passenger airplanes. In 2006, the 747 program had its best year since 1990.

In the dedicated freighter market, Boeing had 81 orders for 777 and 747 freighters - demonstrating the robust freighter market we're experiencing.

Looking ahead, I think we're going to see continued strength in the freighter market. In fact, as I've mentioned before, the demand for new airplanes overall looks to remain strong.

Today there are about 2,500 commercial airplanes in operation that have been in service 20 years or more. In the next decade another 5,000 airplanes will reach 20 years - for a total of 7,500. Many of those airplanes are going to need to be replaced by new-technology models.

Finally, you're probably wondering what I think about how the orders "race" shaped up in 2006. I've thought a lot about this question in the past week, and the best way to put the sentiment into words is that in a competitive business like this, you win some and you lose some, and it always feels better to win. But it's more important that our customers win.

So, I don't think it's really about celebrating who had the bigger numbers. It's about the quality of the order base, including great customers across all models of our product families, and the value that those products are providing our customers.

It sounds technical, but it’s actually good news for the traveling public, which I’ll explain in a moment.

This all goes back to a discussion we had previously here in the blog regarding extended operations flights. As I noted before, we have a lot of years of data and flight records showing that twin-engine airplanes are more efficient, more economical, and more reliable than three- or four-engine airplanes.

And part of the interesting news I get out of this announcement is that the rules under which airlines have been operating long-range twin-engine passenger airplanes have been so effective that the FAA has decided it makes sense for three- and four-engine jetliners to have the same operational standards.

The new rules are based on the proven track record that we’ve been working on for decades. We’ve always believed that what matters is the total reliability of the whole airplane system, not the number of engines an airplane has.

The ruling allows for the certification of long-range 777s and the 787 Dreamliner to operate on virtually any route in the world in the most efficient manner possible. And of course, extending the operating capabilities of twin-engine airplanes allows for more direct routing, and opens up more choices for airlines in terms of size and type of airplanes on long-range routes.

Twin-engine airplanes are, by definition, more efficient, weigh less, and have fewer emissions than similar sized airplanes with three and four engines. For example, the A340-600 consumes over 20% more fuel compared with the 777-300ER. Higher fuel consumption generates higher emissions.

But really, this is a victory for the traveling public. Twins on more routes will mean lower operating costs - which should mean lower fares. And it will help travelers get where they want to go with more flights to more destinations with more direct routing, and fewer connections and delays.

It should make the whole system more efficient, more reliable, and overall more convenient for passengers.

My thoughts exactly.

Who’da thunk it, right? One year ago we thought, no way could we see a repeat of 2005. But for a second year in a row Boeing has achieved a record for orders. It was another remarkable year not only for us but for our customers and the industry as a whole.

As Yogi would say, “You can observe a lot by watching.” And no doubt we’ll be observing many more of these rolling out of the factory next year. This is the newest model Next-Generation 737, the 737-700ER, rolling out for the first time earlier this week.

Customers have endorsed our product line across the board, from single-aisles, to mid-size widebodies, all the way up to the amazing performance of the 747 this year. The 1,044 net orders recorded in 2006 are the most this company has ever booked in a single year. It adds up to a strong, well-balanced backlog, with significant orders from customers around the globe.

And it says to me that the recovery in the aviation industry is going strong, with sustained traffic growth, increases in point-to-point travel, new routes and more frequencies, and continued demand for new fuel-efficient airplanes.

But of course at this point everyone likes to talk about the numbers. And this time every year I get asked two very difficult questions.

The first question is: What’s your prediction for 2007 orders?

And I wish I had an answer to that, because I’m tired of answering that question. (That’s another Yogi-ism, by the way.)

Anyway, the deal is that Boeing does not forecast orders. I couldn’t even if I tried. Look at the past two years. You just can’t predict stuff like this. So the best way to answer this is to say that a lot of factors are involved, and it’s impossible to forecast how the business environment will translate into order totals in 2007.

But we can say - as we said last year - that the basic industry fundamentals remain sound. In a general sense I’d expect this order cycle to continue. Keep in mind that a number of traditional North American and European carriers have not yet participated in this cycle in a big way.

And certainly demand for new airplanes continues to be strong, both for meeting growth and for replacing older airplanes with newer, more efficient models that use less fuel and offer lower overall operating costs.

So while we don’t make predictions about orders, especially in the wake of two record years, there’s every reason to believe that 2007 will be another good year.

And now the second difficult question I get asked this time each year: Who’s going to win the orders race, Boeing or Airbus?

And to that I say, check back in a few weeks. After all, it ain’t over ‘till it’s over.

So many things have happened in our business in 2006 I don't even know where to begin. I guess I can just sum up by saying that with more than 900 orders and counting for the year, there's no way anyone could have predicted the amazing, sustained, strong demand for airplanes we've been seeing.

With 619 orders for the Next-Generation 737 so far this year, we have already smashed the single-year sales record for our single-aisles (which we set in 2005). I know that in the past year there's been a lot of buzz speculating about an all-new airplane in the 737/A320 size category. But quite frankly, the 737 is doing very well, and sets a very high hurdle to beat.

The 787 Dreamliner program has already set a record as the fastest-selling commercial airplane ever. We've seen major assembly get underway in recent months, as orders increased to 438 airplanes from 35 customers since launch. And we remain on schedule for first flight next year.

Since the December 6 announcement, the halls of Boeing Commercial Airplanes have been decked with banners celebrating Lufthansa and
the 747-8 Intercontinental.

Just a couple of weeks ago, a major customer came on board for the Intercontinental when Lufthansa announced as the first airline order for the passenger model of the 747-8. This being coffee-crazy Seattle, some of us celebrated that day with espresso and lattes!

The 747 has logged 67 orders in 2006, including some 747-400 freighters - the most 747 orders in a single year since 1990. For the 747-8 alone, we've seen 73 orders since program launch a little over a year ago.

The 777 is having another solid year, with 61 orders so far, and the 600th 777 delivery just last week. The 767 program received orders for 10 airplanes - passenger and freighter - from two customers in 2006, increasing the backlog of 767 orders that will already extend the life of the program for several more years.

Boeing Business Jets is having a stellar year, with 21 orders, and the launch of the 747 and 787 VIP models.

And in Commercial Aviation Services, we expanded with some key, strategic acquisitions, such as Aviall and Carmen Systems, and we offered the GoldCare Lifecycle Support Solution, with seven aviation industry leaders now signed to the team.

I'd be remiss if I didn't also mention the blog itself. It's likely that by the end of this month we will have surpassed the half-million mark in terms of individual visits to Randy's Journal since we started this blog about 23 months ago.

I can't tell you how much that means to me personally, that people from all over the globe take the time to check out this page regularly. It shows what a continued commitment and interest our visitors have in the Boeing Company and in the dynamic world of commercial aviation. Your comments are fascinating, intelligent, often thought-provoking, and sometimes just plain bizarre. I can't answer them all, but I can assure you I do read them all.

This blog has been a real surprise to me over these past couple of years. It's been used as source material (!) in news articles, and has been cited in Web articles about corporate blogging. It's all been somewhat surreal, but the blog sure is achieving one thing, the big reason we started it - spreading to a wider audience the word about the important issues in commercial aviation and Boeing's vision of the future of flight.

In 2007 we hope to be making another small step - as we take our blogging software and design a little further. Like anything else that's new, this has been a learning process, and we appreciate all the feedback. I'm glad you've been along for the ride. And I can't wait to see what the next year has in store for our company and for the business of flying.

Until then, all the best to you, whatever your year-end celebrations may be, and we'll talk again at the start of the year!

But as we approach the end of 2006, the Dreamliner remains on schedule. We understand the challenges, and we're managing those issues along the way.

A "virtual landing" - the Dreamliner is on its way, as depicted in this new image.

This year we completed a number of important events in the development of the 787, with test articles completed and the first inner subcontractor shipments made. In addition, the 787 engines are performing as we expected and we're well in advance of where we've been in typical engine development at this stage in the past.

I'm sure you've heard that the airplane is "overweight." Well, most new airplanes at this point in the program are. We have a plan on how to bring the weight down. But the good news is, while the weight's up a little bit, our performance and operating costs assessments are actually better than what we had projected.

To quote Scott Carson, BCA's president and CEO, at a conference last week, "These are hard projects to do, but we're very satisfied with the progress we have made. We remain laser focused on the execution of our promises and commitments on this program as we move into next year. But we know it will be a challenging year and we'll learn a lot as we go through it."

Still, before we turn to 2007, let's acknowledge some big milestones so far. This year major assembly started on time, and our structure partners around the world are building their key parts of the airplane and "spinning" fuselage barrels. The "Systems" team has also made tremendous progress - opening new laboratories, testing our flight control system, and beginning to deliver the first production parts.

Simulations such as this 787 final assembly factory flow diagram are the culmination of the challenge to digitally "build the airplane before you build it."

And as if to put a cap on things, the program just held a "virtual rollout" event at the Everett factory. This was a way for customers, partners, and employees to celebrate the 787 Dreamliner's solid progress over the past year, and to recognize the completion of detailed analysis of the build process of the airplane.

One of the cool things demonstrated during the event was the new "digital toolset," provided by Dassault Systemes, and a number of engineering-based simulations ranging from parts installations to final assembly factory flow.

The computer simulation is designed to prove the "manufacturability" of the 787. As program chief Mike Bair said, "Our tools have enabled us to model the entire production process from our partners' factories to our own. We have found errors in simulation that would have been costly to find in production and have been able to design corrections quickly to keep the program on track."

The 787 program has unveiled a new paint scheme for the 747-400 Large Cargo Freighter and a new name for the giant freighter: "Dreamlifter." The second of three freighters will be arriving in Seattle next month already painted and ready for flight testing.

Now to 2007. It's the year when many of the program's major milestones will be completed. 787 production in the Everett factory will get underway. Rollout of the airplane and first flight will take place in 2007, as well as the beginning of the flight test program. Every year has been important so far, but next year will certainly be the most dynamic as we head toward deliveries in 2008.

As Mike Bair said last week, this is why we came to work for Boeing. "To create new airplanes that bring new levels of performance to our customers and new levels of comfort and convenience to the passengers of the world."

And I'd have to agree with Mike's conclusion that this has been an amazing journey - but the best is yet to come.

Or better yet, the shape of the future is a beautiful, iconic airplane called the 747. With the fabulous endorsement from Lufthansa of the 747-8 Intercontinental, clearly passengers are going to be flying in this amazing machine for many years to come.

Lufthansa is the first airline to place an order for the 747-8 Intercontinental.

I, for one, never gave up on the 747. There was a time not too long ago when the media was writing the epitaph for the Queen of the Skies. Some have even been quoted this week as saying the 747 is on its "last legs." But does an airplane that has had 73 orders since its launch just over a year ago sound like it's on its last legs?

I'm reminded of what Joe Sutter told me earlier this year, when he pointed out that there have been lots of airplanes designed after the 747, but none have been able to fly faster or adapt better over the years. As Joe put it: "It's been able to absorb technology in every area - structure, aerodynamics, power plant, cockpit systems. It's just as modern as any airplane flying out there because Boeing has continued to invest in the product, and the basic product was right, so the investment pays off."

And the fact is, with the breakthrough engines from the 787 Dreamliner, an aerodynamically advanced wing with newly designed raked wingtips, an upgraded flight deck, and a longer passenger cabin that's completely redesigned based on the 787 interior, this is going to be a great airplane, and will be the most efficient large airplane out there, on a per seat basis.

A few words about the Lufthansa order. You couldn't ask for a better launch customer for the passenger model of the 747-8. Beginning in 2010, they'll take delivery of 20 747-8 Intercontinentals.

The new 747-8 interior is on display at the Customer Experience Center in Renton. It incorporates 787 innovations such as curved, upswept architecture, bigger bins, and mood-lighting technology.

Not only will the new 747-8s mean further efficiency through fleet modernization and a reduction of fuel and operating costs, but as Lufthansa stated this week, the 747-8 is a sustainable investment in environmental efficiency.

The 747-8 features advanced technologies from the 787, including the breakthrough new GE-nx67 engines. These technologies allow the 747-8 to reduce fuel consumption and carbon dioxide emissions by 15% compared to the 747-400s it will replace. In addition, the -8 will generate 30% less noise than its predecessor, and meets the London QC2 airport noise level standards.

Lufthansa says its 747-8s will be configured to about 400 seats, and that the -8 "slots neatly capacity-wise between the A380 with around 550 seats and the A340-600 with around 300 seats."

This is exactly how we envisioned the 747-8 fitting with A380 operators. Other 747 operators who may not need an airplane as large as the A380 will see the -8 as a perfect airplane for the top of their fleet.

Our new 747-8 Website features some pretty cool flight videos and further details on the Shape of the Future. Click on the image to go directly to the site.

Remember, the 747-8 Intercontinental remains in the 400-500 seat market. It is not a direct competitor in the over-500-seat market, where the A380 is offered. We've been saying for some time that we've positioned the -8 in the traditional 747-size market and timed it correctly for the 747-400 replacement cycle. For those few operators that need a larger airplane, sure, the A380 may be a choice.

But clearly, Lufthansa's order validates the market for the 747-8 Intercontinental. The 747-8 program now has orders for 49 freighters and 24 Intercontinental airplanes (20 to Lufthansa, and four split between two unidentified customers) in just over a year.

Joe Sutter's vision truly became the shape of the future for millions of travelers around the world. And today we're proud to be partnered with Lufthansa to help shape the future, once again.

And in general, it doesn't appear to be much different from what was announced at Farnborough. The only significant differences that we see at this point are in the areas of:

• Timing
• Composites

Airbus says we won't see the first A350-900 until 2013 - which is a year later than previously announced. The first A350-800 is now scheduled for 2014, and the first A350-1000 will not be delivered until at least 2015. This makes the initial A350 delivery at least five years behind the 787 Dreamliner.

And their biggest model, the -1000, which is to compete with the 777-300ER, won't be arriving until nine years from today. Mind you, we forecast a market of 1,450 airplane deliveries in this size category (200-400 seats) between now and 2015.

Enough said about timing.

The other change we see is in the commitment to more composites. They've dramatically reversed course and decided to join us in building an airplane with a composite fuselage, taking the total use of composites to about 50%. (I seem to recall that in talking about the early A350 they proclaimed that the "optimum" amount of composites for an airplane was about 30%.)

We see this change as a rational and smart decision. However their fuselage - as we understand it - is going to be constructed in a traditional manner, except with composite panels rather than aluminum panels. For an airplane like the 787, we think that sacrifices some of the benefits of going with composite material.

Airbus claims it is going with composite panels because of their "repairability." We chose to go with the barrel manufacturing approach because it is lighter and more efficient. The repairability aspects are comparable.

Airbus' view is that panels make it easier to repair. But in fact, repairs would be made in a similar way on either airplane. As I like to think of it, if you have a hole in the wall of your house, would you take down the entire wallboard to repair it? Of course not. You'd just fix the hole.

Elsewhere, I was surprised to see in some reports that Airbus continues to muddle its comparisons between the A350 and various Boeing airplanes in order to claim a seat-efficiency advantage. As I pointed out during and after Farnborough, why would you compare a 270-seat A350 with a 240-seat 787, when you can compare it with the 787-9 which seats 280? It's misleading when you don't compare like sizes to like sizes.

The 787 and 777 - better market coverage, a more efficient fleet, and available sooner. (Note: 777s are shown in two seat classes, 9-abreast premium economy and 10-abreast standard economy.)

There's still a lot to understand about the A350 family, and we'll report more here as we learn more. But there's nothing contained in the Airbus launch announcement that alters the Boeing product strategy. The 787 and 777 continue to be the perfect combination to cover this very broad 200-400 seat market. Keep in mind that this segment is forecasted to make up 90% of all passenger widebody deliveries over the next 20 years.

Finally, there's a school of thought that says being second to market is good, because you can respond to whatever the competitor has done. In defense of this argument people have referenced the success of the Boeing 777 against the A340.

Well let me tell you why this is different. With the 777 we were about two years after the A340. But the key difference was a technology breakthrough - two engines over four engines, and the efficiency that came with that breakthrough.

With the A350 we're talking five years later, at least - and with comparable technology. So where is the breakthrough in the A350 that makes being second a significant advantage?

And simply put, liberalization in this context refers to the phenomenon of commercial aviation around the world moving from being highly regulated to a more open and competitive marketplace.

Earlier this year an important study came out, taking a look at the economic impact of liberalization. And I've been meaning to share it with you and talk a bit about what it means for our business.

Over the past 25 years, three main forces have radically changed the airline industry: the regulatory environment, airplane/aerospace capabilities, and airline strategies/business models.

First, changes to government regulations have been critical in shaping the airline industry. Since the deregulation of the U.S. market in 1978, we've seen a dramatic shift in domestic and international markets. And we've also seen increased liberalization - even "open skies" - in international markets. This freer market access has had the effect of intensifying airline competition and causing airlines to focus more on what passengers want.

Second, airplane capability has reshaped airline networks. Today, airlines have a much greater selection of airplane types, with capacity and range combinations to meet competitive market demands.

And finally, this combination of changing regulation and improved airplane capabilities has shaped airline strategies and business models. The events of the recent down cycle accelerated the effects of these factors.

All of these forces will continue to drive our industry's evolution.

You can find out a lot more inside the study that I mentioned, The Economic Impact of Air Service Liberalization. It was conducted by a well-respected and credible third-party expert, InterVISTAS Consulting, and takes a look at the benefits of liberalization for the commercial aviation industry as well as for national economies.

Liberalizing air transportation directly affects economies by increasing flight frequencies and business and leisure traffic. And this increased travel demand drives GDP, jobs, travel, tourism, and exports.

Now, what about the effect of this growth on the environment? Well, as I've mentioned here in the blog before, it's important to understand that commercial aviation is one of the more efficient means of transportation. Enormous strides have been made by the aviation industry in reducing fuel consumption and the release of CO2 - about 70% since the jet age began. In fact, flying from point A to point B has less environmental impact than going by car or even high-speed train.

Boeing was one of the co-sponsors of the study. We took part because nobody had ever formally studied the issue in this manner. Before now, there was no hard data to support the conventional wisdom that liberalizing air travel had tangible economic benefits.

Although Airbus did not take part in the study, it's important to point out that both companies will benefit from liberalization since it so clearly leads to growth in air travel and the need for really good, efficient airplanes.

And I'm feeling more liberated just talking about how it helps both of us!

In general, the new A350 offering is an improvement over the existing Airbus A330 and 4-engined A340 families. But the A350 still lacks answers to several key technological questions for an airplane entering service as much as 8 or so years from today.

In addition, Airbus is trying to cover the very broad 200 to 400 seat market with just one airplane family. Something that is very difficult to do. And it leaves Airbus basically with no entry in the sizeable 200-250 seat market (where the 787-8 is positioned). About 1,500 airplanes of that size will need to be replaced (A300, A310, 767).

Obviously our views on the A350 are based on what Airbus announced at Farnborough earlier this year. I expect there will be more changes to the design, because the current configuration seems to fall short of what the market is looking for.

The 777 and 787: still the perfect combination - depicted here as they might look parked together at the gate in the near future.

Airbus has previously released some information on seating capacity, range, and economic comparisons vs. the Boeing 787 and 777, with little technical detail to back up their claims. Even by 2015, Boeing doesn't foresee the availability of technologies needed to produce an aircraft with the capabilities and economics that Airbus was advertising at Farnborough.

And one of the important things to keep in mind as you hear about the A350: Airbus compares each A350XWB model with a Boeing airplane that is significantly smaller, rather than comparing like-sizes. This has the effect of distorting the per-seat efficiency comparisons to their advantage.

For example, Airbus compares the A350-800 at 270 seats to the 787-8 at 242 seats - a 28-seat differential. A more appropriate comparison is with the 787-9 which seats 280 - a 10-seat differential.

Something else to remember: Airbus is comparing the relative efficiency of the A350 - not due to enter service until sometime after 2012 - to today's versions of the 777 family. But Boeing continuously adds technology to the 777 product line - note the recent introductions of the 777-300ER, 777-200LR, and 777 Freighter - and we'll look to further improve our twin-aisle products by incorporating the latest technologies.

And as I've noted before, there is a market for more than 1,400 new airplane deliveries between now and 2015 in the 200-400 seat market. What airline can afford to wait?

Finally, you ought to view the "XWB" label with a bit of skepticism. While the A350XWB may claim to be 3 to 5 inches wider than the 787 (which adds little to no value), it is 10 to 12 inches narrower than the 777. I still don't quite get the claim of "Xtra Wide Body" when 2 out of 3 of its models compete directly with the 777, which is significantly wider.

So, having summed that all up, I will now turn my attention to working on an extra wide body of my own. I'll be feasting on the traditional American Thanksgiving turkey dinner tomorrow!

Of course, all airlines were once startups. And some relatively recent startups have enjoyed enormous success and have evolved into industry giants.

But there have been hundreds more worldwide that have valiantly tried but ultimately failed to "make it" in the extremely competitive airline industry. This is a tough, tough business to get a toe-hold in. Only about one percent of carriers that get off the ground actually succeed in the long run.

Maybe you've heard the saying from Virgin Atlantic Airways Chairman Sir Richard Branson: "What's the best way to become a millionaire? Start off as a billionaire and launch an airline."

StartupBoeing.com is a great resource for entrepreneurs interested in starting a new airline.

But seriously, if against the odds you decide you want to start an airline, where do you begin? Boeing receives hundreds of requests each year from startup airlines, entrepreneurs, investor groups, and many others seeking our help. So we've decided to create a single place to provide experienced answers for a startup's questions.

We've launched a Website called StartupBoeing. On the site are some tools and resources to help future aviation entrepreneurs get started. You could almost call it a "one-stop shop" for folks who have a serious interest in starting an airline.

StartupBoeing consolidates all the ingredients to get started: business plan outlines, airplane selection data, airplane sourcing information, and links to a wide variety of internal and external resources. Everything is geared to the specific needs of startup airlines.

But let me repeat something. Starting an airline is not easy.

The absolute essential ingredient, as with any other venture, is a sound business plan. And we think StartupBoeing will help potential startups think about the right questions and considerations to prepare that plan.

Some of the things I would suggest considering are: understanding the market, developing a competitive advantage, and creating a mix of products and services customized to the opportunity. You also have to think about who will manage the airline. And of course, how to raise all-important capital.

Now here's the good part. There are Boeing experts behind the scenes to help along the way. They won't write a business plan for a startup, but they can evaluate it and provide feedback and insight.

So why are we doing this? Sure, we love to sell airplanes. But we also believe in using our expertise and resources to help all potential customers succeed for the good of the airline industry. In the past, these questions were handled by multiple organizations within Boeing. This Website will allow us to use our resources more efficiently so we can be more responsive and provide more thorough and complete information.

And above all, we want to do what we can to help create healthy airlines that promote safe, reliable and profitable operations.

So if you've ever dreamed of starting an airline, check out the new site. Maybe you can be the exception to Sir Richard's rule.

We visited Shanghai, Beijing, Guangzhou, and finished up at the air show in Zhuhai.

Our visit started with a media briefing in Shanghai to present the 2006 Current Market Outlook (CMO). The event opened with presentations by me, followed by Bates, who is our regional director of product marketing. It ended with a spirited media Q & A session.

Here I am presenting the CMO, while off-camera, Adele Long, our Boeing interpreter, translates for the Chinese media.

We had a great turnout, with 40 journalists attending the event - including the Xinhua News Agency, and the China News Agency, as well as the China Daily, and Shanghai Online. There was a lot of interest in Boeing's outlook and product strategy, especially in what we see for China and the Asia-Pacific region.

During the Q&A session, questions focused on our commitment to the Chinese market, and on orders from Chinese airlines. We also got some questions about the delivery schedule for the 787 Dreamliner, and on technology transfer. Afterwards, Boeing executives and media representatives enjoyed a luncheon together.

All of the CMO slides were in Chinese. And since John Bates (pictured here) and I do not read Chinese, we had to basically memorize the charts before the presentation.

I think it's important to present our CMO in this way each year because Chinese journalists regard this outlook as a highly informative and authoritative industry analysis. But on top of that, I think this event enhanced and promoted Boeing's leadership position in the aviation industry and demonstrated Boeing's knowledge of the market.

Concluding our China visit, we had the opportunity to attend the 6th China International Aviation & Aerospace Exhibition - also known as Airshow China - in Zhuhai. At the show we featured our popular traveling mockup of the 787 interior. And we talked a lot about our complete product line - from the best-selling Next-Generation 737, to the 787, 777, and 747-8 families.

We hosted another CMO and product briefing at Airshow China's press center, starting with our projection that China's airline operators are going to spend $280 billion to purchase almost 2,900 new airplanes over the next 20 years.

Since 1990, the number of flights in China has increased by 13 times and will continue to grow at a very rapid rate.

China is the world's fastest-growing airplane market and by 2025, it will be the world's second biggest civil airplane market after the U.S. - with a 7.4% average annual overall growth rate for China's markets and a 8.8% average annual growth rate for domestic travel in China.

With the rapidly expanding travel and cargo markets there, we think the number of airplanes in China will more than triple to 3,900 in 2025.

It's interesting to note that I first visited China in 1984, when I spent a week in Beijing. More than 20 years later, it is absolutely mind-boggling to see the changes due to rapid economic growth China is experiencing and will continue to experience.

It is a magical place that I will always enjoy visiting.