Airlines say holiday bookings still strong

Saturday October 25, 7:28 am ET
By Harry R. Weber and Kristin A. Lee, AP Business Writers
Airlines, resorts hope to keep numbers up over holidays amid global financial crisis

ATLANTA (AP) -- Minneapolis business manager Roque Rossetti plans to make his annual trip home to Sao Paulo, Brazil, for Christmas. The 35-year-old said the sagging economy gave him no second thoughts about shelling out $1,200 for the ticket.
"If I wait longer, I'd probably pay more, and I might not end up going," he said. But, he added, "I'm secure. I don't have kids or a wife. My house is paid for."

Several carriers have said that advance bookings show their planes are expected to be as full as or fuller than a year ago over the late fall and winter holidays -- largely because they have taken so many seats out of the air, a decision that was made when fuel prices were soaring. In fact, travelers who have not booked flights for the holidays could find it more difficult and expensive than usual to find the flights they want, when they want them.

Because of the capacity cuts, fuller planes do not mean more people will be flying. It also may be tougher for ski resorts and sunny vacation destinations to keep their numbers up, though some are offering promotions to lure holiday travelers who may be hesitant to open their wallets amid an uncertain economy.

"I think the consumer now has a lot of things on their mind -- they're concerned about the economy, they're concerned about the election, but I think they have already made the decision about what they are going to do over Thanksgiving and Christmas," said Arne Haak, chief financial officer of discount carrier AirTran Airways.

Haak said the carrier -- a unit of Orlando, Fla.-based AirTran Holdings Inc. -- has not seen a slowdown in bookings over the holidays.

"In fact, Christmas looks very, very good," he said.

The picture is similar at Atlanta-based Delta Air Lines Inc., an executive said.

"I think it might be the newness of the information," Ed Bastian, Delta's chief financial officer, said of travelers' response to the economic crisis.

He said most consumers are still trying to figure out what the crisis means to them. Bastian said Delta's domestic advance bookings for the holidays show stronger occupancy rates on a year-over-year basis and are in line with the carrier's expectations, though he noted capacity cuts may be playing a role in that. On the international side, he said November-December occupancy rates based on advance bookings are down, though he noted Delta is increasing capacity on overseas flights.

At American Airlines, a unit of Fort Worth, Texas-based AMR Corp., its occupancy rate based on advance bookings for the fourth quarter is down about 2 percentage points year-over-year, Chief Financial Officer Tom Horton said. That's "not outside of the norm you might see varying from year to year, but remember we are taking capacity out of the system," Horton said. The fourth quarter, which includes the holidays, is traditionally a slow period for airlines.

While he would not offer specifics for the holiday season itself, Horton suggested the carrier was not expecting a big drop-off in sales during the time period.

"I don't see anything unique to the holiday period right now," Horton said.

A big change may be that, with the economy suffering, people are looking for better deals.

During a recent stop at Minneapolis-St. Paul International Airport, Georgeann Becker, 60, an attorney from a suburb of Denver, said she and her husband paid for a plane ticket for their daughter to fly home from New York to visit them this Christmas. Her daughter shopped around at the online travel sites and found a cheaper ticket than their travel agent, at around $350, which the Beckers are paying.

"I don't know that we're necessarily holding back. I think you do go out of your way to find the cheapest ticket," Georgeann Becker said.

Esmeralda Perez, a spokeswoman for the Puerto Rico Hotel & Tourism Association, said travelers appear to be waiting to book their vacations until closer to the holidays.

The island's hotels and resorts are being more aggressive with promotions and packages than in past years to lure last-minute guests, she said. The government-sponsored Puerto Rico Tourism Co. has doubled its advertising and marketing spending as well.

Perez said the election in November may also be adding to the broader economic uncertainty. In past election years, she said hotels have seen a surge of holiday bookings after the election.

Cayman Islands Tourism Minister Charles Clifford said cutbacks by carriers within the U.S. have pushed up fares to the islands. In response, Cayman Airways is adding nonstop service from Washington and Chicago to the British dependency beginning in December.

Ski.com, which books vacations at 80 resorts in the western U.S., Canada, Europe and South America, has seen sales slip compared to last year, said spokesman Dan Sherman.

As of September, Vail Resorts Inc. Chief Executive Rob Katz said the number of Colorado season passes sold was down 8.4 percent. Advance lodging bookings through central reservations were down 17.7 percent in room nights over the same period last year.

Recently, the company announced a slate of new promotions, including offering a free night to guests who book a five-night stay or more on dates around Thanksgiving, Christmas, New Year's and other major holidays in 2009.

Katz expects the company's marketing message to penetrate following the election. "I think we will potentially see a different environment by Thanksgiving than what we're seeing today."

Andy Wirth, the chief marketing officer of resort owner Intrawest ULC, said consumers seem to be favoring ski destinations within driving distance this year, although he noted that airline capacity has held steady at the three airports that service its western resorts.

He is optimistic about a major marketing push planned for shortly after the election in November. "The destination skiing customer is a very resilient customer base," he said.

Alain Brochu, a vice president of Intrawest's Mont Tremblant in Quebec, said the resort is seeing increased sales from promotions targeted to individual travelers so far this season. He said one strong seller is the $129 pass, good for 3 days of skiing.

"Preliminary results indicate that adapting to the market rather than trying to change it has generated good response," he said in an e-mail.

Airlines are not sure how long demand will hold up for them, and several expressed concern recently that demand will drop off in 2009 as the realities of a recession set in for more travelers.

AirTran's Haak said "obviously that is something we're going to keep an eye on."

Wal-Mart, P&G Pass Petrobras, Gazprom in Market Value on Profit

By Alexander Ragir(Bloomberg) -- The financial crisis triggered in the U.S. is proving to be a bigger problem for the rest of the world, based on a tally of the world's largest companies.

Wal-Mart Stores Inc., Procter & Gamble Co., Johnson & Johnson and Berkshire Hathaway Inc. vaulted into the top 10 biggest companies by market value last quarter as investors sought profit growth, data compiled by Bloomberg show. Emerging- market energy producers OAO Gazprom and Petroleo Brasileiro SA dropped out after falling by more than half on a plunge in oil.

``Everybody's focused in on steady Eddies, which haven't been the darlings of momentum investors and performance chasers,'' said Lincoln Anderson, who helps oversee about $150 billion as chief investment officer LPL Financial in Boston. ``Risk-aversion is super high so they look like much better bets than owning some oil company in Russia or Brazil.''

Demand for some of America's biggest household names helped the Standard & Poor's 500 Index outperform stocks in Europe and Asia as slower global growth extended the worst year for global equities since at least 1970. The S&P 500's 38 percent drop compares with declines of more than 42 percent for Europe's Dow Jones Stoxx 600 Index and the MSCI Asia Pacific Index. MSCI's Emerging Market Index lost 59 percent this year.

Wal-Mart, the world's biggest retailer, climbed to third in the rankings by market capitalization from 11th at the start of last quarter, according to data compiled by Bloomberg. P&G, the world's largest consumer goods producer, leapt 10 steps to No. 7, while J&J, the biggest health-care products maker, rose to ninth from 20th. Warren Buffett's Berkshire climbed to sixth.

Gazprom, Petrobras

At the same time, Gazprom, Russia's largest energy producer, fell to 37th from third on May 19, when the MSCI Emerging Markets Index reached its peak for the year. Petrobras, Brazil's state- controlled oil company, dropped to 38th from sixth. The companies' market values rose more than ninefold as emerging- market equities surged four times as fast as the S&P 500 during the five-year bull market that ended in 2007.

``In the midst of the U.S. collapse people have been moving to things more defensive,'' said Phil Orlando, the New York-based chief equity strategist at Federated Investors Inc., which oversees $334 billion. Gazprom and Petrobras ``had a huge ascent and collapsed just as quickly.''

Markets around the world erased $30 trillion in value this year as the decline of the U.S. housing market stunted the economy, froze credit markets and saddled financial firms with more than $660 billion in mortgage-related writedowns and credit losses. World economic growth is projected to slip for a third straight year in 2009 to 3 percent, according to the International Monetary Fund in New York.

Export Economies

Brazil and Russia, whose economies are dependent on commodities exports, led the MSCI Emerging Markets Index's 59 percent drop from its May peak as the price of oil, copper and soybeans plunged on concern that demand will fall.

Wal-Mart, Procter & Gamble, J&J and Berkshire have a history of beating the market during stock sell-offs. When the so-called dot-com technology bubble burst, the S&P 500 lost 34 percent from March 24, 2000, to Oct. 9, 2002. Wal-Mart slipped 8.6 percent in that time, while Procter & Gamble jumped 56 percent, J&J gained 58 percent and Berkshire climbed 24 percent.

All four companies rose in the third quarter, defying an 8.9 percent decline in the S&P 500. P&G gained 15 percent, Berkshire climbed 8.2 percent, J&J added 7.7 percent and Wal-Mart increased 6.6 percent. They're down an average 11.7 percent this quarter, compared with a 22 percent drop in the S&P 500.

Higher Profits

Wal-Mart, based in Bentonville, Arkansas, reported second- quarter profit growth of 17 percent, exceeding analysts' estimates. Wal-Mart said Oct. 8 that sales increased 2.4 percent in September as consumers burdened by credit-card bills and mounting job losses bought discounted groceries and $4 medicines.

Procter & Gamble, based in Cincinnati, gained the most among non-financial companies in the third quarter. Earnings increased 33 percent in the three months ended June 30, beating analysts' estimates, as higher prices for Cascade dishwashing detergent, Iams pet food and Gillette razors helped counter rising costs, the company said.

J&J, based in New Brunswick, New Jersey, said on Oct. 14 that its third-quarter profit jumped 30 percent, beating analysts' estimates, as international sales rose and consumers continued buying contact lenses, allergy pills and mouthwash amid the economic downturn.

``Given the seriousness, the depth and the breadth of the crisis, people are buying very defensive names,'' said John Praveen, Newark, New Jersey-based chief investment strategist at Prudential International Investments Advisers LLC, a unit of Prudential Financial Inc., which oversees $638 billion. ``Rich or poor, you have to eat and spend money on buying some medicine.''

Buffett's Buying

Omaha, Nebraska-based Berkshire agreed Sept. 18 to buy Constellation Energy Group Inc. for about $4.7 billion, snapping up the largest U.S. power marketer at less than half its value prior to that week. Goldman Sachs Group Inc. and General Electric Co. sold Buffett a combined $8 billion in preferred shares that pay a 10 percent dividend, allowing Berkshire to earn $800 million unless the companies collapse.

``Berkshire has bought up a lot of things on the cheap,'' Praveen said. ``Their earnings are also more stable and the stock rises less in a bull market so it falls less in a bear market.''

Petrobras more than doubled in the year before its May 21 high after making the Western Hemisphere's biggest oil discovery in three decades. It has since tumbled 57 percent as crude plunged from $149.47 a barrel in July to $69.23.

Gazprom, based in Moscow, sank 76 percent since its May high this year after natural-gas prices fell by more than half since July and Russia invaded Georgia.

Out of Control' CEOs Spurned Davos Warnings on Risk

By A. Craig Copetas (Bloomberg) -- Once upon a time, the World Economic Forum was the ultimate Wall Street jamboree.

Now, in the riptide of the worst financial crisis since the Great Depression, WEF officials and delegates say many of the chief executive officers who gathered in Davos, Switzerland, over the last five years didn't listen to warnings from their peers. Davos organizers also say they failed to play tough with the financial-industry bosses, opting to accept their funding and let them turn Davos into a rave-up for Wall Street excesses.

``The partying crept in,'' says Klaus Schwab, the 70-year- old WEF founder and executive chairman. ``We let it get out of control, and attention was taken away from the speed and complexity of how the world's challenges built up.''

The fallout has left the WEF riddled in buyer's remorse, with officials throughout the organization asking what they have wrought and, like Wall Street, whether they offered too much of a good thing.

Schwab says the delegates treated him like ``Cassandra'' whenever he questioned the logic of their wisdom on asset-price bubbles in housing, stocks and other financial instruments.

WEF Chief Operating Officer Kevin Steinberg says the vast sums of money that rolled in from Wall Street celebrities for marquee billing in Davos contributed to complacency among forum organizers and often obliged them to publicly massage the viewpoints, wishes and status of their superstar guests.

``We catered to what the financial leaders wanted: solo speaking slots, luxury hotels and VIP treatment we wouldn't afford anyone else,'' Steinberg, 38, says. ``We gave them a soapbox. It was all political. We try to minimize the politics, but can't.''

`Psychological Denial'

In his office outside Geneva, about a three-hour drive from Davos and overlooking the French Alps, Schwab says the WEF began issuing warnings in 2003 to investment banks, insurance companies and hedge funds about the systemic risk gnawing at the foundation of the global economy.

``But the financial community didn't listen,'' Schwab says. ``They were told that any serious look at the economic fundamentals showed that we were in an unstable situation. It was denial, total psychological denial.''

For next year, Schwab says his goal is to transform Davos into the ``Bretton Woods of the new millennium,'' a meeting targeted at establishing a fresh set of global rules for commercial and financial relations, much as the original Bretton Woods conference in New Hampshire did in the summer of 1944.

Ending the Merrymaking

As for the merrymaking, Schwab vows ``it won't happen again.'' Unlike Bretton Woods, companies will still pay as much as $750,000 each in annual fees to send executives to Davos.

William Browder, founder of Hermitage Capital Management Ltd. in London and an eight-year WEF veteran, isn't so sure Schwab can pull it off.

``An exercise in moderation is something the private sector doesn't do very well,'' Browder says.

Each January, global financial titans and their entourages gathered in the Alpine hamlet. A band of fluegelhorns wandered in hotel lobbies, heralding the arrival of delegates such as Lehman Brothers Holdings Inc. CEO Richard Fuld Jr., Freddie Mac CEO Richard Syron and U.S. Treasury Secretary Henry Paulson, along with actresses such as Angelina Jolie and Sharon Stone.

Bundled in cashmere coats and goose-down parkas, the WEF's 2,500 ``global leaders'' set off to attend a medley of 500 public and private sessions designed to isolate economic problems, clarify disturbing market trends and forge innovative solutions.

The Stunts

In the days leading up to the conference, volunteers in lederhosen draped the village with hundreds of white and blue banners that declared the 38-year-old conclave's purpose: ``Committed to Improving the State of the World.''

WEF organizers often pulled stunts to hoodwink delegates who preferred partying and meeting privately with clients over attending forum sessions.

In the ``Why Do Brains Sleep?'' meeting in 2007, a cadre of eminent psychologists and psychiatrists explored whether financial leaders got enough rest and ``what that tells us about the quality of their decision-making.''

To spur delegates into addressing financial-market alienation, a session in 2004 was held to discuss whether extraterrestrials had taken control of Wall Street: ``Have Extraterrestrials Made Contact With Government Leaders?''

The ruse didn't work.

Steinberg recalls the attitude among some of the delegates at Davos from 2003 through last January.

Didn't Listen

``It was clear irresponsibility on their part and it's more damning than anyone can imagine,'' says Steinberg, who has been with the WEF for more than a decade. The former McKinsey & Co. management consultant supervises the forum's finance-industry delegates.

``By 2003, the over-leveraging of the system was a serious topic of conversation, but the some 60 of WEF's corporate members from the financial world never had an understanding of how big a problem it was,'' Steinberg adds. ``We had assembled the world's greatest economic experts to confer with them, and the financial community was not aware of that expertise.''

In 2005, Schwab says WEF's delegates from Wall Street were eyebrow-deep in booming markets, easy money and intense pressure to take greater risks, borrow more and seek higher returns.

One of WEF's sessions that year was ``Spotting the Next Bubble Before It Bursts.'' Goldman Sachs Group Inc. CEO Lloyd Blankfein ran the meeting with Syron, then CEO of Freddie Mac, the now-discredited U.S. government-sponsored mortgage buyer and reseller that along with Fannie Mae in September required a $200 billion U.S. government bailout.

Spotting Bubbles

The Blankfein-Syron mission: ``Spotting where and when the next bubbles are likely to occur and how we can get better at spotting and resisting bubbles,'' according to the program.

Yet Wall Street ignored the solutions offered at the meeting, says WEF Senior Director W. Lee Howell, 44, whose office created the session.

``I often wonder how many members were actually listening to what was being said,'' Howell says. ``I know the American financial community didn't show up in Davos to listen.''

Another ``bubble'' session the following January looked at real estate and was led by Stephen Roach, then Morgan Stanley's chief economist, who now is chairman of Morgan Stanley Asia Ltd.

``A sharp decline in housing prices could have a tremendous impact on the global economy; in the U.S. alone, 40 percent of new jobs since 2001 have been related to the housing sector. With low interest rates and excess liquidity, other bubbles may follow,'' the program read.

Divide, Conquer

Steinberg says the most-discussed housing issue among some delegates centered on Davos's Belvedere Hotel, where corporate chieftains and their deputies were ``more interested in entering into bidding wars to secure the biggest party room than they were in attending sessions held there.''

As Steinberg tells it, Wall Street arrived in Davos with a ``divide-and-conquer strategy'' that focused on using WEF to woo new clients and ``launch sales campaigns'' instead of ``collectively taking action to mitigate the evident systemic risk.''

The five-day annual forum, which also attracts scholars and scientists, has always been eclectic. Racing Audis on the ice of a nearby lake and attending snow-polo matches in St. Moritz have been popular diversions. The dress code was casual, and the garb of Wall Street, Schwab says, was perhaps unsuited to the cold and candid camaraderie of Davos. ``There is a certain discomfort with snow,'' Schwab says.

Storm Flags

Steinberg says there were scores of ``intelligent people'' raising storm flags in Davos for the last five years.

In 2007, former U.S. Treasury Secretary Lawrence Summers warned of complacency. He returned to the village in 2008 to say ``a cascading loss of confidence'' threatened to paralyze the global economy, comparing the market mood with the economic sentiment that prevailed just before World War I.

Guidance was offered by monetary-policy makers such as European Central Bank President Jean-Claude Trichet and Bundesbank President Axel Weber as well as economic wise men, including Yale University Professor Robert Shiller, U.S. Congressman Barney Frank and World Bank Director of Governance and Anti-Corruption Daniel Kaufmann. Such advice was swatted away by American confidence salesmen such as Michael Klein, co- president of Citigroup Inc.'s investment-banking unit, and David Rubenstein, managing director at the Carlyle Group buyout firm.

``I warned them all about global risk and the abusive nature of their actions, but they had no incentive to change,'' says Kaufmann, recalling his seven years as a global leader at Davos. ``And why should they have listened to us? I see it with my 10- year-old daughter, who scolds me because I don't put the garbage in the correct bin. Let's not delude ourselves. It's impossible to teach old dogs and investment bankers new tricks unless you change the incentive structure.''

The `Animals'

``It was all laid out in Davos,'' says WEF delegate Daniel Loeb, 46, owner of Third Point LLC, a New York-based hedge fund. ``The investment bankers got so caught up in competing with each other that they used the place to schmooze, instead of actually learning about what was going on in the world.''

Howell describes the Davos attendees in zoological terms:

``The investment banks, private-equity funds, hedge funds and insurance companies were the animals Davos was most fascinated with. But they were exotic animals that people who ran these businesses never took the time to grasp what the world at large thought they knew.''

Malaysia Holds Rate, Vows Action to Support Economy

-- Malaysia's central bank pledged it will take action to prevent the economy from deteriorating after keeping the benchmark interest rate unchanged for the 20th straight meeting.

``In the face of diminishing inflationary pressures, and in the event of heightened downside risks to growth, the bank will take swift monetary policy action to provide support to the economy,'' Bank Negara Malaysia said yesterday, after maintaining the overnight policy rate at 3.5 percent.

The decision contrasts with cuts by central banks in China, India and Australia, which have lowered borrowing costs in recent weeks to spur growth amid a looming global recession. Malaysia's inflation has started to ease from a 26-year high and that may give the central bank room to reduce interest rates should the economy slump.

``Bank Negara will look to ease policy, possibly as soon as the next meeting, especially if the growth risks become clearer and inflation risks diminish,'' said Mark Tan, an economist at Goldman Sachs Group Inc. in Hong Kong. ``The main factor that will influence future rate decisions would be how fast they expect the growth outlook to unravel.''

Earlier this year, the central bank had held off from raising rates to cool inflation as challenges to Prime Minister Abdullah Ahmad Badawi's leadership threatened to hurt consumer confidence and economic growth. Opposition Leader Anwar Ibrahim, who had said he wanted to topple the government by September, said this week that goal is now harder to achieve.

Inflation Peaks

The Malaysian ringgit is the fifth worst performer among 10 Asian currencies, according to Bloomberg data. It has fallen 7.5 percent against the U.S. dollar this year, compared with a 6.7 percent gain by the Chinese renminbi and a 34 percent plunge by the South Korean won.

The central bank said yesterday inflation has peaked and risks to global growth have increased ``significantly.'' Consumer-price gains slowed to 8.2 percent last month from 8.5 percent in August.

Bank Negara expects inflation to slow to below 4 percent before the second half of 2009, Governor Zeti Akhtar Aziz said last week. The government cut gasoline prices three times since late August as crude oil fell from a record in July.

``An increasing number of indicators now signal an easing of inflationary pressures,'' the central bank said yesterday. ``Lower cost pressures and moderating domestic demand are expected to reduce inflation in 2009.''

Global Crisis

Central banks around the world are shifting their focus to supporting growth from damping inflation as the global credit crisis escalates. The turmoil has led to the collapse of banks and forced some countries to approach the International Monetary Fund for loans, while more nations are reporting a contraction in their economies, increasing the risk of a world recession.

During the 1997 Asian financial crisis, Malaysia rejected IMF money, opposing conditions on government policies that came with such loans. Malaysia imposed restrictions on foreign exchange movements in September 1998, trapping about $10 billion in foreign investment in the country, and pegged the ringgit at 3.8 to the U.S. dollar.

``The greater focus of policy makers is now toward restoring the functioning of the international financial markets and toward avoiding a sharp global economic downturn,'' Bank Negara said.

Growth Forecast

Malaysia will cut its 2009 economic-growth forecast on Nov. 4, from the current estimate of 5.4 percent, Finance Minister Najib Razak said this week.

``The slower global growth and the decline in commodity prices will affect the performance of the export sector and consequently, the overall economic growth in 2009,'' the central bank said.

Other central banks have already cut interest rates. The Reserve Bank of India lowered its benchmark by 1 percentage point on Oct. 20, while China has cut borrowing costs twice in the past six weeks.

Federal Aid Seen as Vital to a Merger in Detroit

DETROIT — A possible merger of General Motors and Chrysler increasingly appears to hinge on federal aid, according to people with knowledge of the merger talks.G.M. and Chrysler’s majority owner, Cerberus Capital Management, are said to be committed to a merger of the two troubled automakers but have yet to line up financing to inject more cash into the companies.

But investors are hesitant to put money into the deal without federal assistance in some form, possibly a direct loan or an equity stake, said people close to the talks who spoke on the condition that they not be named.

One person said Friday that G.M. was pursuing government assistance. A spokeswoman for the Treasury Department, however, said the rescue package was more focused on financial institutions.

G.M. and Chrysler, two of Detroit’s Bit Three automakers, have been in merger talks for several weeks.

Sales at both companies have fallen drastically this year, and they are furiously cutting costs to preserve cash, which they are burning through rapidly. Speculation is growing about possible bankruptcy.

On Friday, Chrysler’s chairman, Robert L. Nardelli, told employees that more white-collar job cuts would be made beginning next month.

“As we resize the company to reflect declines in volumes, we know we must find new and more efficient ways to conduct our business operations,” Mr. Nardelli said in an e-mail message to workers.

The company said it planned to reduce its white-collar staff of 18,500 by 25 percent by the end of the year.

Salaried workers will be offered buyouts and early retirement packages in the next two weeks. If not enough employees take the offers, Chrysler will start involuntary layoffs beginning in December.

On Thursday, Rick Wagoner, G.M.’s chairman, sent a letter to executives saying that the company would lay off an unspecified number of salaried workers later this year and would cut benefits and cancel bonuses.

In the letter, Mr. Wagoner said the “dramatic impact” on industry sales from the global credit crisis was forcing the cutbacks.

“In this regard, we expect to initiate involuntary separations in some areas of the business, late this year and early in 2009,” the letter said.

G.M. already announced this summer a series of moves to cut its costs by $10 billion.

But the automaker, which lost $18.8 billion in the first six months of the year, is still burning through more than $1 billion in cash a month.

Mr. Wagoner and other G.M. executives are said to be convinced that a merger with Chrysler would provide broad synergies and cost savings.

A merger with Chrysler would also bring G.M. much-needed cash. Chrysler, which has lost more than $1 billion this year, said in June that it had $11.7 billion in cash.

The merger would require new capital from outside investors to cover revamping costs.

Banks and other financial institutions, however, have balked at investing in the deal without some guarantees of government aid.

Washington has already committed to lending automakers $25 billion for new technology to improve the fuel efficiency of their vehicles.

Michigan legislators have also appealed to the Treasury Department and the Federal Reserve to help consumers regain greater access to car loans as part of the $700 billion economic rescue package for Wall Street. Tighter lending standards have made it difficult for many shoppers to obtain financing.

Skepticism about the merger contributed to another tough day for G.M. shares. They fell 2.4 percent, to $5.95.

Cerberus, which acquired Chrysler last year for $7.4 billion, wants an equity stake in a combined G.M.-Chrysler but is not seeking an active role in management, according to two people close to the talks.

The private equity firm also has no interest in forcing out Mr. Wagoner as chief executive in a merger, these people said.

Cerberus may also not seek board seats in the merged company.

Board representation would make the firm a so-called insider under federal securities rules, and limit its ability to sell or increase its stock position.

The merger talks have taken on an increased urgency as the United States vehicle market continues to deteriorate.

Industry sales are down 12.8 percent this year, but they fell 26.6 percent in September.

The slowdown is hurting all carmakers, including Toyota, which said Friday that its global sales fell 4 percent in the quarter that ended in September, its first quarterly drop in seven years.

The United States sales market, according to one forecasting firm, has been even worse in October.

Sales for the month are expected to decline nearly 29 percent from October 2007, and 9 percent from September’s level, according to an analysis by the auto Web site Edmunds.com.

Edmunds projects that G.M.’s sales will fall 40 percent in October compared with last year, and Chrysler will drop by 38 percent. An Edmunds analyst said the merger talks and dire financial positions of the automakers were having some impact on the deepening slide in sales.

“All of the frenzied speculation about the future of Detroit’s automakers, ranging from mergers to bankruptcies, surely adds to the consumers’ retreat from buying a car,” said Michelle Krebs, senior editor of the Edmunds site.

Nuclear Power May Be in Early Stages of a Revival

WASHINGTON — After three decades without starting a single new plant, the American nuclear power industry is getting ready to build again.When the industry first said several years ago that it would resume building plants, deep skepticism greeted the claim. Not since 1973 had anybody in the United States ordered a nuclear plant that was actually built, and the obstacles to a new generation of plants seemed daunting.

But now, according to the Nuclear Regulatory Commission, 21 companies say they will seek permission to build 34 power plants, from New York to Texas. Factories are springing up in Indiana and Louisiana to build reactor parts. Workers are clearing a site in Georgia to put in reactors. Starting in January, millions of electric customers in Florida will be billed several dollars a month to finance four new reactors.

On Thursday, the French company Areva, the world’s largest builder of nuclear reactors, and Northrop Grumman announced an investment of more than $360 million at a shipyard in Newport News, Va., to build components for seven proposed American reactors, and more for export.

The change of fortune has come so fast that the Nuclear Regulatory Commission, which had almost forgotten how to accept an application, has gone into a frenzy of hiring, bringing on hundreds of new engineers to handle the crush of applications.

Many problems could derail the so-called nuclear revival, and virtually no one believes all 34 proposed plants will be built. It is still unclear how many billions they would cost, whether the expense can be financed in a troubled credit market, and how the cost might compare with other power sources.

But experts who follow the industry expect that at least some of the 34 will be built.

Given rising public concern about global warming and a recent history of reliable operation among nuclear plants, “the climate for introducing new plants is probably the best it’s been since the industry started canceling plants” 30 years ago, said Brian Balogh, a history professor at the University of Virginia. Unlike most types of power generation, nuclear plants do not emit the gases that cause global warming, once they are completed.

In the United States, orders for new reactors essentially ended in October 1973. That was also the month that the Arab oil embargo began, inaugurating an era of economic problems that drove up construction costs and suppressed demand for power. In the end, more than 100 nuclear reactors, some in advanced stages of construction, were canceled, and tens of billions of dollars were squandered.

On top of that, the Three Mile Island accident in 1979 and the Chernobyl explosion in 1986 made nuclear power a hard sell. And cheap turbines were developed to burn natural gas to generate electricity. By the 1990s, even some nuclear plants that had been running for a few years were deemed too costly and were closed.

But nuclear power never went away. The United States has 104 commercial reactors in operation, and the industry has improved their reliability markedly, increasing their output. They generate almost 20 percent of the country’s electric power.

As concerns over global warming and natural gas supplies have worsened, strong support has developed in Congress and some states for new reactors. The governor of Maryland recently cited a “moral imperative” to build plants to counter the threat of climate change. Support for new reactors has long been strong in some localities, particularly those that are candidates for billions of dollars in construction work.

And investment dollars are starting to flow.

“We have a long-term vision,” Anne Lauvergeon, chief executive of Areva, said in an interview here on Thursday, explaining her company’s decision to join forces with Northrop Grumman at Newport News.

To help spur a revival, Congress provided $18.5 billion in loan guarantees in a 2005 energy law, plus operating subsidies similar to those available for solar and wind power, and insurance against regulatory delays.

Little effective political opposition to new reactors has emerged so far. The environmental movement is spending its energy fighting new coal-burning power plants, with considerable effect. While few environmental advocates are enthusiastic about nuclear power, a handful acknowledge it could play a role in countering global warming.

“There is no question that some of the passion of the antinuclear movement has drained away,” said Professor Balogh, who is the author of a 1990 book on opposition to nuclear power.

Homesteads,Up, Up and Away

Shara and Scott Di Valerio wanted to build a deck for their hot tub, a place to relax in the woods on their five acres east of Seattle. But at some point, as they found themselves up in a stand of fir trees with a majestic view of Mount Rainier, their perspective shifted. What began as a 12-by-12-foot platform grew into a virtual treehouse complex: hot tub, living room (with phone, cable, Internet), writing alcove, observation platforms. Despite its inviting suspension bridge and 100-foot zipline, this is no kids’ tree fort. A typical evening among the gently swaying firs involves several grown-ups, a dip in the hot tub, Champagne and a few rounds of canasta. ‘‘It’s a way to be in nature,’’ Shara Di Valerio said. She let out a deflating laugh and quickly added: ‘‘Although it’s a luxurious kind of nature. It isn’t camping.’’The luxury treehouse is a relatively recent phenomenon. Twenty years ago, there was no such thing as a ‘‘master treehouse builder.’’ There is now. Thanks to a confluence of eco-conscious clients looking for sustainable hideaways and recent technological advances that allow elaborate structures to be hung higher and more safely than ever, this may be the golden age of the treehouse. There are now more than 10 dedicated builders of adult tree dwellings in the United States. But if any single person is responsible for the treehouse renaissance, it is Peter Nelson. In 1997, he and a partner founded TreeHouse Workshop, a Seattle firm that built a dozen treehouses last year (including the Di Valerios’). ‘‘I started more as a builder,’’ Nelson said, ‘‘but I’ve come to understand that what I’m really after is a place in nature. To be among the trees is pretty powerful stuff.’’

Nelson’s team can put just about anything into a tree. He has built everything from monkish yurts to multistory retreats, complete with every convenience, even plumbing. Some clients paid hundreds of thousands of dollars for their treehouses; most were around $70,000; many cost far less. The most extravagant projects demanded sites with multiple trees — ‘‘You want to be in the trees, not on top of them,’’ Nelson said. But even the most bare-bones of them were hand-built, timber-framed structures, assembled by a small crew of craftsmen dangling in harnesses from tree branches.

One caveat for anyone considering life among the boughs: Treehouses move. A lot. Charley Greenwood, an engineer who supplies specialty parts for treehouses, lives full time in 700 square feet 14 feet up in an Oregon evergreen grove. He likens it to living on ‘‘a moored houseboat.’’ ‘‘You have to be comfortable with a certain amount of horizontal travel’’ is how he puts it. Which is just fine with Shara Di Valerio; not so much with her 12-year-old son. ‘‘When the wind picks up,’’ she says, ‘‘he’s the first to head down.’’