SAN FRANCISCO — Apple Inc. slashed the entry price for an iPhone in half and lowered some laptops by $300 yesterday, the company's first dramatic price cuts since the recession began a year and a half ago.

With co-founder and CEO Steve Jobs absent until his medical leave is over at the end of June, Apple's biggest unveiling at its annual conference for software developers was a new model of the iPhone, the 3G S. It sports a faster processor, longer battery life, an internal compass, a video camera and a photo camera with better resolution and auto-focus.

A 16-gigabyte version of the 3G S will cost $199 and a 32-gigabyte version will be $299. The 8-gigabyte iPhone 3G, which came out last year, now costs $99.

There was some anticipation that Jobs might make a cameo in the two-hour presentation. But he did not take the stage, and Apple's top marketing executive, Philip Schiller, exited without uttering the company's signature line that there would be "one more thing."

AIRLINE TESTS FUEL-SAVING TACTICS

DALLAS — American Airlines will test fuel-saving technology and tactics on a Paris-to-Miami flight this week that the carrier and federal officials hope will help make the case for a new navigation system.

The plane on Thursday's flight will take a direct route guided by global-positioning technology instead of staying within the usual jetliner highways.

It will also ascend and descend more gradually and use other measures, some of which are already becoming standard, such as taxiing out to the runway on one engine instead of two.

American said it will be the first U.S. carrier to test the full range of fuel-saving and emissions-reducing tactics on a trans-Atlantic route. The test is being conducted with the Federal Aviation Administration.

MCDONALD'S SALES INCREASE IN MAY

NEW YORK — McDonald's Corp. said yesterday its same-store sales climbed 5.1 percent in May, boosted by strong international sales but weighed down by slower sales growth in the U.S.

The Oak Brook, Ill.-based company said U.S. same-store sales climbed 2.8 percent, helped by classic menu items and its new McCafe espresso-based coffees. The espresso drinks are now being rolled out to all the company's U.S. restaurants.

In May last year, the company's same-store sales rose 4.3 percent in the U.S., aided by the launch of the company's Southern Style Chicken Sandwich and the government stimulus checks that began appearing in consumers' mailboxes and bank accounts.

The fried chicken sandwich was a popular new menu item, boosting the company's sales in the U.S. for months.

Stimulus checks, meanwhile, helped add to sales at most restaurant chains as thrifty consumers treated themselves to a few meals out.