A Little Perspective on United, Continental and the Outer Continental Shelf

United Airlines and Continental Airlines have agreed to merge into what will be the largest carrier (passing Delta Air Lines, which itself took the top spot after its merger with Northwest Airlines).  The deal apparently involves United’s parent (UAL Corporation) issuing shares worth $3.17 billion in the all-stock deal.  This is a large deal, to be sure, but the most recent cost estimates related to the BP oil disaster in the Gulf Coast make it look rather pedestrian by comparison.  Experts are estimating that the total costs of the disaster could be more than $14 billion. 

Airlines are significant companies to be sure, but energy companies are the real big fish (if you’ll excuse the metaphor in light of recent events). At least there is reason to believe BP has the resources to deal with the enormous costs of this disaster. To put a fine point on it, let’s review a few of the major energy mergers.  Way back in 1998, Exxon and Mobil merged in an $80 billion deal.  The BP-Amoco merger:  $48 billion.  In December 2009, Exxon Mobil completed another deal, acquiring XTO Energy for $41 billion. 

Oh, and while we’re on the topic of money, although we can’t know if it would have worked, that oil well shut-off device my co-blogger Stefan mentioned a short while back costs about $500,000.  

--Josh Fershee