BA on brink of Footsie relegation

BRITISH Airways is facing a humiliating relegation from the FTSE 100 index - the 'Premiership' of top companies. The threat of dropping out of the blue-chip list of the 100 largest listed companies would be the biggest embarrassment yet for the self-styled World's Favourite Airline.

The national carrier has had a turbulent few years. It was criticised for dropping the Union flag from its planes and was in turmoil over the sacking of chief executive Bob Ayling and failed merger attempts with other airlines.

Its exit is likely because another Footsie company, BT, plans to split its fixed-line and mobile operations into two listed companies, BT Group and mmO2, which will both easily be big enough to hold FTSE places.

This means that one of the present members will be bounced out. At the end of last week, the lowest-valued Footsie company was United Business Media with a market value of £1.53bn. BA closed in 99th place with a value of £1.59bn. UBM has long been expected to drop out of the index, but BA has plunged into the relegation zone in a matter of weeks. Since 11 September, the shares have nosedived by 117 1/ 4p, or 45%, wiping almost £1.3bn off the value of the company.

The BT split is due to go ahead on Monday, November 19, and the previous Friday FTSE International will calculate which company to drop from the top 100. With two weeks of trading before then, BA must avoid any dip in its share price if it is to retain its blue-chip status. But this week could prove a difficult one with the company scheduled to release its interim results on Tuesday.

Analysts' forecasts for half-year pre-tax figures vary from losses of £23m to profits of £59m. The wide range is due to difficulty in estimating the effect of the US attacks. The airline, led by chief executive Rod Eddington, has already revealed that traffic fell 22% in September. On its vital transatlantic routes, the drop was even sharper at 32%.

The long-term effects are even more uncertain, but the airline's results are expected to include a statement on trading since the 30 September year-end.

Last week, BA said it was imposing a £2.50 surcharge on tickets to help cover increased insurance and security costs. It also said it had sold a small stake in France Telecom, which it had held as part of a co-operative venture with other airlines to save communications costs. The sale raised £23m, but it will not appear in the airline's accounts for the recent half-year.