Spluttering start for BA on FT 100 return

British Airways made a lacklustre start to its latest stint back in the ranks of Britain’s top-flight companies today.

Shares in the airline dropped 4p to 237.5p in the first hour of trading.

BA lost its Footsie status in March after its share price crumbled to 86p in the run-up to the Iraq war.

But it has re-entered the FTSE 100 Index after confirmation of the move in a quarterly review by the FTSE Equity Indices Committee.

Analysts said BA had done well to re-enter the FTSE following a turbulent couple of years in which the airline has tussled with the impact of the September 11 terrorist attacks in 2001, the economic downturn and unofficial industrial action.

But the company has encountered renewed turbulence of late, prompting it to announce last month that half-year pre-tax profits had tumbled to £60m (€85m), against £310m (€440m) in the same period last year.

Chief executive Rod Eddington has hinted at more job cuts and savings on top of the 13,000 redundancies that BA has already announced.

Henk Potts, of Barclays Private Clients, said a lot of analysts were concerned that the stock is now overpriced and would not last long back in the top-flight.

“The industry still has a lot of problems and continues to be vulnerable to worldwide events,” Mr Potts said.

“There’s a whole host of reasons why people shouldn’t be buying into flag-carrying airlines at the moment.”

It is the second time in a year that BA has won back its place in the Footsie, after making a brief return in December 2002.

Prior to that, BA had been an ever-present since its flotation in 1987.

BA has been promoted along with recruitment services company Hays, which is returning to the top flight after a brief absence.

The pair will replace Provident Financial and pubs group Mitchells & Butlers.

Shares in Hays were down 0.5p to 121.25p in early trading.