BA leads exodus of stalwarts from FTSE 100

British Airways, EMI and International Power yesterday lost their places in the FTSE 100 in the latest quarterly rejig of the blue-chip index.

The changes will be formally announced at the close of trading today by FTSE, which compiles the index of the UK's leading shares. According to the rules any company ranked below 110th place by stock market value at the close of business yesterday is automatically relegated. EMI was last night ranked 114th, BA 111th and International Power was in 121st place.

The relegation is a blow for the trio, none of which have ever been outside the FTSE 100. BA was added to the index in 1987 after its privatisation while International Power was included in April 1991 after its de-merger from National Power. The blow is particularly acute for EMI. It has been in the FTSE 100 since 1984, the year the index was founded, although then it was part of Thorn EMI from which it was de-merged in 1996.

In their place will come the auto parts company Tomkins, the packaging group Rexam, which has been among the main market's top performers over the past 12 months, and the medical products distributor Alliance UniChem, which has the former Chancellor Kenneth Clarke on its board. The changes will be effective from the close of trading on 20 September.

Among those who narrowly escaped relegation were the financial software developer Sage and the fund management giant Schroders. Sage was helped by a 6.5 per cent rally in its share price yesterday. The group has recently been meeting City analysts and reassuring them trading is continuing in line with expectations despite the tough conditions for the software industry. Meanwhile, last-minute buying pushed Schroders 5.3 per cent higher, leaving the company ranked in 104th place and out of the danger zone.

Brokers have attributed the weakness in BA's share price over the past few months to question marks over the recovery of the US economy. Transatlantic business passenger numbers, which are vital for the airline, are expected to be among the first to suffer should the world's largest economy head towards recession again. More recently a warning from BA's chief executive, Rod Eddington, earlier this week did the airline's fight for FTSE 100 survival no favours. He cautioned that a war in Iraq similar to that in 1991 would have a substantial impact on BA and the industry.

Recent news flow from International Power also undermined its chances of staying in the index. Last week the electricity generator made downbeat comments about its prospects in 2003, which sent its shares sharply lower. International Power has been hit by falling power prices in the US, where 40 per cent of its assets are located.