BA vows to bounce back as FTSE 100 demotion looms

Rod Eddington, the chief executive of British Airways, pledged yesterday that the airline would remain a robust business even if it falls out of the FTSE 100 index of leading companies this week.

Mr Eddington also forecast that BA, currently ranked 111th in terms of market capitalisation, would bounce back if it is relegated when the blue-chip index is recalculated based on tomorrow night's closing share prices. "If we can build a strong, robust British Airways, as we will, then if we do fall out this time we will come back," he told BBC1's Breakfast with Frost.

He also said that while a war with Iraq would be a "major issue" for the airline industry, BA was better placed to withstand any renewed turmoil. "We've taken unprofitable flying out of the network, we've attacked our cost base, we've worked much harder to compete with the no-frills carriers and we're always in the customer service business and we must not forget that," he added.

Two other stalwarts of the FTSE 100 threatened with the drop are EMI, currently ranked 117th, and International Power, the former National Power, which is in 122nd place.

In their place will most likely come the packaging group Rexam, the engineerinng company Tomkins and Alliance UniChem, the healthcare products distributor which boasts the former chancellor Kenneth Clarke on its board.

At the close of business on Friday EMI was valued at £1.3bn. 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. BA has been in the top-flight index since privatisation in April 1987.

A profits warning from International Power last week did the electricity generator no favours and left it firmly in the relegation zone. The group has been hit hard by falling power prices in the US and UK, where 40 per cent of its assets are located.

However, the battle to stay in the FTSE 100 is expected to go right down to the wire. The changes will be based on market values at the close of trading tomorrow and it has been known for companies to come up with novel schemes to boost their share prices in a bid to stay in the index of leading UK shares.

In the past this has included cajoling the company's stock brokers to issue a bullish piece of research or announcing a contract win on the last day of trading before the cut off.