February 26, 2019 / 8:28 AM / 7 months ago

British Airways owner IAG falls after MSCI ditches it from global indices

FILE PHOTO: British Airways logos are seen on tail fins at Heathrow Airport in west London, Britain, February 23, 2018. REUTERS/Hannah McKay/File Photo

LONDON (Reuters) - British Airways and Iberia owner IAG fell on Tuesday after MSCI said it would remove it from its global indices because of a decision to cap foreign ownership of the airline’s shares.

Madrid-listed IAG shares closed down 3.3 percent, at the bottom of the IBEX, while in London they were down 4.3 percent, the second-biggest FTSE faller.

IAG has set the maximum level for ownership of its shares by non-Europeans at 47.5 percent, the current level, in a bid to maintain its status as a European-owned airline.

IAG’s situation may become even more complicated after Brexit as airlines that will no longer be majority owned by European Union nationals once Britain leaves face losing their right to fly within the bloc.

Because the maximum level of non-EU ownership of IAG shares was already reached, MSCI said it will remove the airline group, citing rules on how investors are able to hold a stock.

IAG declined to comment on MSCI’s decision. Deletion from global indices tends to dent stocks as it leads to forced selling by index-tracking funds.

FTSE Russell said that IAG’s move to limit foreign ownership would not impact its membership of the bluechip British FTSE 100 index and other FTSE UK indices.

“There is... no impact on the eligibility, or weighting, of IAG arising as a result of the IAG notice,” FTSE Russell said in a statement.

Reporting by Helen Reid, Additional reporting by Alistair Smout, Editing by Josephine Mason and Alexander Smith

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