Tony Ryan

by Richard Aldous

  It was a low moment when Tony made the move back to Ireland, unsure of what awaited him at the Aer Lingus headquarters in Dublin Airport. ‘He didn’t particularly want to go,’ O’Brien recalls, but family needs had taken precedence over professional advancement.

  In many ways it was an everyday story. Tony Ryan was a company worker who had climbed up the corporate ladder in a purposeful but unspectacular way to a comfortable middle-management position. Now, for personal reasons beyond his control, he had been forced to slip out of the groove of what was expected of him by his employer. As a result, his career had stalled.

  As the plane touched down in Shannon Airport in 1972, bringing the Ryans home to Ireland, Tony could reflect that perhaps the most dynamic period of his life was over. Now in his mid-thirties and apparently going nowhere in Aer Lingus, he had not much to look forward to other than the bland existence of a white-collared administrator in the service of the national airline. The abyss of pen-pushing anonymity opened up in front of his eyes.

  Chapter 3

  A NEW LEASE ON LIFE

  So far, so ordinary: that had been the life of Tony Ryan up to the point when he flew home to Ireland with his family in 1972. Soon things would change, but for that to happen Tony needed one huge of slice of luck. And, as so often in life, that luck came as a result of someone else’s misfortune, as fate rattled over the points.

  When Tony had gone to the Aer Lingus management ‘cap in hand’ to ask for a move back to Ireland he had not been given much in the way of encouragement. In the end, however, he got his transfer home because Aer Lingus needed to fill a position quickly, and appointing Tony seemed like the easiest solution.

  The airline was putting more resources into its leasing operation. Seán Daly, who had been in the sales department, was put in charge. ‘He was a very good personality,’ recalls a fellow-employee, Seán Braiden, ‘a very striking guy’, with exactly the kind of charisma and expertise needed for what would be a difficult sales job on a global scale. But sadly for Daly, shortly before taking the post he was involved in a serious car accident. That put him out of action for a year. Looking for a replacement in a hurry, the general manager, Arthur Walls, who liked what Tony had done in JFK, gave him the job. ‘So the way Tony got into leasing was interesting,’ says Braiden, ‘because he got in by default, really.’

  What the ‘striking’ figure of Daly would have made of the opportunity that now came Tony’s way is anyone’s guess; but it is no exaggeration to say that Daly’s bad luck placed Tony in the right place at the right time in a way that would see him transform his own life and the airline industry.

  ——

  By the early 1970s the global airline industry was in one of its periodic bouts of depression. ‘The airline industry tends to have cycles of euphoria brought about by rising markets and rising profits,’ explained Aer Lingus’s chief executive, Michael Dargan, ‘followed by acute melancholia when the pendulum swings the other way.’

  By 1972 there was not much doubt about the direction in which that pendulum was moving. On 21 February 1970 a Swissair Convair 990 four-engine jet had exploded five minutes after takeoff from Geneva Airport for a scheduled flight to Tel-Aviv, killing all forty-seven on board. That same day an Austrian Airlines jet had narrowly avoided a similar fate, managing to return to Frankfurt Airport after being rocked by an explosion. These two events marked the beginning of a new era of attacks on aircraft, and anti-Israeli terrorist organisations carried out a campaign of such attacks throughout the 1970s. The fear of being blown out of the sky had a disastrous effect on passenger numbers, as well as dramatically increasing security and insurance costs for airlines. The result was a sharp loss of income, accompanied by drastic overcapacity. When the Oil Crisis of 1973 saw fuel prices jump to astronomical levels the airline industry was plunged into ‘melancholia’.

  Amid the general crisis, Aer Lingus had managed to double down on its own misfortune through a combination of bad luck and bad judgement. For an industry battling against the threat of terrorism, images of the ‘Troubles’ in the North—where by 1972 the death toll averaged more than one person every day—had, among other considerations, wrecked the tourist industry in Ireland. As if the subsequent loss of passenger numbers for Aer Lingus wasn’t bad enough, the chaos of the Irish economy, with inflation spiralling out of control, left its own disastrous mark on a company that had made most of its money abroad. In the financial year 1971/2 Aer Lingus and its non-scheduled air-transport arm, Aerlínte Éireann, had incurred a net loss of £2.39 million—the first loss in more than a decade.

  Aer Lingus had also been the author of its own misfortune. The decision to buy two Jumbo Jets from Boeing may have looked like good business in January 1967, when the order was placed. But by the time Aer Lingus took delivery of the aircraft, in 1971, it looked like hubris. The ‘bubble’ of transatlantic air traffic had well and truly popped. Carriers around the world had mothballed their Boeing 747 aircraft. But mothballing wasn’t a luxury that Aer Lingus could afford. The company needed to get its Jumbos leased—and to do it fast. Seán Braiden recalls that

  the mission Tony had was to get rid of the 747s—get them out and leased. But he was in territory that he had never been in before. Tony had never been involved in leasing, and I can’t imagine why there would be any reason he would have any knowledge or experience of it, because his area of operations had been the airport and what was going on there.

  Fortunately the company had already had some success in the area. Historically, Aer Lingus had always suffered an imbalance between its winter and summer operations. This was an industry-wide problem that was more acute for Aer Lingus than most airlines, because it relied so heavily on tourist traffic. Scheduling most of the annual aircraft maintenance for the winter months alleviated some of the problem, but it still left a surplus of aircraft standing around doing nothing for half the year. In the mid-1960s Aer Lingus addressed the problem by leasing out aircraft on long-term contracts in the winter months to carriers in the United States and the Middle East.

  The experience had not always been a straightforward or comfortable one. The international nature of the game, involving contracts and property that fell outside the jurisdiction of Irish courts, would often lead to hair-raising and expensive attempts by Aer Lingus to get what it was owed, or indeed owned.

  Earlier attempts to lease the brand-new 747s had produced mixed results. After the order for the two Jumbos was placed with Boeing in 1967, Aer Lingus had successfully identified an airline, the low-cost carrier Trans Caribbean Airways, that had peak traffic in the Irish winter months. Trans Caribbean operated between New York, Newark and Washington, DC, and the Virgin Islands, Haïti and the Netherlands Antilles. Tourist traffic on these routes from the north-eastern United States to the sunnier climate of the Caribbean was potentially high, but Trans Caribbean had been unable to exploit this because its fleet consisted of only nine jets. Leasing a Jumbo from Aer Lingus suited everyone. A long-term contract was agreed that would see Aer Lingus provide the aircraft to Trans Caribbean for the high season in the West Indies and bring it back to Ireland for the busy summer on the transatlantic route. Advance payments were to be made at specified intervals. The contract was signed and the arrangement ready to kick in once the 747 came into service in 1971.

  However, before the first payment was even made, O. Roy Chalk, the flamboyant owner of Trans Caribbean, sold the company to American Airlines in January 1970 for about $18 million in stock. ‘We immediately got worried when we got wind of American’s lack of enthusiasm for the contract,’ recalls Neil Gleeson, who had helped negotiate the leasing deal. American Airlines had a very large fleet of its own and hardly needed an Aer Lingus 747 to add to the overcapacity it already had. ‘As it happened, Trans Caribbean had just missed the advance payment as provided under the contract, which meant they were in default,’ Gleeson remembers. ‘Our New York lawyers advised that, in view of the default, we were entitled to terminate the con
tract and sue for our loss.’

  It was a high-risk strategy for an Irish airline to take on a giant of the aviation world on home territory, in the United States. But it was a risk that paid off, with Aer Lingus getting a settlement. ‘We then had a substantial amount of money’, says Gleeson, ‘and an aircraft available to lease out again for the winter.’

  The experience with Trans Caribbean meant that Aer Lingus by 1972 had developed a certain level of in-house expertise on the legal, financial and operating complexities of leasing out aircraft. What was needed in the context of a depressed global industry was for someone to get out and sell the lease in the new, tougher environment. Hence the appointment in the first instance of Seán Daly, a salesperson. Following Daly’s accident, Aer Lingus had turned to Tony because he was available, had a good understanding of routes and carriers, had followed the Trans Caribbean hearings at close quarters in New York, and had brought with him the unconventional turn of mind that his bosses had noticed in JFK.

  For the next few months, with his family happily settled back in Ireland, Tony began flying around the world touting for business and trying to get a taker for the Jumbos sitting idly on the ramp back at Dublin Airport. It was a hard and dispiriting job. There was no global shortage of 747s. Dozens upon dozens of planes belonging to airlines from around the world had already been mothballed in the area around Tucson, Arizona, where the dry, smog-free climate helped minimise corrosion. In Seattle, the home of Boeing, a long line of new 747s gathered dust awaiting new owners. It was hardly any surprise when Tony met with rejection after rejection. No-one wanted a spare Irish 747.

  That seemed to be the story when Tony started touting for business in Thailand. The country had two commercial airlines. The first was the national carrier, Thai International, which had close ties with the Scandinavian airline SAS and was generally thought to be under the control of the Thai military. That was a non-starter for Tony, but the second designated airline, a much smaller operation called Air Siam, offered a glimmer of potential. It had been inaugurated in 1969 as the brainchild of the entrepreneurial Prince ‘Nicky’ Varananda Dhavaj, a former wartime RAF pilot and a nephew of the Thai king. His vision was to establish an airline flying across the Pacific, from Bangkok to Los Angeles via Hong Kong, Tokyo and Honolulu. The airline was a minnow in comparison with Thai International, but it had a knack for publicity—even getting one of its planes into the opening credits of the hit television series ‘Hawaii Five-O’. Its major competitive advantage was the exclusive right to fly to the United States, including the lucrative LA route. A year after it began flying the route, in 1971, Air Siam sought to expand its capacity and began looking around to lease another Boeing 707.

  When Tony arrived in Bangkok he found himself in the frustrating position of negotiating with a company that wanted to lease an aircraft but not the larger Boeing 747s that Aer Lingus had to offer. Tony held several meetings with the chief executive, Virachai Vannukul, trying to tempt, cajole and flatter him into making the ‘jump into the big time’ with the 747. The two men got along well, but in the end the meetings went nowhere. The risk for Air Siam was simply too great.

  Tony left disconsolate at the fact that yet another meeting had failed. Gathering his things together, he headed out to the airport, only to discover that his flight had been delayed. He was left to mooch around, have a snooze, read a book and look over his papers—all the familiar attempts to thwart the boredom and frustration of long delays in the departures lounge of an international airport.

  At some point during the wait a light-bulb came on inside Tony’s head. Why not give it one last go with Virachai? He found a pay phone and some change, and put the call in. It was the moment that changed everything for Tony Ryan. Virachai, impressed by his tenacity, said, ‘Okay, come back and talk to me.’ Tony did exactly that and leased him the Boeing 747. ‘From that moment onwards’, says Fergus Armstrong, a legal adviser to Aer Lingus and later Tony’s confidant, ‘a perception arose that Tony was a miracle-worker and a man who could do the deal.’ Overnight, Tony had become the man who wouldn’t take no for an answer.

  Dublin might have been delighted at Tony getting one of the Jumbos leased, but the agreement in principle with Air Siam didn’t come without its headaches. Reportedly nicknamed ‘Air Heroin’ within the industry, Air Siam looked like a risky custodian for something as precious as a 747 jet. It appeared to have no cash reserves—any money it had seemed to come from whatever was earned on flights. Air Siam, said the magazine Asian Finance, was the ‘black sheep’ of the region’s airlines and not a good credit risk.

  That poor reputation caused understandable nervousness back in Dublin. ‘It was clearly a high-risk venture involving a company of dubious credit rating,’ notes David Kennedy, then assistant chief executive (operations), ‘and it entailed sending our most valuable asset—indeed one of Ireland’s most valuable assets—to the far end of the world. However, the alternative was to have the aircraft sitting idle on the ground in Dublin, which was not a very attractive proposition.’

  Kennedy sent the financial adviser Laurence Crowley to Thailand to put together a deal that would be absolutely watertight. Crowley explains that

  everything had to be watched very carefully. Just like a ship, if you run up debts across the world, you can get writs nailed to your mast and you won’t be able to take the ship home until you pay each one of these off on the way back. We didn’t want that to happen, and therefore things had to be very tightly organised in terms of guarantees. They were the most difficult things to get, and I worked with Tony to get those guarantees in the end.

  A contract was finally signed in the summer of 1973 for the Boeing 747 to operate on the Bangkok–Hong Kong–Tokyo–Honolulu route three times a week. In the first year Aer Lingus would make an operating profit of $3 million from the deal.

  Contractual undertakings were backed up by a detailed action plan put together by Kennedy with Tony to make sure that matters never got near a foreign court. For a start, Aer Lingus had insisted on a ‘wet’ lease (with aircraft, complete crew, maintenance and insurance), which meant that Tony and the 747 flew down to Bangkok with fifteen pilots, twelve engineers and three support staff. Thai cabin crew and co-pilots would be trained by Aer Lingus. Having so many Irish staff members on the ground and in the air made it easier to facilitate repatriation of the plane if the worst came to the worst.

  Even these arrangements caused a certain alarm in Dublin. During the Dáil debate on the Air Navigation and Transport Bill in November 1973, Ray Burke of Fianna Fáil demanded that the Minister for Transport and Power, Peter Barry, ‘explain the situation in regard to Irish crews flying Irish planes which are on lease to foreign countries.’

  Those concerns were shared by Aer Lingus itself. Beyond the arrangement for the wet lease, there was also a confidential plan involving a ‘snatch squad’ for the 747 and its staff. In the event that Air Siam ran into any kind of trouble, the fear in Dublin was that somebody would slap a lien on the aircraft and hold it on the ground in some place such as Hong Kong or Tokyo. Aer Lingus would have to argue about ownership in the courts of a foreign jurisdiction. ‘So we actually had a group of pilots in Dublin’, Kennedy recalls, ‘ready to fly out to Honolulu, if necessary, to take the aircraft, fly it back to Dublin and then argue about it in an Irish court. That’s how concerned we were about the security of the asset.’ Indeed when Air Siam ran into financial trouble a few years later, Kennedy did actually ‘pull the aircraft back home’, and he thought Aer Lingus lucky to have got out with a shortfall of only $1 million in payments from Air Siam.

  However risky it might have been, pulling off the deal to get rid of an Aer Lingus Jumbo brought Tony great kudos in Dublin. Colleagues remember that his ‘wizardry’ on the Air Siam contract excited ‘genuine astonishment’ in Aer Lingus. The arrangement might have made his reputation, but it also came at a personal price. ‘The measures to protect the asset’, says Neil Gleeson, ‘were where Tony Ryan cam
e in. We put arrangements in place with Tony to ensure he could recover the aircraft at very short notice.’ There was, the management at Aer Lingus concluded, ‘nobody better to handle that situation than Tony Ryan.’ So it turned out that the key to the relationship with Air Siam was that Tony would be sent down to Bangkok to run the operation on a day-to-day basis.

  That was not a decision well received at home. Only the previous year Mairéad, homesick and tired of life in the United States, had convinced Tony to return to Ireland. By now she was happily settled in Co. Dublin, with Declan and Shane at home and Cathal close by at Clongowes Wood. It might not have been Co. Tipperary, but after Long Island it was good enough. Tony may have been spending a great deal of time abroad, but the Ryans as a family were at home once again. So it can hardly have surprised Tony that when he came back to announce that everyone was moving to Thailand it was devastating news for Mairéad. In the end, Tony managed to convince her by saying that it would be for only ‘a couple of years’. After that, he promised, he would have made his mark in Aer Lingus to such an extent that he would be able to demand a senior management position in Dublin.

  Not the least of Mairéad’s concerns was the safety and happiness of her boys in Thailand. That summer had seen revolution overthrow the military dictatorship, and the political situation remained fragile and dangerous. There was a feeling that anything could happen while they were there.

  Yet, for all the sense of political chaos, what struck the Ryans when they arrived in Thailand for the first time was its spectacular beauty. At weekends the family would travel to the island of Ko Samet. The beaches and the warmth of the sea were like nothing the boys had ever experienced before. ‘Thailand in the 1970s was just incredible,’ Declan recalls, ‘very unspoilt.’