Tony was furious, not least because GPA was set to make that amount in profit from the deal. In the end only a ‘gentlemen’s agreement’ of the kind that still existed in the City of London in the 1970s kept the deal alive. Aer Lingus, as a state-owned company, could not guarantee the $3 million from Guinness Mahon, a private bank, that would finance the deal. The bank, however, took the fact that Aer Lingus would be buying the aircraft as a guarantee in all but name. ‘Our only risk’, says Ledbetter, ‘was Air Zaïre not paying the rent, and we got a four-month deposit from them. So we operated very conservatively.’
Even with the bank and Aer Lingus on board, the final moments of the deal were nervy. Everyone met in London in March 1976 to sign the contract. With the Japanese becoming visibly angry, GPA had to stall until the phone call came through to say that Air Zaïre had made the first payment. Eventually confirmation arrived and, about five o’clock in the morning, the contract was signed.
After eight months in business Tony was able to report that GPA had broken even substantially ahead of its forecast, in fact making a ‘small profit’. He had the basis of an ‘aggressive team’ with ‘enthusiasm and ability’, ready to take the company to the next level.
Yet the experience with the Air Zaïre lease, he informed the board, had been a bitter one. ‘The last-minute rearrangement and distortion of the original concept’ was bound to have ‘some negative repercussions’ for GPA. The ‘loss of control’ of the Air Zaïre lease was ‘unfortunate’, because he had wanted this to be ‘a showpiece’ for the company.
Now he gave his board both a prediction and a warning. ‘It is now very obvious’, he told them, ‘that Guinness Peat Aviation can make substantial profits if supported.’ That endeavour required a brave approach. ‘Our future is suspect’, he cautioned, ‘if we cannot put aircraft brokerage on a different level to the traditional broker. We must develop new concepts and ideas.’ If GPA failed to seize the moment, there were others ready and able to do so. Continental Airlines had recently concluded an agreement with Citibank to offer a similar service. ‘We now have a potentially serious rival,’ Tony predicted.
After less than a year in business Tony had already begun to identify a broader strategy for GPA, ‘moving’, says Laurence Crowley, ‘from being a broker to a leaser, which was a big step forward.’ Tony now began a relentless campaign to persuade his two major shareholders to allow him to acquire aircraft without having them pre-let. The move from broker to leaser meant upping the risk factor. The current arrangement of acquiring a lease and then finding a plane meant very little exposure unless the lessee went bankrupt. Moving to a new strategy was more risky, but, Tony promised, it would eventually allow GPA to sweep up most of the aircraft of the world—and all the profits that went with them.
‘We are inundated with requests for B737 leases for [next] year,’ he wrote in frustration to the board at the end of 1976, ‘but at this time cannot satisfy a single airline.’ The recent upswing in the fortunes of the aviation business meant that it was harder to source efficient jet aircraft. ‘GPA must be prepared to accept some element of protected risk in either leasing or acquiring aircraft,’ he pleaded. ‘Having even one aircraft would allow us some control.’
A few months later Tony returned to the same theme, but this time he was hardly able to contain his anger. Profits were up, to half a million pounds. New staff members were being taken on. But there was frustration within the company about the fact that potential was going unexploited. In particular, everyone was ‘concerned at the bank’s lack of involvement in our development to date.’ Then Tony let rip, writing angrily:
I accept that frustration is an element in our work but cannot condone long-term continuation of this middleman ‘Mickey Mouse’ involvement in leases. Frankly our staff are too talented for this grovelling work. Furthermore, by taking a risk we can utilise our expertise and make more money for GPA.
Projects to date had all been short term. The need to acquire aircraft was vital in maintaining cash flow. That would require a credit line of at least $500 million through the Guinness Peat Group to obtain even a reasonable share of the financing market. He told his major shareholders:
GPA progress to date must be described as interesting and exciting … I believe we have scratched the surface of an industry that offers fantastic returns if properly structured and supported. Limited risk is necessary if we are to tap this profit potential.
Eventually Tony’s badgering paid off: in December 1977 GPA began the process of acquiring aircraft when it signed a contract for a Boeing 747-100, to be delivered in 1981. The following year GPA established a subsidiary, Air Tara, to register aircraft in Ireland. In the meantime Tony consciously began implementing a strategy that moved the company from brokerage to being a wet-leasing operator with access to its own equipment and staff. The financial return was about four times higher. GPA would maintain tighter control over negotiations, leading to longer-term contracts and a build-up of residual value services.
The move into wet leasing was a step change for GPA, but it didn’t come without its own frustrations—and even real dangers. A month after the deal with Nissho Iwai, GPA won a deal with National Airways Corporation of New Zealand to lease out a Boeing 737-200. Tony had expressed his habitual irritation that GPA itself could not buy the lease, which was being offered at well under market value, because he knew ‘we could make a substantial amount of money by taking a position on the lease.’ But he had exclusive rights in marketing the aircraft, which GPA succeeded in wet leasing to Nigeria Airways.
For the nine-month period of the lease, GPA was projected to make $200,000 profit, with more to come if the arrangement was extended. Even after the first two months, the projected profit went up, as the aircraft was flying many more hours than the minimum agreed in the lease. Tony reported:
It was obvious that if we want great profits we must get into wet leasing [where] the return as compared to leasing the hull only is quite staggering. On the Nigeria lease, GPA will achieve more revenue and profit than the aircraft owners.
For the next flew years Nigeria would become the cash cow of his business.
Wet leases also came with their own set of problems. In the case of Nigeria Airways, even getting the aircraft to Lagos was problematic. The man given that task was Seán Braiden, GPA’s vice-president for south-east Asia. (‘We all got great titles!’ he remembers.) He was in Bangkok when Tony ordered him down to Christchurch to collect the aircraft and deliver it to Nigeria Airways. ‘It was a B737,’ Braiden continues, ‘so I could only do two-hour hops right across the world. It took us three days, going something like Christchurch, Brisbane, Darwin, Kuala Lumpur, Bombay, Khartoum, Cameroon and Lagos, where the Nigerians signed for the plane that night.’ For Braiden it was then a return trip that went ‘Lagos, Rome, London, Dublin, Shannon, back to Dublin, Amsterdam and onwards to Bangkok.’ Such was the life of GPA executive, he refects, although ‘Tony was doing that all the time.’
Getting the plane to Lagos was only half the story for Tony and GPA. There were difficulties and delays about changing the aircraft registration from New Zealand to Ireland. That meant paperwork irregularities when the 737 arrived in Nigeria. Accompanying Braiden to Lagos as part of the wet-lease operation were three crew members from New Zealand, who had their passports promptly confiscated by the immigration authorities on arrival. Those crew members then refused to take orders from Nigeria Airways officials, leaving the plane sitting on the ground for three days.
Eventually Tony sent Peter Swift to Lagos to sort everything out. A sum of $12,000 was paid to Nigeria Airways as ‘no fault’ compensation for the plane not flying. It was money well spent as far as GPA was concerned. Swift recalls that the cheque ‘built up good faith with Nigeria and was a sign of our willingness to step up to our responsibilities.’
The relationship turned out to be highly profitable, but it shows how the company had to operate outside the comfort zone of Western airlines to make
money. ‘It was huge revenue for GPA,’ Braiden recalls, ‘but it was not an easy area to operate in.’ As Tony warned the board, ‘conditions are, and will be, extremely difficult.’
The difficulties and dangers involved in international leasing were even more starkly apparent in Iran. In the summer of 1976 Tony arranged the wet lease of two Air Jamaica 727s to Iranair. At the outset there were the usual cultural problems involving staff from two different continents, not least that the Iranians at first refused to work with the black Air Jamaica crew for ‘security reasons’. But these problems were ironed out quickly enough, and the leases continued working well until 1978, when they were overtaken by political events in Iran.
By the autumn of that year the events were well under way that would lead to the overthrow of the Shah and his replacement by the religious leader Ayatollah Khomeini in the Iranian Revolution. Almost half the Iranian population was urban, and most of those were poor. As the gap between them and the wealthy elite grew, with an increasingly impoverished middle class, so people began to take to the streets in mass demonstrations.
Observing with concern from Shannon, Tony sent Christy Ryan out to assess the situation. The message that came back from Tehran was unambiguous: ‘Abort!’ The Royal Garden Hotel, where the GPA team of twelve pilots, eight engineers, one office manager and fifty-eight flight attendants were staying, had already been attacked by rioters. None of the seventy-nine staff members was hurt, but it had been a lucky escape. On 7 November the mostly Irish team flew out of Tehran using one of the GPA 707s.
In Dublin the story was headline news. ‘Mercy flight brings Irish girls out of riot-torn Iran’, ran the uncharacteristically flushed headline of the Irish Times. ‘On arrival in London’, the paper went on, ‘one girl said: “We were virtual prisoners on the 11th floor of the hotel … The rioters just went completely berserk, smashing everything they could lay their hands on … We just ran for our lives.’ No wonder that Christy Ryan was quoted by the Irish Times as saying that GPA would not be sending their aircraft or staff back until they were assured it was safe. ‘Things were not too good,’ he noted with characteristic understatement.
GPA’s ‘mercy mission’ for the Irish ‘girls’ was just the beginning of the company’s troubles in Iran. On 2 January 1979, as the revolution gathered pace, Tony cancelled the Iranair contract and pulled the remaining aircraft out of Tehran. Once the plane was in the air it came under fire from the Iranian air force and was made to land at Tabriz. The Iranians believed that the Shah may have been attempting to flee the country on the GPA plane. It was only when Brendan Swan of GPA assured them that the plane was Irish that ‘tensions were somewhat eased’.
This was a competitive advantage for GPA that had become a potential lifesaver. ‘A country so small as Ireland’, Tony said, ‘has none of the suspicion that may attach to the big powers, and there is no taint of colonialism. It makes things that bit easier.’ Certainly that was the case in Iran, from where the Boeing 707 was eventually allowed to continue onwards to London and then Shannon.
Within two days GPA had signed a new sublease for the aircraft with Air Algérie. ‘The luck of the Irish had nothing to do with this,’ judged the Irish Independent, ‘but rather all that flying and an astute awareness of the opportunities there to be seized.’
That sense of GPA as a rising player was confirmed six months later at a press conference in Shannon when Tony announced major leasing and sales agreements on seven aircraft with a total hull value of $37 million. The deals involved trading with nine international airlines in agreements that were spread over the Far East, the Middle East, West Africa, North America, the Caribbean and Europe. It was the largest aircraft deal that GPA had yet undertaken. Moreover, Tony told journalists, GPA was in the final stages of other negotiations with several major world airlines for aircraft placement and technical and management consultancy, and it already had its own Jumbo Jet on the way.
Clearly GPA was at a tipping-point. From a work-force of eight in 1975, the company would expand to a hundred employees by 1980. As one of Ireland’s major foreign-currency earners it was already making a sizeable contribution to the national economy—and the national airline. While Aer Lingus lost £2.9 million on its passenger and cargo services that year, GPA made £1.5 million in profit, contributing £0.7 million to the beleaguered Irish carrier.
‘Aer Lingus and the Guinness Peat Group must be extremely happy with the way things are going,’ noted Desmond Rushe in the Irish Independent. ‘So must Tony Ryan, the pioneering brain behind it all. He holds the remaining 10 per cent share and if anyone merited astonishing success, it is he.’ Tony was so delighted that he sent the journalist two free tickets to Lagos as a thank you.
Chapter 5
GOING IT ALONE
Kilboy House, Dolla, Co. Tipperary
It might have been only a fifty-minute drive by car, but this rambling, 350-acre Georgian estate was a world away from the railway hubbub of Tony Ryan’s birthplace in Limerick Junction. ‘There is a sense of gentle seclusion,’ he later said, ‘a place of utter peace and tranquillity.’ The glory of the estate was not so much the house, which was twentieth-century pastiche after the original was burnt out in the Anglo-Irish War, but the glorious parkland that surrounded it. Filled with ancient oaks and horse chestnuts, with horses and Blonde d’Aquitaine cattle grazing, the property nestled in pastoral tranquillity beneath the Silvermine Mountains. Within a life travelling hundreds of thousands of miles every year, Kilboy became the still point in Tony’s ever-turning world.
By the end of the 1970s Tony had come a long way, and not just from Limerick Junction. At the beginning of the decade he had been the Aer Lingus station manager in JFK Airport. Few then would have predicted the kind of success that followed at GPA. He was on the way to creating a $4 billion business that would transform global aviation and see him join the ranks of Ireland’s super-rich. Yet it had come at a cost. The building of the company, Tony later reflected, ‘required the virtual sacrifice of my private life.’
Tony had bought Kilboy House in April 1976. The Fianna Fáil TD Des O’Malley acted as his solicitor in the sale, bidding on the estate at auction while Tony hovered near the doorway. Eventually Tony got Kilboy for just over £100,000. Afterwards, with O’Malley crowing that the legislation he had passed as Minister for Justice had saved Tony 5 per cent in fees, they went out to Kilboy to look the property over. O’Malley recalls that the house was ‘a bit of a wreck’. Everything seemed very neglected and required vast redevelopment. Tony needed to start work on the renovation as soon as possible, he said, because he wanted to create a family home for Mairéad and the boys.
In fact, by the time the house was fit for occupation Mairéad, after a short time in Tipperary, returned to Dublin in order to be closer to the two older boys at Clongowes Wood. This was the beginning of a painful period for the Ryans. ‘It was an area of his life that Tony was very sensitive about and felt regret about,’ his son Declan remembers. ‘There was regret about the marriage, that it broke down, and, like any relationship, there was a lot of sadness associated with that for all of us.’
Tony always accepted that he had asked too much of his wife. She had travelled with him from station to station—London, Chicago, New York and Bangkok—and in all those places she felt desperately homesick for Ireland. When eventually the family moved back home, Tony then began the relentless travelling with GPA that would see him on the road more often than he was at home. Success in business had come because he was such a driven individual. Work consumed him and in the process left very little room for family obligations. ‘I travelled ceaselessly, averaging more than half a million miles by air per year,’ he said. ‘I installed an office in my home … staying in touch with the business twenty-four hours a day and planning strategy in weekend sessions with my senior managers.’
On occasion it was hard enough for Mairéad to speak to her husband even on the telephone, let alone see him. In the end the strain simpl
y became too much. They agreed that she could not be expected to live in Kilboy House on her own with Shane when Tony himself was there so infrequently. ‘He took the view’, Declan concludes, ‘that his family life would have to suffer in order for him to achieve success—and it did. Thank God he lived until the age of seventy-two and we all had a great catch-up period later.’
The turmoil in Tony’s private life had been caused in no small part by his obsessive commitment to work. The collapse of his marriage if anything only intensified that commitment. He could hardly have put in longer hours than he was already working, but a restlessness now began to take hold of him. It would become the dominant characteristic of the second half of his life. The old happy-go-lucky Tony who had married his childhood sweetheart and been Mr Popular down in Shannon was gone. In his place stood a tenacious, ambitious businessman and entrepreneur consumed by a determination to make it big. That in turn demanded more ambition of GPA. And it meant looking beyond it.
By the end of the 1970s Tony believed that GPA had maximised its efforts as a start-up. The wet-leasing side of the business run by the GPA subsidiary Air Tara was generating decent profits. But Tony wanted more for the company, so from 1978 he began agitating for greater commitment from GPA’s major shareholders, Aer Lingus and the Guinness Peat Group. To get their attention he began an aggressive campaign in his monthly reports and at board meetings to highlight what he perceived as their lack of attention and investment. He focused his ire particularly on the Guinness Peat Group. When the bank’s placeman on the board tartly reminded him that GPA’s business was ‘primarily that of an airline leasing company rather than a financing institution’, Tony’s reaction was immediate and harsh. GPA, he acidly noted, ‘would have benefited by even one project being supported by our banking associates, Guinness Mahon.’ Their ‘degree of participation’, he claimed, didn’t even come close to matching the brilliant success of ‘GPA’s track record’.
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