Tony Ryan

by Richard Aldous

  It was through McEvoy that O’Leary was introduced to Tony. ‘Michael was working on the [Kilboy] farm accounts,’ McEvoy recalls, ‘and got to know Tony a bit.’ O’Leary might have been just one more of the faceless number-crunchers who crossed Tony’s path daily, but he had a couple of features that helped him stand out. First, he was educated at Clongowes Wood and had been at the school at the same time as Cathal (two years older) and Declan (two years younger). Although their difference in age meant that the boys had not been friends, that common ground meant that Tony and O’Leary could talk easily about a shared world. Second, O’Leary even then had the kind of chutzpah that Tony admired. ‘I called him up one weekend’, O’Leary remembers, ‘because there was a scheme—not a tax dodge, but a grey area—and I said to him, “Look, I’m not allowed to say this at SKC, but I think I can save you some money”.’

  That claim must have struck a chord with Tony, because shortly afterwards he decided to offer O’Leary a job in GPA. The difficulty was that Tony couldn’t find him. ‘I got a phone call one day, asking where was Michael,’ remembers Laurence Crowley, a friend and director in Stokes Kennedy Crowley. When Tony discovered that O’Leary had left to run his own newsagents he was livid. ‘Nobody told me!’ he thundered. To compound the irritation, no-one even knew where the shop was. ‘So Tony apparently travelled around dozens and dozens of newsagents in Dublin looking for Michael until eventually he found him,’ Crowley says. Tony then offered O’Leary a job in GPA, but it was turned down. A few months later he came back and tried again. In the end O’Leary said he wanted to come and work as Tony’s assistant. They agreed that O’Leary would get paid 5 per cent of any money he made.

  By the time O’Leary walked through the door at Ryanair he had already established a rapport with Tony based on straight talking and a forensic analysis of the books. It is striking when talking to anyone who saw the two men in action together, especially in the early days, that they all tell a version of the same story to explain the success they enjoyed. O’Leary, they say, put specifics on Tony’s ideas. ‘Tony was a visionary,’ sums up Crowley. ‘Michael was a doer, a deliverer.’ That made them a perfect match.

  Finding someone to match Tony’s imagination and courage had never been an easy task for him. Sometimes that was because those he picked ended up lacking the necessary skills for the job. At other times it was because they didn’t have the strength of character required to tell Tony when to back off. And at still other times it was because they lacked faith in Tony’s instincts when every rational instinct said, ‘Abort.’ In part this was often Tony’s own fault, as he found it almost impossible not to interfere when others had been tasked with implementing his ideas.

  The fact that he could be ferocious in his criticism added a personal dimension to any relationship. In Denis O’Brien, his first PA, Tony had found someone who would stand up to him and whose entrepreneurial spirit matched his own. Now in Michael O’Leary he had discovered someone who would also stand up to him and whose managerial talent far outmatched his own. It was O’Leary who could make Tony’s vision fly, and he also possessed the self-confidence to clip Tony’s wings when necessary. On occasion that would lead to spectacular rows between the two men, but Tony always understood that talent-spotting the young accountant, as he had done with O’Brien, was among his most important calls. The eventual decision to put O’Leary into Ryanair was described by him as the best deal he ever did.

  By 1988 Ryanair was ‘a mess of unmerciful proportions’, O’Leary recalls.

  They had great PR, but where was all the money? They were producing accounts showing them making money, and yet there was a huge hole, with cash running out the door. They were making assumptions about passenger numbers and fares paid, they didn’t seem to know what half the costs were, and there was hardly any accounting system. It was a shambles. So I was sent in to try and find out what the hell was going on.

  Three weeks later O’Leary went back to Tony and delivered the news: ‘This is a fecking total mess.’

  Tony now instructed O’Leary to draw up an action plan of how to put the airline on a more stable footing. When O’Leary presented that report to Tony on 26 August it made for stark reading. The company would need ‘a minimum funding of IR£3 million to see it through to April/May’ the following year. Thereafter, every lever had to be pulled in order for the company to make money. ‘THIS COMPANY MUST NOW BE PROFITABLE,’ O’Leary wrote. ‘It has established a firm platform of profitable routes. All future efforts must centre around cutting costs and developing (strategically important) profitable routes.’

  O’Leary listed the ‘immediate and widespread cuts’ that needed to be implemented. There had to be ‘major people/salary reductions’ in management and support staff. ‘Use present “financial crisis” as basis for action,’ he advised. The plush city-centre headquarters should be abandoned for ‘Portacabin offices’ in the executive jet terminal at Dublin Airport. This move would ‘greatly improve costs/ morale at airport’. A ‘major overhaul’ was required in the advertising and promotional budgets. ‘Current “abuses” in system’ had to be eliminated, including cash payments, company cars, hotels, free bars, family travel, free travel and taxis. All costings, including lease rates, fuel, spares and insurance, had to be reviewed and greater efforts made to use competitive tendering to reduce fees.

  Beyond these specifics, O’Leary also called for a change of oversight in Ryanair, including a new ‘system of strict financial control and discipline’. It would be essential to ‘overemphasise these controls’ for the next six months. Ryanair had to have firmer leadership, with a ‘stronger system of management from top down’. That meant management by decision, not drift. ‘Management’, he pointed out, ‘are paid to lead the Company. Do so.’

  Tony himself was asked to consider exactly what his commitment to the airline was. The Ryan family, O’Leary wrote, ‘must consider this entire investment now.’ An investment of £2 million would be required immediately just to fund the current deficit. Should the present management be given these funds? How should the company be directed? Was the family prepared to fund the additional development that would be required in 1989? What did the family wish to own in terms of Ryanair in three years’ time? ‘These decisions must be made now’, O’Leary concluded, ‘and subsequently followed through without distraction.’

  O’Leary had cut to the heart of the matter for Tony. Did he want to keep putting his money into the airline, and did he trust O’Neill to spend it well? There was no question in Tony’s mind about staying in. However, by the end of the summer of 1988 he had lost faith in his chief executive.

  The tipping-point came in an incident involving Tony’s middle son, Declan. At a meeting with Tony, instead of talking about the hole in Ryanair’s finances, O’Neill made a presentation arguing for an investment in property in Portugal. Declan, as O’Neill’s deputy, bit his tongue during the meeting, but afterwards he wrote him a coruscating note asking why they would be wasting money on property overseas when the company was running out of cash. O’Neill, assuming that Tony had seen the note, sent it to the entire Ryanair board in protest. In fact Tony hadn’t seen this scathing assessment until the chairman of the board, Arthur Walls, forwarded it to him.

  A tense meeting between Tony and O’Neill followed at the Westbury Hotel in Dublin. O’Neill protested that the note had been a challenge to his authority as chief executive. Tony asked him outright if Ryanair was running out of money. By the conclusion of the testy meeting it was clear to both men that they had reached the end of the road together. Shortly afterwards O’Neill was fired by the board. ‘You were right to send him the memo,’ Tony told Declan afterwards. ‘In fact, you should have written it earlier.’

  There were few doubts even among those close to O’Neill that he had deserved to go. ‘Eugene had done a pretty good job of getting the airline up and running,’ says Denis O’Brien, O’Neill’s brother-in-law, ‘but the cost side of the business was n
ot in control, and that drove Tony mad.’

  While O’Brien thought O’Neill could have few complaints about losing his job, the way in which he was sacked did not reflect well on Tony. ‘It was absolutely awful,’ O’Brien says, ‘and Tony handled it really badly. It was very, very messy.’ Even O’Leary, who argued strongly for the change of leadership, agrees that O’Neill was despatched without much grace. ‘Ryanair was a complete mess,’ he says, ‘so it was “Right, out you go,” boot him out and replace him. Then it all blew up.’

  O’Neill was incandescent at both the fact and the manner of his dismissal. ‘Eugene appeared to have lost the run of himself,’ O’Leary suggests, ‘reading all that “businessman of the month” stuff and believing his own BS that he was the next Tony Ryan or Michael Smurfit.’ One minute he had been Mr Ryanair, the next he was out on the street. When O’Neill threatened to sue for unfair dismissal Tony told him in the bluntest language possible what he thought of that course of action. ‘Eugene got very upset with Tony,’ says O’Brien, ‘and they had this row that went on for ever. Neither of them would give an inch. It was just a nightmare.’ When the legal process began, O’Neill would swear an affidavit saying that Tony had promised to ‘crush’ him. Business, Tony was reputed to have told him, was made up of ‘fuckers and fuckees, and in our relationship you are my fuckee.’

  In the end an uneasy truce was worked out, with O’Neill settling and having his legal costs paid in return for surrendering his shares. A separate case, in which O’Neill alleged that Aer Lingus and the GPA subsidiary TAI had conspired to thwart competition on airline routes, was thrown out by the High Court.

  The settlement money didn’t last long for O’Neill, who spiralled into financial meltdown and ill-health. His role in establishing Ryanair would often be minimised in the story of the airline, with the emphasis placed on the financial black hole rather than the achievements. In many ways O’Neill had done what Tony had asked of him, successfully launching a new airline with the kind of panache that quickly established the brand in the consciousness of Irish and British consumers. By 1988 the company needed to head in a different direction, and perhaps Tony could be blamed for failing to make O’Neill’s departure more elegant. Yet brutality was the only language that Tony knew in business; he rarely offered praise or softened the blow. Silence was usually the best pat on the back anyone could expect. When O’Neill refused to go quietly, Tony simply went through him, because that was the only shortcut he ever knew.

  O’Leary’s judgement on O’Neill perfectly captures the ambiguity that Tony himself felt.

  Ryanair needed the flash and the representation to get it off the ground, and Eugene looked good, talked a good story and generated huge publicity. But you look back and it was a piece of shite. He sold it well, but the product was crap.

  Tony now put Declan Ryan in to steady the ship while he was searching for a new CEO, finally appointing P. J. McGoldrick, who, as an experienced operations man, was the antithesis of O’Neill. His job was to stop money haemorrhaging out of the airline and to make it a viable business. ‘I don’t give a shite what you do,’ Tony instructed him, ‘just stop losing me money.’

  Not that Tony was short of money that summer. A few weeks before sacking O’Neill he had stunned the Irish establishment and sent ripples throughout the international markets by acquiring a 5 per cent share in Bank of Ireland for more than £30 million. ‘Tony Ryan and the bank enigma’ was the Irish Times headline for a long article trying to work out what game he might be playing. ‘Whatever Tony Ryan’s motivation for taking a five per cent stake in Bank of Ireland,’ it suggested, ‘there are very few in either Dublin or London who believe that this is merely a long-term investment in a high-yielding stock by the GPA chairman.’

  The acquisition of the shares had been done quietly and involved a certain amount of subterfuge even among Tony’s staff. All correspondence on the matter at Kilboy was filed under ‘Project B’, with no direct references made to the target. In July 1988, shortly before declaring his acquisition to the Securities and Exchange Commission, Tony used a visit to GPA by a senior group from Bank of Ireland to break the news. ‘At the end of the meeting’, the bank’s chief executive, Mark Hely Hutchinson, recalls, ‘Tony asked me if I would go home with him for a cup of tea.’ At Kilboy the two men chatted amicably about paintings and horses—as a young man Hely Hutchinson had ridden the legendary racehorse Arkle— before Tony showed him in to the office. There Tony announced that he was about to complete the purchase of shares in the bank. ‘Can I pass that on?’ Hely Hutchinson enquired. ‘Yes, you can,’ Tony replied simply.

  Tony may have been a little put out that Hely Hutchinson’s reaction was so bland, forgetting that Eton, Oxford and the Guards had made sang froid second nature to this younger son of Lord Donoughmore.

  Tony would have been more pleased with the reaction back at head office. ‘It was cat among the pigeons to some degree,’ Hely Hutchinson says, ‘with people scurrying to and fro, saying, “What does this mean?” In fact, even afterwards we never knew what it meant!’

  The answer may well be contained in a briefing note drawn up the previous April at Kilboy outlining the pros and cons of buying into the bank. The recent history did not make pretty reading. Bank of Ireland was bedevilled by ‘poor, conservative, unimaginative management’. It had a ‘very high cost structure’, was heavily ‘unionised’ and had ‘no interdepartmental strategy’. Moreover, there were ‘too many insiders’ on the board, which needed to be revamped to change from a ‘luncheon club’ to a ‘more dynamic commercial body’. All told, it was time for Bank of Ireland to ‘join the twentieth century’.

  Yet, for all these deficiencies, Bank of Ireland had represented an outstanding target for one reason, and one alone: ‘impact’. There was no question that buying into the bank would generate ‘huge publicity’ for Tony. He would be able to use his ‘contacts, reputation and selling skills’ to improve the standing of the bank. His influence could bring in ‘new, higher-profile directors’. There were exciting opportunities around the corner stemming from Dublin’s new International Financial Services Centre as well as from deregulation in London. And for GPA there would now be ‘major opportunities in aircraft finance’.

  This assessment made a compelling case for buying into a bank. Perhaps the real surprise was that Tony chose Bank of Ireland rather than Allied Irish Bank. ‘AIB would have been in tune with his style much more readily,’ Hely Hutchinson judges. ‘They were street-smart, whereas Bank of Ireland would be described as more thoughtful. AIB tended to take a decision almost on the spur of the moment, which would have suited his style, I think.’ What Hely Hutchinson, with family wealth and a privileged upbringing, didn’t fully understand was that Tony didn’t want street-smarts: he wanted class.

  Bank of Ireland was a historic part of the Irish establishment (nicely personified by Hely Hutchinson himself). For Tony to sit on the quaintly named Court of Directors was to become part of the traditions of a great Irish institution. At the same time as spending hundreds of thousands each year on art from the eighteenth century, Tony could now pride himself that he was a member of an institution that traced its origins from a royal charter in 1783.

  ‘Talk about cultural differences,’ says Laurence Crowley, who served on the Court of Directors during Tony’s time as a shareholder. ‘The Bank of Ireland in those days was a very distinguished pillar of old Irish society, something very distinct from GPA. Imagine the gulf for a new breed of Irish person.’

  Any feeling of pride that Tony might have enjoyed lasted no longer than the first five minutes of his first board meeting. ‘From my limited experience,’ he wrote to the governor of the bank, Louden Ryan, shortly afterwards, ‘the Bank must be more commercial and the publicly perceived club atmosphere needs to be addressed and changed.’ It was a criticism that would become more frustrated and strident over the next three years as Tony watched his multi-million investment spiral downwards.


  Some of Tony’s irritation was the result of perceived slights against him as a major shareholder. It was difficult not to be offended when, in 1989, David Kennedy, having just resigned as chief executive of Aer Lingus, was installed as deputy governor of the bank, overriding Tony’s vehement opposition. Other frustrations were deeper seated and reflected Tony’s growing awareness that his methods and those of Bank of Ireland were completely out of sync. ‘Bank of Ireland is competitively mesmerised by Allied Irish Bank,’ he wrote wearily in July 1989, a year after buying his 5 per cent of shares. ‘My general frustration is that the Bank has enormous potential which is not, I am afraid, totally appreciated by the Board and some of its management.’ It was a situation that was costing him money. ‘Our share performance in relation to AIB is appalling,’ he complained, with shareholders ‘deprived … of hundreds of millions of value.’ If matters did not improve, Tony warned, he would have to ‘give serious consideration’ to pulling out.

  Frustrations were felt on both sides. Tony’s relationship with the donnish Louden Ryan was always cordial, yet the two men never created any personal rapport. ‘It was not that they disliked each other,’ Crowley feels, ‘but they just did not get on. They were so different—the academic professor from Trinity College, Dublin, and the gouger from Shannon.’

  That compounded Tony’s sense that his ideas and suggestions were not being taken seriously. Partly this was because, by character, he struggled with the role of non-executive director, which was essentially that of formalising, overseeing and advising. ‘Meetings of the Court are ritual-driven,’ he groused. ‘I am still shocked at the waste of directors’ time on pernickety minutiae.’ In other ways it was also because the management team at Bank of Ireland saw him as a loose cannon.