Certainly Tony wasn’t above making straightforward political contributions. In November 1995, for example, Fianna Fáil asked for and was given £50,000 to help clear party debts. In 1989 insiders at Ryanair speculated about whether money might have changed hands in a less formal way, not with Brennan but with the Taoiseach, Charles Haughey. ‘Brennan was very pro-Ryanair, because he liked the idea of open skies and was very pro-that in meetings I had with him,’ says Derek O’Brien, who was Ryanair’s commercial director. ‘But what went on behind the scenes I don’t know, except that there was always this undercurrent of other conversations being held “sub rosa” with Charlie, so what Charlie got from those conversations God only can imagine.’ Declan Ryan’s reply to that question is unequivocal: ‘He got nothing!’
In any event, the announcement was a huge boost for Ryanair. O’Brien says that Tony
came up with the two-airline policy, and that’s when Brennan began saying, ‘Look, guys, there’s space for everybody here, so let’s not drive each other out of business.’ I don’t think there was anything Machiavellian about it. Brennan was very clear that if the suicidal competition continued we were going to end up with no second airline. The whole situation had been insane. His was the first bit of political sense that came into it.
The day after the announcement, Tony fulfilled his side of the bargain by announcing a new investment of £20 million in Ryanair. ‘Only the most naïve would hold that the two developments might not be connected,’ judged the Irish Times. ‘The Ryan family can hardly be criticised for pressuring the government into giving them route advantages so as to render their airline profitable.’ Even so, ‘by any standards it is a considerable sum of money’, and it was ‘another stark reminder of Dr Ryan’s determination to invest’.
The two-airline policy could not have been more helpful to Ryanair. The company would still make a loss that year of £5 million, but for the first time it was now competing on a level playing field, even if it still remained very much a Championship rather than a Premier League side.
The first task was still to stop the airline losing money—a job entrusted to P. J. McGoldrick, in conjunction with Declan Ryan and Michael O’Leary. ‘I don’t want to spend any more money,’ Tony warned them. ‘Cut the spending.’ Every Saturday at 8:30 a.m. the three men would troop into Tony’s office at Kilboy to give him an update. ‘We used to be summoned down,’ O’Leary recalls, ‘and, to be fair, we still didn’t know how bad the losses were, as the figure seemed to go up every six months: 3 million—no, 5 million—no, actually 7 million. Nobody knew how much the original thing had lost, because the bills just kept coming in—bills we didn’t even know we had.’
The Ryans had brought in McGoldrick, says O’Leary, because he was ‘brilliant operationally’. Slowly, over two years, the new chief executive began to restructure the airline, in particular rationalising the schedules. Ryanair went from about thirty routes to focusing on only four: Dublin to Stansted, Luton and Liverpool, and Knock to Stansted.
Meanwhile, O’Leary and Declan Ryan took a hatchet to expenditure, rationalising everything in sight. When Tony complained that the airline was starting to look just ‘cheap’ rather than ‘cheap and cheerful’, O’Leary told him, ‘This is the way it has to be. You cut, you cut some more, then you cut more again.’
It was how the turnaround began, according to Gerry McEvoy of KPMG, who was Tony’s personal taxation adviser. ‘Michael and Declan started to drive the company forward in a significant way,’ he recalls. ‘The transfer of the company from loss to profitability was about Declan and Michael.’
They suggested to Tony that it was ‘in the long term strategic interest’ of the company to ‘attract an international partner’. This was a tricky proposition, because Ryanair had to do so on its own terms in order to avoid getting picked off cheaply by a large international airline.
In the autumn of 1989, just weeks after Tony announced his £20 million investment, he was approached by Goldman Sachs with a proposal. At a meeting over lunch in London, it advised that it was working on behalf of a number of international airlines operating to and from Britain that would be interested in establishing links with Ryanair. It was a tempting suggestion, but the timing was wrong. Ryanair was going through its restructuring process, and the new rules of competition on the Dublin route, only just announced by Brennan, made immediate co-operation inappropriate. However, Ryanair would come back to them, Tony said, ‘when the timing was better.’
Six months later Tony was ready to deal. Michael O’Leary and Declan Ryan met representatives of Goldman Sachs and told them to ‘locate an international partner who might acquire a minority stake in the company.’ Only after Tony had given the instruction did he inform McGoldrick. It was the kind of decision-making process that McGoldrick, who was unused to Tony’s style, constantly struggled to comprehend. ‘PJ was a very understated, nice person,’ O’Leary remembers, ‘so he really found it very hard to deal with Tony, because Tony was so mercurial.’
Tony personally oversaw the putting together of a ‘suitable document’ for Goldman Sachs to provide to their clients. However, he insisted that it ‘will only be issued to those airlines who can bring substantial partnership benefits to the table in terms of the long term growth and development of Ryanair.’ This was the beginning of an effort to turn Tony’s ugly-duckling airline into something finer—hence the aspirational code-name Project Swan.
It soon became apparent that one of the airlines interested in Ryanair was British Airways, the recently privatised national carrier headed by Lord King. Throughout the summer and autumn of 1990 detailed discussion took place between the two sides to work out a deal. Negotiations centred on Ryanair taking over BA’s Irish routes, including the entire sales operation. BA would become an equity partner in Ryanair and establish a new brand, Ryanair Express, to feed Heathrow.
Although the deal eventually fell through because of ‘strategic and legal sensitivities’ at the British end, the Ryanair team had noticed a real sense of fragility in BA’s negotiating position and understood the reason behind it. ‘BA’s performance on the Irish routes continues to worsen monthly,’ Declan Ryan had written to Tony in August. ‘July’s market share proves this point; this is the first time Ryanair has been higher than BA.’
On 10 December, BA informed Ryanair that a relationship would not be pursued. The explanation came a few weeks afterwards, when it stunned the market by announcing that it was pulling out of its Irish routes after forty-four years. ‘This is the first time BA has ever moved off a route as a result of competition,’ noted Michael Bishop, head of British Midland. Ryanair immediately moved to fill the gap by announcing extra services to Stansted.
British Airways had been an obvious potential investor for Ryanair. The other approach in 1990 was just as predictable in its own way. In the late summer, Ryanair’s fiercest rival, Aer Lingus, entered into negotiations not to invest but to purchase the airline from the Ryan family. Tony put an initial price on the sale of £35 million plus. Negotiations with the Aer Lingus chief executive, Cathal Mullan, revealed just how bad the blood between the two airlines had become. In November, John Thornton of Goldman Sachs upbraided Aer Lingus for their ‘slow speed’ and pointed out that ‘they weren’t acting like people who were interested in a deal.’ O’Leary reported that Aer Lingus ‘held the view that this operation was of limited if little value, and therefore they didn’t believe that they should pay a very significant price for it.’ They also ‘whinged about the price range, and insisted that if the Ryans were serious at this kind of price range, then there was no point in proceeding with the discussions.’
All told, it was unlikely ever to have worked out, not least, wrote O’Leary, because ‘TAR was now getting involved in this … and the egos take over.’ It seemed clear that Aer Lingus was only in talks because it wanted Ryanair ‘to go away, either by acquiring them or by shutting them down’—frankly, they ‘didn’t care which’.
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bsp; When Tony got a report on such attitudes he was predictably ‘upset’. Aer Lingus took ‘three months to get to this stage,’ he complained. That had left him ‘appearing very weak’ for putting up with such a slow pace. ‘Tell them now to do a deal or feck off,’ he barked. Declan Ryan believes that the sale of Ryanair to Aer Lingus ‘could have been done in five minutes if they had really wanted it, because Cathal Mullan was capable of being a deal-maker.’
Formal negotiations were quickly broken off. Ryanair instead focused its efforts on keeping the show going on a stand-alone basis. But the negotiations hadn’t been worthless. Ryanair had learnt important lessons about their principal rival. ‘Aer Lingus were now convinced that Ryanair would stay in business,’ concluded an internal memo for Tony, and they were ‘a bunch of old ladies’.
That accusation was not one that could be made against the management at Ryanair, with its mantra of ‘Cut, cut, cut.’ This policy brought Ryanair a certain amount of unpopularity, not least because the cut-backs involved redundancies and salary cuts.
There was also a clash of cultures within the airline, which saw the departure of many of the ‘old guard’ that Tony had brought in to run it in the early days. ‘Some of them were good in their day,’ says O’Leary, ‘but their whole thing was “You can’t get rid of the meals, nobody will fly with us.” When they said, “I’m going to Tony,” I said, “Fine, go to Tony, but you know he’s going to tell you the same thing.” So they couldn’t really hack it.’
Many of these exits were unhappy, especially that of Christy Ryan, who had been an original partner in Ryanair. When Christy had asked to go back to Waterford, Cathal Ryan suggested that Tony, as a gesture towards long years of friendship, should buy out Christy’s shares even though in the early 1990s they seemed next to worthless. Years later, Christy would be devastated to miss out on the bonanza that Ryanair became. ‘Christy made a big deal out of the share value and essentially accused Tony of ripping him off,’ recalls Graham Boyd, who had worked with them both from the earliest days of GPA. ‘By that time Christy had fallen on hard times. He could always have come back and got another job with Tony, but he couldn’t face it after he had made all the accusations about the shares.’
Tony did his best to patch things up publicly with his old friend. ‘I remember they ran into each other at a party,’ says Boyd. ‘Tony and Christy went for a walk together to try to talk things out, but it didn’t really resolve anything. It was such a shame, because they had been really tremendous friends.’
‘What guys like that didn’t know,’ counters Declan Ryan, ‘was that Tony had been seeing Christy all right with regular financial contributions for years and continued to do so for the rest of his life. He was generous to Christy financially and emotionally, not that he ever got much thanks for it.’
At the end of 1991 P. J. McGoldrick announced his intention to resign as chief executive. He had stemmed the losses in Ryanair and rationalised its operations. By the time of his departure he had turned an annual deficit of millions into a small operating profit of £300,000. The figure itself didn’t seem much and had in fact been supplemented by Ryanair’s disposal of a travel subsidiary. Yet, in the context of what he had inherited, McGoldrick’s had been a herculean effort, not least in the forbearance this mild-mannered character had demonstrated during the dressing-downs he had endured at Kilboy each Saturday. At his last meeting he was able to report that, while Ryanair was not financially secure, it was at least stable, for which Tony typically gave little beyond a grimace in the way of thanks.
The question for Tony was who should run the airline after McGoldrick. Initially there was speculation that Declan Ryan, who was already deputy chief executive, would be put into the post. However, for all the progress that had been made, the odds against Ryanair surviving were still not much better than evens. Tony’s eldest son, Cathal, had endured a miserable time in running the failed offshoot London European Airways. It would be bad enough, in the event of the failure of Ryanair, having ‘Ryan’ in the name of the airline; Tony wasn’t going to make matters worse by having one of his sons at the helm. Declan accepted the decision with more grace than Tony himself would have done.
Other observers expected O’Leary to be installed at the airline, unaware that Tony already had plans for him as a possible successor at GPA. Instead, Tony made the surprising choice of Paddy Murphy, a former CEO of Irish Ferries. ‘He was a good guy,’ says O’Leary, ‘but he didn’t seem to understand we had no money.’ Murphy barely lasted a month in the post.
The next appointment was more propitious. Conor Hayes, as a trained accountant (from KPMG, like O’Leary), was the ideal man to push on with the ‘cuts’ strategy. He quickly introduced further restructuring and launched a new, popular, easy-to-understand fare structure, including the Ryanair signature £29.99 ‘Happy Days’ flights to London. Market share jumped from 15 to 26 per cent in a year, and the airline returned another small profit.
Part of Hayes’s restructuring effort was to keep stripping away any luxuries in the Ryanair service. Frequently this included the flight itself: if not enough seats had been sold, a flight would be combined with a later one, with little care for the inconvenience that decision might cause passengers. These kinds of measures irritated Tony when he heard about them and were the beginning of a growing disenchantment with the airline that would last for the rest of his life.
‘It was getting cheaper and nastier,’ admits O’Leary, ‘and Tony didn’t like cheap and nasty. He would get complaints from his pals that a flight was late, so he would be on the phone complaining to Conor that this was unacceptable.’ When Tony asked for friends to be given the VIP treatment, Hayes was left to explain that there was no VIP treatment to give on Ryanair. It was a point that Hayes and O’Leary reiterated at their weekly audiences at Kilboy when ‘we were getting called out about not making enough money.’
In the end Tony couldn’t do much more than grouse, because the strategy was clearly working. By the end of 1992 Ryanair was able to announce a trading profit for the year of £850,000. In fact the profit was closer to £3½ million.
At this stage, however, Tony had good reason to hide the profitability of his airline: the collapse of GPA had left him with vast personal debts. Already his bankers were eyeing the family airline as a way to recoup some of their losses. It was no harm at all for Ryanair to look like a struggling business. By the time Tony had evaded the clutches of the bank in 1994, his PA had stepped into the role of chief executive at the airline. ‘I had learnt enough about the ops side from McGoldrick and the finance side from Conor, so I was ready to shove myself out there,’ says O’Leary. It was the beginning of a new period in the history of the airline— and in Tony’s life.
One of the remarkable aspects of what happened to Tony when he lost his fortune was the extent to which it seemed to galvanise rather than depress him. Certainly there was genuine regret that his downfall had affected others. Figures such as Jim King, who had been loyal throughout and had staked their own fortunes on Tony’s success, had been left with nothing from GPA. Tony was only too aware of sensitivities and possible resentment towards him. ‘Most of these guys must hate me,’ he observed when attending a party in 1995 to mark GPA’s thirtieth anniversary.
Yet, in truth, that seemed not to be the case. Indeed it was striking how loyal those close to Tony remained even when they had lost everything. ‘I was like a zombie for the first year,’ reflects King, ‘but most of us survived, and there weren’t too many cry-babies.’
Tony was careful to respect those sensitivities. He might have railed against the bankers who he felt had shafted GPA, but in the end he accepted that the responsibility was his. ‘I remember Gay Byrne interviewed him on RTE,’ says Gerry Power, who worked at GPA and became a good friend in the period after the IPO. ‘It was a very honest Tony you heard, saying the buck stops with him and taking full responsibility. That was good, because there would be a number of people that would have said, “
Tony, you’re right: you were responsible for the IPO failing”.’
For all the public self-flagellation that Tony was prepared to display, those who observed him behind closed doors every day saw a different character. ‘It was amazing, but he never got knocked back by it,’ says Derek Doyle, Tony’s driver. ‘Even at the height of everything going bad with GPA he never showed any sense of disgrace. He was still exactly the same with me. I knew he was going through a lot of personal bother and was concerned about the company, but he never showed it. He was a gutsy person.’
By temperament Tony was never a ‘sharer’, so it would have been surprising if he had chosen to unburden himself on his driver, however trusted. Yet unless he possessed superhuman qualities of self-control, the most likely explanation for Tony not displaying any sense of disgrace is that he didn’t feel it. Accepting that you might fail is an essential aspect of the entrepreneurial character. When Tony got knocked down, his principal consideration was not to lament finding himself on the floor but immediately to consider how to get back up.
‘Most people would have gone away and hidden themselves,’ says his friend Ed Walsh. ‘But he was at his best when things were really going against him.’ In Ireland a humiliation such as Tony had endured meant that ‘you’re a failure—rejected.’ But, says Walsh, Tony understood the lessons of the great American entrepreneurs who ‘fail and fail again, but they pick themselves up and are wiser as a result of failing.’
Walsh had seen this kind of persistence up close at the height of the GPA crisis. Shortly beforehand he had invited Tony to chair a development committee for finding a permanent home in Limerick for the John Hunt Collection, one of the great art bequests to Ireland of modern times, ranking alongside those of Chester Beatty and Sir Alfred Beit. It was a project that appealed to Tony’s growing interest and expertise in art, and he embraced it enthusiastically. In 1990 Hunt had arrived at Tony’s office in Dublin with a bag filled to the brim with stuffed stockings. ‘To my astonishment,’ Tony later recalled, ‘he produced out of it the Leonardo Horse and other treasures from his family’s collection, which he placed on my desk.’ From that moment Tony was ‘determined to do what I could’ to create a Hunt Museum.
Tony Ryan Page 21