Tony Ryan

by Richard Aldous

  By January 1992 a beautiful site had been identified at the dilapidated eighteenth-century Custom House in Limerick. The question then became one of funding. Serious lobbying began just after the failure of the IPO for GPA. When Tony might have been expected to back off or drop out, instead he threw himself into the political hurly-burly with vigour. He solicited help from such famous Limerickmen as Terry Wogan and Richard Harris. (‘The answer is definitely yes, I would love to do it,’ Harris wrote graciously.)

  Tony’s friend Des O’Malley was a local TD, and he remembers Tony asking him in September 1992 to intercede with the Taoiseach, Charles Haughey, and the Minister for Finance, Bertie Ahern. After a meeting with Haughey, Tony got the Taoiseach’s agreement to give a speech in Limerick to announce that the state would give the old Custom House to the Hunt Collection.

  All the last-minute negotiations centred on getting one extra word—‘restored Custom House’—into his speech. It was a word worth an extra £3 million. As the hours ticked down, Walsh and Tony cornered the Taoiseach at a lunch in Dublin on the day of the speech and then followed him back down to Limerick by helicopter to see him make the commitment. ‘Tony, of course, was at the centre of this,’ says Walsh, ‘and the fact that he was chairing the Hunt committee had got Charlie Haughey’s attention.’ That Tony had done so in the middle of the worst crisis of his business life was another example of his resilience, his chutzpah and, says Declan Ryan, ‘his love of everything Irish’.

  That approach characterised Tony’s whole mindset after the failed IPO. It explains why he fought the bankers so tenaciously to keep them away from Ryanair. Denis O’Brien, Tony’s former PA, remembers calling in to Kilboy at about this time and being amazed to find his old boss talking so enthusiastically about building up Ryanair. ‘I heard what he thought,’ recalls O’Brien, who took to heart the lesson in how to keep the entrepreneurial fires burning. ‘This is how to build a huge business,’ Tony told him. ‘If it doesn’t work, revise the strategy. If it still doesn’t work, revise the strategy again.’

  ‘Tony had that view, that if he kept going he would eventually get it right,’ says O’Brien. ‘That’s how Ryanair happened. When the business became successful, people forgot that Tony deserved the credit not just for setting up Ryanair, but for sticking with it.’

  Gerry Power agrees. ‘Michael O’Leary used to tell Tony to close it down, and Tony kept on putting money in and believed in it,’ he says. ‘He was steering Michael in the right direction, so when GPA went, Tony had it to fall back on, and that made his second fortune.’

  O’Leary had been keen to shut down Ryanair throughout the late 1980s and into the early 90s for reasons that were both professional and personal. One look at the books had convinced him that not even Tony’s multi-millions could make a silk purse out of this particular sow’s ear. That was bad news for O’Leary, who was on a profit-sharing deal to take 5 per cent of any money he made for Tony. Rather than Tony sending money into the abyss that was Ryanair, O’Leary would have preferred to see the money being spent on more obviously profitable ventures. ‘I just thought, This thing can’t make any money,’ O’Leary says. ‘It’s impossible.’

  O’Leary’s calculations changed after the failed IPO. With Tony’s millions gone, Ryanair became the way in which both master and protégé could hope to make money. Before the GPA flotation, O’Leary had stepped away from Ryanair, leaving Conor Hayes to run the airline. O’Leary ‘grew tired of Conor,’ Declan Ryan recalls, ‘so he moved into Irelandia’s offices.’ Only in 1994 did O’Leary return to Ryanair, taking over from the departing Hayes, as chief executive. After years of trying to tie him down, Tony at last had his man.

  Tony motivated O’Leary by making him a de facto partner in the airline. That deal would become the stuff of legend: O’Leary would get 25 per cent of any profits that Ryanair made over £2 million. The two other executive directors, Cathal and Declan Ryan, would also share 25 per cent of profits. The arrangement would be formalised as the Executive Directors Performance Incentive Bonus Programme. They had ‘learnt it from him,’ O’Leary recalls of the deal, ‘because profit-sharing was how he had made all his money in GPA.’

  Over the next few years, as Ryanair went from strength to strength, Tony would try to bargain his CEO down on the 25 per cent. ‘It happened every year with Tony,’ O’Leary wryly recalls. ‘I would say, “You owe me 25 per cent,” but he wouldn’t pay me. So I would send in my letter of resignation to the board and then he paid me. The more I did that, the more I became irreplaceable.’ Tony understood that too. He looked forward to the annual game about profits but never for a moment considered calling O’Leary’s bluff by accepting his resignation. To his friends he always said the deal with O’Leary was the best bit of business he ever did.

  Having secured O’Leary as chief executive, Tony also gave him a strategy. Back in the 1970s, when Tony was clocking up millions of air miles travelling around the world to drum up business for GPA, his eye had been caught by the start-up airline operated by Herb Kelleher in Dallas. Southwest Airlines was run along very simple lines: it was a no-frills airline that concentrated on minimal expenditure and maximum profit, combined with a philosophy to ‘LUV’ its staff and passengers. Whenever Tony had run across Kelleher, the two men had got along famously, drinking Wild Turkey bourbon together late into the night. The original Ryanair had been an attempt to introduce the low-cost model into the Irish market, but only latterly had it embraced the ‘no frills’ concept that was so vital to Kelleher’s success. Tony had decided that his own ‘cheap and cheerful’ airline could learn more from the Southwest model. ‘Get down there and take a look,’ he told O’Leary.

  When O’Leary wrote to Kelleher asking to visit he received a polite rebuff. ‘I tremendously appreciate your interest in Southwest,’ Kelleher responded. ‘Unfortunately neither my schedule nor the schedules of our Revenue and Yield Management folks will accommodate even the briefest of meetings in the foreseeable future.’ Tony picked up the phone to call Herb personally. ‘I had got to know Tony fairly well and liked him a lot,’ Kelleher remembered. ‘He called me and asked me in essence whether I would be willing to sit down and talk to Michael. So I said, “Yes, I would be delighted”.’

  O’Leary left for Dallas still feeling sceptical. ‘Tony knew about Southwest,’ he recalls, ‘but the problem was that I was still struggling in Ryanair, thinking there’s no real future in it.’ The introduction to Kelleher changed that assessment overnight. In some regards this was about stepping out of Tony’s shadow. ‘I went off on my own,’ O’Leary recalls, ‘so I didn’t have Tony going on in my ear.’ But what he found when he got to Dallas was a man who in many ways resembled the one he had left behind at Kilboy. ‘Kelleher was a genius and all ego, like Tony,’ he says, ‘so I knew how to handle that. But when I saw what Southwest did, it was like a Formula 1 operation. It took me fifteen minutes to see that we could replicate this in Europe.’ As Kelleher himself remarked, O’Leary now assumed ‘leadership of our European Fan Club!’

  Towards the end of 1994, in his first year as chief executive, O’Leary put what he had learnt down on paper in ‘The challenge of replicating Southwest Airlines in Europe’. It offered a blueprint for Ryanair. ‘The future of the international airline business, or more importantly its salvation, has arrived,’ he wrote. ‘In the US it is called Southwest Airlines.’ Their model came from ‘a constant focus upon challenging every received wisdom in the airline industry, and constantly innovating new procedures and systems with the sole purpose of increasing efficiency, heightening productivity, eliminating unnecessary frills, and above all reducing costs.’

  Moreover, there was a style that went with the Southwest model. ‘Kelleher has imbued his people and Southwest with a “can do”, service oriented culture,’ he enthused. ‘The ethos of Southwest is to provide a service to the passenger which will amuse, surprise and entertain.’ That was now the aim for Ryanair.

  We must reeducate our
people. This is the airline business—this is a fun business … If we are having fun, the passenger is having fun. To requote Kelleher, we must amuse, surprise and entertain. To those who believe it will never happen here, in Europe, to you I say just one word: ‘McDonalds’. Just as surely as the Big Mac has revolutionised the fast food industry, so will Southwest and its replicas change the way we view air travel and manage the airline business.

  Tony had galvanised O’Leary in the most profound way possible by sending him to Southwest. His PA-turned-CEO would become (in the phrase made popular by Malcolm Gladwell, about the joint founder of Apple, Steve Jobs) the most brilliant ‘tweaker’ in the history of the modern commercial airline industry. Where Tony was a ‘visionary’ and an ‘inventor’, O’Leary’s genius was in taking someone else’s idea and endlessly refining it, bringing energy and vision again and again to the same narrow territory he had marked out for Ryanair. That would eventually bring the airline the kind of success that not even O’Leary himself envisaged. ‘I do not propose that Ryanair will in ten years’ time threaten every major airline in Europe,’ he predicted in 1994. ‘It will not.’ In fact, the model would succeed beyond his or even Tony’s most fanciful dreams.

  Tony and his chief executive agreed that Southwest was the model for Ryanair to pursue. ‘In Ryanair, you are king,’ Tony would tell Kelleher later. Quite what the Southwest model meant, however, opened up a fissure between the two Ryanair men. Even as O’Leary was outlining his blueprint in the autumn of 1994, there were some sharp exchanges about how to interpret what Southwest represented for the Irish airline. ‘Ryanair is not a “quality” product,’ O’Leary wrote to Tony in September. They would ‘get no return for style or elegance. We are the Woolworths of the industry.’ Tony disagreed. ‘I do not fully accept your reference that Ryanair is not a quality product,’ he countered. ‘More importantly I believe that Ryanair should become a quality product while offering the lowest possible fares.’

  Over the years, this debate about the direction of Ryanair would become more embittered. For Tony, the Southwest example of ‘amuse, surprise and entertain’ dovetailed perfectly with his initial vision of the airline as offering low fares alongside ‘a smiling face to the public’. O’Leary, on the other hand, quickly abandoned this ideal. ‘I’ve driven way beyond the Southwest model,’ he concedes, ‘and it’s much more efficient, much more aggressive on costs, much more aggressive with passengers, so what we’ve done every year since then is keep improving the model. While we were doing that, I would run into fights with Tony.’ In essence, the battle was between whether Ryanair should be cheap and cheerful or just cheap.

  These debates would simmer away as Tony began to emerge from the shadows at Ryanair. On a personal level, the year 1994 ended in great sorrow for him, with the death just before Christmas of his mother. The two had always remained close. Lily was a regular guest at Kilboy and often travelled around the world to join Tony at his various houses in the sunshine, particularly in Ibiza. At the height of her son’s power and wealth at GPA, she had been one of the few people still able to give out to him. Tony had learnt the hard way, through a dressing-down in front of his driver, that sending a car to the airport to collect her was not the same thing as coming himself. It was not a mistake he would make twice. Tony would always bitterly regret that his mother had to witness his downfall at GPA without seeing him rebound through Ryanair.

  Lily’s funeral was itself a sad reminder of Tony’s dramatic reversal of fortune. Ann Reihill, publisher of Irish Arts Review, attended the service with John Meagher and was shocked at how few people bothered to turn out. Only one GPA director showed up. Otherwise it was just family, including Mairéad, and friends. ‘It was not a big funeral as he might have expected a year earlier,’ she reflects. ‘It was after the IPO and before Ryanair took off. He really seemed all alone.’ Afterwards, she expressed her concerns to Meagher. ‘No, he’ll be all right,’ he reassured her.

  Meagher’s judgement was right. Lily Ryan’s funeral in many ways drew a line under a troubled and unhappy phase in Tony’s life. As 1994 turned into 1995 he emerged once again into the public gaze with his spirit and confidence renewed. Since the foundation of Ryanair, Tony had always denied that he had any connection with the airline other than having provided capital for his sons. The formalities of that arrangement had saved him from losing the airline to his creditors. The reality, of course, had been different. It was no wonder that AIB Bank had been the most vociferous in protesting that Ryanair should be used to pay off Tony’s personal debts, because there wasn’t a person in Ireland who didn’t know that he controlled the airline. Every Saturday when Tony was in the country, the key management team would traipse down to Kilboy to be grilled about the state of the company. He may not have been involved in its day-to-day operations, but the direction of strategy and appointment of personnel had been determined by him alone.

  Now that his GPA fortune had been lost, Tony moved to formalise his role within the airline he had founded. In the past, Ryanair had been an expensive hobby. But now that he was no longer the all-powerful head of GPA it provided him with a certain status and an arena in which to expound his ideas.

  Tony enjoyed the formalities of the board room and everything that went with it—but only when he was in charge. Committees he had joined in such organisations as Bank of Ireland and the National Gallery had only frustrated him. Those he chaired, such as GPA and the Hunt Museum, gave him considerable pleasure. He loved circulating memos in advance of meetings, correcting minutes, phoning round beforehand. Nothing irritated him more than when the formalities of a meeting were transgressed. Tardiness in giving notice of a meeting or in preparing paperwork was not tolerated. Being late for a meeting would often see the offender barred from the room. Management who failed to keep the board informed were given a dressing-down. All told, chairmanship was a sacerdotal function for Tony, not least at meetings of the board itself, when he would hear confession, give penance and, very occasionally, offer absolution.

  The GPA failure meant that he no longer had any outlet for these pleasures. Therefore it came as no surprise when, in February 1995, Ryanair announced that he would be joining the board. Furthermore, Tony was appointed ‘chairman-designate’ and would take over from the outgoing chairman, the former Minister for Finance, Ray MacSharry, on 1 January 1996. In reality, he was already at the helm. In a nice touch that demonstrated the convoluted ownership arrangements of the airline, it was Declan Ryan who wrote to his father confirming the terms of his appointment as a non-executive director of Ryanair.

  Inevitably the nature of Tony’s relationship with the company dominated the media coverage that followed. ‘Dr Ryan’, reported the Irish Times, ‘has always denied having any direct connection with Ryanair.’ The airline itself stuck vigorously to that line. ‘Dr Ryan has no equity in the company, and he has no intention of taking equity,’ a spokesperson stated. His involvement had come about simply because ‘he has more time on his hands’ following the restructuring of GPA. Tony himself was also keen to point out that he would not be adopting any kind of ‘hands-on approach’. Instead, he told the RTE Radio 1 evening news, ‘the implementation of strategy will be for the management.’

  Expectations that Tony would be running Ryanair were rife not only in the media: they were shared within the airline itself, not least by the chief executive. It was no coincidence that about this time Declan Ryan began to emerge as Tony’s closest business confidant. In part his job was to keep an eye on O’Leary and clip his wings if he lost the run of himself. ‘Overall, the airline’s recent performance has been very good and I certainly am not throwing cold water on our results,’ Declan warned everyone as Tony joined the board in April 1995, ‘but it is quite easy for us to get somewhat “euphoric” about our position.’

  In advance of Tony’s appointment as incoming chairman, O’Leary had angered him with a memo setting out the chairman’s role as he saw it. ‘In your capacity as chairman,
you have the potential to substantially improve, or equally substantially damage the larger controllable items here,’ he warned, returning to his principal concern about Tony’s vision for the airline. On cost reduction the ‘mission is ruthless’: ‘low cost—no frills … at [the] expense of style, charm & elegance if necessary.’ Tony had a role to play in reinforcing that line with the public through ‘dealings with the press, speeches, appearances’ in order to ‘get [the] message across’. Obviously he also had a role in helping to ‘determine medium term strategy.’ Nevertheless, O’Leary warned, it was essential that there should be ‘no distractions, no “coups”.’ The chairman had to have ‘tunnel vision [in] pursuit of making money (profits and cash)’. O’Leary may have signed off with a jocular ‘Over to you Mr Chairman!’ but the real message had come earlier in the memo: ‘Stick to the knitting.’

  That was never going to be Tony’s style. Instead he immediately embarked on an ambitious, eye-catching project that O’Leary thought was mad: a new commercial airport at Baldonnel, the site of a military airfield south-west of Dublin. On one very basic level the proposal was symptomatic of the geographical tie that Tony always retained to his native county: Baldonnel is beside the N7, the road to Tipperary. More importantly, it was about creating a new home for Ryanair away from Dublin Airport, which was dominated by the airline’s rival, Aer Lingus, and run by what Tony saw as its creature, Aer Rianta.