Michael O'Leary

by Alan Ruddock

  He also attacked Aer Rianta and Aer Lingus for their actions which had led to the closure of the airport. ‘It was not Ryanair which indulged in the unlawful activity which shut Dublin Airport last weekend,’ he wrote. ‘It was Aer Lingus and Aer Rianta employees who engaged in unlawful secondary action, by blockading Ryanair’s aircraft and our passengers for two hours on Saturday morning (and again on Sunday morning), and by withdrawing the fire cover at Dublin Airport from 1 p.m. on Saturday, therefore preventing Ryanair and all other flights from operating.’

  But McCarthy’s wrath was by no means confined to old foes Aer Rianta and Aer Lingus.

  Even worse were the shameful scenes of intimidation at the entrance of Dublin Airport on Sunday, as efforts were made to block and intimidate many of our 961 staff who wished to work, from doing so. The behaviour of some taxi-drivers – who dropped young Ryanair employees in full uniform at the airport’s entrance, forcing them to walk through a baying mob who subjected them to gross abuse and intimidation – was unforgivable. If these are low-paid employees, with poor conditions, why would 961 of them brave the bullyboys last weekend?

  For the unions the baggage handlers’ dispute proved to be a dismal failure. They had shut Dublin airport and organized an impressive array of political and media support, but O’Leary had stood firm. There would be no union presence in Ryanair, and O’Leary was free to continue to cut costs and expand the airline at his own pace. As the pickets had gathered outside his offices, he had been finalizing the details of his most aggressive expansion, which would be announced within 48 hours of Dublin airport reopening for business. On 10 March news broke that Ryanair had agreed to buy twenty-five new planes from Boeing, with options for a further twenty.

  It was a massive order for a still small airline, more than doubling its fleet size, while the options would allow it to treble in size over the next eighteen months. The new planes would all be Boeing 737–800s, capable of carrying 189 passengers, fifty-nine more than the 737–200s. The total value of the deal was estimated at £1.4 billion – making it easily Ryanair’s biggest ever transaction.

  ‘I can’t say what the discount is, for confidentiality reasons, but no airline pays the full price for new aircraft,’ Cawley told journalists.

  For Ryanair, the deal was the culmination of months of negotiations with Boeing and rival aircraft manufacturers Airbus. Chris Buckley, a vice president of Airbus who was involved in the Ryanair negotiations, says Ryanair effectively played Airbus and Boeing off against each other, with Conor McCarthy and O’Leary spearheading Ryanair’s negotiating team. McCarthy was already known to Buckley and his Airbus colleagues in Toulouse from his days at Aer Lingus. But O’Leary was an anomaly.

  He might have said ’Bonjour’ once on a visit to Toulouse [Airbus headquarters] but everything else was very much in English. The negotiations were earthy and very direct. He was certainly not somebody to waste any time at all on detail or unnecessary issues. It was all very much focused on doing the right deal for Ryanair as efficiently as possible.

  In 1997 we really had the opportunity to do a deal there and we lost that opportunity. Ryanair came to the conclusion that the A3 20 would work very well for them and in November 1997 Michael O’Leary sent me a letter saying that Ryanair would like to go with Airbus. He set down lots of terms for Airbus to make so that Ryanair would do a deal with us. And he said, ‘Chris, if Airbus can deliver these terms then we would be prepared to recommend them to the board.’

  The ‘terms’ Ryanair wanted involved a ‘further but fairly small reduction in price’, Buckley says. He recommended to his colleagues that they did whatever it took to secure the Ryanair deal, ‘but unfortunately not everybody agreed with me, so we did not deliver on the terms’. Airbus’s loss was Boeing’s gain.

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  The new planes represented a coming of age for Ryanair.

  ‘This new fleet of aircraft will allow Ryanair to compete head on and beat any low-fare competition from Europe’s major airlines, and enables us to maintain our planned capacity growth of 25 per cent per annum,’ O’Leary said at the time.

  ‘It was an absolute landmark,’ says Tim Jeans. ‘We had been flying with ten– to fifteen-year-old hand-me-down 737s, and in many ways they defined the company – they were cheap, they were reliable, they sat 130 people and they allowed us to compete with Aer Lingus and British Airways. But ordering the new 737– 800s, that put us in a different ball game. There was huge pride and massive excitement. It was a turning point – we could now compete with the flag carriers of Europe.’

  In less than a year O’Leary had engineered a staggering transformation, from a small family-owned airline that competed in a small, if busy, piece of airspace over the Irish Sea, into a publicly quoted European airline with new planes, new routes and unbridled ambition. At home the trade unions had been seen off and the overwhelming majority of his workforce had stayed loyal. Stansted was proving a successful gateway into Europe and the Ryanair brand was beginning to become as well known in Stockholm as it was in London.

  13. Pre-emptive Strike

  Ireland’s economic blossoming in the 1990s turned a nation accustomed to hiding its meagre wealth into a nation of ostentatious spenders. Economic growth was, by European standards, staggering: in each year from 1994 to 2000 the Irish economy grew by almost 10 per cent net, a spurt that spawned a new generation of multimillionaires.

  In 1997 Ireland’s fast-emerging wealth prompted the London Sunday Times to devote part of its annual Rich List survey to the Irish phenomenon. That year the paper could only find seventy-five Irish people worth individually more than £6 million; the collective worth of the seventy-five was just over £4 billion. O’Leary, whose salary and bonuses were unknown while Ryanair was a private company, made his first appearance in the list in 1998, joining the top ten Irish with an estimated worth of €140 million. That year the newspaper commented, ‘A noticeable feature of this year’s list is the high proportion of young self-made millionaires. A new breed of entrepreneurs has leapfrogged over older money. These were led by newcomers [like] Michael O’Leary.’

  For some, recognition in the Sunday Times Rich List was an important symbol of arrival, but for O’Leary it was meaningless. His life was dominated by work at Ryanair, which was all-consuming during the working week, and his farm in Mullingar, which took up most of his remaining hours. O’Leary did not parade his wealth or indulge public passions. But his life had changed course over the previous year. He had become one of the most recognizable Irish voices and faces, and his fame, or infamy, was spreading to the UK and onto the continent. The Irish public was being introduced to something it had never experienced before: a chief executive with attitude.

  O’Leary did not play by the normal rules of polite engagement. He was prepared to state his case robustly, to argue, harangue and provoke. Along with his stubbornness or intransigence, O’Leary had an extra quality that gave him a marked edge: he did not want to be a bosom friend of prime ministers, or an accepted member of the business elite or the most loved man of his generation. All he wanted was for his business to prosper.

  His calculation was simple: if Ryanair was to keep growing, it had to become a household name. He was not prepared to spend (or as he would see it, waste) tens of millions of pounds on advertising campaigns if he could reach people more directly. He recognized that at least part of the success of Southwest came from the high profile of founder Herb Kelleher, the hard-drinking, chain-smoking Texan who gave the airline personality and whose flamboyant behaviour generated publicity. O’Leary could never be a Kelleher – he lacks his charisma – but he could nonetheless give Ryanair a definition of its own.

  ‘I think he felt that it was important to give the airline some personality,’ says Charlie Clifton, a long-standing executive at the company.

  Not at the start, because it was important to do the knitting at the start. But later, when people were comparing Ryanair to Southwest, they would look at us and
say, ‘Right, who’s gonna run it? Are you trying to say we’re really like Southwest but we’ve got a dull accountant running the company?’ It wouldn’t have washed. Michael knew he had to lead from the front, but I suspect he took that on reluctantly rather than egotistically. He’d been trying to keep out of the limelight for a long long time.

  On one level his new-found fame made O’Leary uncomfortable and presented a threat to his low-key and unremarkable life. He wanted to be seen as an ordinary person, wanted to maintain the myth that he was just one of the boys. But he had also realized that recognition could be used to the advantage of his airline – people’s interest in him translated directly into newspaper coverage, which in turn translated into free publicity for Ryanair and lower marketing budgets. He would happily prostitute himself for the cause, because whatever benefited Ryanair, benefited him. ‘I don’t mind dressing up in something stupid or pulling gormless faces if it helps,’ says O’Leary. ‘Frankly I don’t give a rat’s arse about my personal dignity.’

  O’Leary was conducting a series of noisy re-education seminars for Europe’s travelling public. The concept of cheap air travel was still relatively alien outside the British and Irish markets where Ryan-air had already made its mark. O’Leary had to change the way travellers thought about airlines, had to strip away preconceived notions about both cost and service, and he had to do it fast if he was to fill his soon-to-arrive fleet of Boeings with fare-paying passengers.

  The primary message was price. In every fight he picked O’Leary would portray himself as the people’s champion fighting against fat, cosy, cosseted and expensive national airlines. The secondary message was simplicity: you pay for what you get, so do not expect traditional levels of service. In O’Leary’s new world order planes were buses; there would be no more romance about flying, no exclusivity and no luxury. Airlines were no more, and no less, than a means of getting from A to B simply and cheaply, and they were now available and affordable to everybody.

  Over the years O’Leary had become increasingly unhappy about Aer Rianta’s charges at Dublin, which he claimed were the highest Ryanair paid in Europe – a claim repeatedly denied by the airport’s managers. As a destination, Dublin worked for Ryanair – 40 per cent of the airline’s turnover was from flights in and out of the city – but as an airport, it did not. His solution was simple: build a new terminal at Dublin, attached to the same runway but with different management and lower charges. Competition, which had breathed life and lower prices into the airline industry, should logically be extended to airports. If airports had more than one terminal operated by rival companies then the terminals would compete on price and service for the airlines’ business, rather than charging take-it-or-leave-it monopoly rates.

  He was not alone. Ulick and Desmond McEvaddy, two Irish entrepreneurs, through their company Huntstown Air Park, had already approached the government with a view to building a new terminal on land they owned near the existing airport but had met entrenched opposition from Aer Rianta, who had tied the McEvaddys’ proposals up in lengthy legal wranglings. Growing impatient with the delays, O’Leary decided that while what the McEvaddys were proposing was compatible with Ryanair’s needs, the plans were moving too slowly. The best solution, he thought, was for Ryanair to build its own terminal. And so in mid–May he submitted the first plans for Terminal Ryanair to Ireland’s department of transport.

  Before submitting the plans, O’Leary had tried to rally support at a Dublin Chamber of Commerce meeting in mid–April, telling the assembled crowd of businesspeople that Ryanair was prepared to spend £20 million on the new terminal as a way to break ‘the totally unfair and appalling monopoly of Aer Rianta’. The move would also make good financial sense for Ryanair, O’Leary said, because the airline was paying Aer Rianta £10 million a year to use Dublin airport, so the airline would recoup its investment in just two years. Ryanair’s terminal would be built on Aer Rianta land which adjoined the airport and would have enough gates to allow Ryanair to operate more flights, O’Leary said. And, eager to capitalize on his public image as the champion of the consumer, he added that the new terminal would mean cheaper fares for those flying from Dublin airport.

  Convincing the business community of the merits of his proposals was a relatively easy challenge, but O’Leary was to have a much tougher time winning over Mary O’Rourke, the minister for transport, who would ultimately decide the fate of the plan. O’Rourke hailed from Athlone, in the same electoral area as O’Leary’s Mullingar home. The pair had met occasionally at local events in Westmeath before O’Rourke came to transport, but didn’t know each other ‘in any meaningful way’, O’Rourke says. Once she took over the transport ministry their contact became much more frequent, and O’Leary soon became a thorn in the minister’s side. ‘I wasn’t long in the office when he made contact with me,’ she says.

  There was often twenty letters a day. All that is quite silly, I mean if you want to write one punchy letter that’s grand, but twenty letters a day, that’s silly.

  I have never met anyone like him in my life. It is not persistence – I’ve met persistent people – he is obsessive, about himself and his business. He’s not interested in a good business relationship, or a social relationship, he is interested in none of those things, it’s just me me me me. I just think he is a horrid, horrid little man.

  The hostility was mutual. ‘She’s an idiot,’ he says. ‘I’m very supportive of people who come from the [Irish] midlands but I’m not supportive of an idiot no matter where they come from. Most politicians are idiots, but if you look on the scale of idiocy she’d be right up there at the top.’

  O’Rourke was prepared to meet O’Leary to discuss his proposals, but the omens were hardly inspiring. A privately owned terminal would be a direct competitor to the state’s own operator, and required O’Rourke and her cabinet colleagues to take a decision that would inevitably spark serious confrontation with the trade unions that controlled the existing airport, and would provoke political opposition both within and outside the government parties. Either way, there would be no fast decision. The wheels of Ireland’s public service churn slowly, and a decision on something as momentous as a second terminal for the country’s largest airport would not be swift.

  O’Leary had commercial logic on his side – a second terminal would give Dublin airport room to grow – but his battle with the unions at the start of the year, and in particular his refusal to engage with Bertie Ahern when he wanted to appear to be solving the crisis, had set O’Leary on a course to conflict with the Irish government. Ahern’s hostility was made evident in a barely concealed swipe at O’Leary in May, when he hit out at managers ‘who don’t seem to believe in social partnership but who have done very well out of a strong economy’ and attacked ‘people who weren’t around ten years ago’who had been’jumped up a bit’by economic growth and’who are now telling us how we achieved what we collectively achieved’.

  The lines had been drawn: O’Leary could expect no political support for a plan that would deliver extra jobs and extra tourism to Ireland, largely because that plan was opposed by the trade union movement, whose grip on Dublin airport would be loosened by a privately owned second terminal. For the moment it was a confined battle, one that pitched O’Leary as the people’s champion against a government that refused to deliver better and cheaper services for consumers, and while it undoubtedly alienated O’Leary from the political establishment, it gave him and his company precisely the profile and media coverage that he had hoped for.

  In the summer of 1998 Ryanair bolstered its route network further by launching three new routes into Italy – Stansted to Venice, Pisa and Rimini – and two new French routes – Stansted to Lyons–St Etienne and Carcassonne/Toulouse. The routes followed Ryanair’s now established approach of selecting remote airports and hammering out favourable deals on landing charges, promotional and marketing incentives and grants. Each time the offer was the same: We can deliver passengers, what
can you do for us to make it worth our while?

  The small airports were chosen for a number of straightforward business reasons: they were underused or barely used at all, meaning Ryanair had no competition on the route and also guaranteeing swift turnaround times for their aircraft; they were typically distant from the main cities they were expected to serve, creating opportunities for Ryanair to earn more money from its passengers through deals with car-hire companies, hotels and bus operators, as well as drawing passengers from a greater hinterland. Starved of passengers and planes, they were desperate to please them and were prepared to charge little or nothing for their services and to subsidize Ryanair’s arrival.

  For Venice the airline flew to Treviso airport, some nineteen miles from the city centre – a short walk in Ryanair terms – and little more than a shed attached to a runway. The airport at the destination Ryanair dubbed Carcassonne/Toulouse is on the outskirts of Carcassonne but more than fifty miles from the region’s major city, Toulouse. Similarly, a flight to Lyon-St Etienne leaves passengers quite close to St Etienne but some forty miles away from Lyon. Pisa’s airport is close to the city centre – but the main city in Tuscany is Florence, some fifty miles away. Meanwhile, Rimini airport is quite close to Rimini, but quite far from anything else of interest.

  For Ryanair each route was but another notch on an ever-expanding belt, but for the five chosen cities the launches were far more significant. ‘It’s equivalent to somewhere like Longford [a small town in the Irish midlands], that doesn’t have an airport, and suddenly has three million people coming in every year,’ says Ethel Power, who helped organize the route launches that summer.