Michael O'Leary (23 page)

Just as O'Leary was about to embark on his new life, hawking his company to global investors while dealing with his new-found celebrity status at home, his former life as Tony Ryan's personal assistant came back to haunt him. In 1992, when O'Leary was still doubling as Tony Ryan's assistant, Cathal Ryan had allegedly assaulted Michelle Rocca, a former Miss Ireland and the mother of his child. Ireland's justice system grinds slowly, and it was not until February 1997 that the case finally opened in Dublin's High Court.

It was, inevitably, a media circus. Rocca was a photogenic celebrity, and by the time the court started hearing evidence she had become the partner of Van Morrison. Cathal Ryan's celebrity
status was also assured; since the high-profile collapse of GPA the Ryan family had been regular fodder for the Irish media. Tony Ryan's rise and fall had been chronicled in detail, and his financial resurrection with Ryanair had added extra spice. Cathal Ryan, too, was flamboyant in his own right. A pilot with all the stereotypical attributes of the breed – he was seen as an arrogant playboy – he was grist to the media mill.

The trial had everything the media could have wanted – sex, violence, bizarre humour, celebrities at war and a rare glimpse of the lifestyle of the rich and pampered. In the trial's opening statements the court heard that Ryan and Rocca had begun dating in 1988 and in April of 1991 had had a daughter, Claudia. Rocca's lawyer told the court that Ryan had assaulted her in the early hours of 22 March 1992 at a party at Blackhall Stud near Clane in County Kildare. Rocca said that at the time of the incident she and Ryan were still a couple though they were living apart. Rocca was left badly bruised, the court heard, and Cathal Ryan had never apologized to her. ‘He did send his daddy, Dr Tony Ryan, with flowers to say sorry,' her lawyer told the court.

When Tony Ryan had apologized for his son, Rocca told him that she would not allow Cathal to see his daughter Claudia again. Ryan wanted some arrangement made for access and Michael O'Leary was dispatched to talk to Rocca. His role was uncomplicated: he was to offer cash and get Rocca to agree a settlement that would allow the Ryans to see Cathal's daughter.

The court was told that in April 1992 O'Leary brought Rocca a document to sign. In return for agreeing access, the Ryans would provide
£
1,000 a month maintenance for Claudia and a further
£
5,000 one-off payment for Rocca. She signed on the dotted line but later said she had not realized that the document included a clause which stipulated that she could make no further claims against Cathal Ryan.

O'Leary was called to testify. ‘Tell me more about being the Ryans' bagman,' the lawyer began. ‘If the Ryans wanted someone to, say, go to the shop for a bag of sugar, would that be you?' O'Leary was not amused.

The case was finally settled in mid-February with the court awarding
£
7,500 to Rocca and finding Ryan guilty of assault. The case was a tawdry embarrassment for the Ryans but it gave O'Leary a public profile as the Ryanair flotation drew nearer. In March the
Irish Times
did its numbers and estimated that the airline would be worth
£
250 million when the shares were sold. That, the paper realized, would value O'Leary's stake at about
£
50 million, making him one of the wealthiest men in the country.

For O'Leary, the self-styled one of the boys, a chief executive who wore jeans and open-necked shirts and mucked in with the baggage handlers for a weekly game of football as well as helping out with the bags from time to time, the focus on his wealth was uncomfortable. ‘His big personal concern was, I'm a man of the people and can mix it up with the best of them, and I work harder than anyone else,' said one source close to the flotation. ‘Once you are a rich guy in Ireland all of a sudden you've gone from labour to management. People, as opposed to saying, “This guy's the man,” say, “Rich bastard.”'

Publicity, however, was unavoidable. In April the
Irish Times
decided that the time had come to publish its first major profile of the rising star of the aviation world. Of his life before Ryanair the paper said, ‘He began his career in KPMG, then trading as Stokes Kennedy Crowley, having graduated from Trinity College Dublin with a business degree. He worked in taxation for two years, but hated it. He left and dabbled in property, bought a couple of newsagents in Dublin, turned them around, made some money and sold them at a profit.'

On his personality the report said, ‘Publicity shy or not, Mr O'Leary is not afraid to fight his corner,' referring to his campaigns against Aer Rianta and his frequent denunciations of Aer Lingus. The newspaper also speculated about O'Leary's relationship with Tony Ryan: ‘O'Leary was undoubtedly once very close to Dr Ryan. Sources say this is no longer the case, that in some ways O'Leary has sought to distance Tony Ryan and his family from the business they founded.'

O'Leary was clearly being billed as the star of the flotation, the
unconventional, publicity-shy chief executive who had transformed the company and would now lead it to greatness. But his own attentions were on simpler pursuits. That spring, while New York beckoned, O'Leary started a hobby – a rare departure for a man who seemed to devote every waking hour to his business. O'Leary decided that Gigginstown needed some purpose, so he decided to create his own herd of prime Aberdeen Angus cattle, prized for the quality of their meat.

‘At the time, I didn't want to be in Charolais [a popular breed for indulgent farmers] because Tony Ryan and Tony O'Reilly and all those guys were into Charolais. I didn't want to be pricking around as the latest idiot with his Charolais cows,' he says. ‘I wanted something which was a native breed to Ireland, which means Whitehorns or Angus. The Angus were easy calving, they are very easy to handle. For someone who farms two days a week they were perfect.'

While he didn't tell journalists about his new passion, he was quick to suggest that he was planning for a life more ordinary. O'Leary, uncomfortable with media attention and conscious that his privacy was a thing of the past, lusted for a return to the quiet life where he could accumulate money without attention. He was, after all, publicity shy, as the
Irish Times
had said. Ryanair, too, did not need media attention in Ireland. It had already achieved a market presence; its planes were full and its name was known. At a press conference in February O'Leary showed how little of what was to come had been planned when he said, ‘You're probably wondering why we're suddenly talking to everybody for the first time in ten years. When this is finished we'll probably disappear for another ten years.'

Some chance. The flotation would change his world, forcing O'Leary onto a global stage to sell the company. The game was just beginning, and he was to be the central player. Instead of disappearing to his private world of cattle and country, O'Leary was about to become the Duracell bunny of European aviation.

The prospect of flotation had concentrated O'Leary's mind even further on cost reduction. Investors would want to see profits, and
they would want to see evidence that the Ryanair model was continuing to evolve. O'Leary decided it was time to tackle one of his biggest and most irritating costs: the commission paid to travel agents on every Ryanair ticket they sold.

For the moment O'Leary was interested only in shaving the commission from 9 to 7.5 per cent, but it was a radical move at the time and the Irish Travel Agents' Association, which represented 340 agents across the country, was not going to give up its money without a struggle. Within days of O'Leary's decision to cut their commissions, there were mutterings in the trade about a boycott of Ryanair, but this was not O'Leary's only move against the travel agents. In January 1997 he had also set up Ryanair Direct, a telemarketing operation which he hoped would cut the travel agent out of the loop completely. Helped by a
£
2.5 million government grant, Ryanair Direct hoped to handle five million customers by the end of its first year in operation, and each ticket it sold would be free of agent commission.

Telemarketing was not a new idea, nor was O'Leary the airline innovator. The British low-fare airline easyJet had blazed the trail by painting its reservations number on the side of its aircraft and had been determined from the outset to control its own bookings. O'Leary, naturally cautious, watched and waited. Only when he was convinced that it would work did he follow easyJet's lead.

Ireland's travel agents were not happy. In March Ryanair opened negotiations with the ITAA but the talks broke down without agreement. ‘There was no headway made in those talks, none whatsoever,' recalls P. J. Brennan, who was head of the ITAA at the time. ‘I still think it was an exercise that we had to go through. It would have been very remiss of us to sit back and do absolutely zilch.'

In public the row quickly turned nasty. At the end of March Ryanair angered agents by faxing advertisements for Ryanair Direct to their offices and rumours flew around the industry that Ryanair was harassing and intimidating individual travel agents. Brennan, though, remembers little acrimony at subsequent meetings. ‘We didn't go in with pitchforks or anything like that, and
they didn't arrive with them either, he says. ‘We weren't being told what we wanted to hear, but there was no hitting the desk or anything.' O'Leary was central to all discussions. ‘There would have been five or six Ryanair people there, but I can't remember who else was there because Michael was such a focal point,' recalls Brennan. ‘He would have done 99.99 per cent of the talking.'

With no compromise on the table, ITAA's members voted on 4 April to refuse to handle sales of Ryanair tickets when the new commission rates were imposed by the airline. A week later their planned confrontation was sabotaged by Ireland's Competition Authority. Prompted by O'Leary, it wrote to ITAA and said that a boycott of Ryanair would be anti-competitive, and the organizers would face immediate court action.

The Competition Authority was not bluffing. It followed up its letter with a raid on the association's headquarters, and demanded personal assurances from ITAA's leaders that they would not seek to damage Ryanair's business. Pat Massey, a member of the Competition Authority at the time, says that authority staff found enough evidence during the raid to justify court action against the travel agents. ‘The raid started at nine or ten in the morning, and lasted until four or five,' he says. ‘ITAA seemed surprised to see us.'

The Competition Authority decided to proceed against ITAA, but it was settled on the steps of the court. ‘All a court could have done was force the ITAA to give an undertaking not to continue any anti-competitive behaviour/boycott, and the ITAA gave that undertaking to CA the morning of the court case,' Massey recalls.

O'Leary had been handed a simple victory by the Competition Authority, which had carried out its raid on the ITAA offices following an anonymous complaint. ‘I have no proof or information as to who [the complaint] came from, but it wouldn't surprise me if it came from Ryanair,' says Brennan.

Two weeks later, at an extraordinary general meeting of its members, ITAA said it would pursue legal action against the airline, but this never materialized. The agents had been defeated
with barely a shot fired. Ryanair cut its commission on i May and travel agents were forced to comply. Some retaliated by introducing legal surcharges on Ryanair sales, but they could not refuse to sell the tickets.

‘It's a matter of conjecture really as to whether there was a boycott or not,' says Brennan. ‘I suppose travel agents acted individually in the sense that they felt that their business was threatened and when people feel that their back is against the wall and their business is threatened, you know, people do things off their own bat, and maybe sometimes they're not the right things.'

Soon they had all come back into line. Ryanair was a popular airline with passengers and a source of revenue, even at a reduced rate of commission. The agents could not afford to boycott it.

For O'Leary it was a gratifying coup. He had made a relatively painless assault on his cost base, had seen off an industry boycott, and at the same time had established his own direct sales operation. It was also a popular victory with consumers and with potential investors. By defeating the ITAA O'Leary had made it possible for airfares to fall further, and he had also demonstrated to investors that Ryanair was serious about cost cutting and not afraid to fight its corner.

Ryanair's use of small, out-of-town airports was a crucial element in keeping costs down, but there was no guarantee that passengers would want to fly to them. So while Ryanair might be landing in Beauvais, its passengers needed to believe they were flying to Paris.

O'Leary and Jeans had travelled this road before. Prestwick, a long way south of Glasgow, was still Glasgow as far as IATA regulations were concerned, just as Stansted, in Essex, was a London airport. For the new destinations, all Jeans had to manage was a simple sleight of hand.

‘We had to make sure that they were designated by IATA as Paris and Brussels and that they were included in the three-letter city codes,' recalls Jeans. ‘At the time the airlines operating to those airports had to vote on them being included in the city designation.
So the airlines operating to Beauvais had a vote – and so we had the only vote. We were the lone rangers in Charleroi too.'

Beauvais was Paris and Charleroi was Brussels because Ryanair said so, and IATA's own regulations – which allowed the airlines serving the airport to decide on what it should be designated – made the claim easy to ratify and impossible to refute. ‘Our competitors were then ready and able to take us to advertising standards and things like that and say you're not flying to Paris you're flying to Beauvais. But we were manifestly flying to a designated Paris airport,' says Jeans. And that was the key: despite the protestations of its rivals, Ryanair could legitimately market its flights as London to Paris.