Tony Ryan: The incredible story of Ireland' Gatsby
The extraordinary life story of Tony Ryan, the original high-flyer
Tony Ryan was born in a railwayman's cottage and rose to enormous success, overseeing the spectacular making of two business fortunes and the dramatic losing of one.
After an early spell in Aer Lingus, he set up an airline leasing company, Guinness Peat Aviation (GPA), which had its headquarters situated in Shannon and quickly became the largest such enterprise in the world.
Ryan was a hard taskmaster and the company reflected his ferocious work ethic.
Yet, despite a stellar board of directors, a poorly timed Initial Public Offering in the 1990s saw GPA crash and burn. Ryan lost almost everything.
What remained was a little airline that was chronically loss making. Ryan set about turning Ryanair around, putting in one of his assistants, Michael O'Leary, to help knock it into shape.
The rest is history. Ryan remade his fortune, lived lavishly and elegantly, was a generous patron of the arts, and in every respect larger than life. He was Ireland's original high-flyer.
By the autumn of 2007, as it became obvious that the end was near, the friends and family of Tony Ryan were summoned for what he called "the exit interview". That humour was characteristic of his mood during those final days. When one of Tony's grandchildren came in to see him for the last time, he was offered words of comfort. "You know I'm going to a better place," Tony told him. The boy walked to the window and looked out over the extensive grounds of the Georgian estate, puzzlement on his face. "Really?' he said, "A better place than Lyons?"
In the days that followed Tony Ryan's death from pancreatic cancer on October 3, 2007, tributes poured in from around the world. Then then Taoiseach, Bertie Ahern, described Tony's contribution as "immense" and hailed him as "one of the greatest Irish economic success stories". Garret FitzGerald noted that "it was Tony Ryan who showed us how to transcend Ireland's geographical isolation". Tony's protégé, Michael O'Leary, said his former boss was one of the 20th Century's "greatest Irishmen".
That judgment would have seemed unlikely in 1992 when Tony's airline leasing company, GPA, spectacularly imploded. The company had contracted commitments for new aircraft amounting to a staggering $9.4bn – a massive one-way bet on the continuing expansion of the commercial airline business.
The early 1990s turned out to be the worst possible time to launch. The global economy, which had improved every year since 1982, had gone into sharp recession. That economic downturn led to apocalyptic predictions, most notoriously an aviation industry report by the Warburg Group that forecast an imminent "airburst".
A few days before GPA went public, all the indicators seemed grim. Several of the biggest institutional investors that would normally be expected to buy in such a mega flotation indicated that on this occasion they would pass.
At a meeting in London on Tuesday, June 16, 1992, GPA's bankers from Nomura, Schroders and Goldman Sachs gave Tony the bad news that the issue had closed heavily undersubscribed, with little hope of generating additional demand for the shares.
"I don't fucking accept that," Tony roared back at them. "Get out there and fix it!"
Over the next 36 hours, sales personnel from all three banks began frantic phone calls to investors in whichever markets happened to be open at the time. "We were trying to breathe life back into a corpse," one senior adviser said. When the bankers reconvened on the evening of Wednesday, June 17, they all told the same story. No one was buying.
In the early hours of Thursday, June 18, confronted with a total rout, the representatives of the three banks took the decision that the GPA flotation had to be aborted. John Howland Jackson from Nomura was given the unenviable task of walking down the corridor to the boardroom where Tony was waiting.
At first, Tony refused to take the advice. "Wait for Tokyo," he instructed. An hour later, by which time it was clear that the Japanese market had failed to ignite, he was forced to admit defeat. In the end Tony did so quietly and without rage. "He probably thinks we're all rogues," one financial adviser admitted.
As well as professional humiliation, Tony was staring at personal ruin. Without the $36m from the conversion of his 'A' shares, he had been left with an outstanding $35m loan at Merrill Lynch Investment Bank, New York. As one of Tony's creditors bluntly told him, things were going to "get ugly".
Tony had little choice but to hand over details of his personal assets to the US bank, and it was revealing of his worth and lifestyle. His net salary was $200,000 with further fees of $100,000. His dividend income the previous year from GPA had been $5.6m. Interest on his deposit accounts generated a further million, all of which totalled an annual personal income of $6.9m. His expenditure was estimated at $150,000 a month, comprising $1.8m per annum. Interest paid on bank loans came to $1.5m. Taken together, his incomings and outgoings left a discretionary surplus of $3.6m. Assets included properties in Spain and Mexico, each worth $1m. His art and antiques collections were valued at $10m. He held $25m in bank accounts and cash. GPA shares, which would turn out to be worthless, were nevertheless estimated at $234.1m.
Tony should have lost everything, but Ryanair provided an escape hatch. Back in the mid-1980s, when he set up the airline with his friend, Christy Ryan, Tony had established ownership under the names of his three children, Cathal, Declan and Shane, to maintain the pretence that he was not going into competition with Aer Lingus (which part-owned GPA). The legalities of that arrangement now kept Ryanair and other family assets out of the grips of creditors. To pull off the trick had involved patience and unshakeable nerve. No amount of charm, threats, inducements, public humiliation or potential ruin had moved Tony to hand over the airline.
That approach characterised Tony's whole mindset after the failed IPO. Denis O'Brien, Tony's former PA, remembers being amazed to find his old boss talking so enthusiastically about building up Ryanair. "This is how to build a huge business," Tony told him. "If it doesn't work, revise the strategy. If still doesn't work, revise the strategy again."
Tony put his assistant, Michael O'Leary, in to run Ryanair and motivated him by making him a de-facto partner in the airline. That deal would become the stuff of legend: O'Leary would get 25pc of any profits that Ryanair made that were more than £2m. To his friends, Tony always said the deal was the best bit of business he ever did.
O'Leary, in retrospect, regrets the tension that developed between him and Tony. "We were fighting like cats and dogs," he says, "and to be fair to him, I would say I was an odious little jerk because I wanted to get rich. Tony was older, more mature and wanted to give me my head a lot of the time, because I was delivering the goods. But he wished I would tone it down a bit and he was probably right in that respect, too."
O'Leary also understands something of the personal cost for Tony in having to go into the background after the failure of GPA. "It was tough for him," he says, "because he deserved a lot of the credit for Ryanair. It wouldn't have been there if he had followed my advice and shut it down. But he wasn't going to get any of the credit for it, the great success, the comeback and the rest. He had to bite his lip. As it turned out, he was happy to take the money."
On May 30, 1997, Ryanair was simultaneously launched on the Dublin stock exchange and the NASDAQ in New York. Shares in the airline were more than 18 times oversubscribed. The New York Times reported that shares in Ryanair "soared in their first day of United States trading as investors clamoured for a piece of the company, an Irish no-frills airline". By the end of business in New York, shares had closed at $25.50, sharply higher than the offering price of $14.734.
For the Ryans it meant that they had made more than £40m from the launch price while retaining a 35pc shareholding in a company now estimated to be worth £166m. That figure would turn out to be a conservative valuation. No wonder that in response to a warm note of congratulation from Irish financier Dermot Desmond, Tony expressed himself "chuffed with the market reaction".
Explaining Tony Ryan might seem straightforward enough. His life conforms to one of the most attractive narratives in human existence: that of the working-class boy made good. Tony came from a happy home, but his family did not have much in the way of money or business ambition. When he got a job in Aer Lingus shortly before his father died, his parents were delighted because a public service job in the Ireland of the 1950s brought both security and respectability. For a long time Tony seemed happy with those qualities in his life until a slow epiphany drew him towards the entrepreneurial life and unimagined riches. The story did not have to turn out that way – the example of Christy Ryan, who started out in Aer Lingus at the same time and pursued his own dreams without much success, was stark proof that it was Tony who made his own life and that it could have turned out entirely different.
By any standard, the rise to riches was an astonishing story, though as Malcolm Gladwell points out in his book Outliers, even the most brilliant of self-made men come from somewhere. "People don't rise from nothing," he writes. "It makes a difference where and when we grew up."
That was certainly the case for Tony. It was no coincidence that three of the transformational figures in the business life of modern Ireland – Tony Ryan, Michael Smurfit and Tony O'Reilly – were all born in the same year of 1936. Ireland then might have seemed the bleakest ground in which to plant entrepreneurial seeds. In fact, the timing was perfect. By the time they started out, Ireland was emerging from an era of self-imposed, crippling economic isolation.
The forward thinking in the 1950s of politicians like Seán Lemass and public servants such as Ken Whitaker and Todd Andrews began to transform a relatively barren landscape into one cultivated for competition. Entry into the European Community in 1973 further extended this drive and opened up a vast marketplace. Because the free market was a new frontier in Ireland, it presented opportunities for "change agents", without as many of the regulations and constraints that would later develop, and no earlier generation that had already made off with all the best new ideas.
What did make Tony exceptional was that he turned the dreams he shared with his generation into reality. That came about not because he wanted to make a fortune, although he was happy when he did. Rather it was because he had the vision to see where the market was imperfect, the courage to stake his claim, and the tenacity to see the job through.
Tony displayed in abundance the three behavioural characteristics that the global financial services firm Ernest and Young identify as shared by successful entrepreneurs: an opportunistic mindset; acceptance of risk and potential failure; independence and control.
Both GPA and Ryanair were the result of an opportunistic mindset. Someone was always going to create an airline leasing business. Deregulation was always going to lead to competition in the skies. Tony didn't just happen to get there first. He barged his way to the front to stake his claim. Once there, he did not allow anyone or anything to get in his way until the business succeeded.
Once Tony discovered his entrepreneurial streak in his 30s, acceptance of risk and failure became second nature. Critics would point to the acceptance of too much risk, most notoriously in GPA. Yet it is the failure of GPA as much as the company's earlier success and then the later triumph of Ryanair that marks Tony out as a true entrepreneur. He only knew how to play for high risk. Sometimes he came up 'snake eyes' with disastrous consequences for himself and others. Yet the alternative was safety and caution that would have made Tony a good manager, not an innovator. Unpredictability and even foolhardiness have always been the prerogatives of the creative genius – "Tony getting all mercurial", as Michael O'Leary says.
The third characteristic, the determination to control your own life, in many ways represents the strangest conundrum. For the first half of his life, Tony was conventional, even passive. There are no standout moments of brilliant individuality or commercial activity. Tony was a friendly lad of middling ability who did not make much impact on the world around him. He married the girl round the corner, got a decent job at Aer Lingus and looked set for an unexceptional life. In many ways it was the national carrier that gave him his real schooling and eventually became the Establishment against which he rebelled.
Over more than 30 years, Tony scaled the heights and plumbed the depths of the entrepreneurial life. He built up two businesses that transformed international aviation. Even the one that eventually failed created a new leasing industry that superseded GPA itself in importance. The company's legacy is that Ireland remains the centre for half the world's aircraft leasing and finance business.
As to Ryanair, few would doubt that it transformed the lives of millions of ordinary people. For the first time, air travel became the right of the many instead of the privilege of the few. As Britain's bestselling newspaper put it the day after Tony's death: "Little did we know way back in the 1980s that we would soon be flying abroad for next to nothing. Tony Ryan helped ensure this by setting up Ryanair in 1985 and driving down airfares. He died yesterday but his spirit lives on in the sky."
Prof Richard Aldous holds the Eugene Meyer Chair at Bard College, New York, having previously taught history for 15 years at UCD. He is the bestselling author of numerous books,including Great Irish Speeches, Reagan and Thatcher and The Lion and the Unicorn: Gladstone vs Disraeli.