Tony Ryan offered to quit the board of Ryanair in dispute over O'Leary's rants
A new book on the entrepreneur unveils the inner-workings of Ireland's most successful airline writes Nick Webb
Ryanair boss Michael O'Leary's rants caused Tony Ryan to offer his resignation from the board of the company he had helped turn into a global giant, according to Richard Aldous's new book, Tony Ryan – Aviator.
Mr Ryan and his former PA Mr O'Leary had been at loggerheads over his brash and abrasive style and particularly over his approach to customer service.
"The sense of frustration that the Ryans felt about O'Leary's 'aggressive' strategy for Ryanair was captured in a memorandum by Declan Ryan in 1998. He expressed himself 'disappointed but not surprised' that the most recent strategic document produced by O'Leary 'did not cover the areas of customer service'.
"He pointed to the bad press that Ryanair had been getting on the topic. This included a phone-in on The Last Word on Today fm, which, it was reported in the press, heard 'a litany of complaints about the service provided by Ryanair and the attitude displayed by members of Ryanair towards customers'. It was 'indicative of how many people feel about Ryanair . . . being tough, uncompromising and unsympathetic, which is not that far from reality'," the book notes.
"Throughout 2003 and into early 2004, Tony continued to express 'concerns in relation to the airline'. He offered Lyons Demesne as a venue for a 'tiny group of directors' to thrash out the issues. In particular, Tony remained vexed by O'Leary. 'I am becoming more and more convinced that Michael's utterances are very negative for the company,' he complained to [chairman David] Bonderman in the summer of 2004." The note was accompanied by "a recent expletive-full article on Michael in Ryanair (Sunday Times)".
Bonderman was not unsympathetic to these concerns, especially to that of convincing Declan Ryan to stay on the board. "As to Michael, I am in agreement," he admitted. "I am working on it, but you know Michael!"
"The situation deteriorated in the summer and autumn of 2004. Declan Ryan resigned from the board, saying that the 'buzz from Ryanair was gone'."
The Ryan family also dramatically reduced their stake by one-third, leaving them with a 17 per cent shareholding.
"After another vociferous complaint from Tony about O'Leary's behaviour, Bonderman sent an email saying he had spoken directly to O'Leary about the matter.
"'David was a good referee,' concedes O'Leary, who had not taken kindly to being upbraided. Bonderman had urged restraint.
"'While Michael certainly is a man of strong viewpoints,' he reported back to Tony, 'I believe he did listen to us on a number of points, specifically including his use of language. Accordingly, I think we should press on and see how it goes'."
This did little to assuage Ryan's concerns over the maverick O'Leary. "I am really not sure if there is an improvement," he wrote to Bonderman. "The fact that I write directly to you probably says it all. Michael does not want to listen."
Then he added, ominously: "I must therefore give my own position further thought."
Days later, he offered to resign. "As per your request, I have given the question of my resignation considerable thought over the last few days," he wrote on October 7, 2004.
"The chief executive's lack of interest in directors' views leaves me no alternative but to resign."
"The email was copied to O'Leary," the book notes.
The resignation of Ryan could have been a disaster for Ryanair. Bonderman bent over backwards to try to persuade the entrepreneur to change his mind. The lovebombing worked.
"I am now concerned that my resignation may be misconstrued," Ryan told him. He would remain on the board till his death in 2007.
While it reveals the tensions in the board room of Ryanair, it also highlighted the sense of irreverence endemic throughout Ireland's most successful airline.
Aldous highlights an incident when Virgin boss Richard Branson kicked up a stink about Michael O'Leary's comments about his airline. O'Leary had claimed that Virgin Express was losing money. Branson dispatched a fax to Michael O'Leary's office.
"Dear Michael," it said. "Bollocks! Kind regards, Richard." When Tony saw the fax, he immediately fired one back in kind. "Dear Richard, the correct spelling is Bollix. Warmest regards, Tony."
Dangly bits became an important topic of discussion in the Ryanair boardroom. "Declan Ryan remembers that at the first Ryanair board meeting with the TPG directors, Bonderman 'asked us about the different use of the word "bollocks". We told him there were at least six different uses, with the most positive being "the dog's bollocks". The Americans were in stitches of laughter with that definition!'"
'Tony Ryan – Aviator' by Richard Aldous is published by Gill & McMillan