There is more to Michael O’Leary than the art of making money. There had been rumours of romance and of an impending engagement towards the end of 1999, but confirmation that O’Leary planned to marry Denise Dowling, his girlfriend for more than two years, still came as a shock to his colleagues in Ryanair. They had been aware of Denise Dowling’s presence – she had helped O’Leary host his annual party in Gigginstown the previous summer – but none was close enough to the chief executive to know his private thoughts.
Despite, or rather because of, the intensity of his working week, O’Leary still maintained as rigid a divide as he could between his professional existence as Michael O’Leary, chief executive of Europe’s fastest-growing and most mischievous low-cost airline, and Michael O’Leary, ordinary bloke, who lived in Mullingar and happened to work at something in Dublin during the week.
His colleagues, in any case, were pleased. ‘We were all thrilled for him,’ says Ethel Power. ‘We teased him about having to do a pre-marriage course and several funny notices went up on the internal Ryanair TV slagging him.’ Romance, however, was only a private distraction. There was to be no reduction in the hours he worked, no easing of the obsession that drove the airline and no softening of O’Leary’s approach to business. ‘I certainly didn’t notice any change in him,’ says Tim Jeans. ‘It was just another thing that he added to the portfolio of things that were going on in his life.’
That portfolio now included nesting as a priority; if O’Leary was to be married then Gigginstown had to be transformed from a bachelor pad into a marital home fit for a wife and perhaps a family. Redevelopment had been on his mind for a few years. Funding the work was not an issue; in June he had sold shares which had grossed him £16.6 million, and in September he had received a 25 per cent pay rise for 1999 which gave him a salary of £314,000 and £136,000 in bonuses.
Love, though, was to prove a more complicated affair than business. In January while preparing to tell the world of his engagement O’Leary had joked in an interview with the Guardian that he was ‘depressingly single and living in hope that a woman will find me sufficiently attractive to settle down’. He might have been trying to deflect attention from the imminent change in his private life, but in fact he would have cause to recycle the quote many times over the next few years. For the moment, though, plans were moving apace for a summer wedding. That same month O’Leary contacted Pat and Marie Cooney, well known Mullingar hoteliers and caterers, to ask them to prepare for his wedding. O’Leary knew he could depend on the Cooneys for discretion – they had worked for him before, catering his midsummer garden parties – and the couple already knew Dowling. ‘He was seen around a lot with Denise,’ Pat Cooney says. ‘They used to come in to us a lot.’
The Cooneys started to plan a menu for the big day. Dowling was ‘very precise’, they recall, while O’Leary had ‘simpler tastes’. ‘It was to be a buffet, like the garden parties,’ says Pat Cooney. ‘They wanted Aberdeen Angus and exotic fish. Michael is big into the fish. There was lobster, prawns, caviar – his father and mother love fish too. Denise likes chicken and they were having a chicken dish, but he hates chicken because he had it in boarding school, so they [compromised and] decided on a chicken salad to start.’
By early spring, with the engagement public knowledge, Ireland’s tabloid press started to probe for details of the wedding plans. The ceremony, the Sunday Mirror announced in March, would take place in a church in Mullingar and would be followed by a lavish reception at Gigginstown. The paper also interviewed an unnamed ‘friend of the couple’ who revealed that O’Leary and Dowling ‘have been an item since last summer’. They had, in fact, been involved for several years. The same friend went on to inform the Sunday Mirror’s readers, ‘They have never been photographed together. Denise isn’t the publicity-seeking kind…She’s blonde and very attractive, more in a girl-next-door way than a glamorous model.’
It was tame stuff, an early build-up to what would have been the wedding of the year for an Irish media desperate to foster a celebrity culture in a country still coming to grips with its newfound wealth. Newspapers wanted superstars, and O’Leary was an obvious target. Young, dynamic, successful and already rich by Irish standards, he could have been the perfect playboy. Instead, he was resolutely private, steered clear of establishment events and charity balls, dressed down and talked of nothing but his company and occasionally his cattle.
And then O’Leary called a halt. ‘I think there was suddenly a realization that she wasn’t the right person,’ says Tim Jeans. ‘But no one was close enough within the business to know the whys and wherefores. And nobody really sought to find out either. We were all extraordinarily sorry for him. It was his decision and clearly it was not one that was taken too easily. I just remember saying, “Michael, I’m really sorry it hasn’t worked out.” And he wasn’t dismissive, he was clearly quite affected by it.’
O’Leary has subsequently refused to discuss the reasons for the split, arguing that Dowling is entitled to her dignity and her privacy. She was, he said, ‘too good for him’. Dowling returned to her previously anonymous life, working as a secretary for Gerry Purcell, the son of a successful beef trader. For O’Leary there would be no time for mourning; his philosophy was that it had happened, it had hurt, now move on.
Marie Cooney recalls a brief phone call from O’Leary to tell her the news. ‘All he said was, “Marie, I don’t know how to tell you this but we’re not going ahead with that.”’
Meanwhile, O’Leary’s business life was moving at increasing speed. In January he had set the template for the year by announcing Ryanair’s biggest ever seat sale. The prices were the lowest Ryanair had ever advertised – flights between Dublin and Stansted were to cost just £4 return, plus taxes and charges, a total fare of about £24.99 – and the sale was rolled out across most of Ryanair’s European network, with twenty-one routes included.
‘The economics of the operation appear to defy explanation,’ the transport editor of the Guardian noted at the time, but the economics were blindingly obvious to O’Leary. He wanted publicity, he wanted passengers and he wanted Ryanair.com, the website launched three months earlier, to become instantly recognizable as the place to surf for cheap flights. O’Leary had previously recognized that airline passengers represented a captive market for as long as they were on his planes; now, with the Internet, he saw that they could be a captive market while they booked their flights as well.
The dryly dubbed ‘ancillary sales’, already a significant factor in Ryanair’s profits, were about to become their driving force, and every pound earned from selling more than just a seat could be used to reduce the cost of selling those seats. By February O’Leary was able to make public the next development: Ryanair.com would no longer merely sell tickets, it would also offer travel insurance, hotel accommodation and car hire. Unlike Richard Branson, the entrepreneurial brains behind the Virgin group of companies, O’Leary had no interest in stretching the Ryanair brand beyond the core business of flying passengers from airport to airport. Other companies could compete for the privilege of a presence on the Ryanair.com website; all O’Leary wanted was a large slice of cash.
Immediately, stockbrokers started to speculate that Ryanair.com could be floated on the stock market as a separate company – the dot-com bubble was a month away from bursting. O’Leary quashed the speculation: ‘We want to concentrate on being Europe’s largest low-fares airline,’ he said. ‘Selling tickets online will help us cut some £10 million in costs, but there is scope for using Ryanair.com to sell a variety of products.’
O’Leary’s conversion from apparent technophobe to full-blooded embracer of the new world of the web was complete. So complete, indeed, that he decided his cows deserved a website of their own. Sean Coyle, then O’Leary’s personal assistant, was given the job of arranging it, and he turned again to the two young men who had created the Ryanair site. ‘He wanted pictures of the cattle, their family history, their vital statistics, contact numbers for the farm,’ recalls John Beckett. ‘It took a couple of weeks. The pay wasn’t nearly as much as the Ryanair site but it was actually harder to get paid.’
Coyle was learning at the feet of his master. He knew that the two boys had been hammered on the Ryanair website, and he was determined to prove that he could be as tough a negotiator as his boss. ‘I was surprised how aggressive Sean was in his negotiations after we finished the site,’ says Beckett. ‘A price had been agreed before we began, but Sean was trying to negotiate the price down severely after we had done the work. I was just seventeen and I was way out of my depth. I made one of the worst decisions in my life by not walking out but I didn’t see it that way at the time. I thought I’d better try and get paid something, so I accepted a reduced rate.’
Within weeks of the seat sale O’Leary announced seven new routes to Europe from Stansted and an additional 250 jobs at the London airport. It was a stunt designed to capitalize on the publicity he had already generated at the start of the year and create the impression of unstoppable growth. The routes and the jobs would happen, but not for another year when Ryanair was to take delivery of another five Boeing 737s.
O’Leary’s timing was also intended to place additional pressure on the Irish government and Aer Rianta. Jobs and routes that could have gone to Dublin were moving to the UK, he said, because of the Irish government’s refusal to introduce competition at Dublin airport by agreeing a second terminal, and because of Aer Rianta’s decision to eliminate its rebate scheme and increase its charges.
We were disappointed that the Irish government permitted the Dublin airport monopoly to increase costs for all airlines from 1 January, and this has already resulted in the average cost of air travel to and from Ireland rising for the first time since 1986. The Irish government has got it wrong. The days of protecting these state-owned monopolies are gone. Dublin airport will once again lose out as all our new routes this year will operate between the UK and Europe.
What mattered for the company, though, was not snubbing Dublin but the sheer scale of the planned expansion. At the start of 2000 Ryanair operated eight routes to continental Europe. The new launches would almost double that number and set the airline firmly on the path to O’Leary’s stated ambition of becoming Europe’s dominant low-fare airline. In his mind dominant meant more than being the biggest in a growing but still small market; it meant reaching a scale that would represent a serious challenge to the traditional airlines. Some fretted that O’Leary was moving too fast, that the thin layer of senior management would not be able to cope with the multiplying organization beneath them. But O’Leary was unconcerned. To him the growth was as controlled as it was essential.
The trick was to keep the business model simple and to keep chipping away at costs. Ryanair was a point-to-point airline, and would stay that way. Passengers could choose to fly from Dublin to Stansted and then onward to a European destination of their choice, but they did so at their own risk. Landing at Stansted, passengers planning to fly on to Sweden would have to collect their bags, clear customs and then check in again at the Stansted departure desk. If their Dublin flight had been delayed and the connection was missed, tough. It was not Ryanair’s problem. No Ryanair staff would ease passenger transfers, no planes would be held back to facilitate delayed passengers and no refunds would be given for flights missed. It was a reiteration of Ryanair’s existing policy, but as the airline expanded its route network, offering destinations across Europe, it would attract a new generation of customers who would have to be educated in the ways of the low-cost airline business. The O’Leary mantra was unforgiving: low fares meant basic service. It was a novel approach to public relations, but it was working. O’Leary had decided he did not need to be loved; all that mattered was that Ryanair was well known for what it delivered.
In mid-February 2000 O’Leary announced the airline’s results for the third quarter of 1999. Pre-tax profit had risen by more than 29 per cent, compared with the same period in the previous year, to almost £16 million, helped by some exceptional gains on foreign exchange and by the sale of shares in a communications company. The results also revealed that Ryanair’s fares had risen by 18 per cent during the quarter to an average of £45 – a rise that had given O’Leary the room to launch his January sale.
A week later Ryanair announced the destinations for the seven new routes it had flagged up. Flights would operate from Stansted to Lübeck (‘near Hamburg’) in Germany, Malmö (nowhere near Stockholm) in Sweden, Nîmes and Perpignan in southern France, and Brescia and Lamezia in Italy. Further north, Ryanair also added a flight from Prestwick to Frankfurt Hahn. The routes were an eclectic mix, but with the exception of Prestwick–Hahn were linked by a common factor: substantial population centres were being offered cheap flights to London, one of the world’s greatest tourist destinations as well as one of its most important financial centres. British tourists might want to visit Nîmes or Perpignan or even Malmo, but Ryanair’s expectation was that the seats would be filled mainly by Europeans travelling to London – a point missed by sceptics who wondered how O’Leary planned to fill his planes on such seemingly unglamorous routes.
The noise of the early months of 2000, with the seat sale, website relaunch and route announcements, set the scene for O’Leary’s decision to ask the stock markets to fund the acquisition of ten more Boeing 737s and ‘to exploit opportunities for the purchase of second-hand aircraft’. Ryanair, he said, wanted to raise GB£100 million. ‘We are facing into a period of great opportunity,’ O’Leary said. ‘The successful launch of Ryanair.com has the potential to transform both Ryanair’s business and European air travel.’
The new shares were to be offered to new and existing institutional investors in Ireland, the UK and continental Europe, but not in the United States because European rules on the ownership of airlines meant that the majority of shareholders had to be European. O’Leary also planned to liberate some of his own assets by selling five million Ryanair shares at the same time, in a move that was to earn him £38 million and reduce his stake-holding below 10 per cent. O’Leary’s sale came less than a year after the share placement in 1999 which earned him £25 million but analysts were unconcerned at the move. ‘The company decided now is a good time to raise some cash because the share price is full and fair and since the chief executive makes the decision for the company, it’s logical that he also thinks it is a good time to sell some of his own shareholding,’ airline analyst Shane Matthews said.
The share placement raised €122 million for Ryanair, while O’Leary’s sale raised €48 million.* After previous share sales, O’Leary had always insisted his money was hoarded away in his local post office. This time O’Leary told investors that he had serious plans for his money – paying for his upcoming wedding. The post office, however, would not be disappointed. Within weeks of the sale, the wedding had been called off.
If Michael O’Leary had been about to walk up the aisle of his local Roman Catholic church on 1 July, he might have paused before launching his May advertising campaign. It was a classic of its type: cheap, crudely executed and mightily effective. Placed on the front page of the Irish Independent, Ireland’s largest-selling daily newspaper, the advertisement was headlined, ‘Pope reveals Fourth Secret of Fatima’, and showed the pontiff whispering to a nun, ‘Psst! Only Ryanair.com guarantees the lowest fare on the Internet.’
The advertisement sparked outrage among members of the Roman Catholic Church, and the publicity flowed for Ryanair. ‘It is surprising that a reputable airline couldn’t have found a more appropriate way of reaching the public than the use of advertising
copy linking the Pope and a facetious reference to Fatima,’ a statement said, describing the advertisement as ‘pointless and without particular focus’. How wrong that was. The advertisement was both pointed and focused. Ryanair had a foothold in the Italian market and had just announced two more routes, and a spat with the Catholic Church was a sure-fire way to generate plenty of free publicity.
Back home, the sisters of La Sagesse Convent in Sligo complained to the Advertising Standards Authority that ‘the advertisement was an affront and a gratuitous insult to the Pope and the thousands of practising Catholics and was in poor taste. It trivialised and demeaned the head of a worldwide religion, and it attempted to make a joke of the Fatima experience which for many was the focus of devout respect.’
The Catholic Church was not alone in failing to see through a transparent piece of attention-seeking. The advertising standards authorities on both sides of the Irish Sea regularly complained about Ryanair’s advertisements, rising to whatever bait O’Leary threw their way. The previous year the Irish ASA had said that an O’Leary advertisement that made fun of a bank robbery had been ‘gravely offensive’ and in June, just after the Fatima campaign, Tom Kitt, a junior minister in the Irish government, launched an attack on Ryanair’s advertising policy. Kitt said there was ‘widespread dissatisfaction’ about the way its fares were advertised, claims dismissed by O’Leary as ‘rubbish’. The UK ASA was on hand to back up Kitt’s assertions, denouncing Ryanair as the ‘most complained about airline’ and revealing that it had issued a special alert to British newspapers advising them to seek advice from the ASA before publishing the airline’s advertisements.
They just did not get it. Kitt and both ASAs were trying to protect customers from misleading advertisements – complaints ranged from Ryanair’s destinations, like Beauvais being sold as Paris, to its fares, which excluded taxes and charges, making the advertised fare significantly lower than the price actually paid by the customer – but by engaging with Ryanair, they played its game. Ryanair wanted as much controversy as possible by spending as little money as possible. ‘We track coverage sometimes,’ says Paul Fitzsimmons, Ryanair’s former head of communications. ‘I don’t mean hiring a research company to track it, I mean googling it and seeing where it is getting to and putting cost estimates to it. On the Pope one, we tracked it [as being worth] four or five million dollars.’
The simplest way to have restrained O’Leary would have been to refuse to react to any campaign unless it breached a certain impact point: one or two cheap advertisements, no response; a multi-million pound campaign, response. O’Leary would have been stumped. Instead, he cast the flies and those he offended swallowed them whole. ‘Bookings peak for big ads,’ says O’Leary, ‘and they’ll peak even more if somebody reacts badly to them.’
Publicity could come from any quarter, and O’Leary would seize it gratefully. Just before he offended the Pope he had happily capitalized on the success of Brian Dowling, a Ryanair employee who had been chosen as a contestant in the second series of Big Brother. In a format which has been replicated across the world, Dowling and others would live together in a house, their every moment recorded on camera. Each week, viewers would vote to eject one contestant from the house, and the last man or woman standing would take the spoils.
Ryanair pledged to give GB£1,000 to a children’s charity for every week Dowling stayed in the house, and painted a Big Brother logo and a good luck message on one of its aircraft. ‘Everyone here is delighted that Brian made it into the house,’ said O’Leary. ‘He’s been two years in the Ryanair madhouse, which is perfect training. We will be holding his job for him and hope that he will be returning to us – unless, of course, he becomes an international superstar through this.’
Dowling, an early favourite and the only gay contestant, duly won. ‘I don’t imagine he will want to come back if he is making a fortune,’ said O’Leary. ‘If he does, then we would be glad to have him, and perhaps we would use him in promotion. But if he is looking for appearance money he can feck off.’
*
The promise of the third-quarter results for 1999, released in February, was confirmed by the full-year results O’Leary announced in June. Pre-tax profits had grown by 19 per cent to €90.09 million. Passenger numbers were up by 13 per cent to 5.6 million for the year, turnover was up 25 per cent to €370.1 million and Ryanair now had forty-five routes serving eleven countries. Investors, who had driven the shares from €3.85 the previous November to €8.22 by the close of business on the day of the results, had been rewarded for their faith. Ryanair.com was a success, generating 50,000 seat bookings a week and rising.
‘We intend to make Ryanair.com the largest air travel website in Europe,’ O’Leary said. He was also able to put flesh on his earlier promises that the website could become a profit centre in its own right by formally announcing that a deal had been done with Hotel Systems International on the first website tie-in. The deal would allow Ryanair’s customers access to 13,500 hotels worldwide from 28 June, and Ryanair would earn money on every booking made.
Media commentators and stock market analysts were impressed. ‘The Ryanair formula of low fares and no frills continues to carry all before it, and there are few clouds on the immediate horizon,’ said the Financial Times. ‘The oil price risk is fully hedged, airport charges are under control, the cost of aircraft acquisition is locked in and the older parts of the fleet are almost fully depreciated.’
At the airline’s AGM later that year O’Leary announced that Ryanair was exercising options to buy three more Boeing 737–800s at a cost of €136 million. The airline had already taken delivery of eight 737–800s in 2000. Profits, too, continued to rise and analysts were forecasting that the result for 2000 would exceed €120 million on a turnover of more than €480 million.
In O’Leary’s seven years as chief executive the company had been transformed beyond recognition. The chaotic losses of the early years had been turned into modest profits by the time O’Leary stepped into the main job, but progress since 1994 had been exponential and the effect on European air travel had been revolutionary. As the Wall Street Journal wrote that summer, ‘Ryanair’s rise from Irish puddle-jumper to Continental contender is more than one airline’s growth story. The Gaelic upstart and its followers, such as London-based easyJet, are fundamentally shifting the economics of flying around Europe.’
The shifting structure of the European aviation industry, prompted by the emergence of the low-cost carriers and intensifying competition on the lucrative intercontinental routes, was forcing the flag carriers to think the previously unthinkable. Mergers were now on the agenda and in the summer of 2000 the possibility of British Airways joining forces with KLM, the Dutch carrier, was floated.
O’Leary professed to be unconcerned about the creation of a European aviation giant. ‘I can’t for the life of me think why they [BA] would take it over,’ O’Leary said in mid-June. ‘KLM is a basket case. BA is a basket case too. You put the two together and you get an even bigger basket case.’ He was, however, conscious that a low-fare airline backed by the two giants could pose a commercial threat. Each of the two potential partners already had its own low-cost airline, BA’s Go and KLM’s Buzz. ‘With BA and KLM’s deep pockets to tap, these low-fares units could sell tickets at a loss in order to drive carriers like us, with no rich parent to call on, from certain air routes,’ he said. ‘While we are keen to take on Goliath, we want a fair fight.’
With or without a BA–KLM merger, competition was already intensifying in the low-cost market. EasyJet had grown impressively from its humble beginnings in March 1995 when it had started operations with two leased Boeing 737s. Two years later the airline had ordered twelve new 737s, followed by an order for fifteen more in July 1998 and a further seventeen in March 2000. EasyJet had also expanded through acquisition, buying 40 per cent of Swiss airline TEA Basel AG in 1998 and rebranding it easyJet Switzerland. In June 1999 easyJet strengthened its Swiss position by increasing its stake to 49 per cent, and acquiring an option to buy out the remaining 51 per cent. Under the deal, easyJet Switzerland also moved its operations to Geneva, which became easyJet’s first continental European base.
The airline’s success meant that it too could plan for a stock market flotation. Stelios announced his flotation plans that summer, telling the market that the carrier was on course to make profits before tax of GB£20 million that year. It was an impressive number for a five-year-old airline, but still way behind the GB£ioo million Ryanair would make in the same year. Yet easyJet’s success was not a hindrance to Ryanair because it demonstrated that low-cost aviation was not a one-company phenomenon. Meanwhile, the well-funded loss makers, like BA’s Go, helped highlight Ryanair’s key differences. It was, in stark contrast to most of its rivals, a low-cost airline which delivered profits for its shareholders.
Go, launched in 1998, had been a marketing and promotional triumph, but it lacked the rigour and ruthlessness that marked out Ryanair. By the autumn of 2000 Go was flying to twenty-one European destinations, employed 650 staff, had a turnover of GB£150 million, and was speculatively valued at about GB£200 million, a sizeable return on the £25 million BA had invested just two years previously. But the airline had yet to turn a profit.
The BA group, under chief executive Rod Eddington, was in cost-cutting mode by the summer of 2000, with BA chairman Bob Ayling signalling compulsory redundancies across the group. Barbara Cassani, Go’s chief executive, was not impressed and began to speculate publicly about the benefits of BA selling off its low-cost wing. Throughout the summer speculation about a sale continued to mount, with Cassani expressing interest in a management buyout and easyJet reportedly considering a takeover bid.
While Go’s future was in the balance, Richard Branson’s Virgin Express was haemorrhaging cash. In the first quarter of 2000 Virgin Express racked up losses of GB£8 million – more money than the airline had lost in the whole of 1999 – and was now culling routes in a desperate attempt to stem its losses.
Ryanair’s profits demonstrated that the airline could thrive in a competitive market place. Mergers, however, could change the dynamics and O’Leary was not prepared to be rolled over by the giants. Ryanair, he said, would go to the European Commission and ask that ‘any merging airline’ surrender slots at London’s Stansted and any other airports where both of the merging carriers were present. ‘If the European Commission does not act, we may be pushed out of Stansted and other airports,’ he said. O’Leary also asked the EU to insist that Buzz and Go be sold if the BA–KLM merger went ahead. Before long, however, the merger talks collapsed.
In the autumn of 2000 O’Leary chose to reignite the Dublin airport row with his usual flair for controversy. In an interview with the Wall Street Journal O’Leary said that the best way to settle his differences with Aer Rianta was ‘with Semtex’ – ‘preferably during a board meeting’.
Aer Rianta spokesman Flan Clune said he ‘wouldn’t stoop so low as to respond to that remark’. Clune’s colleagues, however, were happy to stoop. O’Leary’s comments were ‘malevolent and shocking’, said Rita Bergin, an Aer Rianta director. ‘[O’Leary proposes] to resolve business differences in a manner which is far too fresh in the minds of people on the island of Ireland,’ she admonished, referring to the terrorist campaigns that had blighted the country for the previous thirty years. ‘Here we have an individual worth well in excess of £100 million behaving in a shockingly irresponsible manner.’
O’Leary was unmoved and refused to apologize. A week later at Ryanair’s AGM he renewed his attacks on Aer Rianta and Dublin airport. Conditions at the airport were ‘shambolic’, he said. ‘They’ve spent £50 million on a five-storey extension which nobody wants to use,’ he said, adding that the new baggage hall was ‘something designed by Russian architects’, while ‘Pier C was designed by Aer Rianta to win an architectural competition rather than serve the needs of airlines.’
Could Ryanair accomplish more with a bit of diplomacy, wondered the Wall Street Journal. ‘Nahhh,’ said O’Leary. ‘You want to take on monopolies, you’ve got to be ready to fight.’ The fights, he told the paper with a laugh, ‘are good for the soul’.
*
In November 2000 Ryanair’s staffpolicies came in for sharp media coverage when it emerged that Ryanair’s pilots were considering going on strike. Until then, Ryanair’s pilots had negotiated directly with O’Leary, and with reasonable success. ‘We used to have what were called “town hall meetings”,’ recalls one pilot.
O’Leary would come and he would negotiate with pilots, and there was an ERC [employee relations committee] who sat down with him. The ERC wasn’t elected as such by the pilots, but they were pilots and they used to talk with O’Leary. They never did a very good job, and we got these pay agreements, two-page things, but we had a bit of power. If O’Leary turned around and said, ‘No we don’t want to do this any more,’ then we turned around and said, ‘Screw you.’ In the early years, because Dublin was the main hub, we could do that.
In 2000 the Ryanair pilots were due to negotiate another wage agreement and O’Leary was not in a generous mood. ‘He did one of these sweeps of the pen, changing the amount of hours we could work in a week,’ recalls the pilot. The pilots were not impressed, and in mid-September it was reported they were considering a go-slow. The pilots had also beefed up their negotiating power by bringing in the pilots’ union IALPA and its larger affiliate IMPACT, the largest public-sector union in Ireland, to help defeat the changes.
They had hoped that with the experience and organization of IALPA they would be better equipped to fight their corner. But they were quickly disappointed. ‘IALPA just didn’t deal with it very well,’ recalls another pilot. ‘There was a few meetings and then, “Right, we’ll go out on strike.”’ A strike was first mooted in late September, but IMPACT then announced that it was being deferred because Ryanair had reached an agreement with its pilots on working hours.
For Ryanair, the simple fact that IMPACT, with SIPTU the dominant union at Aer Lingus, was saying anything at all about the airline’s internal industrial relations was an unwelcome development. ‘As always these matters were discussed and clarified directly between Ryanair and our pilots and this will continue to be the case. Rumours of disruption within Ryanair which emanate from an Aer Lingus trade union should be seen for what they are,’ Ryanair said in a statement. But despite the airline’s denials pilot unrest continued, and in early November the pilots voted by 77 to 1 to reject the company’s pay deal and take industrial action.
O’Leary professed bafflement at the development. It was, he said, ‘quite extraordinary that Ryanair’s pilots would fail to accept a five-year pay package which included all captains rising to £100,000 per annum’. But reject it they did, and strike action was set for 23 November. Faced with an imminent and potentially ruinous dispute O’Leary switched to diplomatic mode and successfully convinced the pilots to call off their strike on the promise of fresh negotiation.
As a gesture of goodwill, the pilots pledged to donate their flight allowances from 23 November to the North Dublin Hospice. O’Leary had taken a public relations hammering during the baggage handlers’ dispute two years previously, and was forced to admit to RTE radio in 1999 that ‘if you look back you’d have to accept that it was a PR disaster’. Keen to avoid a repeat of that error and ever keen for a publicity coup, O’Leary said that Ryanair would match the amount donated. He then went on a promotional offensive, determined to make what use he could of the press coverage of the dispute, and offered free flights on all available seats between Ireland and the UK on 24 November, with passengers paying only taxes and charges.
His tactics worked. Direct negotiations with the pilots produced marginal improvements in their pay and conditions and the dispute was settled. The deal included a €100,000 share option package for all pilots and a 15 per cent increase in basic pay over its five-year term, which would see pilots’ annual pay increase to more than €127,000 per year. The pilots signed up, and the unions were eased back out of the company. IMPACT’s Michael Landers said pilots would be ‘reasonably happy’, and conceded there were ‘significant improvements on roster patterns and working hours’.
For the pilots it had been a bruising battle, and not all of them were satisfied. ‘A really bad pay agreement and a really bad working agreement was signed,’ recalls one pilot. For Ryanair, however, the battle had proved something of a coup. The airline had attracted some decent publicity from its charitable donation, the original terms of its pilots’ package had been altered only minimally and, most importantly, Ryanair had once again managed to steer its way out of industrial strife without having to sit down with the trade unions.
O’Leary’s growing skill at turning even the worst story into a positive publicity stunt would be tested more and more in the months to come.
In September Ryanair’s attempts to place advertisements in Glasgow’s central railway station had been met by a sniffy letter from Malden Outdoor, agents for the sites, which said, ‘Regrettably we are unable to accept any form of advertising within the station which is deemed as direct competition to the train services provided.’
Ryanair’s flights from Glasgow to London were of course a competitive threat to the trains, but it was naive of the agency to spell this out. O’Leary made the affair public. ‘We’re knocking the stuffing out of the rail competition with our £9 plus tax return fares from Scotland to London,’ he said, ‘and the best Railtrack can come up with is “You can’t advertise that here.”’ The result was that the refusal to carry advertisements drew more attention to Ryanair than the advertisements themselves would have generated.
Soon afterwards O’Leary had another opportunity to practise the art of turning bad news to his company’s advantage. In late October 264 Ryanair passengers, including 49 school students, were stranded in Beauvais, the tiny airport on the outskirts of Paris, for two days due to bad weather. Mike O’Hara, the leader of the school party, complained that they were ‘practically ignored’ by the airline. ‘I am furious about the treatment we received from Ryanair staff at Beauvais airport,’ he told the Sun. ‘The handling staff were absolutely brutal and made no effort with us whatsoever. We weren’t offered any food, not even a cup of tea, and no one tried at all to accommodate us.’
The Irish Times ran a 1,100-word story on the ‘trauma’ endured by one passenger, David Gibbons. ‘The accommodation we were offered for the night was in a hangar in the airport with beds like army cots and no showers,’ Gibbons complained. ‘Anybody with any money went into Beauvais. I got a two-star hotel for £30 and paid £10 on taxis.’ The airline eventually offered passengers a roll and ‘a thimbleful of tea’ according to Gibbons.
Any other airline faced with a hostile media onslaught and images of distraught passengers would have made conciliatory noises and perhaps offered compensation. Not Ryanair. The affair was instead another opportunity to hammer home the company’s mantra: low fares, nothing more, nothing less. ‘It’s not part of our service to provide accommodation or even a cup of tea in these circumstances,’ O’Leary said. ‘Some people paid as little as £9 return for their fares, so they can’t really expect such extra benefits.’
O’Leary’s attack was considered: if you paid a pound for your flight, how could you expect the airline to pay £50 to put you up if the weather was bad? He was also irritated by the Irish media. Ryanair’s success did not receive the attention or praise it deserved from a domestic media fascinated by the negatives and bored by the positives. O’Leary’s opposition to trade unions, his refusal to become part of the cosy establishment, his wealth and his aggression had turned most of the media against Ryanair.
O’Leary’s competitors seemed incapable of learning that the best defence was simply to ignore him and his airline. In September BA had announced it was suing Ryanair in London’s High Court for running advertisements which it claimed amounted to trademark infringement and ‘malicious falsehood’. Britain’s biggest airline, which liked to call itself the world’s favourite, had been irritated by a number of Ryanair advertisements, but the one that stuck in its corporate throat had been run the previous year under the simple but effective headline: ‘Expensive BA———DS’.
BA wanted the courts to give Ryanair a public and expensive dressing-down and calculated that a successful action might take the wind out of O’Leary’s billowing sails. Big mistake. In December Mr Justice Jacob delivered his ruling, and it was devastating for BA. The ‘Expensive BA———DS’ campaign centred on a comparison of Ryanair’s and BA’s fares, with O’Leary’s company claiming that BA was five times more expensive on certain routes. Jacob said it was ‘particularly odd commercially’ that BA should complain that the comparisons were misleading. ‘The complaint amounts to this: that Ryanair exaggerate in suggesting BA is five times more expensive because BA is only three times more expensive,’ he said.
The advertisements ‘might amount to vulgar abuse’ but they did not constitute malicious falsehood. And then came his withering conclusion. ‘I suspect the real reason BA do not like [the advertisement] is precisely because it is true.’
O’Leary was a happy man. ‘They did not think we could afford to fight them in court,’ he said outside, playing his David card even though he would make profits of more than GB£100 million that year, easily enough to fund a few days in London’s High Court. ‘It is an age-old dirty trick by BA. But we did fight them and we won. It’s game, set and match to us.’
Win some, lose some. On the same day as Justice Jacob made his ruling, Ireland’s High Court found against O’Leary in a case brought by Aer Rianta. The airports company had sued Ryanair for £459,885 it claimed was owed to it for unpaid fees due on various routes. Ryanair had subsequently paid just over £103,000 for fees on the Dublin–Bristol route, but Aer Rianta had returned to court in December to claim the remaining £350,000.
O’Leary had claimed that he had held discussions with Aer Rianta’s assistant chief executive Brian J. Byrne in which the two men agreed a variation on the standard landing charges for Ryanair and that therefore the £350,000 was never in fact due. Byrne’s recollection was somewhat different. He denied any special deal had been agreed. Mr Justice Kelly took the same view, found that there was no written agreement between the airline and the airport, and that correspondence demonstrated there was no evidence of any amendment to landing charges.
The verdict was squarely against Ryanair. What Ryanair was saying was not credible, Kelly said, and was undermined by documents exhibited by O’Leary. Kelly ordered the airline to pay the full £350,000, as well as 8 per cent interest and Aer Rianta’s costs. He also refused to give the airline leave to appeal and refused a stay on his order. For once, O’Leary stayed silent, concentrating instead on milking his victory over BA.