Michael O'Leary (3 page)

For O'Leary's first year in the big city he moved into Hatch Hall, a Jesuit boarding house on the same street as the maternity hospital where he had been born. It was a ten-minute stroll from the Trinity campus; it was also less than a hundred yards from Hartigan's public house, situated just off St Stephen's Green, which would become O'Leary's local for the next four years. ‘We went mad when we left school and went to college, everybody went mad. We were released out of a boarding school after six years, you couldn't help yourself,' he says.

O'Leary's madness was of the predictable kind. He and his friends, many of whom had chosen to study at UCD, would gather at Hartigan's, or the Pavilion bar in Trinity, which overlooked the college playing fields, or in the seedier surroundings of Trinity's canteen bar – a modern, bomb-shelter-like structure that sat incongruously to the side of the college's elegant Front Square. Early evenings in the pubs were followed by later sessions in Old Belvedere rugby club, ‘and then there'd normally be a party in someone's house. It was fantastic, without a doubt the best fuck-up years of my life were in Trinity.'

Paying for the student lifestyle was not a problem. O'Leary received thirty pounds a week from his parents – a lavish stipend at the time – and also worked on Friday and Saturday nights in a hotel owned by his uncle, Noel O'Callaghan. O'Leary worked the late shift, from eight in the evening until four in the morning, serving drinks in the nightclub after the main bar had closed.

The cash he earned and the money he received from his parents allowed him to save. While most of his contemporaries were struggling with debts, O'Leary claims to have accumulated £5,000 during his college years. ‘It wasn't that hard, actually,' he told a reporter for the
Sunday Business Post
in March 2001. ‘My parents gave me the pocket money, and every time I saw the uncles and aunts they'd slip you a fiver too. I was rolling in it, to be honest.'

His network of friends slowly extended beyond his schoolmates. None had joined him in ESS, the course he had chosen to study, though a few had gone to Trinity. ‘You had two groups of pals,' he says. ‘The ones you went to school with – most of whom were in UCD – and another group in Trinity.' Invariably, the new friends came from similar backgrounds, and similar schools, like Glenstal, a boarding school near Limerick run by Benedictine monks, or Dublin's fee-paying Catholic schools.

A dutiful son, O'Leary found time to visit his parents in Mullingar, travelling home on the train until he solved his commuting problems by buying his first car, a purple Mini. ‘Best car I ever drove,' he says. ‘It was a babe magnet – not because it was a great car, but because you were one of the few people in college who
actually had a car, even if it was a Mini. Our record was fifteen people one night, going to a twenty-first party in Howth. There were four of them sitting on the roof. And we drove from Trinity to Howth [in north Dublin, a twenty-minute journey]. You wouldn't fucking do it now, you'd be arrested long before you got there.'

O'Leary's summers were spent working in Mullingar. By now an accomplished barman, O'Leary plied his trade in the local hotel. He was one of the few students lucky enough to get work in his hometown. Ireland remained economically depressed. Most of his contemporaries went abroad each summer, working on building sites across Europe or travelling further afield to the United States to accumulate money for the following year, but O'Leary's skills as a barman ensured there was always a job waiting in Mullingar.

‘I liked bar work; it was good fun, good money. I was good at it,' he says. ‘I was fast, I'd get the drinks in and out. If you were good at it you'd go in in the evenings – I couldn't stand around all afternoon doing a shift from two till eleven at night. A lot of these places would want extra bar staff for nightwork, so I'd work the evening shift from six till maybe three in the morning. You'd get extra into your hand for working the nightclubs.'

O'Leary made his final break from the Jesuits when he moved from Hatch Hall into an apartment owned by his parents – another luxury denied most college students in 1980 – which he shared with his two oldest sisters. It was free, but it had its drawbacks. ‘I couldn't bring back girls, but anyway I was useless with girls. I'd chase all day and catch nothing. Girls were the target in Trinity, they weren't friends. There were one or two but it was all very innocent in those days.'

Four years of university life was enough for O'Leary. The time had come to make some serious money. In his final year at Trinity College he had worked hard for his examinations, the hedonistic lifestyle of the early college years replaced by a more sober work ethic. Life was getting more serious.

‘I wanted to make money because we had financial problems when I was growing up and I remember my father being broke a couple of times,' O'Leary says. ‘I would have murdered, I would have gone through concrete walls, to make money.'

Quite how he was going to make money, though, was a problem. His time at Clongowes and then Trinity had given O'Leary the quintessential attribute of middle-class boys with a private education behind them: innate self-confidence. Although Ireland in 1983 was in the midst of recession, with double-digit unemployment figures that encouraged tens of thousands of young men and women to emigrate each year, O'Leary believed that a well-paying job would fall into his hands. There were a few choice jobs for Irish graduates – a small number of management consultancy firms hired graduates each year, the accountancy firms took on trainees, and a few Irish companies, like Jefferson Smurfit, the paper company, ran graduate trainee programmes.

‘When I finished college I thought, I'm a fucking genius here, I'll have my pick of these jobs,' says O'Leary. But he did not. Far from having his pick, he did not have a single approach until Stokes Kennedy Crowley, a Dublin accountancy firm, threw him a lifeline by offering him the opportunity to train as an accountant. He had no choice, no alternatives to consider. It was accountancy or nothing. In an Ireland where emigration was the norm for college graduates, an opportunity to train as an accountant was one of the most coveted positions for most business students, but
O'Leary was unimpressed. The training was tough, low paid and, worst of all in his mind, ‘It was fucking dull.'

His Trinity degree granted him a number of exemptions from accountancy examinations, but he knew nothing about taxation. ‘So they put me into tax and said, “Right, you can do the tax in twelve months. So I did tax, which was actually very fortuitous because in tax you were working on accounts all the time. I was never out counting washers or dipping oil tanks at midnight on New Year's Eve. It was, “Here's a set of accounts, how do we get the tax down?”'

O'Leary played the game. He turned up at work each day wearing a suit and tie and resolved to work hard and make a name for himself, racking up fourteen-hour days that could then be charged out to clients. His mentor in the tax department was Gerry McEvoy, a partner and widely respected tax expert who had a clutch of major individual and corporate clients. One of McEvoy's most important private clients was Tony Ryan, who had left Aer Lingus shortly after O'Leary first went to Clongowes to set up his own aircraft-leasing company, Guinness Peat Aviation.

Ryan had begun life as a train driver's son in Tipperary, left school at sixteen, then went to work at Aer Lingus. His twenty years at the company saw him work his way through the tiers of bureaucracy to reach the heady heights of middle management. And that was where he would likely have stayed – too much a maverick for the conservative company – if he had not struck out on his own.

In 1975 Ryan risked £5,000 of his own money to start his aircraft-leasing venture. Aer Lingus, Air Canada and Guinness Peat, a merchant bank, kicked in the other £45,000, and shared a 90 per cent shareholding. Operating out of the tax haven of Shannon, the airport on Ireland's Atlantic coast that was the early gateway to North America, Guinness Peat Aviation bought aircraft and then leased them to airlines. Instead of borrowing millions to buy new planes, airlines could get the planes they needed from GPA and pay monthly, leaving Ryan with the ultimate risk if the industry nosedived. In return, he earned handsome profits by
charging the airlines more than it cost him to raise the money to buy the planes in the first place.

The bigger GPA grew, the better the rates it could extract from financial institutions to borrow money and the greater profits it could extract from the airlines that needed its planes. GPA became one of the most profitable finance machines in the world and turned Ryan into a multimillionaire.

O'Leary was fascinated by Ryan's success and instinctively drawn to him. Stories of how the two men came to work with each other are as numerous as they are apocryphal. One version has O'Leary sneaking into McEvoy's office on a Sunday and flicking through his contacts book until he found Ryan's home number. O'Leary, so the story goes, then called Ryan and told him how he could save him even more money. Another says that Ryan had spotted O'Leary when he was still at school with his son Declan, and had kept his eye on him ever since.

O'Leary, however, says that he ‘wasn't friends with the Ryans in school. Cathal was two years ahead of me and Declan was two years behind.' In boarding-school terms, the two-year gaps were vast. ‘I knew them in school, but I wasn't particularly friendly with them. I didn't go to their house or anything. The relationship with the Ryans started with Tony not through the boys.'

O'Leary says he made direct contact with Ryan while working for SKC. ‘I called him up one weekend and said I think you can save some more tax by doing XYZ,' he says. They first met in 1984 when McEvoy brought O'Leary on a working visit to Ryan's home in Tipperary. Ryan was disappointed when O'Leary failed to reappear the following year, asked McEvoy what had happened to the restless young man, and was told that he had gone out on his own. Ryan liked hiring bright young men to work with him – Denis O'Brien, who would become a multimillionaire many years later by launching and selling a mobile phone company, cut his teeth at Ryan's side – and O'Leary's hunger and sharpness had impressed him. He made a mental note to pursue him.

Taxation was never going to hold O'Leary's attention for long. Partnership – the Holy Grail for accountancy trainees – held
no interest for him, and he had scant respect for the men who ran SKC. ‘They had some brilliant partners,' he says, ‘but some of them were wankers, the greatest fucking gobshites.' O'Leary was in a hurry to make money. He was making a living at SKC, but no more than that. It was going to take at least another two years to pass all his exams and become a manager, and even then the rewards were not what he had in mind. ‘I wanted it faster. I wanted to make a hundred grand, which seemed like, Jaysus, with a hundred grand the wolf wouldn't be at the door,' he says.

Eighteen months after joining SKC O'Leary walked out the door for the last time in the summer of 1985. Armed with a university degree and a grounding in tax law, he was determined to make his own mark and to make his own money.

While O'Leary pondered his next move, Tony Ryan was preparing for his greatest gamble. In June 1980 Ryan had drawn up his first proposal for a new airline, provisionally called Irelandia, but it had failed to get off the ground. Having made his fortune at GPA from airlines' inefficiencies, Ryan was confident that he could do better.

The prologue of Ryan's first proposal document noted that ‘it is remarkable that Ireland is the least developed aviation nation in Europe'. Ryan also attacked Aer Lingus, the national carrier, for being Dublin-centred, claiming that ‘token service is given in other cities'. Irelandia on the other hand planned to base its operations out of Shannon, home to Ryan's GPA.

In his proposal, which was pitched both at investors and at the government, which would have to grant his airline a licence to fly, Ryan argued that Ireland needed a second airline to force Aer Lingus to rationalize its own cost base, so that it would be ready to compete in what Ryan saw as the emerging low-fares market.

Ryan was ahead of the game. His experience in the airline industry and his knowledge of the US market had given him a glimpse of the future that others in Ireland and Europe could not see. He believed it was inevitable that Europe would follow the American lead and reduce the number of regulations that made flying such an exclusive and expensive business. It would take
longer because Europe was a collection of independent states each with its own national airline, but he believed it would happen. Already, competition had spread beyond America's borders and into the transatlantic market, where Freddie Laker's Skytrain had slashed prices.

Ryan's original proposal claimed that Ireland and Portugal were the only two European countries which were home to just one airline flying international routes. In France, Air France competed with eight other airlines; in the UK British Airways had nine significant competitors and in Scandinavia SAS was fighting it out against five other airlines. In Ireland there was Aer Lingus.

Ryan argued that the Irish aviation market would soon have room for Aer Lingus and another airline half its size. And if that was not allowed to happen, then the new market would simply be served by foreign carriers, who would establish new routes between their home countries and Ireland once regulations were eased.

‘The main objectives of a new airline are to profitably make low fares available to the public and prevent further foreign airlines dominating the market,' he said in his proposal. Ryan knew his plan would not be easy, and to underline his determination he quoted Machiavelli, the Italian master of politics. ‘It must be considered that there is nothing more difficult to carry out, nor more doubtful of success, nor more dangerous to handle, than to initiate a new order of things. For the reformer has enemies in all those who profit by the old order.'