A man who plans to survive

THE SATURDAY INTERVIEW: 'I HAVE NEVER called a reporter in my life. They come to me," said Pádraig Ó Céidigh a few years ago. Aer Arann's owner had been crowned Irish entrepreneur of the year. The plucky little airline's upward mobility seemed assured. He was a "big fan" of Michael O'Leary. Heck, he even talked like him.

"With me what you see is what you get. I have no time for plámás or bullshit," he told TG4, before tearing into smug "Dublin 4 types".

Fast forward to the Clayton Hotel near Galway, after a nightmare week for Aer Arann, which had announced it was laying off 100 people - almost a quarter of its staff. Ó Céidigh is still a man with no time for bullshit but is gracious with it, and it's fair to say that he is no longer a "big fan" of Michael O'Leary. But he still hasn't called a reporter.

He was advised against giving this interview and agreed to it only because it was mediated by people whose "integrity" he respects. This is vintage Ó Céidigh, a man who might be an endangered species: a serial entrepreneur whose ethical heart is in occasional mutiny against his head; one who believes that power is "not about something you have, it's something you give"; a high flyer prepared to accuse "some" developers of being "extremely self-centred" and politicians of virtually running a closed shop. And he is unequivocal about the causes of the current economic calamity: banks and greed.

Famously, the native-Irish-speaking, Jesuit-educated Galway boy was first an accountant, then a teacher for 11 years, then - after pursuing a law degree at night - a solicitor. His love of teaching in Coláiste Iognáid, his old school, and slow, painful disenchantment with the politics of the staffroom reveal much about the man himself.

With characteristic passion, he threw himself into learning about teaching, reading hundreds of books and doing summer courses in the UK and the US. He concluded that his role was not to teach but to facilitate learning: "You can teach animals in a circus but now I was looking at how to help people to learn more effectively."

He got his Leaving Cert students to write their own maths book. He devised a law course for Transition-year students (rejected, alas, by the Department of Education). Meanwhile, the atmosphere in the staffroom was darkening. "There were some teachers who were kinda playing the mickey with me on it . . . being a bit derisive". His classes were hugely popular; he was competing for upcoming appointments.

With a sinking heart, he saw vigorous agendas being pursued that had nothing to do with the students. As school steward in the ASTI, he perceived that the union "was actually protecting some of those teachers who were doing the least amount of work. The more you did, the more you were given to do. And others were laughing away."

The stress took its toll and his wife, Catherine, told him that he was no longer the man she married. He took a career break and set up as a solicitor. He soon found that it wasn't for him either: "I was meeting a number of solicitors in Galway who weren't happy in what they were doing. I could see that."

So, in 1994, he re-mortgaged the family home and forked out under £500,000 for a little airline comprising a couple of tiny old planes, a dodgy runway in a bog, a hangar, a few offices and a route to the Aran Islands. As you do. The vendor, interestingly, was one Tim Kilroe, one of Bertie's Manchester dig-out men.

Ó Céidigh gives a vivid account of the wit and resources required to stay solvent, of the chance meetings and fast talking that led to vital contacts and contracts, and the numerous times the company almost went bust. After 9/11, he had to lay off 14 pilots out of 25 - "We were almost gone that time" - and all with a growing family at home in Connemara and a staunchly supportive wife "acting as both mother and father" to their four children.

Tough times, then, are not a novel experience for him. "You feel absolutely gutted when you have to let people go. I feel like I've let them down . . . It's an extremely difficult time. But I don't know what else I could have done. I don't think it's through any fault of mine but I always question myself: could I have foreseen something earlier that might have changed things? I don't know . . ."

In the US, wristbands ask: "What would Jesus do?" Here, swaggering graduates ask: "What would Michael O'Leary do?" Slash and burn, anyone?

There is a long pause. "That wouldn't have happened in Aer Arann because we're a totally different culture. When you have to do it, you do it. But you'll look at the repercussions. You try and put yourself in the shoes of those people who are being affected by it and you try and minimise the hurt and the damage as well as you can. But even when you do your best, it still may not work out."

The three prongs in the "tsunami" that has the airline fighting for survival - "and it is about survival now for Aer Arann" - are the economy, fuel costs and Ryanair. Unlike Ryanair, his company had the foresight to hedge against oil, but Ryanair, he says, is the problem: "The single biggest issue is Ryanair. If Ryanair left me alone, we'd be fine."

THE NOTION OF Ryanair bullying little Aer Arann conjures up images of the Monarch of the Glen locking horns with Bambi. Here is Ryanair, with 700 routes and 55 million passengers, red in capitalist tooth and claw. There is Aer Arann, with 40 routes and a million passengers, still drawing on public service obligation routes (PSOs), which attract Government subventions, for ballast. Why would Ryanair be bothered?

Ó Céidigh is not wounded by the contrast; he has heard it all before. "Oh I know. I'm Mickey Mouse compared to Ryanair. That's what Michael O'Leary says publicly. But how he is acting privately is totally different."

Ó Céidigh's theory is that Ryanair has already gained control of Shannon and wants to control Cork and Dublin. As the third-largest airline out of Dublin and Cork (after Ryanair and Aer Lingus), Aer Arann is the meat in the sandwich. "The less competition Ryanair have in Cork and Dublin airports, the more they can control the airport, the more they can demand free landing charges and so on, the more they have the airport over a barrel. So we are a bit of an inhibitor to them there. Strategically, it works for Ryanair to weaken us and in fact to close us down."

It's a serious charge but he reckons there's no shortage of evidence. "Ryanair copied [Southwest Airlines] and introduced a totally new business model for aviation in Europe, which was badly needed. And it got very significant help from the Irish government. If I got that, I'd be away with it. But we had to compete very aggressively for the PSOs; they were handed theirs and Aer Lingus was not allowed to compete with them. I'm not saying that the government was wrong; in some respects it was the right thing because it helped another airline grow, which an airline needs from time to time. I don't begrudge Ryanair that at all."

In fact, his admiration for Tony Ryan's vision and creativity is unbounded. "He saw what was happening in [Southwest Airlines] and he got a great guy to bring reality to the vision. And that set the standard and a different style of operation for all airlines in Europe."

But then, he says, Ryanair became "more monopolistic. They took over airports and actually got rid of other airlines that were flying in and out of those airports.

"Take one example: they're in Shannon for around three years now and in that time Shannon has lost seven or eight different airlines. Ryanair are now doing roughly two out of every three flights in and out of Shannon so it's become a Ryanair airport, while other airlines are being squeezed out. That's what happened to Aer Lingus. Ryanair got rid of EasyJet out of Knock; it went in on the Knock-Stansted route and when EasyJet left the Irish market, Ryanair pulled out of Knock-Stansted."

Ó Céidigh believes that as Dublin airport becomes more "slot-controlled" and more like Gatwick - where slots (a right to land an aircraft) cost from £1 million to £7 million - Ryanair is eyeing up Aer Arann's slots in Dublin. "They have about 40 big new airplanes on the ground now - 737-800s - that are not flying. Just parked. They could potentially be used in Dublin; plus the stronger Ryanair gets in Dublin, the more control they will have."

So by this analysis, O'Leary looked for Aer Arann's Achilles heel and found it on the Dublin-Cork route (a 20-minute flight) and the Kerry-Dublin route (a PSO). Between them, they accounted for about a quarter of the smaller airline's regular traffic.

O'Leary increased capacity by about 200 per cent on the Cork-Dublin route, despite what Ó Céidigh perceives as dodgy economics, including using 189-seater planes more suited to one- or two-hour flying sectors than a 20-minute flight. "He spends more money taxiing out of Dublin airport than I do in flying from Dublin to Cork in my small airplanes. How could he be making money on that?"

As for the Kerry-Dublin route, Ryanair now runs three flights a day. When Ryanair bid for the route three years ago, it looked for a subsidy of roughly €3.5 million, according to Ó Céidigh. When it bids again this year, "despite the way fuel is gone, wages the way they are, airport costs about 50 per cent higher", it looked for about €1.7 million. "The reason they were looking for smaller money was to get us out of it."

But isn't that capitalism for you? Isn't Michael O'Leary simply being what Tony Ryan wanted him to be?

"No. Not in my view. I knew Tony Ryan . . . He telephoned me to meet with him shortly before he passed away last year. I was actually on my way out to see him when I got a call to say that Tony was being taken to hospital as we spoke and he didn't come out after that. I don't know why he wanted to meet with me but he did."

So is he saying that O'Leary's tactics are unethical? "Ethical isn't the right word. I'd call it absolutely ruthless strategy to get what you want to get, regardless of the consequences - and to go through or step over whoever or whatever, in order to get there."

But since that has always appeared to be Michael O'Leary's proud business strategy, why is he surprised?

"It does surprise me. Really it does. Maybe I'm being naive. I thought that deep inside there someplace, there was a sense of fairness and equity, a sense of where he came from himself, a sense of Irishness and pride. I really thought that deep down he would recognise that - look, he got breaks, he had a sugar daddy or a money daddy behind him who gave him a significant percentage of the company free and supported him along the way, and got Aer Lingus to step aside to give them routes for nothing.

"I thought he might say something like, 'Look, you're a fellow Irishman, you didn't have that money, you didn't have that kind of support, you're never going to be competition to me, so live and let live'. I really thought that would be the situation. Honest to goodness. That's why I went to meet him."

AH YES. THE MEETING. THERE ARE two versions of the 45-minute tête-à-tête called by Ó Céidigh, in O'Leary's office. Ó Céidigh is adamant that O'Leary said: "If I were you now, I'd f**k off back to Connemara where you came from . . . sell the f**king airline and get out of it because it's not going to work for you."

Ó Céidigh says he accepted this in the spirit of expert advice, albeit couched in O'Leary language, but that he was much more annoyed by O'Leary's pretence to play the violin on a couple of occasions.

O'Leary later denied that he ever told Ó Céidigh to "feck off to Connact or anywhere else", insisted that he encouraged Aer Arann to stay on the Cork route and that Ryanair was "not going after Aer Arann" and, all in all, said he couldn't have been nicer to a fellow airline executive.

This is not just about Aer Arann's survival, he says : "It's in Dublin airport's interest and in the national interest to have a lot of airlines flying in and out, to make sure that no one airline has a monopoly on the country's principal airport or its second, which is Cork."

GOOGLE Ó CÉIDIGH AND OUT FROM among the many accolades and cuttings springs a website apparently centred on Cork airport and seemingly written by an aviation insider, accusing the airline of incompetence, unreliability, unpunctuality; of losing money, of being "doomed" and "quite happy to live off PSOs".

Ó Céidigh glances through it - he has not seen it before - and for the first time he looks winded. "It's lies, pure and simple. It's certainly defamatory. But a lot of thought has gone into it and it's by somebody who knows aviation. For the record, our reliability out of Cork is 99 per cent. Our punctuality out of Cork is about 90 per cent. PSOs are about 12 per cent of our total income now; it was 85 per cent three years ago. And we didn't make a loss in 2007; we made a profit."

But there is no doubt that these weeks are seeing Ó Céidigh fighting for Aer Arann's survival. And there's no doubt that he would sell up to the right buyer.

"I've no interest in aviation. To me, an airplane is a bus with wings on it. It's just a business. I was hopeful I could make money at it and at the same time provide services to the regions of Ireland that are entitled to those services. I've made some money. As for providing services, I've absolutely done that and it has worked far better than I ever imagined. I'm particularly proud of that."

Whatever happens, he is financially secure, if worth nothing like the €81 million attributed to him in this year's Sunday Times Rich List: "I don't know how they assembled that figure; no one checked with me."

With the exception of investing around €25,000 in bank shares and €5,000 in CRH, his money has been ploughed back into his half-dozen other businesses. They include an outsourcing company, a maintenance business and Foinse, the Irish-language paper, which clearly means more to him than any airline.

The Ó Céidighs are not a "pretentious" or "show-off" family and live quietly. The fine six-bedroom house to which they moved a year ago lacks the ostentation considered de rigueur in recent years. Their honeymoon was a house swap; they went to San Francisco and since then, most of their holidays have been swaps. He is passionate about rugby - he played full-back - and sponsors Connacht as well as Galway's GAA team.

He's the kind of Catholic who only goes to mass "the odd Sunday" but a heavy clue to the inner Pádraig Ó Céidigh lies in his latest passion: "To use a business term, there's a big gap in the market, a huge gap, for this. In Ireland, we've gone very, very weak on - you'll think I'm cracked - spirituality."

While teaching, he noticed students coming back from the French retreat Taizé, "and those kids would be affected in some significantly positive way. So I wanted to create an Irish Taizé, a spiritual centre of excellence. I've set up a structure with the Redemptorists at Esker in Athenry where they have about 150 acres of land, a monastery and buildings and it's going to be a centre where people, not only from Ireland but all over the world, can hopefully develop their uniqueness and spirituality."

The Redemptorists asked him what was in it for him. "I said I'd love my kids to do that kind of stuff. That's what's in it for me."