In today’s context, that’s no bad thing. In the late 1990s, fuel and oil accounted for about 15% of Ryanair’s operating expenses. In 2007 it was close to 40%. “We’re trying hard to maintain a high double-digit, after-tax margin in the face of those kind of increases,” Cawley says. “The fuel issue is largely out of our hands, except that we can hedge and get some certainty, albeit at very high prices. We can hedge, say, at $100 a barrel, but is there value in that if it falls to $90?”
Managing rapid growth also carries challenges. Amid EU expansion and regional deregulation, Ryanair has introduced new routes and bases rapidly, and Cawley says the company aims “to roll out the same standards even as [it becomes] geographically more diverse and more distant from the centre.” In what might be seen as an unflattering analogy, he compares a Ryanair flight to a McDonald’s Big Mac burger — customers expect it to be the same wherever they are in the world. To achieve such standardisation, all of Ryanair’s planes have computers in the cockpit that monitor “hundreds of parameters” in the flight, which are fed back to a department in Dublin that checks whether they vary from what Cawley and colleagues deem necessary standards.
Despite looking back fondly on his achievements while CFO, such as the IPO, Cawley says he never expected to stay long in finance at Ryanair. One reason was that when he arrived at the company, finance was in the capable hands of Howard Miller, the finance director. “He was a particularly strong member of the management team and I guess without an IPO, there probably wouldn’t have been any need for a CFO per se,” he says.
When Cawley became COO at the beginning of 2003, Miller was promoted to CFO. Cawley now focuses on the company’s commercial activities, rattling off a list of responsibilities that runs from negotiating with airports and planning routes to overseeing sales and marketing. He also shares the deputy-chief executive role with Miller. Either could be O’Leary’s successor when he retires. When that time will come is uncertain. In 2007, O’Leary said he may step down within three years, although he also pointed out that he’s mooted retirement dates several times previously but can’t seem to stick to them. As Cawley says, “This business never ceases to surprise.”
1998: CFO, Allied Irish Bank
2008: CFO, Home Credit
Ten years ago, like a banking version of Nostradamus, Declan McSweeney made a prediction. Speaking with CFO Europe in late 1998, the then-finance chief of Allied Irish Bank reckoned that the arrival of the euro would help accelerate the long-awaited cross-border M&A in financial services. Given last year’s hostile break-up of Dutch bank ABN Amro at the hands of a pan-European banking consortium, his prediction may finally be coming true.
Now, amid the credit turmoil, the 55-year-old Irish industry veteran sees more deal-making ahead. “The strong companies — and by that I mean those that are strong from a capital, funding and liquidity perspective and that have excellent asset quality — will see opportunities in this downturn,” McSweeney says. “I think over the next 12 to 24 months we’ll see a lot of acquisitions.”