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MANAGEMENT GIANT
Aristotle Onassis
Timeline
1900 Born. 1922 Turks recapture Smyrna. 1923 Onassis sets sail for Argentina and a new life. 1931 Made Greeces deputy consul to Argentina. 1932 Buys six ships in Canada. 1938 Ariston, first 15,000 ton tanker, launched. 1940 Two-thirds of fleet sequestered. 1946 Marries Greek American, Tina Livanos. Settles in New York. 1947 Forms United Petroleum Carriers. Buys T3 tankers. 1950 Starts whaling fleet. 1956 Starts Greeces first privately-owned national carrier. 1968 Marries Jacqueline Bouvier Kennedy. 1975 Forced to hand over Olympic Airlines to the Greek government. 1975 Dies.

Summary
The son of a wealthy tobacco merchant, Aristotle Onassis could have taken over his fathers business but instead chose to make his own fortune. He traveled to Argentina and built his own cigarette business through a mixture of guile, networking and bravado. With the profits from tobacco he bought ships and, with the help of some cunning financing, built one of the largest commercial fleets in the world. Later in his career he took control of the Greek national airline. Onassis life was one of adventure. His business affairs often bordered on the brink of illegality. Toward the end of his life, his business empire began to curl at the edges. Yet he still deserves recognition for fashioning a hugely profitable business empire from scratch.

Background and Rise

Aristotle Onassis was born a Turkish citizen, in the port of Smyrna, Turkey on January 20, 1900. Onassis Greek father had come to Smyrna to take advantage of the economic opportunities he was told existed there: he worked an apprenticeship with a merchant, and then started his own import-export business. By the time Onassis was born, his father was a successful tobacco dealer.

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Tragically Onassis mother died in 1909 when he was nine years old. Onassis cared little for school and produced consistently poor grades. He told his stepmother, great scholars do not make good businessmen and are seldom rich. After World War I Smyrna was occupied by Greece, an act approved by the Allies, but in 1922 it was recaptured by the Turks. Onassis family was interned in a prison camp, but the resourceful Onassis lied about his age and convinced the authorities that he was too young to go to the camp. Shortly after he managed to organize a rescue for his family, getting the women and children back to the safety of Greece. This mission accomplished, Onassis was disappointed with the lack of appreciation from his father, who was saved from certain death. Declining to go into business with his father, he decided to join relatives in Buenos Aires. On August 27, 1923, with $250 and a third-class ticket in his pocket, he set sail for Argentina and a new life.

Defining Moments
In Argentina Onassis, with the help of some Greek contacts, found a job as a telephone operator. When he wasnt putting calls through, he was scouring the financial pages of the press for investment opportunities. His forays into stocks earned him $700. His next venture was into the tobacco business. He manufactured his own cigarettes and then expanded to import tobacco from Greece. He ran into a problem early on when Greece announced that it was applying a 1,000% increase in taxes on those countries with which it did not have a trade agreement. Argentina was one such country. This meant taxes on the tobacco Onassis imported would be prohibitive. Rather than capitulate, Onassis boldly drafted a memo to the Greek government informing them how such punitive taxes would ruin Greeces sea trade. He delivered it by hand. The government didnt change its policy, but it did appoint Onassis as Greeces deputy consul to Argentina. Next, Onassis attempted to buy a ship and set himself up in the shipping business. He trawled Europe in the hope of finding a suitable vessel, but returned disappointed. Finally he was tipped off about some ships in Canada. The ships belonging to the Canadian National Steamship Company were anchored in the Saint Lawrence River, on sale at $30,000 apiece. Onassis, in full view of the authorities, crawled over every inch, frowning and making lengthy notes. He bought six, for $20,000 each. Before long Onassis, with no experience in the shipping business, encountered a major problem. One of his ships was delayed at Rotterdam. The Port Authority refused to allow the ship to offload its cargo. One of the crew was ill and needed to be replaced with another Greek national, as the ship was sailing under the Greek flag. An incensed Onassis flew to Rotterdam to argue with the authorities. It did him no goodthe boat was forced to unload in Copenhagen, wasting valuable time and money. Determined that this should not happen again, Onassis consulted his lawyers and together they came up with the idea of registering the ship under the Panamanian flag. This had considerable advantages in

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terms of tax liabilities and easing the regulatory burden. This practice became widespread in the industryknown as sailing under a flag of convenience. When World War II came, it threatened to scupper Onassis plans for expansion. He had commissioned a Scandinavian firm to build the biggest oil tanker ever at 15,000 tons (6,000 tons heavier than the previous biggest). He named it Ariston. In addition, he commissioned a second. But the outbreak of hostilities meant that the vessels were sequestered. In 1940, two-thirds of his fleet was removed from operation in one stroke. Onassis was forced to do some rapid maneuvering and sell two cargo ships to Japan. His personal fortune took a knock-down from $8 million to $2 million, but he was still in business. A combination of his deal-making skills and luck meant that Onassis emerged from World War II relatively unscathed. His remaining ships, leased to the United States Navy for $250,000 a year, were still intact. Similarly his oil tankers, impounded in Scandinavia, were undamaged. Of the 450 Greek ships involved in the war, 360 had been sunk. Onassis did not lose a single vessel. His business was in better shape than ever. After the war, Liberty Ships built by the United States Navy were put up for sale. Onassis put in a bid for 13 but was allotted none. He was cut out by the Greek shipping families, who regarded him as a parvenu. He vowed to get his own back. As well as the Liberty Ships, a number of oil tankers were available to American companies. Onassis formed an American companyUnited States Petroleum Carriersfronted by prominent American businessmen and then, having bought the tankers, obtained a controlling interest through his Panama-based holding company. He followed up his audacious coup by arranging a $40 million loan to build five new tankers. He negotiated the charters for the new tankers with the major oil companies long before the ships were completed. His business acumen soon earned him the sobriquet of the Golden Greek. By 1946, Onassis had the biggest shipping company in the world. He yearned for respectability, particularly in the United States. He married a Greek American, Tina Livanos, in December 1946 and settled in New York. For a while his ships were built in the United States but, as ever, Onassis was on the prowl for the best deal. When shipbuilding became too expensive in America, he turned to the shipyards of Hamburg where his tankers had been built before the war. Postwar Hamburg was desperate for the business, but the Potsdam Accords limited German-built ship tonnage to 15,000 tons. The Potsdam Accords did not reckon on the ingenuity of Onassis, however. As usual, he and his lawyers found a loophole. There were no restrictions on whaling ships. Onassis took up whaling. For a number of years, Onassis operated the largest whaling fleet in the world, largely unregulated. This came to an end in 1954, when he fell foul of the Peruvian authorities. Once before, Onassis had allowed his fleet to stray illegally into Perus territorial limits. When the Onassis whaling ships approached Peru in 1954, they were machine gunned, bombed and forced to put in at Lima. Four hundred sailors were imprisoned and five ships sequestered. Once again, Onassis managed to wriggle his way out of a tight spot.

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He had insisted on an extremely wide wording on his insurance, so that when the Peruvian government imposed a fine on him, it was the insurers who paid. Onassis got his ships back, but the whaling was finished. In March 1956, he disbanded his whaling fleet and sold it to Japanese interests. Along with the difficulties over his injudicious whaling, Onassis had been fighting charges of fraud filed by the United States government and trying to cement an audacious bid to monopolize the shipping of Saudi oil. Onassis entered a guilty plea on behalf of his company, and the United States Justice department dropped its charges. The Saudi deal fell apart, although he did pick up some lucrative contracts. The failed deal cost Onassis a lot of money and dealt a lasting blow to his reputation and pride. Master of the waves for two decades, Onassis decided to take to the skies. In 1956, he started Greeces first privately-owned national carrierthe first in the world. The airline was named Olympic Airways. The fleet of aircraft was limited to 12 DC-8s, a Dakota and one DC-4. But Onassis arranged for two international flights, one to Paris and one to London. For agreeing to take over the national fleet, he was rewarded with extremely advantageous terms. He was given a monopoly for 20 years, reimbursement for losses due to strike action, exemption from land taxes and other tax benefits. Still Onassis wasnt satisfied, squeezing more concessions out of the government, including an extension on the monopoly until 2006. In his inimitable style, he created a complex financing arrangement involving a Panama-based company and the aviation giant Boeing, and leasing agreements, which swiftly recouped his investment of $8 million. In his last years, Onassis was badly shaken by the death of his son Alexander in an airplane accident. His business affairs, the day-to-day handling of which had been delegated years before, were in a poor state. For most of his life Onassis kept an iron grip on his empire. In his final years, tired and ill, he suffered a series of business setbacks. The oil crisis of the early 1970s meant that much of his fleet was idle. In January 1975, he was forced to hand over Olympic Airlines to the Greek government after the junta led by the colonels was overthrown. A major property deal turned sour. Onassis socializing and flamboyant personal life had taken the edge off of his once razor-sharp business acumen. He had lost his enthusiasm for business. In February 1975, he had an operation to remove his gall bladder. He never fully recovered and died on March 15, that year.

Context and Conclusions

To say Onassis life was colorful would be an understatement. His playboy reputation, marriages, affairs and extravagances are well documented. But there was a good deal more to Onassis than fabulous wealth, Maria Callas, and Jackie Kennedy. He started business in Argentina with very little. The construction of his business empire required the type of personality and skills that set entrepreneurs and leaders apart from others. Onassis was fiercely driven throughout his life by a desire to succeed, which in turn was founded on a need to prove himself to his family and outdo his rivals. However, drive

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alone isnt enough. Onassis possessed excellent networking skills, coupled with an eye for a bargain and the ability to negotiate. His career did encompass less savory aspects, bribery, for example, but he certainly wouldnt be the first or the last businessmen to grease the wheels. Onassis doesnt rank alongside the great managershe was never a team player. Instead he merits comparison with eccentric but brilliant men such as Howard Hughes and William Crapo Durantmen who lived a life finely balanced between astonishing success and terrible failure.

Close But No Cigar

Stavros Niarchos Born into a wealthy family in 1908, the career of Greek shipping tycoon Niarchos was defined by a lifelong rivalry with Aristotle Onassis. Much of Niarchos shipping fleet, built up with the help of his uncle, was destroyed during World War II, in which he served as a naval officer. The $2 million in insurance money he received as a result assisted in the rebuilding of his fleet. In the 1970s, after the oil crisis, he sold some of his companies and concentrated on diamonds and finance. Niarchos main ambition in life seemed to be to outdo Onassis. He built supertankers at the same time as Onassis; he became a billionaire like Onassis; he married Onassis ex-wife. He did manage to surpass his rival at least oncehe died in 1996, 21 years after Onassis.

For More Information

Books: Evans, Peter. Ari: The Life & Times of Aristotle Socrates Onassis. New York: Summit Books, 1986. Fraser, Nicholas, et al. Aristotle Onassis. Philadelphia, PA: J. B. Lippincott Company, 1977.

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