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Aviation Sustainability: In Conversation with SFS Co-Founder Agnes Thornton

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Petro Visage

Introduction:

The aviation industry is responsible for 3% of the world’s carbon emissions – a footprint that could swell to a staggering 27% by 2050 if we were to continue business as usual. In its 77th Annual General Meeting in October 2021, the International Air Transport Association (IATA) passed a resolution for the global air transport industry to achieve net zero carbon emissions by 2050. It is, however, widely acknowledged within the sector that reaching this objective poses a substantial challenge. Balancing emissions reduction with the growing global demand for air travel in a post-COVID-19 era presents a delicate equilibrium to be struck.

TBR’s Deputy Editor, Petro Visage, sat down with Agnes Thornton, co-founder of Sustainable Flight Solutions (SFS) to explore potential opportunities for sustainable aviation in Ireland.

Sustainable Flight Solutions: Pioneering Sustainable Aviation

Founded by Agnes Thornton and Darren Carty, SFS is an innovative project development company focusing on the production of Sustainable Aviation Fuels (SAFs) in Ireland and abroad. SAFs are alternative fuels used in commercial aviation, capable of reducing CO2 emissions by up to 80%. SAFs can be sourced from various materials, including waste fats, oils, greases, municipal solid waste, agricultural residues, and non-food crops grown on marginal land. This newly developed fuel source is considered sustainable as they do not compete with food crops, require minimal additional resources like water or land, and do not contribute to environmental issues such as deforestation or biodiversity loss. Unlike fossil fuels that release sequestered carbon, SAFs recycle CO2 absorbed by their feedstock biomass during growth, reducing their overall carbon footprint.

The firm’s mission is rooted in a shared responsibility to drive the decarbonization of the aviation sector, both regionally in Ireland and on a global scale. By fostering collaborations with industry partners, academia, and technology providers, SFS is actively engaged in research and development efforts.

The Inspiration Behind SFS: A Journey to Sustainability

SFS was inspired by a shared vision for a more sustainable future in the aviation sector. Both Founders of SFS are airline pilots; during the COVID-19 pandemic, fewer working hours enabled the pair to embark on higher education, focusing their research on SAF Life Cycle Analysis and SAF implementation for industry through a post-graduate Diploma in Sustainable Systems Engineering and an MSc in Aviation Management, respectively. As the team expanded to include expertise in aircraft leasing and financing with the addition of Aidan Bodkin as third director, their collective vision for a more sustainable future for the aviation sector came into sharp focus.

Thornton and Carty understood that the aviation industry needed changing if it were to continue. “Sustainability is imperative for the industry to survive in the long run”, Thornton explains. Knowing this, a concerning observation was that while many studies were done on SAF here in Ireland, there was a gap between academia and industry, with significant interest by firms with minimal information. SFS Ireland then started to bring the needed conversations to the table, starting as an advocacy group to spread awareness on SAF and other sustainable practices. Soon, they hosted workshops with academics and stakeholders across supply chains to spark conversations around potential solutions.

Agnes explains that the road to making aviation more sustainable is long and tedious, but initial, encouraging steps have been taken in Europe and world-wide. SFS believes that Ireland has an important role to play in the development of SAFs and are therefore actively engaged in projects to facilitate the transition, from R&D to feasibility studies and policy discussions.

Feasibility Study with SkyNRG: A Significant Step Forward

One significant milestone in SFS’s journey was a comprehensive feasibility study carried out with SAF producer SkyNRG. This study, conducted in collaboration with industry giants Avolon, Orix Aviation, and Boeing, assessed the commercial viability of a Sustainable Aviation Fuel (SAF) production in Ireland.

The EU’s ReFuelEU initiative presently requires a phased elevation in the inclusion of SAF in aviation fuel at EU airports, commencing at 2% by 2025 and ultimately achieving 70% by 2050. Released last Wednesday, the report found that Ireland has the potential to establish a €2.55 billion annual sustainable aviation fuel (SAF) industry, generating over 1,000 highly skilled jobs by 2050 if it meets these targets.

The study, funded by industry leaders, marks a promising step towards reducing the aviation industry’s environmental footprint.
That being said, the report accentuates the necessity of executing well-structured policy modifications to enable the comprehensive growth of this industry. It advocates for business incentives, such as tax credits and guaranteed pricing, while emphasising research and development funding and planning process reform. Moreover, the report stresses the need for investment in storage and transport infrastructure, along with public-private collaboration. For an actualisation of a prosperous SAF sector in Ireland, industry players must collaborate in establishing and effectively enacting vital policies. In light of these recommendations, it is worth noting that Minister for Enterprise, Trade and Employment Simon Coveney underscored the government’s steadfast commitment to initiatives focused on emissions reduction in air travel when presenting the study last week.

Overcoming Barriers to Sustainability: The Road Ahead

When asked about the challenges in adopting sustainable practices in the industry, Thornton pointed out a variety of measures beyond just SAF, including improved operational procedures, enhanced air traffic management, and the use of fuel-efficient aircraft and engines. These measures are collectively needed to work towards industry-wide emissions reduction goals.

However, significant progress has been made with the recent ReFuelEU proposal, which mandates SAF use, thus providing a clear direction for the industry. This proposal mandates SAF use by putting an obligation on fuel suppliers to blend a certain percentage of SAF into their jet fuel supply, starting with 2% in 2025, and stepping up to reach 70% by 2050 as mentioned prior. A sub-mandate is also relevant to note, which ensures that part of the SAF is of non-biological origin, so called “synthetic fuels”. This agreement is a significant milestone, as it sets out the ambitious targets from the EU and gives more certainty and clarity to investors and SAF producers alike.

The primary hurdles in advancing sustainable aviation fuels (SAF), Thornton explains, include issues related to scalability, feedstock supply, and insufficient investment due to lingering uncertainties, as the implementation of EU policy requires national-level adoption. While the EU agreement marks an initial step, long-term certainty necessitates the establishment of a robust national policy.

To address these challenges, strategies under consideration involve the implementation of an EU SAF mandate and ongoing policy discussions. These discussions are showing promise in instilling confidence among investors, particularly those involved in capital-intensive SAF projects.

Regulatory Changes and Trends: Navigating a Greener Sky

In recent years, there has been significant regulatory changes pushing for sustainability within the aviation sector some of which include:

1. Renewable Energy Directive (RED III): On September 12, 2023, European Parliament members officially passed revisions to the Renewable Energy Directive (RED III), facilitating the adoption of renewable energy across EU member states.

2. ReFuelEU Aviation Initiative: on October 9, 2023, the EU Council approved the ReFuelEU Aviation initiative as a fundamental component of the ‘Fit for 55’ package, initially introduced by the European Commission on July 14, 2021. The primary objective of this package is to reduce greenhouse gas emissions by a minimum of 55% by 2030, ultimately achieving climate neutrality by 2050.

3. CORSIA Implementation: Commencing from 2027, the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) will be mandatory in most nations. Differing from the EU ETS, which sets emissions caps, CORSIA permits emissions to rise while mandating compensation through offsets. In 2022, the EU Parliament and European Council mutually agreed to integrate CORSIA into their emission monitoring framework and gradually phase out free aviation allowances by 2027. Ireland took an active step by embracing CORSIA regulations in 2021 during its initial stages.

However, Thornton emphasises the significance of the Climate Action Plan for 2024, expressing hope for a more comprehensive acknowledgment of aviation compared to previous initiatives. “Unfortunately, Ireland has been somewhat lacking in ambition in this regard, but we are encouraged by positive trends and anticipate the integration of Sustainable Aviation Fuels (SAF) in future climate and transportation discussions,” Thornton explains.

The Future of Sustainable Aviation: Collaboration and Consciousness

Thornton strongly believes that a more sustainable aviation industry is achievable. However, she emphasises that this goal can only be achieved through a collaborative and conscious approach by everyone involved. Stakeholders from all sectors need a clear understanding of the environmental impact of air travel, the opportunities presented by sustainable fuels, and the importance of policy support to aid the transition towards a sustainable future for the aviation industry. The future of sustainable aviation is promising but requires a collaborative and conscious effort to properly meet the state of the sector.

Fostering Sustainability in Aviation: Advice for All Stakeholders

Thornton emphasises the various avenues for bolstering a sustainable aviation sector. Some include conscientious travel, participation in Sustainable Aviation Fuel (SAF) procurement programs, and advancing awareness through education.

Businesses, in particular, can play a pivotal role by setting an example, educating their workforce about the environmental impact of air travel, and exploring pathways to minimise their emissions. Firms should explore corporate initiatives to procure SAF for their business travel needs, thereby stimulating SAF production through voluntary contributions.

National policymakers have been given a clear task by the recent ReFuelEU initiative: to demonstrate commitment to a future SAF industry, it is imperative that they swiftly and consistently implement the regulation on a national level.

While success stories from industry frontrunners such as the Lufthansa SAF program, the SAS SAF Program, the IAG SAF Roadmap, and the JetZero Council showcase the economic and competitive advantages achievable through sustainable aviation practices, Thornton cautions against the lurking threat of greenwashing. Maintaining robust governance and transparency remains essential to empower customers to make well-informed decisions regarding their individual contributions.

Read more about SFS initiatives at:

SFS Ireland

To learn more about SAF:

https://www.iata.org/en/iata-repository/pressroom/fact-sheets/fact-sheet—alternative-fuels/

TES Startup Weekend: A Fresher’s Perspective & Success Story

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Daniel O’Brien

The echo of creative minds at work reverberated through Trinity Business school during the annual TES Startup Weekend last weekend, where a generous €3000 prize awaited the boldest startup pioneers.  TBR correspondent, Daniel O’Brien, plunged headfirst into the event and shares his experience. 

Starting with a bang

Geared toward students interested in entrepreneurship, the weekend began on Friday evening with a high-energy brainstorming session where attendees were divided into groups, each comprising a diverse mix of backgrounds and expertise. The goal of this exercise was to generate innovative business ideas that could potentially solve real-world problems. My group for this activity was nothing short of diverse, including a fourth-year Law and Business student from UCD, a 4th year Electrical Engineering student, a Postgraduate Computer Science student, a Postgraduate Entrepreneurship student, and myself. I was greatly impressed by the seriousness and quality of those in my brainstorming group; the team was active and vocal in sharing their ideas and the problems that they wanted to solve. 

Day one surged ahead with great momentum, as Joseph Lanzillotta took the stage to deliver a captivating discussion on the Trinity entrepreneurship pipeline—an enlightening revelation that held my attention completely. We had a walk-through of the amazing tools Trinity has for those who want to build companies, with the key tool being the Open Incubator – a platform that allows you to plan your business ideas and organize key parts of your business. Mr. Lanzillotta is an entrepreneur himself, having founded a machine learning business related to beekeeping. The particularly enlightening part of his address delved into the transition from problem to solution. It involved reshaping the original problem into a tool that consumers could employ to tackle the issue. The timing of this talk was impeccable, considering I had arrived without a business concept or a problem to tackle. As such, Mr. Lanzillota was really able to get me thinking about what problems I had that I would like to find solutions for, and how to transform these ideas into products. 

After this talk, we had the chance to walk around and meet individuals in other groups. This was particularly enticing as it allowed me to learn about the 16 ideas in the room and the entrepreneurs behind them. During this time, it became clear how diverse the number of ideas were: from physical products like drinks and makeup, to digital products like new tools for consumers and new infrastructure for businesses. This segment was beyond what I had originally conceived for the event, as it offered the opportunity to engage with an idea or group without the need for a fully structured concept. The first day concluded with us finalizing groups. In my case I decided to partner with two people from my brainstorming table, despite most people joining groups and ideas other than the ones that they had initially brainstormed with.

Day 2: Shifting to a higher gear

The second day was all about developing our pitch deck and fleshing out our ideas. These decks were needed to effectively communicate the problem, solution, target market, competitive analysis, revenue model, and the potential impact of our ideas. Personally, I found this to be the most challenging –  grappling with the intricate task of distilling the crucial elements of our idea into a brief 5-minute presentation. Thankfully, we then heard from Anthony Quigley, a serial entrepreneur, speaking about his journey and advice on how to pitch our businesses. His talk featured a long Q&A session, which was a fantastic chance to discuss ideas and skills with someone who is highly acquainted with starting and running a business. Mr. Quigley has been in the process of company creation for 30 years, and I found his insights to be especially relevant to the room. Between his initial talk and the long Q&A session, Mr. Quigley’s ideas played a substantive role in helping my group make decisions on the formulation of our slides. 

Also during the Saturday slide making activity were two mentors, Liam Junkermann and Charles Cullen, who walked around and discussed their experiences with each group. My group had the chance to talk with Mr. Junkerman, discussing both his experiences as a founder of Imprint Esports. This was a fascinating opportunity to glean insights from an entrepreneur’s journey that was catalyzed by the Trinity Entrepreneurial Society.  He also provided valuable insights into the feasibility of my group’s idea along with practical tips on our presentation regarding what to include and how to format it. 

Day 3: The grand finale

The zenith of the weekend came on the third day, with the opportunity to pitch our ideas to a panel of venture capitalists. Each group had 5 minutes to present their pitch, followed by a Q&A session that lasted about 3 minutes. After arriving on the third day, we were introduced to a panel consisting of Joe Gorman, Dick Bourke and Zaur John Unsizadeh. Gorman works at Dogpatch labs, a startup and innovation hub in the Docklands, with Dogpatch being part of a global network of 50 startup hubs supported by Google.  Bourke is the founder of Scorebuddy, an internal tool used by call centers. Unsizadeh is a TCD alumni and now runs the Tangent workspace in the Trinity Business School, working with more than 100 startups on their business models. 

Needless to say, the opportunity to present to such an experienced and connected panel was the cumulative highlight of this weekend, and presented a chance for participants to do something very few first year students get a chance to. As the fourth presenting team among 16, the time had come for my group. We entered the presentation room with a mix of anticipation and nerves, and embarked on our pitch. The panel was very engaged throughout the pitch and followed up with questions covering all parts of the idea – from monetisation to implementation. 

Following the presentation the team awaited the results, with 12 more groups to present; this lasted several hours but was some of the most enjoyable time spent all weekend.  Participants were truly remarkable, and with nothing left to do but wait, it was the perfect time to engage in conversation and further acquaint ourselves with the attendees.

After a few hours of anticipation, it was time for the winners to be announced. The room buzzed with excitement!  Much to our elation, my group emerged victorious and was honoured to receive the coveted €3000 in business expense funding. As the event was wrapping up, it was apparent to me how many of the groups were going to continue with their business ideas, many of whom had no idea of a business problem before the weekend. It was clear that nearly everyone had found an idea that they wanted to pursue further.

Conclusion

For me, the real hidden value in the event was a chance to meet other like minded individuals and spend time thinking and learning alongside them. The array of highly qualified guest speakers really gave participants every chance to build new business skills, and I was especially impressed by how accessible the event was for people without pre-existing ideas, experience, or formulated groups. Overall, I highly recommend attending future TES startup weekends for anyone who has ever had an interest in any form for starting a business.

To find out more about Trinity Entrepreneurial Society, visit https://testrinity.com/. 

Or, follow them on instagram here: https://www.instagram.com/testrinity/ 

Budget 2024: An Economic Analysis

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Natalie Kollrack

In speeches to Dáil Éireann last Tuesday, the 10th of October, Minister of Finance Michael McGrath of Fianna Fáil, and Minister of Public Expenditure, NDP Delivery, and Reform Paschal Donohoe of Fine Gael unveiled the 2024 Budget. Key themes in this year’s budget included supporting Ireland’s current society and augmenting sustainability, while also considering future implications of increasing public expenditure. The total budget package was to the tune of €14 billion, funded in part by €250 million from windfall corporation tax receipts. Interestingly, the government, boasting a budget surplus of €8.8 billion, would have encountered a €2 billion deficit were it not for the windfall corporate tax receipts. This article provides an overview of the primary provisions and delves into the criticisms raised by economists regarding its potential ramifications.

Housing

Minister McGrath detailed efforts from the government regarding housing – a prevalent issue in contemporary discourse. McGrath announced that homeowners with an outstanding mortgage balance from €80,000 to €500,000 on their house will receive a one-year Mortgage Interest Tax Relief. This will cost about €125 million and will benefit about 165,000 mortgage holders. The Rent Tax Credit has been increased from €500 per year to €750 per year, a temporary tax relief to keep small landlords from leaving the market. Additionally, the Help-To-Buy Scheme, the Vacant Homes Tax, and the Residential Zoned Land Tax are all intended to be extended. Lastly, Minister Donohoe reported that there are plans for 29,000 homes to be constructed by the year’s end, with 21,000 already built.

Finances

Minister McGrath celebrated falling inflation, with an estimated rate of 5.25% for September this year, and predicted a 2.9% inflation rate for 2024. In response to inflationary challenges, McGrath and the Department of Finance have escalated public spending from 5% to 6.1%, even as they anticipate income growth outpacing inflation due to a thriving economy. Their plan is to revert it to 5% as inflation diminishes.

Additionally, the government has also increased personal income tax to support workers and achieve efficiency in the labour market: the cutoff point for the lower income tax bracket has been raised by €2,000 for both single and married individuals. On the wage front, the national minimum wage has been increased by €1.40 to €12.70 per hour.  The Universal Social Charge, or USC, has been decreased for the first time in five years, from 4.5 to 4%, and the threshold for USC will be raised to €25,760. Finally, the government has introduced the Future Ireland Fund, made to support future government expenditure, which will receive a 0.8% investment of GDP annually.

Education & Health

Minister Donohoe has allocated a significant proportion of the budget to the Department of Education. Regarding higher education, he announced a once-off reduction of €1,000 for students qualifying for free fees, as well as payments to help students with secondary education. For the health sector, Minister Donohoe announced additional recruitment to increase healthcare staff, as well as continued investment in public health and vaccinations. To combat smoking, Minister McGrath announced an increased excise duty on tobacco products, raising the price of cigarettes to €16.75, additionally proposing a domestic tax on E-Cigarettes in next year’s budget.

Climate

Minister McGrath has taken steps to address climate change concerns by launching the Infrastructure, Climate, and Nature Fund, which is set to increase to €14 billion by 2030. The fund’s financing includes an annual contribution of €2 million and a share of the windfall from corporate tax receipts. On the public transportation front, Minister Donohoe has introduced funding for cycling, walking, and Greenways infrastructure, with additional fee reductions being introduced to encourage the usage of public transportation. Regarding energy, Minister Donohoe mentioned a target of 80% of electricity coming from renewable electricity in 2030, as households prepare for the cold winter ahead. Additional funding to increase environmental sustainability and to support farmers was also cited. Last but not least, Donohoe announced that approximately half of the income from carbon tax revenues will be reinvested to enhance energy efficiency in homes.

Other

Less prominent but nonetheless important, in the digital sector Minister Donohoe announced funding in the National Broadband scheme, extension of broadband to rural communities, and investment in cybersecurity. Funds have been allocated to the tourism sector, creative arts sector, the Gaeltacht, and sporting infrastructure as well. Support for the justice sector involves investment in Gardaí recruitment, an increase in the Gardaí budget, and investment in the defense sector. Funds have been allocated for foreign aid to developing countries, especially for those struggling with the impact of climate change. Finally, investment has been announced in peace-promoting and other cross-border projects with Northern Ireland.

Reception from Economists

Measures on housing have been met with heavy criticism from economists. David McWilliams, Irish economist and writer, argues these measures have done nothing to make housing more affordable and available. Instead, these measures are contradictory and only help existing homeowners, not first-time renters and buyers. In theory, the rising interest rates Ireland is currently experiencing should increase the cost of borrowing, thus decreasing the amount of money people can borrow, decreasing the size of new mortgages on houses for sale, and decreasing housing prices. Therefore, the government need not introduce any other measures as prices will fall on their own. The tax relief given to mortgage holders simply increases housing prices – the exact opposite of what the government claims to be doing. If the government continues to give a once-off relief every time interest rates increase, housing prices may  continue to increase as well. McWilliams believes the government has not built enough homes, considering net migration to Ireland significantly exceeds predicted levels. He argues that the rental tax credit and the Help to Buy Scheme could have a contradictory effect of putting upward pressure on rents. In final remarks, McWilliams emphasizes the potential drawback of tax credits designed to keep landlords in the market, potentially exceeding a cost of €100 million, especially if they had no intention to exit.

Dr. Barra Roantree, Economics professor at Trinity College Dublin, joins McWilliams in arguing the Help to Buy scheme should not have been extended  as it has demonstrated a propensity to inflate housing prices. While the Mortgage Interest Tax Relief scheme could be helpful to those suffering to pay loans from non-bank lenders hiking interest rates, overall, this policy is mainly helping people who do not need the relief. Additionally, Dr. Roantree notes concerning similarities between this relief scheme and a scheme that caused the Financial Crisis of 2008. Leading up to the financial crisis, people were receiving mortgages higher than they could afford, increasing property prices. When too many mortgages were given to people who normally would not qualify, a housing bubble was created – and every bubble inevitably bursts. Finally, Dr. Roantree criticized the Rental Tax Credit, arguing there is no evidence to show the tax relief is keeping landlords who would have otherwise left. He postulates landlords are not leaving the market due to tax but due to retirement, as many became landlords in the Celtic Tiger era. Thus, a tax relief would not have an impact on their decision.

The Irish Fiscal Council, a watchdog on the government’s procedures, has also given an opinion on the budget. The Fiscal Council approved of the new Future Ireland fund, as it argues it could unburden future taxpayers. However, the council had a host of critics regarding other measures. It is concerned about the increase in core net spending to 5.7% in 2024, which breaks the National Spending Rule of 5%, and argues the predicted break of the Rule to 2026 undermines Ireland’s public finances. The Fiscal Council criticizes the Irish government’s current adherence to procyclical fiscal policy (involving the augmentation of government spending and the reduction of taxation during periods of economic growth and low unemployment) as it has been damaging to Ireland in the past. Additionally, it predicts the larger permanent budget package will increase inflation and keep it at high levels for a longer period. Considering the robust economy, declining prices, and inflation risks, the Fiscal Council discerns minimal rationale for additional ‘one-time’ or transient policies. It specifically points to non-core funding, which was created for exceptional circumstances like Covid-19 and the humanitarian response to the war in Ukraine.

Members of rival political parties were also among the prominent critics of the 2024 Budget. Sinn Féin TD Pearse Doherty declared it a “budget for landlords.” Similarly, Holly Cairns, leader of the Social Democrats, argues the budget supports landlords more than it does tenants or first-time buyers.

Irish Congress of Trade Unions (ICTU) Secretary Owen Reidy argues the tax relief for landlords has made the taxation system more regressive, as opposed to progressive (like the USC). Reidy echoes members of the public arguing that the government has not gone far enough: the minimum wage should have been raised higher, higher education fees should have been decreased further, and more should be done to address the housing crisis and cost of living. There is also general criticism of too many temporary measures, especially the large number of “once-off” taxes. Patrick Leahy of the Irish Times argues that “once-off” taxes have been used so frequently that the phrase has lost its meaning.  Furthermore, he underscores the worrisome failure to address the housing crisis, especially since a significant number of young voters view housing as their primary concern. Finally, there is a prevalent argument that the budget predominantly caters to the middle class – which should not be surprising as Fine Gael prides itself as the party of the “squeezed middle”.

Is this turning into Apple’s most challenging year yet?

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Apple has been through a rough patch lately. With regulators and governments around the world
turning their ire against the tech giant and a litany of technical faults plaguing their latest phone –
will 2023 be Apple’s most onerous year yet?

iPhone 12
On Tuesday, 12 September, French regulators halted the sale of the iPhone 12 – on a charge that
the radiation levels emitted contravened safety guidelines. France’s ANFR found the phone’s specific
absorption rate (SAR) was 5.74 watts per kilogram, well above the 4 watts per kilogram EU standard
for such tests. While Apple has issued a software update to attempt to rectify the problem, issues
surrounding health and safety live long in consumer memories, as Samsung experienced with their
Galaxy Note 7 explosive battery debacle.

iPhone 15
Amidst these challenges, Apple needed the launch of this year’s iPhone 15 to go off without a hitch.
However, early reviews and impressions have resulted in a host of technical issues with the device.
Apple’s launch of the phone touted unrivalled performance from a phone, yet it appears this
computing power is resulting in serious overheating issues. Customers report iPhones that become
uncomfortable to hold due to overheating – with an iPhone 15 Pro Max reportedly reaching 112˚ F.

Further issues emerged from users attempting to transfer data between iPhones. The iPhone 15
reportedly becomes unresponsive, displaying what has been described as the ‘Apple logo of death,’
as it struggles to transfer data. While Apple issued a software update to try and resolve the issue,
many users claim not to have received it. When similar issues plagued LG’s G4 flagship, the company
never truly recovered, forcing the company to close its mobile phone division a few years later in
2021.

Apple was also forced to again return to Qualcomm for the modem in the iPhone 15, despite a five-
year drive to develop their own chips. iPhone’s have traditionally used Intel modems, but their
performance lacked behind those of Qualcomm, which manufactures the majority of high-end
processors for the Android market. This performance prompted Apple to purchase Intel’s modem
division in 2019, but Apple has proven unable to match Qualcomm’s current level of sophistication.

Regulatory Intervention
While the setbacks listed so far have been technological, and confined to the iPhone, Apple is facing
problems on all fronts. The EU has forced Apple to adopt USB Type-C on all future iPhones, in an effort to force more
standardisation and put to an end Apple’s proprietary, and lucrative, lightning cable.


Both Apple and Google have come under intense scrutiny from regulators for their so-called ‘walled
garden’ app stores. Regulators are working to force Apple and Google to allow competing app
stores, such as the Amazon App Store, to be used for downloading applications on iOS and Android.
Currently, Apple’s walled garden allows it to charge a 15-30% fee on all transactions conducted
through apps downloaded in the App Store. The tech giants have been hit with fines and action from
regulators in Europe and the US, and Fortnite developer Epic Games brought the iPhone maker to
court over its refusal to allow Epic Games to circumvent the fees.

Apple also faces hurdles in one of its most lucrative markets, China. Apple has bucked the trend among non-Chinese smartphone manufacturers, by managing to have a sizable presence in a country traditionally hostile to foreign companies. As in much of the world, Apple products are a growing status symbol among China’s growing middle and upper classes.

But international tension between the People’s Republic of China and the democratic western
powers has begun jeopardising this relationship. Apple, like many other companies, has begun
opening new assembly plants in South-East Asian countries like Vietnam, as rising labour costs and
the possibility of sanctions and conflict has compromised China’s status as the ‘Manufacturer of the
World’s Goods.’ Additionally, this vSeptember the Chinese government announced a crackdown on
‘unregistered apps’ within the Apple App Store. This push is likely to see the operation of several
social media apps including Facebook, Instagram and X (formerly Twitter) curtailed, in an effort to
stop the spread of ‘misinformation.’

Pivoting
Many of the adversity Apple faces surrounds its iPhone. While the iPhone remains Apple’s main
revenue generator (accounting for nearly half of the company’s total revenue) the company has
been making efforts to reduce its reliance on traditional hardware products, and is increasingly
entering the services industry. Apple Music and Apple TV are some examples of the strides into new
sectors that Tim Cook has steered the trillion-dollar company. There is also a plan for an Apple Car in
the pipeline – which may be just the revitalization Apple needs to stay relevant and to prevent issues
in its traditional operations from affecting the company’s overall performance.

Credit Suisse First Boston: Has the Ship Sailed?

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On the 27th October, current Credit Suisse (CS) CEO Ulrich Körner announced to shareholders the latest restructuring plan his bank will undertake to regain the share value it has lost in the last few years. A series of scandals, stemming from poor risk management and permissive governance, has led to Credit Suisse’ share price falling close to 60% in the last year. The restructuring plan is the second attempt at stabilising the bank in the last two years, with the former CEO Thomas Gottstein announcing a similar plan before leaving due to pressure from scandals and poor performance.

The latest restructuring plan involves downscaling the investment bank significantly and focusing on Credit Suisse’ strong wealth and asset management businesses. The investment bank will look to offload capital in the volatile securities business and focus more on mergers and acquisitions as well as capital markets. The restructuring will require an additional $4 billion from investors. An external memo released described the investment bank reshuffle as “CS First Boston is expected to be more global and broader than boutiques, but more focused than bulge bracket players”. Critically, the investment bank will spin off into an independent firm, and will be renamed CS First Boston in a nostalgic bow to its banking history.

The recent flurry of scandals began in March 2020, when then CEO Tidjane Thiam was forced to resign after an investigation had found that the bank had hired private detectives to spy on the former head of wealth management Iqbal Kahn after he had left Credit Suisse for competitor UBS. Credit Suisse tried to downplay the event, but further investigation from the Swiss regulator FINMA found that there had been seven other incidents of spying between 2016 and 2019, and stated that there were serious organisational shortcomings within the bank.

A year later, Credit Suisse was marred in further controversy when British financier Greensill Capital collapsed. Greensill Capital was a supply chain finance firm, providing interim finance to businesses that need to pay suppliers in advance. This allowed banks such as Credit Suisse to sell Greensill’s debt to investors. The debt was advertised as low risk due to the fact that the underlying credit was insured. However, in March 2021, Greensill Capital collapsed after its insurance provider stopped underwriting its debt. This led to Credit Suisse freezing $10 billion worth of funds which were not fully repaid, losing a significant amount of money for clients in its asset management division.

The turmoil of March 2021 did not end there for Credit Suisse, when Archegos Capital Management, a family office and client of CS’ prime brokerage business defaulted. This led to losses of $5.5 billion for Credit Suisse, who were the worst affected of the bulge bracket banks by the default. Other investment banks had suffered losses, but these had been limited due to other banks to settling some of their positions with Archegos prior to the default. David Soloman, CEO of Goldman Sachs, stated that “We identified the risk early and took prompt action consistent with the terms of our contract with the client”, praising the risk management of his firm.

An independent report into the incident criticised Credit Suisse for focusing too much on short-term profit maximisation and not recognising the extreme risk-taking behaviour of Archegos. As a result of both losses, Credit Suisse had to raise an additional $1.9 billion in capital from investors to sure up its balance sheet.

The current Chair of CS, Axel Lehmann, admitted in May of this year that CS has failed to be proactive in risk management and that the scandals that have plagued the bank cannot be perceived as isolated incidents. The current restructuring plan intends to limit the sources of risk, but it is likely that a complete reform of how CS assesses risk is also necessary to limit any future scandals.

The use of First Boston to define the new “boutique bracket” investment bank is an interesting strategical move. First Boston was a US-based investment bank, which was first partially acquired by Credit Suisse in 1988, with the acquisition being completed fully in 1996. The bank was renamed Credit Suisse First Boston, commonly referred to as CSFB.

CSFB was a significant competitor in the late 90s, gaining success underwriting IPOs for many high-tech companies. CSFB operated as a bulge bracket investment bank and was officially integrated into Credit Suisse in 2005. Many banks were chasing the universal bank model at the time, making this integration sensible. The might of the original CSFB is in contrast with the new CSFB, which is being downsized to offer a more bespoke service than bulge bracket banks.

If the restructuring takes place as planned, it will be interesting to see how well the investment bank can attract clients due to its reduced offering of services. Direct comparisons in the market are Jeffries and PJT Partners, who have experienced sustained profitability in recent years. However, the detachment of the bank from consumer deposits will make CSFB’s balance sheet more unstable, and the significant losses experienced in 2021 cannot be repeated if the new investment bank is to survive.

CSFB made its name in the late nineties and early naughties, when high risk-taking was rewarded with significant profit and compensation. However, severe risk-taking has led the investment bank to its knees, and it is clear that prudent risk management is necessary. This new risk strategy of CSFB will need to be significantly different from that of the original investment bank.

The recent turmoil has left Credit Suisse vulnerable to a takeover, with rumours of a merger between CS and UBS intensifying. The actions of the new management team will likely decide the future of the bank. A repeat of previous missteps may lead to the vanishing of the Credit Suisse name, let alone First Boston.

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