Latvia has agreed a controversial stop gap investment package to buoy flag carrier airBaltic. While the deal will help the airline survive to allow it to hunt a long term solution, the transport minister was not so lucky. 

Following a marathon cabinet meeting ending late on November 3 to approve the deal, Prime Minister Laimdota Straujuma demanded the following day that Minister of Transport Anrijs Matiss step down. The PM railed over the minister's lack of proper supervision over airBaltic, her office announced on November 4.

The demand came shortly after the cabinet agreed to invite an investor, with alleged ties to Russian money, to help the airline out of a hole. Riga will invite German investor Ralph Dieter Montag-Girmes to invest €52mn in the company, with the government putting in a further €80mn.

Latvia has been seeking an investor for the national carrier for some years. The airline, which was at risk of being grounded a few years ago, has overcome immediate crisis, but Riga has been warned it needs to move fast to strengthen the company and expand its operations into neighbouring Baltic markets in order to make it more attractive. airBaltic needs cash to fund new planes it has agreed to buy from Canada's Bombardier.  

Straujuma said Matiss has “lost her confidence”, Latvian newswire LETA reports. In a statement published on the government’s website, the prime minister went on to say the minister's supervision of airBaltic was lacking, potentially endangering the airline’s future.

Latvian media are also writing about ties the German investor has with Russian banks, speculating airBaltic might have to buy Russian planes as a condition for investment. Matiss himself described inviting Montag-Girmes as the "best of bad options".

An investor “from Western Europe” was speculated to be interested in airBaltic in September, with rumours also circulating of Chinese investors looking at the airline.