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The situation at Latvian national airline airBaltic worsened on 21st September the Board of airBaltic filed for legal protection which under Latvia law is essentially a court-approved business plan allowing for a capital increase in the company and payments to suppliers and creditors. While the “legal protection plan”, filed by airBaltic was rejected by the court. airBaltic was allowed to continue operations in its network of services in Europe, the Middle East, and Russia/CIS. However, friction between the government which owns 52% of the airline and airBaltic’s German CEO Bertolt Flick who fled the country in May after the anti-corruption bureau conducted a series of raids that included AirBaltic offices. The anti-corruption bureau carried out another series of searches of Baltic Aviation Systems and AirBaltic offices on 27th September as calls for Flick resignation to resolve the situation mounted. On 29th September, the shareholders agreed to finalise details for the injection of new capital by the two main shareholders which would see the government securing new investment worth 57.6 million lati (€81.9 million), while Baltic Aviation Systems (BAS), jointly owned by Mr. Flick and the Bahamas Taurus Asset Management Fund would invest 50 million lati (€71.1 million). Flick’s removal was a key element of the deal and 4th October he bowed to the inevitable and announced that “as an owner and for the sake of airBaltic” that he had “agreed to step down, as the agreement between the shareholders does so require, for the future of the airline”. In his resignation letter he described airBaltic as his “child”, for which he “built up an excellent management team” adding “together we have created an excellent and award-winning company”.

Under the agreement which is being implemented on a phased basis. airBaltic had to retract its petition for legal protection submitted to the Riga District Court, 59,110 SAS shares must be annulled, and a new version of airBaltic charter must be approved. A new council is to be appointed for the airline and they are to appoint a new three-member board following what it describes as the dismissal of Mr. Flick. No replacement has been named but speculation has centred on Martin Gauss, the former head of Hungarian airline Malév. BAS must provide 14 million lati (€19.84 million) to airBaltic. The airline's liabilities to BAS will be consolidated, consolidated will also be the subsidiaries of airBaltic and BAS, and the outsourced services will be given back to airBaltic. A restructuring plan and a new business plan must be drawn up for the airline in two months. The Government would loan airBaltic 16 million lati (€22.67 million) and if all the conditions are met, the share capital of airBaltic will be increased to a total state investment of 57.6 million lati (€81.9 million). The International Monetary Fund said (IMF) it had not been consulted about Latvia's plans to use public money to rescue its majority state-owned airline and had concerns about the strategy. Latvia, which secured a €7.5 billion bailout from the IMF and the European Union in 2008 and must meet budget targets this year to complete the programme and the government has said it might need to adjust its 2011 budget to free up the funds. The IMF has said that If the plan goes ahead, the Fund and the European Commission will be looking for additional budget measures to compensate for the cost.