Estonian Air is overhauling its strategy in a dramatic shift that includes appointing a new chief executive with immediate effect.
The airline has named Jan Palmer as the new head from 1 November, without clarifying the situation regarding previous chief Tero Taskila who had been in charge since mid-2011.
State-controlled Estonian Air has been struggling financially and, under Taskila, underwent a strategic review of its operations to focus on expanding the route network.
The airline also overturned its fleet policy - switching its Bombardier CRJ900s for Embraer twinjets, some leased from Finnair, despite the CRJs' having been newly introduced.
But the carrier's supervisory council chairman Erkki Raasuke says: "By the middle of this year, it was clear that the chosen strategy of Estonian Air had risks, realisation of which worsened the company's financial performance considerably."
Over the first nine months of this year the carrier's losses have exceeded €20 million ($26 million), nearly double the loss at the same stage in 2011, although revenues increased by 20%.
Based on financial projections the supervisory council has "decided to change the strategy approved last year", by appointing a new chief and focusing on developing a "core route network" for which there is "solid, fundamental demand", Raasuke adds.
Palmer will work on a revised medium-term plan for the airline and present it to the Estonian economics ministry by the end of November.
Raasuke says that, as part of the change, all the members of the supervisory council will request to resign in order for the new strategy to be reviewed by a fresh panel.