Latvia's government has reportedly refused to make any further investments in Air Baltic unless the carrier's chief executive, Bertolt Flick, agrees to step down.
According to local media reports, the government has warned that the carrier faces bankruptcy without a further capital increase from the state.
However, the state is reported to be reluctant to inject any additional capital if Flick remains in charge.
Air Baltic is 52.6% state-owned. Its other main shareholder is Baltijas Aviacijas Sistemas, which holds 47.2%. Baltijas Aviacijas Sistemas is owned by Flick.
The carrier last year underwent a capital increase of Ls30 million ($60.7 million), which the government said at the time was provided by shareholders "in proportion" to their stakes.
A spokesman at Latvia's transport ministry declined to comment on the reports. Air Baltic could not immediately be reached for comment.