Latvia's transport ministry has formally put the national carrier, Air Baltic, on the market by inviting expressions of interest from potential investors.
The government holds a 99.8% stake in the flag-carrier and intends to offer 50%, minus a single share, to a buyer.
But the transport ministry says that it would consider "other transition structures", if this suited both sides' interests.
The ministry is inviting non-binding expressions of interest, to be submitted to financial adviser IBS Prudentia by 1 November.
It states that the selection of an investor will be based on the buyer's ability to support Air Baltic's long-term development, the investor's reputation and its access to financial resources.
"After the confirmation of the initial interest, all potential investors will be provided with a non-confidential investment overview," says the ministry.
Air Baltic has already decided to modernise its fleet with 10 Bombardier CS300 twinjets, under a letter of intent, and take purchase rights on a further 10.
Its current fleet of 29 aircraft includes 14 older-variant Boeing 737s plus eight Bombardier Q400 and seven Fokker 50 turboprops. The airline is aiming to operate a two-type all-Bombardier fleet comprising the CSeries jets and the Q400s.
During the first half of last year the Riga-based airline transported 3.4 million passengers and achieved sales of €150 million ($190 million).
The government took over virtually the entire share capital towards the end of 2011 after a dispute with former private co-owner Baltijas Aviacijas Sistemas over terms of a funding injection.
Part of the funding package has been earmarked for renovating the carrier's fleet. Air Baltic has already offered its Fokker 50s for lease.
Simplifying and updating the fleet is a crucial part of Air Baltic's plans to return to profitability in 2014. If it firms the CSeries agreement, the airline would take delivery of the Pratt & Whitney-powered 130-seat aircraft from 2015. Air Baltic has the option of converting some of the type to 110-seat CS100s.