The Prime Minister said she had decided to demand the resignation of Transport Minister Anrijs Matiss (Unity) for keeping the government in the dark about the strategic development of the Latvian national airline airBaltic.
Matiss himself had raised the possibility of resignation two weeks ago and also at the Cabinet meeting on November 3 which approved a financial investor for airBaltic, the prime minister said.
Straujuma said Matiss had lacked a vision about development of airBaltic. Although he had been criticizing the proposed investor, the Transport Ministry has nevertheless put the investor before the government for approval on Tuesday.
But the prime minister said she did not see any malicious intent in Matiss’ actions in supervision of the national airline. She said also that Matiss had also accomplished much as the transport minister, for example, in improving the condition of roads in the country.
Finance Minister Janis Reirs will be performing the responsibilities of the transport minister as of November 7.
Matīss will be returning to serve as an MP at the Latvian parliament, he told faction leader and chairwoman of the Unity party Solvita Aboltina, reported LSM's Russian-language service. Matīss' MP mandate was previously handed to Janīne Kursīte, who will lose her seat upon the minister's return to Saeima.
The prime minister had not yet signed a decree removing Matiss as the transport minister and by Wednesday evening Matiss was signalling he did not intend to go quietly, saying he would not resign as it would be "cowardly" and would instead wait for Straujuma to sign a her decree.
After a four-hour discussion behind closed doors on Tuesday, the government agreed to invite German entrepreneur Ralph Dieter Montag-Girmes to invest €52 million in airBaltic with the government stumping up a further €80 million.
Straujuma said that the solution would be temporary while the Transport Ministry continues efforts to find a long-term strategic investor for the company.
However, Matiss described the deal as "the best of bad options" amid question marks over Montag-Girmes' long established ties with Russian banks and other companies, including in the aviation sector, plus a suggestion that airBaltic would have to buy Sukhoi planes as a condition of investment.
In mid-October, the Latvian government said it needed more information about the potential investor of Latvia's airBaltic carrier found by the Prudentia consultancy - which itself has an increasingly rocky relationship with government.
An auditor, hired by the Transport Ministry, warned that a solution to airBaltic's financial issues is urgently needed to ensure the company's stability.
Prudentia, a consultancy hired by the Latvian government to find an investor for airBaltic, announced in September that it had found a Western investor, ready to invest an estimated 50 million euros in the Latvian carrier, and that the government would have to provide 80 million euros.
Prudentia also warned that if airBaltic does not receive financing fast enough it might become unable to meet its payments to Canadian company Bombardier and that as a result airBaltic might lose the money paid in advance for Bombardier aircraft.
After these announcements, the Latvian government terminated its contract with Prudentia accusing it of breaching confidentiality terms.
airBaltic, founded in 1995, is 99.8 percent-owned by the Latvian state and serves over 60 destinations from its home base in Riga.