The paper presents an idea of flutter margin detection algorithm which is based on identification of natural frequencies and modal damping ratio for airplane structure employing in-flight vibration measurements. The method is based on application of wavelets filtering for decomposition of measured system response into components related to particular vibration modes. In the second step classical Recursive Least Square (RLS) estimation methods is used to obtain ARMA model parameters. The hardware implementation of proposed algorithm is based on FPGA technology which allows implementing complex algorithm in a one chip. The results of modal parameters tracking using designed real-time embedded system are compared with more classical in-flight modal analysis at discrete flight points.