Sri Lanka is seeking foreign assistance to rescue its loss-making national carrier, a minister said on Thursday, after the government announced the airline was unable to pay back nearly $1bn in debt.

The country cannot afford to bear SriLankan Airlines' losses of 128bn Sri Lankan rupees ($872mn) on top of its massive debt, International Trade Minister Sujeewa Senasinghe told reporters in Colombo.

The airline owes at least $933mn but the government last week said the true figure could be much higher.

"We want to restructure SriLankan (Airlines) with either direct foreign capital or through a management agreement with a foreign airline," Senasinghe said.

He added that he hopes the process will be completed within "two to three months".

Official sources said Colombo was in talks with a Middle Eastern carrier to form an agreement that would see the airline hand over control of its management to a foreign carrier.

A previous management deal with Emirates was ended in 2008 by the former Sri Lankan government following a personal disagreement between the flag carrier and then-president Mahinda Rajapakse.

The airline had refused to bump fare-paying business-class passengers to economy class and give their seats to members of Rajapakse's family, who were returning from London.

An angry Rajapakse removed the Emirates-appointed CEO of SriLankan Airlines from his post and replaced him with his brother-in-law.

The beleaguered national carrier has also drawn controversy in recent years after an independent investigator last year found evidence of serious corruption in a $2.3bn deal to buy Airbus aircraft during Rajapakse's presidency.

Rajapakse's brother-in-law, Nishantha Wickramasinghe, is under investigation for bribery and corruption dating back to when he was the chairman of the national carrier.

A mounting debt crisis of its own has forced the Sri Lankan government to request a bailout for the country from the International Monetary Fund. Media reports have placed the requested bailout amount at $1.5bn.