Dozens of Sri Lankan state-owned companies employing tens of thousands of people could be restructured or shut down as part of an IMF bailout of the bankrupt country, with the country’s airline at the top of the reform list.

With nearly 6,000 employees, SriLankan Airlines is the largest and most expensive of the bleeding, sclerotic companies that drained the budget and aggravated the worst financial crisis in the country’s history.

According to the Treasury Department, the airline lost $4.50 for every dollar earned earlier this year. It hasn’t made a profit since 2008, when the CEO was fired for insulting the then head of state.

“Even those who have never boarded a Sri Lankan plane are paying to subsidize the airline,” government spokesman Manusha Nanayakkara told reporters this month.

“We can’t go on like this.”

Sri Lanka defaulted on its $51 billion foreign debt in April and is now deep in the arduous process of renegotiating its obligations with creditors.

Its 22 million people suffered months of food and fuel shortages, and at the height of the crisis, an angry mob stormed government buildings and drove Sri Lanka’s former president into exile.

The International Monetary Fund (IMF) has tentatively approved a $2.9 billion bailout, and the government hopes to have access to the first tranche by the end of the year.

The terms of the deal have yet to be released, but the IMF’s money is usually contingent on painful reforms, such as raising taxes, removing consumer subsidies, and privatizing or shutting down underperforming state-owned companies.

The country has more than 300 state-owned companies ranging from nut farms to fuel retailers, and the 52 largest companies lost nearly $2.4 billion between January and April — about $140 million a week.

SriLankan Airline’s future is a top priority and the government last month directed the Treasury Department to begin restructuring, ideally by attracting outside investment.

But finding a company willing to put money into the airline will be a formidable challenge given its history of interference, mismanagement and turbulent partnerships, analysts say.

In 1998 Emirates acquired a minority stake in the airline and took over its management.

It remained in the black for most of the next decade, although ironically one of its most profitable years was 2001, when the Tamil Tigers separatist movement attacked the country’s main international airport.

Several of the airline’s planes were destroyed in the July attack, but insurance payments and excess capacity reduction offset a drop in ticket sales.

But the partnership was ended in 2008 by then-President Mahinda Rajapaksa and the chief executive sacked after the airline refused to push paying passengers to make room for members of his family returning from a trip to London.

The leader filled SriLankan’s management with relatives and followers, some of whom are now accused of corruption, and the airline has bled money ever since.

Rajapaksa even founded a rival state airline named after him, a colossal failure that was eventually merged with Sri Lankan – along with its accumulated losses.

Authorities tried to sell a 49 percent stake in SriLankan back in 2017 when the island nation’s tourism market was booming, but even then private equity firm TPG eventually withdrew its offer after deciding it wasn’t a profitable operation.

Airlines are “generally not that attractive” to investors, Singapore-based aviation analyst Brendan Sobie told AFP, “particularly airlines that are state-owned and have a lot of legacy assets have a lot of debt, like Sri Lanka does.”

“There aren’t many foreign airlines, especially in this post-Covid environment, that are even looking or considering buying stakes in airlines overseas,” he added, adding that the track record for strategic investments in the sector is “very poor.” .

“It’s very difficult,” he said.

Sri Lanka Chairman Ashok Pathirage admits the airline’s current balance sheet is not an attractive proposition.

“If you try to privatize the whole thing, people will come and ask the government to take on half the debt,” Pathirage told AFP.

But he said Sri Lanka could pay about half of its debt by spinning off and selling profitable businesses, including its virtual monopoly on catering and ground handling at Colombo airport.

Union leaders and workers support restructuring in this direction, on condition that no jobs are cut.

“The airline is not losing money because of staff, but because of expensive leases and poor financial structures,” a cabin crew member who requested anonymity told AFP.

But the sale of the airline’s profitable businesses would mean that the residual operations would cause even greater losses for the government.

Former state finance minister Eran Wickramaratne told AFP that unless authorities can find an investor, the airline should be permanently grounded before it could further incriminate the public.

“We are a bankrupt country,” he said. “We were unable to service our debt and that reality hit us.”