India’s Narendra Modi government is leaving no stone unturned in its second attempt to sell off the national carrier Air India, but it may be acting with undue haste.

On January 7, the government formally kick-started the divestment process, by deciding to invite expressions of interest for the debt-laden carrier by January-end, the Mint newspaper reported.

The privatisation of Air India is top priority for the Modi government, which is battling a revenue shortfall following last October’s corporate tax cut and a severe economic slowdown. The sale also assumes significance, given that divestment proceeds in the current financial year are expected to fall short of the government’s ambitious Rs 1.05 lakh crore target.

Besides, Air India is flying on a 10-year, Rs 30,231-crore bailout package announced in 2012. “The reason behind the centre’s desperation is that the funds infused in 2012 are beginning to exhaust now and any further delay would mean an infusion of more funds,” explained Jitender Bhargava, former executive director of Air India and author of The Descent of Air India.

Experts, though, say it’s best to hold off on the process in the interest of a successful sale. “With the rupee depreciating against the dollar, fluctuating oil prices and an overall economic slowdown, it’s better to wait,” said Mark Martin, founder and CEO at Martin Consulting. “The government should consider the sale of Air India in a more positive economic backdrop.”

Aviation passenger traffic grew in single-digits for most of the year in 2019. For the first seven months, growth was just 3.15%, compared to 21.8% the previous year, according to data from directorate general of civil aviation. Potential buyers may prefer to wait out the ongoing economic slowdown, before making aviation investments, Martin said.

Another failure?

Air India had witnessed a failed divestment attempt in 2018. At the time, investors had baulked at the prospect of the government retaining a 24% stake in the airline. Then, there was also the overhang of Air India’s Rs 60,000-crore debt pile.

Now, the government is course-correcting by offering to sell its entire 100% stake, it had informed parliament in December.

To reduce the impact of debt on the buyer, a special purpose vehicle – Air India Asset Holding Ltd or AIAHL, which was setup in February 2018 – is absorbing a bigger chunk of the airline’s debt. So far, the carrier has already transferred Rs 29,474 crore of debt to AIAHL, and a further transfer is possible, suggest some media reports.

Air India also plans to transfer some of its non-core, and non- operational assets to the SPV. So far, only Air India Air Transport, the airline’s ground handling service arm, has been transferred. AIAHL also raised Rs 7,000 crore through a bond sale to refinance its debt in August 2019.

However, analysts say these measures will fall short. “The government’s statement in Parliament [Aviation Minister Hardeep Singh Puri’s comment that Air India will have to shut down if divestment fails] made it clear that it has no plans, it is good in talking but knows little on how to go about the process. The release of expression of interest has also been unnecessarily delayed,” said Bhargava.

Meanwhile, officials from the civil aviation ministry and the department of investment and public asset Management visited Singapore and London in November searching for an investor. These roadshows did not garner expected interest, as per media reports.

“The government has not been a great marketer so far. You need to have a requisite competence in ensuring that you sell a product by putting its strength on the front rather than hiding,” Bhargava said. “The details about the debt and the loss it’s making are in public knowledge but nobody is highlighting the strengths of the national carrier. In the end, it all depends on how sensibly the whole exercise of divestment takes place and what value the airline will add to the potential buyer.”

This article first appeared on Quartz.