(Yicai Global) July 19 -- Hainan Airlines Group said it has agreed with creditors to pay back around CNY180 million (USD25.1 million) of outstanding loans using the Chinese carrier's shares.

The creditors will trade the debt for about 56.19 million shares priced at CNY3.18 (44 US cents) each, which account for about 0.13 percent of its total share capital, the Haikou-based firm said late yesterday. The debt was mainly incurred in aircraft leasing contracts and supplementary deals that units penned during the airline’s bankruptcy reorganization, it added.

Hainan Airlines [SHA: 600221] ended unchanged at CNY1.60 a share in Shanghai today.

If the value of the shares is less than the debt after creditors have held them for two years, Hainan Airlines will pay the difference, it noted, but added that if the equity value is higher, the surplus will be used to offset leasings.

Hainan Airlines has used debt-to-equity swaps several times before, totalling CNY2.5 billion (USD348.6 million) before the latest deal, with the shares priced at CNY3.18 apiece this year.

Strategic investor Liaoning Fangda Group Industrial became Hainan Airlines' actual controller on in December 2021 after its restructuring.

Hainan Airlines expects its net loss to have shrunk to between CNY1.5 billion and CNY2.1 billion in the six months ended June 30, from CNY12.8 billion a year earlier. The figure includes CNY2.5 billion to CNY2.8 billion in foreign exchange losses.

Most of Hainan Airlines' leasing and some loans are denominated in foreign currencies, and its foreign currency expenditure on operations is higher than its foreign currency income, so changes in the yuan have a big impact on its earnings, it added.

Editor: Martin Kadiev